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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|o | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended
.
|- | ------------------------------------------------------------------------------------------------------------------------

|ý | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from May 5, 2002 to June 30, 2002
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------

Commission File No. 1-13919

PawnMart, Inc.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of incorporation or organization)

75-2520896(I.R.S. Employer Identification No.)


2175 Old Concord Rd. SE, Suite 200, Smyrna, Georgia 30080(Address of principal executive offices)

(678) 305-7211(Registrant's telephone number)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

The
following securities of the registrant were outstanding as of May 30, 2002: 2,503,217 shares of common stock; 1,974,060 Series A redeemable common stock purchase warrants; and
1,380,000 Series B redeemable common stock purchase warrants. The common stock and warrants were cancelled as of May 31, 2002 under the terms of the Company's bankruptcy plan of
reorganization which has not been consummated as of the filing date.

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PAWNMART, INC.        INDEX

|PART IFINANCIAL INFORMATION |  | Page No.                                                                             
|---------------------------- |  | -------------------------------------------------------------------------------------
|Item 1                       |  | Consolidated Financial Statements                                                    
|                             |  | Consolidated Balance Sheets                                                          
|                             |  | Consolidated Statements of Operations                                                
|                             |  | Consolidated Statements of Cash Flows                                                
|                             |  | Notes to Consolidated Financial Statements                                           
|Item 2                       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 3                       |  | Quantitative and Qualitative Disclosures About Market Risk                           
|PART IIOTHER INFORMATION    |  |                                                                                      
|Item 1                       |  | Legal Proceedings                                                                    
|Item 2                       |  | Changes in Securities and Use of Proceeds                                            
|Item 3                       |  | Defaults Upon Senior Securities                                                      
|Item 4                       |  | Submission of Matters to a Vote of Security Holders                                  
|Item 5                       |  | Other Information                                                                    
|Item 6                       |  | Exhibits and Reports on Form 8-K                                                     

2

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

PAWNMART, INC. AND SUBSIDIARIES

(Operating
as Debtor-in-Possession)

Consolidated
Balance Sheets

(In
thousands, except share and per share data)

|                                       |                                                                                                                                                                                            | June 30,
2002 |                                             | February 2,
2002 |  
|-------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------- | ------------------------------------------- | ---------------- | -
|
|Assets                                 |                                                                                                                                                                                            |               |                                             |                  |  
|Current assets:                        |                                                                                                                                                                                            |               |                                             |                  |  
|                                       | Cash and cash equivalents                                                                                                                                                                  |               | $                                           | 377              |  
|                                       | Accounts receivable                                                                                                                                                                        |               |                                             | 36               |  
|                                       | Pawn service charges receivable                                                                                                                                                            |               |                                             | 330              |  
|                                       | Pawn loans                                                                                                                                                                                 |               |                                             | 3,001            |  
|                                       | Inventories, net                                                                                                                                                                           |               |                                             | 2,616            |  
|                                       | Prepaid expenses and other current assets                                                                                                                                                  |               |                                             | 180              |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|                                       |                                                                                                                                                                                            |               | Total current assets                        |                  |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|Property and equipment, net            |                                                                                                                                                                                            |               | 840                                         |                  |  
|Debt issuance costs, net               |                                                                                                                                                                                            |               | 999                                         |                  |  
|Other assets, net                      |                                                                                                                                                                                            |               | 115                                         |                  |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|                                       |                                                                                                                                                                                            |               | Total assets                                |                  | $
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|Liabilities and Stockholders' Deficit  |                                                                                                                                                                                            |               |                                             |                  |  
|Current liabilities:                   |                                                                                                                                                                                            |               |                                             |                  |  
|Liabilities not subject to compromise: |                                                                                                                                                                                            |               |                                             |                  |  
|                                       | Accounts payable and accrued liabilities                                                                                                                                                   |               | $                                           | 643              |  
|                                       | Current installments of notes payable                                                                                                                                                      |               |                                             | 3,864            |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|                                       |                                                                                                                                                                                            |               | 4,507                                       |                  |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|Liabilities subject to compromise:     |                                                                                                                                                                                            |               |                                             |                  |  
|                                       | Prepetition liabilities                                                                                                                                                                    |               |                                             | 12,540           |  
|                                       |                                                                                                                                                                                            |               | Total current liabilities                   |                  |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|Stockholders' deficit:                 |                                                                                                                                                                                            |               |                                             |                  |  
|                                       | Preferred stock, $.01 par value; authorized 10,000,000 shares                                                                                                                              |               |                                             |                 |  
|                                       | 8% Convertible preferred stock, $6.00 par value; authorized 416,667 shares; 416,667 shares issued and outstanding (liquidation preference $6.00 per share)                                 |               |                                             | 2,500            |  
|                                       | Common stock, $.01 par value; authorized 20,000,000 shares; 2,503,213 shares issued                                                                                                        |               |                                             | 25               |  
|                                       | Series A redeemable common stock purchase warrants, $0.125 par value; 1,974,060 and 1,842,840 warrants issued and outstanding at June 30, 2002 and February 2, 2001, respectively (note 2) |               |                                             | 249              |  
|                                       | Series B redeemable common stock purchase warrants, $0.0625 par value; 1,380,000 warrants issued and outstanding                                                                           |               |                                             | 86               |  
|                                       | Additional common stock purchase warrants                                                                                                                                                  |               |                                             | 60               |  
|                                       | Additional paid-in capital                                                                                                                                                                 |               |                                             | 22,004           |  
|                                       | Accumulated deficit                                                                                                                                                                        |               |                                             | (33,407          | )
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|                                       | Less treasury stock, at cost; 7,144 common shares                                                                                                                                          |               |                                             | (70              | )
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|                                       |                                                                                                                                                                                            |               | Total stockholders' deficit                 |                  |  
|                                       |                                                                                                                                                                                            |               |                                             |                  |  
|                                       |                                                                                                                                                                                            |               | Total liabilities and stockholders' deficit |                  | $
|                                       |                                                                                                                                                                                            |               |                                             |                  |  

See accompanying notes to consolidated financial statements.

3

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PAWNMART, INC. AND SUBSIDIARIES(Operating as Debtor-in-Possession)

Consolidated Statements of Operations

(Unaudited)

(In
thousands, except per share data)

|                                |                                   | Two Months Ended |                                           | Five Months Ended |  
|------------------------------- | --------------------------------- | ---------------- | ----------------------------------------- | ----------------- | -
|
|Revenues:                       |                                   |                  |                                           |                   |  
|                                | Merchandise sales                 |                  | $                                         | 1,296             |  
|                                | Pawn service charges              |                  |                                           | 678               |  
|                                | Other                             |                  |                                           | 33                |  
|                                |                                   |                  |                                           |                   |  
|                                |                                   |                  | Total revenues                            |                   |  
|                                | Cost of sales                     |                  |                                           | 960               |  
|                                |                                   |                  |                                           |                   |  
|                                |                                   |                  | Gross profit                              |                   |  
|                                |                                   |                  |                                           |                   |  
|Expenses:                       |                                   |                  |                                           |                   |  
|                                | Store operating expenses          |                  |                                           | 807               |  
|                                | Corporate administrative expenses |                  |                                           | 418               |  
|                                | Interest expense                  |                  |                                           | 61                |  
|                                | Depreciation and amortization     |                  |                                           | 70                |  
|                                |                                   |                  |                                           |                   |  
|                                |                                   |                  | Total expenses                            |                   |  
|                                |                                   |                  |                                           |                   |  
|                                |                                   |                  | Operating Loss                            |                   |  
|Gain on sale of stores          |                                   |                  |                                          |                   |  
|                                |                                   |                  |                                           |                   |  
|                                |                                   |                  | Net loss allocable to common stockholders |                   | $
|                                |                                   |                  |                                           |                   |  
|Loss per common share (note 3): |                                   |                  |                                           |                   |  
|                                |                                   |                  | Basic                                     |                   | $
|                                |                                   |                  |                                           |                   |  
|                                |                                   |                  | Diluted                                   |                   | $
|                                |                                   |                  |                                           |                   |  

See
accompanying notes to consolidated financial statements.

4

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PAWNMART, INC. AND SUBSIDIARIES(Operating as Debtor-In-Possession)

Consolidated Statements of Cash Flows

(Unaudited)

(In
thousands)

|                                                                         |                                                                             | Five Months Ended                            |                                                                  
|------------------------------------------------------------------------ | --------------------------------------------------------------------------- | -------------------------------------------- | -----------------------------------------------------------------
|
|Cash flows from operating activities:                                    |                                                                             |                                              |                                                                  
|                                                                         | Net loss                                                                    |                                              | $                                                                
|                                                                         | Adjustments to reconcile net loss to net cash used in operating activities: |                                              |                                                                  
|                                                                         |                                                                             | Depreciation and amortization                |                                                                  
|                                                                         |                                                                             | Amortization of debt issuance costs          |                                                                  
|                                                                         |                                                                             | Amortization of debt discount                |                                                                  
|                                                                         |                                                                             | Gain on sale of stores                       |                                                                  
|                                                                         |                                                                             | Changes in operating assets and liabilities: |                                                                  
|                                                                         |                                                                             |                                              | Accounts receivable                                              
|                                                                         |                                                                             |                                              | Pawn service charges receivable                                  
|                                                                         |                                                                             |                                              | Inventories, net                                                 
|                                                                         |                                                                             |                                              | Prepaid expenses and other current assets                        
|                                                                         |                                                                             |                                              | Other assets                                                     
|                                                                         |                                                                             |                                              | Prepetition liabilities, accounts payable and accrued liabilities
|                                                                         |                                                                             |                                              |                                                                  
|                                                                         |                                                                             |                                              |                                                                  
|                                                                         |                                                                             |                                              |                                                                  
|Cash flows from investing activities, net of effect of acquisitions:     |                                                                             |                                              |                                                                  
|                                                                         | Proceeds from sale of stores                                                |                                              |                                                                  
|                                                                         | Net decrease in pawn loans                                                  |                                              |                                                                  
|                                                                         | Purchases of property and equipment                                         |                                              |                                                                  
|                                                                         |                                                                             |                                              |                                                                  
|                                                                         |                                                                             |                                              |                                                                  
|                                                                         |                                                                             |                                              |                                                                  
|Cash flows from financing activities:                                    |                                                                             |                                              |                                                                  
|                                                                         | Principal payments on notes payable (note 2)                                |                                              |                                                                  
|Net increase (decrease) in cash and cash equivalents                     |                                                                             |                                              | (36                                                              
|Cash and cash equivalents at beginning of period                         |                                                                             |                                              | 413                                                              
|                                                                         |                                                                             |                                              |                                                                  
|Cash and cash equivalents at end of period                               |                                                                             | $                                            | 377                                                              
|                                                                         |                                                                             |                                              |                                                                  
|Supplemental disclosures of cash flow informationCash paid for interest |                                                                             | $                                            | 88                                                               
|                                                                         |                                                                             |                                              |                                                                  

See
accompanying notes to consolidated financial statements.

5

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PAWNMART, INC. AND SUBSIDIARIES(Operating as Debtor-in-Possession)

Notes to Consolidated Financial Statements

June 30,
2002 and July 7, 2001

(Unaudited)



6

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7

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|                                                                          |  | Two Months Ended |  | Five Months Ended
|------------------------------------------------------------------------- |  | ---------------- |  | -----------------
|
|Weighted average shares  basic                                           |  | 2,503            |  | 2,503            
|Shares attributable to stock options, warrants and convertible securities |  |                 |  |                 
|                                                                          |  |                  |  |                  
|Weighted average sharesdiluted                                           |  | 2,503            |  | 2,503            
|                                                                          |  |                  |  |                  





8

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9

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements appearing in the following discussion that are not historical facts are forward-looking statements ("forward-looking
statements") within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created by those sections. Such forward-looking statements are necessarily estimates reflecting the best judgment of the Company's management based upon current information
and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors, include, but are not limited to, those set
forth and those appearing from time to time in filings made by the Company with the Securities and Exchange Commission. These risks, uncertainties and other factors should not be construed as
exhaustive and the Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after
the date of such statements.

In addition, the following discussion and analysis should be read in conjunction with the Company's consolidated financial statements and notes thereto and other
financial data included in the Company's Form 10-K for the fiscal year ended February 2, 2002.

GENERAL

PawnMart, Inc.
(the "Company") is a specialty finance and retail enterprise principally engaged in establishing and operating stores which advance money secured by the pledge of
tangible personal property and sell pre-owned merchandise to the value-conscious consumer. The Company generates income in two ways: through collection of a monthly service charge from
advancing money to individuals based primarily upon the estimated resale value of pledged personal property such as jewelry, consumer electronics, tools, musical instruments, firearms, automobiles and
other miscellaneous items and through profit realized on the retail sale of the unredeemed or other purchased pre-owned merchandise.

The
Company experienced cash flow difficulties in the second quarter of the fiscal year ended February 2, 2001. ("Fiscal 2001") when it reported substantial difficulties in
meeting its obligations.
Continued operating losses and negative cash flow forced management to scrap and sell over $1.8 million in gold jewelry at cost to raise working capital but had a detrimental effect on store
sales which created larger operating losses and negative cash flow in the fourth quarter of Fiscal 2001.

In
January 2001, the Company failed to meet its financial covenants with its secured lender and was in arrears on sales taxes, personal property taxes and trade payables as well
as a default on payment of interest on the 2004 Notes. Management concluded that without additional working capital, it would be unable to sustain operation of the 45 stores it was then operating. The
Company attempted to raise additional working capital through its brokerage contacts and negotiated a loan modification on February 9, 2001 with its secured lender to provide a
$1 million extension of credit in excess of its borrowing base. The Company was required to repay the over-line advance with new equity, additional financing or through the sale of
assets over a Five-month period from the date of the extension beginning in March 2001.

The
Company was unsuccessful in its attempts to raise working capital and in March 2001 announced its intention to close or sell stores as part of a restructuring effort. From
March 2001 through June 2001, the Company closed or sold 15 stores. During the Five months ended July 7, 2001, the Company sold one store and closed fourteen stores. Continuing
efforts to secure new financing and equity were unsuccessful and on July 9, 2001, the Company filed for protection under the Bankruptcy Code.

10

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The
Plan was filed on February 15, 2002 and was amended on April 3, 2002. A confirmation hearing for the Plan was held on May 20, 2002 and the Plan was confirmed by
the Bankruptcy Court as of that date. The Plan became effective on May 31, 2002. The Company will issue approximately 2,280,000 shares of Common Stock to its unsecured creditors in exchange for
indebtedness in connection with the Merger. The equity holders of CMHI will receive two new classes of Preferred Stock in the Company that will have a liquidation preference over the new common
shareholders and the preferred shareholders will be able to convert one of the classes of Preferred Stock to approximately 43% of the Common Stock. The Company also negotiated a
post-confirmation credit facility with Comerica in the amount of $4,500,000 in connection with the Plan. Terms of the Plan are set forth in the Company's Form 10-K for
the year ended February 2, 2002 and the Confirmation Order, the Plan, and the Disclosure Statement filed as exhibits thereto are incorporated herein by reference.

The
Company's total revenues are derived primarily from service charges on loans and the proceeds from the sales of merchandise inventory. The Company's pawn loans are generally made on
the pledge of tangible personal property for one month, with an automatic sixty-day extension period. All pawn loans are collateralized by tangible personal property placed in the
possession of the Company, except for automobile title loans. During the term of an automobile title loan, the borrower is allowed to maintain possession of the collateral. Pawn service charges are
recognized when loans are repaid or renewed. If a loan is not repaid, the principal amount advanced on the loan, exclusive of any uncollected pawn service charges, becomes the carrying value of the
forfeited collateral (inventory), which is recovered through subsequent sales.

Selected
elements of the Company's unaudited consolidated statements of operations are shown below for the Two and Five months ended June 30, 2002 and July 7, 2001 as a
percentage of total revenues. The following table, as well as the discussion following, should be read in conjunction with the Company's consolidated financial statements and notes thereto and other
financial data included in the Company's Form 10-K for the fiscal year ended February 2, 2002.

|                                  |                           | Two Months Ended |       | Five Months Ended |      
|--------------------------------- | ------------------------- | ---------------- | ----- | ----------------- | -----
|
|Merchandise sales                 |                           | 64.6             | %     | 66.5              | %    
|Pawn service charges              |                           | 33.8             |       | 32.0              |      
|Other income                      |                           | 1.6              |       | 1.5               |      
|                                  |                           |                  |       |                   |      
|                                  | Total revenues            |                  | 100.0 |                   | 100.0
|Cost of sales                     |                           | 47.8             |       | 60.0              |      
|                                  |                           |                  |       |                   |      
|                                  | Gross profit              |                  | 52.2  |                   | 40.0 
|Store operating expenses          |                           | 40.2             |       | 35.7              |      
|                                  |                           |                  |       |                   |      
|                                  | Store contribution margin |                  | 12.0  |                   | 4.3  
|Corporate administrative expenses |                           | 20.8             |       | 14.6              |      
|Interest expense                  |                           | 3.0              |       | 9.6               |      
|Depreciation and amortization     |                           | 3.6              |       | 1.7               |      
|(Gain) on sale of store           |                           |                 |       |                  |      
|                                  |                           |                  |       |                   |      
|                                  | Net loss                  |                  | (15.4 | )%                | (21.6
|                                  |                           |                  |       |                   |      

11

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RESULTS
OF OPERATIONS

Two Months Ended June 30, 2002 Compared to Two Months Ended July 7, 2001

Total revenues decreased 44.1% to $2,007,000 during the Two months ended June 30, 2002 (the "Two Month 2002 Period") as compared to $3,591,000 during the
Two months ended July 7, 2001 (the "Two Month 2001 Period"). The overall decrease was attributable primarily to the closing or sale of 15 stores ("Closed Stores") since the beginning of the
prior fiscal year which accounted for $1,484,000 of the decrease. Stores that remained open for the full 12 months or more as of June 30, 2002 (the "Comparable Stores") experienced a net
decrease in revenues of $100,000 or 4.7%.

Merchandise
sales decreased 45.8% to $1,296,000 during the Two Month 2002 Period from $2,389,000 during the Two Month 2001 Period primarily due to the loss of sales attributable to the
Closed Stores of $1,028,000. Sales in Comparable Stores for the Two Month 2002 Period decreased $65,000 or 4.8%.

Pawn
service charges decreased $471,000 or 41.0% to $678,000 during the Two Month 2002 Period from $1,149,000 during the Two Month 2001 Period primarily due to operating fewer stores for
the Two Month 2002 Period. Pawn service charges from Comparable Stores decreased $41,000 or 5.7% from $719,000 for the Two Month 2001 period as compared to the Two Month 2002 period.

Gross
profit decreased 27.1% to $1,047,000 during the Two Month 2002 Period from $1,436,000 during the Two Month 2001 Period primarily due to a reduction in gross profit from Closed
Stores of $398,000 in the Two Month 2001 Period. Gross profit for Comparable Stores increased $9,000 for the Two Month 2002 Period as compared to the Two Month 2001 Period, a 0.9% increase. Gross
profit as a percentage of total revenues increased to 52.2% during the Two Month 2002 Period as compared to 40.0% during the Two Month 2001 Period primarily as a result lower margins on merchandise
sales for Closed Stores in the Two Month 2001 Period.

Store
operating expenses decreased to $807,000 for the Two Month 2002 Period from $1,283,000 during the Two Month 2001 Period primarily due to reduction in expenses attributable to
Closed Stores. On a Comparable Store basis, store operating expenses were 40.2% of total revenues during the Two Month 2002 Period compared to 35.7% of total revenues during the Two Month 2001 Period
primarily increased in personnel costs due to quarterly bonuses and increased in property taxes accrued for the post confirmation period.

Store
contribution margin (defined as total store revenues less direct operating expenses, which exclude corporate administrative expenses, interest expense, and depreciation and
amortization expense) increased to $240,000 from $153,000 during the Two Month 2002 Period compared to Two Month 2001 Period primarily due to the lower gross profit on merchandise liquidation sales
for Closed Stores in the Two Month 2001 Period.

Corporate
administrative expenses decreased 20.2% to $418,000 during the Two Month 2002 Period from $524,000 during the Two Month 2001 Period primarily due to staff reductions at the
corporate office related to the financial restructuring. Corporate administrative expenses increased to 20.8% of total revenues during the Two Month 2002 Period as compared to 14.6% during the Two
Month 2001 Period primarily due to reduced revenues from store closings and due the costs attributed to the Company's bankruptcy reorganization.

Interest
expense decreased to $61,000 from $344,000 during the Two Month 2002 Period as compared to the Two Month 2001 Period primarily due to decreased borrowings under the Credit
Facility and due to the Company discontinuing the accrual for interest on the 2004 Notes as a result of the bankruptcy filing. The 2004 Notes are to be exchanged for common stock in the reorganized
Company.

12

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Net
loss to common stockholders during the Two Month 2002 Period was $309,000, or $0.12 per basic and diluted share, compared to $775,000, or $0.31 per basic and diluted share, during
the Two Month 2001 Period.

Five Months Ended June 30, 2002 Compared to Five Months Ended July 7, 2001

Total revenues decreased 40.1% to $5,639,000 during the Five months ended June 30, 2002 (the "Five Month 2002 Period") as compared to $9,415,000 for the
Five months ended July 7, 2001 (the "Five Month 2001 Period"), primarily due to the closing of 15 stores. Comparable Stores revenues increased 5.4% or $285,000 during the Five Month 2001
Period.

Merchandise
sales decreased to $3,768,000 or 41.5% during the Five Month 2002 Period from $6,442,000 during the Five Month 2001 Period due to the net loss of sales attributable to the
Closed Stores totaling $2,913,000. Sales from Comparable Stores increased $170,000 or 4.8% during the Five Month 2001 Period as compared to the Five Month 2001 Period.

Pawn
service charges decreased 36.7% to $1,797,000 during the Five Month 2002 Period from $2,838,000 during the Five Month 2001 Period primarily due to a $462,000 reduction in pawn
service charges from Closed Stores.

Gross
profit decreased 6.1% or $188,000 during the Five Month 2002 Period from $3,090,000 during the Five Month 2001 Period primarily due to a decrease in gross profit from Closed
Stores. Comparable Stores gross profit increased $258,000 or 9.6% during the Five Month 2002 Period as compared to the Five Month 2001 Period. Gross profit was adversely affected by aggressive pricing
of merchandise from the liquidation of inventories during the closing and consolidation of stores in the Five Month 2001 Period.

Store
operating expenses decreased 42.4% to $2,104,000 during the Five Month 2002 Period from $3,653,000 during the Five Month 2001 Period primarily due to expense and personnel
reductions for Closed Stores. The Company did not accrue any rent expense related to properties it vacated prior to its bankruptcy filing. Store operating expenses for Comparable Stores increased 5.8%
or $112,000 primarily due to increased personnel costs attributable to increased turnover due to the Company's financial difficulties and its bankruptcy filing.

Corporate
administrative expenses decreased 21.6% to $998,000 for the Five Month 2002 Period from $1,273,000 during the Five Month 2001 Period due to reductions in corporate personnel
and the relocation of its corporate headquarters to the Atlanta, Georgia metropolitan area.

Interest
expense decreased 83.9% to $149,000 during the Five Month 2002 Period from $924,000 during the Five Month 2001 Period due to reduced borrowings under the Credit Facility due to
the closing and sale of the Closed Stores and due to the Company discontinuing the accrual for interest on the 2004 Notes as a result of the bankruptcy filing. The 2004 Notes are to be exchanged for
common stock in the reorganized Company.

Net
loss to common shareholders was $520,000, or $0.21 per basic and diluted share, for the Five Month 2002 Period as compared to a net loss of $2,854,000, or $1.14 per basic and diluted
share, during the Five Month 2001 Period.

LIQUIDITY
AND CAPITAL RESOURCES

At
June 30, 2002, the Company's primary sources of liquidity were $377,000 in cash and cash equivalents, $330,000 in pawn service charges receivable, $3,001,000 in pawn loans
outstanding, and $2,616,000 in inventories. The Company had $500,000 available to borrow under the Post-Petition Credit Facility.

The
Company initiated its financial restructuring in February 2001, selling or closing 15 stores between February and June 2001 to fund operating losses and repay the
over-advance on the Credit Facility. The Company's attempts to raise additional working capital were unsuccessful and on July 9,

13

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2001, the Company filed its bankruptcy petition. The Company was able to secure post-petition financing from Comerica in the amount of $7,200,000 which was contingent on the Company
providing additional working capital financing which the Company was able to secure through the Hulen Note.

Under
the terms of the Plan approved by the Bankruptcy Court, the Company will receive an investment of approximately $7.5 million, of which at least $1.2 million will be
in cash, through the Merger, in exchange for two classes of Preferred Stock. The non-voting Series A Preferred Stock and the Series B Preferred Stock will have a par value of
$0.01 per share and will pay a 5% cumulative cash dividend annually. The Series A Preferred Stock must be redeemed by the Company for cash at $5.00 per share beginning three years after the
Closing Date in amounts of at least 100,000 shares, or $500,000, per year. Each April 30 thereafter through 2009, an additional 100,000 shares must be redeemed at par value for cash. On
April 30, 2010, any unredeemed shares plus any accrued and unpaid dividends must be redeemed at par value for cash. The value of Series A Preferred Stock to be issued is
estimated to be approximately $5 million based on the current value of CMHI net assets. The Series B Preferred Stock is not subject to mandatory redemption. After April 30, 2009
the Series B Preferred Stock may be redeemed by the Company in cash at any time in whole or (with some exceptions), from time to time in part, at the option of the Company, at $5.00 per share
plus accumulated, unpaid dividends on the date of redemption. The Series B Preferred Stock is convertible into 43% of the Company's Common Stock on the date of issuance, subject to
anti-dilutive adjustment, and will have voting rights on the same basis as the Common Stock. The value of the Series B Preferred Stock to be issued is estimated to be approximately
$2,500,000.

The
Company is dependent on the investment of cash and marketable securities provided in the Merger to fund projected operating losses during Fiscal 2002 and to provide sufficient
working capital to increase pawn loans and inventories to levels necessary for the Company to be profitable.

The
Company's profitability and liquidity is affected by the amount of loans outstanding, which is controlled in part by the Company's lending decisions. The Company is able to influence
the frequency of forfeiture of collateral by increasing or decreasing the amount loaned in relation to the sales value of the pledged property. Tighter credit decisions generally result in smaller
loans in relation to the estimated sales value of the pledged property and can thereby decrease the Company's aggregate loan balance and, consequently, decrease pawn service charges. Additionally,
lower loans in relation to the pledged property's estimated sales value tend to slightly increase loan redemptions and improve the Company's liquidity. Conversely, providing higher loans in relation
to the estimated sales value of the pledged property can result in an increase in the Company's pawn service charge income. Higher average loan balances can also result in a slight increase in loan
forfeitures, which increases the quantity of goods on hand and, unless the Company increases inventory turnover, reduces the Company's liquidity.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure relates to changes in interest rates related to its long-term notes payable. The Company's revolving line
of credit with Comerica bears interest at a variable rate that is frequently adjusted on the basis of market rate changes and is equal to rates available for debt with similar characteristics.
Accordingly, management believes that the carrying value of such debt approximates its fair value. The 2004 Notes bear interest at a fixed rate of 12% per annum. As a result, the Company's only
interest rate risk is the opportunity loss associated with this debt should interest rates decline for debt with similar characteristics. The carrying amount of all other financial instruments
included in the Company's consolidated balance sheets approximate fair value due to the short maturity of these instruments. The 2004 Notes are to be exchanged for common stock under the Company's
Plan.

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ITEM 1. LEGAL PROCEEDINGS

The Company filed its Plan and Disclosure Statement on February 15, 2002 and filed its First Amended Plan and First Amended Disclosure Statement on
April 3, 2002. The Disclosure Statement was approved by the Bankruptcy Court on April 3, 2002. The Plan was confirmed by the Bankruptcy Court on May 20, 2002 with an Effective
Date of May 31, 2002. All legal proceedings prior to the July 9, 2001 petition date have been consolidated in the bankruptcy proceeding and are treated as Class 4 claims.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDSNone

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company was in default on payment of interest on its 2004 Notes and on the payment of dividends on its 8% Preferred Stock. The 2004 Notes are to be exchanged
for equity in the reorganized Company under the terms of the plan of reorganization approved by the Bankruptcy Court. The interest of the holders of the 8% Preferred Stock were cancelled on the
Effective Date.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNone

ITEM 5. OTHER INFORMATIONNone

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

|Exhibit
Number |  |                                                                                                                                                                                                                                
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | PawnMart, Inc.'s Restated and Amended Certificate of Incorporation(1)b                                                                                                                                                         
|3.2            |  | Amended and Restated Bylaws of PawnMart, Inc.(11)                                                                                                                                                                              
|4.1            |  | Specimen Common Stock Certificate(2)                                                                                                                                                                                           
|4.2            |  | Specimen Series A Warrant Certificate(2)                                                                                                                                                                                       
|4.3            |  | Specimen Series B Warrant Certificate(2)                                                                                                                                                                                       
|4.4            |  | Form of Warrant Agreement, dated as of March 20, 1998 between PawnMart, Inc. and Continental Stock Transfer & Trust Company(2)                                                                                                 
|4.5            |  | Form of National Association of Securities Dealers, Inc. broker-dealer warrants(3)                                                                                                                                             
|4.6            |  | Form of Amendment to Warrant Agreement, dated as of March 20, 1998 Between PawnMart, Inc. and Continental Stock Transfer & Trust Company(5)                                                                                    
|4.7            |  | Indenture, dated as of March 15, 1999 Between PawnMart, Inc. and Trust Management, Inc., as Trustee, Relating to PawnMart, Inc.'s 12% Subordinated Notes Due 2004(5)                                                           
|4.8            |  | Form of 12% Subordinated Note Due 2004 (included as part of Exhibit 4.7 hereto)                                                                                                                                                
|4.9            |  | Form of Broker-Dealer Selling Agreement(5)                                                                                                                                                                                     
|4.10           |  | Form of Subscription Escrow Agreement dated March 15, 1999 Between PawnMart, Inc., Massie Capital, Ltd. and Norwest Bank Texas, N.A.(6)                                                                                        
|4.11           |  | Certificate of Designations of the 8% Convertible Preferred Stock(7)                                                                                                                                                           
|4.12           |  | 8% Convertible Preferred Stock and Warrant Purchase Agreement, dated as of August 19, 1999, by and between PawnMart, Inc. and Jesse L. Upchurch, Trustee of Trust C of the Constance J. Upchurch Family Trust Dated 10/14/94(7)
|4.13           |  | Purchaser Warrant Agreement, dated as of September 1, 1999, by and between PawnMart, Inc. and Jesse L. Upchurch, Trustee of Trust C of the Constance J. Upchurch Family Trust Dated 10/14/94(7)                                
|4.14           |  | Registration Rights Agreement, dated as of September 1, 1999, by and between PawnMart, Inc. and Jesse L. Upchurch, Trustee of Trust C of the Constance J. Upchurch Family Trust Dated 10/14/94(7)                              
|4.15           |  | Transaction Warrant Agreement, dated as of September 1, 1999, by and between PawnMart, Inc. and Andrew Garrett, Inc.(7)                                                                                                        
|10.1           |  | Form of Indemnity Agreement with Officers and Directors of PawnMart, Inc.(2)                                                                                                                                                   
|10.2           |  | 1997 PawnMart, Inc. Employee Stock Option Plan(1)                                                                                                                                                                              
|10.3           |  | 1997 PawnMart, Inc. Director Stock Option Plan(2)                                                                                                                                                                              
|10.4           |  | Revolving Credit Agreement Dated October 13, 1998 Between PawnMart, Inc. and Comerica Bank as amended(4)                                                                                                                       
|               |  |                                                                                                                                                                                                                                

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|99.1 |  | Confirmation Order dated May 20, 2002(8)                                                                                                 
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|99.2 |  | Debtor's First Amended Plan of Reorganization dated April 3, 2002(8)                                                                     
|99.3 |  | Debtor's First Amended Disclosure Statement dated April 3, 2002(8)                                                                       
|99.4 |  | Fourth Modification to Debtor's First Amended Plan of Reorganization dated April 3, 2002(9)                                              
|99.5 |  | Fifth Modification to Debtor's First Amended Plan of Reorganization dated April 3, 2002(10)                                              
|99.6 |  | Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(11)

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On
June 7, 2002 the Company filed a Form 8-K reporting a change in the Registrant's certifying accountant from KPMG LLP to Grant Thornton LLP.

On
June 10, 2002 the Company filed a Form 8-K reporting the confirmation and the terms of the Debtor's First Amended Plan of Reorganization (the "Plan"). The
Plan was confirmed on May 20, 2002 and was effective on May 31, 2002.

On
June 28, 2002 the Company filed a Form 8-K/A reporting the filing of the Fourth Modification to the Debtor's First Amended Plan of Reorganization which
delayed the Closing Date (as defined in the Plan) to July 31, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|PAWNMART, INC.                                                               |                     |      |                 |                                                                   |     |                        | 
|---------------------------------------------------------------------------- | ------------------- | ---- | --------------- | ----------------------------------------------------------------- | --- | ---------------------- | 
|By:                                                                          | /s/John R. Boudreau |      | August 19, 2002 |                                                                   | By: | /s/Robert W. Schleizer | 
|John R. Boudreau
Chief Executive Officer, Director and Chairman of the Board |                     | Date |                 | Robert W. Schleizer
Senior Vice President Chief Financial Officer |     | Date                  

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