EZCORP INCEZPW
EZCORP INC Fair Value Disclosure
NOTE 5: FAIR VALUE MEASUREMENTS
The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:
•Level 1 — Quoted market prices in active markets for identical assets or liabilities.
•Level 2 — Other observable market-based inputs or unobservable inputs that are corroborated by market data.
•Level 3 — Unobservable inputs that are not corroborated by market data.
Financial Assets and Liabilities Not Measured at Fair Value
The tables below present our financial assets and liabilities that were not measured at fair value:
| Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||||||||
| September 30, 2025 | September 30, 2025 | Fair Value Measurement Using | ||||||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Promissory note receivable from Founders | $ | 24,369 | $ | 24,369 | $ | — | $ | — | $ | 24,369 | ||||||||||||||||||||||
Investments in unconsolidated affiliates | 18,123 | 59,729 | 58,573 | — | 1,156 | |||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| 2029 Convertible Notes | $ | 225,258 | $ | 422,931 | $ | — | $ | 422,931 | $ | — | ||||||||||||||||||||||
| 2032 Senior Notes | 292,818 | 320,734 | — | 320,734 | — | |||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||||||||
| September 30, 2024 | September 30, 2024 | Fair Value Measurement Using | ||||||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Promissory note receivable from Founders | $ | 15,722 | $ | 15,722 | $ | — | $ | — | $ | 15,722 | ||||||||||||||||||||||
| Investments in unconsolidated affiliate | 13,329 | 42,496 | 41,646 | — | 850 | |||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| 2025 Convertible Notes | $ | 103,072 | $ | 100,401 | $ | — | $ | 100,401 | $ | — | ||||||||||||||||||||||
| 2029 Convertible Notes | 224,256 | 273,700 | — | 273,700 | — | |||||||||||||||||||||||||||
Based primarily on the short-term nature of cash and cash equivalents, pawn loans, pawn service charges receivable and other liabilities, we estimate that their carrying value approximates fair value. We consider our cash and cash equivalents to be measured using Level 1 inputs and our pawn loans, pawn service charges receivable and other liabilities to be measured using Level 3 inputs. Significant increases or decreases in the underlying assumptions used to value pawn loans, pawn service charges receivable, consumer loans, fees and interest receivable and other debt could significantly increase or decrease these fair value estimates.
As described in Note 4: Strategic Investments, we have loans outstanding to Founders in exchange for Demand Promissory Notes secured by the common interest in Founders held by the other member. As of September 30, 2025, the interest rate on the notes was 15.00% per annum, and all principal and accrued interest is due on demand. Based primarily on the short-term nature of the notes, we estimate that their carrying values approximate fair value as of September 30, 2025.
We use the equity method of accounting to account for our ownership interest in Cash Converters. The inputs used to generate the fair value of the investment in Cash Converters were considered Level 1 inputs. These inputs consist of (a) the quoted stock price on the Australian Stock Exchange multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate as of the end of our reporting period. We included no control premium for owning a large percentage of outstanding shares.
We measured the fair value of the 2025 Convertible Notes, 2029 Convertible Notes, and 2032 Senior Notes using quoted price inputs. The notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates disclosed above could significantly increase or decrease.
In fiscal 2019, we received $1.1 million in previously escrowed seller funds as a result of settling certain indemnification claims with the seller of GPMX. In April 2019, we loaned the $1.1 million back to the seller of GPMX in exchange for a promissory note. The interest rate on the note was 2.89% per annum and was secured by certain marketable securities owned by the seller and held in a U.S. brokerage account. All principal and accrued interest on the promissory note was received in April 2024.
See “Note 11: Leases” for discussion on the non-recurring fair value adjustment related to our corporate office lease during fiscal 2023.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 13, 2025 | Showing above |
| 2024 | Nov 13, 2024 | |
| 2023 | Nov 15, 2023 | |
| 2015 | Dec 24, 2015 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.