NICHOLAS FINANCIAL INC (Form: 10-K, Received: 06/14/2016 12:02:03)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the fiscal year ended March 31, 2016

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

2454 McMullen Booth Road, Building C

Clearwater, Florida 33759

(Address of Principal Executive Offices, Including Zip Code)

(727) 726-0763

(Registrant’s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:


Title of Each Class		Name of Each Exchange on Which Registered
Common shares, no par value		NASDAQ Global Select Market

Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. ¨

Indicate by check mark whether the Registrant (1) has filed all reports required 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 such filing requirements for the past 90 days. Yes x No ¨

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 during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At September 30, 2015, the aggregate market value of the Registrant’s Common Shares held by non-affiliates of the Registrant was approximately $95.8 million.

As of June 6, 2016, approximately 12.5 million shares, no par value, of the Registrant were outstanding (of which approximately 4.7 million shares were held by the Registrant’s principal operating subsidiary and pursuant to applicable law, not entitled to vote and approximately 7.8 million shares were entitled to vote).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive Proxy Statement and Information Circular for the 2016 Annual General Meeting of Shareholders currently expected to be held on September 8, 2016, are incorporated by reference in Part III, Items 10 through 14, of this Annual Report on Form 10-K.

NICHOLAS FINANCIAL, INC.

FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS


		Page No.
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		9
Item 1B.	Unresolved Staff Comments		15
Item 2.	Properties		16
Item 3.	Legal Proceedings		16
Item 4.	Mine Safety Disclosures		16

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		16
Item 6.	Selected Financial Data		19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 8.	Financial Statements and Supplementary Data		29
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		50
Item 9A.	Controls and Procedures		50
Item 9B.	Other Information		52

PART III

Item 10.	Directors, Executive Officers and Corporate Governance		52
Item 11.	Executive Compensation		52
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		52
Item 13.	Certain Relationships and Related Transactions, and Director Independence		52
Item 14.	Principal Accountant Fees and Services		52

PART IV

Item 15.	Exhibits and Financial Statement Schedules		53

Forward-Looking Information

This Annual Report on Form 10-K (“Report”) contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on management’s current beliefs and assumptions, as well as information currently available to management. When used in this document, the words “anticipate,” “estimate,” “expect,” “will,” “may,” “plan,” “believe,” “intend” and similar expressions are intended to identify forward-looking statements. Although Nicholas Financial, Inc., including its subsidiaries (collectively 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, including but not limited to the risk factors discussed herein under “Item 1A – Risk Factors.” 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 cause actual results to differ materially from those projected in forward-looking statements include fluctuations in the economy, the degree and nature of competition, fluctuations in interest rates, the availability of capital at acceptable rates and terms, demand for consumer financing in the markets served by the Company, the Company’s products and services, increases in the default rates experienced on retail installment sales contracts (“Contracts”), regulatory changes in the Company’s existing and future markets, the Company’s intentions regarding strategic alternatives, and the Company’s ability to expand its business, including its ability to identify and 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. All forward-looking statements included in this Report are based on information available to the Company as of the date of filing of this Report, and the Company assumes no obligation to update any such forward-looking statement. Prospective investors should also consult the risk factors described from time to time in the Company’s filings made with the US Securities and Exchange Commission (“SEC”), including its reports on Forms 10-Q, 8-K and 10-K and annual reports to shareholders.

PART I

Item 1. Business

General

Nicholas Financial, Inc. (“Nicholas Financial-Canada”) is a Canadian holding company incorporated under the laws of British Columbia in 1986. The business activities of Nicholas Financial-Canada are currently conducted exclusively through its wholly-owned indirect subsidiary, Nicholas Financial, Inc., a Florida corporation (“Nicholas Financial”). Nicholas Financial is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of new and used automobiles and light trucks. To a lesser extent, Nicholas Financial also originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. Nicholas Financial’s financing activities accounted for 100% of the Company’s consolidated revenue for the fiscal year ended March 31, 2016 and more than 99% of the Company’s consolidated revenues for each of the fiscal years ended March 31, 2015 and 2014, respectively.

A second Florida subsidiary, Nicholas Data Services, Inc. (“NDS”), historically was engaged in supporting and updating industry-specific computer application software for small businesses located primarily in the Southeastern United States. NDS’s activities accounted for less than 1% of the Company’s consolidated revenues for each of the fiscal years ended March 31, 2015 and 2014. NDS ceased its operations during the fiscal year ended March 31, 2015; however it continues as the interim holding company for Nicholas Financial.

Nicholas Financial-Canada, Nicholas Financial and NDS are hereafter collectively referred to as the “Company”. All financial information herein is designated in United States dollars. References to “fiscal 2016” are to our fiscal year ended March 31, 2016 and references to “fiscal 2017” are to our fiscal year ending March 31, 2017.

The Company’s principal executive offices are located at 2454 McMullen Booth Road, Building C, Clearwater, Florida 33759, and its telephone number is (727) 726-0763.

Available Information

The Company’s filings with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, definitive proxy statements on Schedule 14A, current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, are made available free of charge through the Investor Center section of the Company’s Internet website at http://www.nicholasfinancial.com as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. The Company is not including the information contained on or available through its web site as a part of, or incorporating such information by reference into, this Report. Copies of any materials the Company files with the SEC can also be obtained free of charge through the SEC’s website at http://www.sec.gov or at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Growth Strategy

The Company’s principal goals are to increase its profitability and its long-term shareholder value through greater penetration in its current markets and controlled geographic expansion into new markets. The Company seeks to expand its automobile financing program in the eighteen states — Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin — in which it currently operates by increasing the business generated at its existing branch locations and by targeting certain geographic locations within some of these states where it believes there is a sufficient market for its automobile financing program. The Company’s strategy is to monitor these markets and ultimately decide if and where it will open additional branch locations. During fiscal 2016, the Company started buying Contracts in Wisconsin and Pennsylvania. The Company is planning to open a branch in Pittsburgh by the end of the second quarter in fiscal 2017. Dealers in Wisconsin are serviced in our Gurnee, Illinois branch. During fiscal 2016, the Company also opened a branch in the Chicago area, and two new branch offices in Texas. The Company consolidated two branch locations (Clearwater, FL and Birmingham, AL) into branches previously established within their market. The Company will continue to evaluate any branch locations that do not meet its minimum profitability targets and may elect to close one or more of these branches in the future. The Company also continues to analyze other markets in states in which it does not currently operate for expansion opportunities. The Company is also evaluating the organization and its structure. The Company’s decisions on how it plans to continue operating its business strategy will be influenced by the sustainability of some of its competitors’ underwriting and risk-based pricing. Although the Company has not made any bulk purchases of Contracts in over two decades, if the opportunity arises, the Company may consider

possible acquisitions of portfolios of seasoned Contracts from dealers in bulk transactions as a means of further penetrating its existing markets or expanding its presence in targeted geographic locations. The Company cannot provide any assurances, however, that it will be able to further expand in either its current markets or any targeted new markets.

The Company is currently licensed to provide Direct Loans in Florida and North Carolina. The Company does not have any current plans to expand its strategy of soliciting current customers and expects total Direct Loans to remain less than 5% of its total portfolio for the foreseeable future.

Automobile Finance Business – Contracts

The Company is engaged in the business of providing financing programs, primarily on behalf of purchasers of new and used cars and light trucks who meet the Company’s credit standards but who do not meet the credit standards of traditional lenders, such as banks and credit unions because of the customer’s credit history or job instability or the age of the vehicle being financed. Unlike traditional lenders, which look primarily to the credit history of the borrower in making lending decisions and typically finance new automobiles, the Company is willing to purchase Contracts for purchases made by borrowers who do not have a good credit history and for older model and high-mileage automobiles. In making decisions regarding the purchase of a particular Contract, the Company considers the following factors related to the borrower: current income; credit history; history in making installment payments for automobiles; current and prior job status; and place and length of residence. In addition, the Company examines its prior experience with Contracts purchased from the dealer from which the Company is purchasing the Contract, and the value of the automobile in relation to the purchase price and the term of the Contract.

As of the date of this annual report on Form 10-K, the Company’s automobile finance programs are conducted in eighteen states through a total of 67 branch offices, consisting of twenty in Florida, eight in Ohio, six in each of North Carolina and Georgia, three in each of Illinois, Indiana, Kentucky, Missouri and Michigan, two in each of Alabama, South Carolina, Tennessee, Texas and Virginia, and one in each of Kansas and Maryland. The Company has also commenced Contract acquisition in Pennsylvania utilizing the underwriting staff of the Columbus, Ohio branch location. The Company is planning to open a branch in Pittsburgh by the end of the second quarter in fiscal 2017. The Company has also commenced Contract acquisition in Wisconsin using the underwriting staff of the Gurnee, Illinois branch location. At this time, the Company does not have any plans to open a branch in the Wisconsin area. As of March 31, 2016 the Company had non-exclusive agreements with approximately 4,100 dealers, of which approximately 2,300 were active, for the purchase of individual Contracts that meet the Company’s financing criteria. The Company considers a dealer agreement to be active if the Company has purchased a Contract thereunder in the last six months. Each dealer agreement requires the dealer to originate Contracts in accordance with the Company’s guidelines. Once a Contract is purchased by the Company, the dealer is no longer involved in the relationship between the Company and the borrower, other than through the existence of limited representations and warranties of the dealer in favor of the Company.

A customer under a Contract typically makes a down payment, in the form of cash or trade-in, ranging from 5% to 35% of the sale price of the vehicle financed. The balance of the purchase price of the vehicle plus taxes, title fees and, if applicable, premiums for extended service contracts, gap insurance, roadside assistance plans, credit disability insurance and/or credit life insurance are generally financed over a period of 12 to 72 months.

At approximately the time of origination, the Company purchases a Contract from an automobile dealer at a negotiated price that is less than the original principal amount being financed (the dealer discount) by the purchaser of the automobile. The amount of the dealer discount depends upon factors such as the age and value of the automobile, creditworthiness of the customer and competition in any given market. The Company will pay more (i.e., purchase the Contract at a smaller discount from the original principal amount) for Contracts as the credit risk of the customer improves. In certain markets, competition more significantly impacts the discount that the Company can charge. To date, the Contracts purchased by the Company have been purchased at discounts that range from 1% to 15% of the original principal amount of each Contract. As of March 31, 2016, the Company’s loan portfolio consisted exclusively of Contracts purchased without recourse to the dealer. Although all of the Contracts in the Company’s loan portfolio were acquired without recourse, each dealer remains potentially liable to the Company for breaches of certain representations and warranties made by the dealer with respect to compliance with applicable federal and state laws and valid title to the vehicle.

The Company’s policy is to only purchase a Contract after the dealer has provided the Company with the requisite proof that the Company has a first priority lien on the financed vehicle (or the Company has, in fact, perfected such first priority lien), that the customer has obtained the required collision insurance naming the Company as loss payee and that the Contract has been fully and accurately completed and validly executed. Once the Company has received and approved all required documents, it pays the dealer for the Contract and commences servicing the Contract. The Company requires the owner of the vehicle to obtain and maintain collision insurance, naming the Company as the loss payee, with a deductible of not more than $1,000.

Contract Procurement

The Company currently purchases Contracts in the states listed in the table below. The Contracts purchased by the Company are predominately for used vehicles; for the periods shown below, less than 1% were for new vehicles. The average model year

collateralizing the portfolio as of March 31, 2016 was a 2007 vehicle. The dollar amounts shown in the table below represent the Company’s finance receivables, net of unearned interest on Contracts purchased:


	Maximum allowable interest rate (1)	Fiscal year ended March 31, (In thousands)
State	Maximum allowable interest rate (1)	2016		2015		2014
Alabama	(2)	$	5,764	$	6,289	$	6,041
Florida	18-30%(3)		55,270		54,653		51,841
Georgia	18-30%(3)		18,227		18,710		17,423
Illinois	(2)		7,563		6,457		3,905
Indiana	25%		8,595		7,654		6,983
Kansas	(2)		3,052		2,165		1,539
Kentucky	18-25%(3)		8,837		9,768		8,758
Maryland	24%		2,626		4,081		3,081
Michigan	25%		7,671		7,355		6,345
Missouri	(2)		8,227		7,554		5,651
North Carolina	18-29%(3)		14,291		15,078		15,753
Ohio	25%		24,520		24,245		24,682
Pennsylvania	18-21%(3)		392		—		—
South Carolina	(2)		6,145		3,966		4,965
Tennessee	(2)		6,134		5,206		6,270
Texas	18-28%(3)		4,965		821		—
Virginia	(2)		4,614		4,367		6,008
Wisconsin	(2)		382		—		—

Total		$	187,275	$	178,369	$	169,245

(1)	The maximum allowable interest rates by state are subject to change and are governed by the individual states the Company conducts business in.

(2)	None of these states currently imposes a maximum allowable interest rate with respect to the types and sizes of Contracts the Company purchases. The maximum rate which the Company will typically charge any customer in each of these states is 30% per annum.

(3)	The maximum allowable interest rate in each of these states varies depending upon the model year of the vehicle being financed. In addition, Georgia does not currently impose a maximum allowable interest rate with respect to Contracts over $5,000.

The following table presents selected information on Contracts purchased by the Company, net of unearned interest:


	Fiscal year ended March 31, (Purchases in thousands)
Contracts	2016			2015			2014
Purchases	$	187,275		$	178,369		$	169,245
Weighted APR		22.66	%		22.90	%		23.00	%
Average dealer discount		7.51	%		8.08	%		8.44	%
Weighted average term (months)		56			55			52
Average loan	$	11,348		$	10,967		$	10,612
Number of Contracts purchased		16,503			16,264			15,949

Direct Loans

The Company currently originates Direct Loans in Florida and North Carolina. Direct Loans are loans originated directly between the Company and the consumer. These loans are typically for amounts ranging from $1,000 to $9,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The average loan made to date by the Company had an initial principal balance of approximately $4,000. The Company does not expect the average loan size to increase significantly within the foreseeable future. The majority of Direct Loans are originated with current or former customers under the Company’s automobile

financing program. The typical Direct Loan represents a significantly better credit risk than our typical Contract due to the customer’s historical payment history with the Company. The Company does not have a Direct Loan license in Alabama, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia or Wisconsin, and none is presently required in Georgia (as long as the Direct Loan is greater than $3,000). The Company is currently not pursuing Direct Loans in Georgia. The Company does not expect to pursue a Direct Loan license in any other state during the fiscal year ending March 31, 2017. The size of the loan and maximum interest rate that can be charged vary from state to state. In deciding whether or not to make a loan, the Company considers the individual’s income, credit history, job stability, and the value of the collateral offered by the borrower to secure the loan. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. The Company’s Direct Loan program was implemented in April 1995 and accounted for approximately 3% of the Company’s annual consolidated revenues during the year ended March 31, 2016.

In connection with its Direct Loan program, the Company also makes available credit disability, credit life insurance, and involuntary unemployment insurance coverage to customers through an unaffiliated third-party insurance carrier. Customers in approximately 76% of the approximate 3,000 Direct Loan transactions outstanding as of March 31, 2016 had elected to purchase third-party insurance coverage made available by the Company. The cost of this insurance is included in the amount financed by the customer.

The following table presents selected information on Direct Loans originated by the Company, net of unearned interest:


	Fiscal year ended March 31, (Originations in thousands)
Direct Loans	2016			2015			2014
Originations	$	9,578		$	9,525		$	9,787
Weighted APR		25.82	%		26.47	%		26.72	%
Weighted average term (months)		30			29			29
Average loan	$	3,589		$	3,536		$	3,427
Number of contracts originated		2,669			2,694			2,856

Underwriting Guidelines

The Company’s typical customer has a credit history that fails to meet the lending standards of most banks and credit unions. Among the credit problems experienced by the Company’s customers that resulted in a poor credit history are: unpaid revolving credit card obligations; unpaid medical bills; unpaid student loans; prior bankruptcy; and evictions for nonpayment of rent. The Company believes that its customer profile is similar to that of its direct competitors.

Prior to its approval of the purchase of a Contract, the Company is provided with a standardized credit application completed by the consumer which contains information relating to the consumer’s background, employment, and credit history. The Company also obtains credit reports from Equifax, Experian and/or TransUnion, which are independent credit reporting services. The Company verifies the consumer’s employment history, income and residence. In most cases, consumers are interviewed via telephone by a Company application processor. The Company also considers the customer’s prior payment history with the Company, if any, as well as the collateral value of the vehicle being financed.

The Company has established internal buying guidelines to be used by its Branch Managers and internal underwriters when purchasing Contracts. Any Contract that does not meet these guidelines must be approved by the senior management of the Company. The Company currently has District Managers charged with managing the specific branches in a defined geographic area. In addition to a variety of administrative duties, the District Managers are responsible for monitoring their assigned branches’ compliance with the Company’s underwriting standards.

The Company uses essentially the same criteria in analyzing a Direct Loan as it does in analyzing the purchase of a Contract. Lending decisions regarding Direct Loans are made based upon a review of the customer’s loan application, income, credit history, job stability, and the value of the collateral offered by the borrower to secure the loan. To date, since the majority of the Company’s Direct Loans have been made to individuals whose automobiles have been financed by the Company, the customer’s payment history under his or her existing or past Contract is a significant factor in the lending decision.

After reviewing the information included in the Contract or Direct Loan application and taking the other factors into account, the Company’s loan origination system categorizes the customer using internally developed credit classifications of “1,” indicating higher creditworthiness, through “6,” indicating lower creditworthiness. Contracts are financed for individuals who fall within all six acceptable rating categories utilized, “1” through “6”. Usually a customer who falls within the two highest categories (i.e., “1” or “2”) is purchasing a two to four-year old, low mileage used automobile from the inventory of a new car or franchise dealer, while a customer in any of the three lowest categories (i.e., “4,” “5,” or “6”) usually is purchasing an older, high mileage automobile from an independent used automobile dealer.

The Company utilizes internal audit ( the “IA”) to perform on-site audits of its branches’ compliance with Company underwriting guidelines. IA audits Company branches on a schedule that is variable depending on the size of the branch, length of time a branch has been open, current tenure of the Branch Manager, previous branch audit score and current and historical branch profitability. IA reports directly to the SVP of Operations of the Company.

Monitoring and Enforcement of Contracts

The Company requires each customer under a Contract to obtain and maintain collision insurance covering damage to the vehicle. Failure to maintain such insurance constitutes a default under the Contract, and the Company may, at its discretion, repossess the vehicle. To reduce potential loss due to insurance lapse, the Company has the contractual right to force place collateral protection insurance through a third-party, which covers loss due to physical damage to a vehicle not covered by any insurance policy of the customer.

The Company’s Management Information Services personnel maintain a number of reports to monitor compliance by customers with their obligations under Contracts and Direct Loans made by the Company. These reports may be accessed on a real-time basis throughout the Company by management personnel, including Branch Managers and staff, at computer terminals located in the main office and each branch office. These reports include delinquency aging reports, customer promises reports, vehicle information reports, purchase reports, dealer analysis reports, static pool reports, and repossession reports.

A delinquency report is an aging report that provides basic information regarding each account and indicates accounts that are past due. The report includes information such as the account number, address of the customer, phone numbers of the customer, original term of the Contract, number of remaining payments, outstanding balance, due dates, date of last payment, number of days past due, scheduled payment amount, amount of last payment, total past due, and special payment arrangements or agreements.

Any account that is less than 120 days old is included on the delinquency report on the first day that the Contract is contractually past due. Once an account becomes 30 days past due, repossession proceedings are implemented unless the customer provides the Company with an acceptable explanation for the delinquency and displays a willingness and the ability to make the payment, and commits to a plan to return the account to current status. When an account is 61 days past due, the Company ceases recognition of income on the Contract and repossession proceedings are initiated. At 120 days delinquent, if the vehicle has not yet been repossessed, the account is written off. Once a vehicle has been repossessed, the related loan balance no longer appears on the delinquency report. Instead, the vehicle appears on the Company’s repossession report and is sold, either at auction or to an automobile dealer.

When an account becomes delinquent, the Company immediately contacts the customer to determine the reason for the delinquency and to determine if appropriate arrangements for payment can be made. If payment arrangements acceptable to the Company can be made, the information is entered in its database and is used to generate a “Promises Report,” which is utilized by the Company’s collection staff for account follow up.

The Company prepares a repossession report that provides information regarding repossessed vehicles and aids the Company in disposing of repossessed vehicles. In addition to information regarding the customer, this report provides information regarding the date of repossession, date the vehicle was sold, number of days it was held in inventory prior to sale, year, make and model of the vehicle, mileage, payoff amount on the Contract, NADA book value, Black Book value, suggested sale price, location of the vehicle, original dealer and condition of the vehicle, as well as notes other information that may be helpful to the Company.

The Company also prepares a dealer analysis report that provides information regarding each dealer from which it purchases Contracts. This report allows the Company to analyze the volume of business done with each dealer and the terms on which it has purchased Contracts from such dealer.

The Company’s policy is to pursue legal remedies to collect deficiencies from customers. Oral requests for payment are made beginning when an account becomes 11 days delinquent. When an account becomes 30 days delinquent and the customer has not made payment arrangements acceptable to the Company or has failed to respond to the requests for payment, a repossession request is generally contemplated by the responsible branch office employee for approval by the Branch Manager for the vicinity in which the borrower lives; however, each account is unique and looked at individually. Once the repossession request has been approved, first by the Branch Manager and second by the applicable District Manager, it must then be approved by the Director of Loss Recovery. The repossessor delivers the vehicle to a secure location specified by the Company. The Company maintains relationships with several licensed repossession firms that repossess vehicles for fees that range from $250 to $500 for each vehicle repossessed. As required by Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin law, the customer is notified by certified letter that the vehicle has been repossessed and what the customer needs to do in order to regain their vehicle.

Generally, the minimum requirement for return of the vehicle is payment of all past due amounts under the Contract and all expenses associated with the repossession incurred by the Company. If satisfactory arrangements for return of the vehicle are not made within the statutory period, the Company then sends title to the vehicle to the applicable state title transfer department, which then registers the vehicle in the name of the Company. The Company then either sells the vehicle to a dealer or has it transported to an automobile auction for sale. On average, approximately 30 days lapse between the time the Company takes possession of a vehicle and the time it is sold to a dealer or at auction. When the Company determines that there is a reasonable likelihood of recovering part or all of any deficiency against the customer under the Contract, it pursues legal remedies available to it, including lawsuits, judgment liens and wage garnishments. Historically, the Company has recovered approximately 10-18% of deficiencies from such customers. Proceeds from the disposition of the vehicles are not included in calculating the foregoing percentage range.

Marketing and Advertising

The Company’s Contract marketing efforts currently are directed exclusively toward automobile dealers. The Company attempts to meet dealers’ needs by offering highly-responsive, cost-competitive and service-oriented financing programs. The Company relies on its District and Branch Managers to solicit agreements for the purchase of Contracts with automobile dealers located within a 30-mile radius of each branch office. The Branch Manager provides dealers with information regarding the Company and the general terms upon which the Company is willing to purchase Contracts. The Company presently has no plans to implement any other forms of advertising, such as radio or newspaper advertisements, for the purchase of Contracts.

The Company solicits customers under its Direct Loan program primarily through direct mailings, followed by telephone calls to individuals who have a good credit history with the Company in connection with Contracts purchased by the Company.

Computerized Information System

The Company uses a third party loan origination system and an internally developed loan servicing system to assist in responding to customer inquiries and to monitor the performance of its Contract and Direct Loan portfolio and the performance of individual customers under Contracts. All Company personnel are provided with real-time access to information. The Company has created specialized programs to automate the tracking of Contracts and Direct Loans from inception. The Company’s computer network encompasses both its corporate headquarters and its branch office locations. See “Monitoring and Enforcement of Contracts” above for a summary of the different reports prepared by the Company.

Competition

The consumer finance industry is highly fragmented and highly competitive. Due to various factors, including the existing low interest rate environment, the competitiveness of the industry continues to increase as new competitors continue to enter the market and certain existing competitors continue to expand their operations. There are numerous financial service companies that provide consumer credit in the markets served by the Company, including banks, credit unions, other consumer finance companies, and captive finance companies owned by automobile manufacturers and retailers. Many of these companies have significantly greater resources than the Company. Increased competition for the purchase of Contracts has caused a reduction in the interest rates payable by many individual purchasers of automobiles, and the Company believes that continued increased competition could materially reduce such interest rates in the foreseeable future. In addition, increased competition for the purchase of Contracts has enabled automobile dealers to shop for the best price, thereby giving rise to an erosion in the dealer discounts from the initial principal amounts at which the Company is willing to purchase Contracts and higher advance rates. The Company’s average dealer discount for the fiscal years ended March 31, 2016, 2015, and 2014 was 7.51%, 8.08% and 8.44%, respectively. Further, increased competition has resulted in the purchase of lower credit quality Contracts, though these Contracts are still acceptable under the Company’s underwriting guidelines.

The Company’s target market consists of persons who are generally unable to obtain traditional used car financing because of their credit history or the vehicle’s mileage or age. The Company has been able to expand its automobile finance business in the non-prime credit market by offering to purchase Contracts on terms that are competitive with those of other companies which purchase automobile receivables in that market segment. Because of the daily contact that many of its employees have with automobile dealers located throughout the market areas served by it, the Company is generally aware of the terms upon which its competitors are offering to purchase Contracts. The Company’s policy is to modify its terms, if necessary, to remain competitive. However, the Company generally will not sacrifice its purchasing criteria or prudent business practices in order to meet the competition.

The Company’s ability to compete effectively with other companies offering similar financing arrangements depends in part upon the Company maintaining close business relationships with dealers of new and used vehicles. No single dealer out of the approximately 2,300 dealers with which the Company currently has active Contractual relationships accounted for over 1% of its business volume for any of the fiscal years ended March 31, 2016, 2015 or 2014.

Regulation

The Company’s financing operations are subject to regulation, supervision and licensing under various federal, state and local statutes, regulations and ordinances. Additionally, the procedures that the Company must follow in connection with the repossession of vehicles securing Contracts are regulated by each of the states in which the Company does business. To date, the Company’s operations have been conducted exclusively in the states of Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin. Accordingly, the laws of such states, as well as applicable federal law, govern the Company’s operations. The following constitute certain of the existing federal, state and local statutes, regulations and ordinances with which the Company must comply:

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State consumer regulatory agency requirements. Pursuant to state regulations, on-site audits can be conducted for each of the Company’s branches located within Florida, Alabama, Illinois, Indiana, Michigan and Missouri to monitor compliance with applicable regulations. These regulations include, but are not limited to: licensure requirements; requirements for maintenance of proper records; payment of required fees; maximum interest rates that may be charged on loans to finance used vehicles; and proper disclosure to customers regarding financing terms. Pursuant to North Carolina law, the Company’s Direct Loan activities in that state are subject to similar periodic on-site audits by the North Carolina Office of the Commissioner of Banks.

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State licensing requirements. The Company maintains a Sales Finance Company License with the Florida Department of Banking and Finance, as well as consumer loan licenses in Florida and North Carolina. In addition, each of the dealers that the Company does business with is required to maintain a Retail Installment Seller’s License with each state in which it operates.

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Fair Debt Collection Practices Act. The Fair Debt Collection Practices Act (“FDCPA”) and applicable state law counterparts prohibit the Company from contacting customers during certain times and at certain places, from using certain threatening practices and from making false implications when attempting to collect a debt.

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Truth in Lending Act. The Truth in Lending Act (“TILA”) requires the Company and the dealers it does business with to make certain disclosures to customers, including the terms of repayment, the total finance charge and the annual percentage rate charged on each Contract or Direct Loan.

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Equal Credit Opportunity Act. The Equal Credit Opportunity Act (“ECOA”) prohibits creditors from discriminating against loan applicants on the basis of race, color, sex, age or marital status. Pursuant to Regulation B promulgated under the ECOA, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection.

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Fair Credit Reporting Act. The Fair Credit Reporting Act (“FCRA”) requires the Company to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer-reporting agency.

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Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act (“GLBA”) requires the Company to maintain privacy with respect to certain consumer data in its possession and to periodically communicate with consumers on privacy matters.

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Servicemembers Civil Relief Act. The Servicemembers Civil Relief Act (“SCRA”) requires the Company to reduce the interest rate charged on each loan to customers who have subsequently joined, enlisted, been inducted or called to active military duty.

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Electronic Funds Transfer Act. The Electronic Funds Transfer Act (“EFTA”) prohibits the Company from requiring its customers to repay a loan or other credit by electronic funds transfer (“EFT”), except in limited situations which do not apply to the Company. The Company is also required to provide certain documentation to its customers when an EFT is initiated and to provide certain notifications to its customers with regard to preauthorized payments.

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Telephone Consumer Protection Act. The Telephone Consumer Protection Act (“TCPA”) governs the Company’s practice of contacting customers by certain means i.e. auto dealers, pre-recorded or artificial voice calls on customers’ land lines, fax machines and cell phones, including text messages.

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Bankruptcy. Federal bankruptcy and related state laws may interfere with or affect the Company’s ability to recover collateral or enforce a deficiency judgment.

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Dodd-Frank Wall Street Reform and Consumer Protection Act 0f 2010 (“Dodd-Frank Act”). Title X of the Dodd-Frank Act created the Consumer Financial Protection Bureau (“CFPB”), which, effective as of July 21, 2011, has the authority to issue and enforce regulations under the federal “enumerated consumer laws,” including (subject to certain statutory limitations) FDCPA, TILA, ECOA, FCRA, GLBA and EFTA. The CFPB has rulemaking and enforcement authority over certain non-depository institutions, including us. The CFPB is specifically authorized, among other things, to take actions to prevent companies providing consumer financial products or services and their service providers from engaging in unfair, deceptive or abusive acts or practices in connection with consumer financial products and services, and to issue rules requiring enhanced disclosures for consumer financial products or services. Under the Dodd-Frank Act, the CFPB

also may restrict the use of pre-dispute mandatory arbitration clauses in contracts between covered persons and consumers for a consumer financial product or service. The CFPB also has authority to interpret, enforce, and issue regulations implementing enumerated consumer laws, including certain laws that apply to our business. The CFPB recently issued rules regarding the supervision and examination of non-depository “larger participants” in the automobile finance business. Since we are deemed a larger participant, we are subject to supervision and examination by the CFPB.

Failure to comply with these laws or regulations could have a material adverse effect on us by, among other things, limiting the jurisdictions in which we may operate, restricting our ability to realize the value of the collateral securing the Contracts, making it more costly or burdensome to do business or resulting in potential liability. The volume of new or modified laws and regulations and the activity of agencies enforcing such law have increased in recent years in response to issues arising with respect to consumer lending. From time to time, legislation and regulations are enacted which increase the cost of doing business, limit or expand permissible activities or affect the competitive balance among financial services providers. Proposals to change the laws and regulations governing the operations and taxation of financial institutions and financial services providers are frequently made in the U.S. Congress, in the state legislatures and by various regulatory agencies. This legislation may change our operating environment in substantial and unpredictable ways and may have a material adverse effect on our business.

In particular, the Dodd-Frank Act and regulations promulgated thereunder, including the rules regarding supervision and examination recently issued by the CFPB, are likely to affect our cost of doing business, may limit or expand our permissible activities, may affect the competitive balance within our industry and market areas and could have a material adverse effect on us. Our management continues to assess the Dodd-Frank Act’s probable impact on our business, financial condition and results of operations, and to monitor developments involving the entities charged with promulgating regulations thereunder. However, the ultimate effect of the Dodd-Frank Act on the financial services industry in general, and on us in particular, is uncertain at this time.

In addition to the CFPB, other state and federal agencies have the ability to regulate aspects of our business. For example, the Dodd-Frank Act provides a mechanism for state Attorneys General to investigate us. In addition, the Federal Trade Commission has jurisdiction to investigate aspects of our business. We expect that regulatory investigation by both state and federal agencies will continue and that the results of these investigations could have a material adverse impact on us.

Dealers with which we do business must also comply with credit and trade practice statutes and regulations. Failure of these dealers to comply with such statutes and regulations could result in customers having rights of rescission and other remedies that could have a material adverse effect on us.

The sale of vehicle service contracts and other ancillary products by dealers in connection with Contracts assigned to us from dealers is also subject to state laws and regulations. As we are the holder of the Contracts that may, in part, finance these products, some of these state laws and regulations may apply to our servicing and collection of the Contracts. Although these laws and regulations may not significantly affect our business, there can be no assurance that insurance or other regulatory authorities in the jurisdictions in which these products are offered by dealers will not seek to regulate or restrict the operation of our business in these jurisdictions. Any regulation or restriction of our business in these jurisdictions could materially adversely affect the income received from these products.

The Company’s management believes that the Company maintains all requisite licenses and permits and is in material compliance with applicable local, state and federal laws and regulations. The Company periodically reviews its branch office practices in an effort to ensure such compliance. In addition, the Company continues to increase the size of its compliance department in response to the increasing complexity of the regulatory environment. Although compliance with existing laws and regulations has not had a material adverse effect on the Company’s operations to date, given the increasingly complex regulatory environment, the increasing costs of complying with such laws and regulations, and the increasing risk of penalties, fines or other liabilities associated therewith, no assurances can be given that we are in material compliance with all of such laws or regulations or that the costs of such compliance, or the failure to be in such compliance, will not have a material adverse effect on our business, financial condition or results of operations.

Employees

The Company’s management and various support functions are centralized at the Company’s Corporate Headquarters in Clearwater, Florida. As of March 31, 2016 the Company employed a total of 333 persons, of which 41 persons were employed at the Company’s Corporate Headquarters. None of the Company’s employees are subject to a collective bargaining agreement, and the Company considers its relations with its employees generally to be good.

Item 1A. Risk Factors

The following factors, as well as other factors not set forth below, may adversely affect the business, operations, financial condition or results of operations of the Company (sometimes referred to in this section as “we” “us” or “our”).

We operate in an increasingly competitive market.

The non-prime consumer-finance industry is highly competitive, and the competitiveness of the market continues to increase as new competitors continue to enter the market and certain existing competitors continue to expand their operations and become more aggressive in offering competitive terms. There are numerous financial service companies that provide consumer credit in the markets served by us, including banks, credit unions, other consumer finance companies and captive finance companies owned by automobile manufacturers and retailers. Many of these competitors have substantially greater financial resources than us. In addition, our competitors often provide financing on terms more favorable to automobile purchasers or dealers than we offer. Many of these competitors also have long-standing relationships with automobile dealerships and may offer dealerships or their customers other forms of financing, including dealer floor-plan financing and leasing, which are not provided by us. Providers of non-prime consumer financing have traditionally competed primarily on the basis of:

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interest rates charged;

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the quality of credit accepted;

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dealer discount;

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amount paid to dealers relative to the wholesale book value;

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the flexibility of loan terms offered; and

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the quality of service provided.

Our ability to compete effectively with other companies offering similar financing arrangements depends in part on our ability to maintain close relationships with dealers of new and used vehicles. We may not be able to compete successfully in this market or against these competitors.

We have focused on a segment of the market composed of consumers who typically do not meet the more stringent credit requirements of traditional consumer financing sources and whose needs, as a result, have not been addressed consistently by such financing sources. As new and existing providers of consumer financing have undertaken to penetrate our targeted market segment, we have experienced increasing pressure to reduce our interest rates, fees and dealer discounts in order to maintain our market share. The Company’s average dealer discount for the fiscal years ended March 31, 2016, 2015, and 2014 was 7.51%, 8.08%, and 8.44%, respectively. Further reductions in our interest rates, fees or dealer discount rates could have a material adverse impact on our profitability or financial condition.

The Dodd-Frank Act authorizes the CFPB to adopt rules that could potentially have a material adverse effect on our operations and financial performance.

Title X of the Dodd-Frank Act established the CFPB, which became operational on July 21, 2011. Under the Dodd-Frank Act, the CFPB has regulatory, supervisory and enforcement powers over providers of consumer financial products, such as Contracts and the Direct Loans that we offer, including explicit supervisory authority to examine and require registration of installment lenders such as ourselves. Included among the powers afforded to the CFPB is the authority to adopt rules describing specified acts and practices as being “unfair,” “deceptive” or “abusive,” and hence unlawful. Although the Dodd-Frank Act expressly provides that the CFPB has no authority to establish usury limits, some consumer advocacy groups have suggested that certain forms of alternative consumer finance products, such as installment loans, should be a regulatory priority and it is possible that at some time in the future the CFPB could propose and adopt rules making such lending or other products that we may offer materially less profitable or impractical. Further, the CFPB may target specific features of loans by rulemaking that could cause us to cease offering certain products. Any such rules could have a material adverse effect on our business, results of operation and financial condition. The CFPB could also adopt rules imposing new and potentially burdensome requirements and limitations with respect to any of our current or future lines of business, which could have a material adverse effect on our operations and financial performance.

In addition to the Dodd-Frank Act’s grant of regulatory powers to the CFPB, the Dodd-Frank Act gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer financial laws. In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties ranging from $5,000 per day for minor violations of federal consumer financial laws (including the CFPB’s own rules) to $25,000 per day for reckless violations and $1 million per day for knowing violations. If we are subject to such administrative proceedings, litigation, orders or monetary penalties in the future, this could have a material adverse effect on our

operations and financial performance. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations under Title X, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB (but not for civil penalties). If the CFPB or one or more state officials believe we have violated the foregoing laws, they could exercise their enforcement powers in ways that would have a material adverse effect on us. See “Item 1. Business – Regulation” for additional information.

Pursuant to the authority granted to it under the Dodd-Frank Act, the CFPB adopted rules that subject larger nonbank automobile finance companies such as us to supervision and examination by the CFPB. Any such examination by the CFPB likely would have a material adverse effect on our operations and financial performance.

The CFPB issued rules regarding the supervision and examination of non-depository “larger participants” in the automobile finance business, including us. Since we are deemed a larger participant, we are subject to supervision and examination by the CFPB. The CFPB’s stated objectives of such examinations are: to assess the quality of a larger participant’s compliance management systems for preventing violations of federal consumer financial laws; to identify acts or practices that materially increase the risk of violations of federal consumer finance laws and associated harm to consumers; and to gather facts that help determine whether the larger participant engages in acts or practices that are likely to violate federal consumer financial laws in connection with its automobile finance business. Thus, as a larger participant, we will be subject to examination by the CFPB for, among other things, ECOA compliance; unfair, deceptive or abusive acts or practices (“UDAAP”) compliance; and the adequacy of our compliance management systems.

In February 2016, the CFPB published a list of nine policy priorities on which it intends to focus its resources over the next two years. These priorities include, among other things, initiation of the rulemaking process regarding debt collection practices that would apply to third-party collectors and first-party collectors and continued examination and investigation of, and potential rulemaking regarding, consumer credit reporting practices. The timing and impact of these anticipated rules on our business remain uncertain.

We have evaluated our existing compliance management systems and are in the process of updating, improving and/or replacing such systems. We expect this process to continue as the CFPB promulgates new and evolving rules and interpretations. Given the time and effort needed to establish, implement and maintain adequate compliance management systems and the resources and costs associated with being examined by the CFPB, such an examination would likely have a material adverse effect on our business, financial condition and profitability. Moreover, any such examination by the CFPB could result in the assessment of penalties, including fines, and other remedies which could, in turn, have a material effect on our business, financial condition and profitability.

We are subject to many other laws and governmental regulations, and any material violations of or changes in these laws or regulations could have a material adverse effect on our financial condition and business operations.

Our financing operations are subject to regulation, supervision and licensing under various other federal, state and local statutes and ordinances. Additionally, the procedures that we must follow in connection with the repossession of vehicles securing Contracts are regulated by each of the states in which we do business. The various federal, state and local statutes, regulations, and ordinances applicable to our business govern, among other things:

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licensing requirements;

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requirements for maintenance of proper records;

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payment of required fees to certain states;

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maximum interest rates that may be charged on loans to finance new and used vehicles;

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debt collection practices;

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proper disclosure to customers regarding financing terms;

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privacy regarding certain customer data;

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interest rates on loans to customers;

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late fees and insufficient fees charged;

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telephone solicitation of Direct Loan customers; and

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collection of debts from loan customers who have filed bankruptcy.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. Our failure, or the failure by dealers who originate the Contracts we purchase, to maintain all requisite licenses and permits, and to comply with other regulatory requirements, could result in consumers having rights of rescission and other remedies that could have a material adverse effect on our financial condition. Furthermore, any changes in applicable laws, rules and regulations, such as the passage of the Dodd-Frank Act and the creation of the CFPB, may make our compliance therewith more difficult or expensive or otherwise materially adversely affect our business and financial condition.

We are subject to risks associated with litigation.

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things:

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usury laws;

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disclosure inaccuracies;

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wrongful repossession;

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violations of bankruptcy stay provisions;

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certificate of title disputes;

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fraud;

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breach of contract; and

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discriminatory treatment of credit applicants.

Some litigation against us could take the form of class action complaints by consumers. As the assignee of Contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of actions can be substantial. The relief requested by the plaintiffs varies but may include requests for compensatory, statutory and punitive damages. We also are periodically subject to other kinds of litigation typically experienced by businesses such as ours, including employment disputes and breach of contract claims. No assurances can be given that we will not experience material financial losses in the future as a result of litigation or other legal proceedings.

Our profitability and future growth depend on our continued access to bank financing.

The profitability and growth of our business currently depend on our ability to access bank debt at competitive rates. We currently depend on a $225.0 million line of credit facility with a financial institution to finance a large portion of our purchases of Contracts and fund our Direct Loans. This line of credit currently has a maturity date of January 30, 2018 and is secured by substantially all our assets. At March 31, 2016, we had $211.0 million outstanding under the line of credit and $14.0 million available for additional borrowing. As of June 13, 2016 we had $209.0 million outstanding under the line of credit and $16.0 million available for additional borrowing.

The availability of our credit facility depends, in part, on factors outside of our control, including regulatory capital treatment for unfunded bank lines of credit and the availability of bank loans in general. Our average indebtedness under the line of credit increased to $208.2 million in fiscal 2016 from $133.4 million in fiscal 2015 and $127.1 million in fiscal 2014. Therefore, we cannot guarantee that this credit facility will continue to be available beyond the current maturity date on reasonable terms or at all. If we are unable to renew or replace our credit facility or find alternative financing at reasonable rates or upon reasonable terms, we may be forced to liquidate. We will continue to depend on the availability of our line of credit, together with cash from operations, to finance our future operations.

The terms of our indebtedness impose significant restrictions on us.

Our existing outstanding indebtedness restricts our ability to, among other things:

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sell or transfer assets;

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incur additional debt;

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repay other debt;

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make certain investments or acquisitions;

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repurchase or redeem capital stock;

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engage in mergers or consolidations; and

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engage in certain transactions with subsidiaries and affiliates.

In addition, our line of credit facility requires us to comply with certain financial ratios and covenants and to satisfy specified financial tests, including maintenance of asset quality and portfolio performance tests. The need to comply with such covenants and other

provisions could impact our ability to pay dividends to our shareholders. Moreover, our ability to continue to meet those financial ratios and tests could be affected by events beyond our control. Failure to meet any of these covenants, financial ratios or financial tests could result in an event of default under our line of credit facility. If an event of default occurs under this credit facility, our lenders may take one or more of the following actions:

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increase our borrowing costs;

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restrict our ability to obtain additional borrowings under the facility;

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accelerate all amounts outstanding under the facility; or

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enforce their interest against collateral pledged under the facility.

If our lender accelerates our debt payments, our assets may not be sufficient to fully repay the debt.

We will require a significant amount of cash to service our indebtedness and meet our other liquidity needs.

Our ability to make payments on or to refinance our indebtedness and to fund our operations and planned capital expenditures depends on our future operating performance. Our primary cash requirements include the funding of:

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Contract purchases and Direct Loans;

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interest payments under our line of credit facility and other indebtedness;

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capital expenditures for technology and facilities;

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ongoing operating expenses;

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planned expansions by opening additional branch offices; and

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any required income tax payments.

In addition, because we expect to continue to require substantial amounts of cash for the foreseeable future, we may seek additional debt or equity financing. The type, timing and terms of the financing we select will be dependent upon our cash needs, the availability of other financing sources and the prevailing conditions in the financial markets. There is no assurance that any of these sources will be available to us at any given time or that the terms on which these sources may be available will be favorable. Our inability to obtain such additional financing on reasonable terms could adversely impact our ability to grow.

Our high level of indebtedness could have important consequences for our business.

Our high level of indebtedness could have important consequences for our business. For example,

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we may be unable to satisfy our obligations under our outstanding indebtedness;

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we may find it more difficult to fund future working capital, capital expenditures, acquisitions, and general corporate needs;

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we may have to dedicate a substantial portion of our cash resources to the payments on our outstanding indebtedness, thereby reducing the funds available for operations and future business opportunities; and

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we may be more vulnerable to adverse general economic and industry conditions.

Our ability to make payments on, or to refinance, our indebtedness will depend on our future operating performance, including our ability to access additional debt and equity financing, which to a certain extent, is subject to economic, financial, competitive and other factors beyond our control. If new debt is added to our current levels, the risks described above could intensify.

We may experience high delinquency and loss rates in our loan portfolios, which could reduce our profitability.

Our profitability depends, to a material extent, on the performance of Contracts that we purchase. Historically, we have experienced higher delinquency rates than traditional financial institutions because substantially all of our loans are to non-prime borrowers, who are unable to obtain financing from traditional sources due to their credit history. Our underwriting standards and collection procedures, may not offer adequate protection against the risk of default, especially in periods of economic uncertainty and high unemployment such as have existed over much of the past few years. In the event of a default, the collateral value of the financed vehicle usually does not cover the outstanding loan balance and costs of recovery. Higher than anticipated delinquencies and defaults on our Contracts would reduce our profitability.

In addition, in the event we were to make any bulk purchases of seasoned Contracts, we may experience higher than normal delinquency rates with respect to these loan portfolios due to our inability to apply our underwriting standards to each loan comprising the acquired portfolios. No assurances can be given that we would be able to successfully mitigate the high credit risk associated with the loans.

Other than limited representations and warranties made by dealers in favor of the Company, Contracts are purchased from the dealers without recourse, and we are therefore only able to look to the borrowers for repayment.

We depend upon our relationships with our dealers.

Our business depends in large part upon our ability to establish and maintain relationships with reputable dealers who originate the Contracts we purchase. Although we believe we have been successful in developing and maintaining such relationships, such relationships are not exclusive, and many of them are not longstanding. There can be no assurances that we will be successful in maintaining such relationships or increasing the number of dealers with whom we do business, or that our existing dealer base will continue to generate a volume of Contracts comparable to the volume of such Contracts historically generated by such dealers.

Our success depends upon our ability to implement our business strategy.

Our financial position depends on management’s ability to execute our business strategy. Key factors involved in the execution of our business strategy include achievement of the desired Contract purchase volume, the use of effective risk management techniques and collection methods, continued investment in technology to support operating efficiency, and continued access to significant funding and liquidity sources. Our failure or inability to execute any element of our business strategy could have a material adverse effect on our business and financial condition.

Our business is highly dependent upon general economic conditions.

We are subject to changes in general economic conditions that are beyond our control. During periods of economic uncertainty, such as has existed for much of the past few years, delinquencies, defaults, repossessions and losses generally increase, absent offsetting factors. These periods also may be accompanied by decreased consumer demand for automobiles and declining values of automobiles securing outstanding loans, which weakens collateral coverage on our loans and increases the amount of a loss we would experience in the event of default. Because we focus on non-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on these loans are higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. In addition, during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our servicing income. No assurances can be given that our underwriting criteria and collection methods to manage the higher risk inherent in loans made to non-prime borrowers will afford adequate protection against these risks. Any sustained period of increased delinquencies, defaults, repossessions or losses or increased servicing costs could have a material adverse effect on our business and financial condition.

Furthermore, in a low interest-rate environment such as has existed in the United States in recent years, the level of competition increases in the non-prime consumer-finance industry as new competitors enter the market and many existing competitors expand their operations. Such increased competition, in turn, exerts increasing pressure on us to reduce our interest rates, fees and dealer discount rates in order to maintain our market share. Reductions in our interest rates, fees or dealer discount rates could have a material adverse impact on our profitability or financial condition. For example, the weighted average APR of our portfolio decreased from 22.93% to 22.73% for the fiscal years ended March 31, 2015 and 2016, respectively. Our average dealer discount decreased from 8.08% to 7.51% for the fiscal years ended March 31, 2015 and 2016, respectively.

Recent economic developments may adversely affect our business and financial condition.

Over the past several years, the United States has experienced a period of economic uncertainty and wage stagnation that has adversely affected our business and financial condition. Stagnant wages and a continued lack of available credit have contributed to higher delinquencies and losses than we would otherwise experience.

Additionally, stagnant wages, fluctuating gasoline prices, unstable real estate values, food inflation, resets of adjustable rate mortgages and other factors have adversely impacted consumer confidence and disposable income. These conditions have increased loss frequency, decreased consumer demand for automobiles and weakened collateral values on certain types of vehicles. Because we focus predominately on non-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on Contracts are higher than those experienced in the general automobile finance industry and have been materially affected by recent economic conditions. If economic and credit conditions, including wage conditions, do not continue to improve, our business and financial condition could be further adversely affected.

The auction proceeds we receive from the sale of repossessed vehicles and other recoveries are subject to fluctuation due to economic and other factors beyond our control.

If we repossess a vehicle securing a Contract, we typically have it transported to an automobile auction for sale. Auction proceeds from the sale of repossessed vehicles and other recoveries are usually not sufficient to cover the outstanding balance of the Contract, and the resulting deficiency is charged off. In addition, there is, on average, approximately a 30-day lapse between the time we repossess a vehicle and the time it is sold. The proceeds we receive from such sales depend upon various factors, including the supply of, and demand for, used vehicles at the time of sale. Such supply and demand are dependent on many factors. For example, during periods of economic uncertainty, the demand for used cars may soften, resulting in decreased auction proceeds to us from the sale of repossessed automobiles. Furthermore, depressed wholesale prices for used automobiles may result from significant liquidations of rental or fleet inventories, and from increased volume of trade-ins due to promotional financing programs offered by new vehicle manufacturers. We have experienced declining auction proceeds in the recent past and we expect this trend to continue for the foreseeable future. Decreased auction proceeds to us resulting from sales of used automobiles at depressed prices will result in losses and, in turn, reduced profitability.

An increase in market interest rates may reduce our profitability.

Our long-term profitability may be directly affected by the level of and fluctuations in interest rates. Sustained, significant increases in interest rates may adversely affect our liquidity and profitability by reducing the interest rate spread between the rate of interest we receive on our Contracts and interest rates that we pay under our outstanding line of credit facility. As interest rates increase, our gross interest rate spread on new originations will generally decline since the rates charged on the Contracts originated or purchased from dealers generally are limited by statutory maximums, restricting our opportunity to pass on increased interest costs. We monitor the interest rate environment and, on occasion, enter into interest rate swap agreements relating to a portion of our outstanding debt. Such agreements effectively convert a portion of our floating-rate debt to a fixed-rate, thus reducing the impact of interest rate changes on our interest expense. On June 4, 2012 and July 30, 2012, the Company entered into interest rate swap agreements to convert a portion of its floating rate debt to a fixed rate, more closely matching the interest rate characteristics of finance receivables. The June 4, 2012 agreement provides for a five-year interest rate swap in which the Company pays a fixed rate of 1% and receives payments from the counterparty on the 1-month LIBOR rate. This swap has an effective date of June 13, 2012 and a notional amount of $25 million. The July 30, 2012 agreement provides for a five-year interest rate swap in which the Company pays a fixed rate of 0.87% and receives payments from the counterparty on the 1-month LIBOR rate. This swap has an effective date of August 13, 2012 and a notional amount of $25 million. The changes in the fair value of the interest rate swap agreements (unrealized gains and losses) are recorded in earnings. We will continue to evaluate interest rate swap pricing and we may or may not enter into additional interest rate swap agreements in the future.

We may experience problems with our integrated computer systems or be unable to keep pace with developments in technology.

We use various technologies in our business, including telecommunication, data processing, and integrated computer systems. Technology changes rapidly. Our ability to compete successfully with other financing companies may depend on our ability to efficiently and cost-effectively implement technological changes. Moreover, to keep pace with our competitors, we may be required to invest in technological changes that do not necessarily improve our profitability. We replaced our loan origination system with a third party vendor during fiscal 2016 and plan to upgrade our loan servicing system during the end of fiscal 2017 or the beginning of fiscal 2018. Difficulties experienced in the implementation of a new servicing system could have a material adverse effect on our ability to service existing Contracts and Direct Loans and, thus, on our business and financial condition.

We utilize our integrated computer systems to respond to customer inquiries and to monitor the performance of our Contract and Direct Loan portfolios and the performance of individual customers under our Contracts and Direct Loans. Problems with our systems’ operations could adversely impact our ability to monitor our portfolios or collect amounts due under our Contracts and Direct Loans, which could have a material adverse effect on our financial condition and results of operations.

Failure to properly safeguard confidential customer information could subject us to liability, decrease our profitability and damage our reputation.

In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and personally identifiable information of our customers, on our computer networks. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy.

If third parties are able to breach our network security, the network security of a third party that we share information with or otherwise misappropriate our customers’ personal information, or if we give third parties improper access to our customers’ personal information, we could be subject to liability. This liability could include identity theft or other similar fraud-related claims. This liability could also include claims for other misuses or losses or personal information, including for unauthorized marketing purposes. Other liabilities could include claims alleging misrepresentation of our privacy and data security practices.

We rely on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to secure online transmission of confidential customer information. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the algorithms that we use to protect sensitive customer data. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. We may be required to expend capital and other resources to protect against, or alleviate problems caused by, security breaches or other cybersecurity incidents. Although we have not experienced any material cybersecurity incidents to dates, there can be no assurance that a cyber-attack, security breach or other cybersecurity incident will not have a material adverse effect on our business, financial condition or results of operations in the future. Our security measures are designed to protect against security breaches, but our failure to prevent security breaches could subject us to liability, decrease our profitability and damage our reputation.

Our growth depends upon our ability to retain and attract a sufficient number of qualified employees.

To a large extent, our growth strategy depends on the opening of new offices that focus primarily on purchasing Contracts and making Direct Loans in markets we have not previously served. Future expansion of our branch office network depends, in part, upon our ability to attract and retain qualified and experienced office managers and the ability of such managers to develop relationships with dealers that serve those markets. We generally do not open a new office until we have located and hired a qualified and experienced individual to manage the office. Typically, this individual will be familiar with local market conditions and have existing relationships with dealers in the area to be served. Although we believe that we can attract and retain qualified and experienced personnel as we proceed with planned expansion into new markets, no assurance can be given that we will be successful in doing so. Competition to hire personnel possessing the skills and experience required by us could contribute to an increase in our employee turnover rate. High turnover or an inability to attract and retain qualified personnel could have an adverse effect on our origination, delinquency, default and net loss rates and, ultimately, our business and financial condition.

The loss of one of our key executives could have a material adverse effect on our business.

Our future growth and development to date will be largely dependent upon the services of Ralph T. Finkenbrink, our President and Chief Executive Officer, Kevin D. Bates, our Senior Vice President of Branch Operations, and Katie L. MacGillivary, our Chief Financial Officer and Vice President of Finance. We do not maintain key-man life insurance policies on these executives. Although we believe that we have sufficient experienced management personnel to accommodate the loss of any key executive, the loss of services of one or more of these executives could have a material adverse effect on our business and financial condition.

Our stock is thinly traded, which may limit your ability to resell your shares.

The average daily trading volume of our Common shares on the NASDAQ Global Select Market for the fiscal year ended March 31, 2016 was approximately 26,000 shares. Moreover, on March 19, 2015, our Nicholas Financial subsidiary purchased an aggregate of approximately 4.7 million of our Common shares pursuant to a modified “Dutch auction” tender offer, thereby reducing the number of shares potentially available in the public market. Thus, our Common shares are thinly traded. Thinly traded stock can be more volatile than stock trading in an active public market. Factors such as our financial results, the introduction of new products and services by us or our competitors, and various factors affecting the consumer-finance industry generally may have a significant impact on the market price of our Common shares. In recent years, the stock market has experienced a high level of price and volume volatility, and market prices for the stocks of many companies, including ours, have experienced wide price fluctuations that have not necessarily been related to their operating performance. Therefore, our shareholders may not be able to sell their shares at the volumes, prices, or times that they desire.

Natural disasters, acts of war, terrorist attacks and threats or the escalation of military activity in response to these attacks or otherwise may negatively affect our business, financial condition and results of operations.

Natural disasters (such as hurricanes), acts of war, terrorist attacks and the escalation of military activity in response to these attacks or otherwise may have negative and significant effects, such as disruptions in our operations, imposition of increased security measures, changes in applicable laws, market disruptions and job losses. These events may have an adverse effect on the economy in general. Moreover, the potential for future terrorist attacks and the national and international responses to these threats could affect the business in ways that cannot be predicted. The effect of any of these events or threats could have a material adverse effect on our business, financial condition and results of operations.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

The Company leases its Corporate Headquarters and branch office facilities. The Company’s Headquarters, located at 2454 McMullen Booth Road, Building C, in Clearwater, Florida, consist of approximately 15,000 square feet of office space leased at an annual rate of approximately $18.00 per square foot. The current lease relating to this space was entered into effective April 1, 2015 and expires on March 31, 2020.

Each of the Company’s 67 branch offices located in Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Virginia consists of approximately 1,400 square feet of office space. These offices are located in office parks, shopping centers or strip malls and are occupied pursuant to leases with an initial term of one to five years at annual rates ranging from approximately $12.00 to $35.00 per square foot. The Company believes that these facilities and additional or alternate space available to it are adequate to meet its needs for the foreseeable future.

Item 3.

Legal Proceedings

The Company currently is not a party to any pending legal proceedings other than ordinary routine litigation incidental to its business, none of which, if decided adversely to the Company, would, in the opinion of management, have a material adverse effect on the Company’s financial condition or results of operations.

Item 4.

Mine Safety Disclosures

Not Applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common shares are traded on the NASDAQ Global Select Market under the symbol “NICK.”

The following table sets forth the high and low sales prices of the Company’s common shares for the fiscal years ended March 31, 2016 and 2015, respectively.


Fiscal year ended March 31, 2016	High		Low
First Quarter	$	14.49	$	12.25
Second Quarter	$	14.08	$	12.25
Third Quarter	$	13.80	$	11.45
Fourth Quarter	$	11.88	$	9.92


Fiscal year ended March 31, 2015	High		Low
First Quarter	$	15.85	$	14.27
Second Quarter	$	14.49	$	10.64
Third Quarter	$	14.95	$	10.90
Fourth Quarter	$	15.47	$	13.38

As of June 18 2015, there were approximately 1,700 holders of record of the Company’s Common shares.

No cash dividends were declared or paid during the fiscal year ended March 31, 2016 or 2015. The following cash dividends were declared and paid during the fiscal year ended March 31, 2014.


Date Declared	Record Date	Date Paid	Amount of Dividend
May 7, 2013	June 21, 2013	June 28, 2013	$	0.12
August 13, 2013	September 20, 2013	September 27, 2013		0.12

			$	0.24

Although the Company has declared and paid cash dividends on its Common shares in the past, we have no current plans to declare or pay any cash dividends in the foreseeable future. The payment of future dividends, if any, is reviewed periodically by the Company’s directors and management and will depend upon, among other things, existing conditions, including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities, tax considerations and other conditions and factors, including prospects.

There are no Canadian foreign exchange controls or laws that would affect the remittance of dividends or other payments to the Company’s non-Canadian resident shareholders. There are no Canadian laws that restrict the export or import of capital, other than the Investment Canada Act (Canada), which requires the notification or review of certain investments by non-Canadians to establish or acquire control of a Canadian business. The Company is not a Canadian business as defined under the Investment Canada Act because it has no place of business in Canada, has no individuals employed in Canada in connection with its business, and has no assets in Canada used in carrying on its business.

Canada and the United States of America are signatories to the Convention Between the United States of America and Canada With Respect to Taxes on Income and on Capital (the “Tax Treaty”). The Tax Treaty contains provisions governing the tax treatment of interest, dividends, gains and royalties paid to or received by a person residing in the United States. The Tax Treaty also contains provisions to prevent the occurrence of double taxation, essentially by permitting the taxpayer to claim a tax credit for taxes paid in the foreign jurisdiction.

Dividends paid to the Company from its U.S. subsidiaries’ current and accumulated earnings and profits will be subject to a U.S. withholding tax of 5%. The gross dividends (i.e., before payment of the withholding tax) must be included in the Company’s net income. However, under certain circumstances, the Company may be allowed to deduct the dividends in the calculation of its Canadian taxable income. If the Company has no other foreign (i.e., non-Canadian) non-business income, no relief is available in that case to recover the withholding taxes previously paid.

A 15% Canadian withholding tax applies to dividends paid by the Company to a U.S. shareholder (including those that own less than 10% of the Company’s voting shares) that is an individual. The U.S. shareholder must include the gross amount of the dividends in his net income to be taxed at the regular rates. In general, a U.S. shareholder can obtain a foreign tax credit for U.S. federal income tax purposes with respect to the Canadian withholding tax on such dividends, but the amount of such credit is subject to a limitation that depends, in part, on the amount of the shareholder’s income and losses from other sources. A U.S. shareholder that is an individual also can elect to claim a deduction (rather than a foreign tax credit) for all non-U.S. income taxes paid by the shareholder during the particular year. U.S. shareholders are urged to consult their own tax advisors regarding the U.S. federal income tax treatment of any Canadian withholding tax imposed on dividends from the Company.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth certain information with respect to the purchase of Common shares by our Nicholas Financial subsidiary pursuant to a modified “Dutch auction” tender offer for up to $70.0 million (but not less than $50.0 million) in aggregate value of Common shares. The tender offer commenced on February 10, 2015 and expired on March 13, 2015. The tender offer was completed on March 19, 2015.

ISSUER PURCHASES OF EQUITY SECURITIES

(In Millions, except average price)


Period	Total Number of Common shares Purchased		Average Price Paid per Common share		Total Number of Common Shares Purchased As Part of Publicly Announced Plans or Programs		Maximum Number of Common shares that May Yet Be Purchased Under the Plans or Programs
March 1, 2015 through March 31, 2015		4.7	$	14.85		4.7		—

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information, as of March 31, 2016, with respect to compensation plans under which equity securities of the Company were authorized for issuance:

EQUITY COMPENSATION PLAN INFORMATION

(In thousands, except exercise price)

Plan Category

Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights

Weighted – Average
Exercise Price of
Outstanding Options,
Warrants and Rights

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))

(a)

(b)

(c)

Equity Compensation Plans Approved by Security Holders

357

10.07

703

Equity Compensation Plans Not Approved by Security Holders

None

Not Applicable

None

TOTAL

357

10.07

703

Performance Graph

Set forth below is a graph comparing the cumulative total return on the Company’s Common shares for the five-year period ended March 31, 2016, with that of an overall stock market (NASDAQ Composite) and the Company’s peer group index (Dow Jones US General Financial Index). The stock performance graph assumes that the value of the investment in each of the Company’s Common shares, the NASDAQ Composite Index and the Dow Jones US General Financial Index was $100 on April 1, 2011 and that all dividends were reinvested.

The graph displayed below is presented in accordance with SEC requirements. Shareholders are cautioned against drawing any conclusions from the data contained therein, as past results are not necessarily indicative of future performance. This graph in no way reflects the Company’s forecast of future financial performance.

LOGO


	04/01/2011		03/31/2012		03/31/2013		03/31/2014		03/31/2015		03/31/2016
Nicholas Financial, Inc.	$	100.00	$	108.11	$	120.49	$	128.93	$	114.84	$	88.44
NASDAQ Composite		100.00		111.16		117.49		150.98		176.22		175.11
Dow Jones US General Financial Index		100.00		101.58		123.49		158.19		174.92		159.65

Item 6.

Selected Financial Data

The following tables present selected consolidated financial data of the Company as of and for the fiscal years ended March 31, 2016, 2015, 2014, 2013, and 2012. The selected consolidated financial data have been derived from our consolidated financial statements.

You should read the selected consolidated financial data below in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and notes thereto that are included elsewhere in this Report.


	Fiscal Year ended March 31, (In thousands, except earnings per share numbers)
	2016			2015			2014			2013			2012
Statement of Operations Data
Interest income on finance receivables	$	90,707		$	86,790		$	82,629		$	82,110		$	80,515

Interest expense		9,007			5,970			5,678			5,121			4,892
Provision for credit losses		26,278			20,371			14,979			13,392			12,368
Salaries and employee benefits		22,313			20,835			19,634			18,326			17,583
Change in fair value of interest rate swaps		24			364			(688	)		505			—
Other expenses		12,980			13,154			14,509			12,280			9,524

		70,602			60,694			54,112			49,624			44,367

Operating income before income taxes		20,105			26,096			28,517			32,486			36,148
Income tax expense		7,726			9,240			11,814			12,545			13,926

Net income	$	12,379		$	16,856		$	16,703		$	19,941		$	22,222

Earnings per share – basic:	$	1.60		$	1.40		$	1.38		$	1.66		$	1.89

Weighted average shares outstanding		7,622			12,013			12,096			11,977			11,747

Earnings per share – diluted:	$	1.59		$	1.38		$	1.36		$	1.63		$	1.85

Weighted average shares outstanding		7,692			12,192			12,325			12,218			12,033


	As of and for the Fiscal Year ended March 31, (In thousands, except number of branch locations)
	2016			2015			2014			2013			2012
Balance Sheet Data
Total assets	$	325,309		$	302,529		$	283,430		$	263,835		$	256,560
Finance receivables, net		311,837			288,904			269,344			249,826			241,253
Line of credit		211,000			199,000			127,900			125,500			112,000
Shareholders’ equity		102,849			89,888			141,938			126,965			135,263

Operating Data
Return on average assets		3.94	%		5.75	%		6.10	%		7.66	%		8.90	%
Return on average equity		12.85	%		14.54	%		12.42	%		15.21	%		17.79	%
Gross portfolio yield (1)		27.10	%		28.00	%		28.44	%		29.22	%		29.48	%
Pre-tax yield (1)		6.02	%		8.54	%		9.65	%		11.82	%		13.31	%
Total delinquencies over 30 days, excluding Chapter 13 bankruptcy accounts		5.50	%		4.11	%		4.00	%		3.68	%		2.99	%
Write-off to liquidation (1)		9.10	%		8.13	%		7.17	%		6.81	%		5.66	%
Net charge-off percentage (1)		7.56	%		7.04	%		6.22	%		5.88	%		4.59	%

Automobile Finance Data & Direct Loan Origination
Contracts purchased/Direct Loans originated	$	196,853		$	187,893		$	179,031		$	160,078		$	152,316
Average dealer discount on Contracts purchased		7.51	%		8.08	%		8.44	%		8.54	%		9.23	%
Weighted average contractual rate on Contracts & Direct Loans purchased		22.81	%		23.08	%		23.20	%		23.43	%		23.93	%
Number of branch locations		67			66			65			64			60

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Nicholas Financial-Canada is a Canadian holding company incorporated under the laws of British Columbia in 1986. Nicholas Financial-Canada currently conducts its business activities exclusively through a wholly-owned indirect Florida subsidiary, Nicholas Financial, which purchases and services Contracts, makes Direct Loans and sells consumer-finance related products. Nicholas Financial accounted for more than 99% of the Company’s consolidated revenue for each of the fiscal years ended March 31, 2015 and 2014, and 100% of the Company’s consolidated revenue for the fiscal year ended March 31, 2016. A second Florida subsidiary, NDS, which historically provided limited computer software support and updated services to small businesses, has ceased such operations; however it continues as the intermediate holding company for Nicholas Financial. Nicholas Financial-Canada, Nicholas Financial and NDS are collectively referred to herein as the “Company”.

Introduction

The Company’s consolidated revenues increased for the fiscal year ended March 31, 2016 to $90.7 million as compared to $86.8 million and $82.6 million for the fiscal years ended March 31, 2015 and 2014, respectively. The Company’s diluted earnings per share increased for the fiscal year ended March 31, 2016 to $1.59 as compared to $1.38 and $1.36 for the fiscal years ended March 31, 2015 and 2014, respectively. The per share diluted net earnings for the fiscal year ended March 31, 2016 were positively impacted by the purchase of 4.7 million of the Company’s common shares by its principal operating subsidiary on March 19, 2015. The Company’s operating income before taxes for the fiscal year ended March 31, 2016 decreased to $20.1 million as compared to $26.1 million and $28.5 million for the fiscal years ended March 31, 2015 and 2014, respectively. This was a result of a decrease in the gross portfolio yield, an increase in the provision for credit losses, and an increase in interest expense due to the $70 million the Company borrowed for the tender offer. The effective income tax rate for the fiscal year ended March 31, 2014 was higher than normal due to non-deductible professional fees relating to an agreement providing for the acquisition of the Company by an unaffiliated third party. The effective income tax rate for the fiscal year ended March 31, 2015 was lower than normal due to the same non-deductible expenses becoming deductible when such agreement was terminated. The Company’s consolidated net income for the fiscal years ended March 31, 2016, 2015, and 2014 were $12.4 million, $16.9 million and $16.7 million, respectively. The Company believes the increase in losses each successive year was primarily attributable to an increase in competition which has driven higher advance rates for Contracts acquired. In addition, competition generally results in the purchase of lower credit quality Contracts, though these Contracts are still acceptable under the Company’s underwriting guidelines. Historically, when competition has increased, the Company has experienced higher losses, decreased Contract origination and reduced profits. While it is difficult to predict the level of competition long-term, the Company believes that the current highly competitive environment will prevail for the foreseeable future, which will continue to put pressure on its margins. The weighted average APR of the portfolio for the fiscal years ended March 31, 2016, 2015, and 2014 were 22.73%, 22.93%, and 23.20%, respectively. The average dealer discounts as a percent of gross finance receivables associated with new volume for the fiscal years ended March 31, 2016, 2015, and 2014 were 7.51%, 8.08%, and 8.44%, respectively.

The Company is evaluating its organization and its structure. The Company’s decisions on how it plans to continue operating its business strategy will be influenced by the sustainability of some of its competitors’ underwriting and risk-based pricing.


Portfolio Summary	Fiscal Year ended March 31, (In thousands)
	2016			2015			2014
Average finance receivables, net of unearned interest (1)	$	334,754		$	309,995		$	290,502

Average indebtedness (2)	$	208,214		$	133,434		$	127,093

Interest and fee income on finance receivables	$	90,707		$	86,785		$	82,610
Interest expense	$	9,007		$	5,970		$	5,678

Net interest and fee income on finance receivables	$	81,700		$	80,815		$	76,932

Weighted average contractual rate (3)		22.73	%		22.93	%		23.20	%

Average cost of borrowed funds (2)		4.33	%		4.47	%		4.47	%

Gross portfolio yield (4)		27.10	%		28.00	%		28.44	%
Interest expense as a percentage of average finance receivables, net of unearned interest		2.69	%		1.93	%		1.95	%
Provision for credit losses as a percentage of average finance receivables, net of unearned interest		7.85	%		6.57	%		5.16	%

Net portfolio yield (4)		16.56	%		19.50	%		21.33	%
Marketing, salaries, employee benefits, depreciation, administrative and professional fee expenses and dividend taxes as a percentage of average finance receivables, net of unearned interest (5)		10.54	%		10.96	%		11.68	%

Pre-tax yield as a percentage of average finance receivables, net of unearned interest (6)		6.02	%		8.54	%		9.65	%

Write-off to liquidation (7)		9.10	%		8.13	%		7.17	%
Net charge-off percentage (8)		7.56	%		7.04	%		6.22	%

(1)	Average finance receivables, net of unearned interest, represents the average of gross finance receivables, less unearned interest throughout the period.

(2)	Average indebtedness represents the average outstanding borrowings under the Line. Average cost of borrowed funds represents interest expense as a percentage of average indebtedness.

(3)	Weighted average contractual rate represents the weighted average annual percentage rate (“APR”) of all Contracts and Direct Loans as of the period ending date.

(4)

Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables, net of unearned interest. Net portfolio yield represents interest and fee income on finance receivables minus (a) interest expense and (b) the provision for credit losses as a percentage of average finance receivables, net of unearned interest.

(5)

The numerator for the fiscal year ended March 31, 2015 included expenses associated with the abandoned sale of the Company. Absent these expenses, the percentage would have been 10.85%. The numerator for the fiscal year ended March 31, 2014 included expenses associated with the potential sale of the Company and payments of cash dividends. Absent these expenses, the percentage would have been 10.83%.

(6)	Pre-tax yield represents net portfolio yield minus operating expenses as a percentage of average finance receivables, net of unearned interest.

(7)	Write-off to liquidation percentage is defined as net charge-offs divided by liquidation. Liquidation is defined as beginning receivable balance plus current period purchases minus voids and refinances minus ending receivable balance.

(8)	Net charge-off percentage represents net charge-offs divided by average finance receivables, net of unearned interest, outstanding during the period.

Critical Accounting Policy

The Company’s critical accounting policy relates to the allowance for credit losses. It is based on management’s opinion of an amount that is adequate to absorb losses incurred in the existing portfolio. The allowance for credit losses is established through a provision for credit losses based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, specific impaired loans and current economic conditions. Such evaluation considers, among other matters, the estimated net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for an adequate credit loss allowance.

Because of the nature of the customers under the Company’s Contracts and its Direct Loan program, the Company considers the establishment of adequate reserves for credit losses to be imperative. The Company segregates its Contracts into static pools for purposes of establishing reserves for losses. All Contracts purchased by a branch during a fiscal quarter comprise a static pool. The Company pools Contracts according to branch location because the branches purchase Contracts in different geographic markets. 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 and credit history, and the types of vehicles purchased, in each market. Each such static pool consists of the Contracts purchased by a branch office during a fiscal quarter.

Contracts are purchased from many different dealers and are all purchased on an individual Contract-by-Contract basis. Individual Contract pricing is determined by the automobile dealerships and is generally the lesser of the applicable state maximum interest rate, if any, or the maximum interest rate which the customer will accept. In certain markets, competitive forces will drive down Contract rates from the maximum rate to a level where an individual competitor is willing to buy an individual Contract. The Company purchases Contracts on an individual basis, although the Company may consider portfolio acquisitions as part of its growth strategy. See “Item 1. Business—Growth Strategy.”

The Company utilizes the branch model, which allows for Contract purchasing to be done on the branch level. The Company has detailed underwriting guidelines it utilizes to determine which Contracts to purchase. These guidelines are specific and are designed to cause all of the Contracts that the Company purchases to have common risk characteristics. The Company utilizes its District Managers to evaluate their respective branch locations for adherence to these underwriting guidelines. The Company also utilizes IA to assure adherence to its underwriting guidelines.

The allowance for credit losses is established through charges to earnings through the provision for credit losses. The allowance for credit losses is maintained at an amount that reduces the net carrying amount of finance receivables for incurred losses.

In analyzing a static pool, the Company considers the performance of prior static pools originated by the same branch office, the performance of prior Contracts purchased from the dealers whose Contracts are included in the current static pool, the credit rating of the customers under the Contracts in the static pool, and current market and economic conditions. Each static pool is analyzed monthly to determine if the loss reserves are adequate, and adjustments are made if they are determined to be necessary.

Fiscal 2016 Compared to Fiscal 2015

Interest and Fee Income on Finance Receivables

Interest income on finance receivables, predominantly finance charge income, increased 4.5% to $90.7 million in fiscal 2016 from $86.8 million in fiscal 2015. The average finance receivables, net of unearned interest, totaled $334.8 million for the fiscal year ended March 31, 2016, an increase of 8% from $310.0 million for the fiscal year ended March 31, 2015. The primary reason average finance receivables, net of unearned interest, increased was an increase of the receivable base of several existing branches in younger markets in fiscal 2016. (see “Item 1. Business—Contract Procurement”). The gross finance receivable balance increased 9% to $498.1 million for the fiscal year ended March 31, 2016 from $458.0 million for the fiscal year ended March 31, 2015. The primary reasons gross finance receivables increased were an increase in Contracts purchased and an increase in the weighted-average term of Contracts purchased. The primary reason interest income increased was the increase in the volume of the outstanding loan portfolio, which was partially offset by a lower weighted APR earned on our portfolio for the fiscal year ended March 31, 2016 compared to the fiscal year ended March 31, 2015. The gross portfolio yield decreased to 27.10% for the fiscal year ended March 31, 2016 from 28.00% for the fiscal year ended March 31, 2015. The net portfolio yield decreased to 16.56% for the fiscal year ended March 31, 2016 from 19.50% for the fiscal year ended March 31, 2015. The gross portfolio yield decreased primarily due to the decrease in the average dealer discount and a decrease in the average weighted APR, both of which is primarily the result of increased competition. The net portfolio yield decreased due to a decrease in the gross portfolio yield, an increase in the provision for credit losses, and an increase in interest expense (see “Analysis of Credit Losses” and “Interest Expense” below).

Marketing, Salaries and Employee Benefits, Depreciation, Administrative, and Professional Fee Expenses

Marketing, salaries and employee benefits, depreciation, administrative, and professional fee expenses increased to $35.3 million for the fiscal year ended March 31, 2016 compared to $34.0 million for the fiscal year ended March 31, 2015, primarily because of an increase in cost associated with maintaining the finance receivables portfolio. The Company opened three new branch locations during the fiscal year ended March 31, 2016, and consolidated two branch locations into branches previously established within their market. However, the Company increased the average headcount to 338 for the fiscal year ended March 31, 2016 from 330 for the fiscal year ended March 31, 2015. Marketing, salaries and employee benefits, depreciation, administrative expenses, and professional fee expenses as a percentage of average finance receivables, net of unearned interest, decreased to 10.54% for the fiscal year ended March 31, 2016 from 10.96% for the fiscal year ended March 31, 2015. Absent the professional expenses associated with the abandoned sale of the Company the percentage would have been 10.85% for the fiscal year ended March 31, 2015.

Interest Expense

Interest expense increased to $9.0 million for the fiscal year ended March 31, 2016 as compared to $6.0 million for the fiscal year ended March 31, 2015. The average outstanding debt as of March 31, 2016 and March 31, 2015 was $208.2 million and $133.4 million, respectively. The total average debt outstanding increased due to the tender offer executed on March 19, 2015 The following table summarizes the Company’s average cost of borrowed funds for the fiscal years ended March 31:


	2016			2015
Variable interest under the line of credit facility		0.37	%		0.34	%
Settlements under interest rate swap agreements		0.16	%		0.29	%
Credit spread under the line of credit facility		3.80	%		3.84	%

Average cost of borrowed funds		4.33	%		4.47	%

The Company’s average cost of borrowed funds decreased mostly due to the fixed notional amount interest rate swap agreements representing a lower percentage of average debt. During fiscal 2016 LIBOR rates have increased, which has caused the credit spread to decrease and the variable interest expense to increase. The variable interest rate also includes a decrease in the unused line fees offset with an increase in amortized loan origination fees.

For a further discussion regarding the Company’s line of credit, see “— Liquidity and Capital Resources” below and Note 5 (“Line of Credit”) to our audited consolidated financial statements included elsewhere in this Report.

The weighted average notional amount of interest rate swaps was $50.0 million at a weighted average fixed rate of 0.94% for each of the fiscal years ended March 31, 2016 and 2015. For a further discussion regarding the effect of our interest rate swap agreements, see Note 6 (“Interest Rate Swap Agreements”) to our audited consolidated financial statements included elsewhere in this Report.

Analysis of Credit Losses

As of March 31, 2016, the Company had approximately 1,400 active static pools. The average pool upon inception consisted of 61 Contracts with aggregate finance receivables, net of unearned interest, of approximately $683,000.

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:


	(In thousands)
	2016			2015
Balance at beginning of year	$	11,325		$	12,889
Current year provision		25,926			20,008
Losses absorbed		(27,963	)		(25,042	)
Recoveries		2,977			3,470

Balance at end of year	$	12,265		$	11,325

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:


	(In thousands)
	2016			2015
Balance at beginning of year	$	703		$	590
Current year provision		352			362
Losses absorbed		(328	)		(277	)
Recoveries		21			28

Balance at end of year	$	748		$	703

The provision for credit losses increased to $26.3 million for the fiscal year ended March 31, 2016 from $20.4 million for the fiscal year ended March 31, 2015, largely due to the fact that net charge-offs increased to 7.56% for the fiscal year ended March 31, 2016 from 7.04% for the fiscal year ended March 31, 2015, as well as the portfolio growing. During the fourth quarter of the fiscal year ended March 31, 2016, the Company refined its allowance for credit loss model to incorporate recent trends that include the acquisition of longer term contracts and increased delinquencies. The Company feels that these improvements to the current model better reflect the current trends of incurred losses within the portfolio and better align the allowance for credit losses with the portfolio’s performance indicators.

The Company’s losses as a percentage of liquidation increased to 9.10% for the fiscal year ended March 31, 2016 as compared to 8.13% for the fiscal year ended March 31, 2015. This increase was primarily the result of increased competition in all markets in which the Company presently operates. Increased competition has led to a higher percentage of loans acquired that are categorized in the lower tiers of the Company’s guidelines. The Company also experienced a decrease in auction prices from fiscal year 2015 to fiscal year 2016. Decreased auction proceeds from repossessed vehicles increased the amount of write-offs which, in turn, increased the write-off to liquidation percentage. During the fiscal years ended March 31, 2016 and 2015, auction proceeds from the sale of repossessed vehicles averaged approximately 42% and 46%, respectively, of the related principal balance.

Recoveries as a percentage of charge-offs were approximately 10.59% and 13.82% for the fiscal years ended March 31, 2016 and 2015, respectively. Historically, recoveries as a percentage of charge-offs have fluctuated from period to period, and the Company does not attribute this decrease to any particular change in operational strategy or economic events.

The delinquency percentage for Contracts more than thirty days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2016 increased to 5.57% from 4.17% as of March 31, 2015. The delinquency percentage for Direct Loans more than thirty days past-due as of March 31, 2016 increased to 2.19% from 1.64% as of March 31, 2015. The delinquency percentage increase for Contracts reflects portfolio weakness that generally manifests itself in increased future losses mainly due to competition. The Company utilizes a static pool approach to analyzing portfolio performance and looks at specific static pool performance and recent trends as leading indicators of the future performance of its portfolio.

The Company also considers the following factors to assist in determining the appropriate loss reserve levels: unemployment rates; competition; the number of bankruptcy filings; the results of internal branch audits; consumer sentiment; consumer spending; economic growth (i.e., changes in GDP); the condition of the housing sector; and other leading economic indicators. The Company continues to evaluate reserve levels on a pool-by-pool basis during each reporting period. The longer-term outlook for portfolio performance will depend on overall economic conditions, the unemployment rate, the rational or irrational behavior of the Company’s competitors, and the Company’s ability to monitor, manage and implement its underwriting philosophy in additional geographic areas as it strives to continue its expansion.

In accordance with our policies and procedures, certain borrowers qualify for, and the Company offers, one-month principal payment deferrals on Contracts and Direct Loans. For the fiscal years ended March 31, 2016 and March 31, 2015 the Company granted deferrals to approximately 22.65% and 23.28%, respectively, of total Contracts and Direct Loans. The number of deferrals is influenced by portfolio performance, general economic conditions and the unemployment rate.

Income Taxes

The provision for income taxes decreased to approximately $7.7 million in fiscal 2016 from approximately $9.2 million in fiscal 2015. The Company’s effective tax rate increased to 38.43% in fiscal 2016 from 35.41% in fiscal 2015. The Company had approximately $2.1 million of non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.

Fiscal 2015 Compared to Fiscal 2014

Interest and Fee Income on Finance Receivables

Interest income on finance receivables, predominantly finance charge income, increased 5% to $86.8 million in fiscal 2015 from $82.6 million in fiscal 2014. The average finance receivables, net of unearned interest, totaled $310.0 million for the fiscal year ended March 31, 2015, an increase of 7% from $290.5 million for the fiscal year ended March 31, 2014. The primary reason average finance receivables, net of unearned interest, increased was the opening of one additional branch office and the increase of the portfolio size in certain existing branches during fiscal 2015 (see “Item 1. Business—Contract Procurement”). The gross finance receivable balance increased 8% to $458.0 million for the fiscal year ended March 31, 2015 from $424.3 million for the fiscal year ended March 31, 2014. The primary reasons gross finance receivables increased were an increase in Contracts purchased and an increase in the weighted-average term of Contracts purchased. The primary reason interest income increased was the increase in the outstanding loan portfolio. The gross portfolio yield decreased to 28.00% for the fiscal year ended March 31, 2015 from 28.44% for the fiscal year ended March 31, 2014. The net portfolio yield decreased to 19.50% for the fiscal year ended March 31, 2015 from 21.33% for the fiscal year ended March 31, 2014. The gross portfolio yield decreased primarily as the result of a lower weighted APR and a reduction of the average dealer discount on Contracts purchased due to increased competition. The net portfolio yield decreased primarily due to the decrease in the gross portfolio yield and an increase in the provision for credit losses.

Marketing, Salaries and Employee Benefits, Depreciation, Administrative, Professional Fee Expenses

Marketing, salaries and employee benefits, depreciation, administrative, and professional fee expenses remained relatively flat at $34.0 million for the fiscal year ended March 31, 2015 compared to $34.1 million for the fiscal year ended March 31, 2014. The Company opened one new branch location during the fiscal year ended March 31, 2015. The Company increased the average headcount to 330 for the fiscal year ended March 31, 2015 from 325 for the fiscal year ended March 31, 2014. Marketing, salaries and employee benefits, depreciation, administrative expenses, and professional fee expenses as a percentage of average finance receivables, net of unearned interest, decreased to 10.96% for the fiscal year ended March 31, 2015 from 11.68% for the fiscal year ended March 31, 2014. Absent the professional expenses associated with the abandoned sale of the Company and taxes associated with the payment of cash dividends, the percentages would have been 10.85% and 10.83% for the fiscal years ended March 31, 2015 and 2014, respectively.

Interest Expense

Interest expense increased to $6.0 million for the fiscal year ended March 31, 2015 as compared to $5.7 million for the fiscal year ended March 31, 2014. The following table summarizes the Company’s average cost of borrowed funds for the fiscal years ended March 31:


	2015			2014
Variable interest under the line of credit facility		0.34	%		0.35	%
Settlements under interest rate swap agreements		0.29	%		0.30	%
Credit spread under the line of credit facility		3.84	%		3.82	%

Average cost of borrowed funds		4.47	%		4.47	%

The Company’s average cost of funds for the fiscal year ended March 31, 2015 remained unchanged from the preceding fiscal year.

The weighted average notional amount of interest rate swaps was $50.0 million at a weighted average fixed rate of 0.94% for each of the fiscal years ended March 31, 2015 and 2014. For a further discussion regarding the effect of our interest rate swap agreements, see Note 6 (“Interest Rate Swap Agreements”) to our audited consolidated financial statements included elsewhere in this Report.

Analysis of Credit Losses

As of March 31, 2015, the Company had approximately 1,400 active static pools. The average pool upon inception consisted of 69 Contracts with aggregate finance receivables, net of unearned interest, of approximately $649,000.

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:


	(In thousands)
	2015			2014
Balance at beginning of year	$	12,889		$	16,091
Current year provision		20,008			14,694
Losses absorbed		(25,042	)		(21,691	)
Recoveries		3,470			3,795

Balance at end of year	$	11,325		$	12,889

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:


	(In thousands)
	2015			2014
Balance at beginning of year	$	590		$	468
Current year provision		362			285
Losses absorbed		(277	)		(192	)
Recoveries		28			29

Balance at end of year	$	703		$	590

The provision for credit losses increased to $20.4 million for the fiscal year ended March 31, 2015 from $15.0 million for the fiscal year ended March 31, 2014, primarily as a result of an increase in the average finance receivables and an increase in the net charge-off percentage.

The Company’s losses as a percentage of liquidation increased to 8.13% for the fiscal year ended March 31, 2015 as compared to 7.17% for the fiscal year ended March 31, 2014. This increase was primarily the result of increased competition in all markets that the Company presently operates in and higher advance rates on Contracts purchased during the fiscal year ended March 31, 2015. The Company has experienced favorable variances between projected write-offs and actual write-offs on many seasoned pools, which resulted in an increase in expected future cash flows and favorable impact on the allowance for credit losses. However, increased competition has led to a higher percentage of loans acquired that are categorized in the lower tiers of the Company’s guidelines. Static pools originated during fiscal 2015, 2014 and 2013, while still performing at acceptable net charge-off levels, have experienced losses higher than static pools originated in previous years. The Company also experienced a decrease in auction prices from fiscal year 2014 to fiscal year 2015. Decreased auction proceeds from repossessed vehicles increased the amount of write-offs which, in turn, increased the write-off to liquidation percentage. During the fiscal years ended March 31, 2015 and 2014, auction proceeds from the sale of repossessed vehicles averaged approximately 46% and 48%, respectively, of the related principal balance. Recoveries as a percentage of charge-offs were approximately 13.82% and 17.46% for the fiscal years ended March 31, 2015 and 2014, respectively. Historically, recoveries as a percentage of charge-offs have fluctuated from period to period, and the Company does not attribute this decrease to any particular change in operational strategy or economic events.

The delinquency percentage for Contracts more than thirty days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2015 increased to 4.17% from 4.03% as of March 31, 2014. The delinquency percentage for Direct Loans more than thirty days past-due as of March 31, 2015 decreased to 1.64% from 1.78% as of March 31, 2014. The delinquency percentage increase for Contracts reflects portfolio weakness that generally manifests itself in increased future losses. The Company utilizes a static pool approach to analyzing portfolio performance and looks at specific static pool performance and recent trends as leading indicators of the future performance of its portfolio.

Income Taxes

The provision for income taxes decreased to approximately $9.2 million in fiscal 2015 from approximately $11.8 million in fiscal 2014. The Company’s effective tax rate decreased to 35.41% in fiscal 2015 from 41.43% in fiscal 2014. The Company had approximately $2.1 million of non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.

Liquidity and Capital Resources

The Company’s cash flows are summarized as follows:


	Fiscal Year ended March 31, (In thousands)
	2016			2015			2014
Cash provided by (used in):
Operations	$	24,070		$	25,758		$	21,366
Investing activities – (primarily purchases of Contracts)		(36,653	)		(26,504	)		(21,880	)
Financing activities		11,044			1,499			351

Net (decrease) increase in cash	$	(1,539	)	$	753		$	(163	)

The Company’s primary use of working capital for the fiscal year ended March 31, 2016 was funding the purchase of Contracts, which are financed substantially through cash from principal payments received, cash from operations and our line of credit (the “Line”). The Line is secured by all of the assets of the Company and has a maturity date of January 30, 2018. The Company may borrow up to $225.0 million. Borrowings under the Line may be under various LIBOR pricing options plus 300 basis points with a 1% floor on LIBOR. As of March 31, 2016, the amount outstanding under the Line was $211.0 million, and the amount available under the Line was $14.0 million.

The Company will continue to depend on the availability of the Line, together with cash from operations, to finance future operations. Amounts outstanding under the Line increased by $12.0 million as of March 31, 2016 compared to March 31, 2015 and increased by approximately $71.1 million as of March 31, 2015 compared to March 31, 2014. The increase in the amount outstanding under the Line as of March 31, 2016 was principally related to the growth in finance receivables. The increase in the amount outstanding under the Line as of March 31, 2015 was principally related to the $70.0 million tender offer completed on March 19, 2015. The amount of debt the Company incurs from time to time under these financing mechanisms depends on the Company’s need for cash and ability to borrow under the terms of the Line. The Company believes that borrowings available under the Line as well as cash flow from operations will be sufficient to meet its short-term funding needs. The Line requires compliance with certain debt covenants including financial ratios, asset quality and other performance tests. The Company is currently in compliance with all of its debt covenants.

No cash dividends were declared or paid during the fiscal year ended March 31, 2016 or 2015. The following cash dividends were declared and paid during the fiscal years ended March 31, 2014:


Fiscal Year	Date Declared	Record Date	Date Paid	Amount of Dividend
2014	May 7, 2013	June 21, 2013	June 28, 2013	$	0.12
	August 13, 2013	September 20, 2013	September 27, 2013		0.12

				$	0.24

Impact of Inflation

The Company is affected by inflation primarily through increased operating costs and expenses including increases in interest rates. Inflationary pressures on operating costs and expenses historically have been largely offset by the Company’s continued emphasis on stringent operating and cost controls, although no assurances can be given regarding the Company’s ability to offset the effects of inflation in the future.

Contractual Obligations

The following table summarizes the Company’s material obligations as of March 31, 2016.


	Payments Due by Period (In thousands)
	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Operating leases	$	5,535	$	2,101	$	2,774	$	660	$	—
Line of credit ¹		211,000		—		211,000		—		—
Interest on line of credit ¹		16,750		9,136		7,614		—		—

Total	$	233,285	$	11,237	$	221,388	$	660	$	—

The Company’s current Line matures on January 30, 2018. Interest on outstanding borrowings under the Line as of March 31, 2016 is based on an effective interest rate of 4.33%. The effective interest rate used in the above table does not contemplate the possibility of entering into additional interest rate swap agreements in the future.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Market risks relating to the Company’s operations result primarily from changes in interest rates. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes.

Interest Rate Risk

Management’s objective is to minimize the cost of borrowing through an appropriate mix of fixed and floating rate debt. Derivative financial instruments, such as interest rate swap agreements, may be used for the purpose of managing fluctuating interest rate exposures that exist from ongoing business operations. The Company does not use interest rate swap agreements for speculative purposes. At March 31, 2016, $161.0 million, or approximately 76% of our total debt, was subject to floating interest rates; however, due to a 1% floor on the debt these rates are effectively fixed until the variable rates exceed this threshold. As a result, a hypothetical increase in the variable interest rates of 1% or 100 basis points (an increase to 1.44% as of March 31, 2016) as of March 31, 2016 applicable to this floating rate debt would have an annual after-tax effect on net income of approximately $260,000.

Item 8. Financial Statements and Supplementary Data

The following financial statements are filed as part of this Report (see pages 31-50)


Report of Independent Registered Public Accounting Firm			30
Audited Consolidated Financial Statements
Consolidated Balance Sheets			31
Consolidated Statements of Income			32
Consolidated Statements of Shareholders’ Equity			33
Consolidated Statements of Cash Flows			34
Notes to Consolidated Financial Statements			35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Nicholas Financial, Inc.

We have audited the accompanying consolidated balance sheets of Nicholas Financial, Inc. and Subsidiaries (the “Company”) as of March 31, 2016 and 2015 and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 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 consolidated 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. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2016 and 2015 and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2016, based on criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 14, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ Dixon Hughes Goodman LLP

Atlanta, Georgia

June 14, 2016

Nicholas Financial, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)


	March 31,
	2016			2015
Assets
Cash	$	1,849		$	3,388
Finance receivables, net		311,837			288,904
Assets held for resale		2,148			1,747
Prepaid expenses and other assets		977			1,144
Income taxes receivable		593			113
Property and equipment, net		1,290			872
Deferred income taxes		6,615			6,361

Total assets	$	325,309		$	302,529

Liabilities and shareholders’ equity
Line of credit	$	211,000		$	199,000
Drafts payable		1,499			2,476
Accounts payable and accrued expenses		5,839			7,841
Deferred revenues		3,917			3,143
Interest rate swap agreements		205			181

Total liabilities		222,460			212,641
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par: 5,000 shares authorized; none issued
Common stock, no par: 50,000 shares authorized; 12,466 and 12,416 shares issued respectively; 7,753 and 7,702 shares outstanding, respectively		33,287			32,655
Treasury stock: 4,714 common shares, at cost		(70,459	)		(70,409	)
Retained earnings		140,021			127,642

Total shareholders’ equity		102,849			89,888

Total liabilities and shareholders’ equity	$	325,309		$	302,529

See accompanying notes.

Nicholas Financial, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)


	Fiscal Year ended March 31,
	2016		2015		2014
Interest and fee income on finance receivables	$	90,707	$	86,790	$	82,629

Expenses:
Marketing		1,497		1,562		1,491
Salaries and employee benefits		22,313		20,835		19,634
Professional fees		1,194		1,383		3,659
Administrative		9,831		9,843		9,041
Provision for credit losses		26,278		20,371		14,979
Depreciation		458		366		318
Interest expense		9,007		5,970		5,678
Change in fair value of interest rate swap agreements		24		364		(688	)

		70,602		60,694		54,112

Operating income before income taxes		20,105		26,096		28,517
Income tax expense		7,726		9,240		11,814

Net income	$	12,379	$	16,856	$	16,703

Earnings per share:
Basic	$	1.60	$	1.40	$	1.38

Diluted	$	1.59	$	1.38	$	1.36

Dividends declared per share	$	—	$	—	$	0.24

See accompanying notes.

Nicholas Financial, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(In thousands)


	Common Stock						Treasury Stock			Retained Earnings			Total Shareholders’ Equity
	Shares			Amount			Treasury Stock			Retained Earnings			Total Shareholders’ Equity
Balance at March 31, 2013		12,154		$	30,032		$	—		$	96,934		$	126,966

Net income		—			—			—			16,703			16,703
Issuance of common stock under stock options		67			329			—			—			329
Excess tax benefit on share awards		—			256			—			—			256
Share-based compensation		—			535			—			—			535
Cash dividend		—			—			—			(2,851	)		(2,851	)

Balance at March 31, 2014		12,221		$	31,152		$	—		$	110,786		$	141,938

Net income		—			—			—			16,856			16,856
Issuance of common stock under stock options		151			389			—			—			389
Grants of restricted share awards, net of forfeitures		44			—			—			—			—
Excess tax benefit on share awards		—			600			—			—			600
Share-based compensation		—			514			—			—			514
Common shares purchased		(4,714	)		—			(70,409	)		—			(70,409	)

Balance at March 31, 2015		7,702		$	32,655		$	(70,409	)	$	127,642		$	89,888

Net income		—			—			—			12,379			12,379
Issuance of common stock under stock options		13			85			—			—			85
Grants of restricted share awards, net of forfeitures		38			—			—			—			—
Tax deficiency on share awards		—			(38	)		—			—			(38	)
Excess tax benefit on share awards		—			11			—			—			11
Share-based compensation		—			574			—			—			574
Additional tender offer cost		—			—			(50	)		—			(50	)

Balance at March 31, 2016		7,753		$	33,287		$	(70,459	)	$	140,021		$	102,849

See accompanying notes.

Nicholas Financial, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)


	Fiscal Year ended March 31,
	2016			2015			2014
Cash flows from operating activities:
Net income	$	12,379		$	16,856		$	16,703
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		458			366			318
(Gain) loss on sale of property and equipment		(24	)		6			(64	)
Provision for credit losses		26,278			20,371			14,979
Amortization of dealer discounts		(13,811	)		(13,852	)		(13,491	)
Deferred income taxes		(292	)		356			1,710
Share-based compensation		574			514			535
Change in fair value of interest rate swap agreements		24			364			(688	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		192			66			(129	)
Accounts payable and accrued expenses		(2,002	)		(1,085	)		1,519
Income taxes receivable		(480	)		981			(991	)
Deferred revenues		774			815			965

Net cash provided by operating activities		24,070			25,758			21,366

Cash flows from investing activities:
Purchase and origination of finance contracts		(173,027	)		(164,830	)		(156,997	)
Principal payments received including recoveries		137,627			138,752			135,992
Increase in assets held for resale		(401	)		(51	)		(493	)
Purchase of property and equipment		(913	)		(443	)		(465	)
Proceeds from sale of property and equipment		61			68			83

Net cash used in investing activities		(36,653	)		(26,504	)		(21,880	)

Cash flows from financing activities:
Net proceeds from line of credit		12,000			71,100			2,400
Payment of cash dividend		—			—			(2,851	)
(Decrease) increase in drafts payable		(977	)		137			242
Payment of debt origination costs		(25	)		(318	)		(25	)
Proceeds from exercise of share awards		85			389			329
Excess tax benefits of stock options		11			600			256
Purchase of common shares		(50	)		(70,409	)		—

Net cash provided by financing activities		11,044			1,499			351

Net (decrease) increase in cash		(1,539	)		753			(163	)
Cash, beginning of year		3,388			2,635			2,798

Cash, end of year	$	1,849		$	3,388		$	2,635

Supplemental disclosure of noncash investing and financing activities:
Tax deficiency from share awards	$	(38	)	$	—		$	—

See accompanying notes.

Nicholas Financial, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Organization and Basis of Presentation

Nicholas Financial, Inc. (“Nicholas Financial – Canada”) is a Canadian holding company incorporated under the laws of British Columbia with two wholly owned United States subsidiaries, Nicholas Data Services, Inc. (“NDS”) and Nicholas Financial, Inc. (“NFI”). NDS historically was engaged in supporting and updating industry-specific computer application software for small businesses located primarily in the Southeastern United States. NDS has ceased its operations; however it continues as the interim holding company for Nicholas Financial. NDS’s activities accounted for less than 1% of the Company’s consolidated revenues for each of the fiscal years ended March 31, 2015 and 2014. NFI is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of new and used automobiles and light trucks. To a lesser extent, NFI also offers direct consumer loans (“Direct Loans”) and sells consumer-finance related products. Both NDS and NFI are based in Florida, U.S.A. The accompanying consolidated financial statements are stated in U.S. dollars and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The Company has one reportable segment, which is the consumer finance company.

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of Nicholas Financial – Canada and its wholly owned subsidiaries, NDS and NFI, collectively referred to as (the “Company”). All intercompany transactions and balances have been eliminated.

Dividends

The following cash dividends were declared during fiscal year ended March 31, 2014. No dividends were declared during the fiscal years ended March 31, 2015 and 2016.


Fiscal Year	Date Declared	Record Date	Date Paid	Amount of Dividend
2014	May 7, 2013	June 21, 2013	June 28, 2013	$	0.12
	August 13, 2013	September 20, 2013	September 27, 2013		0.12

				$	0.24

Payment of cash dividends results in a 5% withholding tax payable by the Company under the Canada-United States Income Tax Convention which is included in earnings under the caption of administrative expenses.

Tender Offer

On March 19, 2015, the Company announced the final results of the modified “Dutch auction” tender offer for the purchase of approximately 4.7 million shares of the Company’s common shares by its principal operating subsidiary. The tender offer expired on March 13, 2015. Total payments for common shares, including costs were approximately $70.5 million. Such costs were recorded as an increase to treasury stock, reducing shareholders’ equity.

The aggregate number of common shares purchased in the tender offer by Nicholas represented approximately 38.0% of the Company’s outstanding common shares as of March 17, 2015. Following settlement of the tender offer, the Company had approximately 7.7 million common shares outstanding.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on finance receivables and the fair value of interest rate swap agreements.

2. Summary of Significant Accounting Policies (continued)

Finance Receivables

Finance receivables are recorded at cost, net of unearned interest, unearned dealer discounts and the allowance for credit losses. The amount of unearned interest, dealer discounts and allowance for credit losses as of March 31, 2016 and March 31, 2015 are approximately $186.3 and 169.1 million respectively (See Note 3).

Allowance for Credit Losses

The allowance for credit losses is increased by charges against earnings and decreased by charge-offs (net of recoveries). The Company aggregates Contracts into static pools consisting of Contracts purchased during a three-month period for each branch location as management considers these pools to have similar risk characteristics. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s past loan experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay, the estimated value of any underlying collateral, and current economic conditions. As conditions change, the Company’s level of provisioning and allowance may change as well.

Assets Held for Resale

Assets held for resale are stated at net realizable value and consist primarily of automobiles that have been repossessed by the Company and are awaiting final disposition. Most costs associated with repossession, transport and auction preparation expenses are reported under operating expenses in the period in which they are incurred.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets as follows:


Automobiles		3 years
Equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of lease term or useful life (generally 6 - 7 years)

Drafts Payable

Drafts payable represent checks disbursed for loan purchases which have not yet been funded. Amounts generally clear within two business days of period end and then increase the line of credit or reduce cash.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases along with operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using 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 deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.

2. Summary of Significant Accounting Policies (continued)

The Company recognizes tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from any such position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. It is the Company’s policy to recognize interest and penalties accrued on any uncertain tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor has the Company recognized any related interest or penalties during the three years ended March 31, 2016.

The Company files income tax returns in the U.S. Federal jurisdiction and various State jurisdictions. The Company is no longer subject to U.S. Federal and State tax examinations for years before 2013. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

Revenue Recognition

Interest income on finance receivables is recognized using the interest method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 60 days or more or the collateral is repossessed, whichever is earlier, or when the account is in Chapter 13 bankruptcy. Chapter 13 bankruptcy accounts are accounted for under the cost-recovery method. Interest income on Chapter 13 bankruptcy accounts does not resume until all principal amounts are recovered (see Note 3).

A dealer discount represents the difference between the finance receivable, net of unearned interest, of a Contract, and the amount of money the Company actually pays for the Contract. The discount negotiated by the Company is a function of the lender, the wholesale value of the vehicle, and competition in any given market. In making decisions regarding the purchase of a particular Contract the Company considers the following factors related to the borrower: place and length of residence; current and prior job status; history in making installment payments for automobiles; current income; and credit history. In addition, the Company examines its prior experience with Contracts purchased from the dealer from which the Company is purchasing the Contract, and the value of the automobile in relation to the purchase price and the term of the Contract. The dealer discount is amortized as an adjustment to yield using the interest method over the life of the loan. The average dealer discount, as a percent of the amount financed, associated with new volume for the fiscal years ended March 31, 2016, 2015, and 2014 was 7.51%, 8.08% and 8.44%, respectively.

The amount of future unearned income is computed as the product of the Contract rate, the Contract term and the Contract amount.

Deferred revenues consist primarily of commissions received from the sale of ancillary products. These products include automobile warranties, roadside assistance programs, accident and health insurance, credit life insurance and forced placed automobile insurance. These commissions are amortized over the life of the contract using the interest method.

The Company’s net costs for originating Direct Loans are deferred and recognized as an adjustment to the yield and are amortized over the life of the loan using the interest method.

2. Summary of Significant Accounting Policies (continued)

Earnings Per Share

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. As such, earnings per share is calculated using the two-class method. Basic earnings per share is calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period, which excludes the participating securities. Diluted earnings per share includes the dilutive effect of additional potential common shares from stock compensation awards. Earnings per share have been computed based on the following weighted average number of common shares outstanding:


	Fiscal Year ended March 31, (In thousands, except earnings per share numbers)
	2016			2015		2014
Numerator:
Net income per consolidated statements of income	$	12,379		$	16,856	$	16,703
Less: Allocation of earnings to participating securities		(170	)		—		—

Net income allocated to common stock		12,209		$	16,856	$	16,703

Basic earnings per share computation:
Net income allocated to common stock	$	12,209		$	16,856	$	16,703

Weighted average common shares outstanding, including shares considered participating securities		7,727			12,013		12,096
Less: Weighted average participating securities outstanding		(105	)		—		—

Weighted average shares of common stock		7,622			12,013		12,096

Basic earnings per share	$	1.60			1.40		1.38

Diluted earnings per share computation:
Net income allocated to common stock	$	12,209		$	16,856	$	16,703
Undistributed earnings re-allocated to participating securities		2			—		—

Net income allocated to common stock	$	12,211		$	16,856	$	16,703

Weighted average common shares outstanding for basic earnings per share		7,622			12,013		12,096
Incremental shares from stock options		70			179		229

Weighted average shares and dilutive potential common shares		7,692			12,192		12,325

Diluted earnings per share	$	1.59		$	1.38	$	1.36

Diluted earnings per share do not include the effect of certain stock options as their impact would be anti-dilutive. Approximately 161,000, 155,000, and 10,000 stock options were not included in the computation of diluted earnings per share for the years ended March 31, 2016, 2015 and 2014 respectively, because their effect would have been anti-dilutive.

Share-Based Payments

The grant date fair value of share awards is recognized in earnings over the requisite service period (presumptively the vesting period). The Company estimates the fair value of option awards using the Black-Scholes option pricing model. The risk-free interest rate is based upon a U.S. Treasury instrument with a life that is similar to the expected term of the options. Expected volatility is based upon the historical volatility for the previous period equal to the expected term of the options. The expected term is based upon the average life of previously issued options. The expected dividend yield is based upon the yield expected on date of grant to occur over the term of the option. The fair value of non-vested restricted and performance shares are measured at the market price of a share on a grant date.

2. Summary of Significant Accounting Policies (continued)

The pool of excess tax benefits available to absorb future tax deficiencies is based on increases to shareholders’ equity related to tax benefits from share-based compensation, combined with the tax on the cumulative incremental compensation costs previously included in pro forma net income disclosures as if the Company had applied the fair-value method to all awards.

Fair Value Measurements

The Company measures specific assets and liabilities at fair value, which is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When applicable, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability under a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions (see Note 7).

Financial Instruments and Concentrations

The Company’s financial instruments consist of cash, finance receivables (accrued interest is a part of finance receivables), the line of credit, and interest rate swap agreements. Financial instruments that are exposed to concentrations of credit risk are primarily finance receivables and cash.

As of March 31, 2016, the Company operated in eighteen states through sixty-seven branch locations. Florida represented 29% of the finance receivables total as of March 31, 2016. Ohio represented 14%, Georgia represented 10% and North Carolina represented 8% of the finance receivables total as of March 31, 2016. Of the remaining fourteen states, no one state represented more than 5% of the total finance receivables. The Company provides credit during the normal course of business and performs ongoing credit evaluations of its customers.

The Company maintains reserves for potential credit losses which, when realized, have been within the range of management’s expectations. The Company perfects a primary security interest in all vehicles financed as a form of collateral.

The combined account balances the Company maintains at financial institutions typically exceed federally insured limits, and there is a concentration of credit risk related to accounts on deposit in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes this risk of loss is not significant.

Interest Rate Swap Agreements

Interest rate swap agreements are reported as either assets or liabilities in the consolidated balance sheet at fair value. Interest rate swap agreements are not designated as cash-flow hedges, and accordingly, the changes in the fair value are recorded in earnings. The Company does not use interest rate swap agreements for speculative purposes (see Note 6).

Statements of Cash Flows

Cash paid for income taxes for the years ended March 31, 2016, 2015 and 2014 was approximately $8.5 million, $7.3 million and $10.8 million respectively. Cash paid for interest, including debt origination costs for the years ended March 31, 2016, 2015 and 2014 was approximately $8.8 million, $6.1 million and $5.7 million respectively.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update (“ASU”) 2016-09, “ Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases”, intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment.

2. Summary of Significant Accounting Policies (continued)

“The ASU will require organizations that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The accounting by organizations that own the assets leased by the lessee—also known as lessor accounting— will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company is currently evaluating the impact of the pending adoption of this ASU on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Recognition and Measurement of Financial Assets and Liabilities,” which is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU permits early adoption of the instrument-specific credit risk provision. The Company is currently evaluating the impact of the pending adoption of this ASU on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, since 2015-03 did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. The SEC staff indicated they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted. The Company does not believe the adoption of this ASU will have a significant impact on the consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU, and all subsequently issued clarifying ASUs, will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The ASU would permit public entities to adopt the ASU early, but not before the original effective date (i.e., annual periods beginning after December 15, 2016). The Company has not yet selected a transition method and is currently evaluating the impact of the pending adoption of this ASU on the Company’s consolidated financial statements.

The Company does not believe there are any other recently issued accounting standards that have not yet been adopted that will have a material impact on the Company’s consolidated financial statements.

3. Finance Receivables

Finance receivables consist of Contracts and Direct Loans, each of which comprise a portfolio segment. Each portfolio segment consists of smaller balance homogeneous loans which are collectively evaluated for impairment.

The Company purchases individual Contracts from new and used automobile dealers in its markets. There is no relationship between the Company and the dealer with respect to a given Contract once the assignment of that Contract is complete. The dealer has no vested interest in the performance of any Contract the Company purchases. The Company charges-off receivables when an individual account has become more than 120 days contractually delinquent. In the event of repossession, the charge-off will occur in the month in which the vehicle was repossessed.

3. Finance Receivables (continued)

Contracts included in finance receivables are detailed as follows as of fiscal years ended March 31:


	(In thousands)
	2016			2015			2014
Indirect finance receivables, gross contract	$	487,118		$	447,043		$	413,612
Unearned interest		(152,911	)		(136,896	)		(121,996	)

Indirect finance receivables, net of unearned interest		334,207			310,147			291,616
Unearned dealer discounts		(18,023	)		(17,780	)		(17,214	)

Indirect finance receivables, net of unearned interest and unearned dealer discounts		316,184			292,367			274,402
Allowance for credit losses		(12,265	)		(11,325	)		(12,889	)

Indirect finance receivables, net	$	303,919		$	281,042		$	261,513

The terms of the Contracts range from 12 to 72 months and bear a weighted average contractual interest rate of 22.67% and 22.86% as of March 31, 2016 and 2015, respectively.

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Contracts for the fiscal years ended March 31:


	(In thousands)
	2016			2015			2014
Balance at beginning of year	$	11,325		$	12,889		$	16,091
Provision for credit losses		25,926			20,008			14,694
Losses absorbed		(27,963	)		(25,042	)		(21,691	)
Recoveries		2,977			3,470			3,795

Balance at end of year	$	12,265		$	11,325		$	12,889

The Company purchases Contracts from automobile dealers at a negotiated price that is less than the original principal amount being financed by the purchaser of the automobile. The Contracts are predominately for used vehicles. As of March 31, 2016, the average model year of vehicles collateralizing the portfolio was a 2007 vehicle. The Company utilizes a static pool approach to track portfolio performance. If the allowance for credit losses is determined to be inadequate for a static pool, then an additional charge to income through the provision is used to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio, the composition of the portfolio, and current economic conditions. Such evaluation, considers among other matters, the estimated net realizable value of the underlying collateral, economic conditions, historical loan loss experience, management’s estimate of probable credit losses and other factors that warrant recognition in providing for an adequate allowance for credit losses.

Direct Loans are also included in finance receivables and are detailed as follows as of fiscal years ended March 31:


	(In thousands)
	2016			2015			2014
Direct finance receivables, gross contract	$	11,012		$	10,932		$	10,731
Unearned interest		(2,346	)		(2,367	)		(2,311	)

Direct finance receivables, net of unearned interest		8,666			8,565			8,420
Allowance for credit losses		(748	)		(703	)		(590	)

Direct finance receivables, net	$	7,918		$	7,862		$	7,830

The terms of the Direct Loans range from 12 to 60 months and bear a weighted average contractual interest rate of 25.72% and 26.14% as of March 31, 2016 and 2015, respectively.

3. Finance Receivables (continued)

The following table sets forth a reconciliation of the changes in the allowance for credit losses on Direct Loans for the fiscal years ended March 31:


	(In thousands)
	2016			2015			2014
Balance at beginning of year	$	703		$	590		$	468
Provision for credit losses		352			362			285
Losses absorbed		(328	)		(277	)		(192	)
Recoveries		21			28			29

Balance at end of year	$	748		$	703		$	590

Direct Loans are loans originated directly between the Company and the consumer. These loans are typically for amounts ranging from $1,000 to $9,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The majority of Direct Loans are originated with current or former customers under the Company’s automobile financing program. The typical Direct Loan represents a significantly better credit risk than Contracts due to the customer’s historical payment history with the Company; however, the underlying collateral is less valuable. In deciding whether or not to make a loan, the Company considers the individual’s credit history, job stability, income and impressions created during a personal interview with a Company loan officer. Additionally, because most of the Direct Loans made by the Company to date have been made to borrowers under Contracts previously purchased by the Company, the payment history of the borrower under the Contract is a significant factor in making the loan decision. As of March 31, 2016, loans made by the Company pursuant to its Direct Loan program constituted approximately 2% of the aggregate principal amount of the Company’s loan portfolio. Changes in the allowance for credit losses for both Contracts and Direct Loans were driven by current economic conditions and credit loss trends over several reporting periods which are utilized in estimating future losses and overall portfolio performance.

A performing account is defined as an account that is less than 61 days past due. A non-performing account is defined as an account that is contractually delinquent for 61 days or more or is a Chapter 13 bankruptcy account, and the accrual of interest income is suspended. When an account is 120 days contractually delinquent, the account is written off. Upon notification of a bankruptcy, an account is monitored for collection with other Chapter 13 bankruptcy accounts. In the event the debtors balance has been reduced by the bankruptcy court, the Company will record a loss equal to the amount of principal balance reduction. The remaining balance will be reduced as payments are received by the bankruptcy court. In the event an account is dismissed from bankruptcy, the Company will decide, based on several factors, to begin repossession proceedings or to allow the customer to begin making regularly scheduled payments.

The following table is an assessment of the credit quality by creditworthiness as of March 31:


	(In thousands)
	2016				2015
	Contracts		Direct Loans		Contracts		Direct Loans
Performing accounts	$	473,429	$	10,899	$	438,318	$	10,855
Non-performing accounts		9,435		79		4,765		57

Total	$	482,864	$	10,978	$	443,083	$	10,912
Chapter 13 bankruptcy accounts, net of unearned interest		4,254		34		3,960		20

Finance receivables, gross contract	$	487,118	$	11,012	$	447,043	$	10,932

3. Finance Receivables (continued)

The following tables present certain information regarding the delinquency rates experienced by the Company with respect to Contracts and Direct Loans, excluding any Chapter 13 bankruptcy accounts:


	(In thousands)
Contracts	Gross Balance Outstanding		31 – 60 days			61 – 90 days			Over 90 days			Total
March 31, 2016	$	482,864	$	17,466		$	6,069		$	3,366		$	26,901
				3.61	%		1.26	%		0.70	%		5.57	%
March 31, 2015	$	443,083	$	13,694		$	3,435		$	1,330		$	18,459
				3.09	%		0.78	%		0.30	%		4.17	%
March 31, 2014	$	410,532	$	11,713		$	2,944		$	1,897		$	16,554
				2.85	%		0.72	%		0.46	%		4.03	%

Direct Loans	Gross Balance Outstanding		31 – 60 days			61 – 90 days			Over 90 days			Total
March 31, 2016	$	10,978	$	161		$	41		$	38		$	240
				1.47	%		0.37	%		0.35	%		2.19	%
March 31, 2015	$	10,912	$	122		$	42		$	15		$	179
				1.12	%		0.38	%		0.14	%		1.64	%
March 31, 2014	$	10,705	$	143		$	25		$	23		$	191
				1.34	%		0.23	%		0.21	%		1.78	%

4. Property and Equipment

Property and equipment as of March 31, 2016 and 2015 is summarized as follows:


	(In thousands)
	Cost		Accumulated Depreciation		Net Book Value
2016
Automobiles	$	623	$	413	$	210
Equipment		1,473		664		809
Furniture and fixtures		512		408		104
Leasehold improvements		1,144		977		167

	$	3,752	$	2,462	$	1,290

2015
Automobiles	$	613	$	365	$	248
Equipment		906		516		390
Furniture and fixtures		486		391		95
Leasehold improvements		1,103		964		139

	$	3,108	$	2,236	$	872

5. Line of Credit

On January 31, 2015 the Company executed an amendment with its consortium of lenders. Included in the amendment was an increase in the size of the credit facility (the “Line”) from $150.0 million to $225.0 million once the tender offer (see Note 1) became effective which was executed on March 13, 2015. The pricing of the Line, which did not change, expires on January 30, 2018, is 300 basis points above 1-month LIBOR with a 1% floor on LIBOR (4.00% at March 31, 2016 and March 31, 2015) plus an unused line fee of 0.50%. Pledged as collateral for the Line are all of the assets of the Company. The outstanding amount of the Line was $211.0 million and $199.0 million as of March 31, 2016 and March 31, 2015, respectively. The amount available under the Line was $14.0 million and $26.0 million as of March 31, 2016 and March 31, 2015, respectively.

5. Line of Credit (continued)

The Line requires compliance with certain financial ratios and covenants and satisfaction of specified financial tests, including maintenance of asset quality and performance tests. Dividends do not require consent in writing by the agent and majority lenders under the new Line as long as the Company is in compliance with a net income covenant. As of March 31, 2016, the Company was in compliance with all debt covenants.

6. Interest Rate Swap Agreements

The Company utilizes interest rate swap agreements to manage exposure to variability in expected cash flows attributable to interest rate risk. The interest rate swap agreements convert a portion of the Company’s floating rate debt to a fixed rate, more closely matching the interest rate characteristics of the Company’s finance receivables. As of the twelve months ended March 31, 2016 and 2015, no new contracts were initiated and no contracts matured.

The Company currently has two interest rate swap agreements. A June 4, 2012 interest rate swap agreement provides for a five-year term in which the Company pays a fixed rate of 1% and receives payments from the counterparty on the 1-month LIBOR rate. This interest rate swap agreement has an effective date of June 13, 2012 and a notional amount of $25.0 million. A July 30, 2012 agreement provides for a five-year term in which the Company pays a fixed rate of 0.87% and receives payments from the counterparty on the 1-month LIBOR rate. This interest rate swap agreement has an effective date of August 13, 2012 and a notional amount of $25.0 million.

The locations and amounts of losses recognized in income are detailed as follows for the fiscal years ended March 31:


	(In thousands)
	2016			2015
Periodic change in fair value of interest rate swap agreements	$	(24	)	$	(364	)
Periodic settlement differentials included in interest expense		(343	)		(393	)

Loss recognized in income	$	(367	)	$	(757	)

Net realized losses from the interest rate swap agreements were recorded in the interest expense line item of the consolidated statements of income.

The following table summarizes the average variable rates received and average fixed rates paid under the interest rate swap agreements as of March 31:


	2016			2015
Average variable rate received		0.26	%		0.16	%
Average fixed rate paid		0.94	%		0.94	%

7. Fair Value Disclosures

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The Company estimates the fair value of interest rate swap agreements based on the estimated net present value of the future cash flows using a forward interest rate yield curve in effect as of the measurement period, adjusted for nonperformance risk, if any, including a quantitative and qualitative evaluation of both the Company’s credit risk and the counterparty’s credit risk. Accordingly, the Company classifies interest rate swap agreements as Level 2.


	Fair Value Measurement Using (In thousands)
Description	Level 1		Level 2			Level 3		Fair Value
Interest rate swap agreements:
March 31, 2016 – liability:	$	—	$	(205	)	$	—	$	(205	)
March 31, 2015 – liability:	$	—	$	(181	)	$	—	$	(181	)

7. Fair Value Disclosures (continued)

Financial Instruments Not Measured at Fair Value

The Company’s financial instruments consist of cash, finance receivables and the Line. For each of these financial instruments the carrying value approximates fair value.

Finance receivables, net approximates fair value based on the price paid to acquire Contracts. The price paid reflects competitive market interest rates and purchase discounts for the Company’s chosen credit grade in the economic environment. This market is highly liquid as the Company acquires individual loans on a daily basis from dealers. The initial terms of the Contracts range from 12 to 72 months. The initial terms of the Direct Loans range from 12 to 60 months. In addition, there have been minimal decreases in interest rates and purchase discounts related to these types of loans due to the competitive nature of the current market. If liquidated outside of the normal course of business, the amount received may not be the carrying value.

Based on current market conditions, any new or renewed credit facility would contain pricing that approximates the Company’s current Line. Based on these market conditions, the fair value of the Line as of March 31, 2016 was estimated to be equal to the book value. The interest rate for the Line is a variable rate based on LIBOR pricing options.


	Fair Value Measurement Using (In thousands)
Description	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Cash:
March 31, 2016	$	1,849	$	—	$	—	$	1,849	$	1,849
March 31, 2015	$	3,388	$	—	$	—	$	3,388	$	3,388
Finance receivables:
March 31, 2016	$	—	$	—	$	311,837	$	311,837	$	311,837
March 31, 2015	$	—	$	—	$	288,904	$	288,904	$	288,904
Line of credit:
March 31, 2016	$	—	$	211,000	$	—	$	211,000	$	211,000
March 31, 2015	$	—	$	199,000	$	—	$	199,000	$	199,000

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis. The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis as of March 31, 2016 and 2015.

8. Income Taxes

The provision for income taxes consists of the following for the years ended March 31:


	(In thousands)
	2016			2015		2014
Current:
Federal	$	6,931		$	7,688	$	8,709
State		1,049			1,196		1,395

Total current		7,980			8,884		10,104

Deferred:
Federal		(221	)		308		1,474
State		(33	)		48		236

Total deferred		(254	)		356		1,710

Income tax expense	$	7,726		$	9,240	$	11,814

8. Income Taxes (continued)

The net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes are reflected in deferred income taxes. Significant components of the Company’s deferred tax assets consist of the following as of March 31:


	(In thousands)
	2016		2015
Allowance for credit losses not currently deductible for tax purposes	$	5,918	$	5,552
Share-based compensation		491		514
Interest rate swap agreements		78		69
Other items		128		226

Deferred income taxes	$	6,615	$	6,361

The provision for income taxes reflects an effective U.S tax rate, which differs from the corporate tax rate for the following reasons:


	(In thousands)
	2016		2015			2014
Provision for income taxes at Federal statutory rate	$	7,037	$	9,134		$	9,981
Increase (decrease) resulting from:
State income taxes, net of Federal benefit		660		809			1,059
Transaction costs		—		(734	)		734
Other		29		31			40

Income tax expense	$	7,726	$	9,240		$	11,814

The Company’s effective tax rate increased to 38.43% in fiscal 2016 from 35.41% in fiscal 2015 and 41.73% in fiscal 2014. The Company had approximately $2.1 million of previously non-deductible expenses associated with the potential sale of the Company in 2014. Since the sale of the Company was not consummated, the $2.1 million became deductible in 2015 creating a favorable effective tax rate.

9. Share-Based Payments

The Company has share awards outstanding under two share-based compensation plans (the “Equity Plans”). The Company believes that such awards better align the interests of its employees with those of its shareholders. Under the shareholder-approved 2006 Equity Incentive Plan (the “2006 Plan”) the Board of Directors was authorized to grant option awards for up to approximately 1.1 million common shares. On August 13, 2015, the Company’s shareholders approved the Nicholas Financial, Inc. Omnibus Incentive Plan (the “2015 Plan”) for employees and non-employee directors. Under the 2015 Plan, the Board of Directors is authorized to grant total share awards for up to 750,000 common shares. Awards under the 2006 Plan will continue to be governed by the terms of that plan. The 2015 Plan replaced the 2006 Plan; accordingly no additional option awards may be granted under the 2006 Plan. In addition to option awards, the 2015 Plan provides for restricted stock, performance share awards, and other equity based compensation.

Option awards previously granted to employees and directors under the 2006 Plan generally vest ratably based on service over a five- and three-year period, respectively, and generally have a contractual term of ten years. Vesting and contractual terms for option awards under the 2015 Plan are essentially the same as those of the 2006 Plan. Restricted stock awards generally cliff vest over a three-year period based on service conditions. The annual vesting of performance share awards is contingent upon the attainment of company-wide performance goals including annual revenue growth and operating income targets. There are no post-vesting restrictions for share awards.

The Company funds share awards from authorized but unissued shares and does not purchase shares to fulfill the obligations of the plans. Cash dividends, if any, are not paid on unvested performance shares or unexercised options, but are paid on unvested restricted stock awards.

9. Share-Based Payments (continued)

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	2016			2015
Risk-free interest rate		1.58	%		1.68	%
Weighted average expected original term		5 years			5 years
Expected volatility		23	%		23	%
Expected dividend yield		0.00	%		3.65	%

The Company did not grant any options during the year ended March 31, 2014.

A summary of option activity under the Equity Plans as of March 31, 2016, and changes during the year are presented below.


	(Shares in thousands)
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at March 31, 2015		363		$	9.86
Granted		10		$	12.95
Exercised		(13	)	$	6.45
Forfeited		(3	)	$	10.07

Outstanding at March 31, 2016		357		$	10.07		5.75	$	725

Exercisable at March 31, 2016		198		$	7.75		4.04	$	725

The Company granted approximately 10,000 options with a weighted average fair value of $3.01 during the year ended March 31, 2016. The total intrinsic value of options exercised during the years ended March 31, 2016, 2015 and 2014 was approximately $82,000, $1,829,000, and $699,000 respectively.

During the fiscal year ended March 31, 2016, approximately 13,000 options were exercised at exercise prices ranging from $1.20 to $10.96 per share. During the same period approximately 3,000 options were forfeited at exercise prices ranging from $3.60 to $10.96 per share.

Cash received from options exercised during the fiscal years ended March 31, 2016, 2015 and 2014 totaled approximately $85,000, $389,000, and $329,000, respectively. Related income tax benefits during the same periods totaled approximately $31,000, $700,000, and $267,000, respectively. Such amounts are included in proceeds from exercise of stock options and excess tax benefit on share awards under cash flows from financing activities in the consolidated statements of cash flows. As of March 31, 2016, there was approximately $246,000 of total unrecognized compensation cost related to options granted. That cost is expected to be recognized over a weighted-average period of approximately 2.6 years.

A summary of the status of the Company’s non-vested restricted shares under the Equity Plan as of March 31, 2016, and changes during the year then ended is presented below.


	(Shares in thousands)
Restricted Share Awards	Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Non-vested at March 31, 2015		89		$	13.56
Granted		38		$	13.27
Vested		(45	)	$	12.93
Forfeited		—		$	—

Non-vested at March 31, 2016		82		$	13.78		1.75	$	879

9. Share-Based Payments (continued)

The Company awarded approximately 38,000 restricted shares during the fiscal year ended March 31, 2016. During the same period no restricted shares were forfeited.

As of March 31, 2016, there was approximately $643,000 of total unrecognized compensation cost related to non-vested restricted share awards granted under the Equity Plans. That cost is expected to be recognized over a weighted-average period of approximately 1.75 years.

The Company did not award any performance shares during the fiscal year ended March 31, 2016 or March 31, 2015. As of March 31, 2016, under the Equity Plans, there were no non-vested performance shares and no unrecognized compensation related to performance shares.

10. Employee Benefit Plan

The Company has a 401(k) retirement plan under which all employees are eligible to participate. Employee contributions are voluntary and subject to Internal Revenue Service limitations. The Company did not make a discretionary matching employee contribution. The Board will re-evaluate the Company’s matching policy for plan year 2017 later this year. For the fiscal years ended March 31, 2016, 2015 and 2014, the Company recorded expenses of approximately $7,000, each year related to this plan.

11. Commitments and Contingencies

The Company leases corporate and branch offices under operating lease agreements which provide for annual minimum rental payments as follows:


Fiscal Year Ending March 31	(In thousands)
2017	$	2,101
2018		1,610
2019		1,164
2020		581
2021		79

	$	5,535

Rent expense for the fiscal years ended March 31, 2016, 2015, and 2014 was approximately $2.3, $2.1, and $2.0 million respectively. The Company recognizes rent expense on a straight-line basis over the term of the lease, taking into account, when applicable, lessor incentives for tenant improvements, periods where no rent payment is required and escalations in rent payments over the term of the lease.

12. Quarterly Results of Operations (Unaudited)

Fiscal Year ended March 31, 2016
(In thousands, except earnings per share amounts)

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total revenue

22,025

22,687

22,757

23,238

Interest expense

2,166

2,273

2,311

2,257

Provision for credit losses

4,989

6,177

7,599

7,513

Non-interest expense

8,915

8,940

8,422

9,040

Operating income before income taxes

5,955

5,297

4,425

4,428

Income tax expense

2,285

2,041

1,698

1,702

Net income

3,670

3,256

2,727

2,726

Earnings per share:

Basic

0.48

0.43

0.36

0.35

Diluted

0.47

0.42

0.35


	Fiscal Year ended March 31, 2015 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total revenue	$	21,333	$	21,723	$	21,801	$	21,933
Interest expense		1,449		1,485		1,458		1,578
Provision for credit losses		4,232		5,154		5,797		5,188
Non-interest expense		8,921		8,089		8,408		8,935

Operating income before income taxes		6,731		6,995		6,138		6,232
Income tax expense		1,822		2,665		2,369		2,384

Net income	$	4,909	$	4,330	$	3,769	$	3,848

Earnings per share:
Basic	$	0.40	$	0.36	$	0.31	$	0.34

Diluted	$	0.40	$	0.35	$	0.30	$	0.33

Item 9.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure information required to be disclosed in its reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

The Company’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2016. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2016.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements in accordance with generally accepted accounting principles. The Company’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2016, the end of the fiscal year covered by this Report, based on the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation under the framework in Internal Control-Integrated Framework , management has concluded that the Company’s internal control over financial reporting was effective as of March 31, 2016.

Dixon Hughes Goodman LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of March 31, 2016, as stated in their report, which is included below.

June 14, 2016


Ralph T. Finkenbrink		Katie L. MacGillivary
President and Chief Executive Officer		Vice President-Finance and Chief Financial Officer

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Nicholas Financial, Inc.

We have audited Nicholas Financial, Inc. and Subsidiaries (the “Company”) internal control over financial reporting as of March 31, 2016, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“ the COSO criteria”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Nicholas Financial, Inc. as of and for the year ended March 31, 2016, and our report dated June 14, 2016, expressed an unqualified opinion.

/s/ Dixon Hughes Goodman LLP

Atlanta, Georgia

June 14, 2016

Item 9B.

Other Information

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The information to be set forth under the captions “Proposal 1: Election of Directors,” “Board of Directors,” “Executive Officers and Compensation” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the definitive Proxy Statement and Information Circular for the 2016 Annual General Meeting of Shareholders of the Company, which will be filed with the SEC on or about July 20, 2016 (the “Proxy Statement”), is incorporated herein by reference.

The Company has adopted a written code of ethics applicable to its chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions. The text of this code of ethics is filed as Exhibit 14 to this Report. A copy of the code of ethics is also posted on the Company’s web site at www.nicholasfinancial.com . The Company intends to satisfy the disclosure requirements under Item 5.05 of the SEC’s Current Report on Form 8-K regarding amendments to, or waivers from, the code of ethics by posting such information on the Company’s web site at www.nicholasfinancial.com . The Company is not including the information contained on or available through its web site as a part of, or incorporating such information by reference into, this Report.

Item 11.

Executive Compensation, Compensation Interlocks and Insider Participation

The information to be set forth under the captions “Executive Officers and Compensation” and “Board of Directors” in the Proxy Statement is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information to be set forth under the caption “Voting Shares and Ownership of Management and Principal Holders” in the Proxy Statement is incorporated herein by reference. See also “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Securities Authorized for Issuance Under Equity Compensation Plans” on page 16 and 17 of this Report for certain information relating to the Company’s equity compensation plans.

Item 13.

Certain Relationships and Related Transactions, Director Independence and Board of Directors

The information to be set forth under the captions “Board of Directors” and “Certain Relationships and Related Transactions” in the Proxy Statement is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

The information to be set forth under the caption “Proposal 2: Ratification of Appointment of Independent Auditors” in the Proxy Statement is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

(a)

The following documents are filed as part of this Report:

(1)

Financial Statements

See Part II, Item 8, of this Report.

(2)

Financial Statement Schedules

All financial schedules are omitted as the required information is not applicable or the information is presented in the consolidated financial statements or related notes.

(3)

Exhibits


Exhibit No.		Description

3.1		Articles of Nicholas Financial, Inc. (1)

3.2		Notice of Articles of Nicholas Financial, Inc. (2)

4		Form of Common Stock Certificate (3)

10.1		Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (4)

10.2		Amendment No. 1, dated as of September 1, 2011, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (5)

10.3		Amendment No. 2, dated as of December 21, 2012, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (6)

10.4		Amendment No. 3, dated as of November 14, 2014, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (7)

10.5		Amendment No. 4, dated as of January 30, 2015, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto (8)

10.6		Nicholas Financial, Inc. Employee Stock Option Plan (9)*

10.7		Nicholas Financial, Inc. Non-Employee Director Stock Option Plan (10)*

10.8		Employment Agreement (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Ralph T. Finkenbrink, President and Chief Executive Officer *

10.9		Employment Agreement (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Kevin D. Bates, Senior Vice President-Branch Operations *

10.10		Employment Agreement dated July 2, 2015, between Nicholas Financial, Inc. and Katie L. MacGillivary, Chief Financial Officer and Vice President of Finance *

10.11		Summary of Fiscal 2015/2016/2017 Annual Incentive Programs*

10.12		Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (11)*

10.13		Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Stock Option Award*

10.14		Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Restricted Stock Award*

10.15		Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Performance Share Award*

10.16		ISDA Master Agreement, dated as of March 30, 1999, between Bank of America, N.A. and Nicholas Financial, Inc. (12)

10.17		Letter Agreement, dated June 4, 2012, and effective June 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction (13)



10.18		Letter Agreement, dated June 30, 2012, and effective August 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction (14)

10.19		Form of Dealer Agreement and Schedule thereto listing dealers that are parties to such agreements

14		Code of Ethics for Chief Executive Officer and Senior Financial Officers

21		Subsidiaries of Nicholas Financial, Inc. (15)

23		Consent of Dixon Hughes Goodman LLP

24		Powers of Attorney (included on signature page hereto)

31.1		Certification of President and Chief Executive Officer

31.2		Certification of Vice President and Chief Financial Officer

32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. § 1350

32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. § 1350

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.

(1)	Incorporated by reference to Appendix B to the Company’s Proxy Statement and Information Circular for the 2006 Annual General Meeting of Shareholders filed with the SEC on June 30, 2006 (File No. 0-26680).

(2)	Incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on May 24, 2007 (SEC File No. 0-26680).

(3)	Incorporated by reference to Exhibit 4 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004, as filed with the SEC on June 29, 2004.

(4)	Incorporated by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Quarterly Report on Form 10-Q/A for the fiscal quarter ended December 31, 2009, as filed with the SEC on March 23, 2010.

(5)	Incorporated by reference to Exhibit 10.1.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2011, as filed with the SEC on November 9, 2011.

(6)	Incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the SEC on June 14, 2013.

(7)	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated November 14, 2014, as filed with the SEC on November 18, 2014.

(8)	Incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on From 10-Q for the fiscal quarter ended December 31, 2014, as filed with the SEC on February 9, 2015.

(9)	Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8 filed with the SEC on June 30, 1999 (SEC File No. 333-81967).

(10)	Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-8 filed with the SEC on June 30, 1999 (SEC File No. 333-81961).

(11)	Incorporated by reference to Appendix A to the Company’s Proxy Statement and Information Circular for the 2015 Annual General Meeting of Shareholders, as filed with the SEC on July 6, 2015.

(12)	Incorporated by reference to Exhibit 10.10 to Amendment No. 2 to the Company’s Registration Statement on Form S-2 (Reg. No. 333-113215), as filed with the SEC on April 7, 2004

(13)	Incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the SEC on June 14, 2013.

(14)	Incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the SEC on June 14, 2013.

(15)	Incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004, as filed with the SEC on June 29, 2004.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Ralph T. Finkenbrink and Katie L. MacGillivary, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and any other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Ralph T. Finkenbrink Ralph T. Finkenbrink	Chief Executive Officer, President and Director	June 14, 2016

/s/ Katie L. MacGillivary Katie L. MacGillivary	Chief Financial Officer, Vice President – Finance	June 14, 2016

/s/ Kevin D. Bates Kevin D. Bates	Sr. Vice President-Branch Operations and Director	June 14, 2016

/s/ Stephen Bragin Stephen Bragin	Director	June 14, 2016

/s/ Robin Hastings Robin Hastings	Director	June 14, 2016

/s/ Scott Fink Scott Fink	Director	June 14, 2016

EXHIBIT INDEX


Exhibit No.		Description

3.1		Articles of Nicholas Financial, Inc.*

3.2		Notice of Articles of Nicholas Financial, Inc.*

4		Form of Common Stock Certificate*

10.1		Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto*

10.2		Amendment No. 1, dated as of September 1, 2011, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto*

10.3		Amendment No. 2, dated as of December 21, 2012, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto*

10.4		Amendment No. 3, dated as of November 14, 2014, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto*

10.5		Amendment No. 4, dated as of January 30, 2015, to Second Amended and Restated Loan and Security Agreement, dated as of January 12, 2010, by and among Nicholas Financial, Inc., a Florida corporation, Bank of America, N.A., as agent, and each of the Lenders parties thereto*

10.6		Nicholas Financial, Inc. Employee Stock Option Plan*

10.7		Nicholas Financial, Inc. Non-Employee Director Stock Option Plan*

10.8		Employment Agreement (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Ralph T. Finkenbrink, President and Chief Executive Officer

10.9		Employment Agreement, (as Amended and Restated), dated July 2, 2015, between Nicholas Financial, Inc. and Kevin D. Bates, Senior Vice President-Branch Operations

10.10		Employment Agreement, dated July 2, 2015, between Nicholas Financial, Inc. and Katie L. MacGillivary, Chief Financial Officer and Vice President of Finance

10.11		Summary of Fiscal 2015/2016/2017 Annual Incentive Bonus Programs

10.12		Nicholas Financial, Inc. 2015 Omnibus Incentive Plan*

10.13		Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Stock Option Award

10.14		Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Restricted Stock Award

10.15		Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Performance Share Award

10.16		ISDA Master Agreement, dated as of March 30, 1999, between Bank of America, N.A. and Nicholas Financial, Inc.*

10.17		Letter Agreement, dated June 4, 2012, and effective June 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction*

10.18		Letter Agreement, dated July 30, 2012, and effective August 13, 2012, by and between Nicholas Financial, Inc. and Bank of America, N.A. relating to interest-rate swap transaction*

10.19		Form of Dealer Agreement and Schedule thereto listing dealers that are parties to such agreements

14		Code of Ethics for Chief Executive Officer and Senior Financial Officers

21		Subsidiaries of Nicholas Financial, Inc.*

23		Consent of Dixon Hughes Goodman LLP

24		Powers of Attorney (included on signature page hereto)

31.1		Certification of President and Chief Executive Officer

31.2		Certification of Senior Vice President and Chief Financial Officer

32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. § 1350

32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. § 1350

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Incorporated by reference.

Exhibit 10.8

EMPLOYMENT AGREEMENT

As Amended and Restated

THIS AGREEMENT is amended and restated as of the 2 ^nd day of July, 2015 (as amended and restated, this “Agreement”), by NICHOLAS FINANCIAL, INC., a British Columbia, Canada corporation (the “Company”), and RALPH T. FINKENBRINK (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Company and the Employee entered into an Employment Agreement as of November 22, 1999, which was subsequently amended and restated as of July 3, 2012 and June 30, 2014;

WHEREAS, the Company continues to recognize that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing uncertainty about the Employee’s future employment with the Company without regard to the Employee’s competence or past contributions, which uncertainty may result in the loss of valuable services of the Employee to the detriment of the Company and its shareholders, and the Company and the Employee wish to provide reasonable security to the Employee against changes in the Employee’s relationship with the Company in the event of any such change in control;

WHEREAS, the Company and the Employee continue to be desirous that any proposal for a change in control or acquisition of the Company will be considered by the Employee objectively and with reference only to the best interests of the Company and its shareholders;

WHEREAS, the Employee will be in a better position to consider the Company’s best interests if the Employee is afforded reasonable security, as provided in this Agreement, against altered conditions of employment which could result from any such change in control or acquisition; and

WHEREAS, the Employee desires to continue to be employed by the Company on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as follows:

instruments) and subject to the overall direction and control of the Company’s Board of Directors. The Employee accepts such employment and agrees to devote his best efforts and substantially all of his business time, skill, labor and attention to the performance of such duties. The Employee agrees not to engage in or be concerned with any other commercial duties or pursuits during the Term (as hereinafter defined) of this Agreement; provided, however, that the Employee may be involved in a passive capacity in a non-competitive business subject to the prior written approval of the Company’s Board of Directors. Furthermore, the Employee shall assume and competently perform such reasonable responsibilities and duties as may be assigned to him from time to time by the Board of Directors of the Company. To the extent that the Company shall have any parent, subsidiary, affiliated corporations, partnerships, or joint venture (collectively “Related Entities”), the Employee shall perform such duties to promote these entities and their respective interests to the same extent as the interests of the Company without additional compensation. At all times, Employee agrees that he has read and will abide by, and prospectively will read and abide by, any employee handbook, policy, or practice that the Company or Related Entities has or hereafter adopts with respect to its employees generally.

2. TERM. The employment of the Employee under this Agreement commences on the date hereof and will continue through and including the close of business on the 2nd anniversary of the date hereof (the “Initial Term”). After the end of the Initial Term, this Agreement shall continue to renew automatically on the anniversary of the last day of the Initial Term for successive 1-year terms (the Initial Term, as well as any such renewal(s) thereof, shall be referred to herein as the “Term”) unless the Company provides to the Employee, at least sixty (60) days prior to the expiration of any renewal Term, written notification that it intends not to renew this Agreement; and, provided, further, that this Agreement may be terminated in accordance with Section 5 hereof (with the exception of the obligations of the parties hereunder that shall survive any such termination). Notwithstanding the foregoing, if a Change of Control (as defined in Appendix A hereto) occurs prior to the end of the Initial Term or any renewal term, this Agreement shall be extended automatically for a two year renewal period beginning on the date of the Change of Control (a “Post-Change of Control Renewal Period”). Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

3. COMPENSATION.

(a) Annual Base Salary and Bonus. As compensation for his services under this Agreement, the Employee shall receive, and the Company shall pay, an annual base salary of such amount as shall be determined by the Compensation Committee of the Company’s Board of Directors (or other committee performing similar functions), but not less than $375,000 (U.S.). Such annual base salary shall be payable in equal installments in accordance with the policy then prevailing for the Company’s Employees. Following a Change of Control, the Employee’s annual base salary shall not be decreased and, during the Post-Change of Control Renewal Period, the Employee’s base salary shall be increased on an annual basis by an amount at least equal to the average base salary increase, expressed as a percentage, provided to executives of the Company of comparable status and position to the Employee. The Employee also shall be entitled, during the Term, to an annual performance bonus as determined by the Compensation Committee of the Board of Directors (or other committee performing similar functions), and to

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participate in and receive payments from all other bonus and other incentive compensation plans as may be adopted by the Company as are made available to other Employees of the Company. On and after a Change of Control, to assure that the Employee will have an opportunity to earn incentive compensation, Employee shall be included in a bonus plan of the Company which shall satisfy the standards described below (such plan, the “Bonus Plan”). Bonuses under the Bonus Plan shall be payable with respect to achieving such financial or other goals reasonably related to the business of the Company as the Company shall establish (the “Goals”), all of which Goals shall be attainable, prior to the end of the Post-Change of Control Renewal Period, with approximately the same degree of probability as the most attainable goals under the Company’s bonus plan or plans as in effect at any time during the 180-day period immediately prior to the Change of Control (whether one or more, the “Company Bonus Plan”) and in view of the Company’s existing and projected financial and business circumstances applicable at the time. The amount of the bonus (the “Bonus Amount”) that Employee is eligible to earn under the Bonus Plan shall be no less than 100% of Employee’s target award provided in such Company Bonus Plan (such bonus amount herein referred to as the “Targeted Bonus”), and in the event the Goals are not achieved such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to that portion of the Goals which were achieved. Payment of the Bonus Amount shall not be affected by any circumstance occurring subsequent to the end of the Post-Change of Control Renewal Period, including termination of Employee’s employment.

(b) Payments. All amounts paid pursuant to this Agreement shall be subject to withholding or deduction by reason of the Federal Insurance Contribution Act, Federal income tax, state and local income tax, if any, and comparable laws and regulations.

(c) Other Benefits. The Employee shall be reimbursed by the Company for all reasonable and customary travel and other business expenses incurred by him in the performance of his duties hereunder in accordance with the Company’s standard policy regarding expense verification practices. The Employee shall be entitled to that number of weeks paid vacation per year that is available to other Employees of the Company, and shall be eligible to participate in such pension, life insurance, health insurance, disability insurance and other employee benefits plans, if any, which the Company may from time to time make available to its Employees generally. On and after a Change of Control, the Employee shall be included: (i) to the extent eligible thereunder (which eligibility shall not be conditioned on Employee’s salary grade or on any other requirement which excludes persons of comparable status to Employee unless such exclusion was in effect for such plan or an equivalent plan immediately prior to the Change of Control), in any and all plans providing benefits for the Company’s salaried employees in general (including but not limited to group life insurance, hospitalization, medical, dental, and long-term disability plans) and (ii) in plans provided to executives of the Company of comparable status and position to Employee (including but not limited to deferred compensation, split-dollar life insurance, supplemental retirement, stock option, stock appreciation, stock bonus, cash bonus and similar or comparable plans); provided that in no event shall the aggregate level of benefits under the plans described in clause (i) and the plans described in clause (ii), respectively, in which Employee is included be less than the aggregate level of benefits under plans of the Company of the type referred to in such clause, respectively, in which Employee was participating immediately prior to the Change of Control.

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4. NONCOMPETITION AND NON-DISCLOSURE REQUIREMENTS.

(a) Employee acknowledges that his services are of a special, unique, extraordinary and intellectual character, and his position with the Company places him in a position of confidence and trust with customers, suppliers and employees of the Company and other Related Entities. The Employee further acknowledges that the rendering of services under this Agreement necessarily requires the disclosure to him of confidential information (as defined below) of the Company and/or Related Entities. The Employee and the Company agree that both prior to and during his course of employment with the Company, the Employee had, has and will continue to develop personal relationships with the Company’s financiers, customers, suppliers and employees, and that the Employee holds a position of substantial trust and confidence. As a consequence, the Employee agrees that it is reasonable and necessary for the protection of goodwill and legitimate business interests of the Company and Related Entities that the Employee make the covenants contained herein, that the covenants are a material inducement for the Company to employ the Employee and to enter into this Agreement, and that the covenants are given as an integral part of and incident to this Agreement.

(b) The Employee covenants and agrees that during his employment by the Company (whether during the Term hereof or otherwise), and thereafter for a period of two (2) years following the termination of the Employee’s employment with the Company, he will not:

(i) directly or indirectly engage in, continue in or carry on the business of the Company or any Related Entity, or any business substantially similar thereto, including owning or controlling any financial interest in, any corporation, partnership, firm or other form of business organization which competes with or is engaged in or carries on any aspect of such business or any business substantially similar thereto;

(ii) directly or indirectly, assist, promote or encourage any employees or clients, or potential employees or clients, of the Company or Related Entities to terminate or discontinue their relationship in order to pursue opportunities or employment with any competitor of the Company or Related Entities;

(iii) consult with, advise or assist in any way, whether or not for consideration, any corporation, partnership, firm or other business organization which is now, becomes or may become a competitor of the Company or any Related Entity in any aspect of their respective businesses during the Employee’s employment with the Company, including, but not limited to: advertising or otherwise endorsing the products of any such competitor; soliciting customers or otherwise serving as an intermediary for any such competitor; or loaning money or rendering any other form of financial assistance to or engaging in any form of business transaction whether or not on an arms’ length basis with any such competitor; or

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provided, however, that the foregoing shall not preclude the Employee’s ownership of not more than 5% of the equity securities of a corporation which has such securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(c) The Employee acknowledges that the inventions, innovations, software, trade secrets, business plans, financial strategies, finances, and all other confidential or proprietary information with respect to the business and operations of the Company and Related Entities are valuable, special and unique assets of the Company. The Employee agrees not to, at any time during or after the Term of this Agreement, disclose, directly or indirectly, to any person or entity, or use or authorize or propose to authorize any person or entity to use any confidential or proprietary information with respect to the Company or Related Entities without the prior written consent of the Company including, without limitation, information as to the financial condition, results of operations, identities of clients or prospective clients, products under development, acquisition strategies or acquisitions under consideration, pricing or cost information, marketing strategies or any other information relating to the Company or any of the Related Entities which could be reasonably regarded as confidential. However, this does not include information which is or shall become generally available to the public other than as a result of disclosure by the Company or Related Entities or any of their agents, affiliates or representatives or a person to whom any of them has provided such information.

(d) The Employee agrees that the geographic scope of this covenant not to compete shall extend to (i) the states of Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Texas and Virginia, which constitute the geographic area in which the Company has operated its business at some time during the two years preceding the date of this Agreement; or (ii) such broader geographic area where the Company conducts business at any time during the Term of this Agreement.

(e) In the event of any breach of this covenant not to compete, the Employee recognizes that the remedies at law will be inadequate and that in addition to any relief at law which may be available to the Company for such violation or breach and regardless of any other provision contained in this Agreement, the Company shall be entitled to equitable remedies (including an injunction) and such other relief as a court may grant after considering the intent of this Section 4.

(f) In the event a court of competent jurisdiction determines that the provisions of this covenant not to compete are excessively broad as to duration, geographic scope, prohibited activities or otherwise, the parties agree that this covenant shall be reduced or curtailed to the extent necessary to render it enforceable.

5. TERMINATION.

(a) Death. The Employee’s employment hereunder shall terminate upon his death.

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(b) Disability. If, during the Term, the Employee becomes physically or mentally disabled in accordance with the terms and conditions of any disability insurance policy covering the Employee or, if due to such physical or mental disability, the Employee becomes unable for a period of more than one hundred eighty (180) consecutive days to perform his duties hereunder on substantially a full-time basis as determined by the Company in its sole reasonable discretion, the Company may, at its option, terminate the Employee’s employment hereunder upon not less than thirty (30) days’ written notice of termination.

(c) Cause. The Company may terminate this Agreement at any time with Cause. As used in this Agreement, “Cause” shall mean the following: (1) a material violation of the Company’s policies or practices which reasonably justifies termination; (2) conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction; (3) the commission by the Employee of any act which would reasonably be expected to materially injure the reputation, business, or business relationships of the Company or Related Entities; or (4) any material breach by Employee of this Agreement. The Company may terminate this Agreement with Cause as defined in clauses (1) and (4) above upon fifteen (15) business days’ prior written notice (the “Cause Notification Period”) to Employee, but such termination shall only become effective in the event of Employee’s failure to cure the applicable breach or violation, to the reasonable satisfaction of Company, prior to the end of the Cause Notification Period. The Company may terminate this Agreement without notice at any time with Cause as defined in clause (2) or (3) above. Notwithstanding anything in the foregoing to the contrary, upon and after a Change of Control, the Company may terminate this Agreement with Cause only as defined in clause (2) or (4) above. In the event of a termination with Cause, the Company shall be relieved of all its obligations to the Employee provided for by this Agreement, and all payments to the Employees hereunder shall immediately cease and terminate. For the avoidance of doubt, the Company also may terminate the Employee’s employment hereunder at any time without Cause by written notice; provided, however, that the Company shall owe the Employee the Severance Payment (as defined below) following a termination of the Employee’s employment by the Company other than for Cause.

(d) Involuntary Termination by Employee. The Employee may terminate his employment hereunder upon (i) a good faith determination by the Employee that there has been a material breach of the Agreement by the Company, (ii) a material adverse change in the Employee’s working conditions or status, (iii) a significant relocation of the Employee’s principal office, or (iv) upon or within the two-year period following a Change of Control, a good faith determination by the Employee that there has been any of the following: a breach of the Agreement by the Company, any adverse change in the Employee’s working conditions, status, authority, duties, responsibilities (including but not limited to a requirement that the Employee report to a corporate officer instead of reporting directly to the board of directors) or any requirement that the Employee relocate his principal office to a location that is more than ten (10) miles from the location of the Employee’s principal office immediately prior to the Change of Control (any one of the preceding constituting “Good Reason”), by delivering written notice of termination to the Company indicating in reasonable detail the facts and circumstances alleged to provide a basis for such termination and shall cease performing the Employee’s duties hereunder on the date which is ten (10) days after delivery of the notice, which date shall also be the date of termination of the Employee’s employment.

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(e) Voluntary Termination by Employee. The Employee agrees to provide the Company with at least twenty (20) business days’ (“Termination Notice Period”) prior written notice of his intent to terminate employment voluntarily. Failure to provide such notice terminates the Employee’s entitlement to payment of accrued, unused benefits, such as vacation. However, the Company reserves the right to terminate the Employee before the end of the Termination Notice Period, provided that the Company pays the Employee the salary that he would have received from the date of the last payroll payment to the end of the Termination Notice Period. Such salary shall be paid in accordance with the Company’s normal payroll procedures applicable to base salary. During the Termination Notice Period, the Employee agrees to make a good faith effort to perform the duties described hereunder. If, during the Term, the Employee voluntarily terminates his employment with the Company, the Company’s obligations, including payment obligations, under this Agreement shall cease, except that the Company shall pay the Employee the amount of base salary that he would have received from the date of the last payroll payment to the end of the Termination Notice Period in accordance with the Company’s normal payroll procedures applicable to base salary.

(f) Severance Payment and Post-Change of Control Benefits. In the event of a termination of the Employee’s employment (i) by the Company other than for Cause or (ii) by the Employee in a manner which satisfies Section 5(d):

(i) The Company shall pay the Employee (subject to the provisions of Section 6 of this Agreement) a one-time, lump-sum severance payment equal to TWO (2) times the sum of (A) the Employee’s annual base salary in effect at the time of such termination and (B) the Employee’s average annual bonus for the TWO (2) full calendar years immediately preceding such termination (“Severance Payment”). Notwithstanding the foregoing, if such termination of the Employee’s employment occurs during a Post-Change of Control Renewal Period, the Severance Payment shall be calculated using the Employee’s annual base salary in effect at any time during the period of 180 days prior to the date on which the Change of Control occurred in clause (A), if higher than the annual base salary in effect at the time of such termination, and the Employee’s average annual bonus for the TWO (2) full calendar years immediately preceding the Change of Control in clause (B), if higher than the average annual bonus for the TWO (2) full calendar years immediately preceding such termination. The Severance Payment shall be paid to the Employee in cash equivalent on the date that is sixty (60) days after the date of termination of the Employee’s employment; provided that, to the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), all or a portion of the Severance Payment shall be delayed until the first day of the seventh (7 ^th ) month following the month in which the termination of the Employee’s employment occurs, without interest thereon.

(ii) If such termination of employment occurs during a Post-Change of Control Renewal Period, then the Employee will also receive the following benefits:

(a) (1) all restrictions on any restricted stock or restricted stock unit awards made to Employee by the Company or its affiliates on or after the Change of Control shall lapse such that Employee is

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fully and immediately vested in such awards upon such termination of employment; (2) any stock options or stock appreciation rights granted to Employee pursuant to the Company’s or its affiliate’s equity-based incentive plan(s) on or after the Change of Control shall become fully and immediately vested upon such termination of employment; and (3) any performance shares, performance units or similar performance-based equity awards granted to Employee pursuant to the Company’s or its affiliate’s equity-based incentive plan(s) on or after the Change of Control shall be deemed earned on a pro rated basis according to the portion of the performance period that has elapsed through the date of the termination of employment as if all performance requirements had been satisfied at the target level (or such higher level as would have been achieved if performance through the date of the termination of employment had continued through the end of the performance period).

(b) Until the earlier of eighteen (18) months after the date of Employee’s termination of employment or such time as Employee has obtained new employment and is covered by benefits which in the aggregate are at least equal in value to the following benefits, Employee shall continue to be covered, at the expense of the Company, by the same or equivalent life insurance, hospitalization, medical, dental and vision coverage as Employee received (or, if higher, as was required hereunder) immediately prior to Employee’s termination of employment, subject to the following: After the end of the COBRA continuation period, if such hospitalization, medical or dental coverage is provided under a health plan that is subject to Section 105(h) of the Code, benefits payable under such health plan shall comply with the requirements of Treasury regulation section 1.409A-3(i)(1)(iv) and, if necessary, the Company shall amend such health plan to comply therewith; and if provision of any such health benefits would subject the Company or its benefits arrangements to a penalty or adverse tax treatment, then the Company shall provide a cash payment to Employee in an amount reasonably determined by the Company to be equivalent to the COBRA premiums for similar benefits.

(c) The Employee shall receive until the end of the second calendar year following the calendar year in which the Employee’s termination of employment occurs, at the expense of the Company, outplacement services, on an individualized basis at a level of service commensurate with the Employee’s status with the Company immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employee’s termination of employment), provided by a nationally recognized executive placement firm selected by the Company; provided that the cost to the Company of such services shall not exceed 10% of the Employee’s annual base

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salary immediately prior to the date of the Change of Control (or, if higher, immediately prior to the Employee’s termination of employment).

(d) The Company shall bear up to $15,000 in the aggregate of fees and expenses of consultants and/or legal or accounting advisors engaged by the Employee to advise the Employee as to matters relating to the computation of benefits due and payable under this Section 5.

Notwithstanding anything to the contrary in this Agreement, if a Change of Control occurs and the Employee’s employment with the Company is terminated (other than a termination due to Employee’s death or as a result of Disability) during the period of 180 days prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by Employee that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then for all purposes of this Agreement such termination of employment shall be deemed a termination following such Change of Control.

(g) Benefits. The following shall apply upon termination of the Employee’s employment: Notwithstanding anything to the contrary herein contained, the Employee shall receive all compensation and other benefits to which he was entitled under this Agreement or otherwise as an employee of the Company through the termination date, including payments of base salary accrued hereunder through the calendar month in which such termination occurs.

6. TAX PROVISIONS.

(a) Limitation on Parachute Payments. Notwithstanding any other provision of this Agreement, if any portion of the Severance Payment or any other payment under this Agreement, or payments to or for the benefit of the Employee under any other agreement or plan (collectively, the “Change of Control Benefits”), would constitute an “excess parachute payment,” then the Change of Control Benefits to be made to the Employee shall be reduced such that the value of the aggregate Change of Control Benefits that the Employee is entitled to receive shall be One Dollar ($1) less than the maximum amount which the Employee may receive without becoming subject to the tax imposed by Section 4999 of the Code (or any successor provision) or which the Company may pay without loss of deduction under Section 280G(a) of the Code (or any successor provision); provided that the foregoing reduction in the amount of Change of Control Benefits shall not apply if the after-tax value to the Employee of the Change of Control Benefits prior to reduction in accordance herewith is greater than the after-tax value to the Employee if the Change of Control Benefits are reduced in accordance herewith. For purposes of this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Code Section 280G, and such “parachute payments” shall be valued as provided therein.

(b) Opinion. For purposes of this Section, within thirty (30) days after notice by one party to the other of its belief that there is a payment or benefit due the Employee that

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will result in an excess parachute payment as defined in Section 280G of the Code or any successor provision thereto, the Employee and the Company shall obtain, at the Company’s expense, the opinion (which need not be unqualified) of nationally recognized tax counsel (“Tax Counsel”) selected by the Company’s independent auditors and acceptable to the Employee, which sets forth (A) the “base amount” within the meaning of Section 280G; (B) the aggregate present value of the payments in the nature of compensation to the Employee as prescribed in Section 280G(b)(2)(A) (ii); (C) the amount and present value of any “excess parachute payment” within the meaning of Section 280G(b)(1) without regard to the limitations of this Section 6; (D) the after-tax value of the Change of Control Benefits if the reduction in Change of Control Benefits contemplated under this Section 6 did not apply; and (E) the after-tax value of the Change of Control Benefits taking into account the reduction in Change of Control Benefits contemplated under this Section 6. For purposes of determining the after-tax value of the Change of Control Benefits, the Employee shall be deemed to pay federal income taxes and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of the Employee’s domicile for income tax purposes on the date the payment is to be made, net of the maximum reduction in federal income taxes that may be obtained from deduction of such state and local taxes.

In the event that a reduction is to be made under this Section 6, the Change of Control Benefits shall be reduced or eliminated by applying the following principles, in order: (i) the payment or benefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions) shall be reduced or eliminated before a payment or benefit with a lower ratio; (ii) the payment or benefit with the later possible payment date shall be reduced or eliminated before a payment or benefit with an earlier payment date; and (iii) cash payments shall be reduced prior to non-cash benefits; provided, however, that if the foregoing order of reduction or elimination would violate Section 409A of the Code, then the reduction shall be made pro rata among the payments or benefits included in the Change of Control Benefits (on the basis of the relative present value of the parachute payments). For purposes of this Agreement, the value of any noncash benefits or any deferred payment or benefit, and all present economic values, shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G, which determination shall be evidenced in a certificate of such auditors addressed to the Company and the Employee. Such opinion shall be dated as of the date of termination of the Employee’s employment and addressed to the Company and the Employee and shall be binding upon the Company and the Employee.

The provisions of this Section 6(b), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation earned by the Employee pursuant to the Company’s compensation programs prior to a change of control is reasonable; provided, however, that in the event such Tax Counsel so requests in connection with the opinion required by this Section 6(b), the Company shall obtain at its expense, and Tax Counsel may rely on in providing the opinion, the advice of a firm of recognized Employee compensation consultants as to the reasonableness of any item of compensation to be received by the Employee.

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(c) Effect of Change in Law. In the event that the provisions of Sections 280G and 4999 of the Code (or any successor provisions) are repealed, this Section 6 shall cease to be effective on the effective date of such repeal. The parties to this Agreement recognize that final regulations promulgated under Section 280G of the Code may affect the amounts that may be paid under this Agreement and agree that, upon issuance of such final regulations, this Agreement may be modified as the parties hereto may in good faith deem necessary in light of the provisions of such regulations to achieve the purposes of this Agreement, and that consent to such modification shall not be unreasonably withheld.

7. SUCCESSORS.

(a) If the Company sells, assigns or transfers all or substantially all of its business and assets to any Person (as defined in Appendix A hereto) or if the Company merges into or consolidates or otherwise combines (where the Company does not survive such combination) with any Person (any such event, a “Sale of Business”), then the Company shall assign all of its right, title and interest in this Agreement as of the date of such event to such Person, and the Company shall cause such Person, by written agreement in form and substance reasonably satisfactory to the Employee, to expressly assume and agree to perform from and after the date of such assignment all of the terms, conditions and provisions imposed by this Agreement upon the Company. Failure of the Company to obtain such agreement prior to the effective date of such Sale of Business shall be a material breach of this Agreement. In case of such assignment by the Company and of assumption and agreement by such Person, as used in this Agreement, “Company” shall thereafter mean such Person which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, and this Agreement shall inure to the benefit of, and be enforceable by, such Person. The Employee shall, in the Employee’s discretion, be entitled to proceed against any or all of such Persons, any Person which theretofore was such a successor to the Company (as defined in the first paragraph of this Agreement) and the Company (as so defined) in any action to enforce any rights of the Employee hereunder. Except as provided in this Subsection, this Agreement shall not be assignable by the Company. This Agreement shall not be terminated by the voluntary or involuntary dissolution of the Company.

(b) This Agreement and all rights of the Employee shall inure to the benefit of and be enforceable by the Employee’s personal or legal representatives, executors, administrators, heirs and beneficiaries. All amounts payable to the Employee under Sections 3, 5, and 7 of this Agreement if the Employee had lived shall be paid, in the event of the Employee’s death, to the Employee’s estate, heirs and representatives; provided, however, that the foregoing shall not be construed to modify any terms of any benefit plan of the Company, as such terms are in effect on the date of the Employee’s death, that expressly govern benefits under such plan in the event of the Employee’s death.

8. SEVERABILITY. The provisions of this Agreement shall be regarded as divisible, and the parties agree that if any of said provisions or any part hereof shall under any circumstances be deemed or declared invalid, inoperative or unenforceable, then the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby.

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9. AMENDMENT. This Agreement (as hereby amended and restated) may not be further amended or modified at any time except by written instrument executed by the Company and the Employee.

10. WITHHOLDING. The Company shall be entitled to withhold from amounts to be paid to the Employee hereunder any federal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided, that the amount so withheld shall not exceed the minimum amount required to be withheld by law (unless the Employee has otherwise indicated in writing). The Company shall be entitled to rely on an opinion of nationally recognized tax counsel if any question as to the amount or requirement of any such withholding shall arise.

11. NOTICE. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when actually received, whether hand-delivered, sent by telecopier, facsimile transmission or other electronic means of transmitting written documents (as long as receipt is acknowledged) or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee, to:

Ralph T. Finkenbrink

4348 Hythe Court

Palm Harbor, FL 34685

(727) 943-2762

If to the Company, to:

Nicholas Financial, Inc.

2454 McMullen Booth Road

Building C

Clearwater, Florida 33759

Attn: Corporate Secretary

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.

12. NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any breach of this Agreement by any other party hereto shall be deemed a waiver of any similar or dissimilar term or condition at the same or at any prior or subsequent time. This Agreement and any equity award agreements between the Company and the Employee constitute the entire agreement between the parties hereto with respect to the Employee’s employment by the Company and there are no agreements or representations, oral or otherwise, expressed or implied, with respect to or related to the employment of the Employee which are not set forth in this Agreement or such equity award agreements.

13. NO ASSIGNMENT. Except as expressly set forth herein, no party shall assign any of his or its rights under this Agreement without the prior written consent of the other party and any attempted assignment without such prior written consent shall be null and void and without legal effect.

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14. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be effective upon the execution and delivery by any party hereto of facsimile copies of signature pages hereto duly executed by such party; provided, however, that any party delivering a facsimile signature page covenants and agrees to deliver promptly after the date hereof two (2) original copies to the other party hereto.

15. GOVERNING LAW.

(a) The validity, interpretation, construction and performance of this Agreement shall be governed by the internal laws of the State of Florida, except that Section 15(b) shall be construed in accordance with the Federal Arbitration Act if arbitration is chosen by the Employee as the method of dispute resolution.

(b) Any dispute arising out of this Agreement shall, at the Employee’s election, be determined by either (i) arbitration under the rules of the American Arbitration Association then in effect (but subject to any evidentiary standards set forth in this Agreement), in which both parties shall be bound by the arbitration award, or (ii) by litigation. Whether the dispute is to be settled by arbitration or litigation, the venue for the arbitration or litigation shall be Tampa, Florida. The parties consent to personal jurisdiction in each trial court in the selected venue having subject matter jurisdiction notwithstanding their residence or situs, and each party irrevocably consents to service of process in the manner provided hereunder for the giving of notices.

16. CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.

(a) No party shall be considered as being responsible for the drafting of this Agreement for the purpose of applying any rule construing ambiguities against the drafter or otherwise. No draft of this Agreement shall be taken into account in construing this Agreement. Any provision of this Agreement which requires an agreement in writing shall be deemed to require that the writing in question be signed by the Employee and an authorized representative of the Company.

(b) The Company and the Employee intend the terms of this Agreement to be in compliance with Section 409A of the Code and the regulations promulgated thereunder. To the maximum extent permissible, any ambiguous terms of this Agreement shall be interpreted in a manner that avoids a violation of Section 409A of the Code. The phrase “termination of the Employee’s employment” and similar phrases in this Agreement shall mean the Employee’s “separation from service” as defined in Section 409A of the Code. The Company does not guarantee the tax treatment or tax consequences associated with any payment or benefit, including but not limited to consequences related to Section 409A of the Code.

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with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Employee shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the lesser of (i) the amount required to be included in the Employee’s income as a result of such failure and (ii) the benefits otherwise due hereunder, and shall in any event reduce the amount of payments or benefits otherwise due hereunder.

17. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.


NICHOLAS FINANCIAL, INC.

By:		/s/ Katie MacGillivary
		Katie L. MacGillivary
		Vice President-Finance, Chief Financial Officer and Corporate Secretary

EMPLOYEE:

/s/ Ralph Finkenbrink

Printed Name: Ralph T. Finkenbrink

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APPENDIX A

For purposes of this Agreement, a Change of Control shall be deemed to have occurred upon the earlier of (a) any of the events constituting a “Change of Control” under the Company’s 2015 Omnibus Incentive Plan, as such term is defined in such Plan as of the date of this Agreement, or (b) a determination by the Board of Directors of the Company, in view of the then current circumstances or impending events, that a change of control of the Company has occurred or is imminent, which determination shall be made for the specific purpose of triggering the operative provisions of this Agreement.

A-1

Exhibit 10.9

EMPLOYMENT AGREEMENT

As Amended and Restated

W I T N E S S E T H:

WHEREAS, the Company and the Employee entered into an Employment Agreement as of June 30, 2014;

WHEREAS, the Employee desires to continue to be employed by the Company on the terms and conditions hereinafter set forth.

and substantially all of his business time, skill, labor and attention to the performance of such duties. The Employee agrees not to engage in or be concerned with any other commercial duties or pursuits during the Term (as hereinafter defined) of this Agreement; provided, however, that the Employee may be involved in a passive capacity in a non-competitive business subject to the prior written approval of the Company’s Board of Directors. Furthermore, the Employee shall assume and competently perform such reasonable responsibilities and duties as may be assigned to him from time to time by the Chairman of the Board or the President and Chief Executive Officer of the Company. To the extent that the Company shall have any parent, subsidiary, affiliated corporations, partnerships, or joint venture (collectively “Related Entities”), the Employee shall perform such duties to promote these entities and their respective interests to the same extent as the interests of the Company without additional compensation. At all times, Employee agrees that he has read and will abide by, and prospectively will read and abide by, any employee handbook, policy, or practice that the Company or Related Entities has or hereafter adopts with respect to its employees generally.

2. TERM. The employment of the Employee under this Agreement commences on the date hereof and will continue through and including the close of business on the 2nd anniversary of the date hereof (the “Initial Term”), unless earlier terminated pursuant to the terms of this Agreement. After the end of the Initial Term, this Agreement shall continue to renew automatically on the anniversary of the last day of the Initial Term for successive 1-year terms (the Initial Term, as well as any such renewal(s) thereof, shall be referred to herein as the “Term”) unless the Company provides to the Employee, at least sixty (60) days prior to the expiration of any renewal Term, written notification that it intends not to renew this Agreement; and, provided, further, that this Agreement may be terminated in accordance with Section 5 hereof (with the exception of the obligations of the parties hereunder that shall survive any such termination). Notwithstanding the foregoing, if a Change of Control (as defined in Appendix A hereto) occurs prior to the end of the Initial Term or any renewal term, this Agreement shall be extended automatically for a two year renewal period beginning on the date of the Change of Control (a “Post-Change of Control Renewal Period”). Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

3. COMPENSATION.

(a) Annual Base Salary and Bonus. As compensation for his services under this Agreement, the Employee shall receive, and the Company shall pay, an annual base salary of such amount as shall be determined by the Compensation Committee of the Company’s Board of Directors (or other committee performing similar functions), but not less than $250,000 (U.S.). Such annual base salary shall be payable in equal installments in accordance with the policy then prevailing for the Company’s Employees. Following a Change of Control, the Employee’s annual base salary shall not be decreased and, during the Post-Change of Control Renewal Period, the Employee’s base salary shall be increased on an annual basis by an amount at least equal to the average base salary increase, expressed as a percentage, provided to executives of the Company of comparable status and position to the Employee. The Employee also shall be entitled, during the Term, to an annual performance bonus as determined by the Compensation Committee of the Board of Directors (or other committee performing similar functions), and to participate in and receive payments from all other bonus and other incentive compensation plans

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as may be adopted by the Company as are made available to other Employees of the Company. On and after a Change of Control, to assure that the Employee will have an opportunity to earn incentive compensation, Employee shall be included in a bonus plan of the Company which shall satisfy the standards described below (such plan, the “Bonus Plan”). Bonuses under the Bonus Plan shall be payable with respect to achieving such financial or other goals reasonably related to the business of the Company as the Company shall establish (the “Goals”), all of which Goals shall be attainable, prior to the end of the Post-Change of Control Renewal Period, with approximately the same degree of probability as the most attainable goals under the Company’s bonus plan or plans as in effect at any time during the 180-day period immediately prior to the Change of Control (whether one or more, the “Company Bonus Plan”) and in view of the Company’s existing and projected financial and business circumstances applicable at the time. The amount of the bonus (the “Bonus Amount”) that Employee is eligible to earn under the Bonus Plan shall be no less than 100% of Employee’s target award provided in such Company Bonus Plan (such bonus amount herein referred to as the “Targeted Bonus”), and in the event the Goals are not achieved such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to that portion of the Goals which were achieved. Payment of the Bonus Amount shall not be affected by any circumstance occurring subsequent to the end of the Post-Change of Control Renewal Period, including termination of Employee’s employment.

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4. NONCOMPETITION AND NON-DISCLOSURE REQUIREMENTS.

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5. TERMINATION.

(a) Death. The Employee’s employment hereunder shall terminate upon his death.

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(ii) If such termination of employment occurs during a Post-Change of Control Renewal Period, then the Employee will also receive the following benefits:

(a)(1) all restrictions on any restricted stock or restricted stock unit awards made to Employee by the Company or its affiliates on or after the Change of Control shall lapse such that Employee is

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6. TAX PROVISIONS.

(b) Opinion. For purposes of this Section, within thirty (30) days after notice by one party to the other of its belief that there is a payment or benefit due the Employee that

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7. SUCCESSORS.

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9. AMENDMENT. This Agreement (as hereby amended and restated) may not be further amended or modified at any time except by written instrument executed by the Company and the Employee.

If to the Employee, to the Employee at the Employee’s address then reflected in the records of the Company.

If to the Company, to:

Nicholas Financial, Inc.

2454 McMullen Booth Road

Building C

Clearwater, Florida 33759

Attn: President

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.

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execution and delivery by any party hereto of facsimile copies of signature pages hereto duly executed by such party; provided, however, that any party delivering a facsimile signature page covenants and agrees to deliver promptly after the date hereof two (2) original copies to the other party hereto.

15. GOVERNING LAW.

16. CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.

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this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the lesser of (i) the amount required to be included in the Employee’s income as a result of such failure and (ii) the benefits otherwise due hereunder, and shall in any event reduce the amount of payments or benefits otherwise due hereunder.

17. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.


NICHOLAS FINANCIAL, INC.

By:		/s/ Ralph Finkenbrink
		Ralph T. Finkenbrink
		President and Chief Executive Officer


EMPLOYEE:

/s/ Kevin Bates
		Printed Name: Kevin D. Bates

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APPENDIX A

A-1

Exhibit 10.10

EMPLOYMENT AGREEMENT

THIS AGREEMENT is dated as of the 2 ^nd day of July, 2015 (this “Agreement”), by NICHOLAS FINANCIAL, INC., a British Columbia, Canada corporation (the “Company”), and KATIE L. MACGILLIVARY (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Company recognizes that circumstances may arise in which a change in control of the Company occurs, through acquisition or otherwise, thereby causing uncertainty about the Employee’s future employment with the Company without regard to the Employee’s competence or past contributions, which uncertainty may result in the loss of valuable services of the Employee to the detriment of the Company and its shareholders, and the Company and the Employee wish to provide reasonable security to the Employee against changes in the Employee’s relationship with the Company in the event of any such change in control;

WHEREAS, the Company and the Employee desire that any proposal for a change in control or acquisition of the Company will be considered by the Employee objectively and with reference only to the best interests of the Company and its shareholders;

WHEREAS, the Employee desires to continue to be employed by the Company on the terms and conditions hereinafter set forth.

1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this Agreement, the Company agrees to employ the Employee, and the Employee hereby agrees to serve the Company, as Vice President-Finance, Chief Financial Officer. The Employee shall report directly to the Company’s President and Chief Executive Officer and shall render to the Company such management and policy-making services of the type customarily performed by persons serving in similar capacities with other employers that are similar to the Company, together with such other duties with which she is charged by the Company’s Articles or Notice of Articles (or any similar governance instruments) and subject to the overall direction and control of the Company’s Board of Directors. The Employee accepts such employment and agrees to devote her best efforts and substantially all of her business time, skill, labor and attention to the performance of such duties. The Employee agrees not to engage in or be concerned with any other commercial duties or pursuits during the Term (as hereinafter defined) of this Agreement; provided, however, that the Employee may be involved in a passive capacity in a non-competitive business subject to the prior written approval of the Company’s Board of Directors. Furthermore, the Employee shall assume and competently perform such reasonable responsibilities and duties as may be assigned to

her from time to time by the Chairman of the Board or the President and Chief Executive Officer of the Company. To the extent that the Company shall have any parent, subsidiary, affiliated corporations, partnerships, or joint venture (collectively “Related Entities”), the Employee shall perform such duties to promote these entities and their respective interests to the same extent as the interests of the Company without additional compensation. At all times, Employee agrees that she has read and will abide by, and prospectively will read and abide by, any employee handbook, policy, or practice that the Company or Related Entities has or hereafter adopts with respect to its employees generally.

2. TERM. The employment of the Employee under this Agreement commences on the date hereof and will continue through and including the close of business on the 2nd anniversary of the date hereof (the “Initial Term”), unless earlier terminated pursuant to the terms of this Agreement. After the end of the Initial Term, this Agreement shall continue to renew automatically on the anniversary of the last day of the Initial Term for successive 1-year terms (the Initial Term, as well as any such renewal(s) thereof, shall be referred to herein as the “Term”) unless the Company provides to the Employee, at least sixty (60) days prior to the expiration of any renewal Term, written notification that it intends not to renew this Agreement; and, provided, further, that this Agreement may be terminated in accordance with Section 5 hereof (with the exception of the obligations of the parties hereunder that shall survive any such termination). Notwithstanding the foregoing, if a Change of Control (as defined in Appendix A hereto) occurs prior to the end of the Initial Term or any renewal term, this Agreement shall be extended automatically for a two year renewal period beginning on the date of the Change of Control (a “Post-Change of Control Renewal Period”). Expiration of this Agreement will not affect the rights or obligations of the parties hereunder arising out of, or relating to, circumstances occurring prior to the expiration of this Agreement, which rights and obligations will survive the expiration of this Agreement.

3. COMPENSATION.

(a) Annual Base Salary and Bonus. As compensation for her services under this Agreement, the Employee shall receive, and the Company shall pay, an annual base salary of such amount as shall be determined by the Compensation Committee of the Company’s Board of Directors (or other committee performing similar functions), but not less than $175,000 (U.S.). Such annual base salary shall be payable in equal installments in accordance with the policy then prevailing for the Company’s Employees. Following a Change of Control, the Employee’s annual base salary shall not be decreased and, during the Post-Change of Control Renewal Period, the Employee’s base salary shall be increased on an annual basis by an amount at least equal to the average base salary increase, expressed as a percentage, provided to executives of the Company of comparable status and position to the Employee. The Employee also shall be entitled, during the Term, to an annual performance bonus as determined by the Compensation Committee of the Board of Directors (or other committee performing similar functions), and to participate in and receive payments from all other bonus and other incentive compensation plans as may be adopted by the Company as are made available to other Employees of the Company. On and after a Change of Control, to assure that the Employee will have an opportunity to earn incentive compensation, Employee shall be included in a bonus plan of the Company which shall satisfy the standards described below (such plan, the “Bonus Plan”). Bonuses under the Bonus Plan shall be payable with respect to achieving such financial or other goals reasonably related to the business of the Company as the Company shall establish (the “Goals”), all of which Goals

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shall be attainable, prior to the end of the Post-Change of Control Renewal Period, with approximately the same degree of probability as the most attainable goals under the Company’s bonus plan or plans as in effect at any time during the 180-day period immediately prior to the Change of Control (whether one or more, the “Company Bonus Plan”) and in view of the Company’s existing and projected financial and business circumstances applicable at the time. The amount of the bonus (the “Bonus Amount”) that Employee is eligible to earn under the Bonus Plan shall be no less than 100% of Employee’s target award provided in such Company Bonus Plan (such bonus amount herein referred to as the “Targeted Bonus”), and in the event the Goals are not achieved such that the entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to that portion of the Goals which were achieved. Payment of the Bonus Amount shall not be affected by any circumstance occurring subsequent to the end of the Post-Change of Control Renewal Period, including termination of Employee’s employment.

(c) Other Benefits. The Employee shall be reimbursed by the Company for all reasonable and customary travel and other business expenses incurred by her in the performance of her duties hereunder in accordance with the Company’s standard policy regarding expense verification practices. The Employee shall be entitled to that number of weeks paid vacation per year that is available to other Employees of the Company, and shall be eligible to participate in such pension, life insurance, health insurance, disability insurance and other employee benefits plans, if any, which the Company may from time to time make available to its Employees generally. On and after a Change of Control, the Employee shall be included: (i) to the extent eligible thereunder (which eligibility shall not be conditioned on Employee’s salary grade or on any other requirement which excludes persons of comparable status to Employee unless such exclusion was in effect for such plan or an equivalent plan immediately prior to the Change of Control), in any and all plans providing benefits for the Company’s salaried employees in general (including but not limited to group life insurance, hospitalization, medical, dental, and long-term disability plans) and (ii) in plans provided to executives of the Company of comparable status and position to Employee (including but not limited to deferred compensation, split-dollar life insurance, supplemental retirement, stock option, stock appreciation, stock bonus, cash bonus and similar or comparable plans); provided that in no event shall the aggregate level of benefits under the plans described in clause (i) and the plans described in clause (ii), respectively, in which Employee is included be less than the aggregate level of benefits under plans of the Company of the type referred to in such clause, respectively, in which Employee was participating immediately prior to the Change of Control.

4. NONCOMPETITION AND NON-DISCLOSURE REQUIREMENTS.

(a) Employee acknowledges that her services are of a special, unique, extraordinary and intellectual character, and her position with the Company places her in a position of confidence and trust with customers, suppliers and employees of the Company and other Related Entities. The Employee further acknowledges that the rendering of services under this Agreement necessarily requires the disclosure to her of confidential information (as defined

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below) of the Company and/or Related Entities. The Employee and the Company agree that both prior to and during her course of employment with the Company, the Employee had, has and will continue to develop personal relationships with the Company’s financiers, customers, suppliers and employees, and that the Employee holds a position of substantial trust and confidence. As a consequence, the Employee agrees that it is reasonable and necessary for the protection of goodwill and legitimate business interests of the Company and Related Entities that the Employee make the covenants contained herein, that the covenants are a material inducement for the Company to employ the Employee and to enter into this Agreement, and that the covenants are given as an integral part of and incident to this Agreement.

(b) The Employee covenants and agrees that during her employment by the Company (whether during the Term hereof or otherwise), and thereafter for a period of two (2) years following the termination of the Employee’s employment with the Company, she will not:

(iv) engage in any practice the purpose of which is to evade the provisions of this Agreement or to commit any act which is detrimental to the successful continuation of, or which adversely affects, the business or the Company; provided, however, that the foregoing shall not preclude the Employee’s ownership of not more than 5% of the equity securities of a corporation which has such securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(c) The Employee acknowledges that the inventions, innovations, software, trade secrets, business plans, financial strategies, finances, and all other confidential or

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proprietary information with respect to the business and operations of the Company and Related Entities are valuable, special and unique assets of the Company. The Employee agrees not to, at any time during or after the Term of this Agreement, disclose, directly or indirectly, to any person or entity, or use or authorize or propose to authorize any person or entity to use any confidential or proprietary information with respect to the Company or Related Entities without the prior written consent of the Company including, without limitation, information as to the financial condition, results of operations, identities of clients or prospective clients, products under development, acquisition strategies or acquisitions under consideration, pricing or cost information, marketing strategies or any other information relating to the Company or any of the Related Entities which could be reasonably regarded as confidential. However, this does not include information which is or shall become generally available to the public other than as a result of disclosure by the Company or Related Entities or any of their agents, affiliates or representatives or a person to whom any of them has provided such information.

5. TERMINATION.

(a) Death. The Employee’s employment hereunder shall terminate upon her death.

(b) Disability. If, during the Term, the Employee becomes physically or mentally disabled in accordance with the terms and conditions of any disability insurance policy covering the Employee or, if due to such physical or mental disability, the Employee becomes unable for a period of more than one hundred eighty (180) consecutive days to perform her duties hereunder on substantially a full-time basis as determined by the Company in its sole reasonable discretion, the Company may, at its option, terminate the Employee’s employment hereunder upon not less than thirty (30) days’ written notice of termination.

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(d) Involuntary Termination by Employee. The Employee may terminate her employment hereunder upon (i) a good faith determination by the Employee that there has been a material breach of the Agreement by the Company, (ii) a material adverse change in the Employee’s working conditions or status, (iii) a significant relocation of the Employee’s principal office, or (iv) upon or within the two-year period following a Change of Control, a good faith determination by the Employee that there has been any of the following: a breach of the Agreement by the Company, any adverse change in the Employee’s working conditions, status, authority, duties, responsibilities (including but not limited to a requirement that the Employee report to a corporate officer instead of reporting directly to the board of directors) or any requirement that the Employee relocate her principal office to a location that is more than ten (10) miles from the location of the Employee’s principal office immediately prior to the Change of Control (any one of the preceding constituting “Good Reason”), by delivering written notice of termination to the Company indicating in reasonable detail the facts and circumstances alleged to provide a basis for such termination and shall cease performing the Employee’s duties hereunder on the date which is ten (10) days after delivery of the notice, which date shall also be the date of termination of the Employee’s employment.

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procedures applicable to base salary. During the Termination Notice Period, the Employee agrees to make a good faith effort to perform the duties described hereunder. If, during the Term, the Employee voluntarily terminates her employment with the Company, the Company’s obligations, including payment obligations, under this Agreement shall cease, except that the Company shall pay the Employee the amount of base salary that she would have received from the date of the last payroll payment to the end of the Termination Notice Period in accordance with the Company’s normal payroll procedures applicable to base salary.

(ii) If such termination of employment occurs during a Post-Change of Control Renewal Period, then the Employee will also receive the following benefits:

(a) (1) all restrictions on any restricted stock or restricted stock unit awards made to Employee by the Company or its affiliates on or after the Change of Control shall lapse such that Employee is fully and immediately vested in such awards upon such termination of employment; (2) any stock options or stock appreciation rights granted to Employee pursuant to the Company’s or its affiliate’s equity-based incentive plan(s) on or after the Change of Control shall become fully and immediately vested upon such termination of employment; and (3) any performance shares, performance units or similar performance-based equity awards granted to Employee pursuant to the Company’s or its affiliate’s equity-based incentive

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plan(s) on or after the Change of Control shall be deemed earned on a pro rated basis according to the portion of the performance period that has elapsed through the date of the termination of employment as if all performance requirements had been satisfied at the target level (or such higher level as would have been achieved if performance through the date of the termination of employment had continued through the end of the performance period).

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(g) Benefits. The following shall apply upon termination of the Employee’s employment: Notwithstanding anything to the contrary herein contained, the Employee shall receive all compensation and other benefits to which she was entitled under this Agreement or otherwise as an employee of the Company through the termination date, including payments of base salary accrued hereunder through the calendar month in which such termination occurs.

6. TAX PROVISIONS.

(b) Opinion. For purposes of this Section, within thirty (30) days after notice by one party to the other of its belief that there is a payment or benefit due the Employee that will result in an excess parachute payment as defined in Section 280G of the Code or any successor provision thereto, the Employee and the Company shall obtain, at the Company’s expense, the opinion (which need not be unqualified) of nationally recognized tax counsel (“Tax Counsel”) selected by the Company’s independent auditors and acceptable to the Employee, which sets forth (A) the “base amount” within the meaning of Section 280G; (B) the aggregate present value of the payments in the nature of compensation to the Employee as prescribed in Section 280G(b)(2)(A) (ii); (C) the amount and present value of any “excess parachute payment”

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within the meaning of Section 280G(b)(1) without regard to the limitations of this Section 6; (D) the after-tax value of the Change of Control Benefits if the reduction in Change of Control Benefits contemplated under this Section 6 did not apply; and (E) the after-tax value of the Change of Control Benefits taking into account the reduction in Change of Control Benefits contemplated under this Section 6. For purposes of determining the after-tax value of the Change of Control Benefits, the Employee shall be deemed to pay federal income taxes and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the payment is to be made and state and local income taxes at the highest marginal rates of taxation in the state and locality of the Employee’s domicile for income tax purposes on the date the payment is to be made, net of the maximum reduction in federal income taxes that may be obtained from deduction of such state and local taxes.

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7. SUCCESSORS.

9. AMENDMENT. This Agreement may not be further amended or modified at any time except by written instrument executed by the Company and the Employee.

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If to the Employee, to the Employee at the Employee’s address then reflected in the records of the Company.

If to the Company, to:

Nicholas Financial, Inc.

2454 McMullen Booth Road

Building C

Clearwater, Florida 33759

Attn: President

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.

13. NO ASSIGNMENT. Except as expressly set forth herein, no party shall assign any of her or its rights under this Agreement without the prior written consent of the other party and any attempted assignment without such prior written consent shall be null and void and without legal effect.

15. GOVERNING LAW.

-12-

16. CERTAIN RULES OF CONSTRUCTION; CODE SECTION 409A.

(c) If, after the date of a Change of Control of the Company, any payment amount or the value of any benefit under this Agreement is required to be included in the Employee’s income prior to the date such amount is actually paid or the benefit provided as a result of the failure of this Agreement (or any other arrangement that is required to be aggregated with this Agreement under Code Section 409A) to comply with Code Section 409A, then the Employee shall receive a distribution, in a lump sum, within 90 days after the date it is finally determined that the Agreement (or such other arrangement that is required to be aggregated with this Agreement) fails to meet the requirements of Section 409A of the Code; such distribution shall equal the lesser of (i) the amount required to be included in the Employee’s income as a result of such failure and (ii) the benefits otherwise due hereunder, and shall in any event reduce the amount of payments or benefits otherwise due hereunder.

17. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

-13-

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.


NICHOLAS FINANCIAL, INC.

By:		/s/ Ralph Finkenbrink
		Ralph T. Finkenbrink
		President and Chief Executive Officer

EMPLOYEE:

/s/ Katie MacGillivary

Printed Name: Katie L. MacGillivary

-14-

APPENDIX A

A-1

Exhibit 10.11

FISCAL 2015/2016/2017 ANNUAL INCENTIVE BONUS PLAN SUMMARY

The Company’s named executive officers are: Ralph T. Finkenbrink, President and Chief Executive Officer; Kevin D. Bates, Senior Vice President of Branch Operations; and Katie L. MacGillivary, Vice President of Finance, Chief Financial Officer and Corporate Secretary. The Company establishes annual incentive bonus programs for its named executive officers. The annual incentive bonus programs for the fiscal year ending March 31, 2017 (“Fiscal 2017”) have not been established as of the date of filing of the Annual Report on Form 10-K for the fiscal year ended March 31, 2016, but they are expected to be in place by the time of filing the Proxy Statement and Information Statement relating to the 2016 Annual General Meeting of Shareholders. Set forth below is a summary of the principal terms of such annual incentive bonus programs for the fiscal year ended March 31, 2015 (“Fiscal 2015”) and the fiscal year ended March 31, 2016 (“Fiscal 2016”):

Fiscal 2015

Discretionary Cash Bonuses . In addition to his or her annual base salary, each of Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary was entitled to receive cash bonuses for Fiscal 2015 at the discretion of the Compensation Committee of the Company’s Board of Directors. The Compensation Committee awarded cash bonuses for Fiscal 2015 of $35,000, $25,000 and $15,000 to Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary, respectively. In determining such bonuses, the Compensation Committee considered various factors it deemed appropriate, such as (without limitation) profitability, portfolio growth, branch expansion, and competitive circumstances. The Compensation Committee granted Mr. Finkenbrink a $25,000 cash bonus upon his becoming President and Chief Executive Officer of the Company.

Equity Awards . The Company’s current Named Executive Officers received the following equity awards under the Equity Plan as part of the Fiscal 2015 incentive bonus program:


Executive Officer	Restricted Stock*	Non-Qualified Stock Options**
Ralph T. Finkenbrink	20,000	40,000
Kevin D. Bates	12,000	25,000
Katie L. MacGillivary	8,000	15,000

*	These awards were granted effective June 13, 2014 will vest on March 31, 2017.

**	These awards were granted effective June 13, 2014, will vest in five equal installments commencing as of the first anniversary of the date of grant, and expire on June 13, 2024.

Fiscal 2016

The Compensation Committee awarded cash bonuses for Fiscal 2016 of $32,500, $25,000 and $17,500 to Mr. Finkenbrink, Mr. Bates and Ms. MacGillivary, respectively. In determining such bonuses, the Compensation Committee considered various factors it deemed appropriate, such as (without limitation) profitability, portfolio growth, branch expansion, and competitive circumstances.

EXHIBIT 10.13

NICHOLAS FINANCIAL, INC.

2015 OMNIBUS INCENTIVE PLAN

STOCK OPTION AWARD

[Name]

[Address]

Dear :

You have been granted an option (the “Option”) to purchase shares of common stock of Nicholas Financial, Inc. (the “Company”) under the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the “Plan”) with the following terms and conditions:


Grant Date:		, 20

Type of Option:		[Nonqualified or Incentive Stock Option]

Number of Option Shares:

Exercise Price per Share:		U.S. $

Termination Date:		Earlier to occur of: • Close of business at the Company headquarters on the tenth (10 ^th ) anniversary of the Grant Date, and • Thirty (30) days after your termination of employment or service. Your entire Option (whether vested or nonvested) is terminated immediately if your employment or service is terminated for Cause. In addition, if you have submitted a notice of exercise that has not yet been processed and you are terminated for Cause, your notice of exercise will be rescinded and your exercise price will be returned to you.

Vesting:		percent ( %) of your Option will vest on each of the first anniversaries of the Grant Date. If your employment or service terminates prior to the date your Option is fully vested as a result of death, Disability or Retirement, your Option will become fully vested on the date of such termination. Upon any other termination of employment from, or cessation of services to, the Company and its Affiliates, the unvested portion of your Option will terminate.



Manner of Exercise:		You may exercise this Option only to the extent vested and only if the Option has not terminated. To exercise this Option, you must complete the “Notice of Stock Option Exercise” form provided by the Company and return it to the address indicated on the form. The form will be effective when it is received by the Company. However, the Shares you are electing to purchase will not be delivered until the total exercise price and all applicable withholding taxes have been paid as provided in the Plan. If someone else wants to exercise this Option after your death, that person must contact the Company and prove to the Company’s satisfaction that he or she is entitled to do so. Your ability to exercise the Option may be restricted by the Company if required by applicable law.

Change of Control:		Upon a Change of Control, this Option will be treated as set forth in the Plan.

Restrictions on Resale:		By accepting this Option, you agree not to sell any Shares acquired under this Option at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale.

Notice of Sale:		If this Option is designated as an incentive stock option, you must promptly report to the Secretary of the Company any disposition of the Shares acquired under this Option that is made within two (2) years from the Grant Date or within twelve (12) months from the date you acquired the Shares (the “Notice Period”). In addition, the Company may, at any time during the Notice Period, place a legend or legends on any certificate(s) for the Shares, or enter an appropriate stop transfer order if the Shares are in book entry form, requesting the Company’s transfer agent to notify the Company of any transfer of the Shares.

Recoupment:		This Option is subject to any recoupment or clawback policy that is adopted by, or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards to, the Company from time to time.

Miscellaneous:		• This Stock Option Award may be amended only by written consent signed by you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan. • The failure of the Company to enforce any provision of this Stock Option Award at any time shall in no way constitute a waiver of such provision or of any other provision hereof.

• In the event any provision of this Stock Option Award is held illegal or invalid for any reason, such illegality or invalidity shall not affect the legality or validity of the remaining provisions of this Stock Option Award, and this Stock Option Award shall be construed and enforced as if the illegal or invalid provision had not been included in this Option.

• As a condition of the granting of this Option, you agree, for yourself and your legal representatives or guardians, that this Stock Option Award shall be interpreted by the Administrator and that any interpretation by the Administrator of the terms of this Stock Option Award and any determination made by the Administrator pursuant to this Stock Option Award shall be final, binding and conclusive.

• This Stock Option Award may be executed in counterparts.

This Option is granted under and governed by the terms and conditions of the Plan. Additional provisions regarding your Option and definitions of capitalized terms used and not defined in this Option can be found in the Plan.

BY SIGNING BELOW AND ACCEPTING THIS STOCK OPTION AWARD, YOU AGREE

TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN.

YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN AND THE

PROSPECTUS DESCRIBING THE PLAN.


NICHOLAS FINANCIAL, INC.

By:
Name:				Recipient
Title:

EXHIBIT 10.14

NICHOLAS FINANCIAL, INC.

2015 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK AWARD

[Name]

[Address]

Dear :

You have been granted a Restricted Stock Award for shares of common stock of Nicholas Financial, Inc. (the “Company”) under the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the “Plan”) with the following terms and conditions:


Grant Date:		, 20

Number of Restricted Shares:		Shares

Vesting Schedule:		percent ( %) of your Restricted Shares will vest on each of the first anniversaries of the Grant Date. If your employment or service terminates prior to the date your Restricted Shares are vested as a result of death or Disability, or if the Company terminates your employment for other than Cause, your Restricted Shares will become fully vested on the date of such termination. In addition, upon a Change of Control, all of your Restricted Shares will become fully vested. Upon any other termination of employment or service, you will forfeit the Restricted Shares that have not yet vested.

[Issuance by Certificate or Book Entry] [Escrow]:		[Issuance:] The Company will issue certificate(s) or make an appropriate book entry in your name evidencing your Restricted Shares as soon as practicable following your execution of this Restricted Stock Award. If the Restricted Shares are issued in certificated form, in addition to any other legends placed on the certificate(s), such certificate(s) will bear the following legend: “The sale or other transfer of the Shares represented by this certificate, whether voluntary or by operation of law, is subject to restrictions set forth in a Restricted Stock Award agreement, dated as of , by and between Nicholas Financial, Inc. and the registered owner hereof. A copy of such agreement may be obtained from the Secretary of Nicholas Financial, Inc.” If the Restricted Shares are issued in book-entry form, they will be subject to an appropriate stop-transfer order. Upon the vesting of the Restricted Shares, you will be entitled to a new certificate for the Shares that have vested, without the foregoing legend, or to have such stop-transfer order removed, as applicable, upon request to the Secretary of the Company.



		[Escrow:] Your Restricted Shares will be held in escrow by the Company, as escrow agent. The Company will give you a receipt for the Shares held in escrow that will state that the Company holds such Shares in escrow for your account, subject to the terms of this Restricted Stock Award, and you will give the Company a stock power for such Shares duly endorsed in blank which will be used in the event such Shares are forfeited in whole or in part. As soon as practicable after the vesting date, the Restricted Shares will cease to be held in escrow, and the vested Shares will be issued in certificated or book entry form to you or, in the case of your death, to your estate.

Transferability of Restricted Shares:		You may not sell, transfer or otherwise alienate or hypothecate any of your Restricted Shares until they are vested. In addition, by accepting this Restricted Stock Award, you agree not to sell any Shares acquired under this Restricted Stock Award at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale.

Voting and Dividends:		While the Restricted Shares are subject to forfeiture, you may exercise full voting rights and will receive all dividends and other distributions paid with respect to the Restricted Shares, in each case so long as the applicable record date occurs before you forfeit such Shares. If, however, any such dividends or distributions are paid in Shares, such Shares will be subject to the same risk of forfeiture, restrictions on transferability and other terms of this Restricted Stock Award as are the Restricted Shares with respect to which they were paid.

Tax Withholding:		To the extent that the receipt of the Restricted Shares or the vesting of the Restricted Shares results in income to you for Federal, state or local income tax purposes, or the Company is otherwise obligated to withhold amounts in connection with the Restricted Shares, you shall deliver to the Company at the time the Company is obligated to withhold taxes in connection with such



		receipt or vesting, as the case may be, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations, and if you fail to do so, the Company has the right and authority to deduct or withhold from other compensation payable to you an amount sufficient to satisfy its withholding obligations. If you do not make an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, in connection with this Restricted Stock Award, you may satisfy the withholding requirement, in whole or in part, [if escrow: by electing to have the Company withhold for its own account that number of Restricted Shares otherwise deliverable to you from escrow hereunder on the date the tax is to be determined] [if issue: by electing to deliver to the Company that number of Restricted Shares (that would otherwise be vested on the date the tax is determined)] having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the Company must withhold in connection with the vesting of such Shares. Your election must be irrevocable, in writing, and submitted to the Secretary of the Company before the applicable vesting date. The Fair Market Value of any fractional Share not used to satisfy the withholding obligation (as determined on the date the tax is determined) will be paid to you in cash.

Miscellaneous:		• This Restricted Stock Award may be amended only by written consent signed by you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan. • The failure of the Company to enforce any provision of this Restricted Stock Award at any time shall in no way constitute a waiver of such provision or of any other provision hereof. • In the event any provision of this Restricted Stock Award is held illegal or invalid for any reason, such illegality or invalidity shall not affect the legality or validity of the remaining provisions of this Restricted Stock Award, and this Restricted Stock Award shall be construed and enforced as if the illegal or invalid provision had not been included in this Restricted Stock Award. • As a condition of the granting of this Restricted Stock Award, you agree, for yourself and your legal representatives or guardians, that this Restricted Stock Award shall be interpreted by the Administrator and that any interpretation by the Administrator of the terms of this Restricted Stock Award and any determination made by the Administrator pursuant to this Restricted Stock Award shall be final, binding and conclusive. • This Restricted Stock Award may be executed in counterparts.

This Restricted Stock Award is granted under and governed by the terms and conditions of the Plan. Additional provisions regarding your Restricted Stock Award and definitions of capitalized terms used and not defined in this Restricted Stock Award can be found in the Plan.

BY SIGNING BELOW AND ACCEPTING THIS RESTRICTED STOCK AWARD, YOU

AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE

PLAN. YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN AND THE

PROSPECTUS DESCRIBING THE PLAN.


NICHOLAS FINANCIAL, INC.

By:
Name:				Recipient
Title:

EXHIBIT 10.15

NICHOLAS FINANCIAL, INC.

2015 OMNIBUS INCENTIVE PLAN

PERFORMANCE SHARE AWARD

[Name]

[Address]

Dear :

You have been granted a Performance Share Award for shares of common stock of Nicholas Financial, Inc. (the “Company”) under the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the “Plan”) with the following terms and conditions:


Performance Period:		, 20 through , 20

Performance Criteria:		You will earn a number of Shares based on the Company’s achievement of the Performance Goal at the end of the Performance Period as follows: Achievement Number of Performance Shares Earned % of Target % of Target Target % of Target % of Target

		The “Target” Performance Goal for the Performance Period is .

		If your employment or service terminates prior to the end of the Performance Period due to death or Disability, you will be eligible to receive a number of Performance Shares equal to the number of shares specified above assuming the Target Performance Goal had been met, multiplied by a fraction, the numerator of which is the number of days that have elapsed since the first day of the Performance Period to the date of your termination, and the denominator of which is equal to the number of days in the full Performance Period. For this purpose, “Disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, as determined by the Administrator. If your employment or service terminates prior to the end of the Performance Period for any other reason, this Performance Share Award will terminate in full on the date of such termination and you will not earn any Performance Shares.


Issuance by Certificate or Book Entry:		As soon as practicable (but in no event later than 2 ¹ ⁄ ₂ months) after the end of the Performance Period, the Company will issue your earned Performance Shares in your name in certificated form or by book entry. If, however, you terminate employment or service due to death or Disability, the Company will issue your earned Performance Shares in certificated form or by book entry as soon as practicable (but in no event later than 2 ¹ ⁄ ₂ months) after the date of your termination.

Rights as Shareholder:		You will not be deemed for any purposes to be a shareholder of the Company with respect to any of the Shares subject to this Performance Share Award unless and until earned Performance Shares have been issued to you in certificated form or by book entry. Accordingly, until such issuance, you may not exercise any voting rights and you will not be entitled to receive any dividends, dividend equivalent payments or other distributions with respect to the Shares subject to this Performance Share Award.

Change of Control:		Upon a Change of Control, the Performance Shares will be treated as set forth in the Plan.

Transferability of Shares:		By accepting this Performance Share Award, you agree not to sell any Shares acquired under this Performance Share Award at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale.

Tax Withholding:		To the extent that the Performance Shares result in income to you for Federal, state or local income tax purposes, or the Company is otherwise obligated to withhold amounts in connection with the Performance Shares, you shall deliver to the Company at the time the Company is obligated to withhold taxes in connection with such receipt, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations, and if you fail to do so, the Company has the right and authority to deduct or withhold from other compensation payable to you an amount sufficient to satisfy its withholding obligations. You may satisfy the withholding requirement, in whole or in part, by electing to have the Company withhold for its own account that number of Performance Shares otherwise deliverable to you having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the Company must withhold in connection with the vesting of such Shares. Your election must be irrevocable, in writing, and submitted to the Secretary of the Company before the date the Shares are distributed. The Fair Market Value of any fractional Share not used to satisfy the withholding obligation (as determined on the date the tax is determined) will be paid to you in cash.


Recoupment:		This Performance Share Award shall be subject to any recoupment or clawback policy that is adopted by, or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards to, the Company from time to time.

Miscellaneous:		• This Performance Share Award may be amended only by written consent signed by you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan. • The failure of the Company to enforce any provision of this Performance Share Award at any time shall in no way constitute a waiver of such provision or of any other provision hereof. • In the event any provision of this Performance Share Award is held illegal or invalid for any reason, such illegality or invalidity shall not affect the legality or validity of the remaining provisions of this Performance Share Award, and this Performance Share Award shall be construed and enforced as if the illegal or invalid provision had not been included in this Performance Share Award. • As a condition of the granting of this Performance Share Award, you agree, for yourself and your legal representatives or guardians, that this Performance Share Award shall be interpreted by the Administrator and that any interpretation by the Administrator of the terms of this Performance Share Award and any determination made by the Administrator pursuant to this Performance Share Award shall be final, binding and conclusive. • This Performance Share Award may be executed in counterparts.

This Performance Share Award is granted under and governed by the terms and conditions of the Plan. Additional provisions regarding your Performance Share Award and definitions of capitalized terms used and not defined in this Performance Share Award can be found in the Plan.

BY SIGNING BELOW AND ACCEPTING THIS PERFORMANCE SHARE AWARD, YOU

AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE

PLAN. YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN AND THE

PROSPECTUS DESCRIBING THE PLAN.

Exhibit 10.19


		NICHOLAS FINANCIAL, INC.
		*Automobile Dealer Retail Agreement*

Non-Recourse Dealer Retail Agreement

The undersigned Dealer proposes to sell to the undersigned Nicholas Financial, Inc. (NFI), from time to time, Promissory Notes, Security Agreements, Retail Installment contracts, Conditional Sales Contracts, or other instruments hereinafter referred to as “Contracts”, evidencing installment payment obligations owing Dealer arising from the time sale of motor vehicle(s) and secured by such Contracts. It is understood that NFI shall have the sole discretion to determine which Contracts it will purchase from Dealer.

Dealer represents and warrants that Contracts submitted to NFI for purchase shall represent valid, bona fide sales for the respective amount therein set forth in such Contracts and that such Contracts represent sales of motor vehicles owned by the Dealer and are free and clear of all liens and encumbrances.

2.	Upon purchase by NFI of any contracts hereunder from dealer, dealer shall endorse and assign to NFI the obligations and all pertinent security, security instruments, along with such provisional endorsements as may be stipulated for such contracts purchased by NFI.

3.	This Agreement, and sums payable hereunder, may not be assigned by Dealer without written consent of NFI.

Dealer acknowledges that NFI charges an acquisition fee and a $75.00 loan processing charge on all contracts purchased and funded by NFI. The acquisition fee and loan processing charge are taken from Dealer Proceeds and are Non-Refundable. The amount is disclosed on each transaction and is set by Nicholas Financial, Inc.

Perfection of Security Interest: For each Contract purchased by NFI, Dealer shall, within 20 days of the date of the Contract or within a lesser time period if required by applicable law, file and record all documents necessary to properly perfect the valid and enforceable first priority security interest of NFI in the Vehicle and shall send NFI all security interest filing receipts. A Contract shall be subject to Repurchase for the life of the Contract if NFI suffers a loss due to the Dealership’s failure to (1) file and record, within 20 days of the date of the Contract or within a lesser time period if required by applicable law, all documents required to properly perfect the valid and enforceable first priority security interest of NFI in the Vehicle; (2) send NFI the filing receipts reflecting said perfection.

Indemnity : As a separate and cumulative obligation, Dealer shall defend and hold NFI harmless from any and all claims, defenses, offsets, damages, suits, administrative or other proceedings, cost (including reasonable attorney’s fees), expenses, losses, and liabilities. (Collectively Claims) arising out of connected with or relating to the Contract or the goods or services sold there under. Timing of indemnification is within 7 days of demand by NFI.

7.	*Add-on Products and Services:*

Defined . “Add-on Products and Services,” or “APS,” shall mean service contracts, mechanical breakdown contracts, GAP contracts, credit life and credit accident and health insurance. In addition, the term shall include other products and services acceptable to and approved in writing by NFI from time to time.

Cancellation of APS . If APS has been sold by the Dealer and financed in a Contract purchased by NFI, Dealer agrees that such APS shall be cancelable upon demand by Buyer. Upon such cancellation, Dealer shall immediately notify NFI that the Buyer has canceled the APS. Upon cancellation, Buyer shall be entitled to a refund of the unearned portion of the cash price of the APS as provided in the APS Contract or as may otherwise be required by law, whichever is greater. As between NFI and Dealer, Dealer agrees to pay to NFI, as appropriate, any refund due to Buyer under the terms of an APS Contract. Dealer’s liability under this Section shall be limited to the amount Dealer collected and retained or otherwise received, directly or indirectly, in connection with the sale of the APS.

Privacy: Dealer shall not make any unauthorized disclosure of, or use any personal information of individual consumers which it receives from NFI or on NFI’s behalf other than to carry out the purposes for which such information is received. NFI and Dealer shall comply in all respects with all applicable requirements of Title V of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations.

9.	No Provisions hereof may be modified, changed or supplemented, unless both parties agree to the amendment in writing.


Nicholas Financial, Inc.						Dealer:

By:						By:

Date:						Date:

DEALER NAME

123 AUTO LLC

12K & UNDER MOTORS

1ST AUTO SALES INC

1ST CHOICE AUTO FINANCING INC

1ST CHOICE AUTO SALES INC

1ST CHOICE CAROLINA CARS

1ST STOP MOTORS INC

1ST STOP USED AUTOS

247 AUTO SALES

27 MOTORS

2ND CHANCE AUTO OF ALABAMA LLC

31-W AUTO SALES LLC

360 MOTOR CORP

4042 MOTORS LLC

4042 MOTORSPORTS LLC

44 AUTO MART

5 POINTS AUTO MASTERS

5 STAR AUTO PLEX

5 STAR INDY AUTO LLC

83 AUTO SALES LLC

A & D MOTORS SALES CORP

A & D MOTORS, INC.

A & K WHOLESALER LLC

A & S AUTO AND TRUCK SALES LLC

A 2 Z AUTOS

A PLUS CAR SALES & RENTALS INC

A.R.J.’S AUTO SALES, INC

A.Z. AUTOMOTIVE INC

A1 MOTORS INC

AAA AUTO WHOLESALE LLC

AACC AUTO CAR SALES, INC

ABBY’S AUTOS, INC.

ABC AUTO TRADE USA, LLC

ABRAHAM AUTOS

ACCU-CAR EXPO INC

ACCURATE AUTO GROUP INC

ACCURATE AUTOMOTIVE OF

ACE MOTOR GROUP LLC

ACES AUTO MART

ACTION AUTO SALES

ACTION MOTORS, INC.

DEALER NAME

ACTIVE AUTO SALES

ACURA OF GAINSVILLE

ACURA OF ORANGE PARK

ADAM AUTO GROUP INC

ADAM RUE AUTO SALES INC

ADAMS AUTO SALES INC

ADAMSON FORD LLC

ADVANCE AUTO WHOLESALE, INC.

ADVANCED AUTO BROKERS, INC.

ADVENTURE STORE X4 LLC

ADVENTURE SUBARU LLC

AFFORDABLE AUTO MOTORS, INC

AFFORDABLE AUTO SALES

AFFORDABLE USED CARS & TRUCKS

AJ CAR SALES

AJ JR AUTO SALES

AJ’S AUTO

AJ’S AUTO IMPORTS

AK IMPORTS AUTO SALES

AL PIEMONTE SUZUKI INC

ALEXIS MOTORCAR LLC

ALFA AUTO MALL LLC

ALL ABOUT AUTO’S INC

ALL AMERICAN AUTO MART

ALL AMERICAN AUTO SALES INC

ALL AMERICAN MOTORS

ALL CARS LLC

ALL CREDIT AUTO FINANCE, INC

ALL MAKES AUTO SALES INC

ALL SEASON AUTO SALES LLC

ALL STAR DODGE CHRYSLER JEEP

ALLAN VIGIL FORD

ALLEN TURNER AUTOMOTIVE

ALLEN TURNER CHEVROLET

ALLIANCE AUTO SALES LTD

ALLSTAR MOTORS, INC.

ALLSTATE LEASING & SALES INC

ALLURE AUTO SALES LLC

ALM MALL OF GEORGIA

ALPHA MOTORS LLC

AL’S AUTO MART

ALTAMAHA MOTORS LLC

DEALER NAME

ALTERNATIVES

AMERICAN AUTO SALES

AMERICAN AUTO SALES WHOLESALE

AMERICAN MOTOR GROUP OF

AMERICAN SALES & LEASING INC

AMERIFIRST AUTO CENTER, INC.

AMG AUTO SALES INC

AMS CARS

ANDERSON MOTORS

ANDY MOHR FORD, INC.

ANDY MOHR NISSAN, INC.

ANDYS AUTO SALES

ANSWER ONE MOTORS

ANTHONY PONTIAC GMC BUICK INC

ANTHONY UNDERWOOD AUTOMOTIVE

ANTHONY WAYNE AUTO SALES

ANY CAR USA

APPLE FINANCE CO INC

APPROVAL AUTO CREDIT INC.

APPROVED AUTOS LLC

AR MOTORSPORTS INC

ARAK AUTO SALES & SERVICES INC

ARC AUTO LLC

ARCADIA CREEK AUTO SALES LLC

ARCHER AUTOMOTIVE INC

ARENA AUTO SALES

ARES FINANCIAL SERVICES LLC

ARI MOTORS INC

ARIA AUTO SALES INC

ARLA’S USED CARS

ARMANDOS INC

ARMSTRONG FORD OF HOMESTEAD

ART MOEHN CHEVROLET, CO.

A’S USED CARS INC

ASANKA CARS.COM

ASHEBORO NISSAN, INC

ATA TRUCK & AUTO SALES

ATCHINSON FORD SALES

ATL AUTOS .COM

ATLANTA AUTO BROKERS

ATLANTA AUTOMOTIVE GROUP

ATLANTA BEST CARS INC

DEALER NAME

ATLANTA LUXURY MOTORS INC

ATLANTA USED CARS CENTER, INC

ATLANTIS RENT A CAR AND

ATLAS AUTOPLEX

AUCTION DIRECT AUTO SALES

AUCTION DIRECT USA

AUFFENBERG USED CARS

AURORA MOTOR CARS

AUTO AMERICA

AUTO BANK

AUTO BOUTIQUE

AUTO BRIGHT AUTO SALES

AUTO BUY CENTER

AUTO CENTER OF GREER LLC

AUTO CENTERS ST CHARLES LLC

AUTO CENTRAL SALES INC

AUTO CITY AT CLAYTON

AUTO CITY LLC

AUTO CLUB OF MIAMI

AUTO CLUB OF SOUTHWEST FLORIDA

AUTO CONNECTION JAX LLC

AUTO CREDIT & FINANCE CORP

AUTO CREDIT CONNECTION, LLC

AUTO DEALER SOLUTIONS INC

AUTO DIRECT COLUMBUS OH

AUTO DIRECT PRE-OWNED

AUTO ELITE DFW

AUTO ENTERPRISE CO

AUTO EXCHANGE

AUTO EXCHANGE OF CENTRAL

AUTO EXCHANGE USA CORP

AUTO EXPO HOUSTON

AUTO EXPRESS ENTERPRISE INC

AUTO FINANCE OF TAMPA INC

AUTO FINDERS, INC.

AUTO GLOBAL

AUTO GROUP USA

AUTO HUB PLUS INC

AUTO JUNCTION LLC

AUTO KINGS

AUTO LIAISON INC

AUTO LIBERTY OF ARLINGTON

DEALER NAME

AUTO LINE, INC.

AUTO LIQUIDATORS OF TAMPA, INC

AUTO MAC 2

AUTO MAC CARS & CREDIT

AUTO MALL OF TAMPA INC

AUTO MART OF PASCO

AUTO MASTERS AUTO SALES LLC

AUTO MAX TOLEDO

AUTO MEGA STORE LLC

AUTO NATIONS INC

AUTO NETWORK OF THE TRIAD LLC

AUTO NETWORK, INC.

AUTO OPTION LLC

AUTO PASS SALES & SERVICE CORP

AUTO PLANET II INC

AUTO PLAZA

AUTO PLAZA INC

AUTO PLAZA MOTORS

AUTO PLAZA USA

AUTO POINT USED CAR SALES

AUTO PROFESSION CAR SALES 2

AUTO PROFESSIONAL CAR SALES

AUTO RITE, INC

AUTO SALES OF WINTER GARDEN

AUTO SALES USA

AUTO SEARCH ONE INC

AUTO SELECT

AUTO SELECT INC

AUTO SELECTION OF CHARLOTTE

AUTO SHOWCASE

AUTO SMART

AUTO SMART PINEVILLE INC

AUTO SOLUTIONS

AUTO SOLUTIONS MOTOR COMPANY

AUTO SOLUTIONS OF GREENSBORO

AUTO SOURCE CAROLINA LLC

AUTO SPA AUTOMOTIVE SALES INC

AUTO SPORT, INC.

AUTO STAR

AUTO STOP INC

AUTO STORE OF GARNER

AUTO TRADEMARK

DEALER NAME

AUTO TREE

AUTO TRUST LLC

AUTO UNION OF MIAMI INC

AUTO VILLA

AUTO VILLA OUTLET

AUTO VILLA WEST

AUTO VILLAGE

AUTO WAREHOUSE INC

AUTO WEEKLY SPECIALS

AUTO WISE AUTO SALES

AUTO WISE BUYING SERVICE INC

AUTO WORLD

AUTO WORLD INC

AUTOLAND

AUTOLINE INDY

AUTOLINK

AUTOMAC USA INC

AUTOMALL 59

AUTOMANIAC INC

AUTOMAR CAR SALES INC

AUTOMART LLC

AUTOMAX

AUTOMAX ATLANTA

AUTOMAX CHRYSLER DODGE JEEP

AUTOMAX KC LLC

AUTOMAX OF CHESTER COUNTY

AUTOMAXX OF SUMMERVILLE

AUTOMOBILE COMMODITY LLC

AUTOMONSTA

AUTOMOTIVE WHOLESALE CENTER

AUTONET GROUP LLC

AUTONOMICS

AUTO-ONE USA LLC

AUTOPLEX AUTO SALES &

AUTORAMA PREOWNED CARS

AUTORANGE INC

AUTORV MART

AUTOS DIRECT OF FREDERICKSBURG

AUTOS R US

AUTOSHOW SALES AND SERVICE

AUTOSPOT CAR SALES

AUTOTEAM INC

DEALER NAME

AUTOTEAM OF VALDOSTA LLC

AUTOVATION

AUTOWAY CAR SALES LLC

AUTOWAY NISSAN

AUTOWAY TOYOTA

AUTOWORLD OF GREENWOOD LLC

AUTOWORLD USA

AVERY AUTO SALES INC

AXELROD PONTIAC

AXIOM MOTORS

B AND B AUTO BROKERS LLC

BALLPARK AUTO LLC

BANK AUTO SALES

BARBIES AUTOS CORPORATION

BARGAIN SPOT CENTER

BARLEY’S AFFORDABLE AUTO SALES

BARTS CAR STORE INC

BASELINE AUTO SALES, INC.

BATES FORD INC

BAUCOM MOTORS LLC

BAYSIDE AUTOMALL

BEACH AUTO BROKERS, INC

BEACH BOULEVARD AUTOMOTIVE INC

BECKHAM AUTOMOTIVE GROUP

BECK’S AUTO GROUP

BEDFORD AUTO WHOLESALE

BEHLMANN BUICK GMC CADILLAC

BEHLMANN ST PETERS PREOWNED

BELAIR ROAD DISCOUNT AUTO

BELLAMY AUTOMOTIVE GROUP, INC

BELLS AUTO SALES

BEN MYNATT NISSAN

BENSON CADILLAC NISSAN, INC.

BENSON FORD MERCURY

BENSON NISSAN

BEREA AUTO MALL

BEREA MOTORS INC

BERGER CHEVROLET

BERT SMITH INTERNATIONAL

BESSEMER CHR LLC

BEST AUTO SELECTION INC

BEST BUY MOTORS LLC

DEALER NAME

BEST CAR FOR LESS

BEST CARS KC INC

BEST DEALS CARS INC

BEST DEALS ON WHEELS AUTO

BEST MOTORS, INC

BEST N VALUE AUTO SALES

BEST PRICE AUTO SALES

BEST PRICE DEALER INC

BEST VALUE AUTO SALES INC

BEST WAY MOTORS LLC

BESTWAY AUTO BROKERS LLC

BETTER AUTOMALL OF STUART

BETTER VALUE AUTOS, INC.

BEXLEY MOTORCAR COMPANY LLC

BIARTI AUTO SALES LLC

BIC MOTORS LLC

BICKEL BROTHERS AUTO SALES INC

BIG BLUE AUTOS, LLC

BIG BOYS TOYS FLORIDA LLC

BIG CHOICES AUTO SALES INC

BIG M CHEVROLET

BIG O DODGE OF GREENVILLE, INC

BIG STATE DISCOUNT

BILL BLACK CHEVROLET,

BILL BUCK CHEVROLET, INC

BILL KAY CHEVROLET GEO INC

BILL KAY FORD INC

BILL MAC DONALD FORD INC

BILL PENNEY TOYOTA

BILL STANFORD PONT CAD OLDS GM

BILLS & SON AUTO SALES INC

BILLS AUTO SALES & LEASING,LTD

BILLY HOWELL FORD-LINCOLN-

BILLY RAY TAYLOR AUTO SALES

BILLY WILLIAMS AUTO SALES INC

BILTMORE MOTOR CORP.

BIRMINGHAM WHOLESALE AUTO LLC

BLOOMINGTON AUTO CENTER

BLUE SPRINGD FORD SALES INC

BLUESLADE MOTOR CARS LLC

BLVD SELECT PREOWNED

BOB HOOK OF SHELBYVILLE, LLC

DEALER NAME

BOB KING’S MAZDA

BOB MAXEY FORD

BOB MAXEY LINCOLN-MERCURY

BOB PFORTE MOTORS

BOB PULTE CHEVROLET GEO, INC.

BOB STEELE CHEVROLET INC.

BOBB DUNN FORD, INC

BOBB SUZUKI

BOBBY LAYMAN CHEVROLET, INC.

BOBBY MURRAY TOYOTA

BOLUFE ENTERPRISES, INC.

BOMMARITO CHEVROLET MAZDA

BOOMERS TRUCKS & SUVS LLC

BORCHERDING ENTERPRISE, INC

BORN FREE SALES INC

BOWMAN AUTOMOTIVE INC

BRADLEY CHEVROLET, INC.

BRAD’S USED CARS

BRADYS AUTO SALES LLC

BRAMAN HONDA OF PALM BEACH

BRAMLETT PONTIAC INC

BRANDT AUTO BROKERS

BRANNAN AUTO SALES

BRAZIL AUTO MALL INC

BRECKENRIDGE MOTORS EAST LLC

BREVARD VALUE MOTORS

BRIDGEVIEW AUTO SALES INC

BRIGGS KIA

BROCKMAN AUTO LLC

BROGS AUTO

BROMAR LLC

BRONDES FORD MAUMEE LTD

BROOKS AUTO SALES

BROTHERS CHEVROLET OLDSMOBILE

BROWARD AUTO WHOLESALE LLC

BROWN’S AUTO SALES

BRYANT AUTO SALES INC

BUCKEYE CHRYSLER JEEP DODGE

BUCKEYE FORD LINCOLN MERC OF O

BUCKEYE MOTORS

BUCKEYE NISSAN, INC.

BUD LAWRENCE INC

DEALER NAME

BUDGET CAR SALES & RENTALS

BUDGET MOTORCARS

BURL’S USED CARS

BURNS AUTO MART LLC

BURNWORTH ZOLLARS INC

BUSH AUTO PLACE

BUTLER KIA

BUY IT RIGHT AUTO SALES #1 INC

BUY IT RIGHT AUTO SALES LLC

BUY NOW AUTO SALES INC

BUY RIGHT AUTO SALES INC

BUYERS CHOICE AUTO CENTER LLC

BUYING ALL CARS.COM

BUZZ KARZ LLC

BYERLY FORD-NISSAN, INC

BYERS CHEVROLET LLC

BYERS DELAWARE

BYERS DELAWARE AUTO LLC

BYERS IMPORTS

BYERS KIA

C & J AUTO WORLD LLC

C & N AUTO SALES LLC

C & S SALES

C&H AUTO SALES

C.W. MOTORS INC

CADILLAC OF NOVI INC

CALHOUN AUTO OUTLET, INC

CALIFORNIA AUTO CONNECTION INC

CALVARY CARS & SERVICE, INC

CAMARENA AUTO, INC

CANNON BUICK-MITSUBISHI

CAPITAL AUTO SALES

CAPITAL AUTO SPORTS CENTER LLC

CAPITAL AUTOMOTIVE SALES

CAPITAL BUICK PONTIAC GMC LLC

CAPITAL CITY IMPORTS

CAPITAL MOTORS

CAPITAL MOTORS LLC

CAPITAL ONE AUTO GROUP LLC

CAPITOL AUTO

CAR BAZAAR INC OF FRANKLIN

CAR BIZ LLC

DEALER NAME

CAR BIZ OF TENNESSEE

CAR BOSS LLC

CAR CENTRAL

CAR CHOICE

CAR CHOICE ENTERPRISE II INC

CAR CITY USA LLC

CAR COLLECTINO INC

CAR COLLECTION OF TAMPA INC.

CAR CONNECTION INC

CAR COUNTRY

CAR CREDIT INC

CAR DEPOT

CAR EX AUTO SALES

CAR FACTORY OUTLET

CAR LEGENDS

CAR MART FL.COM

CAR NATION

CAR NATION LLC

CAR POINT OF ORLANDO INC

CAR SMART

CAR SMILE

CAR SOURCE

CAR SOURCE, LLC.

CAR SPOT OF CENTRAL FLORIDA

CAR TOWN KIA USA

CAR WHOLESALERS

CAR XPRESS AUTO SALES

CAR ZONE

CAR ZONE INC

CARCITY

CARDINAL MOTORS INC

CARDIRECT LLC

CARENA MOTORS, CO.

CAREY PAUL HONDA

CARISMA AUTO GROUP

CARITE OF FT MYERS LLC

CARL GREGORY CHRYSLER-DODGE-

CARL STONE AUTO SALES LLC

CARMA AUTOMOTIVE GROUP

CARMART AUTO SALES

CARMART AUTO SALES INC

DEALER NAME

CARMART USA LLC

CARMEL MOTORS

CARNATION LLC

CAROLINA AUTO EXCHANGE

CAROLINA AUTO SALEZ LLC 1

CAROLINA AUTO SPORTS

CARPLEX

CARPLUS AUTO SALES INC

CARPORT SALES & LEASING, INC.

CARRICK’S LLC

CARROLLTON MOTORS

CARS & CREDIT OF FLORIDA

CARS 4 YOU LLC

CARS CARS CARS LLC

CARS GONE WILD II LLC

CARS KONNECT INC

CARS N CARS, INC.

CARS OF SARASOTA LLC

CARS PLUS LLC

CARS TO GO AUTO SALES AND

CARS TRUCKS & CREDIT INC

CARS UNLIMITED

CARS.COM CARS & TRUCKS

CARSMART AUTO SALES LLC

CARSMART, INC.

CARTROPIX

CARZ4LESS

CARZONE USA

CAS SALES & RENTALS

CASCADE AUTO GROUP, LTD

CASH & DASH AUTO SALES INC

CASINO AUTOMOTIVE

CASTLE BUICK GMC

CAVALIER AUTO SALES INC

CC MOTORS INC

CC MOTORS INCORPORATED

CD S AUTOMOTIVE INC

CECIL CLARK CHEVROLET,INC.

CEDARCREST AUTO BROKERS LLC

CENTRAL FLORIDA EXPORTS, INC.

CENTRAL MOTOR WERKS, INC

CERTIFIED AUTO CENTER

DEALER NAME

CHAMPION CHEVROLET

CHAMPION CHEVROLET INC

CHAMPION OF DECATUR, INC.

CHAMPION PREFERRED AUTOMOTIVE

CHAMPS AUTO SALES INC

CHARLES BARKER PREOWNED OUTLET

CHARLOTTE MOTOR CARS LLC

CHASE AUTO GROUP

CHATHAM PARKWAY TOYOTA

CHECKERED FLAG HONDA

CHEIFS WHOLESALE AUTOS

CHERRY ROAD AUTO SALES

CHEVROLET OF SPARTANBURG

CHICAGO AUTO DEPOT INC

CHICAGO MOTORS INC

CHIEFLAND FORD

CHIPINQUE AUTO SALES INC

CHOICE AUTOMOTIVE GROUP

CHRIS BROOKS MOTORSPORTS, INC

CHRIS CARROLL AUTOMOTIVE

CHRIS LEITH AUTOMOTIVE INC

CHRIS SPEARS PRESTIGE AUTO

CHRYSLER DODGE JEEP RAM OF

CHRYSLER JEEP AT POSNER PARK

CHRYSLER JEEP OF DAYTON

CINCINNATI USED AUTO SALES

CIRCLE CITY ENTERPRISES, INC.

CITY AUTO SALES

CITY HYUNDAI

CITY MITSUBISHI

CITY STYLE IMPORTS INC

CITY TO CITY AUTO SALES, LLC

CITY USED CARS, INC

CITY WIDE AUTO CREDIT

CJ’S AUTO STORE

CLARK CARS INC

CLARK’S SUNSHINE

CLARKSVILLE AUTO SALES

CLASSIC AUTO GROUP INC

CLASSIC AUTOHAUS

CLASSIC BUICK OLDSMOBILE

CLASSIC CHEVROLET SUGAR LAND

DEALER NAME

CLASSIC CONNECTIONS INC

CLASSIC KIA OF CARROLLTON

CLASSIC MOTOR GROUP

CLAY COOLEY TOYOTA OF HAZELWOO

CLEAN MOTORS OF ORLANDO LLC

CLEVELAND AUTO MART

CLICK SELECT AUTO SALES, INC

CLIFF & SONS AUTO SALES

CLINT HOLMES AUTOMOTIVE

CM AUTO SALES INC

COASTAL AUTO GROUP INC. DBA

COASTAL CHEVROLET, INC.

COBB’S CAR COMPANY INC

COBRA SALES LLC

COCONUT CREEK HYUNDAI

COLE FORD LINCOLN LLC

COLON AUTO SALES INC

COLUMBUS AUTO RESALE, INC

COLUMBUS AUTO SOURCE

COLUMBUS CAR TRADER

COMBS & CO

COMMONWEALTH DODGE LLC

COMMUNITY AUTO SALES

COMPASS MOTORS OF ANDERSON

CONCOURS AUTO SALES, INC.

CONWAY HEATON INC

CONWAY IMPORTS AUTO SALES

COOK & REEVES CARS INC

COOK MOTOR COMPANY

COOPERATIVE AUTO BROKERS INC

COPELAND MOTOR COMPANY

CORAL WAY AUTO SALES INC

CORLEW CHEVROLET CADILLAC OLDM

CORPORATE CARS INC

CORPORATE FLEET MANAGEMENT

COUCH MOTORS LLC

COUGHLIN AUTOMOTIVE- PATASKALA

COUGHLIN FORD- JOHNSTOWN

COUGHLIN FORD OF CIRCLEVILLE

COUNTRY HILL MOTORS INC

COUNTRY HILL MOTORS, INC.

DEALER NAME

COUNTY MOTOR CO., INC.

COURTESY AUTOMOTIVE

COURTESY CHRYSLER JEEP DODGE

COURTESY FORD

COURTESY NISSAN

COURTESY PALM HARBOR HONDA

COURTESY TOYOTA

COX AUTO SALES

COX CHEVROLET INC

COYLE CHEVROLET

CRABBS AUTO SALES

CRAIG & LANDRETH INC

CRAMER HONDA OF VENICE

CREDIT APPROVAL AUTO GROUP INC

CREDIT SOLUTION AUTO SALES INC

CRENCOR LEASING & SALES

CRESTMONT CADILLAC

CRESTMONT HYUNDAI, LLC

CRM MOTORS, INC.

CRONIC CHEVROLET OLDSMOBILE

CRONIC CHEVROLET, OLDSMOBILE-

CROSS AUTOMOTIVE

CROSS KEYS AUTO INC

CROSS MOTORS CORPORATION

CROSS STATE MOTORS LLC

CROSSROADS AUTO MART INC

CROSSROADS AUTO SALES INC

CROWN ACURA

CROWN AUDI

CROWN AUTO SALES AND FINANCE

CROWN BUICK GMC

CROWN HONDA

CROWN KIA

CROWN MOTORS INC

CROWN NISSAN GREENVILLE

CRUISER AUTO SALES

CRYSTAL LAKE CHRYSLER JEEP INC

CULLMAN AUTO MALL

CUTIE CARS LLC

D & G CARS SALE CORP

DAILEY AUTO SALES LLC

DEALER NAME

DAILEYS USED CAR SALES LLC

DAN CUMMINS CHV BUICK PONTIAC

DAN TOBIN PONTIAC BUICK GMC

DAN TUCKER AUTO SALES

DAN VADEN CHEVROLET, INC.

DANE’S AUTO SALES LLC

DANNY MOTORS INC

DARCARS WESTSIDE PRE-OWNED

DAS AUTOHAUS LLC

DAVE GILL PONTIAC GMC

DAVE SINCLAIR LINCOLN

DAVES JACKSON NISSAN

DAVID SMITH AUTOLAND, INC.

DAWSON’S AUTO & CYCLE LLC

DAWSONS AUTO & TRUCK SALES INC

DAYTON ANDREWS INC.

DBA AUTONATION CHEVROLET

DEACON JONES AUTO PARK

DEALER SERVICES FINANCIAL CTR

DEALS 4U AUTO LLC

DEALS FOR WHEELS

DEALS ON WHEELS

DEALZ AUTO TRADE

DEALZ ON WHEELZ LLC

DEAN SELLERS, INC.

DECENT RIDE.COM

DEECO’S AUTO SALES INC

DEEP SOUTH SPECIALTIES LLC

DELRAY MAZDA

DENNIS AUTO POINT

DEPUE AUTO SALES INC

DESTINYS AUTO SALES

DFW AUTO FINANCE AND SALES

DIAMOND K MOTORS LLC

DICK BROOKS HONDA

DICK DEAN ECONOMY CARS INC

DICK MASHETER FORD, INC.

DICK NORRIS BUICK

DICK SCOTT DODGE

DIMMITT CHEVROLET

DIRECT AUTO EXCHANGE, LLC

DIRECT AUTO SALES

DEALER NAME

DIRECT AUTOMOTIVE

DIRECT MOTORSPORT LLC

DIRECT SALES & LEASING

DISCOUNT AUTO MART INC

DISCOUNT CARS OF MARIANNA INC

DISCOVERY AUTO CENTER LLC

DIXIE IMPORT INC

DIXIE WAY MOTORS INC

DM MOTORS, INC.

DODGE OF ANTIOCH INC

DOGWOOD AUTO WORKS INC

DON AYERS PONTIAC INC

DON BROWN CHEVROLET, INC.

DON FRANKLIN FORD, INC

DON HERRING MITSUBISHI

DON HINDS FORD, INC.

DON JACKSON CHRYSLER DODGE

DON MARSHALL CHYSLER CENTER

DON REID FORD INC.

DON SITTS AUTO SALES INC

DONLEY FORD LINCOLN

DORAL CARS OUTLET

DOUGLAS AUTO SALES INC

DOUG’S AUTO SALES INC

DOWNTOWN BEDFORD AUTO

DOWNTOWN HYUNDAI

DRAKE MOTOR COMPANY

DREAM CAR 4 U OF LAKELAND, LLC

DRIVE AUTO SALES

DRIVE NOW AUTO SALES

DRIVE OUT AUTO INC

DRIVE WITH PRIDE INC

DRIVEMAX, INC.

DRIVEN AUTO SALES

DRIVEN AUTO SALES LLC

DRIVER SEAT AUTO SALES LLC

DRIVERIGHT AUTO SALES, INC.

DRIVERS WORLD

DRIVEWAYCARS.COM

DUBLIN CADILLAC NISSAN GMC

DULUTH AUTO EXCHANGE

DUNN CHEVROLET OLDS INC.

DEALER NAME

DURAN MOTOR SPORTS INC

DURHAM MOTORS LLC

DURHAMS AUTO MART

DUTCH ISHMAEL CHEVROLET INC

DUVAL CARS LLC

DUVAL FORD

DYNAMIC AUTO WHOLESALES INC

DYNAMIC MOTOR COMPANY LLC

DYNASTY MOTORS

E & R AUTO SALES INC

E AUTO BROKERS OF FLORIDA INC

E AUTO SOLUTIONS

E CAR SUPERSTORE INC

E Z PAY AUTO SALE INC

EAGLE CAR & TRUCK INC

EAGLE ONE AUTO SALES

EASLEY MITSUBISHI’S THE

EAST ANDERSON AUTO SALES

EAST BEACH AUTO SALES

EAST LAKE AUTO SALES INC.

EAST LIMESTONE AUTOPLEX INC

EASTERN AUTO SALES NC LLC

EASTERN SHORE AUTO BROKERS INC

EASTGATE MOTORCARS, INC

EASTPOINTE AUTO SALES INC

EASY AUTO AND TRUCK

ECONO AUTO SALES INC

ECONOMIC AUTO SALES INC

ECONOMY MOTORS LLC

ED KOEHN FORD OF WAYLAND

ED MORSE AUTO PLAZA

ED MORSE MAZDA LAKELAND

ED NAPLETON OAK LAWN IMPORTS

ED TILLMAN AUTO SALES

ED VOYLES HONDA

ED VOYLES HYUNDAI

ED VOYLES KIA OF CHAMBLEE

EDDIE ANDRESON MOTORS

EDDIE MERCER AUTOMOTIVE

EDEN AUTO SALES

EDGE AUTO

DEALER NAME

EDGE MOTORS

EDWARDS CHEVROLET CO

EJ’S AUTO WORLD, INC.

EJ’S QUALITY AUTO SALES, INC.

ELEPHANT AUTOGROUP

ELITE AUTO SALES OF ORLANDO

ELITE AUTO SOLUTIONS

ELITE AUTO WHOLESALE

ELITE AUTOMALL LLC

ELITE IMPORTS LLC

ELITE LEVEL AUTO INC

ELITE MOTOR MALL

ELITE MOTORS

ELITE MOTORS, INC.

ELYRIA BUDGET AUTO SALES INC

EMJ AUTOMOTIVE REMARKETING

EMPIRE AUTO GALLERY CORPORATIO

EMPIRE AUTO SALES & SERVICE

EMPIRE AUTOMOTIVE GROUP

EMPIRE EXOTIC MOTORS, INC

ENCINOMAN INC

ENTERPRISE CAR SALES

ENTERPRISE LEASING COMPANY

EON AUTO LLC

ERNEST MOTORS, INC.

ERNIE PATTI AUTO LEASING &

ETTLESON HYUNDAI LLC

EVANS AUTO EXCHANGE

EVANS AUTO SALES

EVOLUTION CARS

EXCEL AUTO SALES

EXCEL MOTORS

EXCELLENCE AUTO DIRECT

EXCLUSIVE AUTO WHOLESALE LLC

EXCLUSIVE MOTOR CARS LLC

EXECUTIVE AUTO SALES

EXECUTIVE CARS LLC

EXECUTIVE MOTORS

DEALER NAME

EXOTIC MOTORCARS

EXPRESS AUTO SALES LLC

EXPRESS CAR SALES

EXPRESS MOTORS

EXPRESS MOTORS LLC

EXTREME DODGE DODGE TRUCK

EXTREME WINDOW TINTING SIGNS &

EZ CAR CONNECTION LLC

E-Z CAR CREDIT INC

F4 MOTORS

FACIDEAL AUTO CENTER INC

FACTORY DIRECT AUTO

FAIRLANE FORD SALES, INC.

FAITH MOTORS INC

FAMILY AUTO CENTER AND SERVICE

FAMILY KIA

FANELLIS AUTO

FANTASY AUTOMOTIVE

FASTLANE AUTO CREDIT INC

FAT SACK MOTORS, LLC

FATHER & SON AUTO SALES

FENTON NISSAN OF LEE’S SUMMIT

FERCO MOTORS CORP

FERMAN CHRYSLER JEEP DODGE AT

FERMAN FORD

FERMAN NISSAN

FIAT OF CREVE COEUR

FIAT OF SAVANNAH

FIAT OF SOUTH ATLANTA

FIAT OF WINTER HAVEN

FINAST AUTO SALES

FIREHOUSE MOTORS

FIRKINS C.P.J.S.

FIRST AUTO CREDIT

FIRST CHOICE AUTOMOTIVE INC

FIRST CLASS AUTO CHOICE

FIRST CLASS AUTO SALES LLC

FIRST CLASS MOTORS INC

FIRST COAST AUTO SALES INC

FIRST PLACE AUTO SALES

FIRST STOP AUTO SALES

FIRST UNION AUTOMOTIVE LLC

DEALER NAME

FISHER AUTO & RV SALES

FITZGERALD MOTORS, INC.

FIVE STAR AUTO SALES OF

FIVE STAR AUTOS INC

FIVE STAR CAR & TRUCK

FIVE STAR CHEVROLET CADILLAC

FIVE STAR FORD STONE MOUNTAIN

FIVE STARS SPORT CARS INC

FLAMINGO AUTO SALES

FLAMMER FORD OF SPRINGHILL

FLEET EXCHANGE INCORPORATED

FLETCHER CHRYSLER PRODUCTS INC

FLORENCE AUTO MART INC

FLORIDA AUTO EXCHANGE

FLORIDA AUTO SALES AND REPAIR

FLORIDA AUTO XCHANGE LLC

FLORIDA CARS USA

FLORIDA MOTORS

FLORIDA TRUCK SALES

FLOW HONDA

FLOW MOTORS

FMC AUTO SALES INC

FOOTHILL FORD

FORMULA ONE IMPORTS

FORT MYERS TOYOTA INC.

FORT PIERCE MOTORS, INC.

FORT WALTON BEACH

FORT WAYNE AUTO CONNECTION LLC

FORTUNE MOTOR GROUP

FOX MOTORS INC

FRANCO AUTO MOTORS LLC

FRANK LETA AUTOMOTIVE OUTLET

FRANK MYERS AUTO SALES, INC

FRANKLIN STREET MOTORS LLC

FRED ANDERSON KIA

FRED ANDERSON NISSAN OF RALEIG

FRED MARTIN FORD

FREEDOM AUTOMOTIVE GROUP LLC

FRENSLEY CHRYSLER PLYMOUTH

FRIENDLY FINANCE AUTO SALES

FRITZ ASSOCIATES

FRONTIER MOTORS INC

DEALER NAME

FROST MOTORS

FUSION AUTOPLEX LLC

FUTURE AUTO IMPORTS INC

G & J MOTORSPORTS INC

G & L MOTORS, INC

G & R AUTO SALES CORP

G BROTHERS AUTO BROKERS INC

G E A AUTO SALES

GAINESVILLE AUTO KI LLC

GAINESVILLE DODGE

GAINESVILLE MITSUBISHI

GALEANA CHRYSLER PLYMOUTH

GANLEY BEDFORD IMPORTS INC

GANLEY CHEVROLET, INC

GANLEY CHRYSLER JEEP DODGE INC

GANLEY LINCOLN MERCURY

GARLAND NISSAN LLC

GASTONIA CHRYSLER JEEP DODGE

GASTONIA NISSAN, INC

GATES CHEV PONT GMC BUICK

GATEWAY AUTO PLAZA

GATEWAY BUICK GMC

GATEWAY MOTORS OF TAMPA

GATOR CHRYSLER-PLYMOUTH, INC.

GATOR CITY MOTORS INC

GE MOTORS 1 LLC

GENERAL AUTO LLC

GENESIS AUTO SALES LLC

GENESIS OF SUMMERVILLE LLC

GEN-X CORP

GEOFF ROGERS AUTOPLEX

GEOFF ROGERS AUTOPLEX NORTH

GEORGE NAHAS CHEVROLET INC

GEORGE WEBER CHEVROLET CO

GEORGETOWN AUTO SALES

GEORGIA AUTO WORLD LLC

GEORGIA CHRYSLER DODGE

GEORGIA IMPORT AUTO

GERALDA AUTO SALES

GERMAIN NISSAN OF ALBANY, INC

GERMAIN TOYOTA

DEALER NAME

GETTEL HYUNDAI

GETTEL TOYOTA

GINN MOTOR COMPANY

GISELLE MOTORS, CORP

GLADDING CHEVROLET, INC.

GLADSTONE AUTO INC

GLEN BURNIE AUTO EXCHANGE, INC

GLENBROOK DODGE, INC.

GLOBAL 1 AUTO INC

GLOBAL AUTO LEASING LLC CIRCLE

GLOBAL PRE-OWNED INC

GLOBE AUTO SALES

GLOVER AUTO SALES

GMOTORCARS INC

GMT AUTO SALES, INC

GO! AUTO STORE

GODZILLA MOTORS INC

GOLD KEY AUTO INC

GOLD RUSH REMARKETING

GOLDEN GATE AUTOMOTIVE LLC

GOLDEN OLDIES

GOLLING CHRYSLER JEEP

GOOD BAD NO CREDIT AUTO SALES

GOOD CARMA MOTORS

GOOD MOTOR COMPANY

GOOD MOTORS, INC.

GOOD RIDES INC

GOOD TO GO AUTO SALES, INC.

GR MOTOR COMPANY

GRACE AUTOMOTIVE LLC

GRAHAM MOTOR COMPANY

GRAINGER NISSAN

GRANT CAR CONCEPTS

GRANT MOTORS CORP.

GRAVITY AUTOS ATLANTA

GRAVITY AUTOS ROSWELL

GREAT BRIDGE AUTO SALES

GREAT LAKES CHEVROLET BUICK

GREAT LAKES CHRYSLER DODGE JEE

GREAT LAKES HONDA

GREEN AUTO SALES INC

GREEN LIGHT CAR SALES

DEALER NAME

GREENBRIER DODGE OF CHES, INC.

GREEN’S TOYOTA

GREER NISSAN

GREG COATS CARS AND TRUCKS

GREG SWEET CHEVY BUICK OLDS

GREG SWEET FORD INC

GREGS COMPLETE AUTO REPAIR AND

GRIFFIN FORD SALES, INC.

GRIMALDI AUTO SALES INC

GROTE AUTOMOTIVE INC

GROW AUTO FINANCIAL INC

GROW AUTOMOTIVE

G’S AUTOMOTIVE

GUARANTEED CARS & CREDIT

GULF ATLANTIC WHOLESALE INC

GULF COAST AUTO BROKERS, INC.

GULF SOUTH AUTOMOTIVE

GULFSIDE MOTORS LLC

GWINNETT MITSUBISHI

GWINNETT PLACE NISSAN

GWINNETT SUZUKI

H & H AUTO SALES

H GROUP AUTO SALES

H&M AUTO SALES

HAGGERTY BUICK GMC INC

HAIMS MOTORS INC

HALE OF A DEAL AUTO GROUP INC

HALEY TOYOTA CERTIFIED

HALO AUTOSPORTS LLC

HAMILTON CHEVROLET INC

HAMMCO INC

HANNA IMPORTS

HANSELMAN AUTO SALES INC.

HAPPY AUTO MART

HAPPY CARS AUTO SALES

HAPPY HYUNDAI

HARBOR CITY AUTO SALES, INC.

HARBOR NISSAN

HARDIE’S USED CARS, LLC

HARDIN COUNTY HONDA

DEALER NAME

HARDY CHEVROLET

HARDY CHEVROLET INC.

HARRIET SALLEY AUTO GROUP LLC

HARRIGANS AUTO SALES

HATCHER’S AUTO SALES

HATFIELD USED CAR CENTER

HAVANA FORD INC.

HEADQUARTER HONDA

HEADQUARTER TOYOTA

HEADQUARTERS AUTO GROUP

HEB AUTO SALES INC

HENDERSONVILLE AUTO BROKERS

HENDRICK CHEVROLET LLC

HENDRICK CHRYSLER DODGE JEEP

HENDRICK HONDA

HENKUIS MOTORSPORTS LLC

HENNESSY FORD LINCOLN ATLANTA

HENNESSY MAZDA PONTIAC

HERITAGE AUTOMOTIVE GROUP

HERITAGE NISSAN

HERRINGTON AUTOMOTIVE

HI LINE IMPORTS INC

HIALEAH MOTORS INC

HIGH POINT IMPORTS LLC

HIGH Q AUTOMOTIVE CONSULTING

HIGH QUALITY AUTO SALES, INC

HIGHESTCASHFORCARS LLC

HIGHLINE IMPORTS, INC.

HILL & HILL AUTOMOTIVE SALES

HILL KELLY DODGE, INC

HILLMAN MOTORS, INC.

HILLTOP MOTORS

HILLWOOD AUTO SALES & SERVICE

HILTON HEAD NISSAN

HINESVILLE FORD COMPANY

HOBSON CHEVROLET BUICK GMC LLC

HOLLYWOOD CHRYSLER PLYMOUTH

HOLLYWOOD MOTOR CO #1

HOLLYWOOD MOTOR CO #3

HOLLYWOOD MOTOR SALES

HOMESTEAD MOTORS INC

HONDA CARS OF BRADENTON

DEALER NAME

HONDA MARYSVILLE

HONDA OF CONYERS

HONDA OF FRONTENAC

HONDA OF GAINESVILLE

HONDA OF MUFREESBORO

HONDA OF OCALA

HONDA OF TIFFANY SPRINGS

HONEYCUTT’S AUTO SALES, INC.

HOOSH’S AUTO SALES, INC.

HOOSIER AUTO LLC

HOOVER AUTOMOTIVE LLC

HOOVER CHRYSLER PLYMOUTH DODGE

HOOVER MITSUBISHI CHARLESTON

HOOVER THE MOVER CAR AND

HORACE G ILDERTON

HOUSTON AUTO EMPORIUM

HOUSTON CAR SALES INC

HOUSTON DIRECT AUTO

HOWARD AUTO GROUP

HT MOTORS INC

HUBLER AUTO PLAZA

HUBLER CHEVROLET INC

HUBLER FINANCE CENTER

HUBLER FORD LINCOLN MERCURY

HUBLER MAZDA SOUTH

HUBLER NISSAN, INC.

HUFFINES CHRYSLER JEEP DODGE

HUGH WHITE HONDA

HUGH WILLIAMS AUTO SALES INC

HUNT AUTOMOTIVE, LLC

HUNTER NISSAN

HUSTON BUICK GMC CADILLAC INC

HUSTON MOTORS INC.

HVS CAPITAL GROUP

HWY 150 BUYERS WAY, INC.

HY-TECH AUTO SALE AND EXPORT

HYUNDAI OF GREER

HYUNDAI OF NEW PORT RICHEY

HYUNDAI OF NICHOLASVILLE

HYUNDIA OF ORANGE PARK

I 95 TOYOTA & SCION

I GOT A DEAL USED CARS

DEALER NAME

I-80 AUTO SALES INC

IAUTO INC

IDEAL USED CARS INC

IDRIVE FINANCIAL

IMAGINE CARS

IMAGINE POWERSPORTS

IMPERIAL MOTORS

IMPERIAL SALES & LEASING INC

IMPEX AUTO SALES

IMPORT AUTO BROKERS INC

IMPORT’S LTD

INCREDIBLE AUTO BROKERS AND

INDEPENDENCE AUTO SOLUTIONS

INDIAN RIVER LEASING CO

INDY AUTO LAND LLC

INDY AUTO MAN LLC

INFINITI OF COLUMBUS, LLC

INLINE AUTO SALE INC

INTEGRITY MOTORS RVA LLC

INTEGRITY OF CHICAGO

INTERNATIONAL AUTO OUTLET

INTERNATIONAL AUTO WHOLESALERS

INTERNATIONAL AUTOMOBILES LLC

INTERNATIONAL MOTORS CO.

IONADI AUTO SALES

IPS MOTORS LLC

IVORY CHEVROLET, LLC

J & B AUTO GROUP LLC

J & C AFFORDABLE CARS LLC

J & J MOTORS INC

J & L AUTO SALES

J & M AFFORDABLE AUTO, INC.

J D MOTORS LLC

J&M AUTOMOBILES CORP

J.R. WHOLESALE LLC

JACK DEMMER FORD, INC.

JACK KAIN FORD, INC.

JACK MAXTON CHEVROLET INC

JACK MAXTON CHEVROLET, INC

JACK MAXTON USED CARS

JACK MILLER AUTO PLAZA LLC

JACK MILLER KIA

DEALER NAME

JACKIE MURPHY’S USED CARS

JACK’S USED CARS

JACK-SON AUTO SALES INC

JAKE SWEENEY KIA

JAKMAX

JANSON AUTOMOTIVE

JARRARD PRE-OWNED VEHICLES

JARRETT GORDON FORD INC

JARRETT-GORDON FORD OF WINTER

JAX AUTO WHOLESALE, INC.

JAX EXPORTS INC

JAY PONTIAC BUICK

JAY WOLFE AUTO OUTLET

JAY WOLFE HONDA

JAZCARS, INC.

JC AUTO MARKET LLC

JDF AUTO

JEFF DRENNEN FORD

JEFF WYLER CHEVROLET OF

JEFF WYLER DIXIE HONDA

JEFFERSON CHEVROLET CO.

JEFFREY P. HYDER

JEFFREYS AUTO EXCHANGE

JEMS AUTO SALES INC

JENKINS ACURA

JENKINS HYUNDAI

JENKINS MAZDA

JENKINS NISSAN, INC.

JENO AUTOPLEX

JENROC AUTO SALES

JEREMIAH’S RIDES LLC

JEREMY FRANKLINS SUZUKI OF KAN

JERRY HUNT AUTO SALES

JERRY MOTORS, INC.

JERRY WILSON’S MOTOR CARS

JEWEL AUTO SALES

JIDD MOTORS INC

JIM BURKE NISSAN

JIM BUTLER AUTO PLAZA

JIM M LADY OLDSMOBILE INC

JIM ORR AUTO SALES

JIMMY KAVADAS YOUR CREDIT MAN

DEALER NAME

JIMMY SMITH PONTIAC BUICK GMC

JK AUTOMOTIVE GROUP LLC

JKB AUTO SALES

JMC AUTO BROKERS INC

JOE RICCI AUTOMOTIVE

JOEY BLASINGAME AUTO SALES

JOHN BELL USED CARS INC

JOHN BLEAKLEY FORD

JOHN HINDERER HONDA

JOHN JENKINS, INC.

JOHN JONES AUTOMOTIVE

JOHN SNYDER AUTO MART, INC.

JOHN WEISS TOYOTA SCION OF

JOHNNY WRIGHT AUTO SALES LLC

JOHNNYS MOTOR CARS LLC

JORDAN AUTO SALES

JOSEPH MOTORS

JOSEPH TOYOTA INC.

JOSES AUTO SALES INC

JP POWERCARS CORP

JPL AUTO EMPIRE

JT AUTO INC.

JUSTICE AUTOMOTIVE

JUST-IN-TIME AUTO SALES INC

JV AUTO WHOLESALES LLC

K & M MOTORS

K & M SUZUKI

K & O AUTO WHOLE SALE INC

K B AUTO EMPORIUM

K J N S ENTERPRISE LLC

K T AUTO SALES LLC

KACHAR’S USED CARS, INC.

KAHLER AUTO SALES LLC

KAHLO CHRYSLER JEEP DODGE INC

KALER LEASING SERVICES INC

KAR SELECT

KARGAR, INC.

KATHY’S KARS

KC AUTOMOTIVE GROUP LLC

KC CAR GALLERY

KEFFER PRE-OWNED SOUTH

KEITH HAWTHORNE HYUNDAI, LLC

DEALER NAME

KEITH PIERSON TOYOTA

KELLEY BUICK GMC INC

KELLYS CARS 4 U INC

KELSEY CHEVROLET LLC

KEMET AUTO SALES

KENDALL TOYOTA

KENNYS AUTO SALES, INC

KEN’S AUTOS

KENS KARS

KERRY NISSAN, INC.

KEVIN POWELL MOTORSPORTS

KEVIN’S KARS LLC

KEY CHRYLSER PLYMOUTH INC

KIA COUNTRY

KIA COUNTRY OF SAVANNAH

KIA OF CANTON

KIA OF CLARKSVILLE

KIA OF GREER

KIA OF LEESBURG

KIA OF NORTH GRAND RAPIDS

KIA TOWN CENTER

KILBURN MOTOR COMPANY

KIM GRAHAM MOTORS

KIMP AUTOMOTIVE

KIN FOLK AUTO SALES

KING AUTOMOTIVE, LLC

KING BROTHERS USED CARS

KING MOTORS

KING SUZUKI OF HICKORY LLC

KINGDOM CHEVROLET INC

KINGS AUTO GROUP INC

KINGS AUTO SALES, INC

KINGS FORD, INC

KINGS HONDA

KINGS MAZDA

KINGS OF QUALITY AUTO SALES

KINGSWAY MOTOR CO

KIRTLAND CAR COMPANY, INC.

KKS AUTO SALES

KLASSIC CARS LLC

KMAX INC

KNE MOTORS, INC.

DEALER NAME

KNH WHOLESALE

KNOX BUDGET CAR SALES & RENTAL

KOE-MAK CORP

KRAFT MOTORCAR CO.

KUHN HONDA VOLKSWAGON

KUNES COUNTRY CHEVROLET

KUNES COUNTRY CHRYSLER DODGE

KUNES COUNTRY FORD LINCOLN INC

KUNES COUNTY FORD OF ANTIOCH

KZ AUTO SALES

L & J AUTO SALES & LEASING LLC

L4 MOTORS LLC

LA AUTO STAR, INC.

LAFONTAINE AUTO GROUP

LAFONTAINE BUICK GMC OF ANN

LAFONTAINE MOTORS, INC

LAGRANGE AUTO SALES

LAGRANGE MOTORS

LAGUNA NIGUEL AUTO SALES INC

LAKE HARTWELL HYUNDAI

LAKE NISSAN SALES, INC.

LAKE WALES CHRSYLER DODGE

LAKELAND AUTO MALL

LAKESIDE AUTO SALES, INC.

LAKESIDE MOTORS INC

LALLY ORANGE BUICK PONTIAC GMC

LANCASTER AUTO AND

LANCASTER AUTO SALES AND

LANCASTER AUTOMOTIVE

LANCASTERS AUTO SALES, INC.

LANDERS MCLARTY CHEVROLET

LANDERS MCLARTY SUBARU

LANDMARK AUTO INC

LANDMARK CDJ OF MONROE, LLC

LANDMARK MOTOR COMPANY

LANE 1 MOTORS

LANGDALE HONDA KIA OF

LANIGAN’S AUTO SALES

LARRY JAY IMPORTS, INC

LASCO FORD INC

LATIN MOTORS INTERNATIONAL LLC

LAW AUTO SALES, INC

DEALER NAME

LAWRENCE MOTORSPORTS INC

LCA AUTO WHOLESALES, LTD

LEBANON FORD LINCOLN

LEE KIA OF GREENVILLE

LEE’S AUTO SALES, INC

LEES SUMMIT DODGE CHRYSLER JEE

LEE’S SUMMIT HONDA

LEES SUMMIT SUBARU LLC

LEGACY AUTO BROKERS LLC

LEGACY AUTO SALES

LEGACY AUTO SALES, INC.

LEGACY AUTOS

LEGACY FORD MERCURY

LEGACY TOYOTA

LEOPARDI AUTO SALES

LEVEL UP AUTO SALES

LGE CORP

LIBERTY FORD LINCOLN MERC INC

LIBERTY FORD SOUTHWEST, INC

LIBERTY FORD, INC

LIBERTY MOTORS LLC

LIBERTY USED MOTORS INC

LIBERTYVILLE CHEVROLET LLC

LIFESTYLE MOTOR GROUP

LIGHTHOUSE AUTO SALES

LIONS MOTORS CORP

LJ USED CARS INC 2

LMN AUTO INC

LOCKHART CADILLAC INC

LOKEY NISSAN

LONDOFF JOHNNY CHEVROLET INC

LONESTAR MOTOR

LONGSTREET AUTO

LOT 1 AUTO SALES LLC

LOU FUSZ BUICK GMC

LOU FUSZ CHEROLET COMPANY

LOU FUSZ MITSUBISHI ST. PETERS

LOU FUSZ MOTOR CO

LOU SOBH AUTOMOTIVE OF

LOU SOBH KIA

LOVE FIELD AUTO SALES, LLC

LOWEST PRICE TRANSPORTATION

DEALER NAME

LOWPRICE AUTO MART LLC

LUCKY DOGS CREDIT & CARS LLC

LUCKY MOTORS INC

LUNA MOTOR GROUP CORP

LUNSFORD MOTORSPORTS, LLC

LUXURY AUTO LINE LLC

LUXURY AUTO SALES LLC

LUXURY CARS & FINANCIAL, INC.

LUXURY CARS OUTLET

LUXURY FLEET LEASING LLC

LUXURY IMPORTS AUTO SALES

LUXURY MOTOR CAR COMPANY

LYMAN AUTOMOTIVE

LYNCH CHEVROLET OF KENOSHA

LYNNHAVEN MOTOR COMPANY

M & M AUTO SUPER STORE

M & M AUTO WHOLESALERS, LLC

M & M AUTO, INC.

M & M MOTORS OF ROCK HILL INC

M & S AUTO SALES

MAC HAIK CHRYSLER DODGE JEEP

MAC HAIK PRE-OWNED

MACHADO AUTO SELL LLC

MACON AUTO SALES

MADISON AUTO SALES LLC

MADISON COUNTY FORD LINC MERC

MAGIC IMPORTS OF

MAGIC MOTORS CENTER

MAGIC MOTORS INC

MAHER CHEVROLET INC

MAINLAND AUTO SALES INC

MAINSTREAM AUTO SALES LLC

MAJESTIC AUTOS INC

MALCOLM CUNNINGHAM HYUNDAI

MALOY AUTOMOTIVE LLC

MANASSAS AUTOMOBILE GALLERY

MARANATHA AUTO

MARANATHA AUTO, INC.

MARCH MOTORS INC.

MARCHANT CHEVROLET INC

MARIANNA MOTOR CO

MARIETTA AUTO SALES

DEALER NAME

MARIETTA LUXURY MOTORS

MARK THOMAS FORD

MARKAL MOTORS INC

MARLOZ OF HIGH POINT

MARTIN COACHWORKS LLC

MARTIN’S AUTO BROKERS LLC

MARTINS USED CARS INC

MARVIN MOTORS INC

MASTER AUTO GROUP

MASTER CAR INTERNATIONAL, INC

MASTER CARS

MASTER CARS CO INC

MATHEWS FORD INC.

MATHEWS FORD OREGON, INC

MATHEWS HAROLD NISSAN

MATRIX AUTO SALES, INC.

MATT CASTRUCCI

MAUS MOTORS INC

MAX MOTORS INC

MAXIE PRICE CHEVROLETS OLDS,

MAXIMUM DEALS, INC.

MAYSVILLE AUTO SALES

MAYSVILLE PREMIER AUTO LLC

MAZDA OF ROSWELL

MAZDA SAAB OF BEDFORD

MCADENVILLE MOTORS

MCCLUSKY’S CHEVROLET INC

MCCORMICK MOTORS INC

MCDANIELS ACURA OF CHARLESTON

MCFARLAND CHEVROLET-BUICK, INC

MCGHEE AUTO SALES INC.

MCHUGH INC

MCINERNEYS WOODHAVEN CHRYSLER

MCJ AUTO SALES OF CENTRAL

MCKENNEY CHEVROLET

MCKENZIE MOTOR COMPANY, INC,

MCLYMONT AFFORDABLE LUXURY AUT

MCNEILL NISSAN OF WILKESBORO

MCPHAILS AUTO SALES

MEACH AUTO SALES

MECHANICSVILLE TOYOTA

MEDINA AUTO BROKERS

DEALER NAME

MEDLIN BUICK GMC MAZDA

MEGA AUTO SALES LLC

MELRAY MOTORS CORP

MELROSE AUTO OUTLET INC

MEMBERS SALES AND LEASING INC

MEMORIAL HWY AUTO SALES AND

MERLIN AUTOS LLC

MEROLLIS CHEVROLET SALES

METRO IMPORTS INC

METRO USED CARS

MGM AUTO SALES

MI AUTO CENTER LLC

MIA ON WHEELS CORP

MIA REPOS LLC

MIAMI AUTO LIQUIDATORS INC

MIAMI AUTO SALES

MIAMI AUTO SHOW LLC

MIAMI AUTO WHOLESALE

MIAMI CARS INTERNATIONAL INC

MIAMI EMPIRE AUTO SALES CORP

MICHAELS AUTO SALES OF WEST

MICHAEL’S IMPORTS

MICHAEL’S MOTOR CO

MID AMERICA AUTO EXCHANGE INC

MID AMERICA AUTO GROUP

MID CITY MOTORS OF LEE COUNTY

MID FLORIDA WHOLESALERS INC

MID LAKE MOTORS INC.

MID RIVERS MOTORS

MIDCITY AUTO & TRUCK EXCHANGE

MIDDLE TENNESSEE AUTO MART LLC

MIDDLETOWN FORD, INC

MIDFIELD MOTOR COMPANY, INC.

MID-TOWN MOTORS LLC

MIDTOWN MOTORS OF RALEIGH LLC

MID-TOWNE AUTO CENTER, INC.

MIDWAY AUTO GROUP

MIDWAY AUTOGROUP

MIDWEST AUTO DIRECT

MIDWEST AUTO GROUP LLC

MIDWEST AUTO MART LLC

MIDWEST AUTO STORE LLC

DEALER NAME

MIDWEST FINANCIAL SERVICES

MIDWEST MOTORS

MIDWEST MOTORS & TIRES

MIDWEST MOTORSPORT SALES &

MIDWESTERN AUTO SALES, INC.

MIGENTE MOTORS INC

MIGHTY MOTORS

MIKANO AUTO SALES, INC.

MIKE ANDERSON USED CAR SUPER

MIKE BASS FORD

MIKE BELL CHEVROLET INC

MIKE CASTRUCCI CHEVY OLDS

MIKE CASTRUCCI FORD OF ALEX

MIKE CASTRUCCI FORD SALES

MIKE KEFFER CHRYSLER DODGE

MIKE PRUITT HONDA INC

MIKE SHAD FORD

MIKE WILSON CHEVROLET

MIKES TRUCKS AND CARS

MILES AUTO SALES

MILESTONE MOTORS, L.L.C.

MILLENIUM AUTO SALES

MILTON MARTIN HONDA

MINT AUTO SALES

MINTON MOTOR CARS II LP

MIRA AUTO SALES LLC

MIRACLE CHRYSLER DODGE JEEP

MISSOURI MOTORS LLC

MJ AUTO SALES

MK AUTO BROKER INC

MMC AUTO SALES LLC

MO AUTO SALES

MODERN CORP

MODERN HYUNDAI OF CONCORD LLC

MODERN TOYOTA

MOMENTUM MOTOR GROUP LLC

MONARCH CAR CORP

MONROE DODGE/CHRYSLER INC.

MONROE MOTOR SPORT

MONZON AUTO SALES INC

MOODY AUTO SALES

DEALER NAME

MOORE NISSAN

MOORING AUTOMOTIVE GROUP LLC

MORRIS IMPORTS LLC

MOSS CURTAIN MOTORS LLC

MOTOR CAR CONCEPTS II

MOTOR CARS HONDA

MOTOR CARS OF STUART

MOTOR CITY AUTO INC

MOTORCARS

MOTORCARS OF LANSING INC

MOTORCARS TOYOTA

MOTORHOUSE INC

MOTORMAX OF GRAND RAPIDS

MOTORS DRIVEN INC

MOTORS TRUST INC

MOTORSPORTS UNLIMITED INC

MOTORVATION MOTOR CARS

MOUNTAIN TOP MOTOR COMPANY INC

MOUNTAIN VIEW CDJR

MR AUTO INC

MR AUTO SALES

MR DEALS AUTO SALES & SERVICE

MR WHOLESALER INC

MS AUTO SALES LLC

MULDER AUTO SALES

MULLER HONDA OF GURNEE

MULLINAX FORD OF PALM BEACH

MUNN MOTORSPORTS HIGHLINE

MURPHY MOTOR CO

MURPHY’S AUTO SALES INC

MURRAY’S USED CARS

MUSIC CITY AUTOPLEX LLC

MWS WHOLESALE AUTO OUTLET

MY CAR LLC

MYEZAUTOBROKER.COM LLC

MYLENBUSCH AUTO SOURCE LLC

N & D AUTO SALES, INC.

NALLEY HONDA

NAPLETON SANFORD IMPORTS LLC

NASH CHEVROLET COMPANY

NASHVILLE CHRYSLER DODGE JEEP

DEALER NAME

NATIONAL AUTO CREDIT INC

NATIONAL AUTO SALES I LLC

NATIONAL CAR MART, INC

NATIONAL MOTORS, INC.

NATIONAL ROAD AUTOMOTIVE LLC

NATIONWIDE LUXURY CARS INC

NAVA MOTORS CORP

NAVARRE AUTO AND PAWN INC

NEIL HUFFMAN HONDA

NELSON AUTO SALES

NELSON MAZDA

NELSON MAZDA RIVERGATE

NEUHOFF AUTO SALES

NEW RIDE MOTORS

NEWARK AUTO LLC

NEWPORT AUTO GROUP

NEWSED AUTO INC

NEWTON’S AUTO SALES, INC.

NEXT CAR INC

NEXT RIDE AUTO SALES INC

NEXTCAR

NICE AUTO GROUP LLC

NICHOLAS ANGELO MOTORS LLC

NICHOLAS DATA SERVICES, INC.

NICHOLASVILLE NISSAN

NICKS AUTO MART

NILE AUTOMOTIVE LLC

NIMNICHT PONTIAC

NISSAN OF GALLATIN

NISSAN OF NEWNAN

NISSAN ON NICHOLASVILLE

NITRO MOTORS LLC

NOEL AUTOMOTIVE GROUP LLC

NORTH AMERICAN FLEET SALES INC

NORTH ATLANTA MOTORS LLC

NORTH BROTHERS FORD, INC

NORTH COAST AUTO SALES INC

NORTH COAST CAR CREDIT LLC

NORTH EAST AUTO SALES INC

NORTH MAIN MOTORS INC

NORTHEAST FLORIDA AUTO SOLUTIO

DEALER NAME

NORTHERN KY AUTO SALES LLC

NORTHGATE CHRYSLER JEEP INC

NORTHLAND CHRYSLER JEEP DODGE

NORTHSTAR AUTO GROUP

NORTHTOWNE OF LIBERTY SUZI,

NORTHWEST AUTO BROKERS LLC

NORTHWEST FINANCIAL LLC

NORTHWEST MOTORS INC

NOURSE CHILLICOTHE

NUMBER ONE IN RADIO ALARMS INC

NU-WAVE AUTO CENTER

OAKES AUTO INC

OASIS MOTORS

OBRIEN FORD MERCURY

O’BRIENS AUTO EMPORIUM,LLC

OCEAN HONDA

O’CONNORS AUTO OUTLER

OFF LEASE FINANCIAL, INC.

OFFLEASE AUTOMART LLC

O’HARE MOTOR CARS

OHIO AUTO CREDIT LLC

OLATHE FORD SALES, INC.

OLD SOUTH SALES INC.

OLDHAM MOTOR COMPANY LLC

OLYMPIC MOTOR CO LLC

ON TRACK AUTO MALL, INC.

ONE SOURCE AUTOS INC

ORANGE PARK AUTO MALL

ORANGE PARK DODGE

ORANGE PARK MITSUBISHI

ORANGE PARK TRUCKS

ORCHARD LAKE MOTORS LLC

ORLANDO AUTO LOUNGE LLC

ORLANDO AUTOS

OSCAR MOTORS CORPORATION

OT AUTO SALES

OUR LOCAL DEALER

OV AUTO FARM

OXMOOR FORD LINCOLN MERCURY

OXMOOR MAZDA

OXMOOR TOYOTA

P & A MOBILITY ENTERPRISES INC

DEALER NAME

P S AUTO ENTERPRISES INC

PACE CAR

PALM BAY FORD

PALM BAY MOTORS

PALM BEACH AUTO DIRECT

PALM BEACH MOTORS

PALM CHEVROLET OF GAINESVILLE

PALMETTO FORD

PALMETTO WHOLESALE MOTORS

PAQUET AUTO SALES

PARADISE MOTOR SPORTS

PARAMOUNT AUTO

PARK AUTO MALL, INC

PARKS AUTOMOTIVE, INC

PARKS CHEVROLET, INC

PARKWAY FORD, INC.

PARKWAY MOTORS INC

PATRIOT AUTO INC.

PATRIOT AUTOMOTIVE LLC

PATRIOT PRE-OWNED AUTOS LLC

PAUL CERAME KIA

PAYDAY MOTOR SALES

PAYLESS MOTORS LLC

PC AUTO SALES LLC

PCT ENTERPRISES OF FLORIDA LLC

PEGGY’S AUTO SALES

PENLAND AUTOMOTIVE LLC

PENNINGTON AUTOMOTIVE

PENSACOLA AUTO BROKERS, INC

PERFORMANCE CHEVROLET BMW

PERFORMANCE CHRYSLER JEEP

PERFORMANCE CHRYSLER JEEP DODG

PERFORMANCE MOTOR COMPANY LLC

PERFORMANCE TOYOTA

PETE MOORE CHEVROLET, INC

PETERS AUTO SALES, INC.

PFEIFFER LINCOLN MERCURY

PGF AUTOMOTIVE LLC

PHILLIPS BUICK PONTIAC GMC INC

PHILLIPS CHRYSLER-JEEP, INC

PHILLIPS TOYOTA

DEALER NAME

PHOENIX MOTORS

PHOENIX SPECIALTY MOTORS CORP

PIEMONTES DUNDEE CHEVROLET

PIERSON AUTOMOTIVE

PILES CHEV-OLDS-PONT-BUICK

PINELLAS MOTORS INC

PINELLAS PARK AUTO INC

PINEVILLE IMPORTS

PINNACLE AUTO SALES

PITTSBURGH AUTO DEPOT INC

PLAINFIELD AUTO SALES, INC.

PLANET SUZUKI

PLATINA CARS AND TRUCKS INC

PLATINUM AUTO EXCHANGE INC

PLATINUM WHOLESALES LLC

PLATTE CITY AIRPORT CHRYSLER D

PLATTNER’S

PLAZA AUTO SALES

PLAZA LINCOLN MERCURY

POGUE CHEVROLET INC

PORT MOTORS

PORTAL AUTOMOTIVE INC

POWER MOTORS LLC

POWER ON AUTO LLC

POWERBUY MOTORS

PRADO AUTO SALES

PRATHER AUTOMOTIVE

PREFERRED AUTO

PREFERRED TREATMENT AUTO SALES

PREMIER AUTO BROKERS, INC.

PREMIER AUTO GROUP

PREMIER AUTO LOCATORS

PREMIER AUTO MART, INC

PREMIER AUTO SALES

PREMIER AUTO SALES OF BAY

PREMIER AUTOMOTIVE GROUP INC

PREMIER AUTOMOTIVE OF BONNER

PREMIER AUTOMOTIVE SALES INC

PREMIER AUTOWORKS SALES &

PREMIER DODGE CHRYSLER JEEP

PREMIER MOTORCAR GALLERY

PREMIERE MOTOR SPORTS LLC

DEALER NAME

PREMIUM AUTO EXCHANGE

PREMIUM AUTOS LLC

PREMIUM CARS OF MIAMI LLC

PRE-OWNED EXPRESS

PRESPA AUTO SALES

PRESTIGE AUTO BROKERS

PRESTIGE AUTO EXCHANGE

PRESTIGE AUTO GROUP

PRESTIGE AUTO MALL

PRESTIGE AUTO SALES & RENTALS

PRESTIGE ECONOMY CARS INC

PRESTON AUTO OUTLET

PRESTON HONDA

PRICE IS RIGHT AUTO SALES LLC

PRICE RIGHT STERLING HEIGHTS

PRICED RIGHT AUTO SALES LLC

PRICED RIGHT AUTO, INC.

PRICED RIGHT CARS, INC

PRIDE AUTO SALES LLC

PRIME AUTO EXCHANGE

PRIME CARS & TRUCKS LLC

PRIME MOTORS INC

PRIME TIME MOTORS

PRINCE AUTO SALES LLC

PRIORITY HONDA HUNTERSVILLE

PRISTINE CARS & TRUCKS INC

PRO SELECT AUTOS

PROCAR

PUBLIC AUTO BROKERS

PURE AUTOMOTIVE LLC

Q AUTOMOTIVE BRANDON FL LLC

Q AUTOMOTIVE FT MYERS FL LLC

Q MOTORCARS INC

QUALITY AUTO BROKERS

QUALITY AUTO CENTER

QUALITY AUTO SALES OF FL LLC

QUALITY CARS INC

QUALITY IMPORTS

QUALITY IMPORTS & CONSIGNMENT

R & B CAR COMPANY

R & M HOLDINGS GROUP INC

R & R AUTO SALES AND REPAIRS

DEALER NAME

RADER CAR CO INC

RAMOS AUTO LLC

RAMSEY MOTORS

RANDY CURNOW AUTO PLAZA/RC

RANDY SHIRKS NORTHPOINTE AUTO

RANKL & RIES MOTORCARS, INC

RAP AUTOMOTIVE LLC

RAPTOR AUTOMOTIVE

RAY CHEVROLET

RAY LAETHEM BUICK GMC INC

RAY PEARMAN LINCOLN MERCURY

RAY SKILLMAN EASTSIDE

RAY SKILLMAN WESTSIDE

RAYMOND CHEVROLET KIA

RCK AUTO SALES LLC

RE BARBER FORD INC

REALITY AUTO SALES INC

REASONABLE AUTO GROUP LLC

RED SHAMROCK LLC

REGAL MOTORS INC

REGAL PONTIAC, INC.

REGIONAL WHOLESALE

REICHARD BUICK PONTIAC, INC

REIDSVILLE NISSAN INC

REINEKE FORD LINCOLN MERCURY

RENEWIT CAR CARE

REVOLUTION MOTORS LLC

REXFORD AUTOMOTIVES

REYNOLDS AUTOMOTIVE LLC

RHOADES AUTOMOTIVE INCORPORATE

RHODES AUTO SALES

RICART FORD USED

RICE AUTO SALES

RICH AUTO SALES LTD

RICH FORD LINCOLN MERCURY

RICH MORTONS GLEN BURNIE

RICHARD HUGES AUTO SALES

RICHARD KAY AUTOMOTIVE

RICHMOND HONDA

RICK CASE CARS INC

RICK HENDRICK CHEVROLET

RICK HILL NISSAN INC

DEALER NAME

RIDE N DRIVE

RIDE TIME, INC.

RIGHT PRICE AUTO SALES OF

RIGHT WAY AUTOMOTIVE

RIGHTWAY AUTOMOTIVE CREDIT

RITCHIE AUTO SALES

RITEWAY AUTO SALES

RIVER BEND FORD

RIVER CITY AUTO SALES INC

RIVERSIDE MOTORS, INC

RIVIERA AUTO SALES SOUTH INC

RJ’S AUTO SALES

ROAD MASTER AUTO GROUP INC

ROB PARTELO’S WINNERS

ROBERT-ROBINSON CHEVROLET

ROBERTS COMPANY MOTOR MART LLC

ROCK AUTO KC INC

ROCK BOTTOM AUTO SALES, INC.

ROCK ROAD AUTO PLAZA

ROD HATFIELD CHRYSLER DGE JEEP

ROGER WILSON MOTORS INC

ROME MOTOR SALES

RON’S RIDES INC

ROSE AUTOMOTIVE INC

ROSE CITY MOTORS

ROSEDALE AUTO SALES INC

ROSELLE MOTORS INC

ROSEN HYUNDAI ENTERPRISES LLC

ROSEN HYUNDAI OF ALGONQUIN LLC

ROSEN MAZDA OF WAUKEGAN

ROSEVILLE CHRYSLER JEEP

ROSEWOOD AUTO SALES LLC

ROUEN CHRYSLER DODGE JEEP INC

ROUEN MOTORWORKS LTD

ROUTE 69 SALES, LLC

ROY O’BRIEN, INC

ROYAL AUTO SALES

DEALER NAME

ROYAL FAMILY MOTORS CANTON LLC

ROYAL FAMILY MOTORS INC

ROYAL OAK FORD SALES, INC.

RPM AUTO SALES

S & B AUTO BROKERS LLC

S & M AUTO BROKERS INC

S S & M AUTOMOTIVE

S S AUTO INC

SABISTON MCCABE AUTO SOLUTIONS

SALTON MOTOR CARS INC

SAM GALLOWAY FORD INC.

SAM MOTOR SPORTS INC

SAND MOUNTAIN TOYOTA

SANDOVAL BUICK GMC INC

SANDY SANSING FORD LINCOLN LLC

SANFORD AUTOPARK

SANSING CHEVROLET, INC

SARASOTA FORD

SAVAGE AUTOMOTIVE GROUP

SAVANNAH AUTO

SAVANNAH AUTOMOTIVE GROUP

SAVANNAH HYUNDAI

SAVANNAH MOTORS INC

SAVANNAH TOYOTA & SCION

SAVANNAH VOLKSWAGEN

SC AUTO SALES

SCHAELL MOTORS

SCHIRRAS AUTO INC

SCOGGINS CHEVROLET OLDS BUICK

SCOPE AUTOMOTIVE LLC

SCOTTI’S AUTO REPAIT AND SALES

SECOND CHANCE AUTO

SEHER ENTERPRISES INC

SELECT AUTO

SELECT AUTO GROUP LLC

SELECT AUTO NETWORK LLC

SELECT AUTO SALES

SELECT CARS OF CLEVELAND LLC

SELECT MOTORS OF TAMPA INC.

SENA MOTORS INC

SERRA VISSER NISSAN INC

SHAD MITSUBISHI

DEALER NAME

SHARP CARS OF INDY

SHAVER AUTOMOTIVE LLC

SHAVER MOTORS OF ALLEN CO INC

SHEARON’S AUTO SALES

SHEEHY FORD INC

SHEEHY GLEN BURNIE INC.

SHERDAN ENTERPRISES LLC

SHERMAN DODGE

SHOALS UNIVERSITY KIA

SHOOK AUTO INC

SHORELINE AUTO CENTER INC

SHORELINE AUTO GROUP OF IONIA

SHORELINE MOTORS

SHOW ME AUTO MALL INC

SHOWROOM AUTO SALES OF

SHUTT ENTERPRISES INC

SIGN & DRIVE AUTO SALES LLC

SIGN AND DRIVE AUTO GROUP WILK

SIGN AND DRIVE AUTO SALES LLC

SIGNATURE FORD LINCOLN MERCURY

SIGNATURE MOTORS USA LLC

SIMMONS NISSAN

SIMPLE AUTO IMPORTS

SINA AUTO SALES, INC.

SINCLAIR DAVE LINCOLN MERCURY

SKAGGS RV OUTLET LLC

SLT MOTORS LLC

SMART CHOICE AUTO GROUP

SMH AUTO

SOBH AUTOMOTIVE

SOLID AUTOS LLC

SOMERSET MOTORS

SONS HONDA

SOURCE AUTOMOTIVE INC

SOUTH BEACH MOTOR CARS

SOUTH CHARLOTTE PREOWNED AUTO

SOUTH MOTORS HONDA

SOUTH SUBURBAN MITSUBISHI

SOUTHEAST JEEP EAGLE

SOUTHERN AUTO IMPORTS

SOUTHERN CHOICE AUTO LLC

SOUTHERN COUNTRY INC

DEALER NAME

SOUTHERN KENTUCKY AUTO & TRK

SOUTHERN LUXURY CARS

SOUTHERN MOTOR COMPANY

SOUTHERN POINTE AUTOMOTIVE

SOUTHERN STAR AUTOMOTIVE

SOUTHERN STATES HYUNDAI

SOUTHERN TRUST AUTO GROUP

SOUTHFIELD JEEP-EAGLE, INC.

SOUTHPORT MOTORS

SOUTHTOWN MOTORS HOOVER

SOUTHTOWNE MOTORS OF NEWNAN

SOUTHWEST AUTO SALES

SOUTHWEST AUTOMOTIVE (SWAG)

SPACE & ROCKET AUTO SALES

SPACE CITY AUTO CENTER

SPARKS MOTORS LLC

SPARTANBURG CHRYSLER JEEP INC

SPEEDWAY AUTO SALES LLC

SPEEDWAY MOTORS, INC

SPIRIT CHEVROLET-BUICK INC.

SPITZER AUTOWORLD SHEFFIELD

SPITZER DODGE

SPITZER KIA

SPORTS AND IMPORTS, INC.

SPORTS CENTER IMPORTS INC

SRQ AUTO LLC

ST GEORGE AUTO BROKERS LLC

ST. PETERS AUTO GROUP LLC

STANFIELD AUTO SALES

STAN’S CAR SALES

STAR AUTO

STAR AUTO SALES

STAR MOTORS

STARGATE AUTO SALES LLC

STARK AUTO SALES

STARMOUNT MOTORS LLC

STARRS CARS AND TRUCKS, INC

STATE LINE NISSAN INC.

STATELINE CHRYSLER DODGE JEEP

STEARNS MOTORS OF NAPLES

STEELY LEASE SALES

STEPHEN A FINN AUTO BROKER

DEALER NAME

STERLING AUTO SALES

STERLING AUTOMOTIVE LLC

STEVE JOHNSON AUTO WORLD INC

STEVE RAYMAN CHEVROLET, LLC

STEWART AUTO GROUP OF

STL CAR CREDIT

STOKES AUTOMOTIVE INC

STOKES BROWN TOYOTA SCION

STOKES HONDA CARS OF BEAUFORT

STOKES KIA

STOKES MAZDA

STOKES USED CAR CENTER

STONE MOUNTAIN NISSAN

SUBARU OF KENNESAW LLC

SUBARU OF PORT RICHEY INC

SUBARU OF WICHITA LLC

SUBURBAN AUTO SALES

SUBURBAN CHRYSLER JEEP DODGE

SUCCESS AUTO

SUFFIELD MOTORS

SULLIVAN BUICK GMC INC

SUMMIT AUTO LLC

SUMMIT AUTO SALES CORP

SUMMIT CITY CHEVROLET, INC.

SUMMIT PLACE KIA

SUMMIT PLACE KIA MT. CLEMENS

SUMTER CARS & TRUCKS

SUN HONDA

SUN TOYOTA

SUNBELT’S FORD TWON OF ALBANY

SUNCOAST QUALITY CARS LLC

SUNDANCE CHEVROLET INC

SUNNY DAY AUTO SALES & SERVICE

SUNNY FLORIDA MOTORS, INC.

SUNNY KING TOYOTA

SUNRISE CHEVROLET

SUNSET MOTORS

SUNSHINE AUTO BROKERS INC

SUNTRUP HYUNDAI INC

SUNTRUP HYUNDAI WEST INC

DEALER NAME

SUNTRUP KIA OF WEST COUNTY

SUNTRUP NISSAN VOLKSWAGEN

SUPER AUTO SALES

SUPER CAR MIAMI LLC

SUPER DEAL AUTO SALES LLC

SUPERIOR ACURA

SUPERIOR BUICK GMC

SUPERIOR CHEVROLET

SUPERIOR HONDA

SUPERIOR HYUNDAI SOUTH

SUPERIOR MOTORS NORTH

SUPERIOR USED VEHICLES LLC

SUSAN SCHEIN CHRYSLER PLYMOUTH

SUSKIS AUTO SALES

SUTHERLAND CHEVROLET INC

SUTHERLIN NISSAN

SUTHERLIN NISSAN MALL OF GA.

SVG MOTORS LLC

SW PREMIER MOTOR GROUP INC

SWANNS RENTAL AND SALES INC

SWEENEY BUICK PONTIAC GMC

TAMERON AUTOMOTIVE GROUP

TAMIAMI FORD, INC.

TAMPA AUTO SOURCE INC

TARGET AUTOMOTIVE

TAYLOR AUTO SALES INC.

TAYLOR BUICK NISSAN INC

TAYLOR CHEVROLET INC

TAYLOR KIA OF LIMA

TAYLOR MORGAN INC

TD CAR SALES

TEAM AUTOMOTIVE

TEAM NISSAN OF MARIETTA

TED CIANOS USED CAR CENTER

TEDS AUTO SALES INC

TENA AUTOMOTIVE LLC

TENNESSEE AUTO GROUP & LEASING

TENNYSON CHEVROLET, INC.

TERRE HAUTE AUTO AND EQUIPMENT

TERRY LABONTE CHEVROLET

TERRY LEE HONDA

TESTAROSSA MOTORS

DEALER NAME

TEXAS AUTO SAVERS INC

TEXAS BAY AREA PRE-OWNED

TEXAS CAPITAL AUTO CREDIT

TEXAS CAPITAL AUTO SALES, INC

TEXAS PREOWNED AUTO GROUP

THE 3445 CAR STORE, INC.

THE AUTO BROKER

THE AUTO GROUP LLC

THE AUTO PARK INC

THE AUTO STORE

THE AUTO WAREHOUSE

THE AUTOBLOCK

THE BOULEVARD CAR LOT

THE CAR CABANA OF

THE CAR CENTER

THE CAR COMPANY

THE CAR COMPANY SUZUKI

THE CAR CONNECTION, INC.

THE CAR GUYS INC

THE CAR MAN LLC

THE CAR SHOPPE LLC

THE CAR STORE

THE CHEVY EXCHANGE

THE LAST FRONTIER AUTOS LLC

THE LUXURY AUTOHAUS INC.

THE MONTGOMERY GROUP LLC

THE REPO STORE

THE RITE CAR

THE SUPER AUTO OUTLET

THE USED CAR FACTORY INC

THEE CAR LOT #2

THOMAS & SON INC.

THOMASVILLE TOYOTA

THORNTON CHEVROLET, INC

THORNTON ROAD CHRYSLER DODGE

THORNTON ROAD HYUNDAI

THOROUGHBRED FORD INC

DEALER NAME

THREE RIVERS AUTOMOTIVE

THRIFTY CAR SALES

TIDE AUTOS INC

TILLMAN AUTO LLC

TIM FRENCH SUPER STORES, LLC

TIM SHORT PREMIERE USED CARS

TIM TOMLIN AUTOMOTIVE GROUP

TIME TO BUY LLC

TIMS AUTO SALES

TINPUSHER LLC

TK AUTO SALES LLC

TKP AUTO SALES

TKP AUTO SALES INC

TMR AUTO SALES LLC

TNT AUTO SALES INC

TOM GILL CHEVROLET

TOM HOLZER FORD

TOM TEPE AUTOCENTER INC

TOM WOOD FORD

TOM WOOD NISSAN, INC.

TOMLINSON MOTOR COMPANY OF

TOMMY’S AUTO SALES

TONY ON WHEELS INC

TONY’S AUTO SALES OF

TONY’S AUTO WORLD

TOP CHOICE AUTO LLC

TOP NOTCH AUTO BROKERS INC

TOP RELIABLE AUTO BROKERS LLC

TOTAL CYCLE CARE INC

TOVI MOTORS

TOWN & COUNTRY AUTO & TRUCK

TOWN & COUNTRY FORD, INC.

TOWN & COUNTRY MOTORS II

TOWN CARS AUTO SALES

TOWNSEND FORD INC

TOWNSEND MOTORS, INC

TOWNSENDS MAGNOLIA

TOYOTA OF ELIZABETH CITY

TOYOTA OF GASTONIA

TOYOTA OF GREENVILLE, INC

TOYOTA OF HOLLYWOOD

DEALER NAME

TOYOTA OF LAKEWOOD

TOYOTA OF LOUISVILLE, INC.

TOYOTA OF MCDONOUGH

TOYOTA OF MUNCIE

TOYOTA OF TAMPA BAY

TOYOTA ON NICHOLASVILLE

TRADEWINDS MOTOR CENTER

TRADEWINDS MOTOR CENTER LLC

TRAVERS AUTOMOTIVE INC

TRI CITY MOTORS SUPERSTORE

TRI STATE USED AUTO SALES

TRIAD AUTO GROUP NC LLC

TRIAD AUTOPLEX

TRI-CITY AUTO MART

TRI-COUNTY MOTORS

TRINITY AUTOMOTIVE

TRIPLE C CAR CO., INC.

TRIPLE E AUTO LLC

TRISTATE AUTOMOTIVE GROUP INC

TROPICAL AUTO OUTLET

TROPICAL AUTO SALES

TROY AUTOMOTIVE GROUP

TROY FORD INC

TRUCK TOWN INC

TRUSSVILLE WHOLESALE AUTOS

TRUST CAPITAL AUTOMOTIVE GROUP

TRUST MOTORS LLC

TRUSTED MOTORS LLC

TSW FINANCIAL LLC

TUBBS AUTO SALES LLC

TUSCALOOSA WHOLESALE LLC

TWIN CITY CARS INC

TWO OS MOTOR SALES

TX CAR WORLD

TYSON MOTOR GROUP

U.S. AUTO GROUP, INC.

UCAR, INC.

ULTIMATE IMAGE AUTO, INC

UNITED AUTO BROKERS

UNITED AUTO INC

UNITED AUTO SALES

UNITED AUTO SALES AND

DEALER NAME

UNITED AUTO SALES OF FT PIERCE

UNITED LUXURY MOTORS LLC

UNITED MOTOR COMPANY INC

UNITED VEHICLE SALES

UNIVERSAL AUTO PLAZA

UNIVERSAL AUTO PLAZA LLC

UNIVERSITY CHRYSLER DODGE JEEP

UNIVERSITY HYUNDAI OF DECATUR

UNLIMITED AUTO GROUP INC

UNLIMITED AUTO SALE LLC

UNLIMITED AUTOMOTIVE

UPSTATE LIL BOYZ TOYZ LLC

US 1 CHRYSLER DODGE JEEP

US AUTO MART INC

US AUTO SALES AND SERVICE INC

US MOTOR SALES LLC

US OFF LEASE AUTOS

USA AUTO & LENDING INC

USA MOTORCARS

USA RV & AUTO SALES LLC

USED CAR SUPERMARKET

USED CARS FORSALE LLC

V & S AUTO SALES LLC

V & V AUTO CENTER INC

VA CARS INC

VADEN NISSAN OF HILTON HEAD

VADEN NISSAN, INC.

VAN PAEMEL SALES

VANN YORK BARGAIN CARS LLC

VANN YORK PONTIAC BUICK GMC

VANN YORK TOYOTA, INC

VANS AUTO SALES, LLC

VANTAGE MOTORS LLC

VARSITY LINCOLN MERCURY

VECTOR AUTOMOTIVE

VEHICLES 4 SALES, INC.

VELOCITY MOTORS INC

VENICE MOTORS SECOND, LLC

VERACITY MOTOR COMPANY LLC

VESTAL PONTIAC BUICK GMC TRUCK

VESTAVIA HILLS AUTOMOTIVE

DEALER NAME

VIC BAILEY LINCOLN MERCURY

VICKERS AUTOMOTIVE INC

VICTORIA MOTORS, LLC

VICTORY AUTO INC

VILLAGE AUTO OUTLET INC

VILLAGE AUTO SALES

VILLAGE AUTO SALES LLC

VILLAGE AUTOMOTIVE

VILLAGE MOTOR SALES, INC.

VINCE WHIBBS PONTIAC-GMC

VININGS ENTERPRISES INC

VIP AUTO ENTERPRISES INC

VIP AUTO GROUP, INC.

VIP AUTO MALL

VIP AUTO SALES LLC

VISION AUTO

VISION AUTO LLC

VIZION AUTO

VMARK CARS

VOGUE MOTOR CO INC

VOLKSWAGEN OF OCALA

VOLVO OF FT. MYERS

VOLVO OF OCALA

VOSS CHEVROLET INC

VSA MOTORCARS LLC

VULCAN MOTORS LLC

VW SALE MASTER LLC.

W & S AUTO CENTER INC

WABASH AUTO CARE INC

WADE FORD INC

WAGNER SUBARU

WALDROP MOTORS INC

WALLACE AUTOMOTIVE MANAGEMENT

WALLEYS AUTO SALES

WALLY’S WHEELS

WALTERBORO MOTOR SALES

WALT’S LIVE OAK FORD

WANTED WHEELS INC

WARSAW BUICK GMC

WASHINGTON AUTO GROUP

WAYNESVILLE AUTO MART

WEB AUTO BROKERS

DEALER NAME

WEBBER AUTOMOTIVE LLC

WEEKS MOTORS

WEINE AUTO SALES EAST

WEINLE AUTO SALES

WESLEY CHAPEL NISSAN

WEST ALABAMA WHOLESALE

WEST CLAY MOTOR COMPANY LLC

WEST END AUTO SALES & SERVICE

WEST MAIN MOTORS

WESTERN AUTO SALES INC

WESTERN AVENUE NISSAN INC

WHEELS & DEALS AUTO SALES

WHEELS MOTOR SALES

WHITE ALLEN CHEVROLET SUBARU

WHITEWATER MOTOR COMPANY INC

WHITEWATER MOTORS INC

WHOLESALE, INC

WIDEWORLDOFCARS.NET LLC

WILDCAT AUTO SALES

WILLETT HONDA SOUTH

WILLS MOTOR SALES

WIN - WIN AUTO CENTER CORP

WINDY CITY MOTORSPORTS, INC

WISE MOTORS

WONDERGEM, INC

WOODBRIDGE MOTORS, INC.

WOODY ANDERSON FORD

WOODY BUICK GMC INC

WOODY SANDER FORD, INC.

WORLD AUTO NETWORK INC

WORLD AUTO, INC.

WORLD CAR CENTER & FINANCING

WORLD CLASS MOTORS LLC

WORLD KIA JOLIET

WORLDWIDE MOTORS LLC

WORLEY AUTO SALES

WORRY FREE AUTO GROUP, LLC

WOW CAR COMPANY

WRIGHT’S AUTO SALES

XL1 MOTORSPORTS, INC

XPRESS AUTO MALL

XTREME CARS & TRUX LLC

DEALER NAME

XTREME MOTORS INC

YARK AUTOMOTIVE GROUP, INC

YERTON LEASING & AUTO SALES

YES AUTO SALES INC

YOU SELECT AUTO SALES LLC

YOUR DEAL AUTOMOTIVE

YOUR KAR CO INC

YPSILANTIS IMPORT AUTO SALES

Z AUTO PLACE

Z IMPORTS SALES & SERVICE INC

ZAPPIA MOTORS

ZEIGLER CHRYSLER DODGE JEEP

ZONEMOTORS COM INC

Exhibit 14

CODE OF ETHICS FOR CHIEF EXECUTIVE OFFICER

AND SENIOR FINANCIAL OFFICERS

Nicholas Financial, Inc. (hereinafter referred to as “Nicholas Financial, Inc.” or the “Company”) requires ethical conduct in the practice of financial management in all aspects of business activities.

The Nicholas Financial, Inc. Code of Ethical Conduct for Financial Managers applies to all senior officers serving in a financial role. The Chief Executive Officer, and the Chief Financial Officer, as well as the Senior Vice President of Branch Operations, hold an elevated role in corporate governance and are expected to act in accordance with the highest standards of personal and professional integrity, to comply with all applicable laws, rules, and regulations, to preserve and protect shareholders’ interests, and to abide by the Nicholas Financial, Inc. Code of Business Conduct and Ethics and other policies and procedures adopted by Nicholas Financial, Inc. that govern the conduct of its employees. This Code of Ethical Conduct is intended to supplement the Nicholas Financial, Inc. Code of Business Conduct and Ethics.

As the Chief Executive Officer, Chief Financial Officer, or Senior Vice President of Branch Operations, I certify to you that I adhere to and advocate the following principles governing my professional and ethical conduct in the fulfillment of my responsibilities. I agree to:

Comply with the Company’s internal policies and procedures;

Act at all times in accordance with the Company’s Code of Business Conduct and Ethics which has been provided to me and with which I will comply;

Engage in and promote honesty, integrity and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

Provide accurate, complete, objective, timely and understandable financial disclosures in regards to internal reports as well as documents filed or submitted to the Securities and Exchange Commission, any governmental, private or public regulatory agency, or used in public communications;

Comply with applicable federal, state, provincial, and/or local governmental laws, rules and regulations, as well as appropriate private and public regulatory agencies;

Respect the confidentiality of information acquired in the course of performing my work responsibilities except when authorized or otherwise legally obligated to disclose such information;

Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting or omitting material facts or allowing my independent judgment to be compromised;

Avoid using confidential information acquired in the course of performing my job responsibilities for personal advantage;

Use and control assets and other resources employed or entrusted to my supervision in a responsible manner;

Keep abreast of emerging financial issues and/or skills relevant to shareholders and other constituents and share such knowledge with my peers;

Promptly report any possible violation of this Code to the Nominating and Corporate Governance Committee of the Nicholas Financial, Inc. Board of Directors;

Proactively promote ethical behavior as a responsible partner among peers in my work environment and community.

By signing this statement, I acknowledge that I have read, understand, and agree to adhere to this Code of Ethical Conduct. Violation of this Code may be grounds for termination from the Company.

Printed Name:

Signature:

Date:

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Nicholas Financial, Inc.

We consent to the incorporation by reference in the registration statement (No. 333-143245) on Form S-8 of Nicholas Financial, Inc. of our reports dated June 14, 2016, with respect to the consolidated financial statements of Nicholas Financial, Inc. and Subsidiaries and the effectiveness of internal control over financial reporting, which appear in the Annual Report (Form 10-K) for the year ended March 31, 2016.

/s/ Dixon Hughes Goodman LLP

Atlanta, Georgia

June 14, 2016

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ralph T. Finkenbrink certify that:

I have reviewed this annual report on Form 10-K of Nicholas Financial, Inc.;

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;

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 registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, 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;

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;

Evaluated the effectiveness of the registrant’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

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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 registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Katie L. MacGillivary, certify that:

I have reviewed this annual report on Form 10-K of Nicholas Financial, Inc.;

The registrant’s other certifying officer 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 controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. § 1350

Solely for the purpose of complying with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned President and Chief Executive Officer of Nicholas Financial, Inc. (the “Company”), hereby certify that the Annual Report on Form 10-K of the Company for the fiscal year ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ralph T. Finkenbrink

Ralph T. Finkenbrink

President and Chief Executive Officer

Dated: June 14, 2016

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. § 1350

Solely for the purpose of complying with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned Vice President-Finance and Chief Financial Officer of Nicholas Financial, Inc. (the “Company”), hereby certify that the Annual Report on Form 10-K of the Company for the fiscal year ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Katie L. MacGillivary

Katie L. MacGillivary

Chief Financial Officer and Vice President of Finance

Dated: June 14, 2016