Discontinued Operations

12 Months Ended

Mar. 31, 2025

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 13. Discontinued Operations

On November 13, 2023, the Company entered into the Purchase Agreement with Westlake Financial, pursuant to which the Company agreed to sell substantially all of its finance receivables and all of its repossessed assets. In connection with entering into the Purchase Agreement, the Company ceased new loan originations of contracts and direct loans. On April 26, 2024, the transactions contemplated by the Purchase Agreement closed with an aggregate purchase price of $65.6 million, pursuant to the terms of the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, Westlake Financial was due to make additional payments to the Company based on a percentage of cash collections received over a predetermined threshold on the loan portfolio from September 30, 2023 through the closing of the disposition. On April 26, 2024, Westlake Financial made a $40.6 million payment to the Company at the closing of the disposition.

Subsequent to closing, the Company and Westlake Financial determined that Westlake Financial overpaid the Company $2.6 million. The Company accordingly recorded a $2.6 million contingent liability while negotiations took place until a settlement could be reached on the established contingent consideration.

On July 25, 2024, the arrangement between the Company and Westlake regarding a reconciliation of the initial payment to Nicholas Financial, escrow, and contingent consideration was settled, which resulted in the Company paying Westlake Financial $2.4 million and waiving the right to any future contingent payments from Westlake Financial as originally stated in the Purchase Agreement. As a result of the sale of the Company's finance receivables and repossessed assets to Westlake, the Company recognized a gain of 1.7 million, calculated as the excess of the total consideration over the carrying value of the finance receivables and repossessed assets sold to Westlake. The disposition of the finance receivables and repossessed assets represents a strategic shift in the business that has a major effect on the Company's operations based on the total assets, revenue, and net income of the segment sold to Westlake in comparison to the financial information of the Company as a whole.

The following depicts the results of operations for the discontinued operations of the Company for the fiscal years ended March 31, 2025 and 2024:

	For the Fiscal Year Ended March 31,
(In thousands)		2025			2024
Interest and fee income on finance receivables	$	1,229		$	22,237
Operating expenses
Marketing		6			99
Provision for credit losses		-			2,570
Fair value and other adjustments, net		(140	)		24,164
General and administrative		840			9,178
Total operating expenses		706			36,011
Other expense
Interest expense		-			929
Total other expense		-			929
(Gain) on disposal of assets, net of tax		(1,692	)		-
(Gain) on sale of finance receivables, net of tax		(823	)		-
Income (loss) from discontinued operations before income taxes		3,038			(14,703	)
Income tax (expense) benefit		-			-
Income (loss) from discontinued operations, net of tax	$	3,038		$	(14,703	)

The assets and liabilities of discontinued operations presented in the Consolidated Balance Sheets as of March 31, 2025 and 2024 include the following:

	March 31,
(In thousands)	2025		2024
Assets of discontinued operations
Finance receivables held for sale, at a lower of amortized cost or fair value	$	-	$	38,773
Repossessed assets held for sale, at lower of carrying value or fair value less cost to sell		-		668
Total assets of discontinued operations	$	-	$	39,441
Liabilities of discontinued operations
Accounts payable	$	90	$	497
Total liabilities of discontinued operations	$	90	$	497