<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

   /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the quarterly period ended April 29, 2000

   / / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       For the transition period from _________ to _________

                           Commission File No. 1-13919

                                 PAWNMART, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                            75-2520896
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

             6300 RIDGLEA PLACE, SUITE 724, FORT WORTH, TEXAS 76116
                    (Address of principal executive offices)

                                 (817) 569-9305
                         (Registrant's telephone number)

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 /X/ No / /

The number of shares of Common Stock outstanding as of June 12, 2000 was
7,209,445. The number of Series A Redeemable Common Stock Purchase Warrants
outstanding as of June 12, 2000 was 1,926,000. The number Series B Redeemable
Common Stock Purchase Warrants outstanding as of June 12, 2000 was 1,380,000.

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                         PAWNMART, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets

                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                                 April 29,          January 29,
                                                                                    2000                2000
                                                                                    ----                ----
                                                                                (Unaudited)
<S>                                                                           <C>                <C>
                                 ASSETS

Current assets:
   Cash and cash equivalents                                                  $          733     $          795
   Accounts receivable                                                                   145                180
   Pawn service charges receivable                                                       677                710
   Pawn loans                                                                          6,445              6,758
   Inventories, net                                                                    7,453              7,279
   Prepaid expenses and other current assets                                             214                243
                                                                               ----------------   ----------------
            Total current assets                                                      15,667             15,965
                                                                               ----------------   ----------------
Property and equipment, net                                                            3,489              3,347
Debt issuance costs, net                                                               1,057              1,045
Other assets, net                                                                        679                687
                                                                               ----------------   ----------------
            Total assets                                                      $       20,892     $       21,044
                                                                               ================   ================

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued liabilities                                   $        1,104     $        1,150
   Current installments of notes payable                                                  57                 93
                                                                               ----------------   ----------------
            Total current liabilities                                                  1,161              1,243
                                                                               ----------------   ----------------
Long-term notes payable, net of current installments (note 2)                         17,015             15,923
                                                                               ----------------   ----------------
            Total liabilities                                                         18,176             17,166
                                                                               ----------------   ----------------
Stockholders' equity:
   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              2,500
   Common stock, $.01 par value; authorized 20,000,000 shares;
      7,230,877 shares issued                                                             72                 72
   Series A redeemable common stock purchase warrants, $0.125 par
      value; 1,885,800 and 1,842,840 warrants issued and outstanding
      at April 29, 2000 and January 29, 2000, respectively (note 2)                      236                231
   Series B redeemable common stock purchase warrants, $0.0625 par
      value; 1,380,000 warrants issued and outstanding                                    86                 86
   Additional common stock purchase warrants                                              60                 60
   Additional paid-in capital                                                         21,954             21,954
   Accumulated deficit                                                               (22,122)           (20,955)
                                                                               ----------------   ----------------
                                                                                       2,786              3,948
   Less treasury stock, at cost; 21,432 common shares                                    (70)               (70)
                                                                               ----------------   ----------------
            Total stockholders' equity                                                 2,716              3,878
                                                                               ----------------   ----------------
            Total liabilities and stockholders' equity                        $       20,892     $       21,044
                                                                               ================   ================
</TABLE>
See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                         PAWNMART, INC. AND SUBSIDIARIES
                 Unaudited Consolidated Statements of Operations

                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                        April 29,      May 1,
                                                         2000           1999
                                                         ----           ----
<S>                                                    <C>            <C>
Revenues:
   Merchandise sales                                   $   4,756      $   2,885
   Pawn service charges                                    1,879          1,419
   Other                                                      77             43
                                                         -------        -------
         Total revenues                                    6,712          4,347

Cost of sales                                              3,724          2,051
                                                         -------        -------
         Gross profit                                      2,988          2,296
                                                         -------        -------
Expenses:
   Store operating expenses                                2,506          1,751
   Corporate administrative expenses                         833            688
   Interest expense                                          509            197
   Depreciation and amortization                             257            202
                                                         -------        -------
         Total expenses                                    4,105          2,838
                                                         -------        -------
         Net loss                                         (1,117)          (542)

Preferred stock dividends                                     50             -
                                                         -------        -------
         Net loss to common stockholders               $  (1,167)     $    (542)
                                                         =======        =======
Loss per common share (note 3):
         Basic                                         $   (0.16)     $   (0.08)
                                                         =======        =======
         Diluted                                       $   (0.16)     $   (0.08)
                                                         =======        =======
</TABLE>
See accompanying notes to consolidated financial statements.

                                        3
<PAGE>

                         PAWNMART, INC. AND SUBSIDIARIES
                 Unaudited Consolidated Statements of Cash Flows

                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                              Three Month Ended
                                                                                              -----------------
                                                                                        April 29,            May 1,
                                                                                          2000               1999
                                                                                          ----               ----
<S>                                                                                 <C>                <C>
Cash flows from operating activities:
   Net loss                                                                         $          (1,117) $            (542)
   Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization                                                            257                202
         Amortization of debt issuance costs                                                       63                 42
         Amortization of debt discount                                                              3                  -
         Changes in operating assets and liabilities, net of effect of acquisitions:
               Accounts receivable                                                                 35                  2
               Pawn service charges receivable                                                     33                (90)
               Inventories, net                                                                  (174)              (430)
               Prepaid expenses and other current assets                                           29                (11)
               Other assets                                                                        (5)               394
               Accounts payable and accrued liabilities                                           (46)              (418)
                                                                                      -----------------   ----------------
                     Net cash used in operating activities                                       (917)              (851)
                                                                                      -----------------   ----------------
Cash flows from investing activities, net of effect of acquisitions:
   Net decrease (increase) in pawn loans                                                          313               (230)
   Purchases of property and equipment                                                           (386)              (101)
   Acquisitions of existing operations                                                              -               (993)
                                                                                      -----------------   ----------------
                     Net cash used in investing activities                                        (73)            (1,324)
                                                                                      -----------------   ----------------
Cash flows from financing activities:
   Proceeds from issuance of notes payable                                                      3,416              6,076
   Principal payments on notes payable                                                         (2,358)            (2,633)
   Payment of debt issuance costs                                                                 (75)              (542)
   Preferred stock dividends paid                                                                 (50)                 -
                                                                                      -----------------   ----------------
                     Net cash provided by financing activities                                    928              2,901
                                                                                      -----------------   ----------------
Net increase in cash and cash equivalents                                                         (62)               726
Cash and cash equivalents at beginning of period                                                  795                298
                                                                                      -----------------   ----------------
Cash and cash equivalents at end of period                                          $             733  $           1,024
                                                                                      =================   ================
Supplemental disclosures of cash flow information -
   Cash paid for interest                                                           $             434  $             125
                                                                                      =================   ================
</TABLE>

NONCASH FINANCING ACTIVITIES:

         During the three months ended April 29, 2000 and May 1, 1999, the
Company issued 42,960 and 234,720, respectively, of Series A Warrants in
connection with the issuance of the 2004 Notes (see note 2). The Company has
recorded a debt discount of $5,370 and $29,340, respectively, representing the
value of the underlying Series A Warrants and is amortizing such amount into
interest expense over the life of the 2004 Notes.

See accompanying notes to consolidated financial statements.

                                        4
<PAGE>

                         PAWNMART, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

                         April 29, 2000 and May 1, 1999

                                   (Unaudited)

(1)      BASIS OF PRESENTATION

                  The accompanying consolidated financial statements were
         prepared in accordance with generally accepted accounting principles
         for interim financial information and therefore do not include all
         disclosures necessary for complete financial statements. In the opinion
         of management, all adjustments have been made that are necessary for a
         fair presentation of the financial position and results of operations
         and cash flows as of and for the periods presented. All such
         adjustments are of a normal recurring nature. The results of operations
         for the three months ended April 29, 2000 are not necessarily
         indicative of the results that may be expected for the entire fiscal
         year or any other interim period.

                  The consolidated financial statements include the financial
         statements of PawnMart, Inc. (the "Company") and its wholly owned
         subsidiaries. All significant intercompany balances and transactions
         have been eliminated in consolidation. The consolidated financial
         statements should be read in conjunction with the consolidated
         financial statements for the fiscal year ended January 29, 2000
         included in the Company's Form 10-K which has been previously filed
         with the Securities and Exchange Commission.

(2)      NOTES PAYABLE

         REVOLVING CREDIT FACILITY-

                  The Company maintains a $10,000,000 revolving credit facility
         with Comerica Bank (the "Credit Facility"). At April 29, 2000,
         $8,638,000 was outstanding under the Credit Facility and an additional
         $220,000 was available to the Company pursuant to the available
         borrowing base. The Credit Facility bears interest at either (i) the
         prevailing prime rate plus 0.75%, which was 9.75% at April 29, 2000, or
         (ii) the prevailing LIBOR rate plus 3.35%, and matures on October 13,
         2001. Amounts available under the Credit Facility are limited to
         certain percentages of pawn loans, inventories, and pawn service
         charges receivable. The Credit Facility is collateralized by
         substantially all of the unencumbered assets of the Company. Under the
         terms of the Credit Facility, the Company is required to maintain
         certain financial ratios and comply with certain technical covenants.
         The Company was in compliance with these requirements and covenants as
         of April 29, 2000. The terms of the Credit Facility also require the
         Company to pay an annual commitment fee of 1/2 of 1% on the average
         daily unused portion of the total commitment. The Company is also
         prohibited from paying cash dividends or acquiring treasury stock under
         the terms of the Credit Facility unless specifically approved by
         Comerica Bank.

         SUBORDINATED DEBT -

                  On March 11, 1999, the Company commenced a public offering of
         up to $10,000,000 in principal amount of 12% Subordinated Notes due
         December 31, 2004 (the "2004 Notes"). The 2004 Notes are being offered
         on a "best efforts" basis by participating National Association of
         Securities Dealers, Inc. broker-dealers ("NASD Broker-Dealers").
         Interest on the 2004 Notes is payable monthly commencing with the
         second full calendar month following issuance. At the option of the
         Company, the 2004 Notes may be redeemed prior to December 31, 2004 at
         stipulated redemption prices. The Company had issued a total of
         $8,430,000 of the 2004 Notes as of April 29, 2000.

                  In connection with the sale of the 2004 Notes, the Company has
         agreed to issue Series A Warrants to participating NASD Broker-Dealers
         for the purchase of up to 600,000 shares of the Company's common stock.
         As of April 29, 2000, 505,800 Series A Warrants had been granted in
         connection with the sale of the 2004 Notes. The Company has recorded a
         debt discount of $63,000 representing the value of the Series A
         Warrants and is amortizing such amount into interest expense over the
         life of the 2004 Notes.

                                        5
<PAGE>

                         PAWNMART, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

(3)      NET LOSS PER COMMON SHARE

                  Net loss per common share is calculated as required by FASB
         Statement of Financial Accounting Standards No. 128, "Earnings Per
         Share" (Statement No. 128). Statement No. 128 requires dual
         presentation of basic and diluted earnings per share and a
         reconciliation between the two amounts. Basic earnings per share
         excludes dilution, and diluted earnings per share reflects the
         potential dilution that would occur if securities to issue common stock
         were exercised and converted into common stock. In loss periods,
         dilutive common equivalent shares are excluded as the effect would be
         antidilutive.

                  The following table presents a reconciliation between basic
         and diluted weighted average common shares outstanding for the three
         months ended April 29, 2000 and May 1, 1999, respectively. Since the
         effect of using the weighted average number of shares on a diluted
         basis was antidilutive to the diluted loss per share calculation for
         the three months ended April 29, 2000 and May 1, 1999, diluted loss per
         share was calculated using the same weighted average number of common
         shares in the basic loss per share calculation.
<TABLE>
<CAPTION>
                                                                                              Three Months Ended
                                                                                          April 29,           May 1,
                                                                                            2000               1999
                                                                                            ----               ----
         <S>                                                                           <C>                <C>
         Weighted average shares - basic                                                   7,209              7,209
         Shares attributable to stock options, warrants and convertible securities           -                  -
                                                                                      ----------------    --------------
         Weighted average shares - diluted                                                 7,209              7,209
                                                                                       ===============    ==============
</TABLE>

(4)      LIQUIDITY

                  The Company's operations and expansion over the past three
         years have been primarily funded by the net proceeds from the Company's
         initial public offering and issuance of preferred stock and borrowings
         under its Credit Facility and 2004 Notes ( see note 2 ). The Company
         believes that cash flows generated from its established stores,
         borrowings under the Credit Facility, additional proceeds from the
         offering of the 2004 Notes, and future debt or equity offerings will
         enable the Company to meet its obligations during the remainder of the
         fiscal year ending January 27, 2001. In the event these sources of cash
         are not sufficient to meet its obligations, the Company could increase
         its cash flow by modifying its operational practices or by
         significantly reducing or suspending its planned expansion. No
         assurance can be made that these sources of cash will be sufficient to
         meet the Company's working capital requirements and planned expansion
         needs in the future.

(5)      RECLASSIFICATIONS

                  Certain amounts in the quarter ended May 1, 1999 have been
         reclassified to conform with the presentation of amounts in the quarter
         ended April 29, 2000.

                                        6
<PAGE>

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 JANUARY 29, 2000.

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's recently revised expansion strategy is to primarily
acquire stores in selected regional and local markets meeting its store size,
configuration, and site selection requirements. Additionally, the Company may
open a limited number of new stores in areas where desirable acquisitions are
not available on satisfactory terms. The Company believes that such
anticipated expansion will continue to provide economies of scale in
supervision, purchasing supplies and inventory, administration and marketing
by decreasing the overall average cost of such functions per unit owned. The
overall rate of store expansion will vary based on the Company's ability to
obtain financing to fund such growth, funds generated internally, and the
Company's ability to achieve a balance of continued store growth with
improving profitability.

         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.

         The Company's total revenues and gross profit dollars have been
significantly increased as a result of its rapid store expansion and
improvements in the results of operations at its mature stores. Of the 27
stores added during the past two fiscal years, the Company has opened 18 new
stores. The Company's store contribution margin, earnings before interest,
depreciation, and amortization ("EBITDA"), and overall results of operations
have been impacted by the planned start-up losses that result from these new
store openings, the corporate administrative expenses necessary to support
rapid expansion, and the interest expense associated with funding such
expansion. These new stores are

                                        7
<PAGE>

expected to have a favorable impact on profitability if they achieve the
substantially increased lending and retail sales volumes experienced in the
Company's older stores. The Company has also acquired nine existing stores
during the last two fiscal years and currently plans to acquire additional
stores as part of its store expansion plans during the current fiscal year.
The Company has acquired stores in locations meeting its site selection
criteria if the total capital expenditures required to acquire the existing
store were less than or equal to the total costs to develop a new store and
demographic data and due diligence procedures indicated an acceptable growth
potential. An acquired store will generally mature faster than a new store
due to an established base of customers and the Company's ability to
accelerate the maturation of the store's pawn loan balances. The Company's
overall profitability and total capital requirements in connection with its
continued store expansion plan will be significantly impacted by its ability
to acquire existing stores meeting the Company's acquisition criteria. There
can be no assurance that future store revenues and store profitability will
not vary from historical amounts.

         Operational changes made in September 1998 resulted in an increased
emphasis on the Company's lending business, the focus of which was to lend
more aggressively and increase store traffic. The implementation of this
strategy has resulted in substantial increases in total revenues, gross
profit dollars, and store contribution margin. During the three months ended
April 29, 2000 (the "Three Month 2000 Period"), the Company's 33 stores open
for 12 months or more as of April 29, 2000 ("Comparable Stores") achieved a
27 percent increase in total revenues, an 11 percent increase in gross profit
dollars, and a 16 percent increase in store contribution margin. Although the
Company has experienced significant improvements in gross profit dollars as a
result of the operational changes mentioned above, the Company's realized
gross profit margin as a percentage of merchandise sales has been reduced
primarily due to the more aggressive loaning philosophy. As a result, the
Company's gross profit margin on merchandise sales was 22 percent for the
Three Month 2000 Period, down from 29 percent during the comparable period of
the prior year.

         Selected elements of the Company's consolidated financial statements
are presented below for the Three Month 2000 Period and the three months
ended May 1, 1999 (the" Three Month 1999 Period"), respectively. 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 January 29, 2000.
<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                          ------------------
Operating statement items as a percent of              April 29,         May 1,
  total revenues:                                        2000            1999
                                                       ---------         ------
<S>                                                    <C>               <C>
Merchandise sales ..............................          70.9 %          66.4 %
Pawn service charges ...........................          28.0            32.6
Other ..........................................           1.1             1.0
                                                         -----           -----
   Total revenues ..............................         100.0           100.0

Cost of sales ..................................          55.5            47.2
                                                         -----           -----
   Gross profit ................................          44.5            52.8
                                                         -----           -----

Store operating expenses .......................          37.3            40.3
                                                         -----           -----
   Store contribution ..........................           7.2            12.5

Corporate administrative expenses ..............          12.4            15.8
Interest expense ...............................           7.6             4.5
Depreciation and amortization ..................           3.8             4.7
                                                         -----           -----
   Net loss ....................................         (16.7)%         (12.5)%
                                                         =====           =====
</TABLE>

                                        8
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED APRIL 29, 2000 COMPARED TO THREE MONTHS ENDED MAY 1, 1999

         Total revenues increased 54.4% to $6,712,000 during the Three Month
2000 Period from $4,347,000 during the Three Month 1999 Period. Total
revenues at the Company's Comparable Stores increased 26.8% and contributed
$1,155,000 of the increase.

         Merchandise sales increased 64.9% to $4,756,000 during the Three
Month 2000 Period from $2,885,000 during the Three Month 1999 Period.
Merchandise sales at the Company's Comparable Stores increased 33.4% and
contributed $962,000 of the increase. Average inventory per store increased
44.6% to $162,000 at April 29, 2000 from $112,000 at May 1, 1999 primarily
due to continued implementation of Company's more aggressive lending
operations to provide for the increased levels of merchandise available for
sale, and the maturation of new stores added during the past two fiscal years.

         Pawn service charges increased 32.4% to $1,879,000 during the Three
Month 2000 Period from $1,419,000 during the Three Month 1999 Period. Pawn
service charges at the Company's Comparable Stores increased 12.2% and
contributed to $170,000 of the increase. The increased pawn services charges
from Comparable Stores resulted primarily from pawn loans increasing 11.6% to
$5,388,000 at April 29, 2000 from $4,827,000 at May 1, 1999. In addition to
the service charges recorded upon cash payments, the Company records pawn
service charges receivable in an amount equivalent to one month's earned pawn
service charges, net of an allowance for pawn service charges deemed
uncollectible, based on the Company's historical loan redemption rate. The
operational changes that began to be implemented in September 1998 resulted in
significant loan growth during the Three Month 1999 Period. During the Three
Month 2000 Period, the Company's loan balances fluctuated due to normal
seasonality and as a result were reduced slightly. As such, the Three Month
1999 Period was favorably impacted by approximately $90,000 in pawn service
charges and the Three Month 2000 Period was unfavorably impacted by
approximately $30,000 in pawn service charges reductions.

         Gross profit increased 30.1% to $2,988,000 during the Three Month
2000 Period from $2,296,000 during the Three Month 1999 Period. Gross profit
at the Company's Comparable Stores increased 10.9% and contributed to $246,000
of the increase. The increase in gross profit at the Comparable Stores is
primarily attributable to increased pawn service charges and a slight increase
in aggregate gross profit dollars from merchandise sales. The Company's
realized gross profit margins as a percent of merchandise sales decreased
during the Three Month 2000 Period due to the operational changes that were
begun in September 1998. See discussion above under "General." In addition,
the Company's gross profit was also negatively impacted during the Three Month
2000 Period due to higher inventory losses than historically realized. The
Company's consolidated annualized inventory turnover rate was 2.0 times during
the Three Month 2000 Period compared to 2.4 times during Three Month 1999
Period. The decrease is primarily due to a larger base of new stores existing
during the Three Month 2000 Period combined with the effects of increased loan
activities that have resulted in higher average amounts of merchandise
available for sale. On a Comparable Store basis, the Company's annualized
inventory turnover rate decreased to 2.0 times during the Three Month 2000
Period from to 3.2 times during the Three Month 1999 Period.

         Store operating expenses consist of all items directly related to the
operation of the stores, including salaries and related payroll costs, rent,
property taxes, utilities, supplies, security costs, and other miscellaneous
store expenses. Store operating expenses increased 43.1% to $2,506,000 during
the Three Month 2000 Period from $1,751,000 during the Three Month 1999
Period. As a percentage of total revenues, stores operating expenses declined
to 37.3% from 40.3% during the prior year period. On a Comparable Store basis,
store operating expenses increased $162,000 in the aggregate, but decreased as
a percentage of total revenues to 34.5% during the Three Month 2000 Period
from 40.0% during the Three Month 1999 Period. The overall decrease in the
Comparable Store operating expenses as a percent of total revenues resulted
from the Company's ability to leverage store operating expenses due to the
26.8% increase in Comparable Store revenues.

         Store contribution margin decreased 11.6% to $482,000, or 7.2% of
total revenues, during the Three Month 2000 Period compared to $545,000, or
12.5% of total revenues, during the Three Month 1999 Period primarily due to the

                                        9
<PAGE>

decrease in gross profit discussed above, the effects on pawn service charge
income as a result of the operational changes discussed, and the increased
inventory shrinkage. Comparable Store contribution margin increased 15.6% to
$623,000, or 11.4% of total revenues, during the Three Month 2000 Period
compared to $539,000, or 12.5% of total revenues, during the Three Month 1999
Period. The following table presents an analysis of Comparable Store performance
for the Three Month 2000 Period compared to the Three Month 1999 Period.
<TABLE>
<CAPTION>
(In thousands)                                        Three Month      Three Month
                                                      2000 Period      1999 Period
                                                      -----------      -----------
<S>                                                   <C>              <C>
Merchandise sales ............................           $3,839           $2,877
Pawn service charges .........................            1,565            1,395
Other ........................................               62               39
                                                         ------           ------
   Total revenues ............................            5,466            4,311

Cost of sales ................................            2,955            2,046
                                                         ------           ------
   Gross profit ..............................            2,511            2,265

Store operating expenses .....................            1,888            1,726
                                                         ------           ------
   Store contribution margin .................           $  623           $  539
                                                         ======           ======
</TABLE>
         Corporate administrative expenses consists of all items relating to
the operation of the corporate headquarters and the field supervision cost of
the district managers, store audit team members, other administrative personnel.
Corporate administrative expenses increased 21.1% to $833,000 during the Three
Month 2000 Period from $688,000 during the Three Month 1999 Period primarily
due to increased corporate personnel costs. However, the Company's corporate
administrative expenses have reduced as a percentage of total revenues during
the Three Month 2000 Period to 12.4% of total revenues from 15.8% during the
Three Month 1999 Period as a result of the larger number of stores in operation.

         EBITDA losses increased to $351,000 during the Three Month 2000
Period from an EBITDA loss of $143,000 during the Three Month 1999 Period.
The larger loss primarily results from lower gross profit due to increased
inventory shrinkage and the effects on pawn service charges discussed above.

         Interest expense increased to $509,000 during the Three Month 2000
Period from $197,000 during the Three Month 1999 Period. The increase is
attributable to increased borrowings under the Company's Credit Facility, the
issuance of the Company's 2004 Notes, and other short-term borrowings which
have been utilized to fund continued store expansion.

         The Three Month 2000 Period included $50,000 in preferred stock
dividends related to the Company's issuance of $2.5 million of 8% Convertible
Preferred Stock on September 1, 1999.

         Net loss to common stockholders during the Three Month 2000 Period
was $1,167,000, or $0.16 per basic and diluted share, compared to $542,000,
or $0.08 per basic and diluted share, during the Three Month 1999 Period.

LIQUIDITY AND CAPITAL RESOURCES

         Prior to the completion of its initial public offering in March 1998,
the Company's operations were financed from funds generated from private debt
and equity offerings and funds generated from operations. In March 1998, the
Company received net proceeds of approximately $5,583,000 from the completion
of its initial public offering. In connection with the completion of the
initial public offering, $9,520,000 in aggregate principal amount of the
Company's 14% convertible subordinated debentures were automatically converted
into 2,380,000 outstanding shares of Common Stock and all classes of the
Company's preferred stock were automatically converted into an aggregate of
1,482,766 outstanding shares of Common Stock. Additionally, the Company
utilized $2,524,000 of the net proceeds to repay certain notes payable.

         On October 13, 1998, the Company entered into a $10 million revolving
credit facility with Comerica Bank. At April 29, 2000, $8,638,000 was
outstanding under the Credit Facility and an additional $220,000 was available
to the

                                        10
<PAGE>

Company pursuant to the available borrowing base. The Credit Facility bears
interest at either (i) the prevailing prime rate plus 0.75%, which was 9.75%
at April 29, 2000, or (ii) the prevailing LIBOR rate plus 3.35%, and matures
on October 13, 2001. Amounts available under the Credit Facility are limited
to certain percentages of pawn loans, inventories, and pawn service charges
receivable. The Credit Facility is collateralized by substantially all of the
unencumbered assets of the Company. Under the terms of the Credit Facility,
the Company is required to maintain certain financial ratios and comply with
certain technical covenants. The Company was in compliance with these
requirements and covenants as of April 29, 2000. The terms of the Credit
Facility also required the Company to pay an annual commitment fee of 1/2 of
1% on the average daily unused portion of the total commitment. The Company
is also prohibited from paying cash dividends or acquiring treasury stock
under the terms of the Credit Facility unless specifically approved by
Comerica Bank.

         On March 11, 1999, the Company commenced a public offering of up to
$10 million in principal amount of 12% Subordinated Notes due December 31,
2004. The 2004 Notes are being offered on a "best efforts" basis by
participating NASD Broker-Dealers. Interest on the 2004 Notes is payable
monthly commencing with the second full calendar month following issuance. At
the option of the Company, the 2004 Notes may be redeemed prior to December
31, 2004 at stipulated redemption prices. The Company had issued a total of
$8,430,000 of the 2004 Notes as of April 29, 2000.

         On September 1, 1999, the Company sold 416,667 shares of 8%
Convertible Preferred Stock, $6.00 par value per share ("Preferred Stock"),
resulting in net proceeds of $2,272,000. The Preferred Stock bears dividends
at 8% per annum and is payable quarterly in cash. The Preferred Stock is not
convertible into the Company's common stock until March 1, 2001. From March
1, 2001 until August 31, 2002, the Preferred Stock is convertible at the
option of the purchaser at the lesser of (i) 80% of the average closing sales
price of the Company's common stock for the preceding 25 trading days as
quoted on the NASDAQ market or (ii) $6.00 per share. After August 31, 2002,
the Preferred Stock is convertible at the option of the purchaser at 66 2/3%
of the average closing sales price of the Company's common stock for the
preceding 25 trading days as quoted on the NASDAQ market. The Company may
redeem the Preferred Stock, in whole or in part, prior to August 31, 2002 at
120% of the par value of Preferred Stock then outstanding. After August 31,
2002, the Company may redeem the Preferred Stock, in whole or in part, at
100% of the par value of the Preferred Stock then outstanding. Each share of
the Preferred Stock shall be entitled to one vote per share, voting together
with the holders of the Company's common stock, on all matters submitted to a
vote of stockholders. In connection with the sale of the Preferred Stock, the
Company issued 312,500 warrants exercisable to purchase shares of the
Company's common stock through August 31, 2004 at $5.00 per share and 90,000
warrants exercisable to purchase shares of the Company's common stock through
August 31, 2004 at $3.60 per share (collectively referred to as the
"Preferred Stock Warrants"). The fair value of the Preferred Stock Warrants
has been recorded as a $60,000 reduction of additional paid-in capital.

         During the Three Month 1999 Period, the Company acquired the assets
of four pawnshops in purchase transactions for an aggregate cash purchase
price of $993,000. The acquisitions were substantially financed with
borrowings under the Company's Credit Facility and with net proceeds from the
issuance of the 2004 Notes. The purchase price for acquisitions was
determined based upon the volume of annual loan and sales transactions,
outstanding pawn loan and service charge receivable balances, inventory on
hand, condition of property and equipment, quality and condition of the
location, and projected future operating results.

         At April 29, 2000, the Company's primary sources of liquidity were
$733,000 in cash and cash equivalents, $220,000 of available and unused funds
under the Company's Credit Facility, $677,000 in pawn service charges
receivable, $6,445,000 in pawn loans outstanding, and $7,453,000 in
inventories. The Company had a current ratio of approximately 13.5 to 1.0 and
12.8 to 1.0 at April 29, 2000 and January 29, 2000, respectively. Net cash
used in operating activities was $917,000 during the Three Month 2000 Period
and $851,000 during the Three Month 1999 Period.

         The Company's profitability and liquidity is affected by the amount
of loans outstanding, which is controlled in part by the Company's loaning
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

                                        11
<PAGE>

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. In
addition to these factors, liquidity is also affected by merchandise sales
and the pace of store expansion.

         In addition to factors noted below under "Factors That Could Affect
Future Performance," the Company's store expansion during the next fiscal
year will largely be dependent upon the Company's ability to obtain
additional debt or equity financing, the amount of additional 2004 Notes
sold, and the Company's ability to utilize its remaining borrowing base under
its Credit Facility. In the event the Company is unable to sell the maximum
subscription of the 2004 Notes or additional financing alternatives are not
obtained, its operational strategies could be modified and its planned
expansion schedule is likely to be significantly reduced or suspended. No
assurance can be made that the Company will be able to sell the maximum
subscription of 2004 Notes or obtain additional financing.

FACTORS THAT COULD AFFECT FUTURE PERFORMANCE

LACK OF PROFITABILITY, EXPECTED LOSSES DURING ROLL-OUT PHASE

         From its inception on January 13, 1994 through April 29, 2000, the
Company has experienced aggregate losses of $21,080,000. Further, a key
element of the Company's strategy consists of developing multiple stores
meeting the Company's required store size, configuration, and site selection
requirements in regional and local markets. This strategy is likely to result
in continued net losses during the Company's roll-out phase due to start-up
losses associated with the anticipated high number of new stores. Results of
operations in the future will be influenced by numerous factors including,
among others, the number of stores acquired, the number of additional new
store openings, the maturation of new stores opened during the last two
years, and the Company's ability to manage its growth and maintain the
quality of its personnel, and the ability of the Company to implement its
strategic plan.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT

         At April 29, 2000, the Company had total long-term indebtedness of
$17,015,000 which represents borrowings under the Company's Credit Facility
and the 2004 Notes. The degree to which the Company is leveraged could have
adverse consequences to holders of the debt, including the following: (i)
substantial cash flow from the Company's operations will be required for the
payment of principal and interest on its indebtedness and will not be
available for other purposes; (ii) the Company's ability to obtain additional
financing in the future, whether for capital expenditures, further
development, refinancings or otherwise, may be impaired; (iii) the Company
may be more leveraged than certain of its competitors, which may place it at
a competitive disadvantage; and (iv) the Company's high degree of leverage
makes it more vulnerable to changes in economic conditions and may limit the
Company's ability to withstand competitive pressures and capitalize on
significant business opportunities.

         The Company expects to repay its indebtedness with either (i) cash
flows from operations, (ii) proceeds from the issuance of additional equity
or debt securities, (iii) refinancing, or (iv) the sale of certain assets.
The Company will require substantial cash flows to meet its interest payment
obligations with respect to its indebtedness. The Company's cash flow is
dependent on its future performance and is subject to financial, economic and
other factors, some of which are beyond the Company's control. Since the
Credit Facility bears interest at a floating rate, the Company is sensitive
to any increase in prevailing interest rates. If the Company is unable to
generate sufficient cash flow from operations to satisfy its interest
obligations, the Company may be required to refinance all or a portion of
such obligations, sell assets, or repay such indebtedness with proceeds from
other capital transactions, such as the issuance of additional equity. There
can be no assurance that such refinancing or extension will be available on
reasonable terms or at all, that additional equity will be issued, or that a
sale of assets will occur. The inability to repay such indebtedness could
have a material adverse effect on the Company.

                                        12
<PAGE>

INABILITY TO MEET EXPANSION PLANS

         As of April 29, 2000, the Company has issued approximately $8.4
million of 2004 Notes on a "best efforts" basis. Although the Company is
offering up to $10 million in 2004 Notes, there are no assurances that the
maximum offering amount will be subscribed. The Company's store expansion
during the next fiscal year will largely be dependent upon the Company's
ability to obtain additional debt or equity financing, the Company's ability
to utilize its remaining borrowing base under its Credit Facility, and to a
certain extent sell the remaining amount of the 2004 Notes available. In the
event the Company is unable to secure additional financing and sell the
maximum subscription of the 2004 Notes, its planned expansion schedule is
likely to be significantly reduced or suspended. No assurance can be made
that the Company will be able to sell the maximum subscription of 2004 Notes.

LIQUIDITY

         Although the Company has entered into the $10 million Credit
Facility, there are no assurances that the Company's cash and cash
equivalents on hand and its cash availability will be sufficient to meet the
Company's anticipated working capital needs and capital expenditures in the
future. To finance future expenditures, the Company will need to issue
additional securities or incur additional debt. The Company may not be able
to obtain additional required capital on satisfactory terms, if at all. The
failure to raise the funds necessary to finance future cash requirements
could materially and adversely affect the Company's consolidated operating
results and anticipated growth in future periods.

MANAGEMENT OF GROWTH

         The Company plans to expand its business through a continued
roll-out of additional stores. To a significant extent, the Company's future
success will be dependent upon its ability to engage in a successful
expansion program and will be dependent, in part, upon its ability to secure
suitable sites for its new stores, obtain adequate inventory for its new
stores, maintain adequate financial controls and reporting systems to manage
a larger operation, and to obtain additional capital upon favorable terms.
There can be no assurance that the Company will be able to successfully
implement its planned expansion, finance its growth or manage the resulting
larger operation.

COMPETITION

         The Company encounters significant competition in connection with
the operation of its business. In connection with lending operations, the
Company competes with other pawnshops (owned by individuals and by large
operators) and certain financial institutions, such as consumer finance
companies, which generally lend on an unsecured, as well as on a secured
basis. The Company's competitors in connection with its retail sales include
numerous retail and discount stores. Many of the Company's competitors,
including Cash America International, Inc., First Cash Financial Services,
Inc., and EZCORP, Inc., have greater financial resources. These competitive
conditions may adversely affect the Company's revenues, profitability and
ability to expand.

         In addition, the Company faces competition in the acquisition of
existing stores. Several competing pawnshop companies have implemented
expansion and acquisition programs. There can be no assurance that the
Company will be more successful than its competitors in pursuing acquisition
opportunities and leases for attractive start-up locations. Increased
competition could also increase prices for attractive acquisition candidates.

GOVERNMENT REGULATION

         The Company's lending operations are subject to extensive
regulation, supervision and licensing under various federal, state and local
statutes, ordinances and regulations. These statutes prescribe, among other
things, service charges a pawnshop may charge for lending money and the rules
of conduct that govern an entity's ability to maintain a pawnshop license.
With respect to firearm and ammunition sales, a pawnshop must comply with the
regulations promulgated by the United States Department of the
Treasury-Bureau of Alcohol, Tobacco and Firearms. Governmental regulators
have broad discretionary authority to refuse to grant a license or to suspend
or revoke any or all existing licenses of licensees under common control if
it is determined that any such licensee has violated any law

                                        13
<PAGE>

or regulation or that the management of any such licensee is not suitable to
operate pawnshops. In addition, there can be no assurance that additional
state or federal statutes or regulations will not be enacted at some future
date which could inhibit the Company's ability to expand, significantly
decrease the service charges the Company can charge for lending money, or
prohibit or more stringently regulate the sale of certain goods, such as
firearms, any of which could significantly adversely affect the Company's
prospects. The Company's ability to open new stores in other states could be
affected by the enactment of state or local legislation, similar to current
Texas legislation, which includes certain proximity restrictions in Texas
counties having a population of more than 250,000. In addition, the present
statutory and regulatory environment of some states renders expansion into
those states impractical. For instance, certain states require public sale of
forfeited collateral or do not permit service charges sufficient to make
pawnshop operations profitable.

RISKS RELATED TO IMPROPER ASSESSMENT OF THE PLEDGED PROPERTY'S ESTIMATED
RESALE VALUE

         The Company makes pawn loans without the borrower's personal
liability and does not investigate the creditworthiness of the borrower, but
relies on the pledged personal property, and the possibility of its
forfeiture, as a basis for its lending decision. In this regard, the recovery
of the amount advanced, as well as realization of a profit on sale of
merchandise, is dependent on the Company's initial assessment of the
property's estimated resale value. Improper assessment of the resale value of
the collateral in the lending function can result in reduced marketability of
the property and resale of the merchandise for an amount less than the amount
advanced. Although, historically, the Company has experienced profits from
the sale of such merchandise, no assurances can be given that the Company's
historical results will continue. For example, unexpected technological
changes could adversely impact the value of consumer electronic products and
declines in gold and silver prices could reduce the resale value of jewelry
items acquired in pawn transactions and could adversely affect the Company's
ability to recover the amount advanced on the acquired collateral.

DEPENDENCE ON KEY MANAGEMENT

         The Company relies on the business and technical expertise of its
executive officers and certain other key employees, particularly its Chief
Executive Officer, Carson Thompson and its President, Michael Record. Except
for an employment agreement with Michael Record, the Company does not have an
employment agreement with any member of its executive staff. The loss of the
services of any of these individuals could have a material adverse effect on
the Company's consolidated operating results. No assurance can be given that
their services will be available in the future. The Company's success will
also be dependent on its ability to attract and retain additional qualified
management personnel.

RISKS RELATED TO FIREARM SALES

         The Company currently does not, nor does it intend to, engage in the
sale of handguns, sporting rifles or assault rifles to the public. The
Company does wholesale forfeited handguns, sporting rifles and assault rifles
to licensed firearm dealers leaving it open to the risk of lawsuits from
persons who may claim injury as a result of an improper sale by the licensed
firearm dealers. No such claims have been asserted against the Company as of
the date of this Annual Report. The Company maintains insurance covering
potential risks related to the sale of firearms.

RISKS RELATED TO AUTOMOBILE TITLE LOANS

         Alabama, Georgia, and South Carolina pawn regulations allow the
Company to advance funds secured by automobile titles. Approximately 7.7
percent and 8.9 percent of the Company's total revenues during the Three
Month 2000 Period and the Three Month 1999 Period, respectively, were related
to pawn service charges generated from such advances. During the term of the
title loan, the borrower is allowed to maintain possession of the collateral.
In the event of default, the Company contracts to repossess the automobile
and, subsequently disposes of the automobile through its retail operations.
The Company is exposed to the risk that it is unable to locate the collateral
securing forfeited automobile title loans. During the Three Month 2000
Period, the Company wrote off uncollectible title loans for automobiles
totaling approximately $61,000, which had not been repossessed at the end of
the period. There can be no guarantee that material adverse results from its
title loan activities will not occur in the future. Further, the

                                        14
<PAGE>

adoption of additional or the revision of existing laws and regulations
impacting the Company's ability to advance funds against automobile titles
could have a material adverse effect on the Company's business. The Company
could also be subject to consumer claims and litigation seeking damages based
upon wrongful repossession of automobiles.

PREFERRED STOCK; RISK OF DILUTION

         The Company's Restated Certificate of Incorporation authorizes the
issuance of up to 10,000,000 shares of preferred stock with such rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors may, without stockholder approval, issue
preferred stock with dividend, liquidation, conversion, voting, redemption or
other rights which could adversely affect the voting power or other rights of
the holders of the Company's Common Stock. The issuance of any shares of
preferred stock having rights superior to those of the Company's Common Stock
may result in a decrease in the value or market price of the Common Stock and
could further be used by the Board as a device to prevent a change in control
of the Company. Holders of the preferred stock may have the right to receive
dividends, certain preferences and conversion rights.

         On September 1, 1999, the Company sold 416,667 shares of 8%
Convertible Preferred Stock, $6.00 par value per share. The Preferred Stock
bears dividends at 8% per annum and is payable quarterly in cash. The
Preferred Stock contains conversion rights that allow the purchaser to
convert into the Company's Common Stock after March 1, 2001 at a discount to
the current market price. The number of shares of Common Stock into which the
Preferred Stock may be converted is based upon the then outstanding market
price and, as such, could result in significant dilution to the Company's
common stockholders. The Company may redeem the Preferred Stock, in whole or
in part, at specified redemption prices.

NECESSITY TO MAINTAIN CURRENT PROSPECTUS AND REGISTRATION STATEMENT

         The Company must maintain an effective registration statement on
file with the Commission before any of the Series A Warrants or Series B
Warrants (collectively, the "Warrants") may be redeemed or exercised. It is
possible that the Company may be unable to cause a registration statement
covering the Common Stock underlying the Warrants to be effective. It is also
possible that the Warrants could be acquired by persons residing in states
where the Company is unable to qualify the Common Stock underlying the
Warrants for sale. In either event, the Warrants may expire, unexercised,
which would result in the holders losing all the value of the Warrants.

POSSIBLE FAILURE TO QUALIFY FOR BOSTON STOCK EXCHANGE OR NASDAQ SMALLCAP
MARKET LISTING

         The Company's Common Stock and Warrants are listed on the Boston
Stock Exchange and the Nasdaq SmallCap Market. In order to qualify for
continued listing on the Boston Stock Exchange, the Company must maintain,
among other things, a $500,000 market value of public float, $1 million in
total assets and $500,000 in stockholders' equity. In order to qualify for
continued listing on the Nasdaq SmallCap Market, the Company must maintain,
among other things, a $1 million market value of public float and $2 million
in total net tangible assets. In addition, continued inclusion on the Nasdaq
SmallCap Market requires two market-makers and a minimum bid price of $1.00
per share. If the Company is unable to obtain additional equity financing and
incurs additional operating losses, it may not be able to satisfy the listing
maintenance criteria. The failure to meet these maintenance criteria in the
future may result in a discontinuance of the listing of the Company's Common
Stock and Warrants on the Boston Stock Exchange and Nasdaq SmallCap Market.

         If the Company is or becomes unable to meet the above referenced
listing criteria on a continued basis and is delisted therefrom, trading, if
any, in the Common Stock and Warrants would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" or, if then available,
"Electronic Bulletin Board" administered by the National Association of
Securities Dealers, Inc. In such an event, the market price of the Common
Stock and Warrants may be adversely impacted and an investor may find it
difficult to dispose of or to obtain accurate quotations as to the market
value of the Common Stock and Warrants.

                                        15
<PAGE>

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 Bank 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.

                                        16
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS - None

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

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -

                  The Company's Annual Meeting of Stockholders was held on
May 23, 2000 in Fort Worth, Texas. Of the 7,677,565 shares outstanding as of
the record date, 5,677,565 shares were present or represented by proxy at the
meeting. The following matters were submitted to a vote of the security
holders:

         (1)      To elect the following to serve as Class III directors for
                  terms expiring in 2003:
<TABLE>
<CAPTION>
                                                Votes For         Votes Abstaining
                                                ---------         ----------------
                  <S>                           <C>               <C>
                  Mark E. Kane                   5,115,747             561,818
                  Monty R. Standifer             5,115,673             561,892
</TABLE>
         (2)      To amend the 1997 Director Stock Option Plan to ( i ) increase
                  by 200,000 ( from 263,788 to 463,788 ) the number of share of
                  common stock of the Company authorized for issuance
                  thereunder, ( ii ) decrease the per director annual grant of
                  options from the lesser of 15,000 shares or $200,000 in market
                  value of Common Stock, and ( iii ) reduce the initial grant of
                  options to newly appointed eligible directors from 25,000
                  options to purchase Common Stock to 15,000 options to purchase
                  Common Stock and to prorate the initial grant base upon the
                  portion of the year remaining until the next annual meeting:

                  Votes for: 5,098,055        Votes Against: 333,585
                  Votes abstaining:  245,925

ITEM 5.       OTHER INFORMATION - None

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS
<TABLE>
<CAPTION>
       Exhibit
       Number
       -------
       <S>        <C>
         3.1      PawnMart, Inc.'s Restated and Amended Certificate of
                  Incorporation (1)
         3.2      PawnMart, Inc.'s Second Amended and Restated Bylaws (1)
         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 (6)
         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 (6)
         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 (6)
         4.10     Form of Subscription Escrow Agreement dated March 15, 1999
                  Between PawnMart, Inc., Massie Capital, Ltd. and Norwest Bank
                  Texas, N.A. (7)
         4.11     Certificate of Designations of the 8% Convertible Preferred
                  Stock (8)
         4.12     8% Convertible Preferred Stock and Warrant Purchase Agreement,
                  dated as of August 19, 1999, by and between

                                        17
<PAGE>
                  PawnMart, Inc. and Jesse L. Upchuch, Trustee of Trust C of the
                  Constance J. Upchurch Family Trust Dated 10/14/94 (8)
         4.13     Purchaser Warrant Agreement, dated as of September 1, 1999, by
                  and between PawnMart, Inc. and Jesse L. Upchuch, Trustee of
                  Trust C of the Constance J. Upchurch Family Trust Dated
                  10/14/94 (8)
         4.14     Registration Rights Agreement, dated as of September 1, 1999,
                  by and between PawnMart, Inc. and Jesse L. Upchuch, Trustee of
                  Trust C of the Constance J. Upchurch Family Trust Dated
                  10/14/94 (8)
         4.15     Transaction Warrant Agreement, dated as of September 1, 1999,
                  by and between PawnMart, Inc. and Andrew Garrett, Inc. (8)
         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 (4)
         10.5     Employment Agreement, Dated as of September 8, 1998, Between
                  PawnMart, Inc. and Michael D. Record (5)
         27.1     Financial Data Schedule as of April 29, 2000 (Filed in EDGAR
                  version only) (9)
</TABLE>
         -----------------------------------
         (1)  Filed as an Exhibit to the registrant's Registration Statement on
              Form SB-2, filed on October 23, 1997 (File No. 333-38597).
         (2)  Filed as an Exhibit to the registrant's Registration Statement on
              Amendment No. 2 to Form SB-2, filed on February 9, 1998 (File No.
              333-38597).
         (3)  Filed as an Exhibit to the registrant's Registration Statement on
              Amendment No. 3 to Form SB-2, filed on March 11, 1998 (File No.
              333-38597).
         (4)  Filed as an Exhibit to the registrant's Form 10-QSB for the
              quarter ended October 31, 1998, filed on December 14, 1998 (File
              No. 1-13919).
         (5)  Filed as an Exhibit to the registrant's Registration Statement on
              Form S-1, filed on January 15, 1999 (File No. 333-70635).
         (6)  Filed as an Exhibit to the registrant's Registration Statement on
              Amendment No. 1 to Form S-1, filed on February 24, 1999 (File No.
              333-70635).
         (7)  Filed as an Exhibit to the registrant's Registration Statement on
              Amendment No. 2 to Form S-1, filed on March 10, 1999 (File No.
              333-70635).
         (8)  Filed as an Exhibit to the registrant's Form 8-K, filed on
              September 1, 1999 (File No. 1-13919).
         (9)  Filed herewith.

(b)      REPORTS ON FORM 8-K -

         No reports on Form 8-K were filed by the Company during the quarter
ended April 29, 2000.

                                   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.
<TABLE>
<S>                                 <C>                       <C>                                <C>
By:  /s/ Carson R. Thompson         June 13, 2000             By: /s/ Monty R. Standifer         June 13, 2000
    -----------------------         -------------                 ----------------------         -------------
Carson R. Thompson                  Date                      Monty R. Standifer                 Date
Chief Executive Officer, Director                             Senior Vice President
and Chairman of the Board                                     Chief Financial Officer
</TABLE>

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