40-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 40-F

[Check one]

o REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

OR

þ ANNUAL REPORT PURSUANT TO SECTION 13(a) or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:        September 30, 2010              Commission File Number:  001-34760               

The Cash Store Financial Services Inc.

(Exact name of Registrant as specified in its charter)

Canada

(Province or other jurisdiction of incorporation or organization)

6141	Not applicable
(Primary Standard Industrial	(I.R.S. Employer
Classification Code Number)	Identification Number)

17631-103Avenue

Edmonton, Alberta, Canada T5S 1N8

Phone: 780-408-5110

(Address and telephone number of Registrant’s principal executive offices)

National Corporate Research, Ltd. 10 East 40th Street, 10th Floor New York, NY 10016 (212) 947-7200 Name,  address, and telephone number of agent for service of process Copies to: Michael R. Littenberg Schulte Roth & Zabel LLP 919 3rd Avenue New York, New York 10022 (212) 756-2524

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:	Name of each exchange on which registered:
Common shares, no par value	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

For Annual Reports indicate by check mark the information filed with this Form:

þ Annual information form      þ Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 17,085,727 shares as at September 30, 2010.

Indicate by check mark whether the Registrant filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, please indicate the filing number assigned to the Registrant in connection with such Rule.

Yes o No þ

Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Exchange Act 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 filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes þ  No o

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRINCIPLES

                The Cash Store Financial Services Inc. (the “Company”) prepares its financial statements, which are filed with this report on Form 40-F in accordance with Canadian generally accepted accounting principles (“GAAP”), and are subject to Canadian auditing and auditor independence standards.  They may not be comparable to financial statements of United States companies.  The Company is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare this report in accordance with Canadian disclosure requirements, which are different from those of the United States.  Significant differences between Canadian GAAP and United States GAAP as pertains to the Company for the year ended September 30, 2010, are described in Exhibit 99.1.

FORWARD LOOKING INFORMATION

                This annual report and the Exhibits incorporated by reference into it contain “forward-looking information” within the meaning of applicable Canadian and United States securities legislation.  Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition as well initiatives to grow revenue or reduce expenses.  Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect",  "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved".  Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those described in the Annual Information Form for the year ended September 30, 2010, filed as Exhibit 99.2 to this annual report.

The Company’s forward-looking statements contained in the Exhibits incorporated by reference into this annual report are made as of the respective dates set forth in such Exhibits.  Such forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made.  In preparing this annual report, the Company has not updated such forward-looking statements to reflect any change in circumstances or in management’s beliefs, expectations or opinions that may have occurred prior to the date hereof.  Nor does the Company assume any obligation to update such forward-looking statements in the future.  For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

ANNUAL INFORMATION FORM

                The Company's Annual Information Form for the fifteen months ended September 30, 2010 ("AIF") is filed as Exhibit 99.2 and incorporated by reference to this annual report on Form 40-F.

AUDITED ANNUAL FINANCIAL STATEMENTS AND

MANAGEMENT’S DISCUSSION AND ANALYSIS

Audited Annual Financial Statements

                The audited consolidated financial statements of the Company for the fiscal periods ended September 30, 2010,  and June 30,  2009, are filed as Exhibit 99.1 and incorporated by reference in this annual report on Form 40-F.

Management’s Discussion and Analysis

                The Company’s management’s discussion and analysis (“MD&A”) for the fiscal period ended September 30, 2010 is filed as Exhibit 99.3 and incorporated by reference in this annual report on Form 40-F.

DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chie f Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure. At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation, the Company’s CEO and CFO have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control Over Financial Reporting.

                This annual report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the Commission for newly public companies.

Attestation Report of the Registered Public Accounting Firm.

This annual report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Commission for newly public companies.

Changes in Internal Control Over Financial Reporting.

During the period covered by this annual report on Form 40-F, no change occurred in the Company’s internal control over financial reporting that has materially affected, or  is reasonably likely to materially affect, the Company’s internal control over financial reporting.

AUDIT COMMITTEE

Audit Committee

                The Company’s board of directors (the “Board”) has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Company’s Audit Committee is composed of J. Albert Mondor, Michael Shaw and Ron Chicoyne, all of whom, in the opinion of the Company’s Board, are independent and financially literate. Please refer to Audit Committee Information section in the AIF filed as Exhibit 99.2 for details in connection with each of these members and their qualifications.

Audit Committee Financial Expert

                The Board has determined that it has at least one audit committee financial expert serving on its audit committee. The Board has determined that J. Albert Mondor is an audit committee financial expert and is independent (as determined under Rule 10A-3 of the Exchange Act and Section 303A.06 of the NYSE Listed Company Manual).

                The Commission has indicated that the designation of a person as an audit committee financial expert does not make Mr. Mondor an “expert” for any purpose, impose on such person any duties, obligations or liability that are greater than those imposed on such person as a member of the audit committee and the Board in the absence of such designation and does not affect the duties, obligations or liability of any other member of the audit committee or Board.

CODE OF ETHICS

The Company has adopted a written Code of Business Conduct and Ethics. A copy of this code is available on SEDAR at www.sedar.com or to any person without charge, by written request addressed to: Cash Store Financial Inc., Attention: Chief Financial Officer, 17631-103 Avenue, Edmonton, Alberta, T5S 1N8, or by email (information@CSFinancial.ca).

PRINCIPAL ACCOUNTANT FEES AND SERVICES

KPMG LLP, chartered accountants, acted as the Company’s independent auditor for the fiscal year ended September 30, 2010. See External Audit Fees by Category section of the Company’s AIF, which is attached hereto as Exhibit 99.2, for the total amount billed to the Company by KPMG LLP for services performed in the last two fiscal years by category of service (for audit fees, audit-related fees, tax fees and all other fees) in Canadian dollars.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

See Pre-approval Policies and Procedures section of the Company’s AIF, which is attached hereto as Exhibit 99.2. All audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Regulation S-X.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant does not have any off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table lists, as of September 30, 2010, information with respect to the Registrant’s known contractual obligations.

Payments due by Period (amounts in thousands)($Cdn)
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Capital (Finance) Lease Obligations	$	2,167	$	1,081	$	1,086		-		-
Operating Lease Obligation	$	61,467	$	17,443	$	38,265	$	5,759		-
Other Long-Term Liabilities		-		-		-		-		-
Total:	$	63,634	$	18,524	$	39,351	$	5,759		-

UNDERTAKINGS

The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

CONSENT TO SERVICE OF PROCESS

The Company has previously filed with the Commission an Appointment of Agent for Service of Process and Undertaking on Form F-X.  Any change to the name or address of the Company’s agent for service shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of the Company.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

		CASH STORE FINANCIAL SERVICES INC.
Date: November 24, 2010	By:	/s/ Gordon J. Reykdal
		Gordon J. Reykdal
		Chairman and Chief Executive Officer

EXHIBIT INDEX

Annual Information

Exhibit	Description
99.1	Consolidated Financial Statements (audited) of the Registrant for the fifteen months ended September 30, 2010 and for the year June 30, 2009
99.2	Annual Information Form for the fifteen months ended September 30, 2010
99.3	Management’s Discussion and Analysis for the three and fifteen months ended September 30, 2010

Certifications

99.4	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.5	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.6	Certification of the Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.7	Certification of the Principal Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Consents

99.8 Consent of KPMG LLP

EX-99.1

Exhibit 99.1

THE CASH STORE FINANCIAL SERVICES INC.

CONSOLIDATED FINANCIAL STATEMENTS

For the fifteen months ended September 30, 2010, and

For the year ended June 30, 2009

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The accompanying consolidated financial statements and management’s discussion and analysis (MD&A) are the responsibility of management and have been approved by the Board of Directors.  The consolidated financial statements and MD&A have been prepared by management in accordance with Canadian generally accepted accounting principles and include some amounts based on management’s best estimates and informed judgments.  When alternative accounting methods exist, management has chosen those it considers most appropriate in the circumstances.

The Cash Store Financial Services Inc. maintains a system of internal controls to provide reasonable assurance that transactions are properly authorized, financial records are accurate and reliable and the Company’s assets are properly accounted for and adequately safeguarded.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and is ultimately responsible for reviewing and approving the financial statements.  The Board of Directors carries out its responsibility for the financial statements through its Audit Committee.  This Committee meets periodically with management and the independent external auditors to review the financial statements and the MD&A and to discuss audit, financial and internal control matters.  The Company’s independent external auditors have full and free access to the Audit Committee.  The Audit Committee is responsible for approving the remuneration and terms of engagement of the Company’s independent external auditors.  The consolidated financi al statements have been subject to an audit by the Company’s internal and external auditors, KPMG LLP, in accordance with generally accepted auditing standards on behalf of the shareholders.

The consolidated financial statements and MD&A have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized in note 1 of the notes to the consolidated financial statements.

Signed "Gordon J. Reykdal”	Signed "Nancy Bland”
Gordon J. Reykdal	Nancy Bland, CA
Chairman and	Chief Financial Officer
Chief Executive Officer

November 24, 2010

Edmonton, Alberta, Canada

KPMG LLP Chartered Accountants 10125 – 102 Street Edmonton AB  T5J 3V8 Canada Telephone Fax Internet (780) 429-7300 (780) 429-7379 www.kpmg.ca

AUDITORS' REPORT

To the Shareholders of The Cash Store Financial Services Inc.

We have audited the consolidated balance sheets of The Cash Store Financial Services Inc. (the “Company”) as at September 30, 2010 and June 30, 2009 and the consolidated statements of operations, retained earnings and cash flows for the fifteen months ended September 30, 2010 and the year ended June 30, 2009.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with Canadian generally accepted auditing standards.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2010 and June 30, 2009 and the results of its operations and its cash flows for the fifteen months ended September 30, 2010 and for the year ended June 30, 2009 in accordance with Canadian generally accepted accounting principles.

Chartered Accountants

Edmonton, Canada

November 24, 2010

KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG

 network of independent member firms affiliated with KPMG International, a Swiss cooperative.

KPMG Canada provides services to KPMG LLP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

	Fifteen months ended		Year ended
	September 30		June 30
	2010		2009
Brokerage	$	171,612	$	122,572
Other income		50,165		27,933
		221,777		150,505
EXPENSES
Salaries and benefits		84,614		56,102
Selling, general and administrative - Note 7		33,809		26,715
Retention payments		28,167		17,988
Rent		18,553		11,943
Advertising and promotion		6,109		3,267
Provision for loan losses - Note 23		788		49
Amortization of capital assets		8,138		5,827
Amortization of intangible assets		923		185
Class action settlements - Note 13		2,915		6,910
		184,016		128,986
INCOME BEFORE INCOME TAXES		37,761		21,519
PROVISION FOR INCOME TAXES - Note 11
Current		11,196		4,407
Future		101		2,465
		11,297		6,872
NET INCOME AND COMPREHENSIVE INCOME	$	26,464	$	14,647
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Note 17
Basic		16,913,213		17,957,710
Diluted		17,522,246		18,039,976
BASIC EARNINGS PER SHARE
Net income and comprehensive income	$	1.56	$	0.82
DILUTED EARNINGS PER SHARE
Net income and comprehensive income	$	1.51	$	0.81

See accompanying notes to consolidated financial statements

Page 4

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

(in thousands)

	Fifteen months ended			Year ended
	September 30			June 30
	2010			2009
RETAINED EARNINGS, BEGINNING OF PERIOD	$	20,978		$	21,341
Dividends on common shares - Note 19		(9,120	)		(5,312	)
Shares repurchased - Note 16 (a)		(2,416	)		(9,698	)
Net income and comprehensive income for the period		26,464			14,647
RETAINED EARNINGS, END OF PERIOD	$	35,906		$	20,978

See accompanying notes to consolidated financial statements

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CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30		June 30
	2010		2009
ASSETS
Cash and cash equivalents - Note 4	$	19,639	$	18,519
Other receivables - Note 5		9,940		2,601
Consumer loans receivable - Note 6		4,460		263
Prepaid expenses and other		2,437		1,497
Income taxes receivable		-		150
Current future income taxes - Note 11		614		1,622
		37,090		24,652
Long term receivable - Note 5		450		-
Deposits and other		382		481
Long term investments - Note 7		-		180
Future income taxes - Note 11		2,381		969
Capital assets - Note 8		24,986		14,429
Intangible assets - Note 9		10,648		8,531
Goodwill - Note 10		39,108		34,554
	$	115,045	$	83,796
LIABILITIES
Accounts payable - Note 12	$	17,027	$	14,196
Income taxes payable		2,116		-
Current portion of deferred revenue - Note 14		1,277		133
Current portion of deferred lease inducements		427		260
Current portion of obligations under capital leases - Note 15		961		396
		21,808		14,985
Deferred revenue - Note 14		5,916		13
Deferred lease inducements		1,039		486
Obligations under capital leases - Note 15		991		1,029
Future income taxes - Note 11		1,936		1,431
		31,690		17,944
SHAREHOLDERS' EQUITY
Share capital - Note 16		43,468		40,222
Contributed surplus - Note 18		3,981		4,652
Retained earnings		35,906		20,978
		83,355		65,852
	$	115,045	$	83,796

Commitments - Note 20

Contingencies - Note 21

Subsequent Event - Note 25

Approved by the Board:

Signed "Gordon J. Reykdal"	Signed "J. Albert Mondor"
Director	Director

See accompanying notes to consolidated financial statements

Page 6

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Fifteen months ended			Year ended
	September 30			June 30
	2010			2009
Cash provided by (used in):
OPERATING ACTIVITIES
Net income	$	26,464		$	14,647
Items not affecting cash:
Amortization of capital assets		8,138			5,827
Amortization of intangible assets		923			185
Provision for loan losses		788			49
Equity loss on investments - Note 7		540			-
Warrants to outside agents - Note 16 (c)		-			180
Stock-based compensation - Note 18		1,098			977
Future income taxes		101			2,465
		38,052			24,330
Change in non-cash operating items:
Other receivables		(7,462	)		3,534
Prepaid expenses, deposits and other		(841	)		(272	)
Income taxes receivable		150			(150	)
Accounts payable and accrued liabilities		2,798			5,403
Income taxes payable		2,116			(923	)
Deferred revenue		7,047			(114	)
Deferred lease inducements		720			(116	)
Cash generated by operating activities		42,580			31,692
INVESTING ACTIVITIES
Change in consumer loans receivable		(4,985	)		(294	)
Business acquisitions - Note 3		(5,276	)		(848	)
Purchase of intangible assets		(2,648	)		(3,161	)
Purchase of capital assets		(17,976	)		(3,113	)
Purchase of long-term investments		(360	)		-
Cash used by investing activities		(31,245	)		(7,416	)
FINANCING ACTIVITIES
Repayment of obligations under capital leases		(156	)		(247	)
Dividends paid on common shares - Note 19		(9,120	)		(5,312	)
Issuance of common shares		2,397			268
Shares repurchased		(3,336	)		(16,110	)
Cash used by financing activities		(10,215	)		(21,401	)
INCREASE IN CASH AND CASH EQUIVALENTS		1,120			2,875
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		18,519			15,644
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	19,639		$	18,519
Supplemental cash flow information:
Interest paid	$	210		$	74
Interest received		8			367
Income taxes paid (inclusive of tax refunds)	$	8,891		$	5,729

See accompanying notes to consolidated financial statements

Page 7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Nature of Business

The Cash Store Financial Services Inc. (the “Company”) operates under two branch banners: The Cash Store and Instaloans, who act as brokers to facilitate short-term advances and provide other financial services, including, but not limited to, direct lending and facilitating the opening of bank accounts to income-earning consumers. As at September 30, 2010, the Company operated 544 (June 30, 2009 - 424) branches.

Change in Fiscal Year

In 2010, the Company has changed its fiscal year end from June 30 to September 30.  The fiscal year end change results in a 15 month reporting period from July 1, 2009 to September 30, 2010.

Note 1 - Significant Accounting Policies

(a) Basis of Presentation

These consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles (Canadian GAAP) and differ in certain respects from accounting principles generally accepted in the United States of America (U.S. GAAP), as described in Note 27. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant inter-company balances and transactions have been eliminated.

(b) Use of Estimates

The preparation of these consolidated financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates made by management.  The recoverable values of future income tax assets and liabilities, capital assets, goodwill and intangible assets, the estimated accrued liabilities related to the class action lawsuits, the allowance for doubtful amounts related to consumer loans, and the amortization periods of capital assets and intangible assets are the more significant items which refl ect estimates in these consolidated financial statements.

(c) Retention Payments

The Company, through The Cash Store and Instaloans banners, acts as a broker on behalf of income earning consumers seeking short-term advances.  Funding of most short-term advances is provided by independent third party lenders.  The advances provided by the third party lenders are repayable by the customer to the third party lenders and represent assets of the lenders; accordingly, they are not included on the Company’s balance sheet.

Page 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 1 - Significant Accounting Policies (continued)

            (c)    Retention Payments (continued)

To facilitate the short term advance business, the Company has entered into written agreements with third party lenders who are prepared to consider lending to the Company’s customers.  Pursuant to these agreements, the Company provides services to the lenders related to the collection of documents and information as well as loan collection services.  The agreements also provide that the third party lenders are responsible for losses suffered on account of uncollectible loans provided the Company has properly performed its duties under the terms of the agreements. In the event the Company does not properly perform its duties and the lenders make a claim as required under the agreement, the Company may be liable to the lenders for losses they have incurred. A liability is recorded when it is determined that the Company has a liability under the agreement.

The Company’s Board of Directors regularly approves a resolution which authorizes management to pay a maximum amount of retention payments per quarter to third party lenders as consideration to those lenders that continue to be willing to fund advances to the Company’s customers. While the third party lenders have not been guaranteed a return, the decision has been made to voluntarily make retention payments to the lenders to lessen the impact of loan losses experienced by the third party lenders.  Retention payments are recorded in the period in which a commitment is made to a lender pursuant to the resolution approved by the Board of Directors.

(d) Revenue Recognition

Revenue arising from brokering short-term advances for customers is recognized once all services have been rendered, all advance amounts have been received by the customer, and the brokerage fee has been received by the Company.

Revenue arising from direct lending of short-term advances to customers is recognized on a constant yield basis ratably over the term of the related loan.

Revenue from the Company’s cheque cashing, money order sales, money transfer, bill payment services and other miscellaneous services is recognized when the transactions are completed at the point-of-sale in the branch and the related fee charged by the Company has been received.

(e) Consumer Loans Receivable

Unsecured short-term and longer-term advances that the Company originates on its own behalf are reflected on the balance sheet in consumer loans receivable. Consumer loans receivable are reported net of a provision.

(f) Provision for Loan Losses

Loans in default consist of short-term consumer loans originated by the Company which are past due. A provision for loan losses is recorded when the Company no longer has reasonable assurance of timely collection of the full amount of principal and interest. The provision for loan losses reduces the carrying amount of consumer loan receivables to their estimated realizable amounts. The estimated realizable amount is determined by discounting expected future cash flows associated with the consumer loan receivables at the original effective interest rate inherent in the loans. The provision is reviewed monthly, and any additional provision as a result of historical loan performance, current and expected collection patterns and current economic trends is included in the provision for the loan losses at that time. If the loans rema in past due for an extended period of time, an allowance for the entire amount of the loan is recorded and the loan is ultimately written off.

Page 9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 1 - Significant Accounting Policies (continued)

(g) Capital Assets

Capital assets are recorded at cost.  Amortization is recorded using the rates and methods outlined in the table below.

	Rate	Method
Computer hardware	25%	Straight-line
Computer software	20%	Straight-line
Fixtures, furniture, and equipment	20%	Straight-line
Signs	20%	Straight-line
Buildings	4%	Straight-line
Vehicles	20%	Straight-line

Leasehold improvements are amortized based on the straight-line basis over the shorter of the lease term and the estimated useful life of the asset.

(h) Cash and Cash Equivalents

Cash and cash equivalents are defined as cash and short term investments with maturity dates of less than 90 days.

(i) Intangible Assets

Intangible assets acquired individually or as part of a group of other assets are initially recognized and measured at cost.  The cost of a group of intangible assets acquired in a transaction, including those acquired in a business combination that meet the specified criteria for recognition apart from goodwill, is allocated to the individual assets acquired based on their fair values.

Intangible assets with finite useful lives are amortized over their useful lives.  Intangible assets with indefinite useful lives are not amortized and are tested for impairment annually, or more frequently if events or changes in circumstances indicate that such assets might be impaired.

The amortization methods and estimated useful lives of intangible assets, which are reviewed annually, are as follows:

Customer list, contracts and relationships	Straight-line - 3 years
Computer software	Straight-line - 5 years
Non-compete agreements	Term of the agreements
Favourable and unfavourable leases	Term of leases
Brand name	Indefinite life

(j) Goodwill

Goodwill represents the residual amount that results when the purchase price of an acquired business exceeds the sum of the amounts allocated to the assets acquired, less liabilities assumed, based on their fair values. Goodwill is allocated as of the date of the business combination to the Company’s reporting units that are expected to benefit from the business combination. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

Page 10

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 1 - Significant Accounting Policies (continued)

(j) Goodwill (continued)

Goodwill is not amortized and is tested for impairment annually on July 1st of each year, or more frequently if events or changes in circumstances indicate it may be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared to its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit’s goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. The implied fair value of goodwill is determined in the same ma nner as the value of goodwill is determined in a business combination described in the preceding paragraph, using the fair value of the reporting unit as if it were the purchase price.

When the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

(k) Long-term Investments

The Company applies the equity method of accounting for its investments in The Cash Store Australia Holdings Inc. and RTF Financial Holdings Inc. These investments are recorded at cost plus the Company’s share of net income or loss to date.

(l) Deferred Lease Inducements

The Company has received various inducements to lease space for its branches.  The inducements are amortized over the remaining terms of the respective leases and recorded as a reduction to rent expense.

            (m) Leases

Leases are classified as capital or operating depending upon the terms and conditions of the contracts. Obligations under capital leases are recorded as an asset with a corresponding liability. Asset values recorded under capital leases are amortized on a straight-line basis over the period of expected use. Obligations under capital leases are reduced by lease payments net of imputed interest. Operating lease expenses are recorded in selling, general, and administrative expenses.

(n) Deferred Revenue

The Company has entered into a long-term services contract for which the Company received advance payments. These advance payments are recorded as deferred revenue and recognized as revenue over the life of the contract.

(o) Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, other receivables, consumer loans receivables, accounts payable and accrued liabilities, all of which are short-term in nature and their fair value approximates their carrying value. The fair value of obligations under capital leases carrying amounts are determined by estimating future cash flows on a borrowing-by-borrowing basis, and discounting these future cash flows using a rate which takes into account the Company’s spread for credit risk at year-end for similar terms and types of debt arrangements.

Page 11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 1 - Significant Accounting Policies (continued)

(p) Income Taxes

Income taxes are accounted for under the asset and liability method. Future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment or substantive enactment date. A valuation allowance is recorded against any future tax assets if it is more likely than not that the asset will not be realized.

(q) Stock Based Compensation

The Company has a stock based compensation plan, which is described in Note 16 (b). The Company accounts for all stock based compensation payments that are settled by the issuance of equity in accordance with a fair value-based method of accounting. Stock based compensation awards are recognized in the financial statements over the period in which the related services are rendered, which is usually the vesting period of the option, or as applicable, over the period to the date an employee is eligible to retire, whichever is shorter, with a corresponding increase recorded in contributed surplus. The fair value is calculated using the Black-Scholes option-pricing model. When options are exercised, the proceeds received by the Company, together with the amount in contributed surplus associated with the exercised options, are credi ted to share capital.

(r) Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during each reporting period.  Diluted earnings per share are computed similar to basic earnings per share except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options, if dilutive.  The number of additional shares is calculated by assuming that outstanding stock options were exercised, and that proceeds from such exercises were used to acquire common shares at the average market price during the reporting period.

(s) Accounting for the Impairment of Long-Lived Assets

Long-lived assets and identifiable intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of a group of assets to the sum of future undiscounted cash flows expected to be generated from the use and eventual disposition of the group of assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the group of assets exceeds the fair value of the group of assets. Any assets to be disposed of by sale are reported at the lower of carrying amount or fair value less costs to sell. Such assets are not amortized while they are classified as held-for-sale.

Page 12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 2 - Changes in Accounting Policies and Practices

Goodwill and Intangible Assets

In February 2008, the CICA issued Handbook Section 3064 (“Section 3064”) Goodwill and Intangible Assets. Section 3064, which replaces Section 3062, Goodwill and Intangible Assets and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement, and disclosure of goodwill and intangible assets. The provisions relating to the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Reporting Standard IAS 38, Intangible Assets.  The Company has adopted this standard commencing July 1, 2009, and it has been applied retroactively resulting in $3,161 of net assets being reclassified from capital assets to intangible assets in the comparative June 30, 2009, bala nce sheet, as well as $40 of amortization being reclassified from amortization of capital assets to amortization of intangible assets for the year-ended June 30, 2009.

Business Combinations

In January 2009, the CICA issued Handbook Section 1582, “Business Combinations” which replaces the existing standard. This section establishes the standards for accounting for business combinations, and states that all assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition related costs will be expensed as incurred, restructuring charges will be expensed in the periods after the acquisition date, and non-controlling interests will be measured at their proportionate interest in the fair value of identifiable net assets or at fair value at date of acquisition. This standard is equivalent to the International Financial Reporting Standa rds on business combinations. This standard is applied prospectively to business combinations with acquisition dates on or after January 1, 2011, and earlier adoption is permitted. The Company has adopted this standard effective July 1, 2009.  The adoption of this standard did not have a significant impact on these consolidated financial statements.

Consolidated Financial Statements

In January 2009, the CICA issued Handbook Section 1601, “Consolidated Financial Statements” which replaces the existing standard. This Section carries forward existing Canadian guidance for preparing consolidated financial statements other than for non-controlling interests. The Section is effective for interim and annual financial statements beginning on January 1, 2011, and earlier adoption is permitted. The Company has adopted this standard effective July 1, 2009.  The adoption of this standard did not have a significant impact on these consolidated financial statements.

Non-Controlling Interests

In January 2009, the CICA issued Handbook Section 1602, “Non-Controlling Interests” which establishes standards for accounting for non-controlling interests of a subsidiary in the preparation of consolidated financial statements subsequent to a business combination. This standard is equivalent to the International Financial Reporting Standards on consolidated and separate financial statements. The Section is effective for interim and annual financial statements beginning on January 1, 2011, and earlier adoption is permitted. The Company has adopted this standard effective July 1, 2009.  The adoption of this standard did not have a significant impact on these consolidated financial statements.

Page 13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 2 - Changes in Accounting Policies and Practices (continued)

Financial Instruments - Recognition and Measurement

In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement," to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments related to the application of the effective interest method apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009.  There were no material impacts to the Company’s financial position, net earnings or cash flows as a result of adopting these amendments.

The amendments relating to embedded prepayment options apply to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company is currently evaluating the impact of this amendment.

Financial Instruments - Disclosures

In June 2009, the CICA amended Handbook Section 3862, “Financial Instruments - Disclosures”, to enhance liquidity risk disclosure requirements and to include additional disclosure requirements about inputs to fair value measurements of financial instruments, including their measurement within a hierarchy that prioritizes the input to fair value measurement. These disclosures are presented in Note 23.

Equity

In August 2009, the CICA amended presentation requirements of Handbook Section 3251, “Equity”, as a result of issuing Section 1602, “Non-Controlling Interests”.  The amendments apply only to entities that have adopted Section 1602.  The adoption of the amendments to this standard did not have a significant impact on these consolidated financial statements.

Comprehensive Revaluation of Assets and Liabilities

In August 2009, the CICA amended Handbook Section 1625, “Comprehensive Revaluation of Assets and Liabilities” as a result of issuing Section 1582, “Business Combinations”, Section 1601, “Consolidated Financial Statements”, and Section 1602, “Non-Controlling Interest” in January 2009.  The amendments apply prospectively to comprehensive revaluations of assets and liabilities occurring in fiscal years beginning on or after January 1, 2011.  Earlier adoption is permitted provided that Section 1582 is also adopted.  The Company has adopted this standard effective July 1, 2009. The adoption of this standard did not have a significant impact on these consolidated financial statements.

Page 14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 2 - Changes in Accounting Policies and Practices (continued)

Recent Accounting Pronouncements Not Yet Adopted

International Financial Reporting Standards (IFRS)

In 2006, the Canadian Accounting Standards Board (AcSB) published a new strategic plan that significantly affects financial reporting requirements for Canadian public companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five-year transitional period.

In February 2008, the AcSB confirmed that IFRS will be mandatory in Canada for profit-oriented publicly accountable entities for fiscal periods beginning on or after January 1, 2011, unless, as permitted by Canadian securities regulations, the entity was to adopt U.S. GAAP on or before this date. Should the Company decide to adopt IFRS, its first annual IFRS financial statements would be for the year ending September 30, 2012. Beginning with the three month period ending December 31, 2011, the Company would provide unaudited consolidated financial information in accordance with IFRS including comparative figures for the three month period ending December 31, 2010.

The Company has completed a gap analysis of the accounting and reporting differences under IFRS, Canadian GAAP, and U.S. GAAP, however, management has not yet finalized its determination of the impact of these differences on the consolidated financial statements. This analysis will, in part, determine whether the Company adopts IFRS or U.S. GAAP once Canadian GAAP ceases to exist. The Company is also closely monitoring standard setting activity and regulatory developments in Canada, the United States, and internationally that may affect the timing of its adoption of either IFRS or U.S. GAAP in future periods.

Note 3 - Business Acquisitions

On September 1, 2009, the Company acquired all the business assets of Affordable Payday Loans (APL) representing eight branches in Ontario and two branches in Alberta for total cash consideration of $800. Affordable Payday Loans operated in the short-term advances industry.

On April 26, 2010, the Company acquired all the business assets of 101019134 Saskatchewan Ltd. (EZ Cash), representing 14 branches in Saskatchewan, for total cash consideration of $4,476. EZ Cash operated in the short-term advances industry.

The combined purchase price allocation for the fifteen months ended September 30, 2010, is detailed in the following table below.

Net assets acquired at assigned values
Capital assets	$	36
Customer contracts, relationships, lists and other		392
Goodwill		4,881
Accrued liabilities		(33	)
	$	5,276

Included in goodwill acquired are the favorable market positions as well as the benefits of eliminating competition.

Page 15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 3 - Business Acquisitions (continued)

Revenues and earnings since the acquisitions and pro-forma information if the acquisitions were completed as of July 1, 2009, which are as follows:

	September 30				June 30
	2010				2009
	As reported (1)		Pro forma (2)		As reported (1)		Pro forma (2)
Operating revenues	$	221,777	$	226,540	$	150,505	$	158,735
Net income	$	26,464	$	27,578	$	14,647	$	15,924
Net income per Common Share
- Basic	$	1.56	$	1.63	$	0.82	$	0.89
- Diluted	$	1.51	$	1.59	$	0.81	$	0.88

(1) Operating revenues and net income for the fifteen months ended September 30, 2010, include $4,627 and $854, respectively, in respect of the acquisitions of APL and EZ Cash.

(2) Pro forma amounts for the fifteen months ended September 30, 2010, reflect APL and EZ Cash as if they were acquired on July 1, 2009. Pro forma amounts for the year ended June 30, 2009, reflect APL, EZ Cash, Continual Cash Ltd. and Consolidated Financial Corporation as if they were acquired on July 1, 2008. Continual Cash Ltd. was acquired July 15, 2008, and Consolidated Financial Corporation was acquired November 14, 2008. Their results of operations have been included in the Company's Consolidated Statements of Operations effective the same dates.

The acquisition costs related to the business acquisitions are not significant. Goodwill related to the business acquisitions are 75% tax deductible.

Note 4 - Cash and Cash Equivalents

The significant components of cash and cash equivalents are as follows:

	September 30		June 30
	2010		2009
Cash	$	16,671	$	13,769
Restricted cash		2,968		4,500
Cash equivalents		-		250
	$	19,639	$	18,519

Cash equivalents includes a short-term guaranteed investment certificate in the amount of $nil (June 30, 2009 - $250).

Restricted cash includes $2,968 in funds to facilitate claims related to the British Columbia class action lawsuit settlement (Note 13 (b)). At June 30, 2009, restricted cash included $1,500 in funds to facilitate claims related to the Ontario class action lawsuit settlement and $3,000 in externally restricted cash related to a standby letter of credit in the same amount. The standby letter of credit was issued pursuant to provisions of an agreement with DirectCash ATM Processing Partnership, our debit and credit card service provider, which was required to satisfy timing differences in cash settlements.

Page 16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 5 - Other Receivables

	September 30		June 30
	2010		2009
Mortgages receivable (net of allowance)	$	-	$	292
Due from investee corporations		492		1
Due from suppliers		7,223		1,643
Other		2,675		665
	$	10,390	$	2,601

Due from Suppliers

Due from suppliers includes $7,223 (June 30, 2009 - $1,643) of short term receivables from our main suppliers of bank accounts, debit and prepaid mastercard and insurance products that have occurred in the normal course of business.

Other

Other receivables include amounts receivable in the normal course of business. Included in Other is a long-term receivable in the amount of $450 (June 30, 2009 - $nil).

Note 6 - Consumer Loans Receivable

	September 30			June 30
	2010			2009
Short-term advances receivable	$	3,644		$	-
Term loans receivable		1,327			312
Allowance for doubtful accounts		(511	)		(49	)
	$	4,460		$	263

Page 17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 7 - Long-Term Investments

(a) The Cash Store Australia Holdings Inc.

The Company owns 3,000,000 shares, or approximately 18.3% of the outstanding common shares of The Cash Store Australia Holdings Inc. (AUC) at a share price of $0.06 per share. The carrying amount of this investment is $nil (June 30, 2009 - $180).  Of the 3,000,000 common shares, 1,350,000 common shares are subject to escrow provisions that prevent the Company from selling these shares until the following dates:

Date	Percentage			Common Shares
March 8, 2011		15	%		450,000
September 8, 2011		15	%		450,000
March 8, 2012		15	%		450,000

Included in selling, general, and administrative expenses is a loss of $180 (For the year June 30, 2009 - $nil)

(b) RTF Financial Holdings Inc.

The Company owns 6,000,000 shares, or approximately 15.7%, of RTF Financial Holdings Inc. (RTF) at a share price of $0.06 per share, for a total cost of $360. The carrying amount of this investment is $nil (June 30, 2009 - $nil).

Included in selling, general, and administrative expenses is a loss of $360 (For the year ended June 30, 2009 - $nil)

Note 8 - Capital Assets

	September 30
			2010
			Accumulated		Net Book
	Cost		Amortization		Value
Computer hardware	$	5,538	$	2,949	$	2,589
Computer software		242		230		12
Fixtures, furniture, and equipment		11,578		5,475		6,103
Leasehold improvements		27,359		13,509		13,850
Signs		6,014		3,821		2,193
Buildings		132		15		117
Vehicle		75		4		71
Land		51		-		51
	$	50,989	$	26,003	$	24,986

Page 18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 8 - Capital Assets (continued)

	June 30
			2009
			Accumulated		Net Book
	Cost		Amortization		Value
Computer hardware	$	4,109	$	1,715	$	2,394
Computer software		139		21		118
Fixtures, furniture, and equipment		7,021		4,175		2,846
Leasehold improvements		17,039		9,737		7,302
Signs		4,454		2,894		1,560
Buildings		132		8		124
Vehicle		36		2		34
Land		51		-		51
	$	32,981	$	18,552	$	14,429

Amortization expense for the fifteen months ended September 30, 2010 includes a loss on disposition of capital assets of $61 (June 30, 2009 - $191).

Assets under capital lease included below:

	September 30
			2010
			Accumulated			Net Book
	Cost		Amortization			Value
Computer hardware	$	2,050		$	1,064	$	986
Fixtures, furniture and equipment		903			587		316
Leasehold improvements		7			7		-
Signs		108			108		-
	$	3,068		$	1,766	$	1,302

	June 30
			2009
			Accumulated			Net Book
	Cost		Amortization			Value
Computer hardware	$	1,696		$	280	$	1,416
Fixtures, furniture and equipment		574			537		37
Leasehold improvements		7			7		-
Signs		108			108		-
	$	2,385		$	932	$	1,453

Amortization of capital assets for the fifteen months ended September 30, 2010, includes $821 (June 30, 2009 - $346) relating to assets under capital leases.

During the fifteen months ended September 30, 2010, additions to capital assets included $683 (June 30, 2009 - $1,628) of assets that were acquired by means of capital lease and $47 (June 30, 2009 - $36) of assets that were acquired by way of vehicle financing.

Page 19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 9 - Intangible Assets

	September 30
			2010
			Accumulated			Net Book
	Cost		Amortization			Value
Customer contracts, relationships, lists and other	$	766		$	750	$	16
Non-compete agreements		599			220		379
Favourable and unfavourable leases		94			92		2
Computer software		5,832			881		4,951
Brand name		5,300			-		5,300
	$	12,591		$	1,943	$	10,648

	June 30
			2009
			Accumulated			Net Book
	Cost		Amortization			Value
Customer contracts, relationships, lists and other	$	717		$	706	$	11
Non-compete agreements		269			210		59
Favourable and unfavourable leases		89			89		-
Computer software		3,600			439		3,161
Brand name		5,300			-		5,300
	$	9,975		$	1,444	$	8,531

During the fifteen months ended September 30, 2010, the Company acquired $330 in non-compete agreements (June 30, 2009 - $60) and $16 in customer lists (June 30, 2009 - $10).

Included in computer software are assets under development with a cost of $3,274 (June 30, 2009 - $2,730). These assets have not been amortized in the fifteen months ended September 30, 2010.

Note 10 - Goodwill

	September 30			June 30
	2010			2009
Balance, beginning of period	$	34,554		$	33,986
Goodwill acquired		4,881			568
Disposal of goodwill		(327	)		-
Balance, end of period	$	39,108		$	34,554

Page 20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 11 - Income Taxes

(a) Provision for Income Taxes

The income tax provision differs from the amount that would be computed by applying the federal and provincial statutory income tax rates of 29.1% (June 30, 2009 - 31.3%) to income as a result of the following:

	September 30			June 30
	2010			2009
Income before income taxes	$	37,761		$	21,519
Computed tax expense at statutory income tax rates	$	11,011		$	6,744
Change in enacted tax rates		(1	)		1
Stock-based compensation		319			306
Permanent differences and other		(32	)		(179	)
Total income tax provision	$	11,297		$	6,872

(b) Future Income Taxes

The tax effects that give rise to significant portions of the future income tax assets and liabilities are presented below:

	September 30			June 30
	2010			2009
Future income tax assets:
Current:
Accrued liability for class action settlements and other temporary differences	$	614		$	1,622
Non-current:
Losses availabe to be carried forward		-			67
Capital, intangible assets and goodwill - differences between net book value and
undepreciated capital cost		192			563
Deferred lease inducements - differences between book value and tax value		381			227
Future tax benefit of share issue costs (netted against share issue costs)		-			112
Deferred revenue		1,808			-
	$	2,381		$	969
Future income tax liabilities:
Capital, intangible assets and goodwill - differences between net book value and
undepreciated capital cost	$	(1,936	)	$	(1,431	)

In assessing the realizability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized.  The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible.  Based upon management assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.  The amount of the future tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.

As at September 30, 2010, the Company had no unused non-capital tax loss carry forwards available to reduce taxable income in future years.

Page 21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 12 - Accounts Payable

	September 30		June 30
	2010		2009
Trade accounts payable and accrued liabilities	$	5,733	$	3,587
Class action settlements Note 13 (a), (b), (c), and (d)		2,153		6,169
Accrued salaries and benefits		2,725		3,458
Amounts due to third party lenders		5,647		939
Other		769		43
	$	17,027	$	14,196

The amounts due to third party lenders reflects funds made available by lenders but not yet advanced to customers, any liability under the lending agreement, including any paid retention payments, as well as loan repayment and interest amounts collected from customers. Amounts due to third party lenders are non-interest bearing, unsecured and have no specified repayment terms.

Note 13 - Class Action Settlements

(a) Ontario and the rest of Canada with the exception of British Columbia and Alberta

On April 13, 2004, a legal proceeding was commenced against The Cash Store Inc. and Instaloans Inc., by Thompson McCutcheon (the “Plaintiff”), a customer.  The Plaintiff obtained an order pursuant to the Class Proceedings Act, 1992, S.O. 1992 c.6 (the “Class Proceeding Act”), as amended, certifying the action as a class proceeding and appointing him as the representative of the class.  The Plaintiff asserted that the defendants were in breach of the Criminal Code of Canada and the Fair Trading Act as the aggregate of all charges, including interest, broker fees and card fees, was in excess of those allowed by law.
60; The Statement of Claim stated that the members of the Class would seek to recover all amounts charged, collected or received by the defendants at a criminal rate of interest and/or at an excessive rate, as well as damages, costs and interest.

On December 2, 2008, the Ontario Superior Court of Justice certified the class action lawsuit as a class proceeding under the Act, and granted approval of the settlement that had been agreed to between the Company and the representative Plaintiff on behalf of the Class. The settlement does not constitute any admission of liability by Cash Store Financial.

Under the terms of the settlement, the Company is to pay to the class a minimum of $750 and a maximum of $1,500 in cash and a minimum of $750 and a maximum of $1,500 in credit vouchers to those customers of The Cash Store and Instaloans, exclusive of Alberta and British Columbia, who were advanced funds under a loan agreement and who repaid the payday loan plus brokerage fees and interest in full. The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay a portion of brokerage fees and interest which may arise in the future through new loans advanced. The credit vouchers are fully transferable and have no expiry date. Based on our estimate of the rate of take-up of the available cash and vouchers, a total provision of $2,010 has been recorded to cover the estimated costs of the settl ement, including legal fees and other costs.  During the year ended June 30, 2009, the Company paid the legal fees and costs of the class. On August 6, 2009, the claims process was concluded and we issued $750 in vouchers and $750 in cheques to the class members as full and final satisfaction of all claims. As at September 30, 2010, the remaining accrual is $52.

Page 22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 13 - Class Action Settlements (continued)

(b) British Columbia

On March 5, 2004, an action under the Class Proceedings Act was commenced in the Supreme Court of British Columbia by Andrew Bodnar and others proposing that a class action be certified on his own behalf and on behalf of all persons who have borrowed money from the defendants: The Cash Store Inc., Cash Store Financial and All Trans Credit Union Ltd. The action stems from the allegations that all Payday Loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Criminal Code of Canada. On May 25, 2006, the claim in British Columbia was affirmed as a certified class proceeding of Canada by the B.C. Court of Appeal. In fiscal 2007, the plaintiffs in the British Columbia action brought forward an application to have certain of our customers’ third-party lenders added to the claim.   ;On March 18, 2008, another action commenced in the Supreme Court of British Columbia by David Wournell and others against Cash Store Financial, Instaloans Inc., and others in respect of the business carried out under the name Instaloans since April 2005, collectively, the “Related Actions”.

On May 12, 2009, The Company settled the British Columbia Related Actions in principle.  The settlement has been approved by the Court. The settlement does not constitute any admission of liability by Cash Store Financial.

Under the terms of the court approved settlement, the Company is to pay to the eligible class members who were advanced funds under a loan agreement and who repaid the Payday Loan plus brokerage fees and interest in full, or who met certain other eligibility criteria, a maximum estimated amount of $9,400 in cash and $9,400 in credit vouchers. Thus, the estimated maximum exposure with respect to this settlement is approximately $18.8 million including approved legal expenses.  The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay a portion of brokerage fees and interest which may arise in the future through new loans advanced. The credit vouchers are not transferable and have no expiry date. In addition, the Company is to pay the legal fees and costs of the class. Based on the Company’s estimate of the rate of take-up of the available cash and credit vouchers, an expense of $7,715 to date has been recorded to cover the estimated costs of the settlement, including legal fees of the Class and costs to administer the settlement fund.  It is possible that additional settlement costs could be required. As at September 30, 2010, the remaining accrual is $2,001.

(c) Alberta

The Company has been served in prior fiscal periods with a Statement of Claim issued in Alberta alleging that we are in breach of s. 347 of the Code (the interest rate provision) and certain provincial consumer protection statutes.

The certification motion has been pending since fiscal 2006 and has not yet been heard.  On January 19, 2010, the plaintiffs in the Alberta action brought forward an application to have a related subsidiary, as well as certain of our customers’ third-party lenders, directors and officers added to the Claim.

We believe that we conduct our business in accordance with applicable laws and are defending the action vigorously.  However, the likelihood of loss, if any, is not determinable at this time.

(d) Manitoba

On April 23, 2010, an action under the Manitoba Class Proceedings Act was commenced in the Manitoba Court of Queen’s Bench by Scott Meeking against The Cash Store, Instaloans, and Cash Store Financial proposing that a class action be certified on his own behalf and on behalf of all persons in Manitoba and others outside the province who elect to claim in Manitoba and who obtained a payday loan from The Cash Store or Instaloans.  The action stems from the allegations that all payday loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Code.

Page 23

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 13 - Class Action Settlements (continued)

(d) Manitoba (continued)

We believe that we conducted our business in accordance within applicable laws and are defending the action vigorously.  Further it will be maintained that most of the proposed class members are bound by the judgment in the settlement of the Ontario class action, as approved by the Ontario Superior Court of Justice and the action may not be maintained in its present form.  However, the likelihood of loss, if any, is not determinable.  Accordingly, no provision has been made for this action in the accounts.

Note 14 - Deferred Revenue

	September 30		June 30
	2010		2009
Current	$	1,277	$	133
Long-term		5,916		13
	$	7,193	$	146

On September 1, 2010, the Company entered into an agreement with Ria Financial Services, a division of Euronet Worldwide Inc. (NASDAQ: EEFT), to supply money transfer services across the Company’s network of Cash Store and Instaloans branches in Canada.

The Company received a $7,000 signing bonus, which will be recognized into revenue over the next seven years, which is the length of the agreement.

Note 15 - Obligations under Capital Leases

The Company has financed certain office furniture, equipment, and printers by entering into capital leasing and financing arrangements.

	September 30
			2010
	Aggregate		Less Imputed
	Due		Interest			Net
Various leases - repayable in monthly instalments totalling $59 including imputed interest ranging from nil - 19.8%; due to mature between 2010 - 2014; secured by leased assets with an aggregate carrying amount of $1,302. Included in leases is a one time payment of $368 due in 2011.	$	2,167		$	215	$	1,952
Less current portion		1,081			120		961
	$	1,086		$	95	$	991

Page 24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 15 - Obligations under Capital Leases (continued)

	June 30
			2009
	Aggregate		Less Imputed
	Due		Interest			Net
Various leases - repayable in monthly instalments totalling $42 including imputed interest ranging from nil - 9.0%;  due to mature between 2010 - 2013; secured by  leased  assets with an aggregate carrying amount of $1,453.	$	1,640		$	215	$	1,425
Less current portion		500			104		396
	$	1,140		$	111	$	1,029

The capital lease repayments are due as follows:

	Aggregate		Less Imputed
	Due		Interest		Net
2011	$	1,081	$	120	$	961
2012		640		66		574
2013		323		24		299
2014		123		5		118
	$	2,167	$	215	$	1,952

During the fifteen months ended September 30, 2010, the Company incurred interest charges related to capital leases in the amount of $179 (June 30, 2009 - $76).  These have been included in selling, general, and administrative expenses.

Page 25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 16 - Share Capital

(a) Issued share capital

	September 30						June 30
	2010						2009
	Number of						Number of
	Shares			Amount			Shares0			Amount
Authorized:
Unlimited common shares with no par value
Issued:
Balance, beginning of period		16,959,492		$	40,222			19,540,002		$	46,085
Transfer from contributed surplus for stock options exercised - Note 18		-			1,769			-			281
Options exercised		514,034			2,397			137,960			268
Shares repurchased		(387,799	)		(920	)		(2,718,470	)		(6,412	)
Balance, end of period		17,085,727		$	43,468			16,959,492		$	40,222

On June 30, 2009, the Company announced its intention to make a normal course issuer bid to purchase, through the facilities of the Toronto Stock Exchange, certain of its outstanding common shares. The Company has purchased and subsequently cancelled 387,799 common shares (June 30, 2009 - 1,218,470 common shares) at a cost of $3,336 for the fifteen months ended September 30, 2010 (June 30, 2009 - $7,110).

On November 5, 2008, the Company announced its intention to make a substantial issuer bid to purchase and cancel by way of a “Dutch Auction”, through the facilities of the Toronto Stock Exchange, up to $9,000 of its outstanding common shares from its shareholders. The Company purchased and subsequently cancelled 1,500,000 common shares at a cost of $9,000 for the year ended June 30, 2009.

(b) Options to Employees and Directors

The Company has an incentive stock option plan for certain employees, officers and directors.  Options issued under the plan have vesting terms that vary depending on date granted and other factors.  All stock options must be exercised over specified periods not to exceed five years from the date granted.

	September 30						June 30
	2010						2009
	Total Options			Weighted			Total Options			Weighted
	for Shares			Average Price			for Shares			Average Price
Outstanding, beginning of period		1,128,356			$	4.72		1,089,000			$	4.35
Granted		460,000				12.18		305,000				5.91
Exercised		(514,034	)			4.66		(137,960	)			1.94
Forfeited		(55,000	)			5.69		(127,684	)			7.43
Outstanding, end of period		1,019,322				8.07		1,128,356				4.72
Exercisable, end of period		321,644			$	5.00		466,365			$	4.75

Page 26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 16 - Share Capital (continued)

(b) Options to Employees and Directors (continued)

At September 30, 2010, the range of exercise prices, the weighted average exercise price, and weighted average remaining contractual life are as follows:

			Weighted
			Average	Weighted
	Number		Remaining	Average		Number
Fiscal Year Granted	Outstanding		Term	Exercise Price		Exercisable
2006		40,000	5 mos.	$	5.36		40,000
2007		25,000	10 mos.		5.51		25,000
2008		324,321	26 mos.		3.87		164,979
2009		190,000	42 mos.		6.39		76,665
2010		440,001	52 mos.		8.49		15,000
		1,019,322	39 mos.	$	5.00

The fair value of common share options is estimated at the grant date using the Black-Scholes option pricing model based on the following weighted average assumptions:

	September 30			June 30
	2010			2009
Risk free interest rate		1.7	%		2.8	%
Expected life (years)		3			5
Expected volatility		52.8	%		59.6	%
Expected dividends		3.4	%		4.5	%

The weighted average grant-date fair value of options granted was estimated at $3.46 (June 30, 2009 - $2.42) per option.

The Company is authorized to issue 1,025,614 equity share options under its existing stock option plan.

(c)  Warrants to outside agents

	September 30				June 30
	2010				2009
			Weighted				Weighted
	Number of		Average		Number of		Average
	Warrants		Exercise Price		Warrants		Exercise Price
Balance, beginning of period		150,000	$	7.80	nil		$ nil
Issued	nil		nil			150,000		7.80
Exercised	nil		nil		nil		nil
Expired	nil		nil		nil		nil
Balance, end of period		150,000	$	7.80		150,000	$	7.80
Exercisable for shares, end of period		150,000	$	7.80		150,000	$	7.80

Page 27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 16 - Share Capital (continued)

(c)  Warrants to outside agents (continued)

On May 14, 2009, the Company entered into an agreement for the exclusive financing services of a financing agent. In consideration of providing these financial advisory and agency services, non-transferrable warrants up to a total of 150,000 common shares in the Company at a strike price of $7.80 per share with an expiry on May 14, 2011, were issued.

The fair value of the financing agent warrants issued was $180 for the year ended June 30, 2009. The fair value of the warrants was estimated on the date of issuance using the Black-Scholes option pricing model using the following assumptions:

	September 30		June 30
	2010		2009
Risk free interest rate		-		1.3	%
Expected life (years)		-		2
Expected volatility		-		57.7	%
Expected dividends		-		4.1	%

The weighted average grant-date fair value of options granted was estimated in 2009 at $1.80.

Note 17 -Per Share Amounts

Basic net income per common share is calculated by dividing net income attributable to common shares by the total weighted average common shares outstanding during the period. Diluted net income per common share is calculated to give effect to share option awards and warrants.

The following table presents the reconciliations of the denominators of the basic and diluted per share computations. Net income attributable to common shares equaled diluted income attributable to common shares for all periods presented.

	September 30		June 30
	2010		2009
Basic total weighted average common shares outstanding		16,913,213		17,957,710
Effect of dilutive securities
Share option awards		459,033		62,951
Warrants		150,000		19,315
Diluted total weighted average common shares outstanding		17,522,246		18,039,976

Page 28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 18 - Contributed Surplus

For stock options granted to certain employees, officers and directors after July 1, 2002, the Company records compensation expense using the fair value method.  Compensation costs are recognized over the vesting period as an increase to stock-based compensation expense, which has been recorded in selling, general, and administrative expenses, with a corresponding increase to contributed surplus. When options are exercised, the fair-value amount in contributed surplus is credited to share capital.

	September 30			June 30
	2010			2009
Balance at beginning of period	$	4,652		$	3,776
Stock options exercised		(1,769	)		(281	)
Agency warrants on proposed financing - Note 16 (c)		-			180
Stock-based compensation expense		1,098			977
	$	3,981		$	4,652

Note 19 -Dividends

The Company’s current dividend policy is to declare and pay quarterly cash dividends at the discretion of the Board of Directors, as circumstances permit, in an aggregate annual amount equal to approximately 30% of the prior year’s net income. The Company’s dividend policy and practice will be reviewed from time to time in the context of the Company’s earnings, financial condition, the need to retain earnings to fund future growth of our business and other relevant factors, and the declaration of a dividend will always be at the discretion of the Board of Directors.

	September 30				June 30
	2010						2009
	Declared effective	Paid to shareholders	Total		Declared effective		Paid to shareholders		Total
Dividend per Common Share
* Dividend $0.14 (2009 - $nil)	September 9, 2009	September 24, 2009	$	2,342		N/A		N/A	$	-
Dividend $0.10 (2009 - $0.065)	October 28, 2009	November 26, 2009		1,676	November 12, 2008		November 27, 2008			3,110
Dividend $0.10 (2009 - $0.065)	February 10, 2010	February 25, 2010		1,694	February 3, 2009		February 18, 2009			1,101
Dividend $0.10 (2009 - $0.065)	May 11, 2010	May 26, 2010		1,701	May 5, 2010		May 20, 2010			1,101
Dividend $0.10 (2009 - $nil)	August 11, 2010	August 26, 2010		1,707		N/A		N/A		-
			$	9,120					$	5,312

* Two dividends per common share were declared. One was a quarterly cash dividend of $0.065 and the second dividend was a special cash dividend of $0.075.

Page 29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 20 - Commitments

(a) Lease Commitments

The Company is committed to future minimum annual operating lease payments for office and branch premises, which expire through 2020.

	Aggregate Lease
	Payments
2011	$	17,443
2012		15,908
2013		12,787
2014		9,570
2015		5,037
Thereafter		722
	$	61,467

            (b)    New Branch Openings and Additional Lease Commitments

Subsequent to the year-end, the Company has committed to leases for six additional Cash Store and Instaloans locations.  The additional minimum annual lease payments required for the next five years, including these six leases and thereafter are as follows:

	Additional Lease		Aggregate Lease
	Payments		Payments
2011	$	158	$	17,601
2012		219		16,127
2013		225		13,012
2014		226		9,796
2015		233		5,270
Thereafter		48		770
	$	1,109	$	62,576

Note 21 - Contingencies

(a) Legal Proceedings

The Company has been served in prior fiscal periods with Statements of Claim issued in Alberta alleging that the Company is in breach of s. 347 of the Criminal Code (the interest rate provision) and certain provincial consumer protection statutes.  One of the claims is in respect of payday loans and the certification motion has been pending since fiscal 2006. The other Alberta claim is in respect of title loans and the certification application has not yet been heard. The Company believes that it conducts its business in accordance with applicable law and is defending each of the actions vigorously. However, the likelihood of loss if any is not determinable. Accordingly, no provision has been made for these actions in the accounts.

Page 30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 21 - Contingencies (continued)

(a) Legal Proceedings (continued)

The Company is also involved in other claims related to the normal course of operations.  Management believes that it has adequately provided for these claims.

(b) Branch Operations

The Company acts as a broker on behalf of consumers seeking short term advances. The funding of the advances is provided directly to the customers by independent third party lenders. The Company has entered into written business arrangements with a number of third party lenders that are prepared to consider lending to customers. Pursuant to these agreements, services related to the collection of documents and information as well as loan collection services are provided to the third party lenders. The agreements also provide that the third party lenders are responsible for losses suffered as a result of uncollectible loans provided the required duties under the terms of the agreements have been properly performed by the subsidiaries. In the event the duties are not properly performed and the lenders make a claim as required unde r the agreement, the subsidiaries may be liable to the lenders for losses they have incurred.  The Company’s contingent risk is the balance of the third party lenders loan portfolio which totalled approximately $109,082 as at September 30, 2010 (June 30, 2009 - $79,000).

To date, no claims have been made by the third party lenders and no payments have been made or accrued by the subsidiaries pursuant to this clause in the agreements. Risk is managed through compliance with the loan limits, procedures and selection criteria established by the lenders.

Note 22 - Related Party Transactions

(a)    The Cash Store Australia Holdings Inc.

The Company provided administrative services to The Cash Store Australia Holdings Inc. The Company entered into an interim services agreement with AUC to provide ongoing services such as financial and accounting support, contracts administrative services, and the use of the Company’s information technology and telecommunication systems. Included in selling, general, and administrative expenses is a recovery of $362 (June 30, 2009 - $82) relating to these services. These transactions were subject to normal trade terms and were measured at the actual exchange amount.

The Company has a $7 (June 30, 2009 - $1) receivable from AUC. Amounts due are non-interest bearing, unsecured and have no specified terms of repayment. The receivable was repaid subsequent to year-end.

(b)    RTF Financial Holdings Inc.

The Company provided administrative services to RTF Financial Holdings Inc. The Company entered into an interim services agreement with RTF to provide ongoing services such as financial and accounting support and contracts administrative services. Included in selling, general, and administrative expenses is a recovery of $120 (June 30, 2009 - $nil) relating to these services. These transactions were subject to normal trade terms and were measured at the actual exchange amount.

Page 31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 22 - Related Party Transactions

(b)    RTF Financial Holdings Inc. (continued)

The Company has a $485 (June 30, 2009 - $nil) receivable from RTF. Amounts due are non-interest bearing, unsecured and have no specified terms of repayment. The receivable was repaid subsequent to year-end.

Note 23 - Financial Instruments and Risk Management

(a)    Classification of Financial Instruments

The Company has made the following classifications: cash and cash equivalents as held-for-trading, other receivables and consumer loans receivable as loans and receivables, and accounts payable and obligations under capital leases as other financial liabilities.

(b)    Fair Values

The fair values of financial instruments are determined with respect to the hierarchy that prioritizes the input to fair value measurement described in Note 2. In the absence of an active market, the Company determines fair value by using valuation techniques that refer to observable market data or estimated market prices. Fair values are inherently judgmental, thus the estimated fair values do not necessarily reflect amounts that would be received or paid in case of immediate settlement of these instruments. The use of different estimations, methodologies and assumptions could have a material effect on the estimated fair value amounts. The carrying value of other receivables, consumer loans receivable, accounts payable and accrued liabilities approximate their fair values due to the relatively short-term nature of these balanc es. The carrying amounts of obligations under capital leases are determined by estimating future cash flows on a borrowing-by-borrowing basis, and discounting these future cash flows using a rate which takes into account the Company’s spread for credit risk at year-end for similar terms and types of arrangements.

The hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of fair value hierarchy based on the reliability of inputs are as follows:

• Level 1 - inputs are unadjusted quoted prices of identical instruments in active markets.

• Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 - inputs used in a valuation technique are not based on observable market data in determining fair values of these instruments.

The Company has segregated all financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. Cash and cash equivalents are the only financial instruments valued using Level 1 inputs (quoted market prices). There were no financial instruments categorized in Level 2 (valuation techniques using observable market inputs) and Level 3 (valuation techniques using non-observable market inputs) as at September 30, 2010.

Page 32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 23 - Financial Instruments and Risk Management (continued)

(c) Risk Management

The Company is exposed to a number of financial risks in the normal course of its business operations, including market risks resulting from fluctuations in interest rates, as well as credit and liquidity risks. The nature of the financial risks and the Company’s strategy for managing these risks has not changed significantly from the prior period.

Market risk is the risk of loss that results from changes in market factors such as foreign currency exchange rates and interest rates. The level of market risk to which the Company is exposed at any point in time varies depending on market conditions, expectations of future price or market rate movements and composition of the Company’s financial assets and liabilities held, non-trading physical assets, and contract portfolios.

Overall, the Company’s Board of Directors has responsibility for the establishment and approval of the Company's risk management policies. To manage the exposure to changes in market risk, management performs a risk assessment on a continual basis to help ensure that all significant risks related to the Company and its operations have been reviewed and assessed to reflect changes in market conditions and the Company's operating activities. The following summarizes the types of market price risks to which the Company is exposed, and the risk management instruments applied to mitigate them. The sensitivities provided below are hypothetical and should not be considered to be predictive of future performance or indicative of earnings on these contracts. The Company does not currently use derivative financial instruments to ma nage its market risks and does not hold or issue derivative financial instruments for trading or speculative purposes.

(i) Currency Risk

The Company is not significantly exposed to currency risk as the majority of operations are in Canada with no significant transactions being entered into in a foreign denominated currency.

(ii) Interest Rate Risk

The Company does not have any variable interest bearing obligations; therefore, the

Company’s exposure to interest rate fluctuations relative to financial instruments is minimal.

(iii) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents, other receivables, consumer loans receivable, and long-term receivable. The maximum amount of credit risk exposure is limited to the carrying amount of the balances disclosed in these financial statements.

Page 33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 23 - Financial Instruments and Risk Management (continued)

(c) Risk Management (continued)

(iii) Credit Risk (continued)

The best representation of the Company’s maximum exposure (excluding tax effects) to credit risk, which is a worst case scenario and does not reflect results expected by the Company, is as set out in the following table:

	September 30		June 30
	2010		2009
Cash and cash equivalents	$	19,639	$	18,519
Other receivables		9,940		2,601
Consumer loans receivable - Note 6		4,460		263
Long-term receivable		450		-
	$	34,489	$	21,383

Cash and cash equivalents: Credit risk associated with cash and cash equivalents is minimized substantially by ensuring that these financial assets are placed with reputable Canadian financial institutions that have been accorded strong investment grade ratings by a primary rating agency.

Other receivables: Other receivables includes amounts owing to the Company from various parties. Included within other receivables are amounts of $7,223 owed by two different parties and as such, these balances represent a concentration of credit risk to the Company. For such parties, the Company trades with entities that are assessed as being credit worthy and the Company maintains an ongoing review of their credit status. The balance of other receivables is owed by a large number of parties that individually owe amounts to the Company that are not significant in value as at September 30, 2010.

Consumer loans receivable:  The Company also directly lends to its customers and has no significant concentration of credit risk with any particular individual related to short-term advances.

Credit risk relates to the possibility of default of payment on the Company’s consumer loans receivable. The Company performs on-going credit evaluations, and reviews the aging of the receivable, payment history and other factors, and it establishes a provision for loan losses when it is determined that a loan is impaired.

Page 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 23 - Financial Instruments and Risk Management (continued)

(c) Risk Management (continued)

(iii) Credit Risk (continued)

The following table presents an analysis of the age of consumer loans receivable as of September 30, 2010.

	September 30			June 30
	2010			2009
Consumer loans receivable, net of allowance for doubtful accounts
Current	$	3,410		$	211
1-30 days past due date		992			22
31-60 days past due date		306			10
61-90 days past due date		119			11
Greater than 90 days past due date		144			58
Consumer loans receivable		4,971			312
Allowance for doubtful accounts		(511	)		(49	)
	$	4,460		$	263

The Company makes significant estimates in respect of the allowance for doubtful accounts.  Historical information is considered when determining whether past-due accounts should be provided for and the same factors are considered when determining whether to write off amounts charged to the allowance against the consumer loans receivable. No consumer loans receivable are written off directly to the provision for loan losses.

The following table presents a summary of the activity related to the Company’s allowance for doubtful accounts.

	September 30			June 30
	2010			2009
Balance, beginning of period	$	49		$	-
Provisions made during the period		788			49
Write-offs during the period		(326	)		-
Balance, end of period	$	511		$	49

The gross amount of impaired loans is $511 against which a provision of $511 is recorded against.

(iv) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due or will not receive sufficient funds from its third party lenders to advance to the Company’s customers.  The Company manages all liquidity risk through maintaining a sufficient working capital amount through daily monitoring of controls, cash balances and operating results.  The Company’s principal sources of cash are funds from operations, which the Company believes will be sufficient to cover its normal operating and capital expenditures.

Page 35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 23 - Financial Instruments and Risk Management (continued)

(c) Risk Management (continued)

(iv) Liquidity Risk (continued)

The maximum exposures to liquidity risk are represented by the carrying amount of accounts payable and accrued liabilities, and obligations under capital leases, which is approximately $18,979. This amount is made up of the following:

	Carrying		Contractual			Less Than 1
	Amount		Cash Flows			Year		1-3 Years
Accounts payable and accrued liabilities	$	17,027		$	17,027	$	17,027	$	-
Obligations under capital
leases (including interest)		1,952			2,167		1,081		1,086
	$	18,979		$	19,194	$	18,108	$	1,086

Note 24 - Management of Capital

The Company’s objective when managing capital is to provide a return to its shareholders by fairly pricing its services with the associated level of risk while being able to sufficiently fund future growth initiatives.  The Company defines capital that it manages as the aggregate of its shareholders’ equity, which is comprised of share capital, contributed surplus and retained earnings.

In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue shares, repurchase shares through a normal course issuer bid, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestures, as well as capital and operating budgets.

The Company sets the amount of capital in proportion to risk and manages the capital structure and makes adjustments to it based on economic or regulatory changes.  In order to maintain or modify the capital structure, the Company may seek additional sources of capital.  The Company has limited reliance on debt facilities and is not subject to any restrictive covenants.

The Company’s capital management objectives, policies and procedures were unchanged since the prior year-end.

Page 36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 25 - Subsequent Event

On November 24, 2010, the Company declared a quarterly dividend of $0.10 per common share. The dividend is payable on December 21, 2010, to shareholders of record on December 6, 2010.

Note 26 - Comparative Figures

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

Note 27 - U.S. GAAP Reconciliation

The Company prepares its consolidated financial statements in accordance with Canadian GAAP, which conforms from a recognition and measurement perspective in all material aspects applicable to the Company with U.S. GAAP for the periods presented. Presentation differences and additional disclosures required under U.S. GAAP are as follows:

            (A) Consolidated Statements of Cash Flows

Canadian GAAP permits the disclosure of a subtotal of the amount of funds provided by operating activities before changes in non-cash operating items in the consolidated statements of cash flows. U.S. GAAP does not permit this subtotal to be included in the consolidated statements of cash flows.

(B) Long- Term Investments

U.S. GAAP requires the Company to disclose the aggregate quoted market value of long-term investments, which is not required under Canadian GAAP.

(a) The Cash Store Australia Holdings Inc.

The Company accounts for the investment under the equity method of accounting as it has significant influence over strategic operating, investing and financing activities due to board representation and management involvement in day to day operations. The difference between the carrying amount of the investment and the underlying equity in net assets of the investee is not significant. The aggregate quoted market value of this investment is $8,250.

(b) RTF Financial Holdings Inc.

The Company accounts for the investment under the equity method of accounting as it has significant influence over strategic operating, investing and financing activities due to board representation and management involvement in day to day operations. The difference between the carrying amount of the investment and the underlying equity in net assets of the investee is not significant. No aggregate quoted marked value of the investment exists as RTF is not publicly traded.

Page 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 27 - U.S. GAAP Reconciliation (continued)

            (C) Intangible Assets

The estimated aggregate annual amortization expense for the next five years for intangible assets subject to amortization is as follows:

Fiscal year ending September 30	2011		2012		2013		2014		2015
Amortization expense for intangible assets	$	1,070	$	1,070	$	1,070	$	1,070	$	1,068

            (D) Income Taxes

Under Canadian GAAP, the tax effects of temporary differences are referred to as future income taxes. Under U.S. GAAP, the tax effects of temporary differences are referred to as deferred income taxes.

The Company currently does not have any unrecognized tax benefits. The Company’s tax positions for 2006 to present in Canada remain subject to examination by tax authorities.

(E) Accounts Payable and Accrued Liabilities

U.S GAAP requires the Company to disclose components of accrued liabilities, which is not required under Canadian GAAP. Accrued liabilities included in trade accounts payable and accrued liabilities as at September 30, 2010, were $2,678 (June 30, 2009 - $1,290).

(F) Stock Based Compensation

U.S. GAAP requires the Company to disclose nonvested share options, which is not required under Canadian GAAP. A summary of the status of the Company's nonvested share options as of September 30, 2010, and the changes during the fifteen months ended September 30, 2010, is presented below:

	September 30						June 30
	2010						2009
	Total Options			Weighted			Total Options			Weighted
	for Shares			Average Price			for Shares			Average Price
Nonvested, beginning of period		661,991			$	4.70		914,001			$	4.21
Granted		460,000				12.18		230,000				6.39
Vested		(374,313	)			4.85		(436,344	)			4.64
Forfeited		(50,000	)			5.71		(45,666	)			4.09
Nonvested, end of period		697,678			$	9.48		661,991			$	4.70

The total intrinsic value of options exercised during the fifteen months ended September 30, 2010, was $3,610 (June 30, 2009 - $567).  The total fair value of options that vested during the fifteen months ended September 30, 2010, was $996 (June 30, 2009 - $1,562).

As at September 30, 2010, and June 30, 2009, the aggregate intrinsic value of options outstanding was $7,635 and $4,409, respectively, while the aggregate intrinsic value of the options that are currently exercisable was $3,322 and $1,808, respectively.

As at September 30, 2010, there was $1,447 of total unrecognized compensation costs related to non-vested stock options. The Company expects to recognize this expense over a weighted average period of 2.2 years.

Page 38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 27 - U.S. GAAP Reconciliation (continued)

            (G) Financial Instruments

Valuation Techniques:

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	September 30				June 30
	2010				2009
	Carrying
	Value		Fair Value		Carrying Value		Fair Value
Financial Assets
Cash and cash equivalents	$	19,639	$	19,639	$	18,519	$	18,519
Other receivables		9,940		9,940		2,601		2,601
Consumer loans receivable		4,460		4,460		263		263
Long term receivable		450		450		-		-
Financial Liabilities
Accounts payable		17,027		17,027		14,196		14,196
Obligations under capital leases	$	1,952	$	1,952	$	1,425	$	1,425

            (H) Recent United States Accounting Pronouncements

Effective July 1, 2009, the Company adopted ASC Subtopic 820-20 (formerly FSP FAS 157-2 “Effective Date of FASB Statement No. 157”), which delayed the effective date of ASC 820 for non-financial assets or liabilities that are not required or permitted to be measured at fair value on a recurring basis to fiscal 2010. The adoption of this Subtopic did not have a material impact on the Company’s consolidated financial statements.

Effective July 1, 2009, the Company prospectively adopted ASC Subtopic 350-30 (formerly FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”). The adoption of this Subtopic did not have a material impact on the Company’s consolidated financial statements.

Effective July 1, 2009, the Company adopted the provisions of ASC paragraph 825-10-65-1 (formerly FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”), which increases the frequency of fair value disclosures. Financial instruments measured at fair value as at September 30, 2010, include cash and cash equivalents, which is classified as Level 1 in the fair value hierarchy.

Effective January 1, 2010, the Company adopted ASU No. 2010-06, “Improving Disclosures About Fair Value Measurements”. The ASU amends existing disclosure requirements under ASC 820 by adding required disclosures about items transferring into and out of Levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to Level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation.

Effective July 1, 2009, the Company adopted the FASB Accounting Standards Codification (ASC) (formerly issued as SFAS No. 168, “The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162”). The adoption of the ASC changed the Company’s references to U.S. GAAP accounting standards but did not have a material impact on the Company’s consolidated financial statements.

Page 39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 2010, AND FOR YEAR ENDED JUNE 30, 2009

(in thousands, except share and per share amounts)

Note 27 - US GAAP Reconciliation (continued)

            (H) Recent United States Accounting Pronouncements (continued)

The Company adopted prospectively the provisions outlined in FASB ASC Topic 805 “Business Combinations” (formerly SFAS No. 141R, “Business Combinations”) for all business combinations with an acquisition date on or after July 1, 2009. The adoption of the provisions of ASC Topic 805 did not have a material impact on the Company’s consolidated financial statements.

Effective July 1, 2009, the Company adopted EITF 08-6 “Equity Method Investment Accounting Considerations (included in ASC Subtopic 323-10).” EITF 08-6 applies to all investments accounted for under the equity method and clarifies the accounting for certain transactions and impairment considerations involving those investments. This section is effective for interim and annual financial statements beginning on or after December 15, 2008. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

The Company adopted prospectively the provisions outlined in FASB ASC 160 “Non-controlling Interest in Consolidated Financial Statements.” ASC 160 aligns the reporting of non-controlling interests in subsidiaries with the requirements of IAS 27. This statement provides similar guidance for accounting for changes in a parent’s ownership interest and deconsolidation of a subsidiary. This standard is effective for interim and annual reporting periods beginning on or after December 15, 2008. The adoption of the provisions of ASC Topic 160 did not have a material impact on the Company’s consolidated financial statements.

Effective July 1, 2009, the Company adopted ASC Topic 820 “Measuring Liabilities at Fair Value”. This update addresses practice difficulties caused by tension between fair-value measurements based on the price that would be paid to transfer a liability to a new obligor and contractual or legal requirements that prevent such transfers from taking place. This standard is effective for interim and annual reporting periods beginning on or after August 27, 2009. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

(I) Recent United States Accounting Pronouncements Not Yet Adopted

In 2010, FASB amended ASC Topic 310 “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The ASC significantly expands existing disclosures about the credit quality of financing receivables and their allowance for credit losses. The ASC affects all entities with financing receivables, excluding short-term trade accounts receivable or receivables measured at fair value or lower of cost of fair value. This section is effective for interim and annual reporting periods ending on or after December 15, 2010. The Company is evaluating the impact of the adoption of this standard on its consolidated financial statements.

In 2010, FASB amended  EITF 09-J” Effect of Denominating the Exercise Price of a Share-Based Award in the Currency of the Market in Which the Underlying Equity Security Trades. The task force reached a consensus that an employee share-based payment with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade should be considered an equity classified award assuming all other criteria for equity classification are met. This section is effective for interim and annual reporting periods ending on or after December 15, 2010.  The Company is evaluating the impact of the adoption of this standard on its consolidated financial statements.

Page 40

EX-99.2

Exhibit 99.2

ANNUAL INFORMATION FORM

For the fifteen months ended September 30, 2010

November 24, 2010

TABLE OF CONTENTS

CORPORATE STRUCTURE	4
NAME, ADDRESS AND BACKGROUND INFORMATION	4
INTERCORPORATE AND INTRACORPORATE RELATIONSHIPS	4
GENERAL DEVELOPMENT OF THE BUSINESS	5
THREE YEAR HISTORY	5
ACQUISITIONS	5
DESCRIPTION OF THE BUSINESS	5
GENERAL	5
OPERATIONS	6
CORPORATE OFFICE	8
RISK FACTORS	8
DIVIDENDS	12
DESCRIPTION OF CAPITAL STRUCTURE	12
GENERAL DESCRIPTION OF CAPITAL STRUCTURE	12
MARKET FOR SECURITIES	13
TRADING PRICE AND VOLUME	13
DIRECTORS AND OFFICERS	14
CEASE TRADE ORDERS,BANKRUPTCIES,PENALTIES OR SANCTIONS	15
CONFLICTS OF INTEREST	16
LEGAL PROCEEDINGS	17
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	18
TRANSFER AGENTS AND REGISTRARS	18
EXPERTS	18
AUDIT COMMITTEE INFORMATION	18
ADDITIONAL INFORMATION	19
APPENDIX “A” – AUDIT COMMITTEE CHARTER	20

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Non-GAAP Financial Measures

This Annual Information Form (“AIF”) refers to certain financial measures that are not determined in accordance with generally accepted accounting principles (“GAAP”) in Canada.  These measures do not have standardized meanings and may not be comparable to similar measures presented by other companies.  Although measures such as “Earnings Before Interest, Income Taxes, Extraordinary Items, Stock-based Compensation, Amortization of Capital and Intangible Assets” (“EBITA”) do not have standardized meanings prescribed by GAAP, these measures are used herein or can be determined by reference to our financial statements.  “Same branch revenues” is a non-GAAP measure tracked and reported by us and is generally used to compare the average revenue for a particular group of branches in a current period to that same particular group of branches in a prior period. This non-GAAP measure is a way to gauge the performance of a particular group of branches and is directly related to, and helps explain, changes in total revenue.  Average revenue is defined as revenue for the period divided by the number branches. “Branch operating income” (“BOI”) is a non-GAAP measure tracked and reported by us and is generally used to compare performance at the branch level. It includes expenses which primarily relate to the operations of the branch network.  “Regional expenses” is a non-GAAP measure which is used to gauge expenditures at the regional and divisional level and includes compensation of associates including centralized regional department s, Regional Managers, Divisional Vice Presidents and President, as well as other expenses related to the functions of these groups. “Corporate expenses” is a non-GAAP measure which is used to gauge expenditures at the corporate level and includes compensation of associates and related expenses at the corporate office level. These measures are discussed because management believes that they facilitate the understanding of The Cash Store Financial Services Inc.’s results and of its operational and financial position.

Readers are cautioned that non-GAAP measures used herein are not alternatives to measures under GAAP and should not, on their own, be construed as indicators of the Company’s performance or cash flows, measures of liquidity or as measures of actual return on the Company’s common shares. These non-GAAP measures, as presented, should only be used in conjunction with the consolidated financial statements of the Company. See “Risk Factors”.

Reporting Currency

All dollar amounts are presented in Canadian dollars unless otherwise indicated.  The Company’s quarterly and annual financial statements are presented in Canadian dollars and are reported in accordance with the Canadian generally accepted accounting principles.

Cautionary Statement Regarding Forward-looking Information

ThisAIFcontains “forward-looking information” within the meaning of applicable Canadian and United States securities legislation. Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition as well initiatives to grow revenue or reduce retention payments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anti cipates”, or “does not anticipate”, “believes” or variations of such words and phrases. Forward-looking information contains statements that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur”, or “be achieved”. Known and unknown risks, uncertainties and other factors may cause the actual results, level of activity, performance or achievements of the Company, to be materially different from those expressed or implied by such forward-looking information. These risks include, but are not limited to, changes in economic and political conditions, legislative or regulatory developments, technological developments, third-party arrangements, competition, litigation, risks associated with, but not limited to, market conditions, the availability of alternative transactions, shareholder, legal, regulatory and court approvals and third-party consents, and other f actors described elsewhere herein and in other documents of the Company filed on SEDAR at www.sedar.com.  Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

- 3 -

CORPORATE STRUCTURE

Name, Address and Background Information

The Cash Store Financial Services Inc. (“Cash Store Financial” or the “Company”), operates in the business of brokering short-term advances, providing short-term advances and related services through its subsidiaries.  In this AIF, references to Cash Store Financial or the Company include its subsidiaries unless the context requires otherwise.

The Company was incorporated on February 23, 2001, under the Business Corporations Act (Ontario) (the “OBCA”), as B&B Capital Corporation. On August 1, 2001,B&B Capital Corporation changed its name to “Rentcash Inc.” and subsequently amalgamated with LarkfieldCapital Corp. (“Larkfield”), under the OBCA, effective January 17, 2002 (the “Amalgamation”), with the amalgamated company continuing as Rentcash Inc. Larkfield wasincorporated under the Company Act (British Columbia) on May 15, 2000, under the nameWillow Creek Capital Corp. (“Willow Creek”).  The name of Willow Creek was changed to “Larkfield Capital Corp.”on August 24, 2000, and Larkfield was subsequently continued into Ontario under the OBCA,effective January 15, 2002.

Pursuant to the Amalgamation, each common share of Rentcash was exchanged for one common share of the Company, and each three common shares of Larkfield were exchanged for one common share of the Company.

The Company changed its name on March 31, 2008, from Rentcash Inc. to “The Cash Store Financial Services Inc.” in connection with the “spin off”.  Cash Store Financial’s common shares (the “Common Shares”) are traded on the Toronto Stock Exchange (“TSX”) under the symbol “CSF”, formerly “RCS”.  On June 8, 2010, the Company began trading its shares on the New York Stock Exchange (“NYSE”) under the symbol “CSFS”.

On March 31, 2008, (pursuant to a Plan of Arrangement (the “spin off”)) the Company separated its rental business and certain of its assets and liabilities into an independent, publicly-traded company. Each existing shareholder of The Cash Store Financial Services Inc. received one common share of Insta-Rent for each Common Share held on March 31, 2008.

On April 28, 2010, our board of directors approved a change in our fiscal year end from June 30 to September 30.  The fiscal year end change has resulted in a fifteen month reporting period from July 1, 2009, to September 30, 2010.

The registered office of the Company is located at Scotia Plaza, Suite 2100, and 40 King Street West, Toronto, Ontario M5H 3C2. The head office of the Company is located at 17631-103 Avenue, Edmonton, Alberta, T5S 1N8.

Intercorporate and Intracorporate Relationships

Cash Store Financial’s principal direct and indirect subsidiaries are as set forth in the following chart.  The Company owns 100% of the issued and outstanding shares of each principal subsidiary.  The Cash Store Inc., in turn, owns 100% of the issued and outstanding shares of Instaloans Inc.; and The Cash Store Financial Limited owns 100% of the issued and outstanding shares of The Cash Store Limited and CSF Insurance Services Limited.  Included in parenthesis within the corporate organization chart is the respective province or country of incorporation of each entity:

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GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

Cash Store Financial is the only broker of short‐term advances and provider of other financial services in Canada. The Company operates in Canada and the United Kingdom. The Company’s overall operating strategy is to fulfil the needs of a large segment of the population that are not being met by traditional financial institutions.

The Company’s number of branches in operation has grown to 544 as at September 30, 2010, which compares to 358 as at July 1, 2007. The strategic approach has been to grow rapidly and secure a dominant market footprint, and to then build revenues, followed by infrastructure enhancements and product diversification.  The Company’s associates at branch level, along with regional managers, have grown from a staff of 1,500 in fiscal 2008 to a staff of over 2,000 by the end of fiscal 2010.

To support the growth of our branches, the Company’s corporate office has grown from a staff of 100 in fiscal 2008 to a staff of over 155 by fiscal 2010.  The increase reflects management’s approach of adding infrastructure for future growth, and the strengthening of management and staff in key areas including operations, business development and in our national collection center.

Acquisitions

On September 1, 2009, the Company acquired all the business assets of Affordable Payday Loans Inc. representing eight branches in Ontario and two branches in Alberta for total cash consideration of $800,000. Affordable Payday Loans Inc. operated in the short-term advances industry.

On April 26, 2010, the Company acquired all the business assets of 101019134 Saskatchewan Ltd. (“EZ Cash”), representing 14 branches in Saskatchewan, for total cash consideration of $4.5 million. EZ Cash operated in the short-term advances industry.

DESCRIPTION OF THE BUSINESS

General

Cash Store Financial operates under two branch banners, The Cash Store and Instaloans, which act as brokers to facilitate short‐term advances and provide other financial services

As at September 30, 2010, Cash Store Financial operated 544 (June 30, 2009 - 424) short-term advance branches across Canada and the United Kingdom (“UK”). The Company employed over 2,000 associates across Canada and in the UK. The branch count by location for the fifteen month period ended September 30, 2010, was as follows:

Canada	Branches
British Columbia	104
Alberta	130
Saskatchewan	35
Manitoba	32
Ontario	187
New Brunswick	12
Nova Scotia	22
Prince Edward Island	4
Newfoundland and Labrador	13
Northwest Territories	2
Yukon	1
	542
United Kingdom	2
Total	544

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Operations

Summary

For the fifteen month fiscal period ended September 30, 2010, the Company’s operations generated revenues of $221.8 million, compared to $150.5 million for the twelve months ended June 30, 2009.

The Company, under its The Cash Store and Instaloans banners, provides consumers with short-term cash advances without having to provide a credit history or security on the loan by acting as a broker between the customer and third-party lenders or directly lending to the customer. In terms of process for a brokered loan, after an application is completed and other relevant information is obtained from a customer, the Company brokers the customer’s loan request to third-party lenders. Based on approval criteria established by the third-party lenders, the customers’ eligibility for an advance is assessed. If the customer is approved, the Company provides the lender’s loan documentation to the customer. Upon fulfillment of the loan documentation requirements, the Company is authorized by the lender to forward the cash advance to the customer on behalf of the lender. When an advance becomes due and payable, the customer must make repayment of the principal and interest owing to the lender through the Company, which, in turn, remits the funds to the third-party lender. If there is difficulty with the collection process, the customer’s account may be turned over to an independent collection agency.

In Q5 of fiscal 2010, the Company started providing loans to customers directly. When lending directly to a customer, the process is similar to the above except that the lending criteria are established internally and loan approvals are completed internally.

The Company typically arranges for advances to customers ranging from $100 to $1,500. In order to receive an advance, a consumer is required to provide proof of income, copies of recent bank statements, current proof of residence, and current telephone and utility bills.  The customer must then either write a cheque or execute a pre-authorized debit agreement for the amount of the advance plus the third-party lender’s pre-calculated interest. Deposit of the cheque is deferred until the due date of the loan, which is the consumer’s next payday (normally seven to 14 days but no later than 31 days). The cheque is not post-dated. When the agreement expires, the cheque may be deposited to repay the advance, or the consumer may redeem the cheque by paying cash in the amount of the cheque.

Customers have the option to receive their advance through a cheque from the third-party lender, or they may have the funds loaded on a private labelled debit card or a prepaid credit card, both of which are offered by the Company through an arrangement with a third-party service provider. This arrangement allows the branches to load cash advances and other amounts onto a debit or credit card. The customer can then immediately use the debit or credit card at any ABM or point of sale terminal in Canada where traditional debit or credit cards are accepted.

As at September 30, 2010, the Company operated 544 branches which are located primarily in strip malls within high traffic areas. Branches are open seven days a week, where permitted by law, with operating hours from 9 a.m. to 8 p.m. Monday to Friday, 9 a.m. to 5 p.m. on Saturdays, and 11 a.m. to 4 p.m. on Sundays. Typically, the branches range in size from 500 to 1,500 square feet.

There is some seasonality in the Company’s business.  Historical results lead the Company to believe that its revenues are generally stronger in the quarter ended June 30 and September 30 followed by the quarters ended December 31 and March 31.

Competition

Competition for the Company exists in the short-term advance market with the Company having a market share of approximately 34% by branches. There are approximately 1,600 short-term advance branches across Canada. The Company’s biggest competitor is Dollar Financial Corp. (“Dollar Financial”), a U.S.-based public company. Dollar Financial operates approximately 465 branches in Canada under the banner “Money Mart”. This includes 37 branches in Quebec which do not provide short-term advances. “Cash Money” is the next largest operator in Canada with 112 branches. The rest of the market consists of small, single store operations and regional operations that may have a number of short-term advance branches in a given region. Competition also comes from companies, such as cheque cashers, pawns hops, rental stores and others, that offer the short-term advance service as an ancillary service. Several companies also provide short-term advances via the Internet.

The regulatory environment in Canada is stabilizing due to the recent passing of regulations by most provinces. The Company will likely face increased competition from both U.S. and Canadian based companies as a result. The largest short-term advance lender in the U.S., “Advance America, Cash Advance Centers, Inc.”, has already entered the Canadian market. In addition, a large US company, EZCorp Inc., moved into the Canadian market during the year.  EZCorp Inc. operates 51 branches in Canada under the banner “Cash-Max”.

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Additional information on U.S. companies operating in the short-term advance business is included in the table below. This information is provided for reference only. It is based on publicly available information as at the date hereof and is not intended to be exhaustive.

Company Name	Approximate Market Cap. as of September 30, 2010	Estimated number of locations as at September 30, 2010	Rank by loan revenue	Stock Symbol and Stock Exchange
Advance America, Cash Advance Centers, Inc.	US $251 million	2,360	1	AEA (NYSE)
Dollar Financial Corp	US $509 million	1,193 (franchise locations included)	2	DLLR (Nasdaq)
Ace Cash Express, Inc.	N/A	1,754 (May 6, 2010)	3	N/A – private
QC Holdings Inc.	US $67 million	550	4	QCCO (Nasdaq)
EZCorp Inc.	US $927 million	1,000	5	EZPW (Nasdaq)

New Products

During the fifteen month period, bank accounts were introduced nationally by the Company across the branch network in February 2010. Accounts are Canada Deposit Insurance Corporation (CDIC) insurable and are offered through an agency agreement with a third-party bank which is a federally regulated Schedule I bank.

Suppliers and Contractual Business Arrangements

The Company does not fund all of its short-term advances made to its customers. The majority of short-term advances made to the Company’s customers are provided by independent third-party lenders. The short-term advances made to the Company’s customers are repayable solely to the third-party lenders and are assets of the third-party lenders; accordingly, they are not included in the Company’s consolidated financial statements. To facilitate the short-term advance business, the Company has entered into written agreements with a number of third-party lenders that are prepared to consider lending to customers. The Company believes that its current arrangements with third-party lenders are satisfactory to meet near-term future requirements, and that it will be able to successfully source additional funds from eithe r existing third-party lenders or from new third-party lenders in order to meet the longer-term requirements of the Company’s customers. The absence of third-party lenders willing to lend to customers could have a material adverse impact on the Company’s business.

The Company has a contractual arrangement with a third-party provider of bank accounts, debit card, prepaid credit card, point-of-sale and other electronic payment services. The Company is dependent on this supplier as a majority of the advances provided to customers by the third-party lenders are completed through the debit card and prepaid credit card services offered by this supplier.  While there are a number of suppliers of these services, any adverse condition experienced by the existing supplier could have a material adverse impact on the operations of the Company.

Associates

As of September 30, 2010, the Company had over 2,000 full-time and part-time associates.

Foreign Operations

The Company opened two branches in the United Kingdom during the fifteen month fiscal period ended September 30, 2010.

The Company has an investment in The Cash Store Australia Holdings Inc. that currently operates 63 branches in Australia under the name “The Cash Store Pty.” which is a subsidiary of The Cash Store Australia Holdings Inc. The Company owns approximately 18.3% of the outstanding common shares of The Cash Store Australia Holdings Inc.

The Company also has an investment in RTF Financial Holdings Inc. that is in the business of short-term lending, by utilizing highly automated mobile technology (SMS text message lending).  RTF Financial Holdings Inc. currently operates in Finland, Sweden, Denmark, the Netherlands and the UK with plans to expand to other European countries.  The Company owns approximately 15.7% of the outstanding common shares of RTF Financial Holdings Inc.

- 7 -

Corporate Office

The Company’s corporate office performs corporate, compliance, management and administrative functions. The corporate office is a management group that oversees the operations of all subsidiaries in conjunction with the Company’s responsibilities as a public company. As of September 30, 2010, the corporate office had approximately 155 full-time and part-time associates.

Risk Factors

The Company’s business is subject to risks and uncertainties that could result in material adverse effects on the Company’s business and financial results. Risks and uncertainties specific to each of the operating segments are outlined below.

Regulatory Environment

The Company’s operations are subject to various federal and provincial laws and regulations. The laws and regulations are subject to change which could impose significant costs or limitations on the way the Company conducts or expands its business.

The Minister of Justice and Attorney General of Canada introduced Bill C-26, An Act to amend the Criminal Code (criminal interest rate), in the House of Commons on October 6, 2006. This enactment amends the Code by exempting persons from the application of section 347 of the Code in respect of agreement for small, short-term loans (Payday Loans). The Bill received Royal Assent on May 3, 2007.  Bill C-26 is designed to exempt Payday Loans from criminal sanctions in order to facilitate provincial regulation of the Payday Loan industry.

Section 347 of the Code makes it an offence to enter into an agreement or arrangement to receive, or to actually receive, “interest” on credit in excess of 60 per cent per annum of the total value of the credit advanced.  Payday lending and a variety of other short-term financing arrangements were inadvertently caught under this legislative scheme for exceeding the criminal interest rate.  Bill C-26 was enacted to rectify this discrepancy. Bill C-26 introduced section 347.1 of the Code, which retains the definition of “interest” found in section 347. The new section also defines a “Payday Loan” as, “an advancement of money in exchange for a post-dated cheque, a preauthorized debit or a future payment of a similar nature but not for any guarantee, suretyship, overdraft protection or security on property and not through a margin loan, pawn broking, a line of credit or a credit card.” Section 347.1 further provides that the federal government will exempt a payday lender from criminal interest rate provisions if:

a) the loan is for $1,500 or less and the term of the agreement is for 62 days or less;

b) the lender is licensed or otherwise specifically authorized under the laws of a province to enter into the loan agreement; and

c) the province is designated by the federal government.

In order for a province to be designated by the Governor in Council, the province must:

a) request, through its Lieutenant Governor in Council, the federal designation;

b) enact legislative measures that protect recipients of Payday Loans; and

c) provide for limits on the total cost of borrowing under Payday Loan agreements.

Essentially, the exemption applies to Payday Loan companies licensed by any province that has legislative measures in place designed to protect consumers and to limit the overall cost of loans.

Cash Store Financial has indicated its support of the amendments to section 347 of the Code as well as provincial industry regulation. The Company is, and has been, in compliance with section 347 of the Code, a position maintained throughout the three class proceedings in which it has been involved.

The settlement of class proceedings in British Columbia and Ontario did not require any substantive changes to the Company’s operating model.

Many provinces are currently working through a process to establish consumer protection measures for the payday loan industry.  These measures will include rate caps and a ban on rollovers. The Company expects regulation to be positive for its operations and anticipates that it will be able to accommodate its business model to anticipated rate caps.  In addition, the Company’s voluntary implementation of a prohibition on the provision of rollovers has given it a competitive advantage over those companies that have not done so in advance of the now regulated prohibition on these practices.

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It should be noted that the provincial legislation does not apply to or affect federally regulated banks.  A number of the services offered at Cash Store and Instaloans locations are provided by an independent third party bank, and are not subject to provincial regulation.

The following rate caps are currently in effect:  Nova Scotia - $31 per hundred dollars loaned; British Columbia - $23 per hundred dollars loaned; Ontario - $21 per hundred dollars loaned; Manitoba - $17 per hundred dollars loaned; and Alberta - $23 per hundred dollars loaned.  Newfoundland has announced that it does not intend to enact local legislation.  While at this stage it remains difficult to specify expected rates for the remaining provinces, all Canadian jurisdictions appear committed to facilitating a competitive industry.

There is a risk given that the Payday Loan industry is subject to various federal and provincial laws and regulations and that the laws and regulations are subject to change and could impose unforeseen costs or limitations on the industry.

There continues to be significant litigation and regulatory proceedings against payday advance businesses in the U.S. These proceedings have caused Payday Loan companies to suspend or permanently cease operations in certain states. Class action litigation proceedings are underway against most of the significant payday advance businesses in Canada, including the Company.  See “Legal Proceedings”.

Third-party Lenders/Retention Payments

The Company does not fund all of the short-term advances; the majority of funding is provided by independent third-party lenders. As a result, the Company’s business is highly dependent on third-party lenders that are willing to make significant funds available for lending to the Company’s customers. There are no assurances that the existing, or new, third-party lenders will continue to make funds available to the Company’s customers. Any reduction or withdrawal of funds could have a significant adverse material impact on the Company’s results of operations and financial condition.

To facilitate the short-term advance business, the Company has entered into written agreements with a number of third-party lenders that are prepared to consider lending to the Company’s customers. Pursuant to these agreements, the Company provides services to the lenders related to the collection of documents and information as well as loan collection services. The agreements also provide that the third-party lenders are responsible for losses suffered on account of uncollectible loans provided the Company has properly performed its duties under the terms of the agreements.  In the event the duties are not properly performed, and the lenders make a claim as required under the agreement, the Company’s operations may be liable to the lenders for losses they have incurred. The contingent risk is the balance o f the third-party lenders’ loan portfolio which totalled approximately $109 million as at September 30, 2010 (June 30, 2009 - $79 million).

While no claims have been made by the third-party lenders to date, pursuant to these agreements between the parties and the third-party lenders, there have not been any guaranteed returns. The Company has made the decision to voluntarily make retention payments to the lenders to lessen the impact of the loan losses experienced by the third-party lenders. The retention payments are made pursuant to a resolution approved by the Company’s board of directors which authorizes management to pay a maximum amount of retention payments per quarter to third-party lenders as consideration to those lenders that continue to be willing to fund advances to the Company’s customers.

Class Action Lawsuits and General Litigation

The Company’s businesses are subject to lawsuits and regulatory proceedings that could generate adverse publicity and cause the Company to incur substantial legal expenditures. Class action litigation proceedings are underway against most of the significant short-term advance businesses in Canada, including proceedings against the Company in Alberta and Manitoba.  See “Legal Proceedings”.  Failure by the Company to successfully defend itself in any of the currently filed class action lawsuits, or future actions, could have an adverse material effect on the Company’s results of operations and financial condition in future periods.

Corporate Relationships

The Company is highly dependent on a number of corporate relationships, and the loss of one of the key relationships could have a material adverse impact on the Company’s operations. Further, the Company cannot be certain it will be able to enter into new relationships on terms as favourable as its current relationships if these relationships and/or agreements were terminated or not renewed.

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As noted above, the Company is highly dependent on third-party lenders and the loss of a material relationship could have an immediate adverse impact on the Company’s business. The Company’s operations are also dependent on a third-party provider of debit card, prepaid credit card, consumer bank accounts, point-of-sale and other electronic payment services, as a majority of the advances provided to customers by the third-party lenders are completed through the debit card and prepaid credit card services offered by this supplier.  While there are a number of suppliers of these services, any adverse condition experienced by the existing supplier could have a material impact on the operations of the Company’s business.

Current and Future Competition

The Company is subject to both significant and varied competitive risk. The competitive environment within which the Company operates is somewhat fragmented but could consolidate if large U.S.-based companies decide to directly increase their involvement in Canada.  There are few barriers to entry, other than capital, once the regulations have been fully implemented.

In the short-term advance market, the Company’s largest competitor is Dollar Financial Corp., a U.S.-based public company. Dollar Financial operates approximately 465 branches in Canada under the banner “Money Mart”. This includes 37 branches in Quebec which do not provide short-term advance. “Cash Money” is the next largest operator in Canada with 112 branches. The rest of the market consists of small, single branch operations and regional operations that may have a number of short-term advance branches in a given region. Competition also comes from companies, such as cheque cashers, pawnshops, rental stores and others, that offer the short-term advance service as an ancillary service. Several companies also provide short-term advances via the Internet. Some of Cash Store Financial’s competit ors may have larger local or regional customer bases, more locations, and larger financial, marketing and other resources than the Company.

There are indications that new market entries have opened locations given the stabilization in provincial regulations.  For example, the largest short-term lender in the U.S., “Advance America, Cash Advance Centers, Inc.” has opened several locations within Canada on a test basis. They have indicated that they will be opening additional branches during the year once the provincial regulatory environment has stabilized.  Advance America currently operates 2,360 retail outlets in 31 U.S. jurisdictions. In addition, a large US company, EZCorp Inc., moved into the Canadian market during the year.  EZCorp Inc. operates 51 branches in Canada under the banner “Cash-Max”.  As a result of increasing competition, the Company could lose market share, possibly resulting in a decline in f uture revenues and earnings.

Influence by Significant Shareholder

Mr. Gordon J. Reykdal, Cash Store Financial’s founder, Chairman and Chief Executive Officer, beneficially owned, directly or indirectly, or had control or direction over, approximately 21.0% of the Company’s common shares outstanding as at September 30, 2010. Accordingly, Mr. Reykdal may be able to exercise significant influence over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions.

Key Associates

The success of the Company is dependent on the efforts, skills and performance of a limited number of key individuals, in particular, Mr. Gordon J. Reykdal, Chairman and Chief Executive Officer, as well as other members of senior management and key associates.  The loss of their services for any reason could have a material adverse impact on the Company.  There is competition for such personnel and there can be no assurance that the Company will be successful in attracting and retaining such personnel as it may require. Failure to attract and retain key associates with the necessary skills could have a material adverse impact on the Company.

Possible Volatility of Share Price

The market price of the Company’s common shares has been, and may be, subject to significant fluctuation in response to numerous factors, including variations in the annual or quarterly financial results of the Company, timing of announcements of acquisitions by the Company or its competitors, conditions in the economy in general or in the Company’s respective industries in particular, changes in applicable laws and regulations, and other factors. Moreover, from time to time stock markets experience significant price and volume volatility that may affect the market price of the common shares for reasons unrelated to the Company’s performance. No prediction can be made as to the effect, if any, that future sales of common shares or the availability of shares for future sale (including shares issuable upon the ex ercise of stock options) will have on the market price of the common shares prevailing from time to time. Sales of substantial numbers of such shares, or the perception that such sales could occur, could adversely affect the prevailing price of the Company’s common shares.

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Size and Expansion

The Company has undergone rapid expansion and growth since its inception. There is no guarantee that current or future revenue and earnings from this expansion and growth will be sufficient to maintain current valuations.

Cash Store Financial’s business strategy depends on the ability to compete for suitable locations, to adapt infrastructure and systems to accommodate growth, and to obtain adequate financing for expansion plans in order to ensure continued product diversification. The start-up costs and the losses from initial operations attributable to each newly opened location place additional demands upon liquidity and cash flow.

In addition, Cash Store Financial’s ability to execute its growth, product diversification and infrastructure enhancement strategies will depend on a number of other factors, some of which may be beyond its control, including:

• the prevailing laws and regulatory environment of each province or jurisdiction in which it operates, which are subject to change at any time;

• its ability to obtain and maintain any regulatory approvals, government permits or licenses that may be required;

• the degree of competition in new markets and its effect on the Company’s ability to attract new customers;

• the ability to compete for expansion opportunities in suitable locations;

• the ability to recruit, train and retain qualified personnel; and

• the ability of the Company’s systems, procedures, controls and existing space to continue to support the expansion of its operations.

Current branch levels and future expansion, if any, may further strain the Company’s management, financial and other resources. Cash Store Financial’s future results of operations will substantially depend on the ability of its officers and key associates to manage changing business conditions and regulatory environments and to implement and improve its technical, administrative, and financial control and reporting systems.

New Branch Start-Up Costs

The Company opened 104 new branches, acquired 22 branches and closed six branches in the fifteen months ended September 30, 2010.  The Company anticipates opening 70 to 80 new branches over the next year. Opening or acquiring new branches can involve significant start-up costs. Additionally, new branches may not reach profitability in their first year, or ever.  As a result, opening a number of new branches over a short period of time may materially decrease the Company’s net income for a time period. Further, there can be no assurance that the Company will fully recover these start-up costs.

Media Scrutiny

Media reports and public perception of short-term cash advances as being predatory or abusive could decrease demand for short-term advances, subject the Company to increased regulatory scrutiny and legal proceedings, and reduce the Company’s access to sources of financing.

Corporate Structure

Cash Store Financial is a holding company with no operations of its own and, as such, depends on subsidiaries for cash. If the Company’s subsidiaries do not generate a sufficient amount of cash, the entity’s liquidity (ability to service indebtedness and fund operations) would be materially impaired.

Information Systems

The Company relies upon information systems to manage and operate its operations. Operations maintains a stand-alone computer system, and on a daily basis, each branch forwards their daily transaction files to head office via the Internet to permit the Company to reconcile cash balances and to report revenues and loan transactions to the Company’s head office. In addition, the branches utilize the Internet to load customer advances on debit cards and prepaid credit cards.  The Company is reliant on a third-party provider for these debit and credit card services.  Any extended disruption to the Company’s computer systems or the Internet could adversely affect the Company’s business, results of operations and/or financial condition.

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Economic Factors

The success of the Company is dependant on sustained consumer demand for its products and services. A change in economic condition could have an adverse effect on consumer demand for short-term advances, and thus the Company’s results of operations and its financial condition.

Economic Environment

During periods of economic and financial market uncertainty, we analyze the impact of market fluctuations on the industry, particularly in the areas of revenue growth, default rates and access to capital. To date, we have not experienced any substantial negative effects to our business or to our ability to meet our customers’ needs; however, there is a risk that economic and financial market uncertainty could impact us and our third-party lenders.

Other Factors

The Company cautions that the above discussion of risk factors is not exhaustive. Other factors beyond the Company’s control that may affect future results include changes in tax laws, technological changes, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, and the anticipation of and success in managing the associated risks.

DIVIDENDS

Prior to August 31, 2007, we had not declared or paid a dividend on our common shares.  We declared our first dividend on August 31, 2007, in the amount of $.025 cents per common share.  In total, dividends of $3.6 million were paid to holders of common shares in fiscal 2008, $5.3 million in fiscal 2009, and $9.1 million in the fifteen months of fiscal 2010 ($1.7 million in the fifth quarter of fiscal 2010).  Dividends declared per common share for the fifteen month period ended September 30, 2009, totalled $0.575, up from $0.335 for the year ended June 30, 2009.

On November 24, 2010, we declared a quarterly dividend of $0.10 per common share. The dividend is payable on December 21, 2010, to shareholders of record on December 6, 2010.

Our current dividend policy is to declare and pay quarterly cash dividends at the discretion of the Board of Directors, as circumstances permit, in an aggregate annual amount equal to approximately 30% of the prior year’s net income.  Our dividend policy and practice will be reviewed from time to time in the context of our earnings, financial condition, the need to retain earnings to fund future growth of our business, and other relevant factors. The declaration of a dividend will always be at the discretion of the Board of Directors.

DESCRIPTION OF CAPITAL STRUCTURE

General Description of Capital Structure

Cash Store Financial is authorized to issue an unlimited number of common shares having the following rights, privileges, restrictions and conditions:

1. The holders of common shares are entitled to receive notice of, and vote at, every meeting of the shareholders of Cash Store Financial and shall have one vote for each such common share held.

2. Subject to the rights, privileges, restrictions and conditions attached to any preferred shares of Cash Store Financial, the holders of common shares are entitled to receive such dividends as the directors may from time to time, by resolution, declare.

3. Subject to the rights, privileges, restrictions and conditions attached to any shares of Cash Store Financial, in the event of liquidation, dissolution or winding up of Cash Store Financial or upon any distribution of the assets of Cash Store Financial among shareholders being made (other than by way of dividends out of monies properly applicable to the payment of dividends), the holders of common shares shall be entitled to share pro rata.

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MARKET FOR SECURITIES

Trading Price and Volume

The Company’s common shares are listed on the Toronto Stock Exchange (TSX) under the symbol “CSF” and on the New York Stock Exchange (NYSE) under the symbol “CSFS”.  The volume and price range for the common shares as traded on the TSX for each month for the fifteen month period ended September 30, 2010, was as follows:

Month ended	Volume of shares traded	Price Range ($CDN)
		Low	High
July, 2009	1,317,154	7.85	9.46
August, 2009	529,263	8.28	9.50
September, 2009	761,619	8.26	9.58
October, 2009	790,215	8.53	10.48
November, 2009	895,372	9.64	12.50
December, 2009	657,792	9.10	11.11
January, 2010	1,454,172	10.20	12.24
February, 2010	544,008	11.10	12.50
March, 2010	1,311,151	12.50	15.00
April, 2010	1,529,047	14.80	18.74
May, 2010	1,293,477	14.11	18.10
June, 2010	944,343	15.60	17.16
July, 2010	356,699	14.37	16.64
August, 2010	695,290	15.75	17.28
September, 2010	767,505	15.18	17.18

The volume and price range for the common shares as traded on the NYSE from the date the common shares began trading on the NYSE to September 30, 2010, was a follows:

Month ended	Volume of shares traded	Price Range ($US)
		Low	High
June 8 to June 30, 2010	635,062	15.10	16.66
July, 2010	148,841	13.89	17.32
August, 2010	475,575	15.14	16.34
September, 2010	263,922	14.77	16.30

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DIRECTORS AND OFFICERS

The names and municipalities of residence of the directors and officers of the Company, the date when the individual first became a director, their principal occupations, the positions in the Company held by them and the number and percentage of voting securities of the Company as at November 24, 2010, are as follows:

Name, Municipality of Residence	Position with the Company and Date First Became a Director	Principal Occupation (5 preceding years unless otherwise indicated)	Number of Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised
Gordon J. Reykdal Edmonton, Alberta	Chairman and Chief Executive Officer February 23, 2001	Founder, Chairman and Chief Executive Officer of the Company since February 2001, prior to which he was the founder, Chairman, President and Chief Executive Officer of RTO Enterprises Inc. (now easyhome Ltd.), a rental  company, since August 1991.	3,583,700(4)
William C. Dunn (2) (3) Calgary, Alberta	Director May 14, 2002	Chairman of Bellatrix Exploration Ltd., Director for Precision Drilling Inc.  President of Cardium Service and Supply Ltd. from 1982 to 2000.	725,000
Edward C. McClelland(3) Burlington, Ontario	Director November 8, 2005	CEO of The Cash Store Australia Holdings Inc., listed on the TSX-V exchange since 2009. Previously Vice President for CIBC Finance and President of Transamerica Commercial Finance Canada.	4,500
Robert J.S. Gibson, CD, ICD.D (2), (3) Calgary, Alberta	Director April 8, 2008	President of Stuart & Company Limited since 1973, as well as Managing Director of Alsten Holdings Ltd. and a Director of Precision Drilling Corp. since 1996.	10,000
J. Albert (Al) Mondor, FCA, ICD.D (1) Edmonton, Alberta	Director April 8, 2008	Chair of Alberta Pension Services Corp. (APS), as well as financial & corporate governance consultant.  Past VP of Sumex Inc., prior to which he was a partner of Grant Thornton LLP, Edmonton.	11,225
Ron Chicoyne, CFA, CF, ICD.D (1), (2) Calgary, Alberta	Director October 29, 2008	Founder & Managing Director of Links Capital Partners since August 2005.  Previously, Partner and Director of Mercantile Bancorp Limited.	8,450
Michael M. Shaw, B.Comm. (1) (2) Calgary, Alberta	Director October 29, 2009	Corporate Director and President of Amkco Inc.  Formerly, Managing Director, Strategic Planning ATCO Group.  Prior to this, Managing Director Global Enterprises, ATCO Group.	81,133

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Name, Municipality of Residence	Position with the Company and Date First Became a Director	Principal Occupation (5 preceding years unless otherwise indicated)	Number of Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised
Barret Reykdal (5) Edmonton, Alberta	President and Chief Operating Officer N/A	Chief Operating Officer of the Company’s Operations since April 2005, prior to which he was the Director of Operations for the Company’s Western Canadian operations from March 2003 to April 2005, and prior to which he was the Company’s Northern Alberta Regional Manager since June 2001.	163,700
Nancy Bland St. Albert, Alberta	Chief Financial Officer N/A	Chief Financial Officer of the Company since October 2007, prior to which she was the Vice President Finance of the Company.  Prior to joining the Company, her experience includes positions with Capital Health, Luscar Ltd., The Northwest Territories Power Corporation, and Grant Thornton Chartered Accountants.	2,500
S.W. (Bill) Johnson(6) Edmonton, Alberta	Senior Executive Vice President N/A	Senior Executive Vice President since November 2008, prior to which he was the President and CEO of Insta-Rent Inc., a public company listed on the TSX-V and prior to which he was the President and COO of the Company’s rental division.  Prior to joining the Company his experience included the position of Executive Vice President and Chief Financial Officer of easyhome Ltd. since January 1996.	35,600
Michael Thompson Edmonton, Alberta	Senior Vice President and Corporate Secretary N/A	Senior Vice President and Corporate Secretary since February 2008, prior to which he was the Vice President Investor relations and government affairs.  Prior to Joining the company, he was the President of The Canadian Payday Loan Association.	4,050

Notes

(1)           Member of Audit Committee.

(2)           Member of Corporate Governance and Nominating Committee.

(3)           Member of Compensation Committee.

(4) 3,222,635 of these shares are directly owned by 424187 Alberta Inc., a company controlled by Mr. Reykdal; 223,468 are held by Mr. Reykdal directly and 137,597 are held by Mr. Reykdal’s spouse.

(5) Mr. Barret J. Reykdal is the son of Mr. Reykdal, the Corporation’s Chairman and Chief Executive Officer.

(6) Mr. S. William Johnson ceased employment with Cash Store Financial on March 31, 2008, when the Company spun out the rental division into a separate public company, Insta-Rent Inc. He became President and CEO of Insta-Rent Inc. He was rehired on October 1, 2008, after Insta-Rent Inc. was acquired by easyhome Ltd., a company listed on the TSX.

As at November 24, 2010, the Company’s directors and executive officers together beneficially owned 4,629,858 (27.1%) of the Company’s outstanding Common Shares.

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Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Corporate Cease-Trade Orders or Bankruptcies

No director, executive officer of the Company, or shareholder of the Company holding a sufficient number of securities of the Company to affect materially the control of the Company, or personal holding company of any of such persons, as applicable, is or has been, within the preceding 10 years, a director or executive officer of any company that, while that person was acting in such capacity:

a) was the subject of a cease-trade order or similar order or an order that denied the relevant company access to any exemptions under securities legislation for a period of more than 30 consecutive days;

b) was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the Company being the subject of a cease-trade or similar order or an order that denied the other company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or

c) within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver-manager or trustee appointed to hold its assets.

Penalties or Sanctions

No director, executive officer of the Company, or shareholder of the Company holding a sufficient number of securities of the Company to affect materially the control of the Company, or personal holding company of any such persons, is or has been subject to any penalties or sanctions relating to securities legislation imposed by a court or by a securities regulatory authority, or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanction imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision concerning the Company’s securities.

Personal Bankruptcies

No director, executive officer of the Company, or shareholder of the Company holding a sufficient number of securities of the Company to affect materially the control of the Company, or a personal holding company of any such persons, is or has, within the preceding 10 years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver-manager or trustee appointed to hold its assets.

The directors, officers, and shareholders of the Company holding a sufficient number of securities of the Company to affect materially the control of the Company have furnished the information pertaining to Corporate Cease-Trade Orders or Bankruptcies, Penalties or Sanctions and Personal Bankruptcies.

Conflicts of Interest

To the best of our knowledge, no director or executive officer of the Company has an existing or potential material conflict of interest with Cash Store Financial or any of its subsidiaries with the exception of the following:

• Mr. Gordon Reykdal, Mr. S. William Johnson and Mr. Edward McClelland are currently on the Board of Directors of The Cash Store Australia Holdings Inc., in which the Company has an investment as described above in “Foreign Operations”. The Company has a service agreement with The Cash Store Australia Holdings Inc. to provide certain administrative functions;

• Mr. Gordon Reykdal and Mr. S. William Johnson are currently on the Board of Directors of RTF Financial Holdings Inc., in which the Company has an investment as described above in “Foreign Operations”. The Company has a service agreement with RTF Financial Holdings Inc. to provide certain administrative functions; and

• Mr. Barret J. Reykdal, the Company’s President and Chief Operating Officer, is the son of Mr. Reykdal, the Corporation’s Chairman and Chief Executive Officer.

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LEGAL PROCEEDINGS

In prior periods, the Company was served with three separate Statements of Claim by individuals resident in Alberta, British Columbia, Manitoba and Ontario alleging that Cash Store Financial is in breach of s. 347 of the Code (the interest rate provision) and certain provincial consumer protection statutes. The claims seek various declarations and damages including the reimbursement of any amounts judged to be illegal. In each of these proceedings, the claimants sought to have their lawsuits certified as Class Actions.  As of September 30, 2010, the status of the three actions is as follows:

1. On March 5, 2004, an action under the Class Proceedings Act was commenced in the Supreme Court of British Columbia by Andrew Bodnar and others proposing that a class action be certified on his own behalf and on behalf of all persons who have borrowed money from the defendants: The Cash Store Inc., Cash Store Financial and All Trans Credit Union Ltd. The action stems from the allegations that all Payday Loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Criminal Code of Canada. On May 25, 2006, the claim in British Columbia was affirmed as a certified class proceeding of Canada by the B.C. Court of Appeal. In fiscal 2007, the plaintiffs in the British Columbia action brought forward an application to have certain of our customers’ third-party lenders added to the claim.  On March 18, 2008, another action commenced in the Supreme Court of British Co lumbia by David Wournell and others against Cash Store Financial, Instaloans Inc., and others in respect of the business carried out under the name Instaloans since April 2005, collectively, the “Related Actions”.

On May 12, 2009, the Company settled the British Columbia Related Actions in principle.  The settlement has been approved by the Court. The settlement does not constitute any admission of liability by Cash Store Financial.

Under the terms of the court approved settlement, the Company is to pay to the eligible class members who were advanced funds under a loan agreement and who repaid the Payday Loan plus brokerage fees and interest in full, or who met certain other eligibility criteria, a maximum estimated amount of $9.4 million in cash and $9.4 million in credit vouchers. Thus, the estimated maximum exposure with respect to this settlement is approximately $18.8 million including approved legal expenses.  The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay a portion of brokerage fees and interest which may arise in the future through new loans advanced. The credit vouchers are not transferable and have no expiry date. In addition, the Company is to pay the legal fees and costs of the class.  Based on the Company’s estimate of the rate of take-up of the available cash and credit vouchers, an expense of $7.7 million to date has been recorded to cover the estimated costs of the settlement, including legal fees of the Class and costs to administer the settlement fund.  It is possible that additional settlement costs could be required. As at September 30, 2010, the remaining accrual is $2.0 million.

2. The Company has been served in prior fiscal periods with a Statement of Claim issued in Alberta alleging that we are in breach of s. 347 of the Code(the interest rate provision) and certain provincial consumer protection statutes.

The certification motion has been pending since fiscal 2006 and has not yet been heard.  On January 19, 2010, the plaintiffs in the Alberta action brought forward an application to have a related subsidiary, as well as certain of our customers’ third-party lenders, directors and officers added to the Claim.

We believe that we conduct our business in accordance with applicable laws and are defending the action vigorously.  However, the likelihood of loss, if any, is not determinable at this time.

3. On April 23, 2010, an action under the Manitoba Class Proceedings Act was commenced in the Manitoba Court of Queen’s Bench by Scott Meeking against The Cash Store, Instaloans, and Cash Store Financial proposing that a class action be certified on his own behalf and on behalf of all persons in Manitoba and others outside the province who elect to claim in Manitoba and who obtained a payday loan from The Cash Store or Instaloans.  The action stems from the allegations that all payday loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Code.

We believe that we conducted our business in accordance within applicable laws and are defending the action vigorously.  Further it will be maintained that most of the proposed class members are bound by the judgment in the settlement of the Ontario class action, as approved by the Ontario Superior Court of Justice and the action may not be maintained in its present form.  However, the likelihood of loss, if any, is not determinable.  Accordingly, no provision has been made for this action in the accounts.

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The Company is also involved in other claims related to the normal course of operations.  Management believes that it has adequately provided for these claims.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

To the best of the knowledge of the directors and executive officers of the Company, no director or executive officer of the Company or person or company that is the direct or indirect beneficial owner of, or who exercises control or direction over more than 10% of the outstanding common shares of the Company, or any of their associates or affiliates, had any material interest, direct or indirect, in any transaction within the three most recently completed financial years, or during the current financial year, that has materially affected, or will materially affect, the Company.

TRANSFER AGENTS AND REGISTRARS

Computershare Investor Services Inc. acts as the transfer agent and registrar for Cash Store Financial through its office in Toronto, Ontario.

EXPERTS

KPMG LLP, Chartered Accountants (“KPMG”) were the auditors of the Company for the fifteen month period ended September 30, 2010, and prepared and executed the audit report accompanying the annual financial statements.  KPMG has confirmed their independence with respect to the Company within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Alberta.

AUDIT COMMITTEE INFORMATION

Audit Committee’s Charter

The Company’s Audit Committee charter sets out its roles and objectives, responsibilities and duties, and membership standards for reporting to the Board of Directors.  A copy of the charter is attached hereto as Appendix “A”.

Composition of the Audit Committee

The Company’s Audit Committee is comprised of three directors, all of whom are independent directors: J. Albert (Al) Mondor, Michael Shaw, and Ron Chicoyne.  Each member of the Audit Committee is “financially literate” within the meaning of applicable Canadian securities laws.

Relevant Education and Expertise

The following section lists the relevant education and experience for each Audit Committee member.

1. J. Albert (Al) Mondor, FCA, ICD.D (Chairman of the Audit Committee)

Mr. Mondor is a Fellow of Chartered Accountants and holds the ICD.D designation of the Institute of Corporate Directors.  Currently, he is Chair of the Alberta Pension Services Corporation (APS) which administers contributions, transfers and pension payments on behalf of 9 public sector pension plans in Alberta.  He has continued to provide consulting services regarding financial and corporate governance matters subsequent to his retirement as a senior audit partner with Grant Thornton LLP, Edmonton.  Additionally, Mr. Mondor is a past Vice President of Sumex Inc.

2. Ron Chicoyne, CFA, CF, ICD.D

Mr. Chicoyne holds a Chartered Financial Analyst designation, Corporate Finance Qualification, Institute of Corporate Directors designation and received his Bachelor of Commerce (Honours) degree from the University of Manitoba.  He is the founder and Managing Director of Links Capital Partners Ltd., a boutique corporate finance firm.  Prior to this, he was a partner and director of the private equity firm Mercantile Bancorp Ltd.

3. Michael Shaw, B.Comm.

Mr. Shaw graduated from Queen’s University with a Bachelor of Commerce (Honours) degree and currently serves on 4 other boards of directors.  Over 30 years with the ATCO Group of companies, Mr. Shaw held a wide variety of positions including Managing Director, Global Enterprises (responsible for the activities of 6 non-regulated companies operating in various locations around the globe).

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Pre-approval Policies and Procedures

As part of the Company’s corporate governance structure, the Audit Committee annually reviews and approves the terms and scope of the auditor’s engagement. To further ensure that the independence of the auditors is not compromised, company policy requires that the Audit Committee also pre-approve all significant engagements of the auditors for non-audit services and monitor all other engagements.

All non-audit service engagements, regardless of the cost estimate, are required to be coordinated and approved by the Company’s Chief Financial Officer, or designate, to further ensure that adherence to this policy is monitored. All non-audit service engagements must also be reported to the Audit Committee on a quarterly basis.

External Audit Fees by Category

KPMG has served continually as the Company’s external shareholders’ auditor since January 2002.  The following table lists the fees billed by KPMG, by category, during the last two fiscal years:

	Fifteen months ended September 30, 2010	Year ended June 30, 2009
Audit fees	$329,831	$195,178
Audit-related fees	$42,700	$ nil
Tax fees	$8,450	$6,510
All other fees	$40,400	$69,150
Total fees	$421,381	$270,838

Audit Fees

Audit fees were paid for professional services rendered by the auditors for the audit of the Company’s annual financial statements or services provided in connection with statutory and regulatory filings or engagements and the review of the Company’s interim financial statements.

Audit-related Fees

Audit-related fees were paid for assurance and related services that are reasonably related to the performance of the audit or review of the annual financial statements and are not reported under the audit fees item above. These services consisted of special attest services as required by various government entities and include services provided in relation to foreign investments.

Tax Fees

Tax fees were paid for professional services relating to tax compliance, tax advice and tax planning. These services consisted of tax compliance including the review of a goods and services tax re-assessment.

All Other Fees

All other fees were paid for products or services other than the audit fees, audit-related fees and tax fees described above including services provided in relation to the class action lawsuits and other.

ADDITIONAL INFORMATION

Additional information relating to the Company is available at www.sedar.com.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities, and securities authorized for issuance under equity compensation plans is contained in the Company’s management information circular dated November 24, 2010.

Additional financial information is provided in the Company’s audited consolidated financial statements and Management’s Discussion and Analysis (“MD&A”) for the fifteen month period ended September 30, 2010, both of which are available on SEDAR at www.sedar.com. Security-holders may also obtain a copy of the Company’s financials statements and MD&A by writing to the Company at 17631 - 103 Avenue, Edmonton, Alberta, T5S 1N8, or through the Company’s website at www.csfinancial.ca.

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Appendix “A” - Audit Committee Charter

THE CASH STORE FINANCIAL SERVICES INC.

(the “Corporation”)

AUDIT COMMITTEE

MANDATE AND TERMS OF REFERENCE

GENERAL

The purpose of this document is to establish the Charter of the Audit Committee of The Cash Store Financial Services Inc.

PURPOSE

The purpose of the Audit Committee is to:

(a) review and recommend to the Board for acceptance, prior to their public release, all material financial information required to be gathered and disclosed by the Corporation;

(b) oversee management designed and implemented accounting systems and internal controls; and

(c) recommend, engage, supervise, arrange for the compensation and ensure the independence of the external auditor to the Corporation.

STRUCTURE

The Audit Committee will be comprised of at least three members of the Board each of whom will at all times be independent and financially literate as those terms are defined in Multilateral Instrument 52-110, and Section 303A.06 of the NYSE Listed Company Manual, and possess:

(a) an understanding of the accounting principles used by the Corporation to prepare its financial statements;

(b) the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves;

(c) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation’s financial statements, or experience actively supervising one or more individuals engaged in such activities;

(d) an understanding of internal controls and procedures for financial reporting; and

(e) in the case of the Audit Committee financial expert, an understanding of audit committee functions.

The Audit Committee shall have at least one audit committee financial expert who has acquired the attributes listed above through education and experience as a principal financial officer, principal accounting officer, controller, public accountant, auditor, experience in positions performing similar functions, experience supervising persons performing similar functions, experience overseeing or assessing the performance of companies or public accountants with respect to preparation, auditing or evaluation of financial statements, or other relevant experience.

The Audit Committee is required to meet in person, or by telephone conference call, at least once each quarter and as often thereafter as required to discharge the duties of the Audit Committee.

Each member of the Audit Committee shall serve during the pleasure of the Board of Directors and, in any event, only so long as that person shall be a director. The Directors may fill vacancies in the Audit Committee by election from among their number. The Board of Directors may remove a member of the Audit Committee at any time in its sole discretion by resolution of the Board of Directors.

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In connection with the appointment of the members of the Audit Committee, the Board of Directors will determine whether any proposed nominee for the Committee serves on the audit committees of more than three public companies. To the extent that any proposed nominee for membership on the Audit Committee serves on the audit committees of more than three public companies, the Board of Directors will make a determination as to whether such simultaneous services would impair the ability of such member to effectively serve on the Audit Committee and may disclose such determination in the Corporation’s annual report on Form 40-F filed with the United States Securities and Exchange Commission.

The Chair of the Audit Committee appointed by the Board will, in consultation with the members, determine the schedule, time and place of meetings, and in consultation with management and the external auditor, establish the agenda for meetings.

A quorum for a meeting of the Audit Committee shall be a majority of members present in person or by telephone conference call.

Notice of the time and place of every meeting shall be given in writing, by email or facsimile to each member of the Audit Committee at least 24 hours prior to the time fixed for such meeting, provided that a member may in any manner waive a notice of meeting.

RESPONSIBILITIES

The Audit Committee is responsible for:

(a) assisting Board oversight of the integrity of the Corporation’s financial statements, and the Corporation’s compliance with legal and regulatory requirements;

(b) discussing issues of its choosing with the external auditor, management and corporate counsel;

(c) establishing procedures for the confidential anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters. Following the receipt of any complaints received submitted through the confidential process established by the Corporation, if a complaint is deemed to require further investigation, the Audit Committee shall take appropriate steps to carry out such investigation, including appointing the appropriate investigators with respect to such complaint;

(d) establishing procedures for the receipt and treatment of complaints received by the Corporation regarding accounting, internal accounting controls and auditing matters and the retention (for at least 7 years) of copies of concerns and evidence of investigations; and

(e) making inquiries of the external auditor and legal counsel to the Corporation regarding potential claims, assessments, contingent liabilities, and legal and regulatory matters that may have a material impact on the financial statements of the Corporation.

To preserve the independence of the external auditor responsible for preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, the Audit Committee is responsible to:

(a) recommend to the Board the external auditor to be nominated;

(b) recommend to the Board the external auditor’s compensation;

(c) evaluate the external auditor’s qualifications, performance and independence including by annually reviewing:

(i) a report of the auditor describing its internal quality-control procedures;

(ii) material issues raised by its most recent internal quality-control review; and

(iii) the results of any inquiry or investigation by government or professional authorities of the auditor within the last five years;

(d) review the experience and qualifications of the senior members of the external auditors, ensure that the lead audit partner is replaced periodically in accordance with applicable law, and that the audit firm continues to be independent;

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(e) review and pre-approve any engagements for non-audit services to be provided by the external auditor and its affiliates in light of the estimated fees and impact on the external auditor’s independence;

(f) review with management and with the external auditor:

(i) any proposed changes in major accounting policies;

(ii) the presentation and impact of significant risks and uncertainties; and

(iii) key estimates and judgments of management that may be material to financial reporting; and

(g) review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and most recent former external auditor of the Corporation in compliance with the requirements set out in section 2.4 of Multilateral Instrument 52-110.

The Audit Committee is required to:

(a) maintain direct communications with the internal and external auditors;

(b) discuss and review specific issues with the external auditor;

(c) oversee the work of the external auditor;

(d) resolve any disagreements between management and the external auditor;

(e) meet with the external auditor at least annually in the absence of management;

(f) ensure that the external auditor is answerable to the Audit Committee, as representatives of the shareholders, rather than to the executive officers and management;

(g) pre-approve all audit services;

(h) meet with the external auditor prior to the audit to review the scope and general extent of the external auditor’s annual audit including planning and staffing the audit and the factors considered in determining the audit scope, including risk factors;

(i) upon completion of the annual audit and prior to public disclosure, review the following with the CEO, CFO and executive officers:

(i) annual financial statements, footnotes and management discussion and analysis of financial condition and results of operations;

(ii) significant accounting judgments and reporting principles, practices and procedures applied in preparing the financial statements, including newly adopted accounting policies and the reasons for their adoption;

(iii) results of the combined audit of the financial statements and internal controls over financial reporting, if applicable;

(iv) significant changes to the audit plan, if any, and any disputes or difficulties with management encountered during the audit, including any disagreements which, if not resolved, would have caused the external auditor to issue a non-standard report on the Corporation’s financial statements; and

(v) co-operation received by the external auditor during its audit including access to all requested records, data and information.

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The Audit Committee will:

(a) be satisfied and obtain reasonable assurances from management and the external auditors that:

(i) accounting systems are reliable;

(ii) prescribed internal controls are effective; and

(iii) adequate procedures are in place for the review of the disclosure of financial information extracted or derived from the Corporation’s financial statements;

(b) periodically assess the adequacy of accounting systems, internal controls and procedures for the review of disclosure of financial information;

(c) direct the external auditor’s examinations to particular issues;

(d) review control weaknesses identified by the external auditor and management’s response;

(e) review with the external auditor its view of the qualifications and performance of the key financial and accounting executives:

(f) consider and review the following issues with management and the Director of internal audit:

(i) significant findings of the internal audit group as well as management’s response to them;

(ii) any difficulties encountered in the course of their internal audits, including any restrictions on the scope of their work or access to required information;

(iii) the internal auditing budget and staffing;

(iv) the Audit Services Charter; and

(v) compliance with the The Institute of Internal Auditors’ Standards for the Professional Practice of Internal Auditing;

(g) approve the appointment, replacement, or dismissal of the Director of the internal audit group;

(h) review and approve the compensation of the Director of the internal audit group;

(i) review and approve the reporting relationship of the internal auditor to ensure that an appropriate segregation of duties is maintained and that the internal auditor has an obligation to report directly to the Audit Committee on matters affecting the Audit Committee’s duties, irrespective of his or her other reporting relationships;

(j) direct the Director of the internal audit group to review any specific areas the Committee deems necessary; and

(k) discuss the Corporation’s policies with respect to risk assessment and risk management, including guidelines and policies to govern the process by which risk assessment and risk management are undertaken.

REPORTING

The Audit Committee is responsible, following each meeting, to report to the Board regarding its activities, findings, recommendations, any issues that arise with respect to the quality or integrity of the Corporation’s financial statements, compliance with applicable law, the performance and independence of the external auditor and the effectiveness of the internal audit function.

The Audit Committee is responsible for reviewing and recommending their approval to the Board, prior to their distribution, of all:

(a) interim and annual financial statements and notes thereto;

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(b) management’s discussion and analysis of financial condition and results of operations;

(c) relevant sections of the annual report, annual information form and management information circular containing financial information;

(d) forecasted financial information and forward-looking statements;

(e) press releases and other documents in which financial statements, earnings forecasts, results of operations or other financial information is disclosed; and

(f) disclosure of the selection of accounting policies (and changes thereto), major accounting judgments, accruals and estimates.

The Audit Committee will annually, prior to public disclosure of its annual financial statements, ensure that the external auditor has current participant status with, and is in compliance with, any restriction or sanction imposed by the Canadian Public Accountability Board.

The Audit Committee will prepare any reports required to be prepared by the Committee under applicable law including quarterly reports regarding ongoing investigations made pursuant to the Company’s Whistleblower Policy.

The Audit Committee is responsible to annually review, and in its discretion, make recommendations to the Board regarding changes to its Charter and the position description of its Chair.

The Audit Committee has the power, at the expense of the Company, to retain, instruct, compensate and terminate independent advisors to assist the Audit Committee in the discharge of its duties.

Approved by the Board of Directors - November 24, 2010

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EX-99.3

Exhibit 99.3

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the three and fifteen months ended September 30, 2010

TABLE OF CONTENTS

INTRODUCTION	4
BUSINESS PROFILE AND STRATEGY	4
Operational	5
Financial	6
Selected Annual Information	7
OVERALL FINANCIAL PERFORMANCE	8
2010 Highlights and Outlook	8
Industry and economic review	10
SELECTED FINANCIAL INFORMATION	11
FINANCIAL ANALYSIS	12
Branch Count	12
Revenue	13
Same Branch Revenues	14
Branch Operating Income and Operating Income	15
Expenses (excluding retention payments, amortization and class action settlements)	15
Retention Payments	16
Amortization	16
Income Taxes	16
LIQUIDITY AND CAPITAL RESOURCES	16
Normal Course Issuer Bid	17
Contractual Obligations	17
SUMMARY OF QUARTERLY RESULTS	18
Fifth Quarter	18
RELATED PARTY TRANSACTIONS	20
RISK FACTORS AFFECTING PERFORMANCE	20
Consumer Protection Regulations	21
Legal Proceedings	21
Third Party Lenders/Retention Payments	23
CRITICAL ACCOUNTING ESTIMATES	24
Revenue Recognition	24
Consumer Loans Receivable	24
Provisions for Loan Losses	25
Retention Payments	25
Amortization Policies and Useful Lives	25
Goodwill	26
Intangible Assets	26
Long-term investments	27
Leases	27
Contingencies	27
Income Tax Estimates and Future Income Taxes	27
Stock Based Compensation	27
Accounting for the Impairment of Long-Lived Assets	27

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Financial Instruments	28
Capital Disclosures	29
CHANGES IN ACCOUNTING POLICIES AND PRACTICES	30
Goodwill and Intangible Assets	30
Business Combinations	30
Consolidated Financial Statements	30
Non-Controlling Interests	31
Financial Instruments - Recognition and Measurement	31
Financial Instruments - Disclosures	31
Equity	32
Comprehensive Revaluation of Assets and Liabilities	32
RECENT ACCOUNTING PRONOUCEMENTS NOT YET ADOPTED	32
International Financial Reporting Standards (IFRS)	32
CONTROLS AND PROCEDURES	32
Disclosure Controls and Procedures	32
Internal Control over Financial Reporting	33
Evaluation of Effectiveness	33
Limitations on the Effectiveness of Disclosure Controls and Procedures and Internal Controls over Financial Reporting	33
OUTSTANDING SHARE DATA	34
DIVIDENDS	34
OTHER	34
Cautionary Statement Regarding Forward-looking Information	34
Non-GAAP Measures	35
EBITA Reconciliation	35

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INTRODUCTION

The following management’s discussion and analysis (MD&A) should be read in conjunction with The Cash Store Financial Services Inc.’s (Cash Store Financial or the Company)  fiscal 2010 audited consolidated financial statements for the fifteen months ended September 30, 2010, which are available on SEDAR (www.sedar.com) and the United States Securities and Exchange Commission (www.sec.gov).

All figures are presented in Canadian dollars and are reported in accordance with Canadian generally accepted accounting principles.

In 2010, we changed our fiscal year end from June 30 to September 30.  The fiscal year end change results in a 15 month reporting period from July 1, 2009 to September 30, 2010.  The information is presented and computed as of and for the fifteen months ended September 30, 2010, and twelve months ended June 30, 2009.

This MD&A is dated as of November 24, 2010.

BUSINESS PROFILE AND STRATEGY

This section contains forward-looking statements.  See Cautionary Statement Regarding Forward-Looking Information located at the end of this MD&A.

Cash Store Financial is an alternative to traditional banks, providing short-term advances and other financial services, to serve the needs of everyday people through our two branch banners: The Cash Store and Instaloans.  The Cash Store and Instaloans, primarily act as brokers to facilitate short-term advances and to provide other financial services to income-earning consumers. We also provide a range of in-demand financial products that are not supplied by traditional financial institutions. Driven by a dynamic workforce, a performance-based culture, and a commitment to strong business fundamentals, at September 30, 2010, we owned and operated 544 branches in nine provinces, two territories and the United Kingdom.  We employed approximately 2,000 associates across Canada and the United Kingdom.  Cash S tore Financial is the only broker of short-term advances and provider of other financial services in Canada that is publicly traded on the Toronto Stock Exchange. Cash Store Financial trades under the symbol “CSF” on the Toronto Stock Exchange and under the symbol “CSFS” on the New York Stock Exchange.

Our business is based on the recognition that the needs of a segment of the population are not being met by traditional financial institutions. Our strategic objective is to establish The Cash Store and Instaloans as Canada’s provider of choice for short-term advances and other financial services by offering a wide range of products, a high level of customer service, and convenient locations and hours of operation.

In addition to meeting our customers’ needs by providing small, short-term loans which can be accessed quickly, we also offer financial product insurance, cheque cashing products, bank accounts, money transfers, pre-paid master cards, debit cards, term loans, and prepaid phone cards.

As an important component in the execution of our long term product diversification strategy, bank accounts were introduced nationally across the branch network in February 2010. Accounts are Canada Deposit Insurance Corporation (CDIC) insurable and are offered through an agency agreement with a third party bank that is a federally regulated Schedule I bank. Management continues to be pleased by the interest of our customer base in the product and the revenue generated from these accounts. The agreement also offers Cash Store the opportunity to pursue other banking products and services that will enable the company to continue to diversify its product suite and build ancillary revenue.

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Our commitment to expanding into untapped markets remains strong. Aggressive openings in the Canadian market place as well as testing new markets are two of our primary focuses. The Canadian market potential is strong and with the implementation of provincial regulations, we will take advantage of our large footprint and continue our aggressive expansion. With our openings in the United Kingdom, we are seeing promising results and are excited about the opportunities for future aggressive expansion in this area.

Investor relations are an important part of our future growth plans and we are very excited about the opportunities that have been opened with our listing on the New York Stock Exchange.

To ensure the implementation of our strategic imperatives, our primary areas of focus are in human resources, collections, training and marketing. Improvements to the infrastructure in these areas will continue to occur.

Cash Store Financial is committed to the communities we serve.  As part of this commitment we have partnered with the Alberta Diabetes Foundation and the Alberta Diabetes Institute.  We have committed to raise $7.5 million. In recognition of this commitment, the Company was one of 16 companies recognized with a “Roll of Honour” award by the Alberta Association of Fund Raising Executives. The “Roll of Honour” award celebrates extraordinary commitment and contributions from corporate citizens and individuals around Alberta to the non-profit sector.

Cash Store Financial’s strategic priorities are:

Operational

Operational strategic priorities can be broken down into four main strategic priorities that include:

1) Maturation of branch network:

• Continued focus on improving Branch Operating Income (BOI) margins for all our branches;

• Developing a motivated, knowledgeable team of associates dedicated to serving our customers through an integrated communication and training strategy that includes Cash Store College and Cash Store TV;

• Further integrating the marketing and training departments to achieve effective alignment with operations; and

• Providing strong leadership through in-the-field, hands-on involvement of senior management.

2) New branch openings:

• Further expanding our leading position in the Canadian alternative financial services industry through aggressive organic growth into underserved communities or via the acquisition of existing operators at accretive EBITA (earnings before interest, income taxes, stock-based compensation, and amortization of capital and intangible assets) multiples.

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3) Growing existing product lines:

• Providing superior service and complementary products with further diversification of the revenue stream.

4) International expansion:

• Further expanding our branch network in the United Kingdom (UK);

• Owning an 18% interest in The Cash Store Australia Holdings Inc. (AUC) which owns and operates 63 branches in Australia; and

• Owning a 16% interest in RTF Financial Holdings Inc. (RTF), which is in the business of short-term lending, by utilizing highly automated mobile technology (SMS text message lending).  RTF currently operates in Finland, Sweden, Denmark, the Netherlands, and the UK with expansion plans to other European countries.

Financial

• Maximizing shareholder value by growing our earnings per share;

• Utilizing our strong balance sheet to capitalize on regulatory changes as they occur, namely, through reducing our cost of capital in regulated provinces;

• Controlling or reducing costs through a strong focus on operational excellence and by taking advantage of our growing buying power; and

• Accelerating profitability for our newer branches through enhanced branch opening processes.

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Selected Annual Information

		Fifteen		Twelve		Twelve
Thousands of dollars, except for per share amounts and branch figures		Months  Ended		Months  Ended		Months Ended
Consolidated results		September 30		June 30		June 30
		2010		2009		2008
No. of branches	Canada		542		424		384
	United Kingdom		2		-		-
			544		424		384
Revenue
Brokerage		$	171,612	$	122,572	$	107,169
Other income			50,165		27,933		23,630
			221,777		150,505		130,799
Branch expenses
Salaries and benefits			62,265		40,634		35,399
Retention payments			28,167		17,988		20,111
Selling, general and adminstrative			21,875		17,326		16,621
Rent			17,907		11,300		10,279
Advertising and promotion			5,536		3,971		4,128
Provision for loan losses			788		49		-
Amortization of capital assets			7,006		4,679		4,425
			143,544		95,947		90,963
Branch operating income			78,233		54,558		39,836
Regional expenses			14,336		8,169		7,440
Corporate expenses			21,166		16,627		11,182
Other amortization			2,055		1,333		822
Income before income taxes and class action settlements			40,676		28,429		20,392
Class action settlements			2,915		6,910		-
Loss from discontinued operations			-		-		(1,716	)
EBITA *			48,100		28,583		26,271
Net income and comprehensive income		$	26,464	$	14,647	$	10,806
Weighted average number of shares outstanding
- basic			16,913		17,958		20,124
- diluted			17,522		18,040		20,242
Basic earnings per share
Income from continuing operations		$	1.56	$	0.82	$	0.62
Loss from discontinued operations			-		-		(0.08	)
Net income and comprehensive income			1.56		0.82		0.54
Diluted earnings per share
Income from continuing operations			1.51		0.81		0.62
Loss from discontinued operations			-		-		(0.09	)
Net income and comprehensive income		$	1.51	$	0.81	$	0.53
Consolidated Balance Sheet Information
Working capital		$	15,282	$	9,667	$	16,740
Total assets			115,045		83,796		81,787
Total long-term liabilities			9,882		2,959		1,800
Total liabilities			31,690		17,944		10,585
Cash dividends declared per share			0.54		0.20		0.15
Shareholders' equity		$	83,355	$	65,852	$	71,202

*EBITA - earnings from operations before interest, income taxes, stock-based compensation, amortization of capital and intangible assets

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OVERALL FINANCIAL PERFORMANCE

2010 Highlights and Outlook

This section contains forward-looking statements.  See Cautionary Statement Regarding Forward-Looking Information.

	Three Months		Three Months		Fifteen		Twelve
Thousands of dollars, except for per share amounts	Ended		Ended		Months Ended		Months Ended
Consolidated results	September 30		September 30		September 30		June 30
	2010		2009		2010		2009
Branch operating income	$	16,886	$	15,725	$	78,233	$	54,558
Net income
Before class action expenses net of tax		7,682		5,640		28,507		19,353
Net income and comprehensive income		7,682		5,640		26,464		14,647
Earnings before interest, taxes, stock based compensation, amortization, and class action expenses		11,132		10,725		51,015		35,493
Earnings before interest, taxes, stock based compensation, and amortization		11,132		10,725		48,100		28,583
Diluted earnings per share
Before class action expenses net of tax		0.42		0.33		1.63		1.07
Net income and comprehensive income	$	0.42	$	0.33	$	1.51	$	0.81

Net income for the fifteen month period ended September 30, 2010, after removing class action settlement costs and related taxes was $28.5 million, compared to $19.4 million for the year ended June 30, 2009. Net income and comprehensive income for the fifteen month period ended September 30, 2010, was $26.5 million, compared to $14.6 million for the year ended June 30, 2009.  Diluted earnings per share, before class action settlements costs and related taxes, increased to $1.63 for the fifteen month period ended September 30, 2010, compared to $1.07 for the year ended June 30, 2009.  Diluted earnings per share were $1.51 for the fifteen month period ended September 30, 2010, compared to $0.81 for the year ended June 30, 2009.

Fiscal 2010 earnings were higher as a result of:

• Record revenues related to the maturation of branches, and the introduction of a new banking product;

• Increased loan volumes related to the maturing of branches, implementation of new regulatory frameworks, new branch openings and acquisitions; and

• Record revenue from other services.

We achieved higher earnings, even after taking into consideration the following:

• Reduced branch operating margins associated with broker fee rate compression experienced in the regulated provinces and increased new branch openings;

• An increase in retention payments, as a percentage of revenue, as a result of rate compression experienced in the regulated provinces; and

• The Company’s share of our equity loss on our investments in The Cash Store Australia Holdings Inc. and RTF Financial Holdings Inc.

EBITA, adjusted to remove the impact of class action settlements, was $51.0 million for the fifteen month period ended September 30, 2010, compared to $35.5 million for the year ended June 30, 2009. The increase is due to increased revenues, BOI and the change in the year end. Our EBITA for the fifteen month period ended September 30, 2010, was $48.1 million compared to $28.6 million for the year ended June 30, 2009.

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The implementation of provincial industry rate regulations commenced in August 2009.  We have welcomed the new industry regulations that have provided long-term future stability and growth opportunities.  We have successfully complied with the implementation of regulations in British Columbia, Alberta, Ontario and Nova Scotia, representing 81% of our branches.  With the implementation of regulations, we have experienced a decrease in our margins as a result of the introduction of rate caps. To help us transition through the implementation of regulations, we have utilized short-term incentive programs. The decreased margins and increased expenses have been more than offset by the increases in loan volumes achieved through the maturing of branches, consolidations, and increased loan amounts within reg ulated provinces, increased branch counts, and increased revenues from other services.

We continue to view regulation as a positive for us and expect the benefits to accrue over the long-term. These are welcome developments that demonstrate to capital markets that the industry is now supported by a high degree of regulatory certainty and that the industry’s long-term stability has been secured.  We have accommodated regulation more effectively than some competitors and there has been industry consolidation as a result.  Regulation has positioned us to lend our own capital which we anticipate will result in improved margins in the future. We believe that industry regulation will encourage previously untapped consumer segments to enter the market and offer new revenue opportunities. 

Product and revenue diversification initiatives continue to generate positive results. Revenue from other services (including fees from financial product insurance, cheque cashing, bank accounts, money transfers, pre-paid MasterCard, debit cards, term loans and prepaid phone cards) increased to a record $50.2 million for the fifteen month period ended September 30, 2010, up from $27.9 million for the year ended June 30, 2009. We have made significant improvements in products and services which complement our existing product lines.  We will continue to progress towards our objectives of diversifying our revenue stream with products which enhance and complement our core products, and increasing the value generated from our existing suite of products.

Other revenues have increased significantly as a result of the introduction of new products and other product enhancements.

Management has established, as a strategic priority, the requirement to improve the revenue and earnings contributions from our lowest-performing branches. The effective execution of corporate-directed branch action plans has increased the number of profitable branches, and the earnings contribution from our lowest-performing branches.

Staff turnover remained consistent during the year. We believe this consistency in staff turnover was achieved through increased communications as a result of our Cash Store TV platform, increased training to associates through our Cash Store College platform, integrated marketing and sales training programs, and an innovative profit-sharing compensation program which ties associates’ performance to our strategic vision.

We are well positioned to fund future growth initiatives and working capital requirements with a cash position of $19.6 million and a positive working capital of $15.3 million as at September 30, 2010. During the fifteen month period ended September 30, 2010, working capital increased by $5.6 million from $9.7 million at June 30, 2009, despite our expansion, BC class action payments, acquisitions, and dividend payments. We continue our efforts to capitalize on our strong financial position to secure lower cost capital, which has been made possible as a result of a stable regulatory environment implemented within 81% of our current markets.

- 9 -

Industry and economic review

Many provinces are currently working through a process to establish consumer protection measures for the payday loan industry.  These measures will include rate caps and a ban on rollovers. The Company expects regulation to be positive for its operations and anticipates that it will be able to accommodate its business model to anticipated rate caps.  In addition, the Company's voluntary implementation of a prohibition on the provision of rollovers has given it a competitive advantage over those companies that have not done so in advance of the now regulated prohibition on these practices.

It should be noted that the provincial legislation does not apply to or affect federally regulated banks.  A number of the services offered at Cash Store and Instaloans locations are provided by an independent third party bank, and are not subject to provincial regulation.

The following rate caps are currently in effect:  Nova Scotia - $31 per hundred dollars loaned; British Columbia - $23 per hundred dollars loaned; Ontario - $21 per hundred dollars loaned; Manitoba - $17 per hundred dollars loaned; and Alberta - $23 per hundred dollars loaned.  Newfoundland has announced that it does not intend to enact local legislation.  While at this stage it remains difficult to specify expected rates for the remaining provinces, all Canadian jurisdictions appear committed to facilitating a competitive industry. Below is a summary of rate caps per province:

	Rate
	per	Date enacted or
	$100	anticipated
Nova Scotia	31	August 1, 2009
British Columbia	23	November 18, 2009
Ontario	21	December 15, 2009
Alberta	23	March 1, 2010
Manitoba	17	October 18, 2010
Saskatchewan	23	First quarter fiscal 2011

- 10 -

SELECTED FINANCIAL INFORMATION

		Three Months		Three Months		Fifteen Months		Twelve Months
Thousands of dollars, except for per share amounts and branch figures		Ended		Ended		Ended		Ended
Consolidated results		September 30		September 30		September 30		June 30
		2010		2009		2010		2009
No. of branches	Canada		542		451		542		424
	United Kingdom		2		-		2		-
			544		451		544		424
Revenue
Brokerage		$	36,453	$	34,042	$	171,612	$	122,572
Other income			13,306		7,596		50,165		27,933
			49,759		41,638		221,777		150,505
Branch expenses
Salaries and benefits			13,698		10,972		62,265		40,634
Retention payments			6,934		5,100		28,167		17,988
Selling, general and administrative			4,739		4,412		21,875		17,326
Rent			4,259		3,082		17,907		11,300
Advertising and promotion			1,223		1,059		5,536		3,971
Provision for loan losses			454		32		788		49
Amortization of capital assets			1,566		1,256		7,006		4,679
			32,873		25,913		143,544		95,947
Branch operating income			16,886		15,725		78,233		54,558
Regional expenses			2,582		2,325		14,336		8,169
Corporate expenses			5,048		4,141		21,166		16,627
Other amortization			13		571		2,055		1,333
Income before income taxes and class action settlements			9,243		8,688		40,676		28,429
Class action settlements			-		-		2,915		6,910
EBITA *			11,132		10,725		48,100		28,583
Net income and comprehensive income		$	7,682	$	5,640	$	26,464	$	14,647
Weighted average number of shares outstanding
- basic			17,071		16,817		16,913		17,958
- diluted			17,533		17,197		17,522		18,040
Basic earnings per share
Income before class action settlement costs		$	0.44	$	0.34	$	1.69	$	1.08
Net income and comprehensive income			0.44		0.34		1.56		0.82
Diluted earnings per share
Income before class action settlement costs			0.42		0.33		1.63		1.07
Net income and comprehensive income		$	0.42	$	0.33	$	1.51	$	0.81
Consolidated Balance Sheet Information
Working capital		$	15,282	$	8,112	$	15,282	$	9,667
Total assets			115,045		87,551		115,045		83,796
Total long-term liabilities			9,882		3,423		9,882		2,959
Total liabilities			31,690		20,841		31,690		17,944
Shareholders' equity		$	83,355	$	66,710	$	83,355	$	65,852

*EBITA - earnings from operations before interest, income taxes, stock-based compensation, amortization of capital and intangible assets

- 11 -

FINANCIAL ANALYSIS

This analysis provides an overview of our financial results for the fifteen months ended September 30, 2010, compared to the year ended June 30, 2009.

Branch Count

This section contains forward-looking statements.  See Cautionary Statement Regarding Forward-Looking Information.

At September 30, 2010, we had 544 branches, in total, including two branches in the UK.  This is an increase of 120 branches, compared to 424 branches (2009 - Canada - 424 and UK - nil) as at June 30, 2009. During the fifteen months ended September 30, 2010, 126 new branches were added and six branches were consolidated with nearby branches. Branch performance continues to be monitored and consolidations will occur when efficiencies can be achieved.

	Jun 30-02		Jun 30-03		Jun 30-04		Jun 30-05		Jun 30-06			Jun 30-07		Jun 30-08			Jun 30-09			Sep 30-10
Opening		5		20		57		108		277			338		358			384			424
Organic		15		37		51		67		61			20		37			31			104
Acquired		0		0		0		102		6			0		0			18			22
Consolidations		0		0		0		0		(6	)		0		(11	)		(9	)		(6	)
Closing		20		57		108		277		338			358		384			424			544

Surpassing our growth strategy, we increased by 120 new branches over the fifteen month period ended September 30, 2010 due in large part to a greater number of branch openings than anticipated and the acquisition of 22 branches. Branch performance continues to be monitored, and consolidations will occur when efficiencies can be achieved. We anticipate adding 70 to 80 branches over the next year in Canada and anticipate an expansion of eight to ten branches through fiscal 2011 in the UK.

- 12 -

Material factors that determine the number of branch openings include availability of suitable locations with suitable lease terms and favorable market rates.

Revenue

Revenue increased 47.4% to $221.8 million for the fifteen month period ended September 30, 2010, from $150.5 million for the year ended June 30, 2009.  The higher revenue reflects an increase in both brokerage fees and other services.  The growth in both areas of revenue is due to:

• 120 additional branches;

• the maturing of existing branches;

• positive contributions from our new product initiatives, including bank accounts, which resulted in record revenue from other sources;

• increased same branch revenues as a result of record revenue from other sources. The most significant impact was the introduction of bank accounts. Also same branch revenue, as it relates to the brokering of loans, remained consistent as a result of brokerage fee rate compression in regulated provinces offset by higher loan volumes; and

• fifteen months in 2010 compared to twelve in 2009.

The table below illustrates consistent growth in a majority of branch age categories contributing to the overall growth in revenue.

										Average Revenue per Branch per
(Thousands of dollars, except branch figures)					Revenues					Month
			Fifteen Months		Twelve Months					Fifteen Months		Twelve Months
			Ended		Ended					Ended		Ended
	Number of		September 30		June 30		%			September 30		June 30
Year Opened	Branches		2010		2009		Change			2010		2009
2001*		94	$	49,280	$	39,983		23	%	$	35	$	35
2002		13		9,202		6,839		35	%		47		44
2003		35		20,683		15,959		30	%		39		38
2004		52		27,600		20,805		33	%		35		33
2005		66		32,722		24,517		33	%		33		31
2006		53		24,860		18,283		36	%		31		29
2007**		37		12,104		7,071		71	%		22		16
2008		34		13,829		9,131		51	%		27		22
2009		48		14,180		4,093		246	%		20		7
2010		112		15,657		-		100	%		9		-
		544		220,117		146,681		50	%	$	27	$	22
Consolidation of branches				272		1,316
Other				1,388		2,508
Continuing operations			$	221,777	$	150,505

* Instaloans branches were acquired by Cash Store Financial on April 22, 2005; they have been operating since 2001.

** EZ Cash branches were acquired by Cash Store Financial on April 26, 2010; they have been assumed on average to be operating since 2007.

- 13 -

The following table depicts the split between brokerage fees and other revenues:

	Three Months		Three Months		Fifteen Months		Twelve Months
(thousand of dollars)	Ended		Ended		Ended		Ended
	September		September		September		June
	2010		2009		2010		2009
Revenues
Brokerage fees	$	36,453	$	34,042	$	171,612	$	122,572
Other		13,298		7,582		50,142		27,681
		49,751		41,624		221,754		150,253
Interest income		8		14		23		252
	$	49,759	$	41,638	$	221,777	$	150,505

Broker fees for the fifteen months ended September 30, 2010, increased to $171.6 million, up 40.0% from $122.6 million for the year ended June 30, 2009, as a direct result of improved loan volumes, 120 additional branches, the maturing of existing branches, the longer fiscal period, and the increased focus on growth through the establishment and communication of higher expectations at all levels, improved staff retention, increased marketing initiatives, and more effective compensation structures.

Revenue from other services (including fees from financial product insurance, cheque cashing, bank accounts, money transfers, pre-paid master cards, debit cards, term loans and prepaid phone cards) for the fifteen month period ended September 30, 2010, increased 79.6% to $50.2 million or 22.6% of revenue, up from $27.9 million or 18.6% of revenue for the year ended June 30, 2009.  Other revenues have increased significantly as a result of the introduction of new products and other product enhancements as well as the longer fiscal period. These new products and enhancements are part of our long term strategy to diversify revenue streams through providing our customers with a broader suite of financial services and products.

We have made significant improvements in products and services which complement our existing product lines.  We will continue to progress towards our objectives of diversifying our revenue stream with products which enhance and complement our core products and increasing the value generated from our existing suite of products.

Loans brokered for the fifteen month period ended September 30, 2010, were $847.3 million and averaged $469 per loan, compared to $594.2 million and an average of $456 per loan for the year ended June 30, 2009.

Same Branch Revenues

Same branch revenues for the last 12 months for the 382 locations open since the beginning of October 2008 increased by 4.4% compared to the same period last year, with same branch revenues averaging $401,000 in the current period compared to $384,000 in the prior year.  Same branch revenues increased as a result of record revenues from other sources. The most significant impact on same branch revenues was the introduction of bank accounts. Also, same branch revenue, as it relates to the brokering of loans, remained consistent as a result of brokerage fee rate compression in regulated provinces offset by higher loan volumes. We believe the long-term effects of a stable and effective regulatory environment will be positive for us.

- 14 -

We continue to maximize shareholder value from our network of branches and products. As the cost structure for the existing branch base is relatively fixed, improving same branch revenues is an important objective. Small increases in same branch revenues currently lead to a direct increase in profitability.

Branch Operating Income and Operating Income

Branch operating income for the fifteen month period ended September 30, 2010, was $78.2 million compared to $54.6 million last year.

BOI was down as a percentage of total revenue as a result of a decrease in our margins given lower rate caps, short-term incentive programs used to help through the transition to regulations, and increased expenses due to the opening of 120 new branches and retention payments. The decreased margins and increased expenses have been partially offset by the increases in loan volumes achieved through the maturing of branches, consolidations and increased loan amounts within regulated provinces, increased branch counts, a longer fiscal period and record revenues from other services. BOI, by maturity level, is outlined below:

(Thousands of dollars, except branch figures)			BOI (Loss)						BOI % of Revenues
			Fifteen Months			Twelve Months			Fifteen Months			Twelve Months
			Ended			Ended			Ended			Ended
	Number of		September 30			June 30			September 30			June 30
Year Opened	Branches		2010			2009			2010			2009
2001*		94	$	21,481		$	17,776			43.6	%		44.5	%
2002		13		4,306			2,777			46.8	%		40.6	%
2003		35		9,751			7,436			47.1	%		46.6	%
2004		52		11,907			8,854			43.1	%		42.6	%
2005		66		13,021			9,040			39.8	%		36.9	%
2006		53		9,305			6,028			37.4	%		33.0	%
2007**		37		4,717			1,910			39.0	%		27.0	%
2008		34		5,295			2,400			38.3	%		26.3	%
2009		48		969			(1,876	)		6.8	%		-45.8	%
2010		112		(2,548	)		-			-16.3	%		0.0	%
		544		78,204			54,345
Branches not yet open				(33	)		(1	)
Consolidation of branches				(296	)		(631	)
Other				358			845
Branch Operating Income			$	78,233		$	54,558			35.3	%		36.2	%

* Instaloans branches were acquired by Cash Store Financial on April 22, 2005; they have been operating since 2001.

** EZ Cash branches were acquired by Cash Store Financial on April 26, 2010; they have been assumed on average to be operating since 2007.

Operating income, after removal of non-recurring class action settlement effects, for the fifteen month period ended September 30, 2010, was $28.5 million (12.9% of revenue) compared to $19.4 million (12.9% of revenue) for the year ended June 30, 2009.

Expenses (excluding retention payments, amortization and class action settlements)

Expenses for the fifteen month period ended September 30, 2010, totalled $143.9 million, an increase from $98.1 million for the year ended June 30, 2009.  The increase is primarily due to the addition of 120 new branches, increased bonuses related to higher profitability, short-term incentive programs used to help through the transition to regulations, introduction of new products, an increase in marketing, increased regional and corporate infrastructure costs, a longer fiscal period, and the write-down of our long-term investments as well as one-time costs associated with the start-up in the UK and the listing on the NYSE.

- 15 -

Retention Payments

Third-party lender retention payments for the fifteen months ended September 30, 2010, totalled $28.2 million (3.3% of loans brokered), compared to $18.0 million (3.0% of loans brokered) for the year ended June 30, 2009.  As a percentage of revenue, retention payments have increased to 12.7% for the fifteen months ended September 30, 2010, compared to 12.0% for the year ended June 30, 2009.  The increases as a percentage of revenue and loans brokered are as a result of external collection agencies not meeting expectations, as well as the rate compression experienced as a result of provincial regulation which resulted in higher loan volume offset by lower rates.

Amortization

Amortization of capital and intangible assets for the fifteen months ended September 30, 2010, totalled $9.1 million, compared to $6.0 million for the year ended June 30, 2009. The increase is the result of the addition of 120 new branches, a large scale refresh program for our mature branches and a longer fiscal period.

Income Taxes

Our effective tax rate was 29.9% for the fifteen month period ended September 30, 2010, compared to 31.9% for the year ended June 30, 2009, which was due to reductions in federal tax rates.

LIQUIDITY AND CAPITAL RESOURCES

Our cash increased to $19.6 million at September 30, 2010, compared to $18.5 million at June 30, 2009. Significant items impacting cash for the fifteen month period:

• Cash generated from operating activities, before non-cash operating items of $38.1 million;

• Receipt of the RIA Financial Services, a division of Euronet Worldwide Inc., signing bonus of $7.0 million;

• A $7.5 million increase in other receivables;

• BC Class action payments of $6.5 million;

• Capital and intangible asset expenditures of $20.6 million primarily relating to branch openings and retrofits;

• Acquisition of EZ Cash and Affordable Payday Loans for a total of $5.3 million;

• Increase in consumer loans receivable of $5.0 million as a result of on balance sheet lending;

• Dividend payments of $9.1 million;

• The repurchase of our shares in the amount of $3.3 million pursuant to a normal course issuer bid;

• Issuance of common shares for proceeds from exercised options of $2.4 million; and

• Investment in RTF Financial Holdings Inc. of $360,000.

- 16 -

At September 30, 2010, our working capital position totalled $15.3 million compared to $9.7 million as of June 30, 2009.

Normal Course Issuer Bid

On June 30, 2009, we announced our intention to make a normal course issuer bid (Bid) to purchase, through the facilities of the Toronto Stock Exchange, certain of our outstanding common shares. We repurchased 387,799 common shares (June 30, 2009 - 1,218,470 common shares) at a cost of $3.3 million for the fifteen months ended September 30, 2010 (June 30, 2009 - $7.1 million).  Common shares purchased pursuant to the Bid were cancelled.

Contractual Obligations

Our contractual obligations over the next five years and thereafter are summarized in the table below. For additional information, see Notes 15 and 20 (a) of our audited consolidated financial statements for the fifteen month period ending September 30, 2010.

												5 Years
(thousands of dollars)	1 Year		2 Years			3 Years			4 Years			and >		Total
Obligations under capital leases	$	1,081		$	640		$	323		$	123	$	-	$	2,167
Operating leases		17,443			15,908			12,787			9,570		5,759		61,467
	$	18,524		$	16,548		$	13,110		$	9,693	$	5,759	$	63,634

- 17 -

SUMMARY OF QUARTERLY RESULTS

The financial results for each of the last eight quarters are summarized in the following table. The results demonstrate a continued emphasis on revenue growth compared to the prior quarters with an equal emphasis on management programs for underperforming branches.

In general, improved results reflect a pattern of maturation in our branch network. There was an increase in brokerage revenue over prior periods due to our renewed emphasis on revenue growth. Branch expenses and overall expenses have also steadily increased due to an increased number of branches in operation and costs associated with adding infrastructure at the regional and corporate levels, enhancements to our information technology (IT) infrastructure, and costs associated with the class action settlements and regulations.

From a seasonality perspective, we believe that our revenues are generally stronger in the third and fourth quarters followed by the first and second quarter. In addition, quarterly results of operations are impacted by the number and timing of new branch openings.

(thousands of dollars, except for per share amounts and branch figures)																		Twelve Months Ended
		F2010										F2009						September 30
			Q5		Q4		Q3		Q2		Q1		Q4		Q3		Q2		2010		2009
Consolidated Results
No. of branches	Canada		542		523		489		469		451		424		423		415		542		451
	United Kingdom		2		2		-		-		-		-		-		-		2		-
			544		525		489		469		451		424		423		415		544		451
Loan volume		$	184,110	$	174,902	$	157,653	$	164,819	$	165,866	$	156,831	$	142,465	$	147,041	$	681,484	$	612,203
Brokerage		$	36,453	$	35,346	$	31,440	$	34,332	$	34,041	$	32,380	$	29,519	$	30,276	$	137,571	$	126,216
Other income			13,306		12,016		9,317		7,954		7,598		7,351		6,787		6,774		42,593		28,510
			49,759		47,362		40,757		42,286		41,639		39,731		36,306		37,049		180,164		154,725
Branch expenses
Salaries and benefits			13,698		13,695		12,206		11,694		10,972		11,068		10,249		9,801		51,293		42,090
Retention payments			6,934		5,833		5,300		5,000		5,100		4,600		4,537		4,600		23,067		18,837
Selling, general and administrative			4,739		4,361		4,248		4,114		4,412		4,027		4,752		4,318		17,462		17,509
Rent			4,259		3,780		3,479		3,307		3,082		2,987		2,956		2,671		14,825		11,696
Advertising and promotion			1,223		1,171		1,023		1,060		1,059		1,028		942		1,005		4,477		4,034
Provision for loan losses			454		200		86		16		32		24		13		12		756		81
Amortization of capital assets			1,566		1,477		1,374		1,334		1,256		1,218		1,211		1,141		5,751		4,826
			32,873		30,517		27,716		26,525		25,913		24,952		24,660		23,548		117,631		99,073
Branch operating income			16,886		16,845		13,041		15,761		15,726		14,779		11,646		13,501		62,533		55,652
Regional expenses			2,582		3,862		3,045		2,850		2,357		2,333		2,140		2,024		12,339		8,854
Corporate expenses			5,048		4,526		3,700		3,751		4,141		5,011		4,523		3,688		17,025		17,363
Other amortization			13		405		279		787		571		527		311		282		1,484		1,691
Net income before income taxes and class action settlements			9,243		8,052		6,017		8,373		8,657		6,908		4,672		7,507		31,685		27,744
Class action settlements			-		100		2,715		100		-		5,000		-		1,910		2,915		6,910
EBITA*			11,132		10,325		5,275		10,643		10,725		3,891		6,460		7,303		37,375		28,379
Net income and comprehensive income		$	7,682	$	5,476	$	2,199	$	5,467	$	5,640	$	1,232	$	3,067	$	4,292		20,824		14,231
Basic earnings per share
Net income and comprehensive income		$	0.44	$	0.32	$	0.13	$	0.33	$	0.34	$	0.07	$	0.18	$	0.23	$	1.22	$	0.82
Diluted earnings per share
Net income and comprehensive income		$	0.42	$	0.31	$	0.13	$	0.32	$	0.33	$	0.07	$	0.18	$	0.23	$	1.18	$	0.81

*EBITA - earnings from operations before interest, income taxes, stock-based compensation, amortization of capital and intangible assets

Fifth Quarter

The first quarter of 2010 (July 1, 2009 to September 30, 2009) is used as the comparison to the fifth quarter of 2010 (July 1, 2010 to September 30, 2010) as they are comprised of the same calendar months.

Net income from continuing operations for the fifth quarter of fiscal 2010 increased to $7.7 million, compared to $5.6 million for the first quarter.  Diluted earnings per share for continuing operations for the fifth quarter were $0.42 per share ($0.44 basic), compared to $0.33 per share ($0.34 basic) for the first quarter.

- 18 -

BOI for the quarter, by maturity level, is outlined below:

(Thousands of dollars, except branch figures)			BOI (Loss)						BOI % of Revenues
	Number of		September 30			September 30			September 30			September 30
Year Opened	Branches		2010			2009			2010			2009
2001*		94	$	4,905		$	4,940			48.9	%		48.1	%
2002		13		1,016			834			52.8	%		44.5	%
2003		35		2,162			1,916			50.6	%		45.7	%
2004		52		2,477			2,345			43.6	%		42.7	%
2005		66		2,911			2,590			42.3	%		39.6	%
2006		53		1,844			1,822			36.4	%		36.3	%
2007**		37		1,246			813			38.4	%		39.2	%
2008		34		1,334			878			45.5	%		32.9	%
2009		48		296			(202	)		9.2	%		-7.1	%
2010		112		(1,188	)		-			-19.4	%		-
		544		17,003			15,936
Branches not yet open				(29	)		(311	)
Consolidation of branches				(26	)		(209	)
Other				(62	)		309
Branch Operating Income			$	16,886		$	15,725

* Instaloans branches were acquired by Cash Store Financial on April 22, 2005; they have been operating since 2001.

** EZ Cash branches were acquired by Cash Store Financial on April 26, 2010; they have been assumed on average to be operating since 2007.

BOI has increased 7.4% to $16.9 million in the fifth quarter compared to $15.7 million in the first quarter.  The increase was caused by the maturing of branches, increased emphasis on growth, increased same branch revenues and effective execution of action plans for underperforming branches.

Revenue for the fifth quarter of fiscal 2010 increased to a record $49.8 million, compared to $41.6 million for the first quarter due to an additional net 93 new branches operating since the first quarter of fiscal 2010 and increases in same branch revenues.

										Average Revenue per Branch per
(Thousands of dollars, except branch figures)			Revenues							Month
	Number of		September 30		September 30		%			September 30		September 30
Year Opened	Branches		2010		2009		Change			2010		2009
2001*		94	$	10,021	$	10,261		-2	%	$	36	$	36
2002		13		1,923		1,876		3	%		49		48
2003		35		4,269		4,194		2	%		41		40
2004		52		5,684		5,497		3	%		36		35
2005		66		6,876		6,540		5	%		35		33
2006		53		5,069		5,022		1	%		32		32
2007**		37		3,243		2,075		56	%		29		19
2008		34		2,935		2,665		10	%		29		26
2009		48		3,204		2,865		12	%		22		20
2010		112		6,132				100	%		18		-
		544		49,356		40,995		20	%	$	30	$	25
Consolidation of branches				9		101
Other				394		542
Continuing operations			$	49,759	$	41,638

* Instaloans branches were acquired by Cash Store Financial on April 22, 2005; they have been operating since 2001.

** EZ Cash branches were acquired by Cash Store Financial on April 26, 2010; they have been assumed on average to be operating since 2007.

Same branch revenues for the 419 locations open since the beginning of July 2009 for the three month period, increased by 4.1% compared to the same period last year, with same branch revenue averaging $101,000 this period compared to $97,000 in the same period last year. Same branch revenues increased through improved associate retention, more effective bonus structures, communication of expectations at all levels of the organization and action plans for our lowest-performing branches.

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Loans brokered for the three months ended September 30, 2010, were $184.1 million and averaged $474 per loan, compared to $165.9 million and an average of $377 per loan for the three months ended September 30, 2009.

Expenses for the fifth quarter of fiscal 2010 totalled $32.0 million, compared to $26.0 million in the same first quarter. These increased costs are due to increases in the number of branches, increased bonuses and benefits at all levels, the Company’s share of our equity loss on our long-term investments, infrastructure additions at the regional and corporate levels along with enhancements in our IT infrastructure and increased costs associated with provincial regulations. Retention payments totalled $6.9 million in the fifth quarter, compared to $5.1 million in the first quarter. The amortization of capital and intangible assets was $1.6 million.

Our effective tax rate was 16.9% for the quarter ended September 30, 2010, compared to 35.1% for the first quarter. The decrease was caused by lower effective rates being applied on current and future taxes.

RELATED PARTY TRANSACTIONS

We own 18.3% of the outstanding common shares of The Cash Store Australia Holdings Inc. Included in other receivables as of September 30, 2010, was $7,000 (June 30, 2009 - $1,000) receivable from The Cash Store Australia Holdings Inc.  We entered into an interim service agreement with AUC to provide ongoing services such as financial and accounting support and contracts administrative services, and the use of our IT and telecommunication systems. Included in selling, general, and administrative expenses is a recovery of $362,000 (June 30, 2009 - $82,000).  These transactions were subject to normal trade terms and were measured at the actual exchange amount. Amounts due are non-interest bearing, unsecured and have no specified terms of repayment. Certain employees, directors, and officers have an ownership in AUC. The receivable was repaid subsequent to year-end.

We own 15.7% of the outstanding common shares of RTF Financial Holdings Inc. We entered into an interim service agreement with RTF to provide ongoing services such as financial and accounting support and contracts administrative services.  Included in selling, general, and administrative expenses is a recovery of $120,000 (June 30, 2009 - $nil) relating to these services. These transactions were subject to normal trade terms and were measured at the actual exchange amount.  We have a $485,000 (June 30, 2009 - $nil) receivable from RTF. Amounts due are non-interest bearing, unsecured and have no specified terms of repayment. Certain employees, directors, and officers have an ownership in RTF. The receivable was repaid subsequent to year-end.

RISK FACTORS AFFECTING PERFORMANCE

Our financial and operational performance is potentially affected by a number of factors including, but not limited to, changing consumer protection regulations, industry and company specific class action lawsuits, access to third-party lenders and other issues described in our most recent Annual Information Form (AIF).  As a company, we identify risks in four main categories: 1) operational; 2) financial; 3) legal and regulatory; and 4) strategic.  A more detailed discussion of our risk factors is presented in our most recent AIF filed with the securities regulatory authorities on SEDAR (www.sedar.com). Our Risk Management department works continually to assess and mitigate the impact of potential risks to our stakeholders.

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Consumer Protection Regulations

Cash Store Financial’s business is subject to various federal and provincial laws and regulations, including federal interest rate laws and the various provincial consumer protection laws and regulations. The laws and regulations are subject to change and could impose unforeseen costs or limitations on the way we conduct or expand our business.

Five provinces have worked through a process to establish consumer protection measures for the payday loan industry which represents 81% of our branches.  These measures include rate caps and a ban on rollovers. The Company expects regulation to be positive for its operations and anticipates that it will be able to accommodate its business model to anticipated rate caps.  In addition, the Company's voluntary implementation of a prohibition on the provision of rollovers has given it a competitive advantage over those companies that have not done so in advance of the now regulated prohibition on these practices.

It should be noted that the provincial legislation does not apply to or affect federally regulated banks.  A number of the services offered at Cash Store and Instaloans locations are provided by an independent third party bank, and are not subject to provincial regulation.

The following rate caps are currently in effect:  Nova Scotia - $31 per hundred dollars loaned; British Columbia - $23 per hundred dollars loaned; Ontario - $21 per hundred dollars loaned; Manitoba - $17 per hundred dollars loaned; and Alberta - $23 per hundred dollars loaned.  Newfoundland has announced that it does not intend to enact local legislation.  While at this stage it remains difficult to specify expected rates for the remaining provinces, all Canadian jurisdictions appear committed to facilitating a competitive industry. Below is a summary of rate caps per province:

	Rate
	per	Date enacted or
	$100	anticipated
Nova Scotia	31	August 1, 2009
British Columbia	23	November 18, 2009
Ontario	21	December 15, 2009
Alberta	23	March 1, 2010
Manitoba	17	October 18, 2010
Saskatchewan	23	First quarter fiscal 2011

Legal Proceedings

Ontario and the rest of Canada, with the exception of British Columbia and Alberta

On April 13, 2004, a legal proceeding was commenced against The Cash Store Inc. and Instaloans Inc., by Thompson McCutcheon (Plaintiff), a customer.  The Plaintiff obtained an order pursuant to the Class Proceedings Act, 1992, S.O. 1992 c.6 (Class Proceeding Act), as amended, certifying the action as a class proceeding and appointing him as the representative of the class.  The Plaintiff asserted that we were in breach of the Criminal Code of Canada and the Fair Trading Act as the aggregate of all charges, including interest, broker fees and card fees charged, was in excess of those allowed by law.  The Statement of Claim stated th at the members of the Class would seek to recover all amounts charged, collected or received by the defendants at a criminal rate of interest and/or at an excessive rate, as well as damages, costs and interest.

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On December 2, 2008, the Ontario Superior Court of Justice certified the class action lawsuit as a class proceeding under the Act, and granted approval of the settlement that had been agreed to between us and the representative Plaintiff on behalf of the Class. The settlement does not constitute any admission of liability by Cash Store Financial.

Under the terms of the settlement, we are to pay to the class a minimum of $750,000 and a maximum of $1.5 million in cash and a minimum of $750,000 and a maximum of $1.5 million in credit vouchers to those customers of The Cash Store and Instaloans, exclusive of Alberta and British Columbia, who were advanced funds under a loan agreement and who repaid the payday loan plus brokerage fees and interest in full. The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay a portion of brokerage fees and interest which may arise in the future through new loans advanced. The credit vouchers are fully transferable and have no expiry date. Based on our estimate of the rate of take-up of the available cash and vouchers, a provision of $2.0 million has been recorded to cover the estimated costs of the settlement, including legal fees and other costs.   In addition, we paid the legal fees and costs of the class.  On August 6, 2009, the claims process was concluded and we issued $750,000 in vouchers and $750,000 in cheques to the class members as full and final satisfaction of all claims. As at September 30, 2010, the remaining accrual is $52,000.

British Columbia

On March 5, 2004, an action under the Class Proceedings Act was commenced in the Supreme Court of British Columbia by Andrew Bodnar and others proposing that a class action be certified on his own behalf and on behalf of all persons who have borrowed money from the defendants: The Cash Store Inc., Cash Store Financial and All Trans Credit Union Ltd. The action stems from the allegations that all Payday Loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Criminal Code of Canada. On May 25, 2006, the claim in British Columbia was affirmed as a certified class proceeding of Canada by the B.C. Court of Appeal. In fiscal 2007, the plaintiffs in the British Columbia action brought forward an application to have certain of our customers’ third-party lenders added to the claim.   On March 18, 2008, another action commenced in the Supreme Court of British Columbia by David Wournell and others against Cash Store Financial, Instaloans Inc., and others in respect of the business carried out under the name Instaloans since April 2005, collectively, the “Related Actions”.

On May 12, 2009, we settled the British Columbia Related Actions in principle.  The settlement has been approved by the Court. The settlement does not constitute any admission of liability by us.

Under the terms of the court approved settlement, we are to pay to the eligible class members who were advanced funds under a loan agreement and who repaid the Payday Loan plus brokerage fees and interest in full, or who met certain other eligibility criteria, a maximum estimated amount of $9.4 million in cash and $9.4 million in credit vouchers. Thus, the estimated maximum exposure with respect to this settlement is approximately $18.8 million including approved legal expenses.  The credit vouchers may be used to pay existing outstanding brokerage fees and interest or to pay a portion of brokerage fees and interest which may arise in the future through new loans advanced. The credit vouchers are not transferable and have no expiry date. In addition, we are to pay the legal fees and costs of the class. Based on ou r estimate of the rate of take-up of the available cash and credit vouchers, an expense of $7.7 million to date has been recorded to cover the estimated costs of the settlement, including legal fees of the Class and costs to administer the settlement fund.  It is possible that additional settlement costs could be required. As at September 30, 2010, the remaining accrual is $2.0 million.

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Alberta

We have been served in a prior fiscal period with a Statement of Claim issued in Alberta alleging that we are in breach of s. 347 of the Criminal Code of Canada (the interest rate provision) and certain provincial consumer protection statutes.

The certification motion has been pending since fiscal 2006 and has not yet been heard.  On January 19, 2010, the plaintiffs in the Alberta action brought forward an application to have a related subsidiary, certain of our customers’ third-party lenders, directors and officers added to the Claim.

We believe that we conduct our business in accordance with applicable laws and are defending the action vigorously. However, the likelihood of loss, if any, is not determinable.

Manitoba

On April 23, 2010, an action under the Manitoba Class Proceedings Act was commenced in the Manitoba Court of Queen’s Bench by Scott Meeking against The Cash Store, Instaloans, and Cash Store Financial proposing that a class action be certified on his own behalf and on behalf of all persons in Manitoba and others outside the province who elect to claim in Manitoba and who obtained a payday loan from The Cash Store or Instaloans.  The action stems from the allegations that all payday loan fees collected by the defendants constitute interest and therefore violate s. 347 of the Criminal Code of Canada.

We believe that we conducted our business in accordance within applicable laws and are defending the action vigorously.  Further it will be maintained that most of the proposed class members our bound by the judgment in the settlement of the Ontario class action, as approved by the Ontario Superior Court of Justice and the action may not be maintained in its present form.  However, the likelihood of loss, if any, is not determinable.  Accordingly, no provision has been made for this action in the accounts.

Other

We are also involved in other claims related to the normal course of operations.  Management believes that it has adequately provided for these claims.

Third Party Lenders/Retention Payments

Most funding of short-term advances is currently provided by independent third party lenders. As a result, our business is highly dependent on third party lenders who are willing to make significant funds available for lending to our customers. There are no assurances that the existing or new third party lenders will continue to make funds available. Any reduction or withdrawal of funds could have a significant material adverse impact on our results of operations and financial condition.

To facilitate the short-term advance business, we have entered into written agreements with a number of third party lenders who are prepared to consider lending to our customers. Pursuant to these agreements, we provide services to the lenders related to the collection of documents and information as well as loan collection services. The agreements also provide that the third party lenders are responsible for losses suffered on account of uncollectible loans provided we have properly performed our duties under the terms of the agreements. In the event we do not properly perform our duties and the lenders make a claim as required under the agreement, we may be liable to the lenders for losses they have incurred. A liability is recorded when it is determined that we have a liability under the agreement.

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Our Board of Directors regularly approves a resolution which authorizes us to pay a maximum amount of retention payments per quarter to third party lenders as consideration to those lenders who continue to be willing to fund advances to our customers. While the third party lenders have not been guaranteed a return, the decision has been made to voluntarily make retention payments to the lenders to deflect the impact of the loan losses they experienced.  Retention payments are recorded in the period in which a commitment is made to a lender pursuant to the resolution approved by the Board of Directors.

CRITICAL ACCOUNTING ESTIMATES

Our accounting policies are integral to understanding and interpreting the financial results reported in this MD&A. The significant accounting policies used in preparing our consolidated financial statements are summarized in Note 1 to those statements which are available on SEDAR at www.sedar.com. Certain policies included in Note 1 are considered to be particularly important to the presentation of our financial position and results of operations, because they require Management to make difficult, complex or subjective judgments and estimates, often as a result of matters that are inherently uncertain, which may result in materially different results under different assumptions and conditions. The following is a discussion of those critical accounting estimates. These estimates are adjusted in the normal course to reflect c hanging underlying circumstances. The impact and any associated risks related to these critical accounting estimates on our business may also be discussed elsewhere in this MD&A.

Revenue Recognition

Revenue arising from brokering short-term advances for customers is recognized once all services have been rendered, all advance amounts have been received by the customer and we have received the brokerage fee.

Revenue arising from direct lending of short-term advances to customers is recognized on a constant yield basis ratably over the term of the related loan.

Revenue from the our cheque cashing, money order sales, money transfer, bill payment services and other miscellaneous services is recognized when the transactions are completed at the point-of-sale in the branch and the related fee charged has been received.

Consumer Loans Receivable

Unsecured short-term and longer-term advances that we originate on our own behalf are reflected on the balance sheet in consumer loans receivable. Consumer loans receivables are reported net of a provision.

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Provisions for Loan Losses

Loans in default consist of short-term consumer loans originated by us, which are past due. A provision for loan losses are recorded when we no longer have reasonable assurance of timely collection of the full amount of principal and interest. The provision for loan losses reduces the carrying amount of consumer loan receivables to their estimated realizable amounts. The estimated realizable amount is determined by discounting expected future cash flows associated with the consumer loan receivables at the original effective interest rate inherent in the loans. The provision is reviewed monthly and any additional provision as a result of historical loan performance, current and expected collection patterns and current economic trends is included with our loan losses at that time. If the loans remain past due for an extended perio d of time, an allowance for the entire amount of the loan is recorded and the receivable is ultimately written off.

Retention Payments

The Company, through The Cash Store and Instaloans banners, acts as a broker on behalf of income earning consumers seeking short-term advances.  Funding of most short-term advances is provided by independent third party lenders.  The advances are repayable by the customer to the third party lenders and represent assets of the lenders; accordingly, they are not included on our balance sheet.

To facilitate the short term advance business, we have entered into written agreements with a number of third party lenders that are prepared to consider lending to our customers.  Pursuant to these agreements, we provide services to the lenders related to the collection of documents and information as well as loan collection services.  The agreements also provide that the third party lenders are responsible for losses suffered on account of uncollectible loans provided that we have properly performed our duties under the terms of the agreements. In the event that we do not properly perform our duties and the lenders make a claim as required under the agreement, we may be liable to the lenders for losses they have incurred. A liability is recorded when it is determined that we have a liability under the agree ment.

Our Board of Directors regularly approves a resolution which authorizes management to pay a maximum amount of retention payments per quarter to third party lenders as consideration to those lenders that continue to be willing to fund advances to our customers. While the third party lenders have not been guaranteed a return, the decision has been made to voluntarily make retention payments to the lenders to lessen the impact of loan losses experienced by the third party lenders.  Retention payments are recorded in the period in which a commitment is made to a lender pursuant to the resolution approved by our Board of Directors.

Amortization Policies and Useful Lives

We depreciate the cost of capital assets and intangible assets over the estimated useful service lives of the items.  These estimates of useful lives involve considerable judgment.  In determining these estimates, we take into account industry trends and company-specific factors, including changing technologies and expectations for the in-service period of these assets.  On an annual basis, we reassess our existing estimates of useful lives to ensure they match the anticipated life of the asset from a revenue-producing perspective.  If the in-service period change happens more quickly than we have anticipated, we may have to shorten the estimated life of certain capital or intangible assets, which could result in higher depreciation expenses in future periods or an impairment charge to wri te down the value of capital or intangible assets.

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Goodwill

Goodwill represents the residual amount that results when the purchase price of an acquired business exceeds the sum of the amounts allocated to the assets acquired, fewer liabilities assumed, based on their fair values. Goodwill is allocated as of the date of the business combination to the Company’s reporting units that are expected to benefit from the business combination. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

Goodwill is not amortized and is tested for impairment annually on July 1st of each year, or more frequently if events or changes in circumstances indicate it may be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared to its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit’s goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. The implied fair value of goodwill is determined in the same manner as the value of goodwill is determined in a business combination described in the preceding paragraph, using the fair value of the reporting unit as if it was the purchase price.

When the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess.

Intangible Assets

Intangible assets acquired individually or as part of a group of other assets are initially recognized and measured at cost.  The cost of a group of intangible assets acquired in a transaction, including those acquired in a business combination that meet the specified criteria for recognition apart from goodwill, is allocated to the individual assets acquired based on their  fair values.

Intangible assets with finite useful lives are amortized over their useful lives.  Intangible assets with indefinite useful lives are not amortized and are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.

The amortization methods and estimated useful lives of intangible assets, which are reviewed annually, are as follows:

Customer list, contracts and relationships	Straight-line - 3 years
Computer software	Straight-line - 5 years
Non-compete agreements	Term of the agreements
Favourable and unfavourable leases	Term of leases
Brand name	Indefinite life

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Long-term investments

The Company applies the equity method of accounting for its investment in The Cash Store Australia Holdings Inc. and RTF Financial Holdings Inc. These investments are recorded at cost plus our share of net income or loss to date.

Leases

Leases are classified as capital or operating depending upon the terms and conditions of the contracts. Obligations under capital leases are recorded as an asset with a corresponding liability. Asset values recorded under capital leases are amortized on a straight-line basis over the period of expected use. Obligations under capital leases are reduced by lease payments net of imputed interest. Operating lease expenses are recorded to selling, general, and administrative expenses.

Contingencies

We are subject to various claims and contingencies related to lawsuits, taxes and commitments under contractual and other commercial obligations.  We recognize liabilities for contingencies and commitments when a loss is probable and capable of being reasonably estimated.  Significant changes in assumptions as to the likelihood and estimates of the amount of a loss could result in recognition of an additional liability.

Income Tax Estimates and Future Income Taxes

Income taxes are accounted for under the asset and liability method. Future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment or substantive enactment date. A valuation allowance is recorded against any future tax assets if it is more likely than not that the asset will not be realized.

Stock Based Compensation

We have a stock based compensation plan, which is described in Note 16 (b) of our audited consolidated financial statements.  We account for all stock based compensation payments that are settled by the issuance of equity in accordance with a fair value-based method of accounting. Stock based compensation awards are recognized in the financial statements over the period in which the related services are rendered, which is usually the vesting period of the option, or as applicable, over the period to the date an employee is eligible to retire, whichever is shorter, with a corresponding increase recorded in contributed surplus. The fair value is calculated using the Black-Scholes option-pricing model. When options are exercised, the proceeds received by us, together with the amount in contributed surplus associated with the exercised options, are credited to share capital.

Accounting for the Impairment of Long-Lived Assets

Long-lived assets and identifiable intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of group of assets may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset to the sum of future undiscounted cash flows expected to be generated from the use and eventual disposition of the group of assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the group of assets exceeds the fair value of the group of assets. Any assets to be disposed by sale are reported at the lower of carrying amount or fair value less costs to sell. Such assets are not amortized while they are classified as held- for-sale.

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Financial Instruments

The financial instruments standard establishes the recognition and measurement criteria for financial assets, financial liabilities and derivatives. All financial instruments are generally required to be measured at fair value on initial recognition of the instrument, except for certain related party transactions. Measurement in subsequent periods depends on whether the financial instrument has been classified as “held-for-trading”, “available-for-sale”, “held-to-maturity”, “loans and receivables”, or “other financial liabilities” as defined by the standard.

Financial assets and financial liabilities “held-for-trading” are measured at fair value with changes in those fair values recognized in net earnings. “Available-for-sale” are measured at fair value, with changes in those fair values recognized in Other Comprehensive Income (OCI). “Held-to-maturity”, “loans and receivables” and “other financial liabilities” are measured at amortized cost using the effective interest method.

Cash and cash equivalents has been designated as “held-for-trading”. Other receivables and consumer loans receivable are designated as “loans and receivables”. Accounts payable and obligations under capital leases are designated as “other financial liabilities”.

Section 3862 is based on International Financial Reporting Standards (IFRS) 7 “Financial Instruments: Disclosures” and requires disclosures, by class of financial instrument that enables users to evaluate the significance of financial instruments for an entity’s financial position and performance, including disclosures about fair value. In addition, disclosure is required of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk. The quantitative disclosures must also include a sensitivity analysis of each type of market risk to which an entity is exposed and show how net income and other comprehensive income would have been affected by reasonably possible changes in the releva nt risk variable.

In March 2007, the CICA also issued Handbook Section 3863 to enhance financial statement users’ understanding of the significance of financial instruments to an entity’s financial position, performance and cash flows. This Section establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, gains and losses, and the circumstances in which financial assets and financial liabilities are offset. This standard also harmonizes disclosures with IFRS 7. As a result of adopting this standard, new or enhanced disclosure is provided in Note 23.

The main financial risks arising from our financial instruments include interest rate risk, credit risk, liquidity risk, and other market price risk. On a quarterly basis, we review financial risks and set appropriate limits and controls where necessary. Our strategy for managing these risks and our exposure to risks and how they arise has not changed significantly from the prior fiscal year. We do not currently use derivative financial instruments to manage our foreign exchange, interest rate, and credit or liquidity risk and do not hold or issue derivative financial instruments for trading or speculative purposes.

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We are not significantly exposed to foreign exchange risk as the majority of operations are in Canada and no significant transactions are being entered into in a foreign denominated currency.  We do not have significant amounts of interest bearing obligations; therefore, our exposure to interest rate fluctuations relative to financial instruments is minimal. Credit risk is the risk of financial loss to us if a customer or counter-party to a financial instrument fails to meet its contractual obligations and arises principally from our cash and cash equivalents, other receivables, supplier receivables, consumer loans receivable, and long-term receivable. The maximum amount of credit risk exposure is limited to the carrying amount of the balances disclosed in these financial statements.

We manage the credit risk associated with our cash and cash equivalents by holding our funds with reputable Canadian financial institutions.  We act primarily as a broker and have no concentration of credit risk with any particular individual, supplier or other entity related to the brokering of payday advance services.  Funding of these short-term advances is provided by independent third party lenders. The advances are repayable by the customer to the third party lenders and represent assets of the lenders.  We also directly lend to our customers and have no significant concentration of credit risk with any particular individual related to short-term advances. To mitigate our credit risk, we perform on-going credit evaluations, aging of the receivable, payment history, security, and allow for unco llectible amounts when determinable. As at September 30, 2010, there are no significant past due accounts and there have been no impairment adjustments made to the accounts.  The maximum exposures to credit risk are represented by the carrying amount of other receivables and consumer loans  receivable which are approximately $14.9 million.

We are exposed to liquidity risk as there is a chance that we will not be able to meet our financial obligations as they become due or will not receive sufficient funds from our third party lenders to advance to our customers.  We manage all liquidity risk by maintaining a sufficient working capital amount through daily monitoring of controls, cash balances and operating results.  Our principal sources of cash are funds from operations.  The maximum exposures to liquidity risk are represented by the carrying amount of accounts payable and accrued liabilities and obligations under capital leases which is approximately $19.0 million.

Capital Disclosures

In December 2006, the CICA issued Handbook Section 1535. This standard requires that an entity disclose information that enables users of its financial statements to evaluate an entity’s objectives, policies and processes for managing capital, including disclosures of any externally imposed capital requirements and the consequences of non-compliance.

Our objective when managing capital is to provide a return to our shareholders by fairly pricing our services with the associated level of risk while being able to sufficiently fund future growth initiatives.  We define capital that we manage as the aggregate of our shareholders’ equity, which is comprised of share capital, contributed surplus and retained earnings.

In order to maintain or adjust our capital structure, we, upon approval from our Board of Directors, may issue shares, repurchase shares through a normal course issuer bid, pay dividends or undertake other activities as deemed appropriate under the specific circumstances. Our Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestures, as well as capital and operating budgets.

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We set the amount of capital in proportion to risk and manage the capital structure and make adjustments to it based on economic or regulatory changes.  In order to maintain or modify the capital structure, we may seek additional sources of capital.  We have limited reliance on debt facilities and are not subject to any restrictive covenants.  Our capital management objectives, policies and procedures were unchanged since the prior year-end.

CHANGES IN ACCOUNTING POLICIES AND PRACTICES

Goodwill and Intangible Assets

In February 2008, the CICA issued Handbook Section 3064 (Section 3064) Goodwill and Intangible Assets. Section 3064, which replaces Section 3062, Goodwill and Intangible Assets and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement, and disclosure of goodwill and intangible assets. The provisions relating to the definition and initial recognition of intangible assets, including internally generated intangible assets, are equivalent to the corresponding provisions of International Reporting Standard IAS 38, Intangible Assets.  We have adopted this standard commencing July 1, 2009, and it has been applied retroactively resulting in $3.2 million of net assets being reclassified from capital assets to intangible assets in the comparative June 30, 2009, balance sheet, as wel l as $40,000 of amortization being reclassified from amortization of capital assets to amortization of intangible assets for the year-ended June 30, 2009.

Business Combinations

In January 2009, the CICA issued Handbook Section 1582, “Business Combinations,” which replaces the existing standard. This section establishes the standards for accounting for business combinations, and states that all assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition related costs will be expensed as incurred, and that restructuring charges will be expensed in the periods after the acquisition date and non-controlling interests will be measured at fair value at the date of acquisition. This standard is equivalent to the International Financial Reporting Standards on business combinations. This standard is applied prospectively to business combinations with acquisition dates on or after January 1, 2011, and earlier adoption is permitted. We have adopted this standard effective July 1, 2009. The adoption of this standard did not have a significant impact on our consolidated financial statements.

Consolidated Financial Statements

In January 2009, the CICA issued Handbook Section 1601, “Consolidated Financial Statements” which replaces the existing standard. This Section carries forward existing Canadian guidance for preparing consolidated financial statements other than non-controlling interests. The Section is effective for interim and annual financial statements beginning on January 1, 2011, and earlier adoption is permitted. We have adopted this standard effective July 1, 2009.  The adoption of this standard did not have a significant impact on our consolidated financial statements.

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Non-Controlling Interests

In January 2009, the CICA issued Handbook Section 1602, “Non-Controlling Interests” which establishes standards for accounting for non-controlling interests of a subsidiary in the preparation of consolidated financial statements subsequent to a business combination. This standard is equivalent to the International Financial Reporting Standards on consolidated and separate financial statements. The Section is effective for interim and annual financial statements beginning on January 1, 2011, and earlier adoption is permitted. We have adopted this standard effective July 1, 2009. The adoption of this standard did not have a significant impact on our consolidated financial statements.

Financial Instruments - Recognition and Measurement

In June 2009, the CICA amended Handbook Section 3855, "Financial Instruments - Recognition and Measurement," to clarify the application of the effective interest method after a debt instrument has been impaired. The Section has also been amended to clarify when an embedded prepayment option is separated from its host instrument for accounting purposes. The amendments related to the application of the effective interest method apply to interim and annual financial statements relating to fiscal years beginning on or after May 1, 2009, for the amendments relating to the effective interest method. There were no material impacts on our financial position, net earnings or cash flows as a result of adopting these amendments.

The amendments relating to embedded prepayment options apply to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. We are currently evaluating the impact of this amendment.

Financial Instruments - Disclosures

In June 2009, the CICA amended Handbook Section 3862, “Financial Instruments - Disclosures”, to enhance liquidity risk disclosure requirements and to include additional disclosure requirements about inputs to fair value measurements within the financial instruments, including their measurement within a hierarchy that prioritizes the input to fair value measurement. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of fair value hierarchy based on the reliabil ity of inputs are as follows:

Level 1 - inputs are unadjusted quoted prices of identical instruments in active markets.

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - inputs used in a valuation technique are not based on observable market data in determining fair values of these instruments.

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 Equity

In August 2009, the CICA amended presentation requirements of Handbook Section 3251, “Equity”, as a result of issuing Section 1602, “Non-Controlling Interests”.  The amendments apply only to entities that have adopted Section 1602.  We have evaluated the impact of adopting this standard on our consolidated financial statements and no changes were made.

Comprehensive Revaluation of Assets and Liabilities

In August 2009, the CICA amended Handbook Section 1625, “Comprehensive Revaluation of Assets and Liabilities” as a result of issuing Section 1582, “Business Combinations”, Section 1601, “Consolidated Financial Statements”, and Section 1602, “Non-Controlling Interest” in January 2009.  The amendments apply prospectively to comprehensive revaluations of assets and liabilities occurring in fiscal years beginning on or after January 1, 2011.  Earlier adoption is permitted provided that Section 1582 is also adopted.  We have adopted this standard effective July 1, 2009.  The adoption of this standard did not have a significant impact on our consolidated financial statements.

RECENT ACCOUNTING PRONOUCEMENTS NOT YET ADOPTED

International Financial Reporting Standards (IFRS)

In 2006, the Canadian Accounting Standards Board (AcSB) published a new strategic plan that significantly affects financial reporting requirements for Canadian public companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five-year transitional period.

In February 2008, the AcSB confirmed that IFRS will be mandatory in Canada for profit-oriented publicly accountable entities for fiscal periods beginning on or after January 1, 2011, unless, as permitted by Canadian securities regulations, the entity was to adopt United States Generally Accepted Accounting Principles (U.S. GAAP) on or before this date. Should the Company decide to adopt IFRS, its first annual IFRS financial statements would be for the year ending September 30, 2012. Beginning with the three month period ending December 31, 2011, the Company would provide unaudited consolidated financial information in accordance with IFRS including comparative figures for the three month period ending December 31, 2010.

We have completed a gap analysis of the accounting and reporting differences under IFRS, Canadian GAAP, and U.S. GAAP, however, management has not yet finalized its determination of the impact of these differences on the consolidated financial statements. This analysis will, in part, determine whether the Company adopts IFRS or U.S. GAAP once Canadian GAAP ceases to exist. We are also closely monitoring standard setting activity and regulatory developments in Canada, the United States and internationally that may affect the timing of its adoption of either IFRS or U.S. GAAP in future periods.

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CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining a system of controls and procedures over the public disclosure of financial and non-financial information regarding the Company. Such controls and procedures are designed to provide reasonable assurance that all material information relating to the Company is recorded, processed, summarized and reported to senior management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), on a timely basis so that appropriate decisions can be made regarding public disclosure.

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Management has designed internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Canadian GAAP. There has been no change in the design of the Company’s internal control over financial reporting during the three months ended September 30, 2010, that would materially affect, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Evaluation of Effectiveness

As required by National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109) issued by the Canadian Securities regulatory authorities, an evaluation ofthe effectiveness of the design and operation of the Company’s disclosure controls and procedures andinternal control over financial reporting was conducted as of September 30, 2010, by and under thesupervision of management, including the CEO and CFO. In making the assessment of the effectiveness ofthe Company’s di sclosure controls and procedures and internal control over financial reporting, management used the criteria set forth by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. The evaluation included the certifying officers’ daily interaction with the control systems, walkthroughs, documentation review, observations, enquiries, re-performance, analytical procedures and other tests of controls and audit proceduresconsidered by management to be appropriate in the circumstances.Based on that evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures andinternal control over financial reporting w ere effective as at September 30, 2010.

Limitations on the Effectiveness of Disclosure Controls and Procedures and Internal Controls over Financial Reporting

Our management, including the CEO and CFO, do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system objectives will be met. The likelihood of achievement is affected by limitations inherent in all internal control systems. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented in numerous ways including collusion, overrides and deception. Another inherent limitation in any system of internal control over financial reporting is the increasing complexity of GAAP. With the changing sta ndards, increasing abundance of Canadian, U.S. and International standards and the varying interpretations of GAAP by professional accountants and regulatory authorities, it is possible that the judgments and interpretations made by us may differ from that of others. In addition to the inherent limitations, the design of a control system must reflect that there are resource constraints, and the expected benefit of controls must be considered relative to the expected costs. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Further, no evaluation of controls can provide absolute assurance that all control issues within a company will be detected.

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OUTSTANDING SHARE DATA

As at November 24, 2010, we had 17,094,111 common shares outstanding.  There were also options to purchase 1,010,938 common shares, which if exercised, would provide us with proceeds of approximately $8.2 million.

DIVIDENDS

Prior to August 31, 2007, we had not declared or paid a dividend on the common shares.  We declared our first dividend on August 31, 2007, in the amount of $.025 cents per common share.  In total, dividends of $3.6 million were paid to holders of common shares in fiscal 2008, $5.3 million in fiscal 2009, and $9.1 million in the fifteen months of fiscal 2010 ($1.7 million in the fifth quarter of fiscal 2010). On November 24, 2010, we declared a quarterly dividend of $0.10 per common share. The dividend is payable on December 21, 2010, to shareholders of record on December 6, 2010.

Our current dividend policy is to declare and pay quarterly cash dividends at the discretion of our Board of Directors, as circumstances permit, in an aggregate annual amount equal to approximately 30% of the prior year’s net income.  Our dividend policy and practice will be reviewed from time to time in the context of our earnings, financial condition, the need to retain earnings to fund future growth of our business, and other relevant factors. The declaration of a dividend will always be at the discretion of our Board of Directors.

OTHER

Cautionary Statement Regarding Forward-looking Information

This MD&A contains “forward-looking information” within the meaning of applicable Canadian and United States securities legislation. Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition as well initiatives to grow revenue or reduce retention payments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward - -looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, changes in economic and political conditions, legislative or regulatory developments, technological developments, third-party arrangements, competition, litigation, risks associated with but not limited to, market conditions, the availability of alternative transactions, shareholder, legal, regulatory and court approvals and third party consents, and other factors described in the our latest Annual Information Form filed on SEDAR at www.sedar.com under the heading “Risk Factors”. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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Non-GAAP Measures

This MD&A refers to certain financial measures that are not determined in accordance with GAAP in Canada.  These measures do not have standardized meanings and may not be comparable to similar measures presented by other companies.  Although a measure such as ‘Earnings Before Interest, Income Taxes, Stock-based Compensation, Amortization of Capital and Intangible Assets’ (EBITA) do not have standardized meanings prescribed by GAAP, these measures are used herein or can be determined by reference to our financial statements.  “Same branch revenues” is a non-GAAP measure tracked and reported by us and is generally used to compare the average revenue for a partic ular group of branches in a current period to that same particular group of branches in a prior period. This non-GAAP measure is a way to gauge the performance of a particular group of branches and is directly related to, and helps explain, changes in total revenue.  Average revenue is defined as revenue for the period divided by the number of branches. “Branch operating income” (BOI) is a non-GAAP measure tracked and reported by us and is generally used to compare the performance at branch level and includes expenses which primarily relate to the operations of the branch network. “Operating income” (OI) is a non-GAAP measure tracked and reported by us and is generally used to compare the income before income taxes and other non-recurring items which primarily relates to the overall operations of the branch, regional and corporate network.  “Regio nal expenses” is a non-GAAP measure which is used to gauge expenditures at the regional and divisional level and includes compensation of associates including centralized regional departments, Regional Managers, Divisional Vice Presidents and President, as well as other expenses related to the functions of these groups. “Corporate expenses” is a non-GAAP measure which is used to gauge expenditures at the corporate level and includes compensation of associates and related expenses at the corporate office level. These measures are discussed because management believes that they facilitate the understanding of our results as it relates to our operational and financial position.

The following table provides a reconciliation of net income in accordance with GAAP to EBITA for the past eight quarters.

EBITA Reconciliation

(thousands of dollars)	2010 (Fifteen Months)												2009 (Twelve Months)
		Q5		Q4		Q3		Q2		Q1	YTD			Q4		Q3		Q2
Consolidated Results
Net income and comprehensive income	$	7,682	$	5,476	$	2,199	$	5,467	$	5,640	$	26,464	$	1,232	$	3,067	$	4,292
Interest		51		44		29		29		27		180		41		12		10
Income tax		1,561		2,676		1,190		2,822		3,048		11,297		700		1,618		1,316
Stock-based compensation		260		247		205		204		182		1,098		174		240		264
Amortization of capital and intangible assets		1,578		1,882		1,652		2,121		1,828		9,061		1,744		1,523		1,421
EBITA	$	11,132	$	10,325	$	5,275	$	10,643	$	10,725	$	48,100	$	3,891	$	6,460	$	7,303
EBITA adjusted for class action settlements	$	11,132	$	10,425	$	7,990	$	10,743	$	10,725	$	51,015	$	8,891	$	6,460	$	9,213

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EX-99.4

Exhibit 99.4

CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gordon J. Reykdal, certify that:

1 I have reviewed this annual report on Form 40-F of  The Cash Store Financial Services Inc.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4 The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5 The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date:       November 24, 2010	/s/ Gordon Reykdal  ;
	Name:	Gordon Reykdal
	Title:	Chairman and Chief Executive Officer

EX-99.5

Exhibit 99.5

CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nancy Bland, certify that:

1 I have reviewed this annual report on Form 40-F of  The Cash Store Financial Services Inc.;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4 The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5 The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date:     November 24, 2010  & #160;	/s/  Nancy Bland
	Name:	Nancy Bland
	Title:	Chief Financial Officer

EX-99.6

Exhibit 99.6

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

The Cash Store Financial Services Inc. (the “Company”) is filing with the U.S. Securities and Exchange Commission on the date hereof, its annual report on Form 40-F for the fiscal year ended September 30, 2010 (the “Report”).

I, Gordon Reykdal, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that:

(i)	the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gordon Reykdal
Name:	Gordon Reykdal
Title:	Chairman and Chief Executive Officer
Date:	November 24, 2010

EX-99.7

Exhibit 99.7

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

The Cash Store Financial Services Inc.  (the “Company”) is filing with the U.S. Securities and Exchange Commission on the date hereof, its annual report on Form 40-F for the fiscal year ended September 30, 2010 (the “Report”).

I, Nancy Bland, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that:

(i)	the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Nancy Bland
Name:	Nancy Bland
Title:	Chief Financial Officer
Date:	November 24, 2010

EX-99.8

Exhibit 99.8

KPMG LLP Chartered Accountants 10125 – 102 Street Edmonton AB  T5J 3V8 Canada Telephone Fax Internet (780) 429-7300 (780) 429-7379 www.kpmg.ca

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of The Cash Store Financial Services Inc.

We consent to the inclusion in this annual report on Form 40-F of our auditors' report dated November 24, 2010 on the consolidated balance sheets of The Cash Store Financial Services Inc. (the “Company") as at September 30, 2010 and June 30, 2009 and the consolidated statements of operations, retained earnings and cash flows for the fifteen months ended September 30, 2010 and for the year ended June 30, 2010, which is incorporated by referenceinthis annual report on Form 40-F of the Company for the fiscal year ended September 30, 2010.

Chartered Accountants

Edmonton, Canada

November 24, 2010