<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, 2000
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 33759
(Address of Principal Executive Offices) (Zip Code)
(727) 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 31st, 2000 there were 2,343,008 shares of common
stock outstanding
This Form 10-QSB consists of 19 pages.
<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, 2000.............................3
Condensed Consolidated Statements of
Income for the three and six months
ended September 30, 2000 and 1999....................4
Condensed Consolidated Statements of
Cash Flows for the six months ended
September 30, 2000 and 1999..........................5
Notes to the Condensed Consolidated
Financial Statements.................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................10
Part II. Other Information
Item 1. Legal Proceedings....................................16
Item 2. Changes in Securities and Use of Proceeds............16
Item 3. Defaults upon Senior Securities......................16
Item 4. Submission of Matters to a Vote of
Security Holders....................................16
Item 5. Other Information....................................16
Item 6. Exhibits and Reports on Form 8-K.....................16
Signatures...........................................17
Exhibit Index........................................18
<PAGE> 3
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
September 30,
2000
-------------
<S> <C>
Assets
Cash $ 98,221
Finance receivables, net 60,545,520
Accounts receivable 22,936
Prepaid expenses and other assets 596,042
Property and equipment, net 367,189
Deferred income taxes 1,190,888
-------------
Total assets $62,820,796
=============
Liabilities
Line of credit $45,919,549
Notes payable - related party 1,118,008
Accounts payable 2,530,425
Income taxes payable 35,922
Deferred revenues 577,149
Other liabilities 16,232
-------------
50,197,285
Shareholders' equity
Preferred stock, no par: 5,000,000 shares
authorized; none issued and outstanding -
Common stock, no par: 50,000,000 shares
authorized; 2,343,008 shares issued and
outstanding 3,666,097
Retained earnings 8,957,414
-------------
12,623,511
-------------
Total liabilities and shareholders' equity $62,820,796
=============
See accompanying notes.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
Three months ended Six months ended
September 30, September 30,
2000 1999 2000 1999
------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Interest income on
finance receivables $4,250,555 $3,132,293 $8,160,070 $5,967,474
Sales 99,057 130,000 215,867 265,448
------------------------------------------------
4,349,612 3,262,293 8,375,937 6,232,922
Expenses:
Cost of sales 19,771 22,295 45,628 37,826
Marketing 119,164 95,920 217,442 187,713
Administrative 1,545,740 1,186,054 3,069,876 2,336,615
Provision for credit losses 305,079 224,651 676,789 475,329
Depreciation and amortization 39,000 22,000 66,000 46,140
Interest expense 955,488 678,644 1,790,511 1,302,153
------------------------------------------------
2,984,242 2,229,564 5,866,246 4,385,776
------------------------------------------------
Operating income before
income taxes 1,365,370 1,032,729 2,509,691 1,847,146
Income tax expense (benefit):
Current 526,951 435,632 1,042,958 882,182
Deferred - (40,720) (75,000) (175,000)
------------------------------------------------
526,951 394,912 967,958 707,182
------------------------------------------------
Net Income $838,419 $637,817 $1,541,733 $1,139,964
================================================
Earnings per share - basic $0.36 $0.27 $0.66 $0.48
================================================
Earnings per share - diluted $0.33 $0.25 $0.61 $0.45
================================================
See accompanying notes.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended September 30,
2000 1999
------------------------------
<S> <C> <C>
Operating activities
Net income $ 1,541,733 $ 1,139,964
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 66,000 46,140
Provision for credit losses 676,789 475,329
Deferred income taxes (75,000) (175,000)
Changes in operating assets and
liabilities:
Accounts receivable (2,014) 5,135
Prepaid expenses and other assets (203,358) (150,510)
Deferred revenues 58,431 17,070
Accounts payable (165,198) 570,398
Other liabilities - (2,896)
Income taxes payable (9,043) 4,770
------------------------------
Net cash provided by operating activities 1,888,340 1,930,400
Investing activities
Increase in finance receivables,
net of principal collected (9,207,202) (4,119,150)
Purchase of property and equipment,
net of disposals (101,595) (35,910)
------------------------------
Net cash used in investing activities (9,308,797) (4,155,060)
Financing activities
Repayment of notes payable -
related party (200,000) (3,741)
Net proceeds from line of credit 7,505,000 1,850,000
(Repurchase) sale of common stock (45,505) 10,161
------------------------------
Net cash provided by financing activities 7,259,495 1,856,420
------------------------------
Net decrease in cash (160,962) (368,240)
Cash, beginning of period 259,183 509,418
------------------------------
Cash, end of period $98,221 $141,178
==============================
See accompanying notes.
</TABLE>
<PAGE> 6
Nicholas Financial, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2000
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
of Nicholas Financial, Inc. (the "Company") 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 six months ended September
30, 2000 are not necessarily indicative of the results that may be
expected for the year ending March 31, 2001. 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, 2000.
2. Earnings Per Share
Basic earnings per share excludes any dilutive effects of common stock
equivalents such as options, warrants, and convertible securities.
Diluted earnings per share includes the effects of dilutive options,
warrants, and convertible securities. Basic and diluted earnings per
share have been computed as follows:
<PAGE> 7
<TABLE>
<CAPTION>
Nicholas Financial, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2000
Three months ended Six months ended
September 30, September 30,
2000 1999 2000 1999
----------------------------------------------
<S> <C> <C> <C> <C>
Numerator:
Numerator for basic earnings per
share - Net income Available to
common stockholders $838,419 $637,817 $1,541,733 $1,139,964
Effect of dilutive securities:
Convertible debt 15,554 24,909 31,108 49,818
Numerator for dilutive earnings ------------------------------------------------
per share - income available to
common stockholders after assumed
conversions $853,973 $662,726 $1,572,841 $1,189,782
================================================
Denominator:
Denominator for basic earnings per
share - Weighted average shares 2,343,008 2,351,756 2,347,359 2,351,682
Effect of dilutive securities: (A)
Employee stock options 56,210 52,721 63,322 42,299
Convertible debt 180,556 264,798 180,556 264,798
------------------------------------------------
Dilutive potential common shares 236,766 317,519 243,878 307,097
Denominator for diluted earnings
per share - Adjusted weighted-
average shares and assumed
Conversions 2,579,774 2,669,275 2,591,237 2,658,779
================================================
Earnings per share - basic $0.36 $0.27 $0.66 $0.48
================================================
Earnings per share - diluted $0.33 $0.25 $0.61 $0.45
================================================
Footnote A:
The following options and
warrants were outstanding but not
included in the computation of
diluted earnings per share because
the exercise price was greater than
the average market price of the
common shares and, therefore, the
effect would be antidilutive.
Options 35,500 - 35,500 -
Warrants - 333,333 - 333,333
</TABLE>
<PAGE> 8
Nicholas Financial, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2000
3. Finance Receivables
Finance receivables consist of consumer automobile finance installment
contracts and are detailed as follows:
Finance receivables, gross contract $96,602,579
Less:
Unearned interest (23,068,824)
-----------
73,533,755
Nonrefundable dealer reserves (9,853,150)
Allowance for credit losses (3,135,085)
-----------
Finance receivables, net $60,545,520
The terms of the receivables range from 12 to 60 months and bear a
weighted average effective interest rate of 24%.
4. Line of Credit
The Company has a $60 million line of credit facility (the Line) which
expires on November 30, 2002. Borrowings under the Line bear interest
at the prime rate. The Company also has several LIBOR pricing options
available. If the outstanding balance falls below $10 million the
Line bears interest at the prime rate plus 1.75%. Pledged as
collateral for this credit facility are all of the assets of Nicholas
Financial, Inc. and its subsidiaries.
On May 11, 1999 the Company entered into an interest rate swap with a
notional amount of $10 million at a fixed rate of 5.81%, maturing on
May 24, 2002. On May 21, 1999 the Company entered into two interest
rate swaps with notional amounts of $5 million each, at fixed rates of
5.81% and 6.08%, maturing on May 24, 2001 and May 24, 2004,
respectively.
On August 18, 1999 the Company terminated a $5 million swap maturing
on May 24, 2004 in exchange for $52,000. In addition the Company
entered into an interest rate swap with a notional amount of $10
million at a fixed rate of 5.80%, provided that 30 day libor does not
exceed 8%, maturing on May 24, 2003. In the event 30 day libor exceeds
8.00%, the fixed rate of 5.80% would swap back to the variable rate
for all periods where 30 day libor exceeds 8.00%.
On May 17, 2000 the Company entered into an interest rate swap with a
notional amount of $10 million at a fixed rate of 6.87%, provided that
30 day libor does not exceed 7.7%, maturing on May 17, 2004. In the
event 30 day libor exceeds 7.70%, the fixed rate of 6.87% would swap
back to the variable rate for all periods where 30 day libor exceeds
7.70%.
<PAGE> 9
Nicholas Financial, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
September 30, 2000
5. Notes Payable - Related Party
Notes payable consisted of the following:
Notes payable, due through November 2001, unsecured,
subordinated to the Line, with interest at varying
rates up to 12% with quarterly and semiannual
interest payments. The notes are convertible at the
option of the holder, into common shares at prices
from $4.50 to $6.00 per share. $850,000
Note payable, unsecured, interest at 12%, quarterly
interest due through August 2001, at which time the
entire principal balance is due. 268,008
---------
$1,118,008
<PAGE> 10
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, 2000 to $838,419 from $637,817 for the three month
period ended September 30, 1999. Earnings were favorably impacted by
an increase in the outstanding loan portfolio. The Company's NDS
subsidiary did not contribute significantly to consolidated operations
in the three month periods ended September 30, 2000 or 1999.
Consolidated net income increased for the six month period ended
September 30, 2000 to $1,541,733 from $1,139,964 for the six month
period ended September 30, 1999. Earnings were favorably impacted by
an increase in the outstanding loan portfolio. The Company's NDS
subsidiary did not contribute significantly to consolidated operations
in the six month periods ended September 30, 2000 or 1999.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30 September 30
2000 1999 2000 1999
------------------------------------------------------
<S> <C> <C> <C> <C>
Average Net Finance Receivables(1) $72,742,751 $52,573,141 $70,043,032 $51,493,401
Average Indebtedness(2) 46,669,224 32,964,239 44,409,224 32,313,647
Total Interest Revenues 4,250,555 3,132,293 8,160,069 5,967,474
Interest Expense 955,488 678,644 1,790,511 1,302,153
------------------------------------------------------
Net Interest Income 3,295,067 2,453,649 6,369,558 4,665,321
Gross Portfolio Yield(3) 23.37% 23.83% 23.30% 23.18%
Average Cost of Borrowed Funds(2) 8.19% 8.23% 8.06% 8.06%
------------------------------------------------------
Net Interest Spread(4) 15.18% 15.60% 15.24% 15.12%
Net Portfolio Yield(3) 18.12% 18.67% 18.19% 18.12%
Write-off to Liquidation(5) 8.13% 7.39% 6.94% 6.41%
Net Charge-Off Percentage(6) 6.78% 6.68% 5.83% 5.61%
</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 net finance receivables. Net portfolio yield
represents net interest income as a percentage of average net
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> 11
Three months ended September 30, 2000 compared to three months ended
September 30, 1999
Interest Income and Loan Portfolio
Interest revenue increased 36% to $4.3 million for the period
ended September 30, 2000, from $3.1 million for the period ended
September 30, 1999. The net finance receivable balance totaled $60.6
million at September 30, 2000, an increase of 39% from $43.6 million
at September 30, 1999. The gross finance receivable balance increased
38% to $96.6 million at September 30, 2000 from $69.8 million at
September 30, 1999. The primary reason interest revenue increased was
the increase in the outstanding loan portfolio. The gross portfolio
yield decreased from 23.83% for the period ended September 30, 1999 to
23.37% for the period ended September 30, 2000. The primary reason
that net finance receivables increased was the opening of three
additional offices.
Computer Software Business
Sales for the period ended September 30, 2000 were $99,057 compared
to $130,000 for the period ended September 30, 1999, a decrease of
24%. This decrease was primarily due to a decrease in new
installations during the period ended September 30, 2000.
Operating Expenses
Operating expenses, excluding provision for credit losses and
interest expense, increased to $1.7 million for the period ended
September 30, 2000 from $1.3 million for the period ended September
30, 1999. This increase of 30% was primarily attributable to the
opening of three additional branches, increased home office personnel
and increased general operating expenses.
Interest Expense
Interest expense increased to $955,488 for the period ended
September 30, 2000 as compared to $678,644 for the period ended
September 30, 1999. This increase was due to an increase in average
outstanding borrowings from $33.0 million to $46.7 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 8.23% for the
period ended September 30, 1999 to 8.19% for the period ended
September 30, 2000.
<PAGE> 12
Six months ended September 30, 2000 compared to six months ended
September 30, 1999
Interest Income and Loan Portfolio
Interest revenue increased 37% to $8.2 million for the period
ended September 30, 2000, from $6.0 million for the period ended
September 30, 1999. The net finance receivable balance totaled $60.6
million at September 30, 2000, an increase of 39% from $43.6 million
at September 30, 1999. The gross finance receivable balance increased
38% to $96.6 million at September 30, 2000 from $69.8 million at
September 30, 1999. The primary reason interest revenue increased was
the increase in the outstanding loan portfolio. The gross portfolio
yield increased from 23.18% for the period ended September 30, 1999 to
23.30% for the period ended September 30, 2000. The primary reason
that net finance receivables increased was the opening of three
additional offices.
Computer Software Business
Sales for the period ended September 30, 2000 were $215,867 compared
to $265,448 for the period ended September 30, 1999, a decrease of
19%. This increase was primarily due to a decrease in new
installations during the period ended September 30, 2000.
Operating Expenses
Operating expenses, excluding provision for credit losses and
interest expense, increased to $3.4 million for the period ended
September 30, 2000 from $2.6 million for the period ended September
30, 1999. This increase of 30% was primarily attributable to the
opening of three additional branches, increased home office personnel
and increased general operating expenses.
Interest Expense
Interest expense increased to $1.8 million for the period ended
September 30, 2000 as compared to $1.3 million for the period ended
September 30, 1999. This increase was due to an increase in average
outstanding borrowings from $32.3 million to $44.4 million during the
comparable periods. The average cost of borrowed funds remained
consistent at 8.06% for the six month periods ending September 30,
2000 and 1999 respectively.
<PAGE> 13
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
segregates its Contracts into pools for purposes of establishing
reserves for losses. Each such pool consists of the loans purchased
by a Company branch office during a three month period. The average
pool consists of 80 Contracts with an aggregate initial principal
amount of approximately $632,554. As of September 30, 2000, the
Company had 270 active pools.
The Company pools Contracts according to branch location because the
branches purchase contracts in different markets located in Florida,
Georgia and North Carolina . 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 vehicles purchased in each market.
A pool retains an amount equal to 100% of the discount into a
reserve for credit losses. In situations where, at the date of
purchase, 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. Subsequent to the purchase, if the reserve for
credit losses is determined to be inadequate for a pool which is not
fully liquidated, then a charge to income is used to reestablish
adequate 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, 2000, the Company had established
reserves for losses on Contracts of $12,988,235 or 17.66% of net
outstanding receivables.
<PAGE> 14
<TABLE>
<CAPTION>
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:
Six Months Ended Six Months Ended
September 30, 2000 September 30, 1999
-----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Contracts
Gross Balance Outstanding $92,511,899 $66,884,736
Dollar Dollar
Delinquencies Amount Percent* Amount Percent*
30 to 59 days $2,101,653 2.27% $1,913,208 2.86%
60 to 89 days 574,363 0.62% 413,991 0.62%
90 + days 308,290 0.33% 91,354 0.14%
---------- ----- ---------- -----
Total Delinquencies $2,984,306 $2,418,553
*Total Delinquencies as
percent of outstanding
balance 3.22% 3.62%
Direct Loans
Gross Balance Outstanding $4,090,680 $2,905,329
Delinquencies
30 to 59 days $46,018 1.12% $26,579 0.92%
60 to 89 days 10,856 0.27% 4,445 0.15%
90 + days 10,091 0.25% 4,402 0.15%
---------- ----- ---------- -----
Total Delinquencies $66,965 $35,426
*Total Delinquencies as a
percent of outstanding balance 1.64% 1.22%
</TABLE>
The provision for credit losses was $305,079 for the three month
period ended September 30, 2000 and $676,789 for the six month period
ended September 30, 2000 as compared to $224,651 for the three month
period ended September 30, 1999 and $475,329 for the six month period
ended September 30, 1999. The Company increased its total reserve
percentage from 13.25% for the period ended March 31, 2000 to 13.45%
for the period ended September 30, 2000. Management believes that the
reserve adjustments made during the three and six month periods ended
September 30, 2000 are consistent with its reserve methodology.
Income Taxes
The Company's effective tax rate remained relatively consistent at
38.59% and 38.57% for the three and six months ended September 30,
2000, as compared to 38.24% and 38.29% for the three and six months
ended September 30, 1999, respectively.
<PAGE> 15
Liquidity and Capital Resources
The Company's cash flows for the six months ended September 30, 2000
and September 30, 1999 are summarized as follows:
<TABLE>
<CAPTION>
Six months ended Six months ended
September 30, September 30,
2000 1999
----------------------------------------
<S> <C> <C>
Cash provided by (used in):
Operating Activities- $ 1,888,340 $ 1,930,400
Investing Activities -
(primarily purchase
of Contracts) (9,308,797) (4,155,060)
Financing Activities 7,259,495 1,856,420
Net decrease in cash (160,962) (368,240)
</TABLE>
The Company's primary use of working capital during the six
months ended September 30, 2000 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, 2000 the
Company had approximately $14.1 million available under the line of
credit. The Company is currently negotiating to further increase,
beyond the most recent increase, the size of its line of credit. Since
inception, the Company has also funded a portion of its working
capital needs through cash flows from operating activities.
On July 6, 2000 the Company successfully renegotiated its credit
facility. The new agreement increases the total credit facility to $60
million.
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 term funding needs.
Future Expansion
The Company currently operates twenty branch locations, fourteen
in the State of Florida, four in the State of Georgia and two in the
State of North Carolina. Each office is budgeted (size of branch,
number of employees and location) to handle up to 1,000 accounts and
up to $7,500,000 in outstanding receivables. To date three of our
branches have reached this capacity.
The Company intends to continue its expansion through the
purchase of additional Contracts and the expansion of its direct
consumer loan program. As the branches continue to add customers, the
size of the loan portfolio will continue to grow. With the added
volume in each branch and as the company adds new branches, it will be
necessary for the Company to increase the size of its Line of Credit.
The Company believes that opportunity for growth continues to exist
in the States of Florida, Georgia and North Carolina and for the
foreseeable future intends generally to concentrate its expansion
activities in these States. The Company has identified Greensboro,
North Carolina as an area where it may open a branch office during the
remainder of fiscal 2001.
<PAGE> 16
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.
Part II - Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. (a) Exhibits - See exhibit index following the
signature page.
(b) Reports on Form 8-K - None
<PAGE> 17
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 November 13, 2000.
NICHOLAS FINANCIAL, INC.
(Registrant)
Date: November 13, 2000 /s/ Peter L. Vosotas
--------------------------
Peter L. Vosotas
Chairman, President,
Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 2000 /s/ Ralph T. Finkenbrink
---------------------------
Ralph T. Finkenbrink
(Principal Financial Officer and
Accounting Officer)
<PAGE> 18
EXHIBIT INDEX
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Incorporation of Nicholas Financial, Inc.
and By-Laws
Incorporated by reference to the Company's Form 10-SB
(File No. 0-26680) filed on March 13, 1996
4.1 Stock Certificate
Incorporated by reference to Exhibit 4.1 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.1 Loan and Security Agreement dated March 31, 1993 between
BA Business Credit, Inc. and Nicholas Financial, Inc.
Incorporated by reference to Exhibit 10.1.1 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.2 Amendment No. 1 to Loan Agreement dated January 14, 1994
Incorporated by reference to Exhibit 10.1.2 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.3 Temporary Line Increase Agreement dated Mach 28, 1994
Incorporated by reference to Exhibit 10.1.3 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.4 Amendment No. 2 to Loan Agreement dated June 3, 1994
Incorporated by reference to Exhibit 10.1.4 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.5 Amendment No. 3 to Loan Agreement dated July 5, 1994
Incorporated by reference to Exhibit 10.1.5 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.6 Amendment No. 4 to Loan Agreement dated March 31, 1995
Incorporated by reference to Exhibit 10.1.6 to the Company's
Form 10-SB (File No. 0-26680) filed on March 13, 1996
10.1.7 Amendment No. 5 to Loan Agreement dated July 13, 1995
Incorporated by reference to Exhibit 10.1.7 to the Company's
Form 10-KSB for the fiscal year ended March 31, 1996
<PAGE> 19
10.1.8 Amendment No. 6 to Loan Agreement dated May 13, 1996
Incorporated by reference to Exhibit 10.1.8 to the Company's
Form 10-QSB for the three months ended June 30, 1996
10.1.9 Amendment No. 7 to Loan Agreement dated July 5, 1997
Incorporated by reference to Exhibit 10.1.9 to the Company's
Form 10-QSB for the three months ended September 30, 1997
10.2.0 Amendment No. 8 to Loan Agreement dated September 18, 1998
Incorporated by reference to Exhibit 10.2.0 to the Company's
Form 10-QSB for the three months ended September 30, 1998
10.2.1 Amendment No. 9 to Loan Agreement dated November 25, 1998
Incorporated by reference to Exhibit 10.2.1 to the Company's
Form 10-QSB for the three months ended December 31, 1998
10.2.2 Amendment No. 10 to Loan Agreement dated November 24, 1999
Incorporated by reference to Exhibit 10.2.2 to the Company's
Form 10-QSB for the three months ended December 31, 1999
10.3.1 Employee Stock Option Plan
Incorporated by reference to the Company's 1999 Annual
proxy statement dated June 29, 1999
10.3.2 Non-Employee Stock Option Plan
Incorporated by reference to the Company's 1999 Annual
proxy statement dated June 29, 1999
10.4.1 Employment Contract, dated November 22, 1999, between Nicholas
Financial, Inc. and Ralph Finkenbrink, Senior Vice President
of Finance.
Incorporated by reference to Exhibit 10.2.1 to the Company's
Form 10-QSB for the three months ended December 31, 1999
21 Subsidiaries of Nicholas Financial, Inc.
Incorporated by reference to the Company's Form 10-SB
(File No. 0-26680) filed on March 13, 1996
24 Powers of Attorney (included on signature page hereto)
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
