<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 FOR THE PERIOD ENDED SEPTEMBER 30, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to _________.
Commission file number: 0-26680
NICHOLAS FINANCIAL, INC.
(Exact name of registrant as specified in its Charter)
British Columbia, Canada 8736-3354
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2454 McMullen Booth Road, Building C
Clearwater, Florida 34619
(Address of Principal Executive Offices) (Zip Code)
(813) 726-0763
(Registrant's telephone number, Including area code)
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 and 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____.
As of October 33st, 1997 there were 2,354,346 shares of common
stock outstanding
This Form 10-QSB consists of 18 pages. Exhibits are indexed at
page 17.
<PAGE> 2
Nicholas Financial, Inc.
Form 10-QSB
Index
Part I. Financial Information Page
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet as of September 30, 1997......3
Condensed Consolidated Statements of Income for the three and
six months ended September 30, 1997 and 1996..................4
Condensed Consolidated Statements of Cash Flows for the
six months ended September 30, 1997 and 1996..................5
Notes to the Condensed Consolidated Financial Statements...........6
Item 2. Management's Discussion and Analysis of the Financial
Condition and Results of Operations...........................8
Part II. Other Information
Item 1. Legal Proceedings........................................13
Item 2. Changes in Securities....................................13
Item 3. Defaults upon Senior Securities..........................13
Item 4. Submission of Matters to a Vote of Security Holders......13
Item 5. Other Information........................................13
Item 6. Exhibits and Reports on Form 8-K.........................13
Signatures...............................................14
Index of Exhibits........................................15
Exhibit 1.1- Statement Regarding Computation of
Per Share Earnings......................................16
<PAGE> 3
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
September 30,
1997
---------------
<S> <C>
Assets
Cash $ 94,112
Finance receivables, net 28,497,200
Accounts receivable 14,293
Prepaid expenses and other assets 459,815
Property and equipment, net 192,315
Deferred income taxes 484,828
--------------
Total assets $29,742,563
==============
Liabilities
Line of credit $19,930,594
Notes payable - related party 1,741,595
Accounts payable 1,253,247
Income taxes payable 108,681
Deferred revenues 146,133
Other liabilities 26,582
--------------
23,206,832
Shareholders' equity
Preferred stock, no par: 5,000,000 shares
authorized; -
none issued and outstanding
Common stock, no par: 50,000,000 shares
authorized; 2,347,513 shares issued and 3,746,994
outstanding
Retained earnings 2,788,737
--------------
6,535,731
--------------
Total liabilities and shareholders' equity $29,742,563
==============
</TABLE>
See accompanying notes.
<PAGE> 4
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Three months ended Six months ended
September 30 September 30
1997 1996 1997 1996
----------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Interest income on
finance receivables $1,847,121 $1,500,528 $3,538,929 $2,848,593
Sales 112,259 122,969 221,740 236,680
----------------------------------------------------
1,959,380 1,623,497 3,760,669 3,085,273
Expenses:
Cost of sales 23,259 25,091 44,636 47,556
Marketing 91,786 61,827 159,406 121,415
Administrative 759,029 575,716 1,458,214 1,123,464
Provision for credit losses 148,103 131,808 280,425 186,121
Deferred compensation expense - - - 29,947
Depreciation and amortization 28,500 21,422 54,000 42,187
Interest expense 500,954 423,972 1,000,188 818,602
----------------------------------------------------
1,551,631 1,239,836 2,996,869 2,369,292
----------------------------------------------------
Operating income before
income taxes 407,749 383,661 763,800 715,981
Income tax expense (benefit):
Current 169,087 150,052 370,592 289,835
Deferred (11,461) (3,110) (73,461) (17,029)
----------------------------------------------------
157,626 146,942 297,131 272,806
----------------------------------------------------
Net Income $250,123 $236,719 $466,669 $443,175
====================================================
Net Income per common and
common equivalent share $0.11 $0.11 $0.20 $0.21
====================================================
Weighted average number of
common and common equivalent
shares 2,335,133 2,119,253 2,332,657 2,116,832
====================================================
</TABLE>
See accompanying notes.
<PAGE> 5
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended September 30
1997 1996
--------------------------------
<S> <C> <C>
Operating activities
Net income $ 466,669 $ 443,175
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation of property and equipment 54,000 40,500
Provision for credit losses 280,425 186,121
Amortization of intangible assets
and deferred loan costs - 9,138
Deferred compensation expense - 29,947
Deferred income taxes (73,461) (17,029)
Changes in operating assets and
liabilities:
Accounts receivable 17,931 2,581
Prepaid expenses and other assets (96,244) (159,274)
Deferred revenues (27,881) 21,706
Accounts payable (20,777) (41,496)
Other liabilities (1,228) 795
Income taxes payable 35,754 (84,164)
---------------------------------
Net cash provided by operating
activities 635,188 432,000
Investing activities
Increase in finance receivables,
net of principal collected (2,854,534) (2,316,821)
Purchase of property and equipment (63,974) (49,342)
---------------------------------
Net cash used by investing activities (2,918,508) (2,366,163)
Financing activities
Net proceeds from notes payable-
related party and line of credit
borrowings 2,235,500 1,554,791
Proceeds from sale of the Company's
common stock 33,784 17,028
--------------------------------
Net cash provided by financing
activities 2,269,284 1,571,819
--------------------------------
Net decrease in cash (14,036) (362,344)
Cash, beginning of period 108,148 490,791
--------------------------------
Cash, end of period $94,112 $128,447
================================
</TABLE>
See accompanying notes.
<PAGE> 6
Nicholas Financial, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1997
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB pursuant to the
Securities and Exchange Act of 1934, as amended in Article 10 of
Regulation SB, as amended. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month and six
month periods ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ended
March 31,1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended March 31,
1997.
2. Earnings Per Share
Net Income per share is based upon the weighted average number of
shares outstanding, adjusted for the dilutive effect of stock
options and warrants. Supplementary earnings per share data
described in APB 15 is not materially different from the net
income per share which is presented.
3. Finance Receivables
Finance receivables consist of consumer automobile finance
installment contracts and are detailed as follows:
<TABLE>
<S> <C>
Finance receivables, gross contract $43,023,529
Less:
Unearned interest (9,560,531)
--------------
33,462,998
Nonrefundable dealer reserves (3,586,482)
Allowance for credit losses (1,379,316)
--------------
Finance receivables, net $28,497,200
==============
</TABLE>
The terms of the receivables range from 6 to 60 months and bear a
weighted average effective interest rate of 24%.
4. Stock Split
Effective September 5, 1997 the Company consolidated its common
shares on a one for three basis. All information contained in
this report has been restated to reflect the share consolidation.
<PAGE> 7
5. Line of Credit
The Company has a $30,000,000 line of credit facility (the Line)
with BA Business Credit, Inc. which expires on June 30, 2000.
Borrowings under the Line bear interest at the Bank of America
prime rate plus 0.50%. The Company also has several LIBOR pricing
options available. If the outstanding balance falls below
$10,000,000 the Line bears interest at the Bank of America prime
rate plus 1.75%. Pledged as collateral for this credit facility
are all of the assets of Nicholas Financial, Inc. and the
unconditional guarantee of it's subsidiaries, Canadian parent and
Peter L. Vosotas the majority shareholder.
6. Notes Payable - Related Party
Notes payable consisted of the following:
<TABLE>
<S> <C>
Notes payable, unsecured, with interest at
varying rates up to 12%, quarterly and
semiannual interest payments due through
June 1998, at which time the entire principal
balance and unpaid interest is due,
subordinated to the Line. The notes are
convertible at the option of the holder, into
common shares at $6.00 per share. $1,300,000
Note payable, unsecured, interest at 12%,
quarterly interest due through April 2000,
at which time the entire balance and unpaid
interest is due, subordinated to the Line.
The note is convertible at the option of the
holder,into common shares at $8.25 per share. 200,000
Notes payable, unsecured, interest at 12%,
principal and interest due through May 1998. 218,841
Note payable, unsecured, interest at 12%,
quarterly interest due through August 1998,
at which time the entire principal balance
is due. 22,754
------------
$1,741,595
============
</TABLE>
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
Consolidated net income increased for the three month period
ended September 30, 1997 to $250,123 from $236,719 for the three
month period ended September 30, 1996. Earnings were favorably
impacted by an increase in the outstanding loan portfolio coupled
with a marginal improvement in the cost of funds. However,
increased operating expenses and an increase in the provision for
credit losses as compared to the period ended September 30, 1996,
substantially offset the items that favorably impacted earnings.
The Company's NDS subsidiary did not contribute significantly to
consolidated operations in the three month periods ended
September 30, 1997 or 1996.
Consolidated net income increased for the six month period
ended September 30, 1997 to $466,669 from $443,175 for the six
month period ended September 30, 1996. Earnings were favorably
impacted by an increase in the outstanding loan portfolio coupled
with a marginal improvement in the cost of funds. However,
increased operating expenses and an increase in the provision for
credit losses as compared to the period ended September 30, 1996,
substantially offset the items that favorably impacted earnings.
The Company's NDS subsidiary did not contribute significantly to
consolidated operations in the six month periods ended September
30, 1997 or 1996.
<TABLE>
<CAPTION>
Three Months Ended September 30, Six Months Ended September 30,
1997 1996 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Net Finance
Receivables (1) $32,879,182 $23,564,289 $32,299,376 $22,948,376
Average Indebtedness (2) 21,122,189 16,621,774 20,700,022 16,050,685
Total Revenues 1,847,121 1,500,528 3,538,929 2,848,593
Interest Expense 500,954 423,972 1,000,188 818,602
----------------------------------------------------------------
Net Interest Income 1,346,167 1,076,556 2,538,741 2,029,991
Gross Portfolio Yield (3) 22.47% 25.47% 21.91% 24.83%
Average Cost of
Borrowed Funds (2) 9.49% 10.20% 9.66% 10.20%
----------------------------------------------------------------
Net Interest Spread (4) 12.98% 15.27% 12.25% 14.63%
Net Portfolio Yield (3) 16.38% 18.27% 15.72% 17.69%
Write-off to Liquidation (5) 10.98% 12.04% 10.30% 11.31%
Net Charge-Off Percentage (6) 10.13% 12.46% 9.36% 11.66%
</TABLE>
(1) Average net finance receivables represents the average of
net finance receivables throughout the period. Net finance
receivables represents gross finance receivables less any
unearned finance charges related to those receivables.
(2) Average indebtedness represents the average outstanding
borrowings under the Line of Credit and notes payable-
related party. Average cost of borrowed funds represents
interest expense as a percentage of average indebtedness.
(3) Gross portfolio yield represents total revenues as a
percentage of average finance receivables. Net portfolio
yield represents net interest income as a percentage of
average finance receivables.
(4) Net interest spread represents the gross portfolio yield
less the average cost of borrowed funds.
(5) Liquidation is defined as beginning receivable balance plus
current period purchases minus voids and refinances minus
ending receivable balance.
(6) Net charge-off percentage represents net charge-offs divided
by average net finance receivables outstanding during the
period.
<PAGE> 9
Three months ended September 30, 1997 compared to three months
ended September 30, 1996
Interest Income and Loan Portfolio
Interest revenue increased 23% to $1.8 million for the
period ended September 30, 1997, from $1.5 million for the period
ended September 30, 1996. The net finance receivable balance
totaled $28.5 million at September 30, 1997, an increase of 39%
from the $20.5 million at September 30, 1996. The gross finance
receivable balance increased 41% to $43.0 million at September
30, 1997 from $30.6 million at September 30, 1996. The primary
reason interest revenue increased was the increase in the
outstanding loan portfolio offset in part by a decrease in the
gross portfolio yield. The gross portfolio yield decreased from
25.47% for the period ended September 30, 1996 to 22.47% for the
period ended September 30, 1997. This decrease was caused by the
fact that for contracts purchased during the last four quarters,
the Company, has chosen to reclassify a larger portion of future
unearned finance charges (at the time the contract was purchased)
to the reserve for credit losses as compared to previous
quarters. Also the Company has purchased contracts that represent
newer used vehicles that carry a lower stated APR than the
historical average of contracts purchased. The primary reason
that net finance receivables increased was the opening of two
additional offices.
Computer Software Business
Sales for the period ended September 30, 1997 were $112,259
compared to $122,969 for the period ended September 30, 1996, a
decrease of 9%. This decrease was primarily due to a decrease in
new installations during the period ended September 30, 1997.
Operating Expenses
Operating expenses, excluding provision for credit losses,
stock compensation expense and interest expense, increased to
$902,574 for the period ended September 30, 1997 from $684,056
for the period ended September 30, 1996. This increase of 32%
was primarily attributable to the opening of additional branches
which included additional staffing costs, depreciation and
related expenses.
Interest Expense
Interest expense increased to $500,954 for the period ended
September 30, 1997 as compared to $423,972 for the period ended
September 30, 1996. This increase was due to an increase in
average outstanding borrowings from $16.6 million to $21.1
million during the comparable periods. The impact of this
increase was offset, in part by a decrease in the average cost
of funds borrowed from 10.20% for the period ended September 30,
1996 to 9.49% for the period ended September 30, 1997 .
<PAGE> 10
Six months ended September 30, 1997 compared to six months ended
September 30, 1996
Interest Income and Loan Portfolio
Interest revenue increased 24% to $3.5 million for the
period ended September 30, 1997, from $2.8 million for the period
ended September 30, 1996. The net finance receivable balance
totaled $28.5 million at September 30, 1997, an increase of 39%
from the $20.5 million at September 30, 1996. The gross finance
receivable balance increased 41% to $43.0 million at September
30, 1997 from $30.6 million at September 30, 1996. The primary
reason interest revenue increased was the increase in the
outstanding loan portfolio offset in part by a decrease in the
gross portfolio yield. The gross portfolio yield decreased from
24.83% for the period ended September 30, 1996 to 21.91% for the
period ended September 30, 1997. This decrease was caused by the
fact that for contracts purchased during the last four quarters,
the Company, has chosen to reclassify a larger portion of future
unearned finance charges (at the time the contract was purchased)
to the reserve for credit losses as compared to previous
quarters. Also the Company has purchased contracts that represent
newer used vehicles that carry a lower stated APR than the
historical average of contracts purchased by the Company. The
primary reason that net finance receivables increased was the
opening of two additional offices.
Computer Software Business
Sales for the period ended September 30, 1997 were $221,740
compared to $236,680 for the period ended September 30, 1996, a
decrease of 6%. This decrease was primarily due to a decrease in
new installations during the period ended September 30, 1997.
Operating Expenses
Operating expenses, excluding provision for credit losses,
stock compensation expense and interest expense, increased to
$1,716,256 for the period ended September 30, 1997 from
$1,334,621 for the period ended September 30, 1996. This increase
of 29% was primarily attributable to the opening of additional
branches which included additional staffing costs, depreciation
and related expenses.
Interest Expense
Interest expense increased to $1,000,188 for the period
ended September 30, 1997 as compared to $818,602 for the period
ended September 30, 1996. This increase was due to an increase in
average outstanding borrowings from $16.1 million to $20.7
million during the comparable periods. The impact of this
increase was offset, in part by a decrease in the average cost
of funds borrowed from 10.20% for the period ended September 30,
1996 to 9.66% for the period ended September 30, 1997 .
<PAGE> 11
Analysis of Credit Losses
Because of the nature of the borrowers under the Contracts and
its direct consumer loan program, the Company considers the
establishment of adequate reserves for credit losses to be
imperative. The Company batches its Contracts into pools for
purposes of establishing reserves for losses. Each such pool
consists of the loans processed by a Company branch office during
a fiscal quarter. The average pool consists of 65 Contracts with
an aggregate initial principal amount of approximately $477,000.
As of September 30, 1997, the Company had 138 active pools.
The Company pools Contracts according to branch location
because the branches purchase Contracts in different markets
located in the State of Florida and Georgia. All Contracts
purchased by a branch during a fiscal quarter comprise a pool.
This method of pooling by branch and quarter allows the Company
to evaluate the different markets where the branches operate.
The pools also allow the Company to evaluate the different levels
of customer income, stability, credit history, and the types of
automobiles purchased in each market.
A pool retains an amount equal to 100% of the discount into a
reserve for credit losses. In situations where the discount is
determined to be insufficient to absorb all potential losses
associated with the pool, a portion of future unearned income
associated with that specific pool will be added to the reserves
for credit losses until total reserves have reached the
appropriate level. If the reserve for credit losses is exhausted
for a pool which is not fully liquidated, then a charge to income
will be used to reestablish the reserves. If a pool is fully
liquidated and has any remaining reserves, the excess reserves
are recognized as income.
In analyzing a pool, the Company considers the performance of
prior pools originated by the branch office, the performance of
prior Contracts purchased from the dealers whose Contracts are
included in the current pool, the credit rating of the borrowers
under the Contracts in the pool, and current market and economic
conditions. Each pool is analyzed monthly to determine if the
loss reserves are adequate, and adjustments are made if they are
determined to be necessary. As of September 30, 1997, the
Company had established reserves for losses on Contracts of
$4,910,953, or 15% of net outstanding receivables.
Because of the small number of direct consumer loans currently
outstanding, a reserve for losses is established at the time the
loan is made. As of September 30, 1997, the Company had
established reserves for losses on direct loans of $54,845 or 6%
of net outstanding receivables. When the volume of such loans
increases, the Company intends to utilize a pooling arrangement
similar to that used in connection with Contracts in establishing
reserves. As of September 30, 1997, the Company had not
experienced material losses under its direct consumer loan
program.
The provision for credit losses was $148,103 for the three
month period ended September 30, 1997 and $280,425 for the six
month period ended September 30, 1997 as compared to $131,808 for
the three month period ended September 30, 1996 and $186,121 for
the six month period ended September 30, 1996. This increase was
due primarily to the 39% increase in the net finance receivable
balance as of September 30, 1997 compared to September 30, 1996.
<PAGE> 12
The following tables present certain information regarding the
delinquency rates experienced by the Company with respect to
Contracts and under its direct consumer loan program:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
September 30, 1997 September 30, 1996
------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
Contracts
Gross Balance Outstanding $42,020,250 $29,884,667
Dollar Dollar
Delinquencies Amount Percent* Amount Percent*
------------------------ ------------------------
30 to 59 days $2,004,205 4.77% $1,533,922 5.13%
60 to 89 days 460,944 1.10% 252,658 0.85%
90 + days 133,926 0.32% 104,019 0.35%
------------------------ ------------------------
Total Delinquencies $2,599,075 $1,890,599
*Total Delinquencies as
percent of outstanding balance 6.19% 6.33%
Direct Loans
Net Balance Outstanding $ 839,689 $ 607,457
Delinquencies
30 to 59 days $ 3,542 0.42% $ 17,711 2.92%
60 to 89 days 3,691 0.44% 0 0.00%
90 + days 1,903 0.23% 0 0.00%
------------------------ -----------------------
Total Delinquencies $ 9,136 $ 17,711
*Total Delinquencies as a
percent of outstanding balance 1.09% 2.92%
</TABLE>
Income Taxes
The Company's effective tax rate remained relatively consistent
at 38.66% and 38.90% for the three and six months ended September
30, 1997, as compared to 38.30% and 38.10% for the three and six
months ended September 30, 1996, respectively.
<PAGE> 13
Liquidity and Capital Resources
The Company's cash flows for the six months ended September 30,
1997 and September 30, 1996 are summarized as follows:
<TABLE>
<CAPTION>
Six months ended Six months ended
September 30, September 30,
1997 1996
------------------ -------------------
<S> <C> <C>
Cash provided by (used in):
Operating Activities - $ 635,188 $ 432,000
Investing Activities -
(primarily purchase of Contracts) (2,918,508) (2,366,163)
Financing Activities 2,269,284 1,571,819
Net(decrease) in cash (14,036) (362,344)
</TABLE>
The Company's primary use of working capital during the six
months ended September 30, 1997 was the funding of the purchase
of Contracts. The Contracts were financed substantially through
borrowings on the Company's Line of credit. The line of credit is
secured primarily by Contracts, and available borrowings are
based on a percentage of qualifying Contracts. As of September
30, 1997 the Company had approximately $10.1 million available
under the line of credit. Since inception, the Company has also
funded a portion of its working capital needs through cash flows
from operating activities.
The self-liquidating nature of installment Contracts and
other loans enables the Company to assume a higher debt-to-equity
ratio than in most businesses. The amount of debt the Company
incurs from time to time under these financing mechanisms depends
on the Company's need for cash and it's ability to borrow under
the terms of its line of credit. The Company believes that
borrowings available under the line of credit as well as cash
flow from operations and, if necessary, the issuance of
additional subordinated debt and, or the sale of additional
securities in the capital markets, will be sufficient to meet its
short and long-term funding needs.
Future Expansion
The Company currently operates thirteen branch locations,
eleven in the State of Florida and two in the State of Georgia.
The Company expects to open its fourteenth branch in Marietta,
Georgia within 30 days.
The Company intends to continue its expansion through the
purchase of additional Contracts and the expansion of its direct
consumer loan program. In order to increase the size of its loan
portfolio of Contracts, it will be necessary for the Company to
open additional branch offices and increase the size of its Line
of Credit, either with BankAmerica or another lender.
The Company believes that opportunity for growth continues to
exist in the States of Florida and Georgia and for the
foreseeable future intends generally to concentrate its expansion
activities primarily there. The Company has identified
Pensacola, and Boca Raton as areas in Florida and Macon and
Valdosta as areas in Georgia where it may open additional branch
offices during fiscal 1998.
<PAGE> 14
Forward-Looking Information
This 10-QSB contains various forward-looking statements and
information that are based on management's beliefs and
assumptions, as well as information currently available to
management. When used in this document, the words "anticipate",
"estimate", "expect", and similar expressions are intended to
identify forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Such statements are
subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may
vary materially from those anticipated, estimated or expected.
Among the key factors that may have a direct bearing on the
Company's operating results are fluctuations in the economy, the
degree and nature of competition, demand for consumer financing
in the markets served by the Company, the Company's products and
services, increases in the default rates experienced on
Contracts, adverse regulatory changes in the Company's existing
and future markets, the Company's ability to expand its business,
including its ability to complete acquisitions and integrate the
operations of acquired businesses, to recruit and retain
qualified employees, to expand into new markets and to maintain
profit margins in the face of increased pricing competition.
<PAGE> 15
Part II - Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders -None
Item 5. Other Information - None
Item 6. (a) Exhibits - See exhibit index following the
signature page.
(b) Reports on Form 8-K - On July 17 the Company filed
Form 8-K in connection with the signing of amendment
#7 dated July 11, 1997 to it's Security and Loan
Agreement dated March 31, 1993.
Reports on Form 8-K- On September 5, 1997 the Company
filed Form 8-K announcing a one for three stock split
effective for all shareholder's of record as of
September 5, 1997.
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Securities Act of
1934, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
10-QSB and authorized this Report to be signed on its behalf by
the undersigned, in the City of Clearwater, State of Florida, on
October 31, 1997.
NICHOLAS FINANCIAL, INC.
(Registrant)
Date: October 31, 1997 /s/ Peter L. Vosotas
Peter L. Vosotas
Chairman, President, Chief Executive Officer
(Principal Executive Officer)
Date: October 31, 1997 /s/ Ralph T. Finkenbrink
Ralph T. Finkenbrink
(Principal Financial Officer and
Accounting Officer)
<PAGE> 17
EXHIBIT INDEX
Exhibit Document
1.1 Schedule for Computation of Earnings Per
Share
<PAGE> 18
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Exhibit 1.1
Schedule for Computation of Earnings Per Share
(Unaudited)
Three Months Six Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
---------------------------------------------------
Net income 250,123 236,719 466,669 443,175
===================================================
Weighted average number of
common shares outstanding
during the period 2,335,133 1,957,549 2,332,657 1,955,128
Add: Primary common equivalent
shares determined using the
"treasury stock" method
representing shares issuable
upon exercise of stock option
and warrants - 161,704 - 161,704
---------------------------------------------------
Weighted average number of
shares used in Primary
EPS calculation 2,335,133 2,119,253 2,332,657 2,116,832
===================================================
Add: Fully Diluted common
equivalent shares determined
using the "treasury stock"
method representing shares
issuable upon exercises of
stock options and warrants - 161,704 - 161,704
---------------------------------------------------
Weighted average number of
shares used in Fully Diluted
EPS calculation 2,335,133 2,119,253 2,332,657 2,116,832
===================================================
Primary Earnings Per Share $0.11 $0.11 $0.20 $0.21
===================================================
Fully Diluted Earnings
Per Share $0.11 $0.11 $0.20 $0.21
===================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the condensed
consolidated balance sheet at September 30, 1997, and the condensed
consolidated statements of income for the 3 and 6 months ended September 30,
1997 and 1996. Both are qualified in their entirety by reference to such.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 6-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1997 MAR-31-1998 MAR-31-1997
<PERIOD-END> SEP-30-1997 SEP-30-1996 SEP-30-1997 SEP-30-1996
<CASH> 94,112 0 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 28,497,200 0 0 0
<ALLOWANCES> 4,965,798 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 0 0 0 0
<PP&E> 584,521 0 0 0
<DEPRECIATION> 392,206 0 0 0
<TOTAL-ASSETS> 29,742,563 0 0 0
<CURRENT-LIABILITIES> 23,206,832 0 0 0
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 3,746,994 0 0 0
<OTHER-SE> 2,788,737 0 0 0
<TOTAL-LIABILITY-AND-EQUITY>29,742,563 0 0 0
<SALES> 112,259 122,969 221,740 236,680
<TOTAL-REVENUES> 1,959,380 1,623,497 3,760,669 3,085,273
<CGS> 23,259 25,091 44,636 47,556
<TOTAL-COSTS> 850,815 637,543 1,617,620 1,244,879
<OTHER-EXPENSES> 28,500 21,422 54,000 102,081
<LOSS-PROVISION> 148,103 131,808 280,425 186,121
<INTEREST-EXPENSE> 500,954 423,972 1,000,188 818,602
<INCOME-PRETAX> 407,749 1,239,836 763,800 715,981
<INCOME-TAX> 157,626 146,942 297,131 272,806
<INCOME-CONTINUING> 250,123 236,719 466,669 443,175
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 250,123 236,719 466,669 443,175
<EPS-PRIMARY> .11 .11 .20 .21
<EPS-DILUTED> .11 .11 .20 .21
<FN>
<F1> Receivables are presented net of unearned finance charges,
non-refundable dealer reserve and allowance for doubtful accounts.
<F2> Allowances are presented and total reserves for credit losses, comprised
of non-refundable dealer reserve and allowances for doubtful accounts.
</TABLE>
