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DFC Global Corp. – ‘S-1/A’ on 1/26/05

On:  Wednesday, 1/26/05, at 9:15pm ET   ·   As of:  1/27/05   ·   Accession #:  1047469-5-1631   ·   File #:  333-113570

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/27/05  DFC Global Corp.                  S-1/A                  9:2.4M                                   Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement   HTML   1.69M 
                          (General Form)                                         
 2: EX-1.1      Underwriting Agreement                              HTML    189K 
 3: EX-5.1      Opinion re: Legality                                HTML     14K 
 4: EX-10.2     Material Contract                                   HTML     68K 
 6: EX-10.29(A)  Material Contract                                  HTML     20K 
 7: EX-10.29(B)  Exhibt 10.29(B)                                    HTML     19K 
 5: EX-10.3(E)  Material Contract                                   HTML     15K 
 8: EX-21.1     Subsidiaries of the Registrant                      HTML     28K 
 9: EX-23.1     Consent of Experts or Counsel                       HTML      8K 

As filed with the Securities and Exchange Commission on January 27, 2005

Registration No. 333-113570

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Pre-Effective
Amendment
No. 10

FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

Dollar Financial Corp.
(Exact name of Registrant as specified in its charter)

1436 Lancaster Avenue
Berwyn, Pennsylvania 19312-1288
Phone: (610) 296-3400
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrants' Principal Executive Offices)

Donald F. Gayhardt
President
Dollar Financial Corp.
1436 Lancaster Avenue
Berwyn, Pennsylvania 19312-1288
Phone: (610) 296-3400
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)

Copies to:

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

 If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, 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, 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(c) 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

 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

 If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, check the following box. 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 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

Subject to completion, dated January 26, 2005

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

7,500,000 Shares

Common Stock

$             per share

•

Dollar Financial Corp. is offering 7,378,125 shares and one of the selling stockholders is offering 121,875 shares. We will not receive any proceeds from the sale of our shares by the selling stockholders.

•

We anticipate that the initial public offering price will be between $15.00 and $17.00 per share.

•

This is our initial public offering and no public market currently exists for our shares.

•

Proposed trading symbol: Nasdaq National Market — DLLR

This investment involves risk. See "Risk Factors" beginning on page 9.

The underwriters have a 30-day option to purchase up to 1,125,000 additional shares from the selling stockholders to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                           , 2005.

TABLE OF CONTENTS

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SUMMARY

 This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled "Risk Factors," our consolidated financial statements and the related notes included elsewhere in this prospectus and the documents we have referred you to, before deciding to invest in our common stock. All references to our fiscal year reflect the twelve month period ended June 30 of that year.

Business of Dollar Financial Corp.

 We are a leading international financial services company serving under-banked consumers. Our customers are typically lower- and middle-income working-class individuals who require basic financial services but, for reasons of convenience and accessibility, purchase some or all of their financial services from us rather than from banks and other financial institutions. To meet the needs of these customers, we provide a range of consumer financial products and services primarily consisting of check cashing, short-term consumer loans, money orders and money transfers. We operate a network of 1,122 stores, including 650 company-operated stores, in 16 states, the District of Columbia, Canada and the United Kingdom. We have 472 franchised locations in Canada and the United Kingdom. We also use independent third party businesses such as mail stores and insurance offices, which we refer to as document transmitters, to assist in the transmission of short-term consumer loan applications. Our store network is the second-largest network of its kind in the United States and the largest network of its kind in each of Canada and the United Kingdom. We generated revenues of $246.4 million in fiscal 2004, a 12.3% increase over fiscal 2003, and our comparable store, franchised store and document transmitter revenues increased 11.5% in fiscal 2004 compared to fiscal 2003. We earned pre-tax income of $2.8 million in fiscal 2004 and $141,000 in fiscal 2003.

 Our customers, many of whom receive income on an irregular basis or from multiple employers, are drawn to our convenient neighborhood locations, extended operating hours and high-quality customer service. Our products and services, principally our check cashing and short-term consumer loan program, provide immediate access to cash for living expenses or other needs. We principally cash payroll checks, although our stores also cash government benefit, personal and income tax refund checks. We cashed approximately 8.4 million checks with an average face amount of $376 for an average fee per check of $13.93 in fiscal 2004, compared to 8.2 million checks cashed with an average face amount of $334 for an average fee per check of $11.87 in fiscal 2000. In addition, in fiscal 2004, acting both as a servicer and as a direct lender, we originated 3.0 million short-term loans with a total face amount of $872.7 million, an average principal amount of $288 and a weighted average term of 14.3 days, compared to 2.8 million short term loans in fiscal 2003 with a total face amount of $798.0 million, an average principal amount of $282 and a weighted average term of approximately 15 days.

 We believe the industry in which we participate is large, highly fragmented and growing. Industry growth has been fueled by several demographic and socioeconomic trends, including an overall increase in the population and an increase in service sector workers as a percentage of the total workforce, which have resulted in a greater number of people seeking to cash paychecks on a regular basis and obtaining short-term consumer loans. At the same time, closings of many less profitable or lower-traffic neighborhood bank branches have resulted in fewer convenient alternatives for many consumers. These trends have combined to increase demand for the basic financial services we provide. Our business model and strategic objectives are designed to capitalize on this demand by providing our customer base with a range of value-added financial services available at neighborhood stores.

 To date, our network has grown through a combination of new store openings, acquisitions and franchising. With our network of 1,122 stores, we have reached a size that enables us to benefit from economies of scale and to enter favorable relationships with our key suppliers and strategic partners. For our North American operations, we have also centralized our store support functions, including marketing and advertising, treasury management, human resources and information technology

1

support. These efforts have enabled us to continue to expand our store network, support the development and introduction of new products and services and manage our compliance efforts, particularly those related to our consumer lending activities.

Our Strengths

 We believe that the following competitive strengths position us well for continued growth:

•

Leading Position in Our Core Markets. We have a leading position in our core markets, operating the second-largest store network of its kind in the United States, with 320 company-operated stores, and the largest networks of its kind in Canada, with 203 company-operated stores, and in the United Kingdom, with 127 company-operated stores. We intend to build additional new stores, and acquire competitor stores, to strengthen our competitive position in our core markets, as well as enter new markets in the United States, Canada and the United Kingdom.



•

High-quality Customer Service. We provide high-quality customer service both through our stores and through our centralized support centers. We believe our stores are located in desirable locations near our customers and operate at convenient hours with clean, attractive and secure environments.



•

Diversified Product and Geographic Mix. Our range of consumer financial products and services and our geographic diversification provide a diverse stream of revenue growth opportunities.



•

Diversification and Management of Credit Risk. Our exposure to loss from a single transaction is minimal. We actively manage our customer risk profile and collection efforts in order to maximize our consumer lending and check cashing revenues while maintaining losses within an acceptable range.



•

Management Expertise. Our highly qualified and motivated management team at the corporate and operational levels has demonstrated the ability to grow our business through its strategic vision, operational leadership and strong track record of identifying, closing and successfully integrating acquisitions.

Our Strategy

 Our business strategy is designed to capitalize on our competitive strengths and enhance our leading market positions. Key elements of our strategy include:

•

Capitalizing on Our Enhanced Network and System Capabilities. We plan to continue to take advantage of the economies of scale and efficiencies provided by our network of 1,122 stores and our centralized, proprietary support systems to improve customer service and enhance network and store-level profitability.



•

Growing Through Disciplined Network Expansion. We intend to continue to grow our store network, employing a balanced geographical expansion strategy consisting of a combination of new store openings, acquisitions and franchising, while adhering to a disciplined site selection process. We intend to open 50 to 55 new stores in fiscal 2005, including approximately 20 to 25 stores in the United States, 10 stores in the United Kingdom, and 20 stores in Canada. In addition to these expected new store openings, we are actively seeking to acquire targeted competitor operations in selected expansion markets in the United States, Canada and the United Kingdom.



•

Maintaining Our Customer-driven Retail Philosophy. We will strive to maintain our customer-service-oriented approach with convenient operating hours, clean facilities and

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employees trained and incentivized to meet the basic financial service needs of our customers.

•

Introducing Related Products and Services. We intend to continue to innovate, develop, acquire and introduce new products and services to meet the needs of our customers.



•

Expanding Our Franchising Strategy. We intend to expand the reach of our business and our network through an extension of our existing Canadian and U.K. franchising strategy, as well as implementing our recently introduced franchising strategy in the United States.

Our Challenges

 We face a number of challenges in executing our business strategy. Among the most important we face are:

•

Competition. The industry in which we operate is highly fragmented and very competitive, which could cause us to lose market share and revenues.



•

International Operations. We are subject to risks relating to our international operations that could negatively affect our operating results.



•

Reliance on Two Key Banking Relationships. A significant portion of our consumer lending business is derived from our relationships with County Bank of Rehoboth Beach, Delaware and First Bank of Delaware, and a loss of either of those relationships could adversely affect our liquidity and profits.



•

Regulation. Our business is subject to numerous state and certain federal and foreign laws and regulations that are subject to change and may impose significant costs or limitations on the way we conduct or expand our business.



•

Substantial Debt. We have substantial existing debt and may incur additional debt in the future, which could adversely affect our financial health and our ability to obtain future financing and react to changes in our business.

 Please see the section entitled "Risk Factors" for information on these and other risks related to our business and this offering.

 For the fiscal year ended June 30, 2004, we incurred net losses of $28.0 million, or $2.56 per share, and as of June 30, 2004 we had total shareholders' deficit of $50.9 million. Historically, we have incurred net losses because of our interest expense and U.S. tax on foreign earnings. As a result of our refinancing in November 2003, we no longer accrue U.S. taxes on foreign earnings and our interest expense has been substantially reduced as the new indebtedness is at lower effective interest rates. Additionally, the application of our net proceeds from this offering will further substantially reduce our interest expense. Although we face challenges, we expect to maintain and improve our profitability through the implementation of our business strategy.

Recent Events

 We are conducting an active acquisition program in the United States, Canada and the United Kingdom. On January 4, 2005, we completed an acquisition of 17 competitor stores in the United Kingdom for an aggregate of approximately $2.7 million. In addition, we recently entered into two non-binding letters of intent to acquire competitor stores and franchise operations offering additional products and services from third parties in the United States. If these two potential acquisitions are consummated, the maximum aggregate consideration would approximate $32.3 million. We do not contemplate using any of the net proceeds of this proposed offering of common stock to finance these potential acquistitions.

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 On January 5, 2005, Dollar Financial Group, Inc. provided updated revenue estimates with respect to the three months and six months ended December 31, 2004. For the three months ended December 31, 2004, Dollar Financial Group, Inc. expects revenues of $71.0 million to $72.0 million compared to $60.8 million for the comparable period in the prior year. For the three months ended December 31, 2004, Dollar Financial Group, Inc. expects comparable store, franchised store and document transmitter revenues to increase between 16.0% and 17.0% over the comparable period in the prior year. For the six months ended December 31, 2004, Dollar Financial Group, Inc. expects revenues between $137.2 million and $138.2 million compared to $117.8 million for the comparable period in the prior year. For the six month period ended December 31, 2004, Dollar Financial Group, Inc. expects comparable store, franchised store and document transmitter revenues to increase between 15.0% and 16.0% over the comparable period in the prior year. Dollar Financial Group, Inc. expects to release earnings for these periods on or before the week of February 7, 2005.

 On January 5, 2005, Dollar Financial Group, Inc. also indicated that it expects total revenues for fiscal 2005 to range between $270.0 million and $275.0 million. This outlook is based upon various assumptions, which include, but are not limited to, the following: (1) the opening of 50 to 55 newly-constructed company-owned stores in fiscal 2005 and the opening of approximately 25 franchised stores in fiscal 2005; (2) no material change for the balance of the fiscal year in the products or services that are offered at Dollar Financial Group, Inc.'s locations as of December 31, 2004 or in the terms or procedures for offering such products and services; and (3) no material adverse results from any litigation or regulatory proceedings against Dollar Financial Group, Inc., either currently existing or that may arise in the future.

Company Information

 We are a Delaware corporation incorporated in April 1990 as DFG Holdings, Inc. During fiscal 2004, we changed our name to Dollar Financial Corp. We operate our store network through our direct wholly-owned subsidiary, Dollar Financial Group, Inc., a New York corporation formed in 1979, and its direct and indirect wholly-owned foreign and domestic subsidiaries. Our principal executive offices are located at 1436 Lancaster Avenue, Berwyn, Pennsylvania 19312, and our telephone number is (610) 296-3400. Our website address is http://www.dfg.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.

 Money Mart®, Money Mart Express® and Loan Mart® are our registered trademarks. All other registered trademarks and trade names referred to in this prospectus are the property of their respective owners.

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The Offering

 Unless otherwise indicated, all share information in this prospectus is based on the number of shares outstanding as of September 30, 2004 after giving effect to a contemplated 555-for-1 stock split with the exception of the share information in the financial statements beginning on page F-1 and:

•

excludes 781,440 shares of common stock issuable upon exercise of outstanding options, at a weighted average price of $7.77 per share;



•

excludes 1,718,695 shares of common stock available for future issuance under our 2005 stock incentive plan;



•

assumes no exercise of the underwriters' over-allotment option; and



•

disregards any exchange of shares of common stock and/or options to purchase shares of common stock in satisfaction of certain management debt obligations that may occur, as described in "Certain Relationships and Related Party Transactions—Indebtedness of Management."

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Summary Financial Data

 We derived the following historical financial information from our audited consolidated financial statements as of June 30, 2003 and June 30, 2004 and for each of the years in the three-year period ended June 30, 2004 and our unaudited consolidated financial statements as of and for the three months ended September 30, 2004, which are included elsewhere in this prospectus, and our audited consolidated financial statements as of June 30, 2000, June 30, 2001 and June 30, 2002 and for each of the years in the two-year period ended June 30, 2001 and our unaudited consolidated financial statements as of and for the three months ended September 30, 2003, which are not included in this prospectus. The unaudited financial statements include all adjustments, consisting of normal recurring accruals, which we consider necessary for a fair presentation of the financial position and the results of operations for these periods. Operating results for the three months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 30, 2005. This table should be read together with the information contained in "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited and unaudited consolidated financial statements and related notes included elsewhere in this prospectus.

footnotes on following page
 

6

⁽¹⁾

As a result of our refinancing in November 2003, we no longer accrue U.S. taxes on foreign earnings. This will result in a substantial reduction in our effective tax rate. The amount of such tax was as follows:

footnotes continue on following page
 

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⁽²⁾

Due to the refinancing of our debt in November 2003, significant deferred tax assets have been generated. We provided a valuation allowance against all of our deferred taxes at June 30, 2004 which amounted to $24.5 million. Because realization is not assured, we have not recorded the benefit of the deferred tax assets. As of September 30, 2004, we have approximately $51.7 million of federal and state net operating and loss carry forwards available to offset future taxable income. The federal and state net operating loss carry forwards will begin to expire in 2023, if not utilized.

⁽³⁾

The pro forma statements of operations data and the as adjusted balance sheet data give effect to this offering and the use of proceeds as if they occurred at the beginning of the periods presented for the pro forma statements of operations data and at September 30, 2004 for the as adjusted balance sheet data. The as adjusted balance sheet data reflects adjustments for the write-off of certain deferred finance costs and interest receivable contemplated by the successful completion of this offering.

⁽⁴⁾

These are revenues from stores, franchised stores and document transmitters that were open during the entire period and the comparable prior period.

⁽⁵⁾

Includes principal amount under all such loans and any applicable origination and servicing fees paid by the customer (including pledged company-funded loans).

⁽⁶⁾

During fiscal 2002, Eagle National Bank discontinued the offering of short-term consumer loans through our stores pursuant to a December 18, 2001 consent order entered into with the U.S. Comptroller of the Currency. In June 2002, we entered into a new servicing relationship with County Bank to provide short-term consumer loans to our customers. The change in our servicing relationship required corresponding changes to our banking systems, procedures and daily operations. County Bank elected not to fund loans in California and, therefore, we increased the number and amount of company funded loans we originated. State regulations also prevented the refinancing of company funded loans in California on their stated maturity date. We believed these factors increased the likelihood of loan losses on our company funded consumer loan portfolio and the bank funded consumer loan portfolio. Accordingly, we increased our estimated loss rates for both of these portfolios and established an aggregate reserve of $2.2 million.

⁽⁷⁾

We have servicing relationships with two banks, County Bank of Rehoboth Beach, Delaware and First Bank of Delaware. Under each of these relationships, we provide various services to the bank in connection with our origination and servicing of short-term consumer loans funded by the bank, in exchange for which we are compensated by the bank through the payment of marketing and servicing fees. These fees are subject to adjustment for losses on the loans we originate for County Bank and First Bank. An accrued liability has been established to reflect anticipated adjustments to our servicing fees. The loans we originate for these banks are not reflected on our balance sheet.

⁽⁸⁾

Assumes proceeds to us from this offering of $118.1 million less expenses related to this offering of $11.3 million, $2.5 million to terminate a management services agreement, charges for call premiums of $4.6 million calculated as of September 30, 2004, assumed forgiveness of management loan interest of $2.4 million calculated as of September 30, 2004, $3.0 million from the write-off of original issue discount and $260,000 for the write off of deferred issuance costs.

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RISK FACTORS

 An investment in our common stock involves risk. You should carefully consider these risk factors, as well as the other information contained in this prospectus. If any of these risks actually occur, our business, results of operations and financial condition could be significantly and negatively impacted. This could cause the trading price of our common stock to decline, perhaps significantly.

Risks Related to Dollar Financial Corp.

Competition in the financial services industry could cause us to lose market share and revenues.

 The industry in which we operate is highly fragmented and very competitive. In addition, we believe that the market will become more competitive as the industry consolidates. In addition to other check cashing stores and consumer lending stores in the United States, Canada and the United Kingdom, we compete with banks and other financial services entities and retail businesses that cash checks, offer consumer loans, sell money orders, provide money transfer services or offer other products and services offered by us. Some of our competitors have larger and more established customer bases and substantially greater financial, marketing and other resources than we have. As a result, we could lose market share and our revenues could decline, thereby affecting our ability to generate sufficient cash flow to service our indebtedness and fund our operations.

Unexpected changes in foreign tax rates and political and economic conditions could negatively impact our operating results.

 We currently conduct significant check cashing and consumer lending activities internationally. Our foreign subsidiaries accounted for 55.4% of our total revenues during fiscal 2004 and 60.1% of our total revenues during the three months ended September 30, 2004. Our financial results may be negatively impacted to the extent tax rates in foreign countries where we operate exceed those in the United States and as a result of the imposition of withholding requirements on foreign earnings. Moreover, if political or economic conditions deteriorate in these countries, our ability to conduct our international operations could be limited and the costs could be increased, which could negatively affect our operating results.

The international scope of our operations may contribute to increased costs and negatively impact our operations.

 Our operations in Canada and the United Kingdom are significant to our business and present risks which may vary from those we face domestically. At September 30, 2004, assets held by our foreign subsidiaries represented 59.2% of our total assets. Since international operations increase the complexity of an organization, we may face additional administrative costs in managing our business. In addition, most countries typically impose additional burdens on non-domestic companies through the use of local regulations, tariffs and labor controls. Unexpected changes to the foregoing could negatively impact our operations.

Foreign currency fluctuations may adversely affect our results of operations.

 We derive significant revenue, earnings and cash flow from our operations in Canada and the United Kingdom. Our results of operations are vulnerable to currency exchange rate fluctuations in the Canadian dollar and the British pound against the U.S. dollar. We estimate that a 10.0% change in foreign exchange rates by itself would have impacted reported pre-tax earnings from continuing operations by approximately $1.2 million for the three months ended September 30, 2004 and $783,000 for the three months ended September 30, 2003. This impact represents nearly 35.7% of our consolidated pre-tax earnings for the three months ended September 30, 2004 and 63.0% of our consolidated pre-tax loss for the three months September 30, 2003. Our results of operations will

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continue to be significantly affected by foreign currency fluctuations, which could cause our results to be below expectations in any period.

A significant portion of our consumer lending business is derived from two key banking relationships, and a loss of either of those relationships could adversely affect our liquidity and profits.

 We have alliances with two banks, County Bank of Rehoboth Beach, Delaware and First Bank of Delaware. Under each of these relationships, we provide various services to the bank in connection with our origination and servicing of the bank's short-term consumer loans, in exchange for which we are compensated by the bank through payment of origination and servicing fees. Approximately 19% of our revenues in fiscal 2004 and approximately 18% of our revenues in the three months ended September 30, 2004 were derived from County Bank and First Bank. Our relationships with these banks have existed for less than two years. Termination of, or significant adverse change in, our relationships with either or both of these banks could require us to seek replacement relationships with new financial institutions or make additional loans ourselves. We cannot assure you that we would be able to secure new relationships or that the terms of such new relationships would be as favorable to us as those of our existing relationships. The amount of loans we may make ourselves is limited by the terms of the credit facility. As a result, any changes in our relationship with the banks could disrupt our revenues, cause us to change the way we conduct business in some states or adversely affect our liquidity and profits.

If our estimates of loan losses are not adequate to absorb losses, our results of operations and financial condition may be adversely affected.

 We maintain an allowance for loan losses for anticipated losses for loans we make directly as well as for fee adjustments for losses on loans we originate and service for others. To estimate the appropriate level of loan loss reserves, including the reserve for estimated reductions to loan servicing fees, we consider the amount of outstanding loans owed to us, as well as loans owed to banks and serviced by us, historical loans charged off, current collection patterns and current economic trends. Our current allowance for loan losses is based on our charge-offs, expressed as a percentage of loan amounts originated for the last twelve months applied against the total amount of outstanding loans that we make directly and outstanding loans we originate and service for others. As of September 30, 2004, our allowance for loan losses on company-funded consumer loans was $2.4 million and our reserve for estimated reductions to loan service fees was $1.5 million. These reserves, however, are estimates, and if actual loan losses or reductions to loan servicing fees are materially greater than our loan loss reserves, our results of operations and financial condition could be adversely affected.

Demand for our products and services is sensitive to the level of transactions effected by our customers, and accordingly, our revenues could be affected negatively by a general economic slowdown.

 A significant portion of our revenues is derived from cashing checks. Revenues from check cashing accounted for 47.6% of our total revenues during fiscal 2004 and 45.9% of our total revenues during the three months ended September 30, 2004. Any changes in economic factors that adversely affect consumer transactions could reduce the volume of transactions that we process and have an adverse effect on our revenues and results of operations.

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Changes in applicable laws and regulations governing consumer protection and lending practices, both domestically and abroad, may have a significant negative impact on our business, results of operations and financial condition.

 Our business is subject to numerous state and certain federal and foreign laws and regulations which are subject to change and which may impose significant costs or limitations on the way we conduct or expand our business.

 These regulations govern or affect:

•

check cashing fees;



•

licensing and posting of fees;



•

lending practices, such as truth in lending;



•

interest rates and usury;



•

currency reporting;



•

privacy of personal consumer information; and



•

prompt remittance of proceeds for the sale of money orders.

 In addition, the banks for which we act as a servicer in connection with our consumer lending activities are subject to federal and state banking regulations. During fiscal 2002, Eagle National Bank discontinued the offering of short-term consumer loans through our stores pursuant to a December 18, 2001 consent order entered into with the U.S. Comptroller of the Currency, requiring us to find a replacement relationship. The resulting disruption to our business increased expenses and slowed the growth of our consumer lending activities in 2002. The FDIC is the primary regulator of County Bank and First Bank and in July 2003 issued guidance for member banks operating in the payday lending industry. We cannot assure you that legislative and regulatory activities affecting the banks with which we do business will not again negatively impact our operations.

 As we develop and introduce new products and services, we may become subject to additional federal and state regulations. In addition, future legislation or regulations may restrict our ability to continue our current methods of operation or expand our operations and may have a negative effect on our business, results of operations and financial condition. We recently ceased offering short-term consumer loans in Georgia in response to a law passed by the state legislature prohibiting these loans. Although our short-term consumer lending business in Georgia was immaterial to us financially and we had no company-operated stores in that state, similar legislation in other states could have a more substantial negative impact. States may also seek to impose new licensing requirements or interpret or enforce existing requirements in new ways. For example, the Oklahoma Administrator of Consumer Credit sought to revoke the license of our Oklahoma subsidiary during fiscal 2003, which litigation we subsequently settled. Our business is also subject to litigation and regulatory proceedings, which could generate adverse publicity or cause us to incur substantial expenditures or modify the way we conduct our business.

 Currently our check cashing and consumer lending activities are subject to only limited substantive regulation in Canada other than usury laws. In the United Kingdom, our consumer lending activities must comply with the Consumer Credit Act of 1974 and related rules and regulations which, among other things, require us to obtain governmental licenses and prescribe the presentation, form and content of loan agreements. The modification of existing laws or regulations in Canada and the United Kingdom, or the adoption of new laws or regulations restricting or imposing more stringent requirements on our international check cashing and consumer lending activities, could increase our operating expenses and significantly limit our international business activities.

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Changes in local rules and regulations such as local zoning ordinances could negatively impact our business, results of operations and financial condition.

 In Pittsburgh, Pennsylvania and Oakland, California, local zoning boards have passed ordinances restricting the operating hours, range of services that can be offered and acceptable locations for new check cashing stores. We believe our existing stores in these municipalities will not be significantly adversely affected by these regulations. However, these ordinances could adversely affect our willingness and ability to expand our presence in these municipalities. Also, if other local zoning boards or regulatory bodies approve similar ordinances, or otherwise limit our ability to provide products and services, our business, results of operations and financial condition could be negatively impacted.

Public perception and press coverage of short-term consumer loans as being predatory or abusive could negatively affect our revenues, results of operations and stock price.

 Consumer advocacy groups and some legislators have recently advocated governmental action to prohibit or severely restrict certain types of short-term consumer lending. Typically the consumer groups, some legislators and press coverage focus on lenders that charge consumers interest rates and fees that are higher than those charged by credit card issuers to more creditworthy consumers. This difference in credit cost may become more significant if a consumer does not repay the loan promptly, but renews the loan for one or more additional short-term periods. These types of short-term loans are often characterized by consumer groups, some legislators and press coverage as predatory or abusive toward consumers. If consumers accept this negative characterization of certain short-term consumer loans and believe that the loans we provide to our customers fit this characterization, demand for our loans could significantly decrease, which could negatively affect our revenues and results of operations. Adverse publicity could also affect our stock price even if it does not affect our business or results of operations.

Our financial condition could be significantly negatively impacted if banks decide to stop making loans to companies in our sector of the financial services industry.

 Apparently in response to pressure from consumer advocacy groups, and citing potential risks to its reputation, a major regional bank announced that it would no longer lend to companies making short-term consumer loans of the type we make. Although this bank is not one of the lenders under our existing credit facility, we rely on borrowings from similar banks to meet our liquidity needs. If our existing lenders or potential lenders decide to stop making loans to companies like ours, our borrowing cost could increase or we possibly could face cash shortages, which could limit our ability to expand our business and could have a significant negative impact on our financial condition.

We have substantial existing debt and may incur additional debt in the future, which could adversely affect our financial health and our ability to obtain financing in the future and react to changes in our business.

 We have, and will continue to have, a significant amount of debt and may incur additional debt in the future. As of September 30, 2004, after giving effect to the application of our net proceeds from this offering and the recent senior note offering, our total debt would have been approximately $244.8 million and our shareholders' equity would have been approximately $47.5 million. Our significant amount of debt could have important consequences to you. For example, it could:

•

make us vulnerable to interest rate increases, because a portion of our borrowings is, and will continue to be, at variable rates of interest;

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•

require us to dedicate a substantial portion of our cash flow from operations to payments on our debt obligations, which will reduce our funds available for working capital, capital expenditures and other general corporate expenses;



•

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;



•

place us at a disadvantage compared to our competitors that have proportionately less debt;



•

restrict our operational flexibility through restrictive covenants that will limit our ability to make acquisitions, explore certain business opportunities, dispose of assets and take other actions; and



•

limit our ability to borrow additional funds in the future, if we need them, due to applicable financial and restrictive covenants in our debt instruments.

 The terms of our various debt instruments limit our ability to incur additional debt but do not prohibit us from incurring additional debt. If current debt levels increase, the related risks that we and you now face will also increase.

 If we fail to generate sufficient cash flow from future operations to meet our debt service obligations, we may need to seek refinancing of all or a portion of our indebtedness or obtain additional financing in order to meet our obligations with respect to our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness or obtain additional financing on satisfactory terms or at all, particularly because of our high levels of debt and the debt incurrence restrictions imposed by the agreements governing our debt.

The agreements and instruments governing our debt contain restrictions and limitations that could significantly affect our ability to operate our business.

 Our debt instruments contain a number of significant covenants that could adversely affect our business. These covenants restrict our ability to, among other things:

•

create liens;



•

enter into sale and leaseback transactions;



•

enter into transactions with affiliates;



•

pay dividends or make other payments;



•

effect certain mergers and consolidations;



•

make certain investments, acquisitions or dispositions;



•

incur additional debt;



•

issue equity in our subsidiaries; and



•

repurchase or redeem equity interests and subordinated debt.

 The breach of any covenants or obligations in any of these debt instruments will result in a default under the applicable debt instrument. If there is an event of default under one of our debt instruments, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable, subject to applicable grace periods. This could trigger cross-defaults under our other debt instruments. As a result, our ability to respond to changing business and economic conditions and to secure additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might further our growth strategy. Further, if we are unable to

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repay, refinance or restructure our indebtedness under our credit facility, the lenders under that facility could proceed against the collateral securing that indebtedness. In the event of our insolvency, liquidation, dissolution or reorganizations, the lenders under our debt instruments would be entitled to payment in full from our assets before distributions, if any, were made to our stockholders.

If we do not generate a sufficient amount of cash, which depends on many factors beyond our control, our liquidity and ability to service our indebtedness and fund our operations would be harmed.

 Based on our current level of operations and anticipated revenue growth, we believe our cash flow from operations, available cash and available borrowings under our credit facility will be adequate to meet our future liquidity needs. However, we have substantial contractual commitments and debt service obligations. We cannot assure you that our business will generate sufficient cash flow from operations, that our anticipated revenue growth will be realized or that future borrowings will be available to us under our credit facility in amounts sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. In addition, if we undertake expansion efforts in the future, our cash requirements may increase significantly.

Our business and results of operations may be adversely affected if we are unable to manage our growth effectively.

 Our expansion strategy, which contemplates the addition of new stores, franchisees and document transmitter locations, is subject to significant risks. Our continued growth is dependent upon a number of factors, including the ability to hire, train and retain an adequate number of experienced management employees, the availability of adequate financing for our expansion activities, the ability to find qualified franchisees and document transmitter locations, the ability to obtain any government permits and licenses that may be required and other factors, some of which are beyond our control. There can be no assurance that we will be able to successfully grow our business or that our current business, results of operations and financial condition will not suffer if we are unable to do so. Expansion beyond the geographic areas where the stores are presently located will increase demands on management and divert their attention. In addition, expansion into new products and services will present new challenges to our business and will require additional management time.

Our check cashing services may become obsolete because of technological advances.

 We derive the largest component of our revenues from fees associated with cashing payroll, government and personal checks. Recently, there has been increasing penetration of electronic banking services into the check cashing and money transfer industry, including direct deposit of payroll checks and electronic transfer of government benefits. To the extent that checks are replaced with such electronic transfers, demand for our check cashing services could decrease.

Our business is seasonal in nature, which causes our revenues and earnings to fluctuate.

 Our business is seasonal due to the impact of several tax-related services, including cashing tax refund checks, making electronic tax filings and processing applications for refund anticipation loans. Historically, we have generally experienced our highest revenues and earnings during the third fiscal quarter ending March 31 when revenues from these tax-related services peak. This seasonality requires us to manage our cash flows over the course of the year. If our revenues were to fall substantially below what we would normally expect during certain periods, our financial results would be adversely impacted and our ability to service our debt, including our ability to make interest payments on our debt, may also be adversely affected.

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Because we maintain a significant supply of cash in our stores, we may be subject to cash shortages due to employee error and theft.

 Since our business requires us to maintain a significant supply of cash in each of our stores, we are subject to the risk of cash shortages resulting from employee errors and theft. Although we have implemented various programs to reduce these risks, maintain insurance coverage for theft and provide security for our employees and facilities, we cannot assure you that employee error and theft will not occur. Error and theft could lead to cash shortages and could adversely affect our results of operations.

If we lose key management or are unable to attract and retain the talent required for our business, our operating results could suffer.

 Our future success depends to a significant degree upon the members of our senior management, particularly Jeffrey Weiss, our Chairman and Chief Executive Officer, and Donald Gayhardt, our President. Since joining us in 1990, Messrs. Weiss and Gayhardt have been instrumental in procuring capital to assist us in executing our growth strategies, identifying and negotiating domestic and international acquisitions and providing expertise in managing our developing international operations. The loss of the services of one or more members of senior management could harm our business and development. Our continued growth also will depend upon our ability to attract and retain additional skilled management personnel. If we are unable to attract and retain personnel as needed in the future, our operating results and growth could suffer.

A catastrophic event at our corporate or international headquarters or our centralized call-center facility could significantly disrupt our operations and adversely affect our business, results of operations and financial condition.

 Our management processes are primarily provided from our corporate headquarters in Berwyn, Pennsylvania and our international headquarters in Victoria, British Columbia and Nottingham, England. We also maintain a centralized call-center facility in Salt Lake City, Utah that performs customer service, collection and loan-servicing functions for our consumer lending business. We have in place disaster recovery plans for each of these sites, including data redundancy and remote information back-up systems, but if any of these locations were severely damaged by a catastrophic event, such as a flood, power outage or act of terror, our operations could be significantly disrupted and our business, results of operations and financial condition could be adversely impacted.

Risks Related to our Common Stock and this Offering

Our executive officers, directors and principal stockholders may be able to exert significant control over our future direction.

 After this offering, our executive officers, directors and principal stockholders will together control approximately 55.3% of our outstanding common stock. As a result, these stockholders, if they act together, may be able to control, as a practical matter, all matters requiring our stockholders' approval, including the election of directors and approval of significant corporate transactions. We are also a party to employment agreements with Jeffrey Weiss and Donald Gayhardt that require us to use our commercially reasonable efforts to ensure that they continue to be members of our board of directors as long as they are our Chief Executive Officer and President, respectively. As a result, this concentration of ownership and representation on our board of directors may delay, prevent or deter a change in control, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or its assets and might reduce the market price of our common stock.

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The price of our common stock after this offering may be lower than the offering price you pay and may be volatile.

 Prior to this offering, our common stock has not been sold in a public market. After this offering, an active trading market in our common stock might not develop. If an active trading market develops, it may not continue. Moreover, if an active market develops, the trading price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market prices of many companies. These broad market fluctuations could adversely affect the market price of our common stock. A significant decline in our stock price could result in substantial losses for individual stockholders and could lead to costly and disruptive securities litigation. If you purchase shares of our common stock in this offering, you will pay a price that was not established in a competitive market. Rather, you will pay a price that was negotiated with the representatives of the underwriters based upon a number of factors. The price of our common stock that will prevail in the market after this offering may be higher or lower than the offering price.

Future sales of shares of our common stock in the public market could depress our stock price and make it difficult for you to recover the full value of your investment.

 Prior to this offering, there has been no public market for our common stock. We cannot predict the effect, if any, that market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock prevailing from time to time. If our existing stockholders sell substantial amounts of our common stock in the public market following this offering or if there is a perception that these sales may occur, the market price of our common stock could decline. All of the outstanding shares of common stock belonging to officers, directors and other stockholders are currently "restricted securities" under the Securities Act. Assuming the underwriters do not exercise their over-allotment option, after the lockup agreements pertaining to this offering expire 180 days from the date of this prospectus unless waived earlier by Piper Jaffray & Co., up to 10,843,903 of the shares outstanding prior to this offering will be eligible for future sale in the public market at prescribed times pursuant to Rule 144 under the Securities Act, or otherwise. Sales of a significant number of these shares of common stock in the public market could reduce the market price of the common stock.

 After the lockup agreements pertaining to this offering expire 180 days from the date of this prospectus, holders of 8,887,262 shares of our common stock have the right to require us to register under the Securities Act all or a portion of their shares. Registration of the sale of these shares of our common stock would permit their sale into the market immediately. If our existing stockholders sell a large number of shares, the market price of our common stock could decline. In addition, holders of up to 10,843,903 shares of our common stock will have piggyback registration rights after the consummation of this offering. All of these holders have agreed not to sell or otherwise dispose of any of their shares, other than those shares that may be sold in this offering, for a period of 180 days after the consummation of this offering. If, upon the expiration of the 180 days, existing stockholders exercise their rights to require us to register its shares for resale, the market price of our common stock could decline.

Our anti-takeover provisions could prevent or delay a change in control of our company, even if such change of control would be beneficial to our stockholders.

 Provisions of our amended and restated certificate of incorporation and amended and restated bylaws as well as provisions of Delaware law could discourage, delay or prevent a merger, acquisition or other

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change in control of our company, even if such change in control would be beneficial to our stockholders. These provisions include:

•

a board of directors that is classified such that only one-third of directors are elected each year;



•

authorizing the issuance of "blank check" preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;



•

limitations on the ability of stockholders to call special meetings of stockholders;



•

prohibiting stockholder action by written consent and requiring all stockholder actions to be taken at a meeting of our stockholders; and



•

establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

 In addition, Section 203 of the Delaware General Corporations Law limits business combination transactions with 15% stockholders that have not been approved by the board of directors. These provisions and other similar provisions make it more difficult for a third party to acquire us without negotiation. These provisions may apply even if the transaction may be considered beneficial by some stockholders.

Investors will incur immediate and substantial dilution in the book value of their investment.

 The initial public offering price will be substantially higher than the net tangible book value per share of the outstanding common stock. If you purchase shares of our common stock, you will incur immediate and substantial dilution in the amount of $22.26 per share, based on an assumed initial public offering price of $16.00 per share, which is the mid-point of the initial public offering price range set forth on the cover of this prospectus. This means that if we were to be liquidated immediately after the offering, there may be no assets available for distribution to you after satisfaction of all of our obligations to creditors.

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FORWARD-LOOKING STATEMENTS

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

 We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They can be affected by inaccurate assumptions, including the risks, uncertainties and assumptions described in "Risk Factors." In light of these risks, uncertainties and assumptions, the forward-looking statements in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this prospectus.

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

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USE OF PROCEEDS

 We expect to receive approximately $109.8 million in net proceeds from this offering based on the sale of 7,378,125 shares at an assumed initial offering price of $16.00 per share, which is the mid-point of the initial public offering price range set forth on the cover of this prospectus. We intend to use the net proceeds from this offering to redeem all of our outstanding senior notes and all of our outstanding senior subordinated notes and to pay fees and expenses with respect to these transactions and for general corporate purposes.

 The following table summarizes the estimated uses of funds in connection with this offering
(dollars in millions):

⁽¹⁾

Accrued interest and redemption premiums are calculated assuming a February 2, 2005 redemption date.

⁽²⁾

All or a portion of the remaining proceeds may be used to repay indebtedness outstanding under our revolving credit facility. As of September 30, 2004, we had $3.6 million outstanding indebtedness under our revolving credit facility, which bears interest at a 4.75% annual rate and has no stated maturity date.

 We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders.

 As of September 30, 2004, affiliates of The Goldman Sachs Group, Inc., a principal stockholder, held $12.3 million aggregate principal amount of our 16.0% senior notes due 2012 and $12.2 million aggregate principal amount of our 13.95% senior subordinated notes due 2012, both of which we intend to redeem in full using a portion of the net proceeds of this offering.

DIVIDEND POLICY

 We have never declared or paid any cash dividends on our capital stock. We currently expect to retain any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any payment of cash dividends on our common stock will be dependent upon the ability of Dollar Financial Group, Inc., our wholly owned subsidiary, to pay dividends or make cash payments or advances to us. The agreement governing our credit facility and the indenture governing our senior notes impose restrictions on Dollar Financial Group, Inc.'s ability to make these payments. For example, Dollar Financial Group, Inc.'s ability to pay dividends or make other distributions to us, and thus our ability to pay cash dividends on our common stock, will depend upon, among other things, its level of indebtedness at the time of the proposed dividend or distribution, whether it is in default under its financing agreements and the amount of dividends or distributions made in the past. Our future dividend policy will also depend on the requirements of any future financing agreements to which we may be a party and other factors considered relevant by our board of directors, including the General Corporation Law of the State of Delaware, which provides that dividends are only payable out of surplus or current net profits.

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CAPITALIZATION

 The following table sets forth our capitalization as of September 30, 2004:

•

on an actual basis; and



•

on an as adjusted basis to give effect to 1) the sale of 7,378,125 shares of our common stock in this offering at an assumed initial public offering price of $16.00 per share, which is the mid-point of the initial public offering price range set forth on the cover of this prospectus; and 2) the intended applications of the net proceeds from this offering.

 This table should be read together with "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

⁽¹⁾

Net of original issue discount of $1,481.

⁽²⁾

Net of original issue discount of $1,481.

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DILUTION

 The net tangible book value of our common stock on September 30, 2004 was $(211.0) million, or approximately $(19.24) per share. Net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the net tangible book value per share of our common stock immediately afterwards. After giving effect to the sale of shares at an assumed initial public offering price of $16.00 per share, which is the mid-point of the initial public offering price range set forth on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us, our net tangible book value at September 30, 2004 would have been approximately $(114.9), or $(6.26) per share. This represents an immediate increase in net tangible book value of $12.98 per share to existing stockholders and an immediate dilution in net tangible book value of $22.26 per share to new investors purchasing shares of common stock in this offering. The following table illustrates this dilution on a per share basis:

 The following table summarizes, on an as adjusted basis, as of September 30, 2004, the total number of shares of our common stock purchased, the total consideration paid and the average price per share paid by existing stockholders and by the new investors in this offering, calculated before deducting the estimated underwriting discounts and commissions and offering expenses:

⁽¹⁾

Net of selling stockholder's sale of 121,875 shares of our common stock and the expected proceeds therefrom of $1,950,000.

 The foregoing discussion and tables assume no exercise by the underwriters of their over-allotment option and no exercise of outstanding options for 781,440 shares of our common stock that are exercisable at a weighted average price of $7.77 per share. To the extent the over-allotment option or the outstanding options are exercised, there may be further dilution to new investors.

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SELECTED FINANCIAL DATA

 We derived the following historical financial information from our audited consolidated financial statements as of June 30, 2003 and June 30, 2004 and for each of the years in the three-year period ended June 30, 2004, and our unaudited consolidated financial statements as of and for the three months ended September 30, 2004, which are included elsewhere in this prospectus, and our audited consolidated financial statements as of June 30, 2000, June 30, 2001 and June 30, 2002 and for each of the years in the two-year period ended June 30, 2001 and our unaudited consolidated financial statements as of and for the three months ended September 30, 2003, which are not included in this prospectus. The unaudited financial statements include all adjustments, consisting of normal recurring accruals, which we consider necessary for a fair presentation of the financial position and the results of operations for these periods. Operating results for the three months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 30, 2005. This table should be read together with the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited and unaudited consolidated financial statements and related notes included elsewhere in this prospectus.