Lower- and middle-income individuals represent the largest part of the population in each country. Many of these individuals work in the service sector, which in the U.S. is one of the fastest growing segments of the workforce. However, many of these individuals, particularly in the United States, do not maintain regular banking relationships.

Despite the demand for basic financial services, access to banks has become more difficult over time for many consumers. Many banks have chosen to close their less profitable or lower-traffic locations. Typically, these closings have occurred in lower-income neighborhoods where the branches have failed to attract a sufficient base of customer deposits. This trend has resulted in fewer convenient alternatives for basic financial services in many neighborhoods. Many banks have also reduced or eliminated some services that under-banked consumers need.

As a result of these trends, a significant number of retailers have begun to offer financial services to lower- and middle-income individuals. The providers of these services are fragmented, and range from specialty finance offices to retail stores in other industries that offer ancillary services.

It is believed that the under-banked consumer market will continue to grow as a result of a diminishing supply of competing banking services as well as underlying demographic trends. These demographic trends include an overall increase in the population and an increase in the number of service-sector jobs as a percentage of the total workforce.

Customers may cash all types of checks at the Company’s check cashing locations, including payroll checks, government checks and personal checks. In exchange for a verified check, customers receive cash immediately and do not have to wait several days for the check to clear. Before the Company distributes any cash, it verifies both the customer's identification and the validity of the check as required by the Company’s standard verification procedures. Customers are charged a fee for this service. The fee varies depending on the size and type of check cashed as well as the customer's check cashing history at the Company’s stores.

The Company originates short-term loans on behalf of two domestic banks and for its own account. For the short-term consumer loans the Company originates, at the time the funds are advanced to the borrower, the borrower signs a note and provides the lender with a post-dated check or a written authorization to initiate an automated clearinghouse charge to the borrower's checking account for the loan principal plus a finance charge; on the due date of the loan, the check or automated clearinghouse debit is presented for payment.

The Company also originates unsecured short-term loans to customers on its own account in Canada, the United Kingdom and certain U.S. markets. The Company bears the entire risk of loss related to these loans. In the United States, these loans are made for amounts up to $500, with terms of 7 to 37 days. In Canada, loans are issued to qualified borrowers based on a percentage of the borrowers' income with terms of 1 to 35 days. The Company issues loans in the United Kingdom for up to £600, with a term of 28 days.

Store and regional expenses were $42.4 million for the three months ended September 30, 2004 compared to $38.1 million for the three months ended September 30, 2003, an increase of $4.3 million or 11.4%.

Corporate expenses were $9.5 million for the three months ended September 30, 2004 compared to $7.2 million for the three months ended September 30, 2003.

Losses on store closings and sales was $86,000 for the three months ended September 30, 2004 compared to $60,000 for the three months ended September 30, 2003.

Interest expense was $9.7 million for the three months ended September 30, 2004 compared to $9.2 million for the three months ended September 30, 2003, an increase of $500,000 or 5.2%.