
PAWNBROKERS.COM, INC.






UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549
__________________________________________
FORM 10-Q
(Mark One)


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


For the quarterly period ended June 30, 2002


OR


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


For the transition period from _________ to __________.


Commission file number 0-27215


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


DELAWARE
  33-0794473

(State or Other Jurisdiction

of Incorporation or Organization)
  (I.R.S. Employer Identification No.)




1 East Liberty Street, Sixth Floor, Suite 7
Reno, Nevada
89504
(Address of principal executive offices)


85 Keystone, Suite H
Reno, Nevada
89503
(Former name, former address and former fiscal year, if changed since last report)


(775) 332-5048
(Registrant’s Telephone Number, Including Area Code)


Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    X      No         
The number of outstanding common shares, no par value, of the Registrant at:


August 14, 2002:  5,027,870










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PAWNBROKERS.COM, INC.






PAWNBROKER.COM. INC.


INDEX TO THE FORM 10-Q
For the quarterly period ended June 30, 2002-08-15


Page


Part I
Financial Information


Item 1:
Financial Statements
 3


Item 2:
Management’s Discussion and analysis
Of Financial Condition and Results
Of Operations
26


Item 3:
Quantitative and Qualitative Disclosure
About Market Risk
32


Part II
Other Information


Item 1:
Legal Proceedings
32


Item 2:
Changes in Securities and Use
Of Proceeds
32


Item 3:
Defaults Upon Senior Securities
32


Item 4:
Submission of Matters to a Vote of 
Security Holders
32


Item 5:
Other Information
32


Item 6
Exhibits and Reports on Form 8-K
33


Signatures
38








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PAWNBROKERS.COM, INC.
















PAWNBROKER.COM, INC.
(A Development Stage Company)




CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)




JUNE 30, 2002






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<EDGAR Document Number>


PAWNBROKERS.COM, INC.






PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<t>
June 30,
December 31
2002
2001
$
$
<c>
<c>
<s>
ASSETS
Current
  Cash and cash equivalent
     4,847
    26,615


  Total current assets
     4,847
    26,615


Capital assets (Note 4)
   103,479
   144,736


Domain name (Note 5)
         -
    17,361


Total Assets
   108,326
   188,712






Continued


These accompanying notes are an integral part of these consolidated financial statements.








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PAWNBROKERS.COM, INC.






PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,
December 31
2002
2001
$
$


(Cont’d.)


LIABILITIES AND STOCKHOLDERS’
DEFICIENCY


Current liabilities
  Accounts payable
    574,910
    375,527
  Notes payable (Note 6)
    132,000
    145,000


  Total current liabilities
    706,910
    520,527


Notes payable (Note 6)
     90,000
     80,000


Convertible notes (Note 7)
    568,000
    404,000


  1,364,910
  1,004,527


STOCKHOLDERS’ DEFICIENCY
  Capital stock (Note 8)
    Authorized
      20,000,000 preferred
        shares with a par value
        of $0.0001
      60,000,000 common shares
        with a par value of
        $0.0001
    Issued and outstanding
      June 30, 2002 – 5,027,870
        Common shares
      December 31, 2001 – 5,027,870
        Common shares
        503
        503
    Additional paid-in capital
  9,250,167
  9,250,167
    Deficit accumulated during
      The development stage
(10,507,254)
(10,066,485)


    Total stockholders’ deficiency
 (1,256,584)
   (815,815)


Total Liabilities and Shareholder’s
Equity/(Deficit)
    108,326
    188,712
</t>


History and organization of the Company (Note 1)


Commitments (Note 11)


These accompanying notes are a integral part of these consolidated financial statements.








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PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<t>
Cumulative
Amounts from
February 5,
3 Month
3 Month
6 Month
6 Month
1999 to
Period
Period
Period
Period 
June 30,
Ended
Ended
Ended
Ended
2002
June 30,
June 30
June 30,
June 30,
2002 
2001
2002 
2001
$
$
$
$
$
<c>
<c>
<c>
<c>
<c>
<s>


OPERATING EXPENSES


  Amortization
    705,089
    28,332
  47,031
   58,618
 109,676
  General and
    administrative
 90,088,664
   168,293
 427,643
  322,201
 365,229
  Stock-based
    compensation
    378,685
         -
       -
        -
       -
 10,172,438
   196,625
 474,674
  380,819
 474,905
 
OTHER ITEMS 
  Interest expense
    251,768
   30,005
  12,149
  60,010
  55,649
  Interest income
   (80,138)
         -
    (417)
     (60)
 (3,048)
  (Gain) loss on disposal
    of capital assets
   176,983
         -
  (3,163)
       -
 176,983
  Write-off of capital
    assets
     70,674
         -
       -
       -
  70,674
    419,287
    30,005
   8,569
  59,950
 300,258










PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)


Cont’d.


Loss before extra-
  ordinary item
(10,591,725)  (226,630)
(483,243)
(440,769)
(775,163)
EXTRAORDINARY ITEM
  Gain on settlement
    of debt
     84,471
        -
       -
          -
        -


Loss for the period
(10,507,254)
 (226,630)
(483,243)
(440,769)
(775,163)


Basic and diluted loss
  per common share
    (0.05)
   (0.11)
   (0.09)
  (0.23)
Weighted average number of
  shares of common stock 
  outstanding
 5,027,870
4,547,257
5,027,870
3,312,291
</t>


These accompanying notes are an integral part of these consolidated financial statements.
















PAWNBROKER.COM, INC. 
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<t>
Cumulative
Amounts From
February 5,
6 Month
6 Month
1999 to
Period Ended
Period Ended
June 30,
June 30,
June 30,
2002 
2002 
2001
$
$
$
<s>
<c>
<c>
<c>
CASH FLOWS FROM OPERATING
ACTIVITIES
  Loss for the period
(10,507,254)
(440,769)
(775,163)
  Items not affecting cash:
   Amortization
    705,089
  58,618
 109,676
   Stock-based compensation
    378,685
       -
       -
   Loss on disposal of
     asset
    179,983
       -
 176,983
   Write-off of capital
     Assets
     70,674
       -
  70,674
   Recovery of operating
     expenses
   (156,178)
       -
(158,993)
   Gain on settlement of
    debt
    (84,471)
       -
       -
   Interest accrued on
    notes payable
    142,041
  60,010
       -
    
  Net change in non-cash 
    working capital items:
   Decrease in prepaid
    expense
          -
       -
    754
    Increase in accounts 
     payable and accrued
      liabilities
  1,475,996
 139,373
  54,394
    Increase in due from
      related parties
          -
       -
 (34,633)


  Net cash used in operating
    activities
 (7,798,435)
(182,768)
(556,308)












PAWNBROKER.COM, INC. 
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
Amounts From
February 5,
6 Month
6 Month
1999 to
Period Ended
Period Ended
June 30,
June 30,
June 30,
2002 
2002 
2001
$
$
$


CASH FLOWS FROM INVESTING
   ACTIVITIES
  Purchase of capital assets
 (1,011,971)
       -
       -
  Purchase of domain name
   (125,000)
       -
       -
  Acquisition of cash on
    purchase of subsidiary
      8,007
       -
       -
  Proceeds from disposal of
    capital assets
     80,746
       -
  80,748
  Increase in deposits
          -
       -
   1,695
Net cash provided by (used
   in)      Investing
    activities
 (1,048,218)
       -
  82,443


CASH FLOWS FROM FINANCING
ACTIVITIES
  Proceeds from issuance of
   common stock
6,559,500
      -
        -
  Proceeds from convertible
   debenture
  568,000
164,000
        -
  Proceeds (payments) from
    notes payable
1,724,000
 (3,000)
  205,000
Net cash provided by 
  financing activities
8,851,500
161,000
  205,000


Change in cash and cash
  Equivalents for the period
    4,847
(21,768)
 (268,865)


Cash and cash equivalents,
   beginning of period
        -
 26,615
  231,763


Cash and cash equivalents,
  end of period
    4,847
  4,847
   (37,102)








Cash and cash equivalents,
  comprised of:
  Cash
    4,847
  4,847
         -
  Bank overdraft
        -
      -
  ( 37,102)
   4,847
  4,847
   (37,102)


</t>
Supplemental disclosure with respect to cash flows (Note 10)








The accompanying notes are an integral part of these consolidated financial statements.










PAWNBROKER.COM, INC.
(A Development Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
<t>
<s>
Common Stock




Shares


<c>








Amount
$
<c>




Additional
Paid-in
Capital
$
<c>
Deficit
Accumulated
During the
Development
Stage
$
<c>




Total
Stockholders’ Equity
$
<c>

Balance,
February 5, 1999
         
Common stock
issued for cash


  850,000


         85


      80,415


            - 


      80,500

Balance, March
31, 1999


  850,000


         85


      80,415


            - 


      80,500

           
Capital stock of Pawnbroker.com Inc. at April 6, 1999




  112,475




         11




      26,257




            - 




      26,268

Deficit of Pawn-
broker.com, Inc. at April 6, 1999




        -




          -




     (23,261)




             -




     (23,261)

Common stock issued pursuant to the acquisition of Pawnbroker.com, Inc. (Nevada)








  624,000








         62 








           -








            - 








          62

Common stock issued for cash


  130,000


         13


   3,002,987


            - 


   3,003,000

Share cancellation
  (25,000)
         (3)
        (247)
            - 
         250

Common stock issued on exercise of share purchase warrants




   65,000




          7




   1,501,493




            - 




   1,501,500

Stock-based compensation for options issused to consultants and non-employees








         - 








           - 








      93,617








           - 








      93,617

Loss for the year
         - 
           - 
           -
  (4,706,109)
  (4,706,109)

Balance, March 31, 2000


 1,756,475


         175


   4,681,261


  (4,706,109)


     (24,673)

           
Common stock issued for conversion of convertible debenture




    26,882




           3




     499,997




           - 




     500,000

Common stock issued for cash


   100,000


          10


   1,999,990


           - 


   2,000,000

Common stock issued on exercise of stock options




   187,000




          19




     168,281




           - 




     168,300

Stock-based compensation for options issued to consultants and employees and non-employees










         - 










           - 










     285,068










            - 










     285,068

Loss for the period
         - 
           - 
           - 
  (4,335,831)
  (4,335,831)

           
Balance, December 31, 2000


 2,070,357


         207


   7,634,597


  (9,041,940)


  (1,407,136)

           
           
Common stock issued on exercise of stock options




    10,000




           1




       8,999




           - 




       9,000

Common stock issued to settle debt


 3,000,000


         300


   1,653,804


            - 


   1,654,104

Share cancellation
   (52,487)
          (5)
     (47,233)
            - 
     (47,238)

Loss for the year
         - 
           - 
           - 
   (1,024,545)
  (1,024,545)

Balance, December 31, 2002


 5,027,870


         503


   9,250,167


  (10,066,485)


    (815,815)

           
Loss for the period
         - 
           - 
           - 
     (440,769)
    (440,769)

           
Balance, June 30, 2002
 5,027,870
         503
   9,250,167
  (10,507,254)
  (1,256,584)

</t>
         













PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2002




1.
HISTORY AND ORGANIZATION OF THE COMPANY


Digital Sign Corporation ("the Company), a Delaware corporation, was incorporated on February 13, 1998.  On February 14, 1998, the Company issued 2,500 common shares at par value for all of the issued and outstanding shares of Digital Signs, Inc.  On April 6, 1999, the Company acquired all of the issued and outstanding shares of Eriko Internet Inc. in exchange for 850,000 common shares of the Company.  Effective June 14, 1999, the Company acquired all of the issued and outstanding shares of Pawnbroker.com, Inc. (a Nevada corporation), in exchange for 624,000 common shares of the Company.  On June 10, 1999, the Company changed its name to Pawnbroker.com, Inc.


These financial statements contain the financial statements of Eriko Internet Inc. ("Eriko"), Pawnbroker.com, Inc., Digital Signs, Inc. and Pawnbroker.com, Inc. (a Nevada Corporation) presented on a consolidated basis.  On April 6, 1999, Pawnbroker.com, Inc. acquired all of the issued and outstanding share capital of Eriko by issuing 850,000 common shares.  As a result of the share exchange, control of the combined companies passed to the former shareholders of Eriko.  This type of share exchange has been accounted for as a capital transaction accompanied by a recapitalization of Eriko.  Recapitalization accounting results in consolidated financial statements being issued under the name of Pawnbroker.com, Inc., but are considered a continuation of Eriko.  As a result, the financial statements present the consolidated financial position of the companies as at June 30, 2002 and December 31, 2001 and the results of operations of Eriko for the period ended June 30, 2002 and the results of operations of Pawnbroker.com, Inc., (Nevada) and Digital Signs Inc. from their respective dates of acquisition.  The number of shares outstanding at June 30, 2002 and December 31, 2001 as presented are those of Pawnbroker.com, Inc.


The Company is a development stage company.


The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders’ equity and cash flows at June 30, 2002 and for the period then ended have been made.  These financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2001.  The results of operations for the period ended June 30, 2002 are not necessarily indicative of the results to be expected for the year ending December 31, 2002.




2.
GOING CONCERN


The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  However, as shown in the accompanying consolidated financial statements, the Company has sustained substantial losses from operations since inception and has no current source of revenue.  In addition, the Company has used, rather than provided, cash in its operations.  The Company has utilized all of its available funding.  Without realization of additional capital, it would be unlikely for the Company to continue as a going concern.  It is management's plan in this regard to obtain additional working capital through equity financings.


The Company is in the process of restructuring its business and developing a new business plan and strategy under which it intends to provide financial resources to the pawn industry.  The Company is in the process of finalizing a business plan and attempting to restructure its liabilities to allow it to raise financing to fund the development of its planned business and its working capital requirements.  Over the next twelve months, the Company plans to raise cash through additional debt and equity financing.  The Company currently does not have sufficient working capital to finance its planned business strategy and may be unable to continue as a going concern.


The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.


June 30,
December 31,
1
2001
$
$
Deficit accumulated during the 
  development stage
(10,507,254)(10,066,485)
Working capital deficiency
   (702,063)
 (493,912)


3.
SIGNIFICANT ACCOUNTING POLICIES


Principles of consolidation


These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Digital Signs, Inc., Eriko Internet Inc. and Pawnbroker.com, Inc. (a Nevada corporation).  All significant inter-company balances and transactions have been eliminated upon consolidation.


Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the year.  Actual results could differ from these estimates.


Cash and cash equivalents


The Company considers all investments with a maturity of three months or less to be cash equivalents.


Loss per share


Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" requires basic and diluted earnings per share to be presented.  Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per share takes into consideration shares of common stock outstanding (computed under basic earnings per share) and potentially dilutive shares of common stock.


Income taxes


Income taxes are provided in accordance with SFAS No. 109, "Accounting for Income Taxes".  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards.  Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.


Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.


Comparative figures


Certain comparative figures have been reclassified to conform with the presentation adopted for the current year.


Recent accounting pronouncements


In June 2001, the Financial Accounting Standards Board ("FASB") approved the issuance of Statements of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").  SFAS 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment.  The statement is effective for fiscal years beginning after December 15, 2001, and is required to be applied at the beginning of an entity's fiscal year and to be applied to all goodwill and other intangible assets recognized in its financial statements at that date.  Impairment losses for goodwill and indefinite-lived intangible assets that arise due to the initial application of this statement (resulting from a transitional impairment test) are to be reported as resulting from a change in accounting principle.  Under an exception to the date at which this statement becomes effective, goodwill and intangible assets acquired after June 30, 2001, will be subject immediately to the non-amortization and amortization provisions of this statement.


In July 2001, FASB issued Statements of Financial Accounting Standards No. 143 "Accounting for Asset Retirement Obligations" ("SFAS 143") that records the fair value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal of any tangible long-lived assets.  The initial recognition of the liability will be capitalized as part of the asset cost and depreciated over its estimated useful life.  SFAS 143 is required to be adopted effective January 1, 2003.


In October 2001, FASB issued Statements of Financial Accounting Standards No. 144, "Accounting for the Impairment on Disposal of Long-lived Assets" ("SFAS 144"), which supersedes Statements of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of".  SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell.  Additionally, SFAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction.  SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and, generally, its provisions are to be applied prospectively.


In April 2002, FASB issued Statements of Financial Accounting No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”).  SFAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect and eliminates an inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. Generally SFAS 145 is effective for transactions occurring after May 15, 2002.


The adoption of these new pronouncements is not expected to have a material effect on the Company's financial position or results of operations.


Stock-based compensation


SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value.  The Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."  Accordingly compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.


The Company accounts for stock-based compensation issued to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services".


Capital assets


Capital assets are recorded at cost less accumulated amortization.  The cost of capital assets is amortized using the straight-line method over the following estimated useful lives of the related assets:


Furniture and fixtures
5 years
Computer equipment
3 years
Computer software
1.5 years
Leasehold improvements
2 years




Domain name


The cost of domain name rights is being amortized over 3 years from the date of commencement of operations.


Financial instruments


The Company's financial instruments consists of cash and cash equivalents, accounts payable and accrued liabilities, notes payable and convertible notes.  Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair value of these financial instruments approximate their carry values, unless otherwise noted.


4. .
CAPITAL ASSETS


Accumulated
Net Book
Accumulated
Net Book
Cost
Amortization
Value
Cost
Amortization
Value
$
$
$
$
$
$
Furniture and 
 fixtures
64,970
 (37,031)
 27,939
 64,970
 (30,533)
 34,437
Computer
  equipment
224,994
(151,040)
 73,954
224,994
(116,578)
108,416
Computer 
  software
275,381
(275,381)
      -
275,381
(275,381)
     -
Leasehold
 improvements
  4,990
  (3,404)
  1,586
  4,990
   (3,107) 
  1,883
570,335
(466,856)
103,479
570,335
(425,599)
144,736


5.
DOMAIN NAME
June 30, 
December 31


Domain name
$125,000
$125,000
Less:  Accumulated amortization
(125,000)
(107,639)


$     -
$ 17,361


6.
NOTES PAYABLE


June 30
December 31
2002 
2001
Promissory note from Pacific 
  Pawnbroker, non-interest
  bearing, unsecured and payable
   on demand.
$32,000
$20,000
Promissory note from various
   parties, bearing interest 
  at 18% per annum, unsecured, 
  and payable on December 31, 2003.
  90,000
  80,000
Promissory note, bearing interest
  at 18% per annum, unsecured, and
  payable on October 19, 2001
 (repaid January 2002).
      -
  25,000
Promissory note, bearing interest
  at 18% per annum, unsecured, and
  payable on February 21, 2002 
  (The Company is currently 
  negotiating an extension to 
  the loan).
 100,000
 100,000


 222,000
 225,000
Less:  current portion
(132,000)
(145,000)
$ 90,000
$ 80,000


7.
CONVERTIBLE NOTES


June 30,
December 31
2002 
2001
Convertible notes from various
 parties, bearing interest at 18%
 per annum, unsecured, and payable
 
  on December 31, 2003, convertible
 into 1,136,000 (December 31, 2001 –
 808,000) common shares of the 
 Company
$568,000
$404,000




8.
CAPITAL STOCK


On April 6, 1999, Pawnbroker acquired all the issued and outstanding share capital of Eriko Internet Inc.  As consideration, Pawnbroker issued 850,000 common shares for cash proceeds of $80,500.


On May 19, 1999, a shareholder of Pawnbroker surrendered 25,000 shares of common stock which were initially issued as part of the total shares issued for the acquisition of Eriko Internet Inc.  Capital stock and contributed surplus have been reduced by $1 and $249 respectively to eliminate the values initially recorded on issuance.


On June 14, 1999, Pawnbroker acquired all of the issued and outstanding share capital of Pawnbroker.com, Inc., a Nevada Corporation.  As consideration, Pawnbroker issued 624,000 common shares at a deemed value of $62, equal to the par value of the shares issued.


On June 23, 1999, the Company issued 130,000 units through a private placement at a price of $23.10 per unit, for total proceeds of $3,003,000.  Each unit consisted of one common share and one-half of a share purchase warrant.  One full share purchase warrant entitled the holder to acquire one additional common share at a price of $23.10 per share until September 23, 2000 and at a price of $29.00 per share until September 23, 2001.  These share purchase warrants were exercised during the year ended March 31, 2000 for total proceeds of $1,501,500.


On August 17, 2000, the Company issued 100,000 units through a private placement at a price of $20.00 per unit, for total proceeds of $2,000,000.  Each unit consisted of one common share and one non-transferable share purchase warrant.  One purchase warrant entitled the holder to acquire one additional common share at a price of $30.00 per share until August 10, 2001.


On September 7, 2000, the Company converted the 9% convertible debenture in the aggregate principal amount of $500,000 into 26,882 common shares of the Company at a price of $18.60 per share.


In December, 2000, the Company issued 187,000 common shares upon exercise of stock options at a price of $0.90 per share.


On January 30, 2001, the Company issued 10,000 common shares upon exercise of stock options at a price of $0.90 per share.


On April 17, 2001, the company issued 3,000,000 common shares of the Company to settle notes payable in the amount of $1,500,000 plus accrued interest of $154,104.


On August 1, 2001, the Company consolidated its capital stock on a 10:1 basis.  All capital stock numbers and per share amounts have been restated to reflect this consolidation.


On August 3, 2001, a shareholder of Pawnbroker surrendered 52,487 shares of common stock which were initially issued by exercise of stock options. Capital stock and contributed surplus have been reduced by $5 and $47,233, respectively, to eliminate the value initially recorded on issuance.


The Company has formed a Stock Option Plan ("Plan") under which it may grant stock options to employees and officers to acquire up to a total of 800,000 shares of the Company's common stock, at a price to be determined by the Plan administrator.
2002


9.
STOCK OPTIONS AND WARRANTS


At June 30, 2002, incentive stock options were outstanding enabling the optionee to acquire the following number of common shares:




Number
Exercise
of Shares
Price
Expiry Date


25,000
$  67.50
November 1, 2002
15,000
   67.50
3 years from the date when the Company
receives a specified amount of financing
in private or public offerings after
November 1, 1999.
 8,200
   67.50
September 1, 2002
93,010
   45.00 to
   81.30
3 years from the initial vesting dates of the stock options, over periods ranging from September 13, 2002 to March 15, 2003.
 5,000
   15.30
September 25, 2003


The following warrants enabling the holders to acquire the following number of common shares were outstanding at June 30, 2002:


Number of shares
Exercise price
Expiry Date


  7,200
$67.50
May 10, 2003
  5,882
 48.90
June 7, 2003
 33,426
 35.90
July 7, 2003
150,000
 20.00
October 11, 2005










10.
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS


6 Month
6 Month
Period
Period
Ended ,
Ended 
June 30
June 30
2002 
2001
Cash paid for income taxes
$     -
$    -
Cash paid for interest
 20,409
     -




There were no material non-cash investing and financing transactions during the period from January 1, 2002 to June 30, 2002.


Non-cash investing and financing transactions during the period from January 1, 2001 to June 30, 2001 were as follows:


a)
During the period, employee stock options were exercised to acquire 10,000 shares of common stock at a price of $0.90 per share in exchange for settlement of accounts payable totalling $9,000.


b)
During the period, the Company converted notes payable in the amount of $1,500,000 plus accrued interest of $154,104 into 3,000,000 common shares of the Company.


11.
COMMITMENTS


a)
The Company leases office and production premises and certain office equipment pursuant to operating leases which expire in 2003 and 2004:


Future annual lease payments are as follows:


2002 
$   64,294
1
    18,565
2
     2,038


b)
The Company entered into a distribution agreement with Alpha Financial Solutions ("Alpha") to market pre-paid debit cards to the pawn industry.  The Company will market and sell the Alpha Cash Card, which offers pawnbrokers and other retailers the opportunity to issue prepaid Alpha Cash Cards with debit card, payroll and money transfer features.  The agreement is for three years and gives the Company distribution rights to market the Alpha Cash Card to all industry categories, including the pawnbroking, check cashing, payday loan and auto title loan industries.














12.
INCOME TAXES


Subject to certain restrictions, the Company has certain operating losses available to reduce taxable income of future years.  Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements.


The Company has not recorded potential future income tax benefits of $3,571,416 in operating losses which, if unutilized, expire as follows:


2019
$    1,898,381
2020
     7,143,559
2021
     1,024,545
2022
       440,769
$   10,507,254




A reconciliation of the U.S. statutory federal income tax rate to the effective rate is as follows:


June 30,
June 30,
1
2001


U.S. federal statutory graduated
  rate
  34.00%
  34.00%
State income tax rate, net of federal
  benefit
   7.00%
   7.00%
Net operating loss for which no tax
  benefit is   currently available
 (41.00)%
 (41.00)%
   0.00%
   0.00%




The Company's total deferred tax asset as of June 30 is as follows:
     2002 
   2001


Tax benefit of net operating 
loss carryforward
$ 3,571,416
$3,337,815
Valuation allowance
$(3,571,416)
(3,337,815)
$         -
$        -


At June 30, 2002, deferred taxes consisted of a net tax asset of $3,571,416 due to operating loss carryforwards of $10,507,254 which was fully allowed for in the valuation allowance of $3,571,416.  The valuation allowance offsets the net deferred asset for which there is no assurance of recovery.


The valuation allowance will be evaluated at the end of each period, considering positive and negative evidence about whether the asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax asset is no longer impaired and the allowance is no longer required


13.
NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for statements of historical fact, certain information contained herein constitutes “forward-looking statements,” including without limitation statements containing the words “believes,” “anticipates,” “intends,” “expects” and words of similar import, as well as all projections of future results.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any of our future results or achievements expressed or implied by such forward-looking statements.  Such factors include, but are not limited to the following: our limited operating history; our history of losses; our lack of adequate working capital to fund its operations; risks related to our ability to continue as a going concern; need for additional capital; risks involving new product development; risk related to developing a financial services business; credit risk related to lending money to pawnbrokers; risk related to developing a market for cash card services in the pawnbroker industry; competition; management of growth and integration; risks of technological change; our dependence on key personnel, marketing relationships with pawnshops and third party suppliers; government regulation of the financial services, cash cards and the pawn industry; economic and political factors; and the other risks and uncertainties described under “Description of Business - Risk Factors” in our annual report on Form 10-K filed with the Securities and Exchange Commission on April 2, 2002.  
You should not place undue reliance on forward looking statements.  We do not intend to update forward looking statements contained in this report.  References to “Company,” “Registrant,” “our,” “us,” and “we,” refer to Pawnbroker.com, Inc. and its subsidiaries.  


ITEM 2: – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We, Pawnbroker.com Inc., are a development stage company with no revenues from our operations.  We have never generated any revenues from our operations or profits.  We developed and launched a web site that provided online customers a method to search for and buy merchandise from the inventories of pawnshops.  Our web site experienced very limited success and we generated no material revenues.  We terminated facilitating transactions on our web site and suspended our business operations on March 1, 2001 after we failed to generate sufficient user support.  We are in the process of restructuring our business and developing a new business plan and strategy under which we intend to provide financial services by offering pawnbrokers industry-specific products and services, including a stored value cash card system that allows pawnbrokers to issue their customers cash cards which can be used at most ATM’s and merchants that accept bank debit cards.  In the future, we may offer secured loans to pawnbrokers; however, we have been unable to raise sufficient funds to finance this business strategy.  During the past 12 months, we have been developing our business plan, attempting to restructure our liabilities, and pursuing opportunities to raise financing to fund the development of our planned business and our working capital requirements.  We currently do not have sufficient working capital to finance our planned business strategy and may not be able to continue as a going concern.
As of June 30, 2002, we had a working capital deficit of $702,063, and a working capital deficit of $493,912 at December 31, 2001.  In their independent auditor’s report dated March 15, 2002, Davidson & Company, Chartered Accountants, expressed substantial doubt about our ability to continue as a going concern due to our lack of working capital for our planned business activities.  We intend to address this going concern issue by restructuring our liabilities where possible and by raising capital through equity, debt or convertible securities financing.  We are currently seeking financing by presenting our business plan to potential investors.  If we are unable to raise additional financing, we anticipate we will not be able to continue as a going concern.
Effective August 1, 2001, we completed a 10 (old)-for- 1 (new) reverse split of our issued and outstanding common stock and reduced our authorized share capital to consist of 50,000,000 shares of common stock and 10,000,000 shares of preferred stock, each with a par value of $0.0001 per share.  At July 31, 2001, we had 50,803,567 shares of common stock issued and outstanding, and after giving effect to the reverse split, we had approximately 5,080,357 shares of common stock issued and outstanding.  All share information contained in this report gives effect to the reverse split.  As at August 14, 2002, we had 5,027,870 shares of common stock issued and outstanding.
During the quarter ended March 31, 2002, we entered into an independent service organization agreement, under which we have agreed to market cash card systems to pawnbrokers.  We are in the process of developing our marketing strategy to market the cash cards and expect to begin actively implementing our marketing program during the third quarter of 2002, assuming sufficient financing is available.  We cannot assure you our marketing efforts will be successful or that we will generate any significant revenue from the sale of cash cards.
On April 11, 2002, Joseph Schlader resigned as a director and as our President to return to his family business.  Mr. Schlader was a co-founder of the Company.  William Galine, a director of Pawnbroker.com and co-founder of the Company, replaced Schlader as the Company President.  Steven R. Fowler, a director of Pawnbroker.com and its Director of Business Development, was appointed to fill the position of Company Vice President.
Neither we nor any of our subsidiaries are currently subject to any bankruptcy, receivership or similar proceedings at the date of this report.
We relocated our headquarters on August 9, 2002.  Our new address is 1 East Liberty Street, Suite 7, Reno, Nevada, 89504, and our telephone number is (775) 332-5048.
Our web site address is www.pawnbroker.com.  The information on our web site is not a part of this quarterly report.
Results of Operations
Three and Six Months Ended June 30, 2002 Compared to the Same Periods Ended June 30, 2001
Revenues.  We had no revenues from operations.
General and Administrative.  General and administrative related expenses for three months ended June 30, 2002 were $168,293, compared to $427,643 for the same period in 2001.  General and administrative related expense for the six month period ended June 30, 2002 was $322,201 compared to $365,229 for the same period in 2001.  The general and administrative related expenses for the six month period ended June 30, 2001 included an adjustment to previously accrued expenses and recovery of operating expenses recognized during the quarter ended March 31, 2001.  General and administrative related expense for three and six month periods ended June 30, 2002, consisted primarily of salaries and payroll, professional fees, travel, general office, printing, and maintaining the office in Reno.  General and administrative expenses are expected to remain at low levels until we begin marketing our stored value cash cards under the service organization agreement with Alpha Financial Resources, L.L.C., assuming we can raise adequate funding to finance our plan of operation.
Salaries and Payroll.  During the first half of 2001, we laid off all but four of our employees in an effort to consolidate our operations to conserve working capital; however, we still incurred significant salaries and wage expense as during this consolidation period.  During the three month and six month periods ended June 30, 2002, we employed three employees, including Bill Galine, our President, Steven Fowler, our Vice President and one part-time administrative employee.  We may be required to hire additional employees, assuming financing is available, if we can successful implement our marketing strategy to market the cash cards to pawnbrokers.  We also anticipate that we will hire additional personnel and management with experience in the financial service industry to assist us with implementing our financial service business strategy, assuming we can raise adequate funding to finance our plan of operation.
Contract Services.  We terminated our use of services provided by contract service providers, which included investor relations, public relations and market research.  We may incur contract service expenses related to regulatory compliance and research to develop our financial services business during the remainder of 2002, although we have no current arrangements to do so.
Consulting.  We currently do not rely on consultants in connection with our business.  In future period, we intend to engage outside consultants with experience in the financial service industry to assist us with developing and implementing policies and procedures for our financial service offerings, assuming we can raise adequate funding to finance our plan of operation.  We have been negotiating with a consultant to provide us consulting services to assist us with the strategic planning and implementation of our stored value cash card system.  We anticipate that we will compensate this consultant by issuing stock or stock options in lieu of cash consideration.
Professional Fees.  Professional fees consist primarily of legal and accounting expenses.  We decreased expenditures related to professional fee expense as a result of our lack of working capital and our reduction in the use of our legal counsel and accounting professionals during 2002.  We anticipate at least a minimum level of professional fees expenses related to legal and accounting support during the development of our new business plan and expenses related to preparing filings to comply with our Securities and Exchange Commission reporting obligations.  Professional fees may increase if we obtain additional financing to undertake research related to our financial services business and the development of documents, forms and procedures related to such business.
Marketing and Related Expense.  Marketing and related expenses are expected to increase during the third and fourth quarters of 2002, assuming additional financing is available, as we attempt to market our stored value cash card system.
Office and Travel.  We incurred general office expenses related to maintaining our principal office and travel expenses related primarily to travel for raising capital and business development activities.  Travel and related expenses are expected to be consistent with the levels during the remaining quarters of 2002.  
Loss.  Our loss for three months ended June 30, 2002 was $226,630 or $0.05 per share compared to $483,243 or $0.11 per share during the same period in 2001, a decrease of $256,613.  Our loss for the six months ended June 30, 2002 was $440,769 or $0.09 per share, compared to $775,163 or $0.23 per share for the same period in 2001.  The decreases resulted from our efforts to minimize operations and overhead and our ongoing restructuring efforts.  We anticipate that we will continue to incur losses during the third and fourth quarters 2002 at a level approximately as that recorded during the first and second quarters 2002.  Losses may increase if we are able to raise sufficient financing to market our stored value cash card system, which will require us to increase marketing and general administrative expenses.  We cannot assure you that we will successfully raise the additional capital required to continue as a going concern or that our plan to market stored value cash card systems to pawnbrokers will be commercially successful.  
Liquidity and Capital Resources


In their independent auditor's report dated March 15, 2002, Davidson & Co., our auditors, expressed substantial doubt about our ability to continue as a going concern due to our lack of working capital for our planned business activities. We currently do not have sufficient working capital to meet our on-going obligations. As of June 30, 2002, we had cash and cash equivalents of $4,847 and a working capital deficit of $702,063, which includes current liabilities of $706,910.  
During the six months ended June 30, 2002, we received no revenues from our operations and we used net cash of $182,768 in operating activities.  Our use of cash during such period was primarily as a result of expenses related to sustaining our operations for salary expenses, professional fees and expenses related to general administrative expenses and overhead.
During the six month period ended June 30, 2002, we have been attempting to raise the capital required to fund our Plan of Operation, but our efforts have only been marginally successful.  During the three month period ended June 30, 2002, we raised net financing of $161,000 from the private placement of convertible debentures.  
We will continue to incur losses until we can generate sufficient revenues from sales of our stored value cash card system on a profitable basis.  We do not anticipate we will begin to generate any revenues until we can launch our stored value cash card system, which is not anticipated to occur until the third quarter of 2002, assuming sufficient financing is available.
We estimate that our minimum cash requirements to implement our plan of operation is between approximately $750,000 to $1,000,000 during the remainder of 2002, primarily for capital to market our stored value cash card system to pawnbrokers and to meet our current obligations to creditors.   See “Plan of Operation.”  We are in the process of seeking sufficient financing to implement our business strategy;  however, we have had limited success given the downward trend in the capital market and the economy.  We cannot assure you that we will be able to obtain sufficient financing to fund our working capital needs on acceptable terms, if at all.  If adequate funds are not available, we will be required to sell or liquidate our business or file bankruptcy.  We have no sources of external financing and currently no cash flows from operations.
Plan of Operation
Our plan of operation is based on information provided in discussions with our consultants, discussions with pawnshop owners, our results of operations, our negotiations and discussions with third-party vendors, experience of management and the decisions of our management.  Our plan of operation for the remainder year ending December 31, 2002 and during the first two quarters ended June 30, 2003, is as follows:
•
Raise additional financing of between $750,000 and $1 million during the third or fourth quarter to fund the marketing efforts relating to our stored value cash card system and to meet our obligations to creditors;
•
Launch our stored value cash card system and market the system to the pawnbroker industry;
•
Raise additional financing of between $3 million to $9 million before June 30, 2003 to fund our operations and to implement our business strategy; 
•
Complete research related to regulatory compliance issues related to lending rates, licensing requirements, perfecting security interests in assets and other regulatory issues in states targeted for our financial services roll out; 
•
Develop the documentation, forms and required procedures to facilitate loans to member pawnbrokers;
•
Market and promote our financial services to pawnbrokers in the targeted states and our business-to-business network to pawnbrokers throughout North America; and
•
Identify viable target markets for additional roll outs of our financial services.


In order to reduce our cash requirements, we intend to outsource certain development, marketing, human resources, legal and accounting functions.  Similarly, in order to reduce capital expenditures, we intend to enter into leasing agreements for hardware and other equipment requirements where required.
We cannot assure you that our actual expenditures will not exceed our estimated operating budget. Actual expenditures will depend on a number of factors, some of which are beyond our control, including, among other things:
- the costs associated with marketing our stored value cash card system,
- the costs to complete the regulatory research and obtain licenses to - operate our financial services business,
- our ability to successfully complete financing transactions with pawnbrokers,
- the availability of financing on acceptable terms,
- reliability of the assumptions of management in estimating cost and timing,
- competition; and
-
other factors that may be beyond our control.


We cannot assure you that we will generate sufficient revenues, if any, from our operations to earn a profit or that our planned service offerings will be commercially successful.  Our inability to successful implement our business plan or generate revenues from financial services will have a material adverse effect on our business and results of operations. 
Capital Obligations and Commitments
As of June 30, 2002, we have commitments related to $90,000 in promissory notes, bearing interest at the annual rate of 18%, due December 31, 2003; demand promissory notes in the aggregate principal amount of $42,000; and convertible debentures in the principal amount of $568,000, bearing interest at the annual rate of 18%, which are due December 31, 2003, and convertible into Pawnbroker.com common shares at $0.50 per share.  
We estimate that our initial cash requirements are approximately $70,000 a month, principally for salaries, professional services, marketing and office expenses.  We anticipate that our cash requirements will increase modestly in the third and fourth quarters of 2002 as a result of costs related to marketing our stored value cash card system and a minor increase on office expense related to corporate accounting requirements.
We intend to compete in the highly competitive financial services industry.  We will compete against companies that have substantially greater financial, technical and other resources than us.  Several competitors already have established brand names, strategic relationships and user loyalty, all of which create a competitive advantage over us.  We have not yet begun the process of determining the regulatory requirements for conducting our proposed financial services business and we do not currently have sufficient working capital to implement our planned business strategy.  Competitive pressures, lack of adequate financing, failure to gain market acceptance and the slow down in the economy are some of the factors that have caused such companies to fail.  We face these same challenges, and we cannot guarantee that we will be able to compete effectively or that we will obtain sufficient financing to develop a commercially viable business.
Our ability to implement our proposed business plan is subject to obtaining adequate financing.  In order to implement our business plan, we anticipate that we will enter into financing arrangements in which we will issue equity, debt, convertible securities or a combination of these.  Such financing arrangements are anticipated to result in additional dilution to our existing shareholders.  We cannot assure you that we will be able to restructure our liabilities or that we will successfully obtain additional financing.  If we are unsuccessful at either of these, we will not be able to continue as a going concern and we may be required to liquidate our company or declare bankruptcy.


ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 
The Company believes that it does not have any material exposure to interest or commodity risks. The Company is exposed to economic and political changes in international markets where the Company competes, such as inflation rates, recession, foreign ownership restrictions, domestic and foreign government spending, budgetary and trade policies and other external factors over which the Company has no control.
Part II OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
As of the date hereof, there is no material litigation pending against the Company.  From time to time, the Company is a party to litigation and claims incident to the ordinary course of business.  While the results of litigation and claims cannot be predicted with certainty, the Company believes that the final outcome of such matters will not have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. 
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to shareholders of the Company during the quarter covered by this report.


ITEM 5. OTHER INFORMATION
On April 11, 2002, Joseph Schlader resigned as a director and as our President to return to his family business.  Mr. Schlader was a co-founder of the Company.  William Galine, Pawnbroker.com’s Vice President, a director, and a co-founder of the Company replaced Schlader as the Company President.  Steven R. Fowler, Pawnbroker.com’s Director of Business Development and a director, was appointed to fill the position of Company Vice President.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a)
Exhibits
 2.1⁽¹⁾
Agreement of Reorganization by and between Digital Sign Corporation, Edward F. Meyers III and Digital Signs, Inc. dated February 14, 1998.

2.2⁽¹⁾
Agreement and Plan of Share Exchange by and between Digital Sign Corporation and Eriko Internet, Inc. dated April 4, 1999.

2.3⁽¹⁾
Agreement and Plan of Reorganization by and among Pawnbroker.com, Inc.  and Joseph Schlader, Cheryl Schlader and William Galine dated May 14, 1999.

2.4⁽¹⁾
Addendum to Agreement and Plan of Reorganization by and among Pawnbroker.com, Inc. and Joseph Schlader, Cheryl Schlader and William Galine dated June 11, 1999.

3.1⁽¹⁾
Certificate of Incorporation of Digital Sign Corporation filed February 13, 1998.

3.2⁽¹⁾
Certificate of Amendment of Digital Sign Corporation filed June 10, 1999.

3.3⁽³⁾
Certificate of Amendment of Pawnbroker.com, Inc. filed June 1, 2000.

3.5⁽¹⁾
Bylaws of Digital Sign Corporation. (Previously filed as Exhibit 3.3 to Form 10)

3.6⁽³⁾
Amended and Restated Bylaws of Pawnbroker.com, Inc.  

10.1⁽¹⁾
Form of Private Placement Subscription Agreement dated February 1998.

10.2⁽¹⁾
Contribution Agreement by and between Digital Sign Corporation and Cameron Woodbridge dated May 19, 1999.  




   













   
10.3⁽¹⁾
Subscription Agreement by and between Pawnbroker.com, Inc. and Packard Financial Group Inc. dated June 14, 1999

10.4⁽¹⁾
Form of Share Purchase Warrant issued to Packard Financial Group Inc. on June 14, 1999

10.5⁽¹⁾
85 Keystone Lease Agreement by and between Pawnbroker.com, Inc. and The Kowalski Family Trust dated April 1, 1999

10.6⁽¹⁾
Design and Development Agreement by and between Pawnbroker.com, Inc. and Banshee, Inc. dated April 26, 1999

10.7⁽¹⁾
Consulting Agreement by and between Pawnbroker.com, Inc. and IRG Investor Relations dated June 25, 1999

10.8⁽²⁾
Lease Agreement by and between Pawnbroker.com, Inc. and Don Pearlman Joint Venture Six dated December 2, 1999

10.9⁽²⁾
Employment Agreement by and between Pawnbroker.com, Inc. and Neil McElwee effective September 13, 1999

10.10⁽²⁾
Employment Agreement by and between Pawnbroker.com, Inc. and Joseph Schlader effective June 13, 1999

10.11⁽²⁾
Employment Agreement by and between Pawnbroker.com, Inc. and William Galine effective June 13, 1999

10.12⁽²⁾
Employment Agreement by and between Pawnbroker.com, Inc. and Vahid Rafizadeh 

10.13⁽²⁾
Severance and Release Agreement by and between Pawnbroker.com, Inc. and Daniel McElwee effective May 18, 2000 




10.14⁽²⁾
Letter Agreement by and between Pawnbroker.com, Inc. and Jefferies & Co., Inc. dated December 1, 1999

10.15⁽²⁾
12% Promissory Note in the Principal Amount of $1,000,000 dated April 26, 2000 issued to BWI Avionics, Ltd.

10.16⁽²⁾
Agreement by and between Pawnbroker.com, Inc. and RedTagOutlet.com, Inc. dated May 10, 2000

10.17⁽⁴⁾
Letter Agreement by and between Pawnbroker.com, Inc. and Ladenburg Thalmann & Co. Inc. dated June 7, 2000

10.18⁽⁴⁾
Letter Agreement by and between Pawnbroker.com, Inc. and Ladenburg Thalmann & Co. Inc. dated June 7, 2000

10.19⁽⁴⁾
Loan Agreement by and between Pawnbroker.com, Inc.  and  Lamothe Investing Corp.  dated June 7, 2000

10.20⁽⁴⁾
Registration Rights Agreement by and between Pawnbroker.com, Inc. and Lamothe Investing Corp. dated June 7, 2000

10.21⁽⁴⁾
Escrow Agreement related to the Loan Agreement dated June 7, 2000

10.22⁽⁴⁾
Form of 9% Convertible Debenture issued to Lamothe Investing Corp.

10.23⁽⁴⁾
Form of Warrant issued to Lamothe Investing Corp.

10.29⁽³⁾
Amended and Restated Stock Option Plan, filed June 1, 2000.

10.30⁽⁵⁾
Common Stock Purchase Agreement by and between Pawnbroker.com, Inc. and Gestrow Investments Limited dated July 6, 2000

10.31⁽⁵⁾
Registration Rights Agreement by and between Pawnbroker.com, Inc. and Gestrow Investments Limited dated July 6, 2000

10.32⁽⁵⁾
Escrow Agreement related to the Common Stock Purchase Agreement dated July 6, 2000

10.33⁽⁵⁾
Form of Warrant issued to Gestrow Investments Limited

10.34⁽⁵⁾
Form of Warrant issued to Ladenburg Thalmann & Co.  Inc.

10.35⁽⁵⁾
Letter Agreement dated July 7, 2000

10.36⁽⁵⁾
Promissory Note issued to Ladenburg Thalmamm & Co. Inc.

10.37⁽⁵⁾
Letter Agreement with Gestrow Investment Limited dated July 19, 2000

10.38⁽⁶⁾
Sales and Fulfillment Agreement dated September 2000, by and between Jewelry Edge and Pawnbroker.com, Inc. (filed as Exhibit 10.1)

10.39⁽⁶⁾
Subscription Agreement related to August 11, 2000 unit private placement.  (filed as Exhibit 10.2)

10.40⁽⁶⁾
Strategic Alliance Agreement, dated October 18, 2000, between First Cash Financial Services, Inc. and Pawnbroker.com, Inc.  (filed as Exhibit 10.3)

10.41⁽⁶⁾
Form of Warrant issued to First Cash Financial Services, Inc.  (filed as Exhibit 10.4)

10.42⁽⁶⁾
Strategic Alliance Agreement, dated October 18, 2000, between First Cash Financial Services, Inc. and Pawnbroker.com, Inc.  (filed as Exhibit 10.3)

10.43⁽⁶⁾
Form of Warrant issued to First Cash Financial Services, Inc.  (filed as Exhibit 10.4)

10.44⁽⁷⁾
18% Promissory Note in the Principal Amount of $100,000 dated July 19, 2001 issued to Edward Romano.

10.45⁽⁷⁾
Form of Subscription Agreement dated May 11, 2001 – Note Conversion

10.46⁽⁸⁾
Form of 18% Convertible Promissory Notes

10.47⁽⁸⁾
Independent Service Organization Agreement Alpha Cashcard Program dated April 2, 2002

99.1
Section 906 Certification of Acting Chief Executive Officer

99.2
Section 906 Certification of Acting Chief Financial Officer


 
 
(1) Previously filed September 1, 1999 on Form 10.
 
(2) Previously filed October 13, 1999 on Form 10/A.
 
(3) Previously filed on June 1, 2000 on Form 8-K.  
 
(4) Previously filed on June 30, 2000 on Form 10-K.
 
(5) Previously filed on July 31, 2000 on Form S-1.
 
(6) Previously filed on November 14, 2000 on Form 10-Q.


(7) Previously filed on May 15, 2001 on Form 10-K.


(8) Previously filed on April 2, 2002 on Form 10-K.


b)
Reports on Form 8-K
None.












SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.






Date:
August 14, 2002


PAWNBROKER.COM, INC.






By:
/s/ William Galine


Name:
William Galine
Title:
President
(Principal Executive Officer and Principal Financial Officer)

DELAWARE		33-0794473
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

<s>	Common Stock Shares <c>	Amount $ <c>	Additional Paid-in Capital $ <c>	Deficit Accumulated During the Development Stage $ <c>	Total Stockholders’ Equity $ <c>
Balance, February 5, 1999
Common stock issued for cash	850,000	85	80,415	-	80,500
Balance, March 31, 1999	850,000	85	80,415	-	80,500

Capital stock of Pawnbroker.com Inc. at April 6, 1999	112,475	11	26,257	-	26,268
Deficit of Pawn- broker.com, Inc. at April 6, 1999	-	-	(23,261)	-	(23,261)
Common stock issued pursuant to the acquisition of Pawnbroker.com, Inc. (Nevada)	624,000	62	-	-	62
Common stock issued for cash	130,000	13	3,002,987	-	3,003,000
Share cancellation	(25,000)	(3)	(247)	-	250
Common stock issued on exercise of share purchase warrants	65,000	7	1,501,493	-	1,501,500
Stock-based compensation for options issused to consultants and non-employees	-	-	93,617	-	93,617
Loss for the year	-	-	-	(4,706,109)	(4,706,109)
Balance, March 31, 2000	1,756,475	175	4,681,261	(4,706,109)	(24,673)

Common stock issued for conversion of convertible debenture	26,882	3	499,997	-	500,000
Common stock issued for cash	100,000	10	1,999,990	-	2,000,000
Common stock issued on exercise of stock options	187,000	19	168,281	-	168,300
Stock-based compensation for options issued to consultants and employees and non-employees	-	-	285,068	-	285,068
Loss for the period	-	-	-	(4,335,831)	(4,335,831)

Balance, December 31, 2000	2,070,357	207	7,634,597	(9,041,940)	(1,407,136)


Common stock issued on exercise of stock options	10,000	1	8,999	-	9,000
Common stock issued to settle debt	3,000,000	300	1,653,804	-	1,654,104
Share cancellation	(52,487)	(5)	(47,233)	-	(47,238)
Loss for the year	-	-	-	(1,024,545)	(1,024,545)
Balance, December 31, 2002	5,027,870	503	9,250,167	(10,066,485)	(815,815)

Loss for the period	-	-	-	(440,769)	(440,769)

Balance, June 30, 2002	5,027,870	503	9,250,167	(10,507,254)	(1,256,584)
</t>

2.1⁽¹⁾	Agreement of Reorganization by and between Digital Sign Corporation, Edward F. Meyers III and Digital Signs, Inc. dated February 14, 1998.
2.2⁽¹⁾	Agreement and Plan of Share Exchange by and between Digital Sign Corporation and Eriko Internet, Inc. dated April 4, 1999.
2.3⁽¹⁾	Agreement and Plan of Reorganization by and among Pawnbroker.com, Inc. and Joseph Schlader, Cheryl Schlader and William Galine dated May 14, 1999.
2.4⁽¹⁾	Addendum to Agreement and Plan of Reorganization by and among Pawnbroker.com, Inc. and Joseph Schlader, Cheryl Schlader and William Galine dated June 11, 1999.
3.1⁽¹⁾	Certificate of Incorporation of Digital Sign Corporation filed February 13, 1998.
3.2⁽¹⁾	Certificate of Amendment of Digital Sign Corporation filed June 10, 1999.
3.3⁽³⁾	Certificate of Amendment of Pawnbroker.com, Inc. filed June 1, 2000.
3.5⁽¹⁾	Bylaws of Digital Sign Corporation. (Previously filed as Exhibit 3.3 to Form 10)
3.6⁽³⁾	Amended and Restated Bylaws of Pawnbroker.com, Inc.
10.1⁽¹⁾	Form of Private Placement Subscription Agreement dated February 1998.
10.2⁽¹⁾	Contribution Agreement by and between Digital Sign Corporation and Cameron Woodbridge dated May 19, 1999.


10.3⁽¹⁾	Subscription Agreement by and between Pawnbroker.com, Inc. and Packard Financial Group Inc. dated June 14, 1999
10.4⁽¹⁾	Form of Share Purchase Warrant issued to Packard Financial Group Inc. on June 14, 1999
10.5⁽¹⁾	85 Keystone Lease Agreement by and between Pawnbroker.com, Inc. and The Kowalski Family Trust dated April 1, 1999
10.6⁽¹⁾	Design and Development Agreement by and between Pawnbroker.com, Inc. and Banshee, Inc. dated April 26, 1999
10.7⁽¹⁾	Consulting Agreement by and between Pawnbroker.com, Inc. and IRG Investor Relations dated June 25, 1999
10.8⁽²⁾	Lease Agreement by and between Pawnbroker.com, Inc. and Don Pearlman Joint Venture Six dated December 2, 1999
10.9⁽²⁾	Employment Agreement by and between Pawnbroker.com, Inc. and Neil McElwee effective September 13, 1999
10.10⁽²⁾	Employment Agreement by and between Pawnbroker.com, Inc. and Joseph Schlader effective June 13, 1999
10.11⁽²⁾	Employment Agreement by and between Pawnbroker.com, Inc. and William Galine effective June 13, 1999
10.12⁽²⁾	Employment Agreement by and between Pawnbroker.com, Inc. and Vahid Rafizadeh
10.13⁽²⁾	Severance and Release Agreement by and between Pawnbroker.com, Inc. and Daniel McElwee effective May 18, 2000

10.14⁽²⁾	Letter Agreement by and between Pawnbroker.com, Inc. and Jefferies & Co., Inc. dated December 1, 1999
10.15⁽²⁾	12% Promissory Note in the Principal Amount of $1,000,000 dated April 26, 2000 issued to BWI Avionics, Ltd.
10.16⁽²⁾	Agreement by and between Pawnbroker.com, Inc. and RedTagOutlet.com, Inc. dated May 10, 2000
10.17⁽⁴⁾	Letter Agreement by and between Pawnbroker.com, Inc. and Ladenburg Thalmann & Co. Inc. dated June 7, 2000
10.18⁽⁴⁾	Letter Agreement by and between Pawnbroker.com, Inc. and Ladenburg Thalmann & Co. Inc. dated June 7, 2000
10.19⁽⁴⁾	Loan Agreement by and between Pawnbroker.com, Inc. and Lamothe Investing Corp. dated June 7, 2000
10.20⁽⁴⁾	Registration Rights Agreement by and between Pawnbroker.com, Inc. and Lamothe Investing Corp. dated June 7, 2000
10.21⁽⁴⁾	Escrow Agreement related to the Loan Agreement dated June 7, 2000
10.22⁽⁴⁾	Form of 9% Convertible Debenture issued to Lamothe Investing Corp.
10.23⁽⁴⁾	Form of Warrant issued to Lamothe Investing Corp.
10.29⁽³⁾	Amended and Restated Stock Option Plan, filed June 1, 2000.
10.30⁽⁵⁾	Common Stock Purchase Agreement by and between Pawnbroker.com, Inc. and Gestrow Investments Limited dated July 6, 2000
10.31⁽⁵⁾	Registration Rights Agreement by and between Pawnbroker.com, Inc. and Gestrow Investments Limited dated July 6, 2000
10.32⁽⁵⁾	Escrow Agreement related to the Common Stock Purchase Agreement dated July 6, 2000
10.33⁽⁵⁾	Form of Warrant issued to Gestrow Investments Limited
10.34⁽⁵⁾	Form of Warrant issued to Ladenburg Thalmann & Co. Inc.
10.35⁽⁵⁾	Letter Agreement dated July 7, 2000
10.36⁽⁵⁾	Promissory Note issued to Ladenburg Thalmamm & Co. Inc.
10.37⁽⁵⁾	Letter Agreement with Gestrow Investment Limited dated July 19, 2000
10.38⁽⁶⁾	Sales and Fulfillment Agreement dated September 2000, by and between Jewelry Edge and Pawnbroker.com, Inc. (filed as Exhibit 10.1)
10.39⁽⁶⁾	Subscription Agreement related to August 11, 2000 unit private placement. (filed as Exhibit 10.2)
10.40⁽⁶⁾	Strategic Alliance Agreement, dated October 18, 2000, between First Cash Financial Services, Inc. and Pawnbroker.com, Inc. (filed as Exhibit 10.3)
10.41⁽⁶⁾	Form of Warrant issued to First Cash Financial Services, Inc. (filed as Exhibit 10.4)
10.42⁽⁶⁾	Strategic Alliance Agreement, dated October 18, 2000, between First Cash Financial Services, Inc. and Pawnbroker.com, Inc. (filed as Exhibit 10.3)
10.43⁽⁶⁾	Form of Warrant issued to First Cash Financial Services, Inc. (filed as Exhibit 10.4)
10.44⁽⁷⁾	18% Promissory Note in the Principal Amount of $100,000 dated July 19, 2001 issued to Edward Romano.
10.45⁽⁷⁾	Form of Subscription Agreement dated May 11, 2001 – Note Conversion
10.46⁽⁸⁾	Form of 18% Convertible Promissory Notes
10.47⁽⁸⁾	Independent Service Organization Agreement Alpha Cashcard Program dated April 2, 2002
99.1	Section 906 Certification of Acting Chief Executive Officer
99.2	Section 906 Certification of Acting Chief Financial Officer

PAWNBROKER COM INC 10-Q