e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2005


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ___to ___

Commission file number 000-50866

DOLLAR FINANCIAL CORP.

(Exact Name of Registrant as Specified in Its Charter)


DELAWARE		23-2636866
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1436 LANCASTER AVENUE,
BERWYN, PENNSYLVANIA 19312
(Address of Principal Executive Offices) (Zip Code)

610-296-3400
(Registrant’s Telephone Number, Including Area Code)

None
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check Ö 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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate by a check mark whether the registrant is a shell company (as defined) in Rule 12b-2 of the Exchange Act) Yes o No þ

As of October 15, 2005, 18,102,727 shares of the registrant’s common stock, par value $0.001 per share, were outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DOLLAR FINANCIAL CORP.

INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)


	June 30,			September 30,
	2005			2005
				(unaudited)
ASSETS
Cash and cash equivalents	$	92,504			$	99,735
Loans receivable
Loans receivable		41,353				51,781
Less: Allowance for loan losses		(2,707	)			(4,041	)

Loans receivable, net		38,646				47,740
Other consumer lending receivables		7,996				2,568
Other receivables		4,399				6,469
Income taxes receivable		1,053				3,109
Prepaid expenses		6,858				6,712
Deferred tax asset, net of valuation allowance of $37,460 and $40,048		71				140
Property and equipment, net of accumulated depreciation of $62,555 and $65,730		35,611				36,951
Goodwill and other intangibles, net of accumulated amortization of $23,079 and $23,416		186,190				192,727
Debt issuance costs, net of accumulated amortization of $2,633 and $3,118		10,558				10,785
Other		3,970				2,343

	$	387,856			$	409,279


LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	23,807			$	25,655
Foreign income taxes payable		4,648				4,441
Accrued expenses and other liabilities		22,358				16,190
Accrued interest payable		3,291				9,874
Deferred tax liability		2,352				2,779
Revolving credit facilities		—				11,900
9.75% Senior Notes due 2011		271,764				271,695
Shareholders’ equity:
Common stock, $0.001 par value: 55,500,000 shares authorized; 18,080,652 shares issued and outstanding at June 30, 2005 and 18,102,727 at September 30, 2005		18				18
Additional paid-in capital		160,997				161,169
Accumulated deficit		(121,885	)			(119,586	)
Accumulated other comprehensive income		20,506				25,144

Total shareholders’ equity		59,636				66,745

	$	387,856			$	409,279

See notes to interim unaudited consolidated financial statements.

DOLLAR FINANCIAL CORP.

INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except share and per share amounts)


	Three Months Ended
	September 30,
	2004			2005
Revenues:
Check cashing	$	30,362		$	34,347
Consumer lending:
Fees from consumer lending		37,207			36,487
Provision for loan losses and adjustment to servicing income		(9,437	)		(9,022	)

Consumer lending, net		27,770			27,465
Money transfer fees		3,508			3,958
Franchise fees and royalties		839			2,916
Other		3,654			5,779

Total revenues		66,133			74,465


Store and regional expenses:
Salaries and benefits		20,887			25,191
Occupancy		5,394			6,718
Depreciation		1,754			1,832
Returned checks, net and cash shortages		2,484			3,259
Telephone and communications		1,473			1,421
Advertising		2,832			2,189
Bank charges		936			1,109
Armored carrier expenses		824			986
Other		7,092			7,309

Total store and regional expenses		43,676			50,014

Store and regional margin		22,457			24,451


Corporate and other expenses:
Corporate expenses		8,231			9,172
Management fee		277			—
Other depreciation and amortization		931			925
Interest expense, net of interest income of $105 and $6		9,669			7,241
Other		86			276

Income before income taxes		3,263			6,837
Income tax provision		3,354			4,538

Net (loss) income	$	(91	)	$	2,299


Net (loss) income per share:
Basic	$	(0.01	)	$	0.13
Diluted	$	(0.01	)	$	0.12
Weighted average shares outstanding:
Basic		10,965,779			18,089,141
Diluted		10,965,779			18,423,529

See notes to interim unaudited consolidated financial statements.

DOLLAR FINANCIAL CORP.

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share data)


												Accumulated									Total
						Additional						Other						Management			Shareholders’
	Common Stock					Paid-in			Accumulated			Comprehensive			Treasury			Equity			(Deficit)
	Shares			Amount		Capital			Deficit			(Loss) Income			Stock			Loan			Equity
Balance, June 30, 2004		10,965,779		$	11	$	61,470		$	(120,916	)	$	13,813		$	(956	)	$	(4,309	)	$	(50,887	)
Comprehensive income
Foreign currency translation													6,729									6,729
Other comprehensive loss													(36	)								(36	)
Net loss										(357	)											(357	)

Total comprehensive income																						6,336
Initial public stock offering		7,378,125			7		106,932															106,939
Repayment of notes receivable from officer		(416,287	)													(6,661	)		4,309			(2,352	)
Accrued interest on notes receivable from officers							(2,464	)														(2,464	)
We The People acquisition		141,935					2,000															2,000
Retirement of treasury stock							(7,005	)		(612	)					7,617						—
Share options excercised		11,100					64															64
Balance, June 30, 2005		18,080,652			18		160,997			(121,885	)		20,506			—			—			59,636
Comprehensive income
Foreign currency translation													4,434									4,434
Other comprehensive income													204									204
Net income										2,299												2,299

Total comprehensive income																						6,937
Share options excercised		22,075					144															144
Non-cash stock compensation							28															28
Balance, September 30, 2005 (unaudited)		18,102,727		$	18	$	161,169		$	(119,586	)	$	25,144		$	—		$	—		$	66,745

See notes to interim unaudited consolidated financial statements.

DOLLAR FINANCIAL CORP.

INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


	Three Months Ended
	September 30,
	2004			2005
Cash flows from operating activities:
Net (loss) income	$	(91	)	$	2,299
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		3,071			3,175
Non-cash stock compensation		—			28
Losses on store closings		—			257
Foreign currency loss on revaluation of subordinated borrowings		10			7
Deferred tax (benefit) provision		(150	)		332
Change in assets and liabilities (net of effect of acquisitions):
Decrease (increase) in loans and other receivables		546			(5,014	)
Decrease (increase) in income taxes receivable		574			(2,056	)
(Increase) decrease in prepaid expenses and other		(604	)		2,005
Increase in accounts payable, income taxes payable, accrued expenses and other liabilities and accrued interest payable		7,129			3,300
Net cash provided by operating activities		10,485			4,333

Cash flows from investing activities:
Acquisitions, net of cash acquired		(347	)		(4,922	)
Additions to property and equipment		(2,116	)		(4,994	)
Net cash used in investing activities		(2,463	)		(9,916	)
Cash flows from financing activities:
Proceeds from the exercise of stock options		—			144
Other debt payments		(32	)		—
Net increase in revolving credit facilities		3,600			11,900
Payment of initial public stock offering costs		(393	)		—
Payment of debt issuance costs		(31	)		(1,119	)

Net cash provided by financing activities		3,144			10,925

Effect of exchange rate changes on cash and cash equivalents		1,479			1,889

Net increase in cash and cash equivalents		12,645			7,231
Cash and cash equivalents at beginning of period		69,270			92,504

Cash and cash equivalents at end of period	$	81,915		$	99,735

See notes to interim unaudited consolidated financial statements.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements are of Dollar Financial Corp. and its wholly owned subsidiaries (collectively the “Company”). The Company is the parent company of Dollar Financial Group, Inc. (“OPCO”) and its wholly owned subsidiaries. The activities of the Company consist primarily of its investment in OPCO. The Company’s unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements in its annual report on Form 10-K (File No. 000-50866) for the fiscal year ended June 30, 2005 filed with the Securities and Exchange Commission. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results of interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.

The Company is a Delaware corporation incorporated in April 1990 as DFG Holdings, Inc. The Company operates a store network of 1,316 locations (of which 744 are company-owned) operating as Money Mart^®, The Money Shop, Loan Mart^® and Insta-Cheques in 16 states, the District of Columbia, Canada and the United Kingdom. The services provided at the Company’s retail locations include check cashing, short-term consumer loans, sale of money orders, money transfer services and various other related services. In addition, the Company’s newly acquired business, We The People USA, Inc., offers retail based legal documentation preparation services through a network of 29 company-owned and 147 franchised locations in 32 states.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates and judgments including those related to revenue recognition, loss reserves, income taxes and intangible assets. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications have no effect on net income or shareholders’ equity.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share are computed by dividing net income by the weighted average number of common shares outstanding, after adjusting for the dilutive effect of stock options. The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share (in thousands):


	Three Months Ended
	September 30,
	2004			2005
Net (loss) income	$	(91	)	$	2,299

Reconciliation of denominator:

Weighted average of common shares outstanding — basic		10,966			18,089

Effect of dilutive stock options ¹		—			334


Weighted average number of common shares outstanding — diluted		10,966			18,423


¹		The effect of dilutive stock options was determined under the treasury stock method. Due to the net loss during the three months ended September 30, 2004 the effect of the dilutive options were considered to be antidilutive, and therefore were not included in the calculation of diluted earnings per share.

Stock Based Employee Compensation

At September 30, 2005, the Company offered stock option plans under which shares of common stock may be awarded to directors, employees or consultants of the Company and OPCO. In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R, Share-Based Payment (SFAS 123R). SFAS 123R revises Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123), and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (SAB 107) relating to the adoption of SFAS 123R. This statement requires the compensation cost relating to share-based payment transactions to be recognized in a company’s financial statements. SFAS 123R applies to transactions in which an entity exchanges its equity instruments for goods or services and may apply to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments. Public companies are required to adopt the new standard using a modified prospective method and may elect to restate prior periods using the modified retrospective method. Under the modified prospective method, companies are required to record compensation cost for new and modified awards over the related vesting period of such awards prospectively and record compensation cost prospectively for the unvested portion, at the date of adoption, of previously issued and outstanding awards over the remaining vesting period of such awards. No change to prior periods presented is permitted under the modified prospective method. Under the modified retrospective method, companies record compensation costs for prior periods retrospectively through restatement of such periods using the exact pro forma amounts disclosed in the companies’ footnotes. Also, in the period of adoption and after, companies record compensation cost based on the modified prospective method.

Under SFAS 123R, the Company is required to follow a fair-value approach using an option-pricing model, such as the Black-Scholes option valuation model, at the date of a stock option grant. Effective July 1, 2005, the Company adopted the modified prospective method and has recognized the compensation cost for stock-based awards issued after June 30, 2005 and unvested awards outstanding at the date of adoption, on a straight-line basis over the requisite service period for the entire award. The additional compensation cost, pursuant to SFAS 123R, included in the statement of operations for the three months ended September 30, 2005 was $18,000, net of related tax effects.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock Based Employee Compensation (continued)

The following table reconciles the required disclosure under SFAS No. 148, which summarizes the amount of stock-based compensation expense, net of related tax effects, which would be included in the determination of net income if the expense recognition provisions of SFAS No. 123R had been applied to all stock option awards in periods presented (in thousands, except per share data):


	Three Months Ended
	September 30,
	2004			2005
Net (loss) income — as reported	$	(91	)	$	2,299

Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effects		—			18

Deduct: Total stock-option exepnse determined under the fair value based method, net of related tax benefits		(75	)		(18	)


Net (loss) income — pro forma	$	(166	)	$	2,299


Earnings per share:

Net (loss) income per common share — basic — as reported	$	(0.01	)	$	0.13

Net (loss) income per common share — basic — pro forma	$	(0.02	)	$	0.13

Net (loss) income per common share — diluted — as reported	$	(0.01	)	$	0.12

Net (loss) income per common share — diluted — pro forma	$	(0.02	)	$	0.12

The weighted average fair value of each employee option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants during the three months ended September 30, 2005 (no options were granted during the three months ended September 30, 2004):


	September 30,
	2005
Expected volatility		43.6	%
Expected life (years)		6.0
Risk-free interest rate		4.11	%
Expected dividends	None
Weighted average fair value	$	5.38

2. DEBT

On July 8, 2005, OPCO entered into a Third Amended and Restated Credit Agreement (“Credit Agreement”) which increased OPCO’s senior secured revolving credit facility to $80 million from the previous amount of $55.0 million. The Credit Agreement reduced the rate of interest and fees payable under the credit facility and eliminated the quarterly reductions to the commitment amount. In addition, the Credit Agreement extended the term of the facility for one additional year to November 12, 2009. At OPCO’s request, existing lenders and/or additional lenders may agree to increase the maximum amount of the credit facility to $100 million. Under the Credit Agreement, up to $30.0 million may be used in connection with letters of credit. The commitment may be subject to reductions in the event the Company engages in certain issuances of debt or equity securities or asset disposals. OPCO’s borrowing capacity under the facility is limited to the lesser of the total commitment of $80.0 million or 85% of certain liquid assets. At September 30, 2005, the borrowing capacity was $69.3 million which consisted of the $80.0 million commitment less letters of credit totaling $10.7 million issued by Wells Fargo Bank, which guarantees the performance of certain of the Company’s contractual obligations. There was $11.9 million outstanding under the facility at September 30, 2005.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. DEBT (continued)

Borrowings under the Credit Agreement bear interest based, at OPCO’s option, on: (a) the base rate (as defined therein) plus 2. 00% at September 30, 2005; (b) the applicable Eurodollar rate (as defined therein) plus 3.25% at September 30, 2005; or (c) LIBO (as defined therein) plus 3.25% at September 30, 2005. All obligations due under the Credit Agreement will mature on November 12, 2009. Interest expense under the credit facility for the three months ended September 30, 2005 was $267,000.

All borrowings and other obligations under the Credit Agreement are secured by all assets of OPCO and are guaranteed by the Company and each of OPCO’s existing and future direct and indirect domestic subsidiaries. Borrowings are secured by substantially all of OPCO’s assets and the assets of OPCO’s domestic subsidiaries.

3. SUBSIDIARY GUARANTOR UNAUDITED FINANCIAL INFORMATION

OPCO’s payment obligations under its 9.75% Senior Notes due 2011 are jointly and severally guaranteed (the “Guarantees”) on a full and unconditional basis by the Company and by OPCO’s existing and future domestic subsidiaries (the “Guarantors”). Guarantees of the notes by Guarantors directly owning, now or in the future, capital stock of foreign subsidiaries will be secured by second priority liens on 65% of the capital stock of such foreign subsidiaries. In the event OPCO directly owns a foreign subsidiary in the future, the notes will be secured by a second priority lien on 65% of the capital stock of any such foreign subsidiary (the “Collateral”). The non-Guarantors consist of OPCO’s foreign subsidiaries (“Non-Guarantors”).

The Guarantees of the notes:

•

rank equal in right of payment with all existing and future unsubordinated indebtedness of the Guarantors;

•

rank senior in right of payment to all existing and future subordinated indebtedness of the Guarantors; and

•

are effectively junior to any indebtedness of OPCO, including indebtedness under OPCO’s senior secured revolving credit facility, that is either (1) secured by a lien on the Collateral that is senior or prior to the second priority liens securing the Guarantees of the notes or (2) secured by assets that are not part of the Collateral to the extent of the value of the assets securing such indebtedness.

Separate financial statements of each Guarantor that is a subsidiary of OPCO have not been presented because management has determined that they would not be material to investors. The accompanying tables set forth the condensed consolidating balance sheets at September 30, 2005 and June 30, 2005, and the condensed consolidating statements of operations and cash flows for the three-month periods ended September 30, 2005 and 2004 of the Company, OPCO and the combined Guarantor subsidiaries, the combined Non-Guarantor subsidiaries and the consolidated Company.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING BALANCE SHEETS
September 30, 2005
(In thousands)


				Dollar Financial
	Dollar			Group, Inc.				Subsidiary
	Financial			and Subsidiary				Non-
	Corp.			Guarantors				Guarantors				Eliminations				Consolidated


ASSETS

Cash and cash equivalents	$	199			$	38,923			$	60,613			$	—			$	99,735
Loans receivable
Loans receivable		—				11,445				40,336				—				51,781
Less: Allowance for loan losses		—				(1,222	)			(2,819	)			—				(4,041	)

Loans receivable, net		—				10,223				37,517				—				47,740
Other consumer lending receivables		—				2,568				—				—				2,568
Other receivables		276				2,263				4,272				(342	)			6,469
Income taxes receivable		—				3,109				—				—				3,109
Prepaid expenses		—				2,199				4,513				—				6,712
Deferred tax asset		—				—				140				—				140
Due from affiliates		—				44,476				—				(44,476	)			—
Due from parent		—				2,371				—				(2,371	)			—
Property and equipment, net		—				12,747				24,204				—				36,951
Goodwill and other intangibles, net		—				92,131				100,596				—				192,727
Debt issuance costs, net		—				10,785				—				—				10,785
Investment in subsidiaries		66,696				322,559				—				(389,255	)			—
Other		—				741				1,602				—				2,343

	$	67,171			$	545,095			$	233,457			$	(436,444	)		$	409,279


LIABILITIES AND SHAREHOLDERS’ EQUITY

Accounts payable	$	51			$	13,528			$	12,076			$	—			$	$25,655

Foreign income taxes payable		—				—				4,441				—				4,441
Accrued expenses and other liabilities		4				5,702				10,727				(243	)			16,190
Accrued interest payable		—				9,874				99				(99	)			9,874
Deferred tax liability		—				2,097				682				—				2,779
Due to affiliate		371				—				46,476				(46,847	)			—
Revolving credit facilities		—				11,900				—				—				11,900
9.75% Senior Notes due 2011		—				271,695				—				—				271,695

		426				314,796				74,501				(47,189	)			342,534
Shareholders’ equity:
Common stock		18				—				—				—				18
Additional paid in capital		150,072				95,125				20,599				(104,627	)			161,169
(Accumulated deficit) retained earnings		(108,489	)			106,425				117,539				(235,061	)			(119,586	)
Accumulated other comprehensive income		25,144				28,749				20,818				(49,567	)			25,144

Total shareholders’ equity		66,745				230,299				158,956				(389,255	)			66,745

	$	67,171			$	545,095			$	233,457			$	(436,444	)		$	409,279

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING BALANCE SHEETS
June 30, 2005
(In thousands)


				Dollar Financial
	Dollar			Group, Inc.				Subsidiary
	Financial			and Subsidiary				Non-
	Corp.			Guarantors				Guarantors				Eliminations				Consolidated


ASSETS

Cash and cash equivalents	$	4			$	30,049			$	62,451			$	—			$	92,504
Loans receivable
Loans receivable		—				6,243				35,110				—				41,353
Less: Allowance for loan losses		—				(470	)			(2,237	)			—				(2,707	)

Loans receivable, net		—				5,773				32,873				—				38,646
Other consumer lending receivables		—				7,996				—				—				7,996
Other receivables		276				1,370				2,969				(216	)			4,399
Income taxes receivable		—				1,053				—				—				1,053
Prepaid expenses		—				2,948				3,910				—				6,858
Notes and interest receivable-officers		—				—				71				—				71
Due from affiliates		—				53,893				—				(53,893	)			—
Due from parent		—				2,398				—				(2,398	)			—
Property and equipment, net		—				12,456				23,155				—				35,611
Goodwill and other intangibles, net		—				87,535				98,655				—				186,190
Debt issuance costs, net		—				10,558				—				—				10,558
Investment in subsidiaries		59,759				317,853				9,660				(387,272	)			—
Other		—				527				3,443				—				3,970

	$	60,039			$	534,409			$	237,187			$	(443,779	)		$	387,856


LIABILITIES AND SHAREHOLDERS’ EQUITY

Accounts payable	$	—			$	11,849			$	11,958			$	—			$	23,807
Foreign income taxes payable		—				—				4,648				—				4,648
Accrued expenses and other liabilities		5				10,282				12,071				—				22,358
Accrued interest payable		—				3,291				216				(216	)			3,291
Deferred tax liability		—				1,757				595				—				2,352
Due to affiliate		398				—				55,893				(56,291	)			—
9.75% Senior Notes due 2011		—				271,764				—				—				271,764

		403				298,943				85,381				(56,507	)			328,220
Shareholders’ equity
Common stock		18				—				—				—				18
Additional paid in capital		149,900				104,926				30,259				(124,088	)			160,997
(Accumulated deficit) retained earnings		(110,788	)			105,740				106,410				(223,247	)			(121,885	)
Accumulated other comprehensive income		20,506				24,800				15,137				(39,937	)			20,506

Total shareholders’ equity		59,636				235,466				151,806				(387,272	)			59,636

	$	60,039			$	534,409			$	237,187			$	(443,779	)		$	387,856

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2005
(In thousands)


				Dollar Financial
	Dollar			Group, Inc.				Subsidiary
	Financial			and Subsidiary				Non-
	Corp.			Guarantors				Guarantors				Eliminations				Consolidated

Revenues:
Check cashing	$	—			$	11,353			$	22,994			$	—			$	34,347
Consumer lending:
Fees from consumer lending		—				14,242				22,245				—				36,487
Provision for loan losses and adjustment to servicing income		—				(4,934	)			(4,088	)			—				(9,022	)

Consumer lending, net		—				9,308				18,157				—				27,465
Money transfer fees		—				1,025				2,933				—				3,958
Franchise fees and royalties		—				1,295				1,621				—				2,916
Other		—				2,559				3,220				—				5,779

Total revenues		—				25,540				48,925				—				74,465


Store and regional expenses:
Salaries and benefits		—				12,780				12,411				—				25,191
Occupancy		—				3,499				3,219				—				6,718
Depreciation		—				913				919				—				1,832
Returned checks, net and cash shortages		—				1,483				1,776				—				3,259
Telephone and telecommunication		—				852				569				—				1,421
Advertising		—				1,038				1,151				—				2,189
Bank charges		—				492				617				—				1,109
Armored carrier services		—				402				584				—				986
Other		—				3,276				4,033								7,309

Total store and regional expenses		—				24,735				25,279				—				50,014

Store and regional margin		—				805				23,646				—				24,451


Corporate and other expenses:
Corporate expenses		—				4,505				4,667				—				9,172
Management fee		—				(436	)			436				—				—
Other depreciation and amortization		—				472				453				—				925
Interest expense, net		—				6,667				574				—				7,241
Other		—				277				(1	)			—				276
Equity in subsidiary		(2,299	)			—				—				2,299				—

Income (loss) before income taxes		2,299				(10,680	)			17,517				(2,299	)			6,837
Income tax (benefit) provision		—				(1,849	)			6,387				—				4,538

Net income (loss)	$	2,299			$	(8,831	)		$	11,130			$	(2,299	)		$	2,299

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended September 30, 2004
(In thousands)


				Dollar Financial
	Dollar			Group, Inc.				Subsidiary
	Financial			and Subsidiary				Non-
	Corp.			Guarantors				Guarantors				Eliminations				Consolidated

Revenues:
Check cashing	$	—			$	10,721			$	19,641			$	—			$	30,362
Consumer lending:
Fees from consumer lending		—				19,690				17,517				—				37,207
Provision for loan losses and adjustment to servicing income		—				(5,730	)			(3,707	)			—				(9,437	)

Consumer lending, net		—				13,960				13,810				—				27,770
Money transfer fees		—				1,058				2,450				—				3,508
Franchise fees and royalties		—				—				839				—				839
Other		—				628				3,026				—				3,654

Total revenues		—				26,367				39,766				—				66,133


Store and regional expenses:
Salaries and benefits		—				10,828				10,059				—				20,887
Occupancy		—				2,825				2,569				—				5,394
Depreciation		—				954				800				—				1,754
Returned checks, net and cash shortages		—				1,139				1,345				—				2,484
Telephone and telecommunication		—				970				503				—				1,473
Advertising		—				1,066				1,766				—				2,832
Bank charges		—				493				443				—				936
Armored carrier services		—				368				456				—				824
Other		—				3,358				3,734				—				7,092

Total store and regional expenses		—				22,001				21,675				—				43,676

Store and regional margin		—				4,366				18,091				—				22,457


Corporate and other expenses:
Corporate expenses		—				3,889				4,342				—				8,231
Management fee		277				(678	)			678				—				277
Other depreciation and amortization		—				573				358				—				931
Interest expense, net		3,185				5,422				1,062				—				9,669
Other		—				86				—				—				86
Equity in subsidiary		(3,371	)			—				—				3,371				—

(Loss) income before income taxes		(91	)			(4,926	)			11,651				(3,371	)			3,263
Income tax (benefit) provision		—				(882	)			4,236				—				3,354

Net (loss) income	$	(91	)		$	(4,044	)		$	7,415			$	(3,371	)		$	(91	)

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 2005
(In thousands)


				Dollar Financial
	Dollar			Group, Inc.			Subsidiary
	Financial			and Subsidiary			Non-
	Corp.			Guarantors			Guarantors			Eliminations			Consolidated

Cash flows from operating activities:
Net income (loss)	$	2,299		$	(8,831	)	$	11,130		$	(2,299	)	$	2,299
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Undistributed income of subsidiary		(2,299	)		—			—			2,299			—
Depreciation and amortization		—			1,801			1,374			—			3,175
Non-cash stock compensation		28												28
Losses on store closings and sales		—			257			—			—			257
Foreign currency loss on revaluation of subordinated notes payable		—			7			—			—			7
Deferred tax provision (benefit)		—			340			(8	)		—			332
Change in assets and liabilities (net of effect of acquisitions):
Decrease (increase) in loans and other receivables		—			85			(5,441	)		342			(5,014	)
Increase in income taxes receivable		—			(3,847	)		—			1,791			(2,056	)
Decrease in prepaid expenses and other		—			535			1,470			—			2,005
Increase (decrease) in accounts payable, income taxes, payable, accrued expenses and other liabilities and accrued interest payable		50			6,287			(904	)		(2,133	)		3,300

Net cash provided by (used in) operating activities		78			(3,366	)		7,621			—			4,333

Cash flows from investing activities:
Acquisitions, net of cash acquired		—			(4,618	)		(304	)		—			(4,922	)
Additions to property and equipment		—			(2,317	)		(2,677	)		—			(4,994	)
Net decrease in due from affiliates		—			13,270			—			(13,270	)		—

Net cash provided by (used in) investing activities		—			6,335			(2,981	)		(13,270	)		(9,916	)

Cash flows from financing activities:
Proceeds from the exercise of stock options		144			—			—			—			144
Net increase in revolving credit facilities		—			11,900			—			—			11,900
Payment of debt issuance costs		—			(1,119	)		—			—			(1,119	)
Net decrease in due to affiliates and due from parent		(27	)		(4,876	)		(8,367	)		13,270			—

Net cash provided by (used in) financing activities		117			5,905			(8,367	)		13,270			10,925

Effect of exchange rate changes on cash and cash equivalents		—			—			1,889			—			1,889

Net increase (decrease) in cash and cash equivalents		195			8,874			(1,838	)		—			7,231
Cash and cash equivalents at beginning of period		4			30,049			62,451			—			92,504

Cash and cash equivalents at end of period	$	199		$	38,923		$	60,613		$	—		$	99,735

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 2004
(In thousands)


				Dollar Financial
	Dollar			Group, Inc.			Subsidiary
	Financial			and Subsidiary			Non-
	Corp.			Guarantors			Guarantors			Eliminations			Consolidated

Cash flows from operating activities:
Net (loss) income	$	(91	)	$	(4,044	)	$	7,415		$	(3,371	)	$	(91	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Undistributed income of subsidiary		(3,371	)		—			—			3,371			—
Depreciation and amortization		8			1,905			1,158			—			3,071
Foreign currency loss on revaluation of subordinated borrowings		—			10			—			—			10
Deferred tax benefit		—			—			(150	)		—			(150	)
Change in assets and liabilities (net of effect of acquisitions):
Increase in loans and other receivables		(65	)		(650	)		(172	)		1,433			546
(Increase) decrease in income taxes receivable		—			(510	)		1,511			(427	)		574
Increase in prepaid expenses and other		—			(537	)		(67	)		—			(604	)
Increase in accounts payable, income taxes payable, accrued expenses and other liabilities and accrued interest payable		3,491			4,306			338			(1,006	)		7,129

Net cash (used in) provided by operating activities		(28	)		480			10,033			—			10,485

Cash flows from investing activities:
Acquisitions, net of cash acquired		—			—			(347	)		—			(347	)
Additions to property and equipment		—			(385	)		(1,731	)		—			(2,116	)
Net decrease in due from affiliates		—			1,707			—			(1,707	)		—

Net cash provided by (used in) investing activities		—			1,322			(2,078	)		(1,707	)		(2,463	)

Cash flows from financing activities:
Other debt payments		—			(26	)		(6	)		—			(32	)
Net increase in revolving credit facilities		—			3,600			—			—			3,600
Payment of initial public stock offering costs		(393	)		—			—			—			(393	)
Payment of debt issuance costs		—			(31	)		—						(31	)
Net increase (decrease) in due to affiliates and due from parent		421			(1,287	)		(841	)		1,707			—

Net cash provided by (used in) financing activities		28			2,256			(847	)		1,707			3,144
Effect of exchange rate changes on cash and cash equivalents		—			—			1,479			—			1,479

Net increase in cash and cash equivalents		—			4,058			8,587			—			12,645
Cash and cash equivalents at beginning of period		4			27,124			42,142			—			69,270

Cash and cash equivalents at end of period	$	4		$	31,182		$	50,729		$	—		$	81,915

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

4. GOODWILL AND OTHER INTANGIBLES

In accordance with the adoption provisions of SFAS No. 142, the Company is required to perform goodwill impairment tests on at least an annual basis. The Company performs its annual impairment test as of June 30. There can be no assurance that future goodwill impairment tests will not result in a charge to earnings. A portion of the consideration for the We The People acquisition was allocated to franchise agreements, which are deemed to have a definite life and are amortized on a straight-line basis over the estimated useful lives of the agreements which are generally 10 years. This identifiable intangible asset has been included as other intangibles on the Consolidated Balance Sheets. Amortization for these intangibles for the three months ended September 30, 2005 was $21,000. The amortization expense for the franchise agreements and the covenants not to compete will be as follows:


	Amount
Fiscal Year Ending September 30,	(in thousands)
2006	$	71.0
2007		66.9
2008		66.9
2009		66.9
2010		66.9
Thereafter		269.5

	$	608.1

The changes in the carrying amount of goodwill and other intangibles by reportable segment for the fiscal year ended June 30, 2005 and the three months ended September 30, 2005 are as follows (in thousands):


	United					United
	States			Canada		Kingdom			Total

Balance at June 30, 2004	$	56,514		$	38,821	$	53,783		$	149,118
Amortization of other intangibles		(56	)		—		—			(56	)
Acquisition		31,077			—		3,223			34,300
Foreign currency translation adjustments		—			3,638		(810	)		2,828

Balance at June 30, 2005		87,535			42,459		56,196			186,190

Amortization of other intangibles		(21	)		—		—			(21	)
Acquisition		4,617			—		—			4,617
Foreign currency translation adjustments		—			2,647		(706	)		1,941

Balance at September 30, 2005	$	92,131		$	45,106	$	55,490		$	192,727

The following table reflects the components of intangible assets (in thousands):


	June 30, 2005				September 30, 2005
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization

Non-amortized intangible assets:
Cost in excess of net assets acquired	$	205,572	$	20,532	$	212,949	$	20,830
Amortized intangible assets:
Covenants not to compete	$	2,510	$	2,510	$	2,548	$	2,548
Franchise agreements		1,187		37		646		38

	$	3,697	$	2,547	$	3,194	$	2,586

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5. COMPREHENSIVE INCOME

Comprehensive income is the change in equity from transactions and other events and circumstances from non-owner sources, which includes foreign currency translation and fair value adjustments for cash flow hedges. The following shows the comprehensive income for the periods stated (in thousands):


	Three months Ended
	September 30,
	2004			2005
Net income (loss)	$	(91	)	$	2,299
Foreign currency translation adjustment		4,758			4,434
Fair value adjustments for cash flow hedges		(290	)		204


Total comprehensive income	$	4,377		$	6,937

6. GEOGRAPHIC SEGMENT INFORMATION

All operations for which geographic data is presented below are in one principal industry (check cashing, consumer lending and ancillary services) (in thousands):


	United						United
	States			Canada			Kingdom			Total

As of and for the three months ended September 30, 2004

Identifiable assets	$	136,521		$	99,068		$	99,253		$	334,842
Goodwill and other intangibles, net		56,506			41,173			53,968			151,647
Sales to unaffiliated customers:
Check cashing		10,721			10,399			9,242			30,362
Consumer lending:
Fees from consumer lending		19,690			11,481			6,036			37,207
Provision for loan losses and adjustments to servicing revenue		(5,730	)		(1,918	)		(1,789	)		(9,437	)

Consumer lending, net		13,960			9,563			4,247			27,770
Money transfer fees		1,058			1,620			830			3,508
Franchise fees and royalties		—			839			—			839
Other		628			2,278			748			3,654

Total sales to unaffiliated customers		26,367			24,699			15,067			66,133

Interest expense, net		8,607			324			738			9,669
Depreciation and amortization		1,527			690			468			2,685
(Loss) income before income taxes		(8,389	)		8,462			3,190			3,263
Income tax provision		(882	)		3,241			995			3,354

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. GEOGRAPHIC SEGMENT INFORMATION (continued)


	United						United
	States			Canada			Kingdom			Total

As of and for the three months ended September 30, 2005

Identifiable assets	$	175,822		$	121,905		$	111,552			$	409,279
Goodwill and other intangibles, net		92,131			45,106			55,490				192,727
Sales to unaffiliated customers:
Check cashing		11,353			12,200			10,794				34,347
Consumer lending:
Fees from consumer lending		14,242			14,856			7,389				36,487
Provision for loan losses and adjustments
to servicing revenue		(4,934	)		(2,525	)		(1,563	)			(9,022	)

Consumer lending, net		9,308			12,331			5,826				27,465
Money transfer fees		1,025			1,914			1,019				3,958
Franchise fees and royalties		1,621			1,295			—				2,916
Other		2,233			2,618			928				5,779

Total sales to unaffiliated customers		25,540			30,358			18,567				74,465

Interest expense, net		6,667			(145	)		719				7,241
Depreciation and amortization		1,385			754			618				2,757
(Loss) income before income taxes		(10,680	)		12,750			4,767				6,837
Income tax provision		(1,849	)		4,998			1,389				4,538

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Operations in the United Kingdom and Canada have exposed the Company to shifts in currency valuations. From time to time, the Company may elect to purchase put options in order to protect earnings in the United Kingdom and Canada against foreign currency fluctuations. Out of the money put options may be purchased because they cost less than completely averting risk, and the maximum downside is limited to the difference between the strike price and exchange rate at the date of purchase and the price of the contracts. At September 30, 2005, the Company held put options with an aggregate notional value of $(CAN) 47.4 million and £(GBP) 9.9 million to protect the currency exposure in Canada and the United Kingdom through June 30, 2006. The Company uses purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted earnings denominated in currencies other than the U.S. dollar. The Company’s cash flow hedges have a duration of less than twelve months. For derivative instruments that are designated and qualify as cash flow hedges, the effective portions of the gain or loss on the derivative instrument are initially recorded in accumulated other comprehensive income as a separate component of shareholders’ equity and subsequently reclassified into earnings in the period during which the hedged transaction is recognized in earnings. The ineffective portion of the gain or loss is reported in corporate expenses on the statement of operations. For options designated as hedges, hedge effectiveness is measured by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item, both of which are based on forward rates. As of September 30, 2005, no amounts were excluded from the assessment of hedge effectiveness. There was no ineffectiveness in the Company’s cash flow hedges for the three months ended September 30, 2005. As of September 30, 2005, amounts related to derivatives qualifying as cash flow hedges amounted to an increase of shareholders’ equity of $204,000 all of which is expected to be transferred to earnings in the next nine months along with the earnings effects of the related forecasted transactions. The fair market value of the outstanding puts held by the Company at September 30, 2005 was $536,000 and is included in other assets on the balance sheet.

Although the Company’s revolving credit facility and Canadian overdraft credit facility carry variable rates of interest, most of the Company’s average outstanding indebtedness carries a fixed rate of interest. A change in interest rates is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. CONTINGENT LIABILITIES

In addition to the legal proceedings discussed below, which the Company is defending vigorously, the Company is involved in routine litigation and administrative proceedings arising in the ordinary course of business. Although the Company believes that the resolution of these proceedings will not materially adversely impact its business, there can be no assurances in that regard.

Canadian Legal Proceedings

On August 19, 2003, a former customer in Ontario, Canada, Margaret Smith, commenced an action against the Company and the Company’s Canadian subsidiary on behalf of a purported class of Canadian borrowers (except those residing in British Columbia) who, Smith claims, were subjected to usurious charges in payday-loan transactions. The action, which is pending in the Ontario Superior Court of Justice, alleges violations of a Canadian federal law proscribing usury and seeks restitution and damages, including punitive damages. The Company’s motions to stay the action on grounds of arbitrability and lack of jurisdiction were denied and are presently on appeal.

On October 21, 2003, another former customer, Kenneth D. Mortillaro, commenced a similar action against the Company’s Canadian subsidiary, but this action has since been stayed on consent because it is a duplicate action.

On November 6, 2003, the Company learned of substantially similar claims asserted on behalf of a purported class of Alberta borrowers by Gareth Young, a former customer of the Company’s Canadian subsidiary. The Young action is pending in the Court of Queens Bench of Alberta and seeks damages and other relief. The Company is named as a defendant in this action but it has not been served with the statement of claim to date. Like the plaintiff in the MacKinnon action referred to below, Mortillaro, Smith and Young have signed agreements to arbitrate all disputes with the Company.

On January 29, 2003, a former customer, Kurt MacKinnon, commenced an action against the Company’s Canadian subsidiary and 26 other Canadian lenders on behalf of a purported class of British Columbia residents who, MacKinnon claims, were overcharged in payday-loan transactions. The action, which is pending in the Supreme Court of British Columbia, alleges violations of laws proscribing usury and unconscionable trade practices and seeks restitution and damages, including punitive damages, in an unknown amount. On March 1, 2005, MacKinnon’s application for class certification of this action was dismissed. Attempts by MacKinnon to obtain reconsideration and appellate review of this dismissal are presently pending.

On April 15, 2005, the solicitor acting for MacKinnon commenced a proposed class action against the Company’s Canadian subsidiary on behalf of another former customer, Louise Parsons. The solicitor has indicated to the court that this second action will not proceed pending the appeals described above.

Similar class actions have been commenced against the Company’s Canadian subsidiary in Manitoba, New Brunswick, Nova Scotia and Newfoundland. The Company is named as a defendant in the actions commenced in Nova Scotia and Newfoundland but it has not been served with the statements of claim in these actions to date. The claims in these additional actions are substantially similar to those of the Ontario actions referred to above.

At this time, it is too early to determine the likelihood of an unfavorable outcome or the ultimate liability, if any, of these matters.

California Legal Proceedings

The Company is a defendant in four lawsuits commenced by the same law firm. Each is pled as a class action, and each alleges violations of California’s wage-and-hour laws. The named plaintiffs are the Company’s former employees Vernell Woods (commenced August 22, 2000), Juan Castillo (commenced May 1, 2003), Stanley Chin (commenced May 7, 2003) and Kenneth Williams (commenced June 3, 2003). Each of these suits seeks an unspecified amount of damages and other relief in connection with allegations that the Company misclassified California store (Woods) and area (Castillo) managers as “exempt” from a state law requiring the payment of overtime compensation, that the Company

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

8. CONTINGENT LIABILITIES (continued)

California Legal Proceedings (continued)

failed to provide non-management employees with meal and rest breaks required under state law (Chin) and that the Company computed bonuses payable to its store managers using an impermissible profit-sharing formula (Williams). All of these cases, except Woods, are pending in the California state Superior Courts. The Company compelled arbitration of Woods’ claims, where the arbitrator has certified a class of current and former store managers and set trial for August 2005. The court in the Williams case granted class certification in February 2005. The court in the Chin case denied class certification in April 2005; that determination is presently on appeal. There is no class determination in the Castillo case. In January 2003, without admitting liability, the Company sought to settle the Woods case, which the Company believes to be the most significant of these suits, by offering each class member an amount intended in good faith to settle his or her claim. These settlement offers have been accepted by class members who, in the aggregate worked 92% of all weeks worked by the class during the relevant period. The Company recorded a charge of $2.8 million related to this matter during fiscal 2003. Woods’ counsel is presently disputing through arbitration the validity of the settlements accepted by the individual class members.

At this time, it is too early to determine the likelihood of an unfavorable outcome or the ultimate liability, if any, of these matters.

We The People Legal Proceedings

On August 11, 2005, Sally S. Attia and two other attorneys, purporting to sue on behalf of a nationwide class of all U.S. bankruptcy attorneys, commenced an antitrust action against us in the United States District Court for the Southern District of New York. They allege that the Company and the Former WTP have unlawfully restrained competition in the market for bankruptcy services through our advertising and other practices, and they seek class-action status, damages in an indeterminate amount (including punitive and treble damages under the Sherman and Clayton Acts) and other relief. On August 12, 2005, the court denied plaintiffs’ request for expedited or ex parte injunctive relief. The Company’s motion to dismiss this action was submitted on October 7, 2005, and the Company is presently awaiting a decision.

At this time, it is too early to determine the likelihood of an unfavorable outcome or the ultimate liability, if any, of these matters.

In addition to the matters described above, the Company continues to respond to inquiries it receives from state bar associations and state regulatory authorities from time to time as a routine part of the Company’s business regarding its legal document preparation services business and its franchisees.

While the Company believes there is no legal basis for liability, due to the uncertainty surrounding the litigation process, the Company is unable to reasonably estimate a range of loss, if any, at this time. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate cost to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

DOLLAR FINANCIAL CORP.

NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

9. ACQUISITIONS

The following acquisitions have been accounted for under the purchase method of accounting.

On March 7, 2005, the Company entered into an agreement to acquire substantially all of the assets of We The People Forms and Service Centers USA, Inc. (“WTP”) relating to WTP’s retail-based legal document preparation services business. The aggregate purchase price for this acquisition was $14.0 million, consisting of $10.5 million in cash, paid at closing, $2.0 million in unregistered shares of Corp.’s common stock and $1.5 million paid at closing to an escrow account to secure certain indemnification liabilities of WTP. In May 2005, $250,000 of the escrow amount was distributed to the seller and 25% of the remaining escrow amount is scheduled to be distributed on each of December 31, 2005, March 31, 2006, June 30, 2006 and September 30, 2006, assuming no indemnification claims at such times. In addition, the Company assumed $750,000 in liabilities and assumed approximately $5.1 million in refundable deposits related to certain franchise agreements. The Company allocated a portion of the purchase price to purchased franchise agreements for $1.2 million and other assets for $1.1 million, with the remainder allocated to goodwill. The agreement also includes a maximum revenue-based earn out of up to $3.0 million which is payable over a two-year period. Although the Company completed the acquisition of WTP on March 7, 2005, management is still finalizing the purchase price allocation based on its analysis of the fair value of the assets acquired and liabilities assumed.

The Company is pursuing indemnification claims against WTP and its shareholders on account of asserted breaches of representations and warranties with respect to both undisclosed liabilities and other matters arising out of the acquisition and has instituted a related lawsuit. The Company has terminated the employment of Ira and Linda Distenfield, the shareholders of WTP. At this time, it is too early to determine the outcome of these claims and lawsuit and the impact on the Company of the undisclosed liabilities.

The Company's revolving credit facility and unregistered shares of the Company's common stock were used to fund the purchase. The excess of the purchase price over the preliminary fair value of net identifiable assets acquired was $19.0 million. The Company believes that due to the franchising revenues generated from the network of 170 franchise locations and the potential to sell additional franchises, the preliminary allocation of a portion of the purchase price to goodwill is appropriate.

Following is the allocation of the purchase price for the WTP acquisition (in millions):


	WTP
Purchase price	$	14.0
Net assets acquired:
Purchased franchise agreements		(1.2	)
Refundable deposits		5.1
Other (assets) and liabilities		1.1

Goodwill	$	19.0

In July 2005, the Company purchased 26 We The People franchisee-owned stores, converting them to company-owned and -operated stores, and related franchise territory for future development. The aggregate purchase price for these acquisitions was $4.9 million and was funded through excess internal cash. The excess of the purchase price over the fair value of identifiable assets acquired was $4.5 million. The Company believes that due to the earnings potential from the 26 acquired stores and from the franchising in the acquired territories, the allocation of a portion of the purchase price to goodwill is appropriate.

The following chart presents a summary of our consumer lending operations, including loan originations, which includes loan extensions and revenues for the following periods (in thousands):


	Three Months Ended
	September 30,
	2004			2005
U.S. company-funded consumer loan originations (1)	$	18,562		$	67,636
Canadian company-funded consumer loan originations (2)		107,141			129,092
U.K. company-funded consumer loan originations (2)		42,698			47,738

Total company-funded consumer loan originations	$	168,401		$	244,466


Servicing revenues, net (3)	$	12,150		$	1,408
U.S. company-funded consumer loan revenues (3)		2,774			10,245
Canadian company-funded consumer loan revenues		11,480			14,856
U.K. company-funded consumer loan revenues		6,036			7,389
Provision for loan losses on company-funded loans		(4,670	)		(6,433	)

Total consumer lending revenues, net	$	27,770		$	27,465


Gross charge-offs of company-funded consumer loans (3)	$	16,078		$	24,645
Recoveries of company-funded consumer loans (3)		(11,468	)		(19,526	)

Net charge-offs on company-funded consumer loans	$	4,610		$	5,119


Gross charge-offs of company-funded consumer loans as a percentage of total company-funded consumer loan originations		9.5	%		10.1	%
Recoveries of company-funded consumer loans as a percentage of total company-funded consumer loan originations		6.8	%		8.0	%
Net charge-offs on company-funded consumer loans as a percentage of total company-funded consumer loan originations		2.7	%		2.1	%


(1)		Our company operated stores in the United States originate company-funded and bank-funded short-term consumer loans.

(2)		All consumer loans originated in Canada and the United Kingdom are company funded.

(3)		The variance between the two periods is primarily related to our transition from the bank-funded to the company-funded model.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of the financial condition and results of operations for Dollar Financial Corp. for the three months ended September 30, 2005 and 2004. References in this section to “we,” “our,” “ours,” or “us” are to Dollar Financial Corp. and its wholly owned subsidiaries, except as the context otherwise requires. References to “OPCO” are to our wholly owned operating subsidiary, Dollar Financial Group, Inc. For a separate discussion and analysis of the financial condition and results of operations of OPCO, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in OPCO’s quarterly report on Form 10-Q (File No. 333-18221) for the period ended September 30, 2005.

Executive Summary

Dollar Financial Corp. is the parent company of Dollar Financial Group, Inc. and its wholly owned subsidiaries. We have historically derived our revenues primarily from providing check cashing services, consumer lending and other consumer financial products and services, including money orders, money transfers and bill payment. For our check cashing services, we charge our customers fees that are usually equal to a percentage of the amount of the check being cashed and are deducted from the cash provided to the customer. For our consumer loans, we receive origination and servicing fees from the banks providing the loans or, if we fund the loans directly, interest and fees on the loans. With respect to our We The People (“WTP”) company-operated stores, we charge customers for legal document preparation services sold in our service centers. With respect to our WTP franchised locations, we receive initial franchise fees upon the initial sale of a franchise. Processing fees from our franchisees are earned for processing customers’ legal documents.

On June 16, 2005, we announced that we were transitioning the majority of our United States financial services stores from the bank-funded consumer loan model to the company-funded consumer loan model. This transition was in response to the implementation of the March 2, 2005 revisions to the Federal Deposit Insurance Corporation, or FDIC, guidelines for payday lending, which became effective on July 1, 2005 (as revised, the “Payday Lending Guidance”). As of September 30, 2005, all of our retail financial service locations, with the exception of those located in Pennsylvania and Texas, have transitioned to the company-funded consumer loan model. We also announced on June 16, 2005 that we were discontinuing our operations as a marketing and servicing agent for consumer loans that are fulfilled through document transmitter locations. We expect this to result in a loss of approximately $4.0 million of revenues for the twelve-month period ending June 30, 2006 (“fiscal 2006”) with a minimal impact on income before income taxes. We will continue to offer loans directly to borrowers through other channels of distribution.

Our expenses primarily relate to the operations of our store network, including salaries and benefits for our employees, occupancy expense for our leased real estate, depreciation of our assets and corporate and other expenses, including costs related to opening and closing stores.

In each foreign country in which we operate, local currency is used for both revenues and expenses. Therefore, we record the impact of foreign currency exchange rate fluctuations related to our foreign net income.

In our discussion of our financial condition and results of operations, we refer to stores, franchises and document transmitters that were open for the entire fiscal period and the comparable prior fiscal period as comparable stores, franchises and document transmitters.

Impact of Hurricanes Katrina and Rita on our Operations.

We currently operate 29 financial service stores in the State of Louisiana. Five of these stores are in New Orleans and were directly impacted by Hurricane Katrina; and four of which are located in the Lake Charles area and were directly impacted by Hurricane Rita. At September 30, 2005, all nine stores were closed. By mid-October, however, all of the stores in the Lake Charles area and one store in New Orleans had reopened. Although several of the stores outside of New Orleans and Lake Charles were briefly closed for a few days after the storms, the financial impact on those stores was immaterial. We continue to assess the extent of the damage to the New Orleans stores and are in the process of developing a timetable for reopening them. However preliminary indications are that two of the stores were severely damaged, while the other three sustained wind and water damage but are presumed to be structurally sound. The Company has insurance for the impacted stores, which covers property damage and business interruption due to wind and hail, as well as acts of crime.

The impact of the hurricanes to income before income taxes for the quarter ended September 30, 2005 is approximately $500,000, due primarily to higher loan losses and reduced revenue from the impacted store locations. We anticipate that the two stores in New Orleans that were not completely damaged may be reopened during the quarter ending December 31, 2005, but we are unable to predict when the other two stores may reopen at this time. Furthermore, the timeframe for the reconstruction of the devastated areas of New Orleans and the re-establishment of its local population and their livelihoods cannot yet be predicted. However, at this time, we believe that the negative impact from the disruption of operations resulting from the hurricanes for fiscal year 2006 will likely range from $700,000 to $1.0 million of income before income taxes.

Discussion of Critical Accounting Policies

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with U.S. generally accepted accounting principles. We evaluate these estimates on an ongoing basis, including those related to revenue recognition, loss reserves, income taxes and intangible assets. We base these estimates on the information currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary from these estimates under different assumptions or conditions.

We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements:

Revenue Recognition

With respect to company-operated stores, revenues from our check cashing, money order sales, money transfer and bill payment services and other miscellaneous services reported in other revenues on our statement of operations are all recognized when the transactions are completed at the point-of-sale in the store.

With respect to our franchised locations, we recognize initial franchise fees upon fulfillment of all significant obligations to the franchisee. Royalty payments and processing fees from our franchisees are recognized as earned.

For short-term consumer loans that we make directly (company-funded loans), which have terms ranging from 1 to 37 days, revenues are recognized using the interest method. Loan origination fees are recognized as an adjustment to the yield on the related loan. Our reserve policy regarding these loans is summarized below in ‘‘Company-Funded Consumer Loan Loss Reserves Policy.’’

In addition to the short-term consumer loans originated and funded by us, we also have historically had domestic relationships with two banks, County Bank of Rehoboth Beach, Delaware (“County Bank”) and First Bank of Delaware (“First Bank”). Pursuant to these relationships, we marketed and serviced short-term consumer loans domestically, which had terms ranging from 7 to 23 days, which were funded by the banks. The banks were responsible for the application review process and determining whether to approve an application and fund a loan. As a result, the banks’ loans are not reflected on our balance sheet. We earned a marketing and servicing fee for each loan that was paid by borrowers to the banks. In connection with our transition to a company-funded consumer loan model in June 2005, we terminated our relationship with County Bank and amended our relationship with First Bank.

For domestic loans funded by First Bank of Delaware, we recognize net servicing fee income ratably over the life of the related loan. In addition, the bank has established a target loss rate for the loans marketed and serviced by us. Servicing fees payable to us are reduced if actual losses exceed this target loss rate by the amount they exceed it. If actual losses are below the target loss rate, the difference is paid to us as a servicing fee. The measurement of the actual loss rate and settlement of servicing fees occurs twice every month.

Because our domestic servicing fees are reduced by loan losses incurred by the banks, we have established a reserve for servicing fee adjustments. To estimate the appropriate reserve for servicing fee adjustments, we consider the amount of outstanding loans owed to the banks, historical loans charged off, current and expected collection patterns and current economic trends. The reserve is then based on net charge-offs, expressed as a percentage of loans originated on behalf of the banks applied against the total amount of the banks’ outstanding loans. This reserve is reported in accrued expenses and other liabilities on our balance sheet and was $102,000 at September 30, 2005 and $1.3 million at June 30, 2005.

If one of the banks suffers a loss on a loan, we immediately record a charge-off against the reserve for servicing fee adjustments for the entire amount of the unpaid item. A recovery is credited to the reserve during the period in which the recovery is made. Each month, we replenish the reserve in an amount equal to the net losses charged to the reserve in that month. This replenishment, as well as any additional provisions to the reserve for servicing fee adjustments as a result of the calculations set forth above, is charged against revenues. The total amount of domestic outstanding loans owed to the banks decreased significantly during the period ended September 30, 2005 compared to September 30, 2004 as a result of the transition from the bank-funded to the company-funded model. As a result, we decreased our reserve for servicing fee adjustments and increased our allowance for loan losses on company-funded loans. We serviced $14.1 million of loans for First Bank during the first three months of fiscal 2006 and $106 million during the first three months of fiscal 2005. At September 30, 2005, there was $875,000 in outstanding loans for First Bank and $15.9 million for County Bank and First Bank at September 30, 2004.

Company-Funded Consumer Loan Loss Reserves Policy

We maintain a loan loss reserve for anticipated losses for loans we make directly through our company-operated locations. To estimate the appropriate level of loan loss reserves we consider the amount of outstanding loans owed to us, historical loans charged off, current and expected collection patterns and current economic trends. Our current loan loss reserve is based on our net write-offs, expressed as a percentage of loan amounts originated and extended for the last twelve months applied against the total amount of outstanding loans that we make directly. As these conditions change, we may need to make additional allowances in future periods. As a result of our transition away from the domestic bank-funded consumer loan model to the company-funded consumer loan model, we expect our future domestic loan loss reserve to be increased.

When a loan is originated, the customer receives the cash proceeds in exchange for a post-dated check or a written authorization to initiate a charge to the customer’s bank account on the stated maturity date of the loan. If the check or the debit to the customer’s account is returned from the bank unpaid, we immediately record a charge-off against the consumer loan loss reserve for the entire amount of the unpaid item. A recovery is credited to the reserve during the period in which the recovery is made. Each month, we replenish the reserve in an amount equal to the net losses charged to the reserve in that month. This replenishment, as well as any additional provisions to the loan loss reserve as a result of the calculations in the preceding paragraph, is charged against revenues.

Check Cashing Returned Item Policy

We charge operating expense for losses on returned checks during the period in which such checks are returned. Recoveries on returned checks are credited to operating expense during the period in which recovery is made. This direct method for recording returned check losses and recoveries eliminates the need for an allowance for returned checks. These net losses are charged to other store and regional expenses in the consolidated statements of operations.

Goodwill

We have significant goodwill on our balance sheet. We evaluate the carrying value of goodwill and identified intangibles not subject to amortization in the fourth quarter of each fiscal year. As part of the evaluation, we compare the fair value of business reporting units to their carrying value, including assigned goodwill. If projected future cash flows indicate that the unamortized intangible asset balances will not be recovered, an adjustment is made to reduce the intangible asset to an amount consistent with projected future cash flows discounted at our weighted average cost of capital. Cash flow projections, although subject to a degree of uncertainty, are based on trends of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. As of September 30, 2005, we do not believe any impairment of goodwill has occurred. However, changes in business conditions may require future adjustments to asset valuations.

Income Taxes

As part of the process of preparing our consolidated financial statements we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheet. An assessment is then made of the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we establish a valuation allowance.

Results of Operations

Revenue Analysis


Three Months Ended September 30,
	($ in thousands)				(Percentage of total revenue)
	2004		2005		2004			2005
Check cashing	$	30,362	$	34,347		45.9	%		46.1	%
Consumer lending revenue, net		27,770		27,465		42.0	%		36.9	%
Money transfer fees		3,508		3,958		5.3	%		5.3	%
Franchise fees and royalties		839		2,916		1.3	%		3.9	%
Other revenue		3,654		5,779		5.5	%		7.8	%

Total revenue	$	66,133	$	74,465		100.0	%		100.0	%

The Three Months Ended September 30, 2005 compared to the Three Months Ended September 30, 2004

Total revenues were $74.5 million for the three months ended September 30, 2005 compared to $66.1 million for the three months ended September 30, 2004, an increase of $8.3 million or 12.6%. Comparable retail store and franchised store sales for the entire period increased $5.4 million or 8.4%. New store openings accounted for an increase of $1.2 million and new store acquisitions accounted for an increase of $4.0 million. These increases were partially offset by a decrease of $1.6 million in revenues due to our discontinued operations as a marketing and servicing agent for consumer loans that were fulfilled through document transmitter locations and $483,000 in revenues from closed stores.

A stronger Canadian dollar, partially offset by a weaker British pound, positively impacted revenue by $1.9 million for the quarter. Despite the weaker currency, revenues in the United Kingdom for the quarter increased by $3.8 million, on a constant dollar basis, primarily related to revenues from check cashing and consumer loan products. Revenues from our Canadian subsidiary for the quarter increased $3.5 million in addition to the currency benefit. The growth in our Canadian subsidiary is due to a $1.9 million increase from consumer loan products as a result of a recent criteria change as well as an overall increase in our Canadian customers’ average outstanding loan balance. In addition, Canadian check cashing revenue increased $900,000 in the first quarter of fiscal 2006 compared to the same period in the prior year. Revenues from franchise fees and royalties accounted for $2.9 million, or 3.9%, of total revenues for the three months ended September 30, 2005, compared to $800,000, or 1.3%, of total revenues for the three months ended September 30, 2004. The increase is primarily related to the franchise fees earned from the We The People legal document preparation services.

Store and Regional Expense Analysis


Three Months Ended September 30,
					(Percentage of total
	($ in thousands)				revenue)
	2004		2005		2004			2005
Salaries and benefits	$	20,887	$	25,191		31.6	%		33.8	%
Occupancy		5,394		6,718		8.2	%		9.0	%
Depreciation		1,754		1,832		2.7	%		2.5	%
Returned checks, net and cash shortages		2,484		3,259		3.8	%		4.4	%
Telephone and communications		1,473		1,421		2.2	%		1.9	%
Advertising		2,832		2,189		4.3	%		2.9	%
Bank charges		936		1,109		1.4	%		1.5	%
Armored carrier expenses		824		986		1.2	%		1.3	%
Other		7,092		7,309		10.6	%		9.9	%

Total store and regional expenses	$	43,676	$	50,014		66.0	%		67.2	%

Store and regional expenses were $50.0 million for the three months ended September 30, 2005 compared to $43.7 million for the three months ended September 30, 2004, an increase of $6.3 million or 14.5%. The impact of foreign currencies accounted for $938,000 of the increase. New store openings accounted for an increase of $1.2 million and new store acquisitions accounted for an increase of $4.4 million while comparable retail store and franchised store expenses for the entire period increased $2.9 million. Partially offsetting these increases was a decrease of $1.3 million due to our discontinued operations as a marketing and servicing agent for consumer loans that were fulfilled through document transmitter locations and $912,000 from closed stores. For the three months ended September 30, 2005 total store and regional expenses increased to 67.2% of total revenue compared to 66.0% of total revenue for the three months ended September 30, 2004. On a consistent currency basis, store and regional expenses increased $627,000 in Canada, $2.0 million in the United Kingdom and $2.7 million in the United States. The increase in Canada was primarily due to increases in salaries, returned checks and cash shortages and occupancy expenses, all of which are commensurate with the overall growth in Canadian revenues. Similarly, in the United Kingdom, the increase is primarily related to increases in salaries, returned checks and cash shortages and occupancy costs commensurate with the growth in that country. In the U.S., the increase is primarily due to salaries and occupancy as a result of the incremental costs associated with the acquisition of We The People stores.

Corporate and Other Expense Analysis


Three Months Ended September 30,
					(Percentage of total
	($ in thousands)				revenue)
	2004		2005		2004			2005
Corporate expenses	$	8,231	$	9,172		12.4	%		12.3	%
Management fee		277		—		0.4	%		0.0	%
Other depreciation and amortization		931		925		1.4	%		1.2	%
Interest expense		9,669		7,241		14.6	%		9.7	%
Other		86		276		0.1	%		0.4	%
Income tax provision		3,354		4,538		5.1	%		6.1	%

Corporate Expenses

Corporate expenses were $9.2 million for the three months ended September 30, 2005 compared to $8.2 million for the three months ended September 30, 2004. The $941,000 increase is primarily due to higher insurance and other public company costs, as well as an increase in compensation expense to support the expansion of the global store network and new product offerings.

Management Fees

There was no management fee expense for the three months ended September 30, 2005, compared to $277,000 for the three months ended September 30, 2004. In conjunction with our initial public offering on January 28, 2005, we paid a $2.5 million fee to terminate a management services agreement among the Company, OPCO and Leonard Green & Partners, L.P. Subsequent to that date, the Company is no longer obligated to accrue or pay management fees to Leonard Green & Partners, L.P.

Other Depreciation and Amortization

Other depreciation and amortization expenses remained relatively unchanged and were $925,000 for the three months ended September 30, 2005 compared to $931,000 for the three months ended September 30, 2004.

Interest Expense

Interest expense was $7.2 million for the three months ended September 30, 2005 compared to $9.7 million for the three months ended September 30, 2004, a decrease of $2.4 million or 25.1%. On February 2, 2005, the Company used the majority of the proceeds from its initial public offering to redeem all of its 16.0% senior notes due 2012 and 13.95% senior subordinated notes due 2012. As a result, interest expense related to these notes declined $3.2 million for the quarter ended September 30, 2005 compared to the same period in the prior year. Partially offsetting this decline was an increase of $731,000 related to the additional offering of $30 million principal amount of 9.75% senior notes due 2011 on June 23, 2005.

Income Tax Provision

The provision for income taxes was $4.5 million for the three months ended September 30, 2005 compared to a provision of $3.4 million for the three months ended September 30, 2004. Our effective tax rate differs from the federal statutory rate of 35% due to foreign taxes and a valuation allowance on US deferred tax assets. Our effective tax rate was 66.4% for the three months ended September 30, 2005 compared to 102.8% for the three months ended September 30, 2004. Because of the extinguishment of U.S. debt from the proceeds of our initial public offering in the third quarter of fiscal 2005, interest expense is 28% lower in the three months ended September 30, 2005 than the same period in the prior year, principally resulting in the improvement in the effective tax rate year over year. Interest expense on our public debt held in the United States results in U.S. tax losses, thus generating deferred tax assets. Because realization is not assured, all U.S. deferred tax assets are reduced by a valuation allowance in accordance with SFAS 109. At September 30, 2005, U.S. deferred tax assets recorded were reduced by a valuation allowance of $40.0 million of which $2.6 million was provided for the three months ended September 30, 2005.

Changes in Financial Condition

Cash and cash equivalent balances and the revolving credit facilities balances fluctuate significantly as a result of seasonal, monthly and day-to-day requirements for funding check cashing and other operating activities. For the three months ended September 30, 2005, cash and cash equivalents increased $7.2 million. Net cash provided by operating activities was $4.3 million for the three months ended September 30, 2005 compared to $10.5 million for the three months ended September 30, 2004. The decrease in net cash provided by operations was primarily the result of improved operating results offset in part by the additional cash used to fund company-funded consumer loans as a result of the recent transition from the bank funded model in response to the recent FDIC Payday Lending Guidance.

Liquidity and Capital Resources

Our principal sources of cash are from operations, borrowings under our credit facilities and issuances of our common stock. We anticipate that our primary uses of cash will be to provide working capital, finance capital expenditures, meet debt service requirements, fund company originated consumer loans, finance acquisitions and new store expansion and finance the expansion of our products and services.

Net cash provided by operating activities was $4.3 million for the three months ended September 30, 2005 compared to cash provided of $10.5 million for the three months ended September 30, 2004. The decrease in net cash provided by operations was primarily the result of improved

operating results offset in part by the additional cash used to fund company-funded consumer loans as a result of the recent transition from the bank-funded model in response to the recent FDIC Payday Lending Guidance.

Net cash used in investing activities for the three months ended September 30, 2005 was $9.9 million compared to a usage of $2.5 million for the three months ended September 30, 2004. For the three months ended September 30, 2005, we made capital expenditures of $5.0 million and acquisitions of $4.9 million primarily related to the purchase of additional We The People franchises and territories. The actual amount of capital expenditures for the year will depend in part upon the number of new stores acquired or opened and the number of stores remodeled. Our capital expenditures, excluding acquisitions, are currently anticipated to aggregate approximately $12.5 million during our fiscal year ending June 30, 2006, for remodeling and relocation of certain existing stores and for opening additional new stores.

Net cash provided by financing activities for the three months ended September 30, 2005 was $10.9 million compared to net cash provided of $3.1 million for the three months ended September 30, 2004. The cash provided in the three months ended September 30, 2005 was primarily a result of an increase in the borrowings under our revolving credit facility. The use of cash in the three months ended September 30, 2004 was also a result of an increase in the borrowings under our revolving credit facility.

Revolving Credit Facilities. We have two revolving credit facilities: a domestic revolving credit facility and a Canadian overdraft facility.

		Domestic Revolving Credit Facility. On November 13, 2003, OPCO repaid, in full, all borrowings outstanding under its previously existing credit facility using a portion of the proceeds from the issuance of $220.0 million principal amount of OPCO’s 9.75% senior notes due 2011 and simultaneously entered into a new $55.0 million senior secured reducing revolving credit facility. On July 8, 2005, OPCO entered into an amendment and restatement of its credit facility to increase the maximum amount of the facility from $55 million to $80 million. The amendment and restatement reduced the rate of interest and fees payable under the credit facility and eliminated the quarterly reductions to the commitment amount. In addition, the amendment and restatement extended the term of the credit facility for one additional year to November 12, 2009. At OPCO’s request, existing lenders and/or additional lenders may agree to increase the maximum amount of the credit facility to $100 million. Under the credit facility, up to $30.0 million may be used in connection with letters of credit. The commitment may be subject to reductions in the event we engage in certain issuances of debt or equity securities or asset disposals. OPCO’s borrowing capacity under the credit facility is limited to the lesser of the total commitment of $80.0 million or 85% of certain liquid assets. At September 30, 2005, the borrowing capacity was $69.3 million which consisted of the $80.0 million commitment less letters of credit totaling $10.7 million issued by Wells Fargo Bank, which guarantee the performance of certain of its contractual obligations. There was $11.9 million outstanding under the facility at September 30, 2005.

		Canadian Overdraft Facility. Our Canadian operating subsidiary has a Canadian overdraft facility to fund peak working capital needs for our Canadian operations. The Canadian overdraft facility provides for a commitment of up to approximately $10.0 million in Canadian equivalent, of which there was no outstanding balance on September 30, 2005. Amounts outstanding under the Canadian overdraft facility bear interest at a rate of Canadian prime and are secured by a $10.0 million letter of credit issued by Wells Fargo Bank under our domestic revolving credit facility.

Long-Term Debt. As of September 30, 2005, long term debt consisted of $271.7 million principal amount of OPCO’s 9.75% senior notes due November 15, 2011.

Operating Leases. Operating leases are scheduled payments on existing store and other administrative leases. These leases typically have initial terms of 5 years and may contain provisions for renewal options, additional rental charges based on revenue and payment of real estate taxes and common area charges.

We entered into the commitments described above and other contractual obligations in the ordinary course of business as a source of funds for asset growth and asset/liability management and to meet required capital needs. Our principal future obligations and commitments as of September 30, 2005, excluding periodic interest payments, include the following:


	Payments Due by Period (in thousands)
			Less than		1 - 3		4 - 5		After 5
	Total		1 Year		Years		Years		Years
Revolving credit facilities	$	11,900	$	11,900	$	—	$	—	$	—
Long-term debt:
9.75% Senior Notes due 2011⁽¹⁾		271,695		—		—		—		271,695
Capital lease obligations		—		—		—		—		—
Operating lease obligations		77,663		20,157		32,055		18,103		7,348
Purchase obligations		—		—		—		—		—
Other long-term liabilities reflected on the registrants balance sheet under GAAP		—		—		—		—

Total contractual cash obligations	$	361,258	$	32,057	$	32,055	$	18,103	$	279,043


⁽¹⁾		$1,695 is the unamortized premium on the 9.75% Senior Notes due 2011.

We believe that, based on current levels of operations and anticipated improvements in operating results, cash flows from operations and borrowings available under our credit facilities will allow us to fund our liquidity and capital expenditure requirements for the foreseeable future, including payment of interest and principal on our indebtedness. This belief is based upon our historical growth rate and the anticipated benefits we expect from operating efficiencies. We expect additional revenue growth to be generated by increased check cashing revenues, growth in the consumer lending business, the maturity of recently opened stores and the continued expansion of new stores and sale of franchises as a result of our recent acquisition of the We The People franchises. We also expect operating expenses to increase, although the rate of increase is expected to be less than the rate of revenue growth for existing stores. Furthermore, we do not believe that additional acquisitions or expansion are necessary to cover our fixed expenses, including debt service.

Balance Sheet Variations

September 30, 2005 compared to June 30, 2005

Cash and cash equivalents increased to $99.7 million at September 30, 2005 from $92.5 million at June 30, 2005. Cash and cash equivalent balances fluctuate significantly as a result of seasonal, monthly and day-to-day requirements for funding check cashing, company-funded consumer loans and other operating activities.

Loans receivable increased to $47.7 million at September 30, 2005 from $38.6 million at June 30, 2005 due primarily to increases of $5.9 million in U.S. company-funded consumer loans due to the transition from the bank-funded model to the company-funded model, $1.4 million in installment loans and $767,000 in pawn lending.

Other consumer lending receivables decreased $5.4 million due to the termination of our relationship with County Bank and the amended relationship with First Bank of Delaware.

Income taxes receivable increased to $3.1 million at September 30, 2005 from $1.1 million at June 30, 2005 related primarily to the timing of receipts.

Goodwill and other intangibles increased $6.5 million from $186.2 million at June 30, 2005 to $192.7 million at September 30, 2005 due to foreign currency translation adjustments of $1.9 million and acquisitions of $4.6 million.

Accrued expenses and other liabilities decreased to $16.2 million at September 30, 2005 from $22.4 million at June 30, 2005 due primarily to the timing of accrued payroll and other operating expense accruals.

Accrued interest payable increased $6.6 million due to the timing of interest payments on the 9.75% Senior Notes due 2011.

Revolving credit facilities and long-term debt increased $11.8 million from $271.8 million at June 30, 2005 to $283.6 million at September 30, 2005. The increase is due to additional borrowings under our credit facility.

Total shareholders’ equity increased $7.1 million to $66.7 million from $59.6 million due primarily to net income of $2.3 million and an increase of $4.6 million in accumulated other comprehensive income as a result of $4.4 million in foreign currency translation adjustments.

Seasonality and Quarterly Fluctuations

Our business is seasonal due to the impact of tax-related services, including cashing tax refund checks, making electronic tax filings and processing applications for refund anticipation loans. Historically, we have generally experienced our highest revenues and earnings during our third fiscal quarter ending March 31, when revenues from these tax-related services peak. Due to the seasonality of our business, results of operations for any fiscal quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. In addition, quarterly results of operations depend significantly upon the timing and amount of revenues and expenses associated with acquisitions and the addition of new stores.

Sarbanes-Oxley Act of 2002: Section 404 Compliance

We are evaluating our internal controls systems in order to allow management to report on, and our registered independent public accounting firm to attest to, our internal controls, as required by Section 404 of the Sarbanes-Oxley Act. We are performing the system and process evaluation and testing required in an effort to comply with the management certification and auditor attestation requirements of Section 404. As a result, we are incurring additional expense. While we anticipate being able to fully comply with the requirements relating to internal controls and all other aspects of Section 404 in a timely fashion, we cannot be certain as to the timing of completion of our evaluation, testing and any needed remediation actions or the impact of the same on our operations because there is no precedent available by which to measure compliance adequacy. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission or NASDAQ. Any such action could adversely affect our financial results and the market price of our common shares.

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

This report includes forward-looking statements regarding, among other things, anticipated improvements in operations, our plans, earnings, cash flow and expense estimates, strategies and prospects, both business and financial. All statements other than statements of current or historical fact contained in this prospectus are forward-looking statements. The words ‘‘believe,’’ ‘‘expect,’’ ‘‘anticipate,’’ ‘‘should,’’ ‘‘plan,’’ ‘‘will,’’ ‘‘may,’’ ‘‘intend,’’ ‘‘estimate,’’ ‘‘potential,’’ ‘‘continue’’ and similar expressions, as they relate to us, are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events, financial trends and industry regulations that we believe may affect our financial condition, results of operations, business strategy and financial needs. They can be affected by inaccurate assumptions, including , without limitation, with respect to risks, uncertainties, anticipated operating efficiencies, new business prospects and the rate of expense increases. In light of these risks, uncertainties and assumptions, the forward-looking statements in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this report as well as those risk factors set forth in the section entitled “Risk Factors” set forth in our registration statement on Form S-1 which was effective on January 27, 2005.

Our forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Generally

In the operations of our subsidiaries and the reporting of our consolidated financial results, we are affected by changes in interest rates and currency exchange rates. The principal risks of loss arising from adverse changes in market rates and prices to which we and our subsidiaries are exposed relate to:

	•		interest rates on debt; and

	•		foreign exchange rates generating translation gains and losses.

We and our subsidiaries have no market risk sensitive instruments entered into for trading purposes, as defined by GAAP. Information contained in this section relates only to instruments entered into for purposes other than trading.

Interest Rates

Our outstanding indebtedness, and related interest rate risk, is managed centrally by our finance department by implementing the financing strategies approved by our Board of Directors. Although our revolving credit facilities carry variable rates of interest, our debt consists primarily of fixed-rate senior notes. Because most of our average outstanding indebtedness carries a fixed rate of interest, a change in interest rates is not expected to have a significant impact on our consolidated financial position, results of operations or cash flows.

Foreign Exchange Rates

Operations in the United Kingdom and Canada have exposed us to shifts in currency valuations. From time to time, we may elect to purchase put options in order to protect earnings in the United Kingdom and Canada against foreign currency fluctuations. Out of the money put options may be purchased because they cost less than completely averting risk, and the maximum downside is limited to the difference between the strike price and exchange rate at the date of purchase and the price of the contracts. At September 30, 2005, we held put options with an aggregate notional value of $(CAN) 47.4 million and £(GBP) 9.9 million to protect the currency exposure in Canada and the United Kingdom through June 30, 2006. We use purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted earnings denominated in currencies other than the U.S. dollar. Our cash flow hedges have a duration of less than twelve months. For derivative instruments that are designated and qualify as cash flow hedges, the effective portions of the gain or loss on the derivative instrument are initially recorded in accumulated other comprehensive income as a separate component of shareholders’ equity and subsequently reclassified into earnings in the period during which the hedged transaction is recognized in earnings. The ineffective portion of the gain or loss is reported in corporate expenses on the statement of operations. For options designated as hedges, hedge effectiveness is measured by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item, both of which are based on forward rates. As of September 30, 2005 no amounts were excluded from the assessment of hedge effectiveness. There was no ineffectiveness in the Company’s cash flow hedges for the three months ended September 30, 2005. As of September 30, 2005, amounts related to derivatives qualifying as cash flow hedges amounted to an increase of shareholders’ equity of $204,000 all of which is expected to be transferred to earnings in the next nine months along with the earnings effects of the related forecasted transactions. The fair market value at September 30, 2005 was $536,000 and is included in other assets on the balance sheet.

Canadian operations accounted for approximately 237.5% of consolidated pre-tax earnings for the three months ended September 30, 2005 and 259.4% of consolidated pre-tax earnings for the three months ended September 30, 2004. U.K. operations accounted for approximately 103.6% of consolidated pre-tax earnings for the three months ended September 30, 2005 and approximately 97.8% of consolidated pre-tax earnings for the three months ended September 30, 2004. As currency exchange rates change, translation of the financial results of the Canadian and U.K. operations into U.S. dollars will be impacted. Changes in exchange rates have resulted in cumulative translation adjustments increasing our net assets by $25.0 million. These gains and losses are included in corporate expenses.

We estimate that a 10.0% change in foreign exchange rates by itself would have impacted reported pre-tax earnings from continuing operations by approximately $2.3 million for the three months ended September 30, 2005 and $3.3 million for the three months ended September 30, 2004. This impact represents nearly 48.4% of our consolidated foreign pre-tax earnings for the three months ended September, 2005 and 35.7% of our consolidated foreign pre-tax earnings for the three months ended September 30, 2004.

Item 4. Controls and Procedures

Evaluation of Disclosure Control and Procedures

As of the end of the period covered by this report, our management conducted an evaluation, with the participation of our Chief Executive Officer, President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer, President and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to

management, including our Chief Executive Officer, President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during our fiscal quarter ended September 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In addition to the legal proceedings discussed below, which we are defending vigorously, we are involved in routine litigation and administrative proceedings arising in the ordinary course of business. Although we believe that the resolution of these proceedings will not materially adversely impact our business, there can be no assurances in that regard.

Canadian Legal Proceedings

On August 19, 2003, a former customer in Ontario, Canada, Margaret Smith, commenced an action against us and the our Canadian subsidiary on behalf of a purported class of Canadian borrowers (except those residing in British Columbia) who, Smith claims, were subjected to usurious charges in payday-loan transactions. The action, which is pending in the Ontario Superior Court of Justice, alleges violations of a Canadian federal law proscribing usury and seeks restitution and damages, including punitive damages. Our Canadian subsidiary’s motions to stay the action on grounds of arbitrability and lack of jurisdiction were denied and are presently on appeal.

On October 21, 2003, another former customer, Kenneth D. Mortillaro, commenced a similar action against our Canadian subsidiary, but this action has since been stayed on consent because it is a duplicate action.

On November 6, 2003, we learned of substantially similar claims asserted on behalf of a purported class of Alberta borrowers by Gareth Young, a former customer of our Canadian subsidiary. The Young action is pending in the Court of Queens Bench of Alberta and seeks damages and other relief. We are named as a defendant in this action but it has not been served with the statement of claim to date. Like the plaintiff in the MacKinnon action referred to below, Mortillaro, Smith and Young have signed agreements to arbitrate all disputes with us.

On January 29, 2003, a former customer, Kurt MacKinnon, commenced an action against the our Canadian subsidiary and 26 other Canadian lenders on behalf of a purported class of British Columbia residents who, MacKinnon claims, were overcharged in payday-loan transactions. The action, which is pending in the Supreme Court of British Columbia, alleges violations of laws proscribing usury and unconscionable trade practices and seeks restitution and damages, including punitive damages, in an unknown amount. On March 1, 2005, MacKinnon’s application for class certification of this action was dismissed. Attempts by MacKinnon to obtain reconsideration and appellate review of this dismissal are presently pending.

On April 15, 2005 the solicitor acting for MacKinnon commenced a proposed class action against our Canadian subsidiary on behalf of another former customer, Louise Parsons. The solicitor has indicated to the court that this second action will not proceed pending the appeals described above.

Similar class actions have been commenced against our Canadian subsidiary in Manitoba, New Brunswick, Nova Scotia and Newfoundland. We are named as a defendant in the actions commenced in Nova Scotia and Newfoundland but we have not been served with the statements of claim in these actions to date. The claims in these additional actions are substantially similar to those of the Ontario actions referred to above.

At this time, it is too early to determine the likelihood of an unfavorable outcome or the ultimate liability, if any, of these matters.

California Legal Proceedings

We are defendant in four lawsuits commenced by the same law firm. Each is pled as a class action, and each alleges violations of California’s wage-and-hour laws. The named plaintiffs are our former employees Vernell Woods (commenced August 22, 2000), Juan Castillo (commenced May 1, 2003), Stanley Chin (commenced May 7, 2003) and Kenneth Williams (commenced June 3, 2003). Each of these suits seeks an unspecified amount of damages and other relief in connection with allegations that we misclassified California store (Woods) and area (Castillo) managers as “exempt” from a state law requiring the payment of overtime compensation, that we failed to provide non-management employees with

meal and rest breaks required under state law (Chin) and that we computed bonuses payable to its store managers using an impermissible profit-sharing formula (Williams). All of these cases, except Woods, are pending in the California state Superior Courts. We compelled arbitration of Woods’ claims, where the arbitrator has certified a class of current and former store managers and set trial for August 2005. The court in the Williams case granted class certification in February 2005. The court in the Chin case denied class certification in April 2005; that determination is presently on appeal. There is no class determination in the Castillo case. In January 2003, without admitting liability, we sought to settle the Woods case, which we believe to be the most significant of these suits, by offering each class member an amount intended in good faith to settle his or her claim. These settlement offers have been accepted by class members who, in the aggregate worked 92% of all weeks worked by the class during the relevant period. We recorded a charge of $2.8 million related to this matter during fiscal 2003. Woods’ counsel is presently disputing through arbitration the validity of the settlements accepted by the individual class members.

At this time, it is too early to determine the likelihood of an unfavorable outcome or the ultimate liability, if any, of these matters.

We The People Legal Proceedings

Our business model for our legal document preparation services business is being challenged in the courts, as described below, which could result in our discontinuation of these services in any one or more jurisdictions.

The company from which we bought the assets of our We The People business, We The People Forms and Service Centers USA, Inc. (the “Former WTP”), and/or certain of our franchisees are defendants in various lawsuits. These actions, which are pending in North Carolina, Illinois, Tennessee and Georgia state courts, allege violations of the unauthorized practice of law statute and various consumer protection statutes of those states. There are presently 10 stores operated by franchisees in these four states. These cases seek damages and/or injunctive relief, which could prevent us and our franchisees from preparing legal documents in accordance with our present business model. The Illinois case has been pending since March 2001. The Georgia case was commenced against our local franchisee in May 2005. The North Carolina and Tennessee cases have been pending since the summer of 2003 and March 2004, respectively.

The state bar association in Mississippi has commenced an investigation regarding our and our local franchisee’s legal document preparation activities within that state. The franchisee operates one store in Mississippi. Although we believe that we have adequately addressed the issues initially raised in the investigation and demonstrated that our activities and those of our local franchisee do not constitute the unauthorized practice of law, we believe it is likely that a lawsuit containing allegations similar to those asserted in the North Carolina, Illinois, Tennessee and Georgia proceedings will be filed against us and/or our local franchisees.

The Former WTP and/or certain of our franchisees are defendants in adversary proceedings commenced by various United States Bankruptcy trustees in bankruptcy courts in the Eastern District of New York, the District of Maryland, the Northern District of Illinois, the Middle District of Tennessee, the Eastern District of Tennessee, the Eastern District of Oklahoma, the Middle District of North Carolina, the District of Idaho and the District of Delaware. In each of these adversary proceedings, the United States Bankruptcy trustee alleges that the defendants violated

certain requirements of Section 110 of the United States Bankruptcy Code, which governs the preparation of bankruptcy petitions by non-attorneys, and engaged in fraudulent, unfair and deceptive conduct which constitutes the unauthorized practice of law.

In March 2003, the Former WTP, on behalf of its local franchisee, filed an appeal from a decision of the United States District Court for the District of Idaho which had reduced the fee that the Former WTP franchisee could charge for its bankruptcy petition preparation services and ruled that the Former WTP’s business model for the preparation of bankruptcy petitions was deceptive or unfair, resulted in the charging of excessive fees and constituted the unauthorized practice of law. On June 17, 2005, the United States Court of Appeals for the Ninth Circuit affirmed this decision, without reaching the issues related to unauthorized practice of law. On May 10, 2005, we, the Former WTP and certain of our local franchisees temporarily settled two of the bankruptcy adversary proceedings pending in the District of Connecticut and in the Southern District of New York by entering into stipulated preliminary injunctions regarding preparation of bankruptcy petitions within these judicial districts pending the final resolution of these proceedings. Each of the adversary proceedings temporarily settled is being referred to mediation, together with certain other matters currently pending in the Southern District of New York and in the Eastern District of New York against the Former WTP and certain of our franchisees, in an effort to develop a protocol for us and our franchisees located within all Federal judicial districts in New York, Vermont and Connecticut to comply with Section 110 of the Bankruptcy Code in its present form and as it will exist after the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

In December 2004, the Former WTP entered into a stipulated judgment based on an alleged violation of the Federal Trade Commission’s Franchise Rule. Under the terms of the judgment, the Former WTP paid a $286,000 fine and is permanently enjoined from violating the Federal Trade Commission Act and the Franchise Rule and is required to comply with certain compliance training, monitoring and reporting and recordkeeping obligations. We have requested the Federal Trade Commission to confirm that it agrees with our interpretation that these obligations are applicable only to our legal document preparation services business.

On August 11, 2005, Sally S. Attia and two other attorneys, purporting to sue on behalf of a nationwide class of all U.S. bankruptcy attorneys, commenced an antitrust action against us in the United States District Court for the Southern District of New York. They allege that we and the Former WTP have unlawfully restrained competition in the market for bankruptcy services through our advertising and other practices, and they seek class-action status, damages in an indeterminate amount (including punitive and treble damages under the Sherman and Clayton Acts) and other relief. On August 12, 2005, the court denied plaintiffs’ request for expedited or ex parte injunctive relief. Our motion to dismiss this action was submitted on October 7, 2005, and we are presently awaiting a decision..

At this time, it is too early to determine the likelihood of an unfavorable outcome or the ultimate liability, if any, of these matters.

In addition to the matters described above, we continue to respond to inquiries we receive from state bar associations and state regulatory authorities from time to time as a routine part of our business regarding our legal document preparation services business and our franchisees.


	Three Months Ended
	September 30,
	2004		2005
Check Cashing Data:
Face amount of checks cashed (in millions)	$	816	$	917
Face amount of average check	$	404	$	439
Face amount of average check (excluding Canada and the United Kingdom)	$	369	$	389
Average fee per check	$	15.02	$	16.45
Number of checks cashed (in thousands)		2,022		2,088


	Three Months Ended
	September 30,
	2004			2005
	(in thousands)
Check Cashing Collections Data:
Face amount of returned checks	$	7,601		$	10,267
Collections		(5,374	)		(7,298	)

Net write-offs	$	2,227		$	2,969


Collections as a percentage of returned checks		70.7	%		71.1	%
Net write-offs as a percentage of check cashing revenues		7.3	%		8.6	%
Net write-offs as a percentage of the face amount of checks cashed		0.27	%		0.32	%


Exhibit No.		Description of Document
	10.1	Amendment of Marketing and Servicing Agreement, dated August 22, 2005*

	31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

	31.2	Rule 13a-14(a)/15d-14(a) Certification of President

	31.3	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

	32.1	Section 1350 Certification of Chief Executive Officer

	32.2	Section 1350 Certification of President

	32.3	Section 1350 Certification of Chief Financial Officer


	DOLLAR FINANCIAL CORP.

Date: November 9, 2005	*By:	/s/ Randy Underwood

		Name:	Randy Underwood
		Title:	Executive Vice President and
			Chief Financial Officer
			(principal financial and
			chief accounting officer)

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		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Interim Consolidated Balance Sheets as of June 30, 2005 and September 30, 2005 (unaudited)		3

	Interim Unaudited Consolidated Statements of Operations for the Three Months Ended September 30, 2004 and 2005		4

	Interim Consolidated Statements of Shareholders’ Equity as of June 30, 2005 and September 30, 2005 (unaudited)		5

	Interim Unaudited Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2004 and 2005		6

	Notes to Interim Unaudited Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		33

Item 4.	Controls and Procedures		34

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		35

Item 6.	Exhibits		38

Signature			39
Amendment of Marketing and Servicing Agreement
Rule 13a-14(a)/15d-14(a) Certification of CEO
Rule 13a-14(a)/15d-14(a) Certification of President
Rule 13a-14(a)/15d-14(a) Certification of CFO
Section 1350 Certification of CEO
Section 1350 Certification of President
Section 1350 Certification of CFO


*		An application has been submitted to the Securities and Exchange Commission for confidential treatment, pursuant to Rule 24b-2 of the Securities and Exchange Act of 1934, of portions of this exhibit. These portions have been omitted from this exhibit.


*		The signatory hereto is the principal financial and chief accounting officer and has been duly authorized to sign on behalf of the registrant.