File No. 333-153703

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4/A

PRE-EFFECTIVE AMENDMENT NO. 2
to
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

EZCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		5900 (Primary Standard Industrial Classification Code Number)		74-2540145 (I.R.S. Employer Identification Number)

1901 CAPITAL PARKWAY
AUSTIN, TEXAS 78746
(512) 314-3400
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive
offices)

Connie Kondik, Esq.		Copies to:
General Counsel EZCORP, Inc. 1901 Capital Parkway Austin, Texas 78746 Telephone: (512) 314-3400 Facsimile: (512) 314-3463		Lee Polson, Esq. Strasburger & Price, LLP 600 Congress Avenue, Suite 1600 Austin, Texas 78701 Telephone: (512) 499-3600 Facsimile: (512) 536-5719

(Name, address, including zip code, and telephone
number, including area code, of agent for service)

Approximate dates of commencement of proposed sale to public: As soon as practicable after this registration statement becomes effective.

If the securities being registered on this Form are being offered in connection with the information of a holding company and there is compliance with General Instruction G, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer   o (Do not check if a smaller reporting company)		Smaller reporting company o

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine.

 

 

The information in this proxy statement/prospectus is not complete and may be changed. EZCORP may not sell these securities until the registration statement filed with the Securities and Exchange Commission, of which this document is a part, is declared effective. This proxy statement/prospectus is not an offer to sell these securities and EZCORP is not soliciting an offer to buy these securities in any state where an offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 13, 2008

VALUE FINANCIAL SERVICES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

Date:                     , 2008
Time: 5:00 p.m.
Place: The Memphis Hilton
            939 Ridge Lake Boulevard
            Memphis, TN 38120

Dear Shareholders:

     The board of directors of Value Financial Services, Inc., a Florida corporation (“VFS”), has called this special meeting of shareholders for the following purposes:

	1.		To approve: (i) the articles of amendment to the amended and restated articles of incorporation of VFS to amend the effective time of a mandatory conversion of series A-1 participating stock, series A-2 participating stock and series B participating stock to occur upon approval of such mandatory conversion with no requirement of prior written notice, subject to approval and completion of the merger; and (ii) the conversion of all participating stock into common stock, subject to approval and completion of the merger (upon completion of the merger, all accrued and unpaid dividends due to the holders of the series A-2 participating stock will be paid in full).
	2.		To approve the merger agreement by and between VFS, EZCORP, Inc., a Delaware corporation (“EZCORP”) and Value Merger Sub, Inc., a Florida corporation (“Merger Sub”) pursuant to which Merger Sub will merge with and into VFS. In the merger, VFS ‘s shareholders will receive 0.75 shares of EZCORP’s Class A Non-voting Common Stock (the “EZCORP Shares”) for each share of VFS’s common stock. EZCORP will also pay a limited amount of additional consideration to VFS shareholders who sell their EZCORP Shares in the open stock market within 125 days after closing of the merger at prices either above or below $14.67 per share. Further, EZCORP will pay cash of $11.00 per share for up to 20% of the outstanding VFS common stock, on an as converted basis, to VFS shareholders who elect to receive cash instead of EZCORP Shares.
	3.		To transact any other business that may properly come before the special meeting.

Appraisal Rights

     VFS has determined that you are entitled to assert appraisal rights under Chapter 607 of the Florida Statutes. In accordance with Florida law, a copy of Sections 607.1301-607.1333 of the Florida Statutes, regarding your entitlement to assert appraisal rights, is attached as Exhibit D to the accompanying proxy statement/prospectus.

Record Date

     If you were a shareholder of record as of September 16, 2008, you are entitled to notice of and to vote on matters to which you are entitled at the special meeting. A list of VFS’s shareholders entitled to vote at the meeting will be available during business hours at our offices, 1063 Maitland Commons Boulevard, Suite 200, Maitland, Florida 32751 for examination by any shareholder for any purpose germane to the meeting.

By Order of the Board of Directors,

/s/ John D. Thedford                                                                              
John D. Thedford
Chairman of the Board, Chief Executive Officer and President

                     __, 2008

TABLE OF CONTENTS

Questions and Answers about the Special Meeting and the Merger			1
Proxy Statement/Prospectus			5
Summary			5
The Companies			5
Structure of the Merger			6
Merger Consideration			6
Value of Merger Consideration – the Deficiency Guaranty and the Premium Reserve			7
Comparative Market Prices and Share Information			8
The EZCORP Shares are Non-Voting			9
Conditions to Closing the Merger			9
Termination			9
Termination Fee			9
Non-Solicitation Agreement			9
Recommendation of the VFS Board of Directors to its Shareholders			10
Risk Factors			10
Opinion of VFS’s Financial Advisor			10
Vote Required by VFS Shareholders			10
Interests of Certain VFS Officers and Directors in the Merger			11
EZCORP Will List the EZCORP Shares on NASDAQ			11
Accounting Treatment of the Merger			12
EZCORP’s Credit Facility			12
Summary Selected Consolidated Financial Data of EZCORP			12
Summary Selected Consolidated Financial Data of VFS			15
Summary Selected Unaudited Pro Forma Condensed Combined Financial Data			18
Comparative Per Share Data			19
Risk Factors			21
Risks Related to the Merger and the Combined Entity			21
Risks Related to EZCORP			23
Risks Related to VFS			24
Cautionary Statement Regarding Forward-Looking Statements			25
The Merger Parties			26
EZCORP			26
Value Financial Services			26
Pawn Lending Activities			27
Merchandise Sales Activities			29
Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Security Ownership of Certain VFS Beneficial Owners and Management			52
The Special Meeting of VFS Shareholders			53
General			53
Date, Time and Place of the VFS Special Meeting			53
Purpose of the VFS Special Meeting			53
Admission to the Special Meeting			54
Record Date and Shareholders Entitled to Vote			54
How You Can Vote			54
Required Vote, Quorum and Abstentions			54
Voting by VFS Directors and Executive Officers			55

Revoking Your Proxy			55
Other Matters			56
Solicitation of Proxies and Expenses			56
Shareholders Sharing an Address			56
Recommendation of the VFS Board of Directors			56
Proposal No. 1 – Conversion of All Series A-1 participating, Series A-2 Participating and Series B Participating Stock into Common Stock of VFS			57
Proposal No. 2 – The Merger			57
Information about the Background and Terms of the Merger			58
Background			58
Recommendations of the EZCORP and VFS Boards of Directors			66
Reasons for the Merger			66
The Stephens Fairness Opinion			69
Conversion of VFS Participating Stock to Common Stock			81
Source of Funds for the Merger			81
Listing of Merger Shares on NASDAQ			82
Accounting Treatment of the Merger			82
Certain Fees in Connection with the Merger			82
Appraisal Rights			82
Failure to Comply with Statutory Requirements			85
The Voting Agreement			85
Interests of VFS’s Officers in the Merger			85
Material United States Federal Income Tax Consequences of the Merger			86
The Merger Agreement			90
Structure of the Merger			91
Merger Consideration			91
Value of Merger Consideration – the Deficiency Guaranty and the Premium Reserve			91
Conditions to Closing the Merger			93
Termination			95
Termination Fee			96
Non-Solicitation Agreement			96
Indemnification			97
No Fractional Shares			97
Exchange of Certificates			97
Conduct Pending Closing			97
Regulatory Approvals			98
Effective Time of the Merger			98
EZCORP’s Credit Facility			98
Comparison of the Rights and Privileges of the VFS Common Stock and the EZCORP Shares			99
Authorized Capital Stock and Number of Directors			99
Shareholder Meetings			99
Notice of Meetings			100
Written Consents of Shareholders			100
Election of Directors			100
Removal of Directors			101
Amendments to the Articles or Certificate of Incorporation and Bylaws			101
Dissenters’ Rights			101
Dividends			102
Preferred Stock			103

Preemptive Rights			103
Limitation of Liability of Directors			103
Indemnification of Directors			104
Anti-Takeover Laws			104
Unaudited Pro Forma Financial Statements			106
Indemnification of Officers and Directors			120
Experts			121
Information Incorporated by Reference / Where You Can Find More Information			122
Financial Statements of Value Financial Services, Inc., and Subsidiary			F-1

Exhibits
A     The Merger Agreement
B     Articles of Amendment to the Amended and Restated Articles of Incorporation of VFS
C     Fairness Opinion of Stephens, Inc.
D     Selected Provisions of the Florida Business Corporation Act (Appraisal Rights)
E     The Voting Agreement
F     Proxy Ballot
EX-8.1
EX-23.1
EX-23.2
EX-23.3

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address some commonly asked questions regarding the special meeting, the merger, the merger agreement, the amendment and the conversion. These questions and answers may not address all questions that may be important to you as a shareholder of Value Financial Services, Inc. (“VFS”). Please refer to the more detailed information contained elsewhere in this proxy statement/prospectus, the exhibits to this proxy statement/prospectus and the documents referred to in and delivered with this proxy statement/prospectus.

Q: WHAT AM I BEING ASKED TO VOTE ON?

A: Holders of outstanding VFS shares are being asked to vote on the following proposals:

1.		To approve: (i) the amendment; and (ii) the conversion, both of which are subject to approval of the merger and the merger agreement and completion of the merger (upon completion of the merger, all accrued and unpaid dividends due to the holders of the series A-2 participating stock will be paid in full);
2.		To approve the merger agreement and the merger; and
3.		To transact any other business that may properly come before the special meeting.

Q: WHAT IS THE DATE, TIME AND PLACE OF THE SPECIAL MEETING?

A: The special meeting of shareholders of VFS will be held at the Memphis Hilton located at 939 Ridge Lake Boulevard, Memphis, TN 38120, on                     , 2008, at 5:00 p.m., local time.

Q: WHO IS SOLICITING MY PROXY?

A: This proxy is being solicited by the board of directors of VFS.

Q: WHAT ARE THE MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?

A: Subject to the discussion under Material United States Federal Income Tax Consequences of the Merger, page 86, the exchange of VFS shares for cash, or for EZCORP Shares and rights under the deficiency guaranty and premium reserve, pursuant to the merger will constitute a taxable transaction. United States holders of VFS shares will recognize gain or loss equal to the difference between (1) any cash received, or the sum of the fair market value of the EZCORP Shares received (measured as of the closing date of the merger) and any payments with respect to deficiency guaranty or premium reserve rights, and (2) the VFS shareholder’s tax basis in the VFS shares surrendered in the merger. See The Merger — Material United States Federal Income Tax Consequences of the Merger, page 86.

Q: WHAT IF I DON’T AGREE WITH VFS’S DETERMINATION OF THE FAIR VALUE OF MY SHARES?

A: Under Florida law, you are entitled to assert your appraisal rights with respect to your shares and demand payment of your estimate of the fair value of your shares, as determined immediately prior to completion of the merger. A court of competent jurisdiction would then make a determination of the fair value of your shares, and VFS would pay you that amount, in cash. In order to perfect your appraisal rights, you must not vote any of your shares in favor of the merger or the merger agreement, and you must fully comply with the provisions in Sections 607.1301-607.1333 of the Florida Statutes, which are summarized in The Merger Agreement – Appraisal Rights, page 82, and the full text of which is set forth in Exhibit D attached to this proxy statement/prospectus.

Q: DO I HAVE APPRAISAL RIGHTS?

A: Yes. As a holder of VFS common stock, you are entitled to appraisal rights under the Florida Business Corporation Act in connection with the merger if you meet certain conditions and follow certain required procedures.   See “The Merger—Appraisal Rights” beginning on page 83 of this proxy statement/prospectus.

Q: WHAT IF THE AMENDMENT OR CONVERSION IS APPROVED AND THE MERGER IS NOT?

A: Neither the amendment nor the conversion will become effective unless the merger agreement and the merger are approved and the merger is completed.

Q: WHAT IS THE EFFECT OF THE AMENDMENT?

A: Currently, if holders of any series of VFS participating stock vote to convert their shares into common stock, the conversion will not become effective until ten days’ notice has been delivered to each affected holder. The amendment removes the ten day notice requirement, such that the conversion will occur upon approval of the conversion as described herein.

Q: WILL I BE PAID ANY OF THE UNPAID DIVIDENDS OWED TO ME?

A: It depends on the class of stock you hold as of the record date. The only shareholders entitled to dividends are the holders of VFS series A-2 participating stock. Such holders will be paid all of their accrued and unpaid dividends upon completion of the merger. As of June 30, 2008, the accrued, unpaid dividends on the series A-2 participating stock totaled approximately $2.5 million. We estimate the accrued dividends on the series A-2 participating stock will equal approximately $3.9 million upon completion of the merger and is approximately $3.4 million as of the date of this proxy statement/prospectus.

Q: HOW DOES THE VFS BOARD OF DIRECTORS RECOMMEND THAT I VOTE?

A: The VFS board of directors recommends that you should vote “FOR” each of the proposals.

Q: HAVE ANY VFS SHAREHOLDERS ALREADY COMMITTED TO VOTE FOR THE PROPOSALS?

A: Yes, three members of the VFS board of directors have agreed to vote their shares in favor of the merger. See The Voting Agreement, page 85.

Q: WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETING?

A: Only shareholders of record as of the close of business on September 16, 2008, the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting. If you hold shares of VFS series A-1 participating stock or VFS series B participating stock, you will have one vote at the special meeting for each share you owned at the close of business on the record date with respect to the merger. If you hold shares of VFS series A-2 participating stock, you will have 4.43 votes at the special meeting for each share you owned at the close of business on the record date with respect to the merger. With respect to the amendment and the conversion, each share of each class of VFS participating stock is entitled to one vote within their respective class.

Q: WHAT DO I NEED TO DO NOW? HOW DO I VOTE?

A: We urge you to read this proxy statement/prospectus, including its exhibits, carefully, and to consider how the conversion, the amendment, the merger agreement and the merger affect you. If you are a shareholder of record, then you can ensure that your shares are voted at the special meeting by submitting your proxy.

Q: HOW ARE VOTES COUNTED?

A: For any proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will not count as votes cast on a proposal, but will count for the purpose of determining whether a quorum is present. As a result, if you “ABSTAIN,” it has the same effect as if you vote “AGAINST” the applicable proposal.

If you sign and return your proxy and do not indicate how you want to vote, your proxy will be voted “FOR” each of the proposals, and in accordance with the judgment of the person(s) named as attorneys in the proxy on any other matters properly brought before the meeting for a vote.

Q: MAY I VOTE IN PERSON?

A: Yes. You may attend the special meeting and vote your shares in person. We urge you to sign, date and return the enclosed proxy card or to vote as soon as possible, even if you plan to attend the special meeting, as it is important that your shares be represented and voted at the special meeting. If you attend the special meeting, you may vote in person as you wish, even

though you have previously returned your proxy card. See Q: May I change my vote after I have mailed my signed proxy card?, below.

Q: WHEN SHOULD I SEND IN MY PROXY CARD?

A: You should send in your proxy card as soon as possible so that your shares will be voted at the special meeting.

Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A: Yes. You may change your vote at any time before the shares reflected on your proxy card are voted at the special meeting. If your shares are registered in your name, you can do this in one of three ways: (1) you can deliver to VFS a written notice stating that you would like to revoke your proxy; the written notice should bear a date later than the proxy card; (2) you can complete, execute and deliver to VFS a new, later-dated proxy card for the same shares, provided the new proxy card is received before the polls close at the special meeting; or (3) you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy. Any written notice of revocation should be delivered to VFS’ corporate secretary at or before the taking of the vote at the special meeting.

Q: SHOULD I SEND IN MY STOCK CERTIFICATE(S) NOW?

A: No. After the merger is completed, you will receive written instructions, including a letter of transmittal, for exchanging your shares for the applicable merger consideration.

Q: WHEN DO THE PARTIES EXPECT THE MERGER TO BE COMPLETED?

A: The parties expect to complete the merger immediately after shareholder approval of the conversion, the amendment, the merger and the merger agreement. It should be noted that if the merger has not been consummated by December 31, 2008, any of the parties to the merger agreement may terminate the merger agreement.

Q: WHEN WILL I RECEIVE THE CONSIDERATION FOR MY SHARES?

A: After the merger is completed, you will receive written instructions, including a letter of transmittal, that explain how to exchange your shares for the applicable consideration. When you properly complete and return the required documentation described in the written instructions, you will promptly receive from the paying agent a payment of the cash portion of the consideration for your shares.

Q: WHO CAN HELP ANSWER MY OTHER QUESTIONS?

A: If you have any questions please call John Thedford at (407) 339-0064 or VFS’s legal counsel, Jeffery Bahnsen, Esq., at (561) 955-7600.

PROXY STATEMENT/PROSPECTUS

SUMMARY

     The following is a summary of the information contained elsewhere in this proxy statement/prospectus. This summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the other documents to which it refers. In particular, you should read the Exhibits attached to this proxy statement/prospectus, including the merger agreement which is attached as Exhibit A and is incorporated by reference into this proxy statement/prospectus. In addition, EZCORP incorporates by reference into this proxy statement/prospectus important business and financial information about EZCORP. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled Where You Can Find More Information, page 122.

The Companies

EZCORP, Inc.
1901 Capital Parkway
Austin, TX 78746
(512) 314-3400
http://www.ezcorp.com

     EZCORP is primarily a lender or provider of credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. In 294 U.S. EZPAWN and 30 Mexico Empeño Fácil locations open on June 30, 2008, EZCORP offers non-recourse loans collateralized by tangible personal property, commonly known as pawn loans. At these locations, EZCORP also sells merchandise, primarily collateral forfeited from its pawn lending operations, to consumers looking for good value. In 461 EZMONEY locations and 71 EZPAWN locations open on June 30, 2008, EZCORP offers short-term non-collateralized loans, often referred to as payday loans, or fee based credit services to customers seeking loans.

Value Financial Services, Inc.
1063 Maitland Center Commons Blvd.
Suite 200
Maitland, FL 32751
www.valuepawnandjewelry.com

     VFS operates 60 stores in Florida, making it the second largest pawn lender in the state, based on information provided by the National Pawnbrokers Association. VFS also operates seven stores in Georgia and Tennessee, each of which has characteristics that VFS believes are generally favorable to the provision of pawn loans.

Value Merger Sub, Inc.
1901 Capital Parkway
Austin, TX 78746
(512) 314-3400

     Merger Sub is a wholly-owned subsidiary of EZCORP that was incorporated in Florida on June 5, 2008. Merger Sub does not engage in any operations and exists solely to facilitate the merger.

Structure of the Merger (See Page 91)

     Under the terms of the proposed merger, Merger Sub will be merged with and into VFS. The separate corporate existence of Merger Sub will cease, and VFS will continue as the surviving corporation and will become a wholly-owned subsidiary of EZCORP upon completion of the merger. The merger agreement dated September 16, 2008, by and among EZCORP, VFS and Merger Sub is attached as Exhibit A to this proxy statement/prospectus.

     The completion of the merger is scheduled to take place immediately after the approval of the (1) amendment of VFS’s articles of incorporation to amend the effective time of a mandatory conversion of certain participating stock to occur upon approval of such mandatory conversion with no requirement of prior written notice, (2) conversion of all shares of VFS participating stock into VFS common stock, and (3) merger agreement and the merger by a majority of the VFS shareholders and when each of the other conditions of the merger agreement have been satisfied or waived. It should be noted that if the merger has not been consummated by December 31, 2008, any of the parties to the merger agreement may terminate the merger agreement.

Merger Consideration (See Page 91)

     VFS shareholders will be entitled to receive, upon the effectiveness of the merger and at such shareholder’s election, either (1) 0.75 shares of EZCORP Class A Non-voting Common Stock (the “EZCORP Shares”), rounded up to the nearest whole EZCORP Share, or (2) $11.00 cash for each share of VFS common stock owned by such shareholder at the effective time of the merger. The cash consideration is limited to 20% or less of the issued and outstanding VFS common stock, assuming for all purposes the exercise or conversion into common stock of all their outstanding capital stock other than common stock and exercise of all options, warrants or other conversion rights or rights to acquire VFS’s common stock (the “VFS Common Stock”), and will be prorated if more VFS shareholders than the maximum decide to elect to receive the cash consideration.

     The components of the merger consideration were developed by EZCORP to satisfy the following concerns of EZCORP and VFS, and the needs of VFS shareholders as EZCORP perceived them:

	•		EZCORP desired, to the extent acceptable to VFS shareholders, to issue EZCORP Shares as consideration in the merger.
	•		EZCORP realized that if it issued stock instead of cash as consideration, the time involved to complete the merger would be longer because of the necessity for SEC registration to issue the stock.
	•		EZCORP believed that use of EZCORP stock as consideration would be acceptable to more VFS shareholders if EZCORP provided some sort of price protection against market swings in the EZCORP stock price.
	•		EZCORP wanted to offer an incentive for taking EZCORP stock which would also improve the price per share and thereby discourage competing offers, or at least make EZCORP’s offer look more attractive to the VFS shareholders.

•

EZCORP believed that several of the smaller VFS shareholders wanted cash and not stock.

     These considerations led EZCORP to offer a limited option to receive either EZCORP stock or cash in the merger and also to offer the deficiency guaranty and premium reserve described below. If you sell your EZCORP Shares in open market sales on NASDAQ within 125 days after closing of the merger, you may be entitled to additional payments described in the next section.

Value of Merger Consideration – the Deficiency Guaranty and the Premium Reserve (See Page 91)

     EZCORP has agreed to provide VFS shareholders some price protections if they sell their EZCORP Shares received in the merger within 125 days after the closing of the merger. Pursuant to such guaranty, EZCORP will pay a selling shareholder the difference between $14.67 per share and the gross price per share the selling shareholder actually receives, if less than $14.67 per share, up to a maximum of $4.01 per share.

     If you sell your EZCORP Shares at $14.67 per share, you will receive the equivalent of $11.00 per share of VFS Common Stock ($14.67 x 0.75 EZCORP Shares = $11.00 per VFS share). If you sell your EZCORP Shares at less than $10.66 per share within 125 days after the closing of the merger, the total amount of consideration, including the deficiency guaranty, will be less than $11.00 per share of VFS Common Stock, because the deficiency guaranty will not make up the entire difference between the sale price of your EZCORP Shares and the $11.00 cash per share merger consideration. Two examples of the deficiency guaranty are set forth below:

		Deficiency				Total Amount				Equivalent
Sales Price of		Guaranty				Received for				Value per
EZCORP Share		Amount				EZCORP Share				VFS Share
$12.00		$	2.67			$	14.67			$	11.00
$10.00		$	4.01			$	14.01			$	10.51

     In the second example above, the equivalent price per VFS share (when multiplied by the 0.75 exchange rate of EZCORP Shares per each share of VFS Common Stock) equals less than the $11.00 agreed value of VFS shares for purposes of the merger.

     If and to the extent that a VFS shareholder does not sell their EZCORP Shares within 125 days after the closing of the merger, they will not be entitled to any deficiency guaranty payment.

     In addition to the deficiency guaranty, EZCORP has agreed to provide VFS shareholders who decide to sell their EZCORP Shares within 125 days after the closing of the merger a premium for sales of their EZCORP Shares for more than $14.67 per share. For VFS

shareholders who sell their EZCORP Shares for more than $14.67 per share and, after a five day waiting period to facilitate share distribution, within the (1) first 35 day period from the date of the closing of the merger, EZCORP will pay $1.33 per share, (2) second 30 day period from the date of the closing of the merger, $1.00 per share, (3) third 30 day period from the date of the closing of the merger, $0.67 per share, and (4) fourth 30 day period from the date of the closing of the merger, $0.33 per share.

For example, a VFS shareholder who sells his stock for $15.00 per share within 125 days after the closing of the merger would receive the following: in the following cases

Days						Premium				Total Amount				Equivalent
After		Sales Price of				Reserve				Received for				Value per
Closing		EZCORP Share				Amount				EZCORP Share				VFS Share
20		$	15.00			$	1.33			$	16.33			$	12.25
45		$	15.00			$	1.00			$	16.00			$	12.00
90		$	15.00			$	0.67			$	15.67			$	11.75
120		$	15.00			$	0.33			$	15.33			$	11.50

     If and to the extent that a VFS shareholder does not sell their EZCORP Shares within 125 days after the closing of the merger, or sell the shares for less than $14.67 per share, they will not be entitled to any premium reserve payment.

EZCORP will promptly pay the full amount of any premium reserve payments that become due. The maximum amount EZCORP will be required to pay is $6,646,527, if all VFS shareholders elect to receive EZCORP Shares, and all of these shares are sold for more than $14.67 per share within 35 days after closing.

Comparative Market Prices and Share Information

     EZCORP Class A Non-voting Common Stock is quoted on the NASDAQ Global Select Market under the symbol “EZPW.” VFS, as a private company, does not have publicly traded stock. EZCORP offered to pay $11.00 per share as merger consideration. The following table shows the closing sale price of EZCORP Class A Non-voting Common Stock as reported on the NASDAQ Global Select Market on September 16, 2008, the last trading day before we announced the merger, and on [ ], 2008, the last practicable trading day before distribution of this document. This table also shows the implied value of the EZCORP Shares to be used as merger consideration for each share of VFS common stock, which we calculated by multiplying the closing price of EZCORP Shares on those dates by the exchange ratio of 0.75. This implied value excludes the effect of any deficiency guaranty or premium reserve payment, as described above, as we cannot predict whether VFS shareholders will sell their EZCORP Shares during the period covered by the deficiency guarantee and premium reserve or the price at which VFS shareholders would sell their EZCORP Shares.

		EZCORP Class A								Implied Value of
		Non-voting								One Share of VFS
		Common Stock				VFS Common Stock				Common Stock
At September 16, 2008		$	16.35			$	11.00			$	12.2625
At [ ], 2008		$	[ ]			$	[ ]			$	[ ]

The market price of EZCORP Class A Non-voting Common Stock will fluctuate prior to the merger. VFS shareholders are urged to obtain current market quotations for EZCORP’s shares prior to making any decision with respect to the merger.

The EZCORP Shares are Non-Voting (See Page 99)

     The EZCORP Shares to be issued in the merger do not have voting rights. Only the Series B Voting Common Stock of EZCORP has the right to vote on any matter not required by the Delaware General Corporation Law to be voted upon separately by each class of equity securities. As such, VFS shareholders who receive EZCORP Shares in the merger will not have the right to vote for the election of directors or for other matters generally requiring a vote of common stockholders of a corporation. See Comparison of the Rights and Privileges of the VFS Common Stock and the EZCORP Shares, page 99.

Conditions to Closing the Merger (See Page 93)

     The respective obligations of EZCORP, VFS and Merger Sub to complete the merger are subject to the satisfaction of a number of conditions.

Termination (See Page 95)

     The merger agreement may be terminated by EZCORP, VFS or Merger Sub under certain circumstances at any time prior to the completion of the merger, whether before or after adoption of the merger agreement by VFS shareholders.

Termination Fee (See Page 96)

     A termination fee of $5 million may be payable by VFS to EZCORP upon the termination of the merger agreement under certain circumstances, including the failure of the VFS shareholders to approve the merger.

Non-Solicitation Agreement (See Page 96)

     VFS has agreed that it will not solicit or encourage, directly or indirectly, any proposal or offer or engage in any negotiations with respect to any Acquisition Proposal, as such term is defined in the merger agreement. VFS has also agreed that it will immediately cease and cause to be terminated any existing negotiations with any third parties with respect to any Acquisition Proposal.

     VFS has agreed to promptly notify EZCORP if it receives any other acquisition proposals or acquisition inquiries and the material terms thereof.

Recommendation of the VFS Board of Directors to its Shareholders (See Pages 56 and 66)

     The VFS board of directors has unanimously determined that the merger agreement and the merger are advisable and fair to, and in the best interests of, VFS and its shareholders, and unanimously approved the merger and the merger agreement. The VFS board of directors unanimously recommends that the VFS shareholders vote “FOR” each of the proposals. See Reasons for the Merger, page 66. You should read this section.

Risk Factors (See Page 21)

     VFS shareholders should carefully consider the risk factors listed in this proxy statement/prospectus in evaluating whether to vote in favor of the proposal to adopt the merger agreement.

Opinion of VFS’s Financial Advisor (See Page 69)

     VFS’s financial advisor, Stephens, Inc., (“Stephens”), delivered its opinion to the board of directors of VFS to the effect that, as of September 10, 2008, and based upon and subject to the various considerations described in its written opinion, the consideration to be received by the holders of VFS common stock pursuant to the merger agreement was fair, from a financial point of view, to the holders of such common stock.

     The full text of the written opinion of Stephens, which sets forth the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by Stephens in rendering its opinion, is attached as Exhibit C to this proxy statement/prospectus. VFS shareholders are urged to, and should, read the opinion carefully and in its entirety. Stephens provided its opinion for the use and benefit of the board of directors of VFS in connection with its consideration of the merger. The Stephens opinion addresses only the fairness, from a financial point of view, of the consideration to be received by the VFS shareholders as of September 10, 2008, the date of the Stephens opinion. Although the merger agreement was revised to provide each shareholder with the right to select the category of merger consideration to be received (e.g., cash or stock), the VFS board did not request Stephens to provide an updated fairness opinion because Stephens had only opined as to the fairness, from a financial point of view, of the merger consideration of $11.00 per share and not as to the category of consideration to be received. Accordingly, because the merger consideration of $11.00 per share remained the same and Stephens had already opined as to its fairness, from a financial point of view, the VFS board did not believe that an updated fairness opinion would have provided it with any new or meaningful information. The Stephens opinion does not address the merits of the underlying decision by VFS to engage in the merger and does not constitute a recommendation as to how any holder of VFS Common Stock should vote on the proposed merger or any other matter.

Vote Required by VFS Shareholders (See Page 54)

     The affirmative vote of a majority of the shares of each class of VFS stock, voting separately as a class, is required to approve the amendment and the conversion. The affirmative

vote of a majority of the shares of the series A-1 and B participating stock voting together as a class and the series A-2 participating stock voting separately as a class is required to approve the merger and merger agreement.

     As of the record date for the special meeting, VFS’s directors, executive officers and their affiliates, as a group, beneficially owned and were entitled to vote an aggregate of approximately 57% of the outstanding series A-1, 8% of the outstanding series A-2 and 42% of the outstanding series B participating stock.

     Pursuant to a voting agreement entered into by and among EZCORP, Merger Sub and three VFS directors who are shareholders of VFS, these VFS shareholders have agreed to vote their shares of VFS Common Stock in favor of adoption of the merger agreement. As of the record date for the VFS special meeting, VFS shareholders who are a party to the Voting Agreement collectively owned an aggregate of approximately 47% of the outstanding series A-1, 8% of the outstanding series A-2 and 37% of the outstanding series B participating stock.

Interests of Certain VFS Officers and Directors in the Merger (See Page 86)

     When considering the recommendation by the VFS board of directors, you should be aware that John Thedford, the Chairman of the board, CEO and President of VFS, has interests in the merger that are different from, or in addition to, those of other VFS shareholders. Mr. Thedford will be released from his current employment obligations to VFS upon consummation of the merger. Mr. Thedford will then become an employee of Texas EZPAWN, L.P., a subsidiary of EZCORP and his title will be President of EZPAWN Worldwide. Mr. Thedford will be entitled to the following as the President of EZPAWN Worldwide:

(1) A base salary of $524,000 per year, with consideration for yearly merit increases, which are not guaranteed;

(2) An unguaranteed annual bonus whereby Mr. Thedford may not earn any bonus or he may earn up to 150% of his base salary;

(3) Consideration for (no guaranty) stock compensation based on performance; and

(4) Severance payment equal to one year’s salary if terminated without cause.

     In comparison, Mr. Thedford, under his current employment agreement with VFS, is entitled to a base salary of $425,000 per year and is eligible to earn a yearly bonus of 100% of his base salary. Mr. Thedford is not, however, eligible to receive any performance based equity compensation under his current employment agreement with VFS.

EZCORP Will List the EZCORP Shares on NASDAQ (See Page 82)

     EZCORP has agreed to use its reasonable best efforts to cause the EZCORP Shares to be issued to VFS shareholders pursuant to the merger agreement to be authorized for listing on the NASDAQ Global Select Market, subject to notice of issuance. The listing of the shares on the NASDAQ Global Select Market (subject to notice of issuance) is a condition to VFS’s obligation to complete the merger.

Accounting Treatment of the Merger (See Page 82)

     The merger will be accounted for as a purchase transaction for EZCORP, as the acquirer, for financial reporting purposes under U.S. generally accepted accounting principles.

EZCORP’s Credit Facility (See Page 98)

     EZCORP has secured an amendment to its existing credit facility with a banking syndicate led by Wells Fargo Bank, N.A., as agent and issuing bank. This amendment to EZCORP’s credit facility will provide for, among other things, (1) an $80 million revolving credit facility that EZCORP may request to be increased to $110 million, and (2) a $40 million term loan.

     The credit facility amendments and related loan documents have been placed in escrow pending the earlier of (1) the closing of the merger or (2) December 31, 2008.

SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA OF EZCORP

     The tables below present summary selected consolidated financial data of EZCORP prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The following selected financial data should be read in conjunction with EZCORP’s consolidated financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information in EZCORP’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007 as filed with the SEC on December 14, 2007, which is incorporated by reference into this proxy statement/prospectus. See Where You Can Find More Information, page 122.

The consolidated statement of operations data set forth below for the nine months ended June 30, 2008 and June 30, 2007 and the consolidated balance sheet data as of June 30, 2008 and June 30, 2007, are derived from, and are qualified by reference to the unaudited condensed consolidated financial statements of EZCORP and the related notes thereto that are incorporated by reference into this proxy statement/prospectus. The consolidated statement of operations data set forth below for the fiscal year ended September 30, 2007, September 30, 2006 and September 30, 2005, and the consolidated balance sheet data as of September 30, 2007 and September 30, 2006, are derived from, and qualified by reference to, the audited financial statements of EZCORP and the related notes thereto that are incorporated by reference into this proxy statement/prospectus. The consolidated statement of operations data for the fiscal year ended September 30, 2004 and September 30, 2003, and the consolidated balance sheet data as of September 30, 2005, September 30, 2004 and September 30, 2003, are derived from audited financial statements not included in, or incorporated by reference into, this proxy statement/prospectus.

Selected Financial Data – EZCORP

		Fiscal Years Ended September 30,
		2003				2004				2005				2006				2007
		(Amounts in thousands, except per share and store figures)
Operating Data:
Sales		$	134,591			$	143,472			$	148,410			$	177,424			$	192,987
Pawn service charges			58,175				59,090				62,274				65,325				73,551
Signature loan fees			12,538				23,874				42,200				71,840				104,347
Other			1,045				1,361				1,275				1,263				1,330
Total revenues			206,349				227,797				254,159				315,852				372,215
Cost of goods sold			86,100				88,202				90,678				106,873				118,007
Net revenues			120,249				139,595				163,481				208,979				254,208
Store operating expenses			81,822				87,898				97,079				111,738				128,602
Signature loan bad debt			3,551				8,067				13,000				17,897				28,508
Corporate administrative expenses			17,008				21,845				23,067				27,749				31,749
Depreciation and amortization			8,775				7,512				8,104				8,610				9,812
Interest expense (income), net			2,006				1,528				1,275				(79	)			(1,373	)
Equity in net income of unconsolidated affiliate			(1,412	)			(1,739	)			(2,173	)			(2,433	)			(2,945	)
(Gain) loss on sale of assets			170				3				79				(7	)			(72	)
Impairment of investment			1,100				—				—				—				—
Income before income taxes and cumulative effect of adopting a new accounting principle			7,229				14,481				23,050				45,504				59,927
Income tax expense (benefit)			(1,170	)			5,358				8,298				16,245				22,053
Income before cumulative effect of adopting a new accounting principle			8,399				9,123				14,752				29,259				37,874
Cumulative effect of adopting a new accounting principle, net of tax			(8,037	)			—				—				—				—
Net income		$	362			$	9,123			$	14,752			$	29,259			$	37,874
Earnings per common share, diluted		$	0.01			$	0.23			$	0.36			$	0.69			$	0.88
Cash dividends per common share		$	—			$	—			$	—			$	—			$	—
Weighted average common shares and share equivalents, diluted			37,656				39,366				40,722				42,264				43,230
Stores operated at end of period			284				405				514				614				731

		September 30,
		2003				2004				2005				2006				2007
		(in thousands)
Balance Sheet Data:
Pawn loans		$	47,955			$	49,078			$	52,864			$	50,304			$	60,742
Payday loans			3,630				7,292				1,634				2,443				4,814
Inventory			29,755				30,636				30,293				35,616				37,942
Working capital			90,885				93,062				92,954				117,539				124,871
Total assets			153,690				164,322				165,448				197,858				251,186
Long-term debt			31,000				25,000				7,000				—				—
Stockholders’ equity			105,478				116,729				133,543				170,140				215,925
Book value per share		$	2.88			$	3.15			$	3.46			$	4.20			$	5.23

		Nine Months Ended June 30,
		2007				2008
		(Amounts in thousands, except per share and store figures)
Operating Data:
Sales		$	141,688			$	170,472
Pawn service charges			51,496				67,384
Signature loan fees			74,132				94,917
Other			1,007				1,228
Total revenues			268,323				334,001
Cost of goods sold			85,618				101,732
Net revenues			182,705				232,269
Store operating expenses			94,087				113,185
Signature loan bad debt			19,086				24,847
Corporate administrative expenses			23,528				29,541
Depreciation and amortization			7,194				9,027
Interest expense (income), net			(1,285	)			(131	)
Equity in net income of unconsolidated affiliate			(2,185	)			(3,162	)
(Gain) loss on sale of assets			(131	)			527
Other			—				11
Income before income taxes			42,411				58,424
Income tax expense			15,692				22,026
Net income		$	26,719			$	36,398
Earnings per common share, diluted		$	0.62			$	0.84
Cash dividends per common share		$	—			$	—
Weighted average common shares and share equivalents, diluted			43,393				43,269
Stores operated at end of period			688				785

		June 30,
		2007				2008
		(in thousands)
Balance Sheet Data:
Pawn loans		$	58,053			$	68,022
Payday loans			4,514				6,598
Inventory			33,641				39,444
Working capital			129,223				147,732
Total assets			231,364				285,999
Long-term debt			—				—
Stockholders’ equity			203,586				256,716
Book value per share		$	4.93			$	6.19

SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA OF VFS

     The tables below present summary selected consolidated financial data of VFS prepared in accordance with U.S. generally accepted accounting principles, or GAAP. You should read the information set forth below in conjunction with the selected consolidated financial data, the audited consolidated financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.

     The summary selected consolidated operating data for the six months ended June 30, 2008 and June 30, 2007, and the summary selected consolidated balance sheet data as of June 30, 2008 are derived from the unaudited consolidated financial statements of VFS and the related notes thereto that are contained elsewhere in this proxy statement/prospectus. The summary selected consolidated operating data for the fiscal years ended December 31, 2007, 2006 and 2005 and the summary selected consolidated balance sheet data as of December 31, 2007, 2006 and 2005 are derived from the audited consolidated financial statements of VFS and the related notes thereto that are contained elsewhere in this proxy statement/prospectus. The summary selected consolidated balance sheet data as of June 30, 2007 are derived from the unaudited consolidated financial statements of VFS not contained in this proxy statement/prospectus but that were prepared on the same basis as those contained elsewhere in this proxy statement/prospectus. The summary selected consolidated statement of income data for the fiscal years ended December 31, 2004 and 2003 and the summary selected balance sheet data as of December 31, 2004 and 2003 are derived from the audited consolidated financial statements of VFS not contained in this proxy statement/prospectus but that were prepared on the same basis as those contained elsewhere in this proxy statement/prospectus.

Selected Financial Data – VFS

		Fiscal Years Ended December 31,
		2003				2004				2005				2006				2007
		(Amounts in thousands, except per share and store figures)
Operating Data:
Sales		$	34,299			$	39,802			$	47,378			$	62,348			$	76,514
Pawn service charges			17,361				18,611				20,786				24,090				28,394
Other			943				1,150				1,085				1,376				1,566
Total revenues			52,603				59,563				69,249				87,814				106,474
Cost of goods sold			22,883				25,120				29,289				39,339				47,834
Net revenues			29,720				34,443				39,960				48,475				58,640
Store operating expenses (excluding depreciation)			19,240				20,879				23,822				28,865				34,265
Corporate administrative expenses			4,623				5,211				6,499				7,815				21,234
Depreciation			1,557				1,406				1,435				1,674				1,816
Interest expense (income), net			1,516				1,264				1,297				1,135				2,544
Loss on sale of assets			—				162				60				108				248
Income (loss) before income taxes			2,784				5,521				6,847				8,878				(1,467	)
Income tax expense (benefit)			(1,434	)			(12,354	)			2,593				3,448				(486	)
Net income (loss)		$	4,218			$	17,875			$	4,254			$	5,430			$	(981	)
Earnings per common share, basic*			n/a				n/a				n/a				n/a				n/a
Earnings (loss) per common share, diluted		$	0.68			$	2.90			$	0.69			$	0.88			$	(0.15	)
Cash dividends per common share **			n/a				n/a				n/a				n/a				n/a
Cumulative participating stock dividends		$	2,975			$	3,570			$	4,112			$	4,792			$	3,834
Weighted average common shares and share equivalents, basic*			n/a				n/a				n/a				n/a				n/a
Weighted average common shares and share equivalents, diluted			6,161				6,161				6,161				6,161				6,413

		December 31,
		2003				2004				2005				2006				2007
		(in thousands)
Balance Sheet Data:
Cash		$	771			$	727			$	1,646			$	760			$	795
Total assets			37,192				47,628				51,663				51,849				57,175
Total debt			23,200				16,483				17,517				11,711				31,188
Total shareholders’ equity			9,455				27,330				30,832				36,260				18,582
Book value per share		$	1.75			$	5.06			$	5.71			$	6.71			$	3.16

		Six Months Ended June 30,
		2007				2008
		(Amounts in thousands, except per share and store figures)
Operating Data:
Sales		$	33,376			$	42,249
Pawn service charges			13,660				15,370
Other			718				712
Total revenues			47,754				58,331
Cost of goods sold			20,701				25,335
Net revenues			27,053				32,996
Store operating expenses (excluding depreciation)			16,536				19,732
Corporate administrative expenses			13,130				5,767
Depreciation			847				973
Interest expense (income), net			432				1,000
Loss on sale of assets			117				10
Income (loss) before income taxes			(4,009	)			5,514
Income tax expense (benefit)			(1,557	)			2,188
Net income (loss)		$	(2,452	)		$	3,326
Earnings (loss) per common share, basic*			n/a				n/a
Earnings (loss) per common share, diluted		$	(0.40	)		$	0.50
Cash dividends per common share **			n/a				n/a
Cumulative participating stock dividends		$	2,612			$	1,256
Weighted average common shares and share equivalents, basic*			n/a				n/a
Weighted average common shares and share equivalents, diluted			6,176				6,646

		June 30,
		2007				2008
		(in thousands)
Balance Sheet Data:
Cash		$	3,082			$	762
Total assets			60,728				57,665
Total debt			37,344				29,700
Total shareholders’ equity			17,214				21,907
Book value per share		$	2.92			$	3.72

SUMMARY SELECTED UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL DATA

     The following table presents summary unaudited pro forma condensed combined financial data which reflects the merger. The summary unaudited pro forma condensed combined financial data are derived from and should be read in conjunction with the unaudited pro forma condensed combined financial statements and related notes thereto included in this proxy statement/prospectus. See Unaudited Pro Forma Financial Statements, page 106, and Unaudited Pro Forma Financial Statements — Notes to Unaudited Pro Forma Condensed Combined Financial Statements, page 112.

						Nine Months				Nine Months
		Year Ended				Ended				Ended
		September 30, 2007				June 30, 2007				June 30, 2008
		(Amounts in thousands, except per share and store figures)
Operating Data:
Sales		$	265,014			$	195,074			$	237,290
Pawn service charges			100,968				71,499				90,098
Signature loan fees			104,347				74,132				94,917
Other			2,841				2,136				2,405
Total revenues			473,170				342,841				424,710
Cost of goods sold			163,736				119,454				142,306
Net revenues			309,434				223,387				282,404
Store operating expenses			160,997				117,873				142,326
Signature loan bad debt			28,508				19,086				24,847
Corporate administrative expenses			49,401				38,624				39,472
Depreciation and amortization			11,584				8,520				10,483
Interest expense (income), net			1,164				617				1,772
Equity in net income of unconsolidated affiliate			(2,945	)			(2,185	)			(3,162	)
(Gain) loss on sale of assets			171				(5	)			588
Other			—				—				11
Income before income taxes			60,554				40,857				66,067
Income tax expense (benefit)			22,299				15,074				25,023
Net income		$	38,255			$	25,783			$	41,044
Earnings per common share, diluted		$	0.81			$	0.54			$	0.87
Cash dividends per common share		$	—			$	—			$	—
Weighted average common shares and share equivalents, diluted			47,218				47,381				47,257
Stores operated at end of period			793				750				850

		June 30, 2008
		(in thousands)
Balance Sheet Data:
Pawn loans		$	86,039
Payday loans			6,598
Inventory			52,721
Working capital			153,099
Total assets			383,297
Long-term debt (current and non-current)			27,752
Stockholders’ equity			320,205
Book value per share		$	7.05

COMPARATIVE PER SHARE DATA

     The following table presents for EZCORP Class A Non-voting Common Stock and VFS participating stock, assuming conversion to common stock, certain historical, pro forma and pro forma-equivalent per share financial information. In accordance with requirements of the SEC, the pro forma and pro forma-equivalent per share information gives effect to the merger as if the merger had been effective on the dates presented, in the case of the book value data, and as if the merger had become effective on October 1, 2006, the beginning of the first period presented, in the case of the net income and dividends paid data. The unaudited pro forma data in the table assumes that the merger is accounted for using the purchase method of accounting and represents a current preliminary estimate based on available information of the combined company’s results of operations. The pro forma financial adjustments record the assets and liabilities of VFS at their preliminary estimated fair values and are subject to adjustment as additional information becomes available and as additional analyses are performed. See “Unaudited Pro Forma Condensed Combined Financial Information” on page 106. The information in the following table is based on, and should be read together with, the historical financial information that we have presented in our prior filings with the SEC.

     We anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and revenue enhancement opportunities. The unaudited pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of possible business model changes as a result of current market conditions which may impact revenues, expense efficiencies and other factors. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during these periods nor is it indicative of the results of operations in future periods or the future financial position of the combined company. The Comparative Per Share Data for the nine months ended June 30, 2008 and the year ended September 30, 2007 combines the historical income per share data of EZCORP and VFS giving effect to the merger as if the merger had become effective on October 1, 2006, using the purchase method of accounting. The pro forma adjustments are based upon available information and certain assumptions that EZCORP management believes are reasonable. Upon completion of the merger, the operating results of VFS will be reflected in the consolidated financial statements of EZCORP on a prospective basis.

		Comparative Per Share Data (1)
										Pro Forma				Per Equivalent
		EZCORP				VFS				Combined (2)				VFS Share (3)
Income (loss) from continuing operations - diluted:
For the year ended September 30, 2007		$	0.88				N/A			$	0.81			$	0.61
For the year ended December 31, 2007			N/A			$	(0.15	)			N/A				N/A
For the nine months ended June 30, 2008		$	0.84				N/A			$	0.87			$	0.65
For the six months ended June 30, 2008			N/A			$	0.50				N/A				N/A
Dividends paid per common share (4):
For the year ended September 30, 2007		$	—			$	—			$	—			$	—
For the nine months ended June 30, 2008		$	—			$	—			$	—			$	—
Book value (5):
As of September 30, 2007		$	5.23			$	3.16				N/M				N/M
As of June 30, 2008		$	6.19			$	3.72			$	7.05			$	5.29

RISK FACTORS

     You should carefully consider the following risks before deciding whether to vote in favor of the merger proposal. In addition, you should read and consider the risks associated with the business of EZCORP, which risks can be found in the documents incorporated by reference into this proxy statement/prospectus, because these risks will also affect the combined company.

Risks Related to the Merger and the Combined Entity

The integration of VFS with EZCORP’s business after the merger may not be successful or anticipated benefits from the merger may not be realized.

     After completion of the merger, EZCORP will have significantly larger operations than EZCORP did prior to the merger. EZCORP’s ability to realize the benefits of the merger will depend in part on the timely integration of VFS’s organization, operations, procedures, policies and technologies with EZCORP, as well as the harmonization of differences in VFS’s business culture and practices with EZCORP. EZCORP’s management will be required to devote a significant amount of time and attention to integrating VFS’s business with EZCORP. There is a significant degree of difficulty and management involvement inherent in that process. These difficulties include the following:

	•		integrating the operations of VFS’s business with EZCORP’s business while carrying on the ongoing operations of each business;
	•		diversion of management’s attention from the management of daily operations to the integration of VFS with EZCORP;
	•		managing a significantly larger company than before completion of the merger;
	•		realizing economies of scale and eliminating duplicative overheads;
	•		the possibility of faulty assumptions underlying EZCORP’s expectations regarding the integration process;
	•		coordinating businesses located in different geographic regions;
	•		integrating VFS’s business culture and practices with EZCORP, which may prove to be incompatible;
	•		attracting and retaining the personnel associated with VFS’s business following the merger;
	•		creating and instituting uniform standards, controls, procedures, policies and information systems and minimizing the costs associated with such matters; and
	•		integrating information, purchasing, accounting, finance, sales, billing, payroll and regulatory compliance systems.

     There is no assurance that VFS will be successfully or cost-effectively integrated into EZCORP. The process of integrating VFS into EZCORP’s operations may cause an interruption of, or loss of momentum in, the activities of EZCORP’s business. If EZCORP’s management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, the business of the combined companies could suffer and the results of its operations and financial condition may be harmed.

     All of the risks associated with the integration process could be exacerbated by the fact that EZCORP may not have a sufficient number of employees with the requisite expertise to integrate the businesses or to operate the combined business after the merger. If the combined companies do not hire or retain employees with the requisite skills and knowledge to run its business – including the acquired VFS business – after the merger, it may have a material adverse effect on the combined companies.

     EZCORP cannot assure you that it will realize the anticipated benefits and value of the merger or successfully integrate VFS with EZCORP’s existing operations. Even if EZCORP is able to successfully combine VFS’s business operations with EZCORP’s, it may not be possible to realize the full benefits and value that are currently expected to result from the merger, or realize these benefits and value within the time frame that is currently expected. For example, the elimination of duplicative costs may not be possible or may take longer than anticipated, or the benefits and value gained from the merger may be offset by costs incurred or delays in integrating the companies. If the combined companies fail to realize anticipated cost savings, synergies or revenue enhancements EZCORP anticipates from the merger, its financial results and results of operations may be adversely affected.

     EZCORP has not engaged in any prior mergers and has not made any other acquisitions of companies or assets as large as VFS. EZCORP has engaged in other acquisitions in the range of $20 million and less. It has not experienced significant operating problems with these acquisitions.

A change in the business climate may cause the actual benefits and value of the merger to differ from the anticipated benefits and value of the merger.

     A change in the business climate surrounding the business after the merger may affect the combined companies’ customer activities and actions. This could cause its financial results and results of operations to be adversely affected. This may also cause the actual benefits and value of the merger to differ from the benefits and value anticipated from the merger.

VFS shareholders may receive merger consideration that is inconsistent with their elections.

     Although VFS shareholders will be able to elect to receive cash or EZCORP Shares for their VFS Common Stock, the merger agreement provides that the election to receive cash is limited to 20% of the total VFS Common Stock. Because of this limitation, if you elect to receive cash, your election may be re-allocated if the total cash elections exceed approximately 20% of the VFS Common Stock.

Risks Related to EZCORP

EZCORP will incur significant costs and expenses associated with the merger.

     EZCORP expects to incur significant costs and expenses associated with the merger, which include but are not limited to transaction fees (approximately $0.6 million), professional service fees (approximately $0.5 million) and regulatory filing fees (approximately $0.1 million). EZCORP also believes it may incur charges to operations, which are not currently reasonably estimable, in the quarter in which the merger is completed or the following quarters, to reflect costs associated with integrating VFS into EZCORP. There can be no assurance that EZCORP will not incur additional material charges in subsequent quarters to reflect additional costs associated with the merger and the integration of VFS into EZCORP.

Issuance of the EZCORP Shares in the merger could have a dilutive effect and cause EZCORP’s earnings per share to decrease.

     In the merger, EZCORP will issue a total of nearly 5 million shares of its Class A Non-voting Common Stock if all VFS shareholders elect to receive EZCORP Shares. This will increase the number of issued and outstanding shares of EZCORP Class A Non-voting Common Stock by approximately 13%. If EZCORP is unable to realize sufficient value from the acquisition of VFS and its assets in the merger, the issuance of these shares would decrease the net asset value per share of EZCORP stock, thereby decreasing the value of those shares in the hands of EZCORP shareholders and possibly causing EZCORP’s stock market price to drop.

The Florida Business Corporation Act gives shareholders the right to have the value of their stock appraised by a Florida court, which could raise the cost of acquiring the VFS stock.

     The Florida Business Corporation Act provides that shareholders who do not vote in favor of the merger, assert their right to be paid “fair value” for their shares and do not accept EZCORP’s estimate of the fair value of VFS shares after the merger, can seek to have a Florida state court review the transaction and award them fair value for their shares. If a significant number of minority shareholders assert these appraisal rights, a Florida court might disagree with EZCORP’s valuation and award the shareholders a significantly higher price than the $11.00 per share EZCORP intends to pay. See The Merger Agreement – Appraisal Rights, page 82.

The Guaranty Fund and the Premium Reserve may increase the incentive of the VFS shareholders to sell the EZCORP Shares they obtain in the merger and drive down the price of EZCORP stock.

     To induce VFS’s board of directors and shareholders to approve the merger, EZCORP agreed to pay additional cash consideration to the VFS shareholders if they sell their stock within 125 days after closing of the merger, if they sell at a price either above or below $14.67 per EZCORP Share. During the 125 day period, the additional cash consideration gives a limited amount of price protection to VFS shareholders if the EZCORP Share price falls, and to provide an incentive to sell EZCORP Shares at prices only in excess of the $14.67 valuation on which the merger consideration was based. See The Merger Agreement – Value of Merger Consideration – the Deficiency Guaranty and the Premium Reserve, page 91.

     Because these additional payments are available for only a limited, 125 day period after closing, VFS shareholders may feel an additional urge to sell their EZCORP Shares to obtain either the price protection, if the price goes down, or the premium payment, if the price goes up. Thus, these potential payments could increase selling of EZCORP Shares and send EZCORP’s share price down, resulting in losses in EZCORP share value to those VFS shareholders who do not sell their EZCORP Shares.

Stephens may not have considered all facts a VFS shareholder would believe to be important to a decision whether to approve the merger.

     The VFS board of directors received an opinion from Stephens dated September 10, 2008, that the merger was fair to the VFS shareholders. At the time the opinion was rendered the proposed transaction differed from the one embodied in the final merger agreement, principally because on September 10, the exchange of EZCORP Shares in the merger was to be made only to a limited number of VFS shareholders instead of to all VFS shareholders. In addition, Stephens did not address the relative merits of the merger agreement in comparison with any potential alternatives to the merger. Further, it does not address the underlying decision of the board to proceed with or effect the merger, or any other aspect of the board’s consideration of the merger. Therefore, VFS shareholders might conclude that the Stephens opinion failed to address all concerns that they wish to have addressed in considering whether to approve the merger. See Reasons for the Merger, page 69, and The Stephens Fairness Opinion, page 69.

Risks Related to VFS

The merger agreement restricts VFS’s ability to negotiate with other potential acquirers and may discourage others from making a more attractive acquisition offer.

     The merger agreement contains a non-solicitation clause hat prevents VFS and its officers, directors, employees, agents or representatives from directly or indirectly soliciting or encouraging other acquisition proposals from third parties prior to the effective date. By refraining from seeking other better offers, VFS may forego a potentially better acquisition proposal from a third party. See The Merger Agreement – Non-Solicitation Agreement, page 96.

If VFS terminates the merger agreement it may be required to pay EZCORP a termination fee, and the termination fee may discourage others from making a more favorable acquisition offer to VFS and may increase the costs to VFS if the merger is not consummated.

     The merger agreement requires VFS to pay a $5 million termination fee to EZCORP if:

	•		VFS terminates the merger agreement because it has entered into an acquisition transaction with a third party as described in the preceding paragraph;
	•		The VFS board of directors fails to recommend the merger to its shareholders;
	•		The VFS shareholders fail to approve the merger;
	•		The merger agreement is terminated by EZCORP or the Merger Sub after a material breach of the merger agreement by VFS; or
	•		The merger agreement is terminated by EZCORP or the Merger Sub because VFS has not satisfied any of the conditions precedent to EZCORP’s and Merger Sub’s obligations to close.

     Existence of the termination fee may discourage other third parties from considering an offer to acquire VFS on terms more attractive than those contained in the merger agreement, because it increases the cost of an acquisition of VFS by third parties by the $5 million amount of the fee. It limits the ability of VFS to pursue alternatives to the merger that could potentially be better for the VFS shareholders than the merger.

     In addition, the termination fee is payable if the board of directors fails to recommend the merger to the VFS shareholders, if the VFS shareholders do not vote to approve the merger or if the merger agreement is terminated by EZCORP after a breach of the Agreement or fail to satisfy a condition to closing by VFS. Potential payment of the termination fee in any of these events would harm VFS’s financial results in the period in which the fee would become payable.

Cautionary Statement Regarding Forward-Looking Statements

     This proxy statement/prospectus and the documents incorporated herein by reference include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The parties intend that all forward-looking statements be subject to the safe harbors created by these laws. All statements other than statements of historical information are forward-looking and may contain information about financial results, economic conditions, trends, planned store openings, acquisitions and known uncertainties. These statements are often, but not always, made with words or phrases like “may,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “outlook,” “expect,” “will,” and similar expressions. All forward-looking statements are based on current expectations regarding important risk factors. Many of these risks and uncertainties are beyond our control, and in many cases, the parties cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those expressed in the forward-looking statements. Actual results could differ materially from those expressed in the forward-looking

statements, and you should not regard them as a representation that the expected results will be achieved. Important risk factors that could cause results or events to differ from current expectations are described in this proxy statement/prospectus under the heading “Risk Factors” and in the sections entitled “Risk Factors” in EZCORP’s Annual Report on Form 10-K for the year ended September 30, 2007. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect EZCORP’s operations, performance, development and results. You are cautioned not to overly rely on these forward-looking statements, which are current only as of the date hereof. The parties undertake no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this report, including without limitation, changes in our business strategy or planned capital expenditures, acquisitions, store growth plans or to reflect unanticipated events.

THE MERGER PARTIES

EZCORP

     EZCORP lends or provides credit services to individuals who do not have cash resources or access to credit to meet their short-term cash needs. Our services include pawn loans and short-term non-collateralized loans, often called payday loans or fee-based credit services to customers seeking loans (collectively, “signature loans”). The pawn loans are non-recourse loans collateralized by tangible personal property. We also sell merchandise, primarily collateral forfeited from our pawn lending operations, to customers looking for good value. Our business, operations and financial information are described in detail in our annual report on Form 10-K, quarterly reports on Form 10-Q and other reports which are incorporated by reference into this proxy statement/prospectus.

     EZCORP’s principal executive offices are located at 1901 Capital Parkway, Austin, Texas 78746. Its telephone number is (512) 314-3400.

Value Financial Services

     The following description of VFS, its history and business, is provided by the management of VFS.

     VFS was founded in 1994 by John Thedford, its president and chief executive officer, and currently operates 67 stores in three states – Florida (60 stores), Tennessee (four stores) and Georgia (three stores) under the trade names “Value Pawn and Jewelry” in Florida and Georgia and “Check Jewelry & Loan” in Tennessee. For the year ended December 31, 2007 and the six months ended June 30, 2008, its average revenue per store was approximately $1.7 million and $897,000, respectively. It is the second largest pawn broker in Florida, based on information provided by the National Pawnbrokers Association. VFS lends money on a short-term basis against pledged tangible personal property such as jewelry, electronic equipment, tools, sporting goods, musical instruments and other items of value, and also sells merchandise, including forfeited collateral from pawn loans. Its customers typically require pawn loans for their immediate cash needs, and often use its services for reasons of convenience and/or lack of credit alternatives. As of June 30, 2008, VFS employed over 600 team members.

     VFS’s principal executive offices are located at 1063 Maitland Center Commons Blvd., Suite 200, Maitland, Florida 32751. Its telephone number is (407) 339-6608.

Pawn Lending Activities

     When receiving a pawn loan from VFS, a customer pledges personal property to VFS as security for the loan. VFS delivers a pawn transaction agreement, commonly referred to as a pawn ticket, to the customer, along with the proceeds of the loan. If the customer does not pay all accrued pawn service charges or redeem the property within a specified time period (typically 60 days), the customer forfeits the property to VFS, and VFS sells the property.

     VFS’s customers are obligated to pay a pawn service charge to compensate VFS for the use of the funds loaned. The pawn service charge is typically calculated as a percentage of the pawn loan amount based on the size and duration of the transaction, in a manner similar to which interest is charged on a bank loan, and ranges from 12.5% to 25.0% per month, or 187.5% to 300.0% annually, in the states in which VFS currently operates, as permitted by applicable state pawnshop laws. These pawn service charges contributed approximately 30.0% of VFS’s total revenues in 2005, 27.4% in 2006 and 26.7% in 2007.

     Pledged property is held through the term of the pawn loan, which is 30 days with an automatic extension period of 30 days unless the pawn loan is repaid or renewed earlier. In the event that the borrower does not repay or renew a loan within the 60-day period, the unredeemed collateral is forfeited to VFS and becomes inventory available for sale in the store. The collateral is transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued interest and service charges. The following table summarizes the life cycle of a typical pawn loan:

     VFS generally lends an amount equal to between 60.0% and 65.0% of the estimated resale value of an item of collateral, based on its customer’s needs and its history with them. The principal criteria VFS uses to determine the amount of a loan are the amount needed by the customer, the customer’s transaction history with VFS, VFS’s perception of the customer’s emotional attachment to the collateral and the estimated sale value of the collateral. VFS relies on many sources to determine the estimated sale value, including its experience in selling similar items, catalogs, “blue books,” newspapers and internet research. VFS does not use a standard or mandated percentage of estimated sale value in determining the loan amount. Instead, VFS’s team members may set the percentage for a particular item and determine whether the item’s sale, if it is forfeited to the pawnshop, would yield a profit margin consistent with its historical experience with similar items. Any proposed loan in excess of $500 requires approval from a regional manager. VFS holds the pledged property through the term of the loan, which generally is 30 days with an automatic 30-day extension period, unless earlier redeemed, renewed or extended. A majority of VFS’s pawn loans are either paid in full with accrued pawn service charges or are renewed or extended by the customer’s payment of accrued pawn service charges. If a customer does not repay, renew or extend the loan, the unredeemed collateral is forfeited to VFS and becomes merchandise available for sale through its pawnshops or to wholesale sources or a smelter. VFS does not record pawn loan losses or charge-offs because the amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise sale function described below. VFS does not have recourse against the customer for the loan. As a result, the customer’s creditworthiness is not a factor in VFS’s loan decision, and a decision not to redeem pawned property does not affect the customer’s personal credit status. When a customer fails to repay a pawn loan, VFS relies on the sale of pawned property to recover the principal amount of the loan, plus a yield on the investment.

     VFS’s strategy is generally to make pawn loans where there is a substantial likelihood that the customer will repay the loan and redeem the property. However, because the supply of inventory available for sale in VFS’s stores is derived in part from forfeitures of pledged property, VFS attempts to attain an appropriate balance of redemptions and forfeitures to ensure that there is an appropriate level of inventory available for sale in its stores. In 2005, 2006 and 2007, approximately 78.8%, 77.8% and 77.7%, respectively, of the pawn loans made by VFS were redeemed in full or were renewed or extended through the payment of accrued pawn service charges.

     At June 30, 2008, VFS had 111,728 outstanding pawn loans totaling approximately $18 million, with an average balance of approximately $161 per loan.

     Presented below is information with respect to pawn loans made, redeemed and forfeited for VFS’s pawn lending operations for the years ended December 31, 2005, 2006 and 2007 and the six months ended June 30, 2008 (in thousands):

		2005								2006								2007								6/30/2008
						No. of								No. of								No. of								No. of
		Amount				Loans				Amount				Loans				Amount				Loans				Amount				Loans
Beginning balance		$	9,645				76			$	11,598				86			$	14,528				97				16,759				103
New loans made			51,119				480				62,080				515				71,600				559				36,964				278
Loans redeemed, excluding renewals and extensions			26,437				225				30,770				236				33,692				250				19,301				139
Loans forfeited			22,729				246				28,380				268				35,677				302				16,406				132
Net increase (decrease) in pawn loans outstanding at end of the year			1,953				9				2,930				12				2,231				62				1,257				8
Ending balance		$	11,598				86			$	14,528				97				16,759				103				18,016				111
Loans renewed/extended		$	56,984				333			$	69,939				368			$	87,311				427				45,915				217

Merchandise Sales Activities

     VFS sells merchandise that has been forfeited to it when a pawn loan is not redeemed. VFS sells merchandise principally at its pawnshops, but it also sells some items through wholesale sources or, in the case of some gold jewelry, to a smelter. VFS also sells in its pawnshops used goods purchased from the general public and some new merchandise, principally accessory merchandise that compliments and enhances the marketability of items such as tools, consumer electronics and jewelry. While VFS offers refunds and exchanges for certain merchandise items, it generally does not provide its customers with warranties on used merchandise. Proceeds from sales of merchandise contributed 70.0% of VFS’s total revenues in 2005, 72.6% in 2006 and 71.9% in 2007. Presented below is information with respect to the sources of merchandise acquired during the years ended December 31, 2005, 2006 and 2007 (in thousands):

		2005				2006				2007
Beginning balance		$	7,827			$	10,566			$	12,204
Merchandise acquired through loan forfeitures			22,729				28,383				35,676
Merchandise purchased from customers			6,507				9,086				11,596
Merchandise purchased from vendors			2,709				3,459				1,782
Total merchandise acquired			31,945				40,928				49,054
Less: merchandise sold			29,206				39,290				47,734
Ending balance		$	10,566			$	12,204			$	13,524

     The recovery of the amount advanced and the realization of a profit on the sale of merchandise depend on VFS’s initial assessment of the property’s estimated sale value when the

pawn loan is made. For 2005, 2006 and 2007, VFS experienced profit margins on sales of merchandise of 38.2%, 36.9% and 37.5%, respectively. Changes in gold prices will also generally increase or decrease the sale value of jewelry items acquired in pawn transactions and could enhance or adversely affect VFS’s profit or recovery of the carrying cost of the acquired collateral. VFS does not engage in any hedging transactions with respect to market prices for gold or other precious metals. For 2005, 2006 and 2007, sales of jewelry represented approximately 48.7%, 47.6% and 44.9%, respectively, of VFS’s total retail merchandise sales.

     The following table illustrates the percentage of merchandise held in inventory as of June 30, 2008, by category:

Category		%
Jewelry			63.4
Electronics			16.2
Tools			7.0
Other			13.4

     During the two-year period from 2005 to 2007, same-store merchandise sales increased by approximately 22.9%, from $663,345 in 2005 to $815,356 in 2007. During that same period, the amount of VFS’s average retail merchandise sale increased by 14.4%, from $90 in 2004 to $104 in 2007.

     Customers may purchase merchandise on a layaway plan under which the customer makes an initial cash deposit representing a portion of the sales price and pays the balance in regularly scheduled, non-interest bearing payments. VFS segregates the layaway item and holds it until the customer has paid the full sales price. If the customer fails to make a required payment, the customer’s deposit is forfeited to VFS and the item is placed with the other merchandise held for sale. Layaways are recorded as sales when paid in full. At June 30, 2008, VFS held approximately $866,000 in customer layaway deposits.

     VFS’s inventory is stated at the lower of cost or market. In the case of merchandise acquired through forfeited pawn loans, the acquisition cost is the principal value of the pawn loan. VFS provides an allowance for valuation and shrinkage of its merchandise. The amount of this allowance is based on management’s evaluation of factors such as historical shrinkage and the quantity and age of merchandise on hand. At June 30, 2008, total pawn operations merchandise on hand was $13.3 million, after deducting an allowance for valuation and shrinkage of merchandise of $0.3 million.

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

     The following discussion and analysis of VFS’ financial condition and results of operations is provided by the management of VFS and should be read in conjunction with its consolidated financial statements and related notes that appear elsewhere in this proxy statement/prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect the plans, estimates and beliefs of VFS. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this proxy statement/prospectus, particularly in Risk Factors beginning on page 21.

     For 2007 and the six months ended June 30, 2008, VFS generated total revenues of $106.5 million and $58.3 million, respectively. VFS’ revenues have grown substantially in recent years, at a compound annual growth rate of 19.3% from 2003 to 2007. From 2003 to 2007, its store operating margins improved from 19.9% to 21.4%.

     VFS believes that the experience and qualifications of a store manager are critical components of a store’s success. VFS has found that there is a strong correlation between the length of tenure of a store manager and the financial performance of that store, as a more experienced store manager tends to better understand the needs of a particular store’s customers. As of June 30, 2008, the average tenure of its store managers was 30.0 months, and 37 of its 67 store managers have been VFS team members for two years or more.

     Because there is such a compelling correlation with financial success, VFS allocates significant resources to lowering its team member turnover and, correspondingly, team member continuity in the same store. Improvements in these variables lead to efficiency gains and productivity increases. Moreover, increased tenure leads to the establishment and maintenance of long-term relationships with customers that breed customer loyalty and repeat business. VFS estimates that approximately 80 percent of its transactions are related to repeat customers and it considers customer relationships an important element in the determination of a store’s success.

     The strength of an individual store team’s relationships with its customer base will largely determine its success in developing its pawn loan portfolio and, by extension, its revenue potential; the quality of a store’s pawn loan portfolio is a reliable indicator of a store’s revenue potential. While approximately 50.0% of VFS’ revenues are directly derived from pawn service charges on pawn loans, most sales revenues from merchandise sales are indirectly derived by way of forfeited pawn loans that become merchandise for sale. Accordingly, it is critical for store teams to cultivate and maintain customer relationships and increased team member continuity helps to ensure that.

     VFS’ human resources strategy depends on its ability to recruit and retain its team members. The recruiting aspect of this approach is vulnerable to employment market conditions

as low unemployment shrinks the pool of available candidates. It is, however, important that VFS not compromise the integrity of its hiring standards in response to challenging economic conditions. With this in mind, VFS employs the use of an objective personality measurement tool to assist in hiring decisions. Though this tool does not address the availability of candidates, it does help to ensure that exceptions do not dilute VFS’ human resource approach.

     While VFS believes that its successful performance has been the result of its strategic management, it has also benefited recently from the external favorable spot pricing in the gold market. VFS allocates a portion of its gold inventory each month to be sent to a gold smelter for liquidation. This practice is a key component in VFS’s cash and inventory management processes that has taken on greater significance over the years as gold pricing has steadily increased. Net revenues derived from scrap gold sales totaled $9.6 million in 2007 and represented 16.4% of total net revenues. By comparison, in 2003, net revenues derived from gold scrap sales totaled $1.4 million and represented 4.9% of net revenues.

     A decline in the price of gold would result in a short-term negative impact to VFS’ gold scrap sales revenues and the value of its jewelry inventories. VFS believes, however, that due to the short-term nature of its loan transactions, it would be able to adapt quickly to the changing market and mitigate this risk. VFS has the flexibility to shift resources in favor of its retail sales operations in order to balance the revenue gains and losses.

Components of Revenues and Expenses

     Its revenues are derived primarily from pawn service charges on pawn loans and sales of merchandise, primarily forfeited collateral from pawn loans. If a pawn loan is not repaid prior to the expiration of the automatic extension period, the property is forfeited to VFS and transferred to inventory at a value equal to the principal amount of the loan, exclusive of accrued interest. VFS accrues pawn service charge revenue based on anticipated redemption activity for pawn loans during each reporting period. VFS has historically been able to estimate redemption rates with a high degree of accuracy due to the short-term nature of its pawn loans. As a result, the yields on its outstanding loan portfolio will fluctuate in correspondence with redemption activity. While its redemption rates have historically averaged almost 80.0% over the course of any 12-month period, seasonality and other economic factors produce periodic variations and, as a result, yield rates will vary accordingly.

     VFS also generates revenue from fee income and through forfeited layaway deposits. Fee income results from fees collected from customers for the replacement of lost pawn tickets and for check cashing services. Forfeited layaway deposits occur when a customer defaults on the layaway terms and forfeits the respective deposits.

     The cost of merchandise sales includes all costs related to the acquisition of merchandise. In most cases, merchandise is acquired through forfeited pawn loans and the acquisition cost is the principal value of the pawn loan. In the case of merchandise purchased from an outside vendor, its cost will include the amount paid to the vendor plus any freight and taxes. In addition, a small component of merchandise sales cost includes expenses associated with inventory loss and breakage.

     Store operating expenses consist of all items directly related to the operation of its stores, including salaries and related payroll costs, rent, utilities, equipment, advertising, property taxes, licenses, supplies and security. Because VFS currently leases all 67 of its stores, rent is its largest store operating expense after payroll costs. VFS is responsible for facility costs, including taxes and insurance, under most of its leases.

     General and administrative expenses consist of items relating to its administration and the operation of its corporate offices, including the compensation and benefit costs of corporate management, regional managers and other operations management personnel, accounting and administrative costs, information technology costs, liability and casualty insurance and legal and accounting fees. General and administrative expenses also include depreciation expenses and costs of asset disposals related to its ongoing capital expenditures. Other expenses consist primarily of asset disposal costs, which represent the remaining book value of equipment that is replaced before the end of its depreciable life.

Critical Accounting Policies And Estimates

     Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, inventory, long-lived and intangible assets, income taxes, contingencies and litigation. Management bases its estimates on historical experience, empirical data and on 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.

     Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

     Pawn service charges revenue recognition. VFS accrues pawn service charges revenue based on anticipated redemption activity for pawn loans during each reporting period. Pawn loans written during each calendar month are aggregated and tracked for performance. Loan transactions may conclude based upon redemption, renewal or forfeiture of the loan collateral. The gathering of this empirical data allows us to analyze the characteristics of its outstanding pawn loan portfolio and estimate the probability of collection of pawn service charges. If the future actual performance of the loan portfolio differs significantly (positively or negatively) from expectations, revenue for the next reporting period would be likewise affected.

     Due to the short-term nature of pawn loans, VFS can quickly identify performance trends. For 2007, $28.0 million, or 98.5%, of recorded pawn service charges represented cash collected from customers and the remaining $0.4 million, or 1.5%, represented an increase in the service charges receivable during the year. At the end of 2007 and based on the revenue recognition method described above, VFS had accrued $3.3 million of service charges

receivable. Assuming the year-end accrual of service charges revenue was over-estimated by 10.0%, service charges revenue would decrease by $0.3 million in 2008. Some or all the decrease would potentially be mitigated through the profit on the sales of the related forfeited loan collateral.

     Inventory. Inventory represents merchandise acquired from forfeited pawn loans, merchandise purchased directly from the public and new merchandise purchased from vendors. The carrying value of the inventory is stated at the lower of cost or market. In the case of merchandise acquired through forfeited pawn loans, the acquisition cost is the principal value of the pawn loan. Management provides an allowance for shrinkage and valuation based on its evaluation of the merchandise. Because pawn loans are made without recourse to the borrower, VFS does not investigate or rely upon the borrower’s creditworthiness, but instead bases its lending decision on an evaluation of the pledged personal property and the customer’s transaction history with the company. The amount that VFS is willing to finance to any particular customer ranges based on the store manager’s evaluation of the customer’s need and ability to repay backed by an informal appraisal of the market value of the collateral. Overall, this appraisal generally results in a loan-to-value ratio of approximately 60.0%. In 2007, VFS averaged costs of sales of 62.5%, leading to sales profit margins of 37.5%. VFS uses numerous sources in determining an item’s estimated market value including its experience in selling similar items, catalogs, “blue books,” newspapers and internet research. VFS performs a physical count of its merchandise in each location on a cyclical basis and reviews the composition of inventory by category and age in order to assess the adequacy of the allowance, which was $0.3 million, representing 2.4% of the inventory balance at December 31, 2007. Adverse changes in the market value of its inventory may require an increase in the valuation allowance.

     Valuation of Goodwill. VFS assesses the impairment of its goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is an intangible asset with an indefinite useful life, thus it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Factors that could trigger an impairment review include significant underperformance relative to expected or projected future cash flows, significant changes in the strategy of the overall business and significant industry trends. When management determines that the carrying value of goodwill may not be recoverable, impairment is measured based on the excess of the asset’s carrying value over the estimated fair value.

     Income Taxes. As part of the process of preparing its consolidated financial statements, VFS is required to estimate income taxes in each of the jurisdictions in which VFS operates. This process involves estimating the actual current tax exposure together with assessing temporary differences in recognition of income for tax and accounting purposes. These differences result in deferred tax assets and liabilities and are included within its consolidated balance sheet. Management must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent it believes that recovery is not likely, it must establish a valuation allowance. An expense, or benefit, is included within the tax provision in the statement of operations for any increase, or decrease, in the valuation allowance for a given period.

     Management judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. If VFS were to determine that it could not realize all or part of its net deferred tax assets in the future, VFS would have to charge an adjustment to the deferred tax assets in the income taxes in the period that such determination was made. Likewise, should VFS determine that it could in the future realize its deferred tax assets in an amount exceeding the net recorded amount, VFS could adjust the deferred tax assets to reduce the provision for income taxes in the period that such determination was made.

     Its net deferred tax assets include substantial amounts of net operating loss carryforwards, totaling approximately $15.0 million and $12.8 million for federal and state, respectively. The utilization of its net operating loss carryforwards may be limited in any given year under certain circumstances. Events which may affect its ability to utilize these carryforwards include, but are not limited to, future profitability, cumulative stock ownership changes of 50.0% or more over a three-year period, as defined by Section 382 of the Internal Revenue Code, and the timing of the utilization of the tax benefit carryforwards.

Recently Issued Accounting Standards

     In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and emphasizes that fair value is a market-based measurement, not an entity-specific measurement. It establishes a fair value hierarchy and expands disclosures about fair value measurements in both interim and annual periods. In February 2008, FASB issued FASB Staff Position (“FSP”) FAS 157-2, “Effective Date of FASB Statement No. 157”, which delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed in the financial statements on a nonrecurring basis. The FSP partially defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years for items within the scope of this FSP. The adoption of SFAS No. 157 and FSP FAS 157-2 did not have a material effect on the Company’s consolidated financial position or results of operations. The Company has not applied the provisions of SFAS No. 157 to its nonfinancial assets and nonfinancial liabilities in accordance with FSP FAS 157-2. The Company will apply the provisions of SFAS No. 157 to these assets and liabilities beginning January 1, 2009 as required by FSP FAS 157-2.

     In February 2007, FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election dates, to measure eligible items at fair value (the “fair value option”) and requires an entity to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. SFAS No. 159 was effective for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 159 did not have a material effect on the Company’s consolidated financial position or results of operations.

     In December 2007, FASB issued Statement of Financial Accounting Standards No. 141, “Business Combinations — Revised” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer in a business combination: recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase price; and, determines what information to disclose to enable users of the consolidated financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The application of SFAS No. 141(R) will cause management to evaluate future transaction returns under different conditions, particularly the near term and long term economic impact of expensing transaction costs up front.

     In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, “Disclosure about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures concerning (1) the manner in which an entity uses derivatives (and the reason it uses them), (2) the manner in which derivatives and related hedged items are accounted for under SFAS No. 133 and interpretations thereof, and (3) the effects that derivatives and related hedged items have on an entity’s financial position, financial performance, and cash flows. VFS must adopt SFAS No. 161 by January 1, 2009. VFS does not expect SFAS No. 161 to have a material effect on its financial position, results of operations, or cash flows.

Results of Operations

     The following table sets forth the components of its consolidated statements of operations for the periods indicated, expressed in dollars and as a percentage of total revenues (dollars in thousands):

		Year Ended December 31,																								Six Months Ended June 30 ,
		2005								2006								2007								2007								2008
																										(Unaudited)
		$				%				$				%				$				%				$				%				$				%
Revenue:
Merchandise sales		$	47,378				68.4			$	62,348				71.0			$	76,515				71.9			$	33,376				69.9			$	42,249				72.4
Pawn service charges			20,786				30.0				24,090				27.4				28,394				26.7				13,659				28.6				15,370				26.4
Other			1,085				1.6				1,376				1.6				1,566				1.5				718				1.5				711				1.2
Total revenue			69,249				100.0				87,814				100.0				106,475				100.0				47,754				100.0				58,331				100.0
Cost of merchandise sales			29,289				42.3				39,339				44.8				47,834				44.9				20,701				43.3				25,335				43.4
Net revenue			39,960				57.7				48,475				55.2				58,641				55.1				27,053				56.7				32,996				56.6
Store operating expenses			25,093				36.2				30,365				34.6				35,877				33.7				17,283				36.2				20,593				35.3
Store operating income			14,868				21.5				18,110				20.6				22,763				21.4				9,770				20.5				12,403				21.3
General and administrative expenses:
Administration			6,499				9.4				7,815				8.9				21,127	(1)			19.8				13,130	(2)			27.5				5,767				9.9
Depreciation			164				0.2				173				0.2				204				0.2				101				0.2				112				0.2
Other			60				0.1				108				0.1				355				0.3				117				0.5				10				0.0
Total general and administrative expenses			6,724				9.7				8,097				9.2				21,686				20.4				13,348				28.0				5,889				10.1
Income (loss) from operations			8,144				11.8				10,013				11.4				1,077				1.0				(3,578	)			(7.5	)			6,514				11.2
Non-operating expenses:
Interest expense			1,297				1.9				1,135				1.3				2,544				2.4				432				0.9				1,000				1.7
Net income (loss) before income taxes			6,847				9.9				8,878				10.1				(1,467	)			(1.4	)			(4,010	)			(8.4	)			5,514				9.5
Income tax expense (benefit)			2,593				3.7				3,448				3.9				(486	)			(0.5	)			(1,557	)			(3.3	)			2,188				3.8
Net income (loss)		$	4,254				6.1			$	5,430				6.2			$	(981	)			(0.9	)		$	(2,452	)			(5.1	)		$	3,326				5.7
Earnings (loss) per share:
Basic*			n/a								n/a								n/a								n/a								n/a
Diluted		$	0.69							$	0.88							$	(0.15	)						$	(0.40	)						$	0.50
Weighted average number of shares outstanding:
Basic*			n/a								n/a								n/a								n/a								n/a
Diluted			6,160,646								6,160,646								6,413,097								6,175,959								6,646,369