On March 1, 2008 the Company acquired, for $390,917 in cash, five stores offering cash advance loans in Fargo, Grand Forks, Bismarck, and Minot, North Dakota. These stores currently operate under the Ameri-Cash name.

On February 26, 2008, the Company entered into an Exchange Agreement with National Cash & Credit, LLC, a Minnesota limited liability company (NCC), and the members of NCC. Under the Exchange Agreement, the members of NCC assigned all of the outstanding membership interests in NCC to the Company in exchange 1,114,891 shares (valued at $1.20 per share) of the Company’s common stock and a cash payment of $100,000.

The Company's CEO had a material financial interest in NCC. The CEO’s ownership and conditions of the Exchange Agreement were disclosed to the Company's Board of Directors, which approved the Exchange Agreement.

NCC was formed approximately two years ago and owned and operated five stores located in suburban Phoenix, Arizona. NCC principally offered cash advance loans ranging from $100 to $2,500 and title loans ranging from $500 to $2,000.

The results of the operations for the acquired locations have been included in the condensed consolidated financial statements since the date of the acquisitions. The following table presents the pro forma results of operations for the three and six months ended March 31,June 30, 2008 and 2007, as if these acquisitions had been consummated at the beginning of each yearperiod presented. The pro forma results of operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the year presented or the results which may occur in the future.

During the quarter ended March 31, 2008, 1,475,000 options (mostly which were held by related parties) were exercised at an exercise price of $.01 per share. Also, 125,000 options and warrants were cancelled.

The Company’s short-term consumer loan activities are regulated under numerous local, state, and federal laws and regulations, which are subject to change. New laws or regulations could be enacted that could have a negative impact on the Company’s lending activities. Over the past few years, consumer advocacy groups and certain media reports have advocated governmental and regulatory action to prohibit or severely restrict deferred presentment cash advances. If this negative characterization of deferred presentment cash advances becomes widely accepted by consumers, demand for deferred presentment cash advances could significantly decrease, which could have a materially adverse affect on the Company’s financial condition.

Negative perception of deferred presentment cash advances could also result in increased regulatory scrutiny and increased litigation and encourage restrictive local zoning rules, making it more difficult to obtain the government approvals necessary to continue operating existing stores or open new short-term consumer loan stores.

On March 17, 2008, the Board of Directors of the Company approved the payment of the first quarter 2008 dividend on the Company's Series A Convertible Preferred Stock in the amount of $525,000. The dividends were paid on April 1, 2008. On July 14, 2008, the Board of Directors of the Company ratified the payment of the second quarter 2008 dividend on the Company’s Series A Convertible Preferred Stock in the amount of $525,000. The dividends were paid on July 10, 2008.

On February 26, 2008, we entered into an Exchange Agreement with National Cash & Credit, LLC, a Minnesota limited liability company, and its members. Under the Exchange Agreement, the members of National Cash & Credit assigned to us all of the outstanding membership interests in National Cash & Credit in exchange for our issuance to them of an aggregate of 1,114,891 shares of common stock and a cash payment of $100,000. The closing of the transactions contemplated by the Exchange Agreement occurred effective as of February 26, 2008. As a result of this transaction, we acquired five new stores located in the Phoenix, Arizona market. These stores engage in cash advance lending and title lending.

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America applied on a consistent basis. The preparation of these financial statements requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate these estimates and assumptions on an ongoing basis. We base these estimates on the information currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary materially from these estimates under different assumptions or conditions.

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

We maintain a loan loss allowance for anticipated losses for our cash advance and title loans. To estimate the appropriate level of the loan loss allowances,allowance, we consider the amount of outstanding loans owed to us, historical loans charged off, current and expected collection patterns and current economic trends. Our current loan loss allowance is based on our net write offs, typically expressed as a percentage of loan amounts originated for the last twelve12 months applied against the principal balance of outstanding loans that we write off. AsThe Company also periodically performs a look-back analysis on its loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. The Company is aware that as conditions change, weit may also need to make additional allowances in future periods.

Included in loans receivable are cash advance loans that are currently due or past due and cash advance loans that have not been repaid. This generally is evidenced where a loan is originated,customer’s personal check has been deposited and the customer receivescheck has been returned due to non-sufficient funds in the customer’s account, a closed accounts, or other reasons. Cash advance loans are carried at cost less the allowance for doubtful accounts. The Company does not specifically reserve for any individual cash proceedsadvance loan. The Company aggregates cash advance loans for purposes of estimating the loss allowance using a methodology that analyzes historical portfolio statistics and management’s judgment regarding recent trends noted in exchange for a post-dated check or a written authorization to initiate a charge to the customer's bankportfolio. This methodology takes into account onseveral factors, including the stated maturity date of the loan. Ifstore location and charge-off and recovery rates. The Company utilizes a software program to assist with the tracking of its historical portfolio statistics. As a result of the Company’s collections efforts, it historically writes off approximately 35% of the returned items. Based on days past the check orreturn date, write-offs of returned items historically have tracked at the debitfollowing approximate percentages: 1 to the customer's account is30 days - 35%; 31 to 60 days - 60%; 61 to 90 days - 75%; 91 to 120 days - 80%; and 121 to 180 days - 85%. All returned from the bank unpaid, theitems are charged-off after 180 days, as collections after that date have not been significant. The loan is placed in default status and an allowance for this defaulted loan receivable is established and charged against expense in the period that the loan is placed in default status. Thisloss allowance is reviewed monthly and any adjustment to the loan loss allowance as a result of historical loan performance, current and expected collection patterns and current economic trends is recorded.   The Company uses a third party collection agency to assist in the collection of the loan collateral related to title loans, when and as the Company determines appropriate.

The Company assesses the impairment of long-lived and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured based on the excess of the assets' carrying value over the estimated fair value.