10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 2020

OR

☐ 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	59-2506879
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2454 McMullen Booth Road, Building C Clearwater, FL	33759
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (727) 726-0763

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, no par value	NICK	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the 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 ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO  ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market on September 30, 2019, was approximately $47.7 million.

The number of shares of Registrant’s Common Stock outstanding as of June 19, 2020 was approximately 12.6 million shares, no par value (of which approximately 4.8 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 2020 Annual General Meeting of Shareholders 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	11
	Item 1B.	Unresolved Staff Comments	22
	Item 2.	Properties	22
	Item 3.	Legal Proceedings	22
	Item 4.	Mine Safety Disclosures	22
PART II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
	Item 6.	Selected Financial Data	26
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	35
	Item 8.	Financial Statements and Supplementary Data	36
	Item 9A.	Controls and Procedures	65
	Item 9B.	Other Information	66
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance	67
	Item 11.	Executive Compensation	67
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	67
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	67
	Item 14.	Principal Accountant Fees and Services	67
PART IV
	Item 15.	Exhibits and Financial Statement Schedules	68

Forward-Looking Information

This Annual Report on Form 10-K (this “Report” or “Annual 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. and its subsidiaries (collectively the “Company”) believes that the expectations reflected or implied in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. As a result, actual results could differ materially from those indicated in these forward-looking statements. Forward-looking statements in this Annual Report may include, without limitation: (1) the projected impact of the novel coronavirus disease (“COVID-19”) outbreak on our customers and our business, (2) projections of revenue, income, and other items relating to our financial position and results of operations, (3) statements of our plans, objectives, strategies, goals and intentions, (4) statements regarding the capabilities, capacities, market position and expected development of our business operations, and (5) statements of expected industry and general economic trends; such statements are subject to certain risks, uncertainties and assumptions that may cause results to differ materially from those expressed or implied in forward-looking statements, including without limitation:

• future impacts of the COVID-19 outbreak and measures taken in response thereto, for which futuredevelopments are highly uncertain and difficult to predict;

• availability of capital (including the ability to access bank financing);

• recently enacted, proposed or future legislation and the manner in which it is implemented, including taxlegislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations;

• fluctuations in the economy;

• the degree and nature of competition and its effects on the Company’s financial results;

• fluctuations in interest rates;

• effectiveness of our risk management processes and procedures, including the effectiveness of theCompany’s internal control over financial reporting and disclosure controls and procedures;

• demand for consumer financing in the markets served by the Company;

• our ability to successfully develop and commercialize new or enhanced products and services;

• the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used inpreparing our financial statements;

• increases in the default rates experienced on automobile finance installment contracts (“Contracts”);

• higher borrowing costs and adverse financial market conditions impacting our funding and liquidity;

• our ability to securitize our loan receivables, occurrence of an early amortization of our securitization facilities, loss of the right to service or subservice our securitized loan receivables, and lower payment rates on our securitized loan receivables;

• regulation, supervision, examination and enforcement of our business by governmental authorities, andadverse regulatory changes in the Company’s existing and future markets, including the impact of theDodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and other legislative and regulatory developments, including regulations relating to privacy, information security and data protection and the impact of the Consumer Financial Protection Bureau's (the “CFPB”) regulation of our business

• fraudulent activity;

• failure of third parties to provide various services that are important to our operations;

• alleged infringement of intellectual property rights of others and our ability to protect our intellectual property;

• litigation and regulatory actions;

• our ability to attract, retain and motivate key officers and employees; use of third-party vendors andongoing third-party business relationships; cyber-attacks or other security breaches;

• disruptions in the operations of our computer systems and data centers;

• our ability to realize our intentions regarding strategic alternatives;

• our ability to expand our business, including our ability to complete acquisitions and integrate theoperations of acquired businesses and to expand into new markets; and

• 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. All forward-looking statements included in this Report are based on information available to the Company as the date of filing of this Annual 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 other filings made with the U.S. Securities and Exchange Commission (“SEC”), including its reports on Forms 10-Q, 8-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 used and new automobiles and light trucks. Additionally, Nicholas Financial originates direct consumer loans (“Direct Loans”) and sells consumer-finance related products. A second Florida subsidiary, Nicholas Data Services, Inc. (“NDS”), serves as the intermediate holding company for Nicholas Financial. In addition, NF Funding I, LLC (“NF Funding I”), is a wholly-owned, special purpose financing subsidiary of Nicholas Financial.  

Nicholas Financial-Canada, Nicholas Financial, NDS, and NF Funding I are hereafter collectively referred to as the “Company”.

All financial information herein is designated in United States dollars. References to “fiscal 2020” are to the fiscal year ended March 31, 2020 and references to “fiscal 2019” are to the fiscal year ended March 31, 2019.

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 Sections 13, 14 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.

Operating Strategy

The Company remains committed to its branch-based model and its core product of financing primary transportation to and from work for the subprime borrower through the local independent automobile dealership. The Company will strategically employ the use of centralized servicing departments to supplement the branch operations and improve operational efficiencies, but its focus will be on its core business model of decentralized operations. The Company’s strategy also includes risk-based pricing (rate, yield, advance, term, etc.) and a commitment to the underwriting discipline required for optimal portfolio performance as opposed to chasing competition for to sake of simply generating volume.  The Company’s principal goals are to increase its profitability and its long-term shareholder value.  During fiscal 2020, the Company focused on the following items:

• maintaining our commitment to the local branch model;

• continuing to focus on the accountability of branch managers

• focusing on increased return on assets through strategic initiatives;

• identifying additional ancillary products to enhance profitability;

1

• strengthening relationships with independent dealers across our network and throughout the industry;

• growing the Direct Loan portfolio and implementing such product in all our existing branch offices.

The Company also focused on selecting the right markets to have branch locations.  As of March 31, 2020, the Company operated brick and mortar branch locations in 14 states — Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee. The Company also originated business in its expansion states of Nevada and Wisconsin without a physical branch in such markets.

During fiscal 2019, the Company exited the Maryland market by closing its branch office located in Baltimore. The Company also consolidated offices in Florida (the Sunrise branch was consolidated with the Pompano branch) and in North Carolina (the Winston-Salem branch consolidated with the Greensboro branch). In addition, the Company announced that it was exiting the Texas and Virginia markets.  During the first quarter of fiscal 2020, the Company also consolidated two branches in North Carolina and two branches in Georgia. In the fourth quarter of fiscal 2020, the Company consolidated five branches in Florida.  The Company will continue to evaluate underperforming markets and underperforming branches, as needed.  

During fiscal 2019, the Company expanded into Milwaukee, Wisconsin.  During fiscal 2020, the Company expanded into the markets of Boise, Idaho; Des Moines, Iowa; Phoenix, Arizona; and Salt Lake City, Utah. The Company also continues to look for other expansion opportunities. Although the Company cannot assert how many new markets it will enter (if any) in the foreseeable future, it does remain focused on growing the branch network where conditions are favorable.

On April 30, 2019 the Company acquired substantially all of the assets of ML Credit Group, LLC (d/b/a Metrolina Credit Company) (“Metrolina”).  Metrolina provided automobile financing to consumers by direct loans and through purchases of retail installment sales contracts originated by automobile dealers in the states of North Carolina and South Carolina. This acquisition represented the first bulk purchase of Contracts in over two decades.  If other opportunities arise, the Company may consider possible acquisitions of portfolios of seasoned Contracts from dealers or lenders in bulk transactions as a means of further penetrating its existing markets or expanding its presence in targeted geographic locations.

During fiscal 2020, the Company completed bulk portfolio purchases for a total of $21.0 million, with $1.1 million in the third quarter and $19.9 million in the fourth quarterly, respectively.  The Company plans to consider more bulk portfolio purchase when favorable opportunities present themselves.

The Company is currently licensed to provide Direct Loans in 14 states— Alabama, Florida, Georgia (over $3,000), Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, and Tennessee. The Company solicits current and former customers in these states for the purpose of providing Direct Loans to such customers, and intends to continue the expansion of its Direct Loan capabilities to the other states in which it acquires Contracts. Even with this targeted expansion, the Company expects its total Direct Loans portfolio to remain between 5% and 10% of its total portfolio for the foreseeable future.

The Company cannot provide any assurances that it will be able to expand in either its current markets or any targeted new markets.

Automobile Finance Business – Contracts

The Company is engaged in the business of providing financing programs, primarily to purchasers of 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, job instability, the age of the vehicle being financed, or some other factor(s). Unlike lenders that look primarily to the credit history of the borrower in making lending decisions, typically financing 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.

2

As of the date of this Annual Report, the Company’s automobile finance programs are conducted in 16 states through a total of 43 branch offices located in the states of  Florida, Georgia, Ohio, Illinois, Indiana, Kentucky, Missouri, North Carolina, Alabama, South Carolina, Tennessee, Michigan, Kansas, Pennsylvania, Nevada, and Wisconsin (Nevada and Wisconsin are expansion states with no local branch office). The Company acquires Contracts in Nevada andWisconsin through its virtual expansion office operations based inthe Charlotte, North Carolina branch location. As of March 31, 2020, the Company had non-exclusive agreements with approximately 11,400 dealers, of which approximately 8,700 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 and/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 waiver coverage, roadside assistance plans, credit disability insurance and/or credit life insurance are generally financed over a period of 12 to 60 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 by the purchaser of the automobile. The Company refers to the difference between the negotiated price and the original principal amount being financed as the dealer discount. The amount of the dealer discount depends upon factors such as the age and value of the automobile and the creditworthiness of the customer. The Company has recommitted to maintaining pricing discipline and therefore places less emphasis on competition when pricing the discount.  Generally, 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. 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, with the typical average discount being between 8.50% and 9.50%. As of March 31, 2020, the Company’s loan portfolio consisted of Contracts purchased from a dealer or acquired through a bulk acquisition. Such contracts are purchase without resource to the dealer, however 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 (a) the Company has a first priority lien on the financed vehicle (or the Company has, in fact, perfected such first priority lien), (b) the customer has obtained the required collision insurance naming the Company as loss payee with a deductible of not more than $1,000 and (c) 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.

3

Contract Procurement

The Company purchased Contracts in the states listed in the table below during the periods indicated. The Contracts purchased by the Company are predominantly 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, 2020 was a 2011 vehicle. The dollar amounts shown in the table below represent the Company’s finance receivables on Contracts purchased within the respective fiscal year:

	Maximum allowable interest			Number of		Fiscal year ended March 31, (In thousands)
State	rate (1)			Branches		2020		2019
Alabama	18-36%(2)				2	$	2,359	$	1,590
Florida	18-30%(3)				12		19,294		21,524
Georgia	18-30%(3)				5		10,712		8,988
Illinois		(2	)		1		815		700
Indiana		25	%		2		3,661		3,995
Kansas		(2	)		-		1,030		1,087
Kentucky	18-25%(3)				3		3,990		3,792
Michigan		25	%		2		3,043		3,389
Missouri		(2	)		2		4,361		3,207
Nevada		(2	)		-		350		-
North Carolina	18-29%(3)				3		6,859		7,283
Ohio		25	%		6		10,380		11,768
Pennsylvania	18-21%(3)				1		1,678		1,772
South Carolina		(2	)		2		4,566		2,366
Tennessee		(2	)		2		3,285		2,463
Texas	18-23%(3)				-		-		1,787
Virginia		(2	)		-		-		1,655
Wisconsin		(2	)		-		313		133
Total				43		$	76,696	$	77,499

(1) The maximum allowable interest rates are subject to change and vary based on the laws of the individual states.

(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 36% 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:

	Fiscal year ended March 31, (Purchases in thousands)
Contracts	2020			2019
Purchases	$	76,696		$	77,499
Average APR		23.4	%		23.5	%
Average dealer discount		7.9	%		8.2	%
Average term (months)		47			47
Average loan	$	10,035		$	10,086
Number of Contracts purchased		7,647			7,684

4

Direct Loans

The Company currently originates Direct Loans in Alabama, Florida, Georgia (over $3,000), Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, North Carolina, Ohio, South Carolina, and Tennessee. Direct Loans are loans originated directly between the Company and the consumer. These loans are typically for amounts ranging from $500 to $11,000 and are generally secured by a lien on an automobile, watercraft or other permissible tangible personal property. The average loan made during fiscal 2020 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. Most of the Direct Loans are originated with current or former customers under the Company’s automobile financing program. The typical Direct Loan represents a better credit risk than our typical Contract due to the customer’s payment history with the Company, as well as their established relationship with the local branch staff. The Company does not have a Direct Loan license in Pennsylvania, Nevada, Idaho, or Wisconsin, and none is presently required in Georgia provided that the original principal balance of the loan is greater than $3,000. The Company obtained a Direct Loan license in Ohio during the fiscal year ended 2019 and pursued licenses in all other states with physical branch operations with the exception of Pennsylvania during the fiscal year ended 2020.  The size of the loan and maximum interest rate that may be (and is) charged varies from state to state. 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 as the primary factors in determining whether an applicant will receive an approval for such 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 5% of the Company’s annual consolidated revenues during the year ended March 31, 2020.

In connection with its Direct Loan program, the Company also makes available credit disability insurance, credit life insurance, and involuntary unemployment insurance coverage to customers through unaffiliated third-party insurance carriers. Approximately 64% of the Direct Loans outstanding as of March 31, 2020 elected to purchase third-party insurance coverage made available by the Company. The cost of this insurance to the customer, which includes a commission for the Company, is included in the amount financed by the customer.

The following table presents selected information on Direct Loans originated by the Company:

	Fiscal year ended March 31, (Originations in thousands)
Direct Loans	2020			2019
Originations	$	12,638		$	7,741
Average APR		28.2	%		26.4	%
Average term (months)	25				25
Average loan	$	4,017		$	4,036
Number of contracts originated		3,142			1,918

Underwriting Guidelines

The Company’s typical customer has a credit history that fails to meet the lending standards of most banks and credit unions. Some of the credit problems experienced by the Company’s customers that resulted in a poor credit history include but are not limited to: prior automobile account repossessions, unpaid revolving credit card obligations, unpaid medical bill, 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.

The Company’s process to approve the purchase of a Contract begins with the Company receiving 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 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 (usually the Branch Manager or Assistant Branch Manager). 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.

5

The Company has established internal underwriting 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 District Managers or 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 guidelines as well as approving underwriting exceptions.

The Company uses similar 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 “4,” indicating lower creditworthiness. Contracts are financed for individuals who fall within all four acceptable rating categories utilized, “1” through “4”. Usually a customer who falls within the two highest categories (i.e., “1” or “2”) is purchasing a two to five-year old, lower mileage used automobile, while a customer in any of the two lowest categories (i.e., “3,” or “4”) usually is purchasing an older, higher mileage automobile from an independent used automobile dealer.

The Company utilizes internal audit (“IA”) to perform 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. Additionally, field supervisions and audits are conducted by District Managers, Divisional Vice Presidents and Divisional Administrative Assistants to ensure operational and underwriting compliance throughout the branch network.

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 obtain 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 or at the end of the day 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 reports, customer promise 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 customer 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.

On March 27, 2020, the Company began extending assistance to our customers experiencing hardship due to COVID-19 in the form of up two months’ worth of hardship deferments. These hardship deferments will be processed in the same manner as any other deferment, including the proper review and approval by management.

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 customer promises report, which is utilized by the Company’s collection staff for account follow up.

6

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.

If an account is 121 days delinquent and the related vehicle has not yet been repossessed, the account is charged-off and transferred to the Loss Prevention and Recovery Department. 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 generally sold at auction. During the fourth quarter of fiscal 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due.  Please see Note 3 to the Consolidated Financial Statements included in this Annual Report for further discussion.

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, the terms on which it has purchased Contracts from such dealer, as well as the overall portfolio performance of Contracts purchased from the dealer.

The Company is subject to seasonal variations within the subprime marketplace. While the APR, discount, and term remain consistent across quarters, write offs and delinquencies tend to be lower while purchases tend to be higher in the fourth and first quarter of the fiscal year. The second and third quarter of the fiscal year tend to have higher write offs and delinquencies, and a lower level of purchases.    

Marketing and Advertising

The Company’s Contract marketing efforts currently are directed primarily 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 60-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 is evaluating and assessing 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

On February 1, 2019, the Company converted from an internally-developed system to a third-party 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.

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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. Increased competition for the purchase of Contracts enabled automobile dealers to shop for the best price, resulting in an erosion in the dealer discounts from the initial principal amounts at which the Company was willing to purchase Contracts and higher advance rates. Further, increased competition resulted in the purchase of lower credit quality Contracts. However, with the Company’s change in management during the end of fiscal 2018 and beginning of fiscal 2019, it has placed less emphasis on competition when pricing the dealer discount. The Company instead focuses on purchasing Contracts that are priced to reflect the inherent risk level of the contract, and intends to sacrifice loan volume, if necessary, to maintain that pricing discipline. Primarily as a result of increased competition within the industry, for the fiscal year ended March 31, 2020, the Company’s average dealer discount on Contracts purchased decreased to 7.9%, compared to 8.2% for the fiscal year ended March 31, 2019. The table below shows number and principal amount of Contracts purchased, average amount financed, average term, and average APR and discount for the periods presented:

Key Performance Indicators on Contracts Purchased
(Purchases in thousands)
	Number of				Average
Fiscal Year	Contracts		Principal Amount		Amount		Average			Average			Average
/Quarter	Purchased		Purchased#		Financed*^		APR*			Discount%*			Term*
2020		7,647	$	76,696	$	10,035		23.4	%		7.9	%		47
4		1,991		19,658		9,873		23.5	%	7.9		%		46
3		1,753		17,880		10,200		23.3	%	7.6		%		47
2		2,011		20,104		9,997		23.5	%	7.9		%		46
1		1,892		19,054		10,071		23.4	%	8.3		%		47
2019		7,684	$	77,499	$	10,086		23.5	%		8.2	%		47
4		2,151		21,233		9,871		23.5	%		8.0	%		46
3		1,625		16,476		10,139		23.5	%		8.1	%		47
2		1,761		17,845		10,133		23.5	%		8.4	%		47
1		2,147		21,945		10,221		23.7	%		8.3	%		48
2018		9,767	$	109,575	$	11,219		22.4	%		7.4	%		54
4		2,814		29,254		10,396		23.3	%		7.9	%		50
3		2,365		27,378		11,577		21.7	%		6.9	%		54
2		2,239		25,782		11,515		22.0	%		7.3	%		55
1		2,349		27,161		11,563		22.3	%		7.6	%		55
Key Performance Indicators on Direct Loans Originated
(Originations in thousands)
	Number of				Average
Fiscal Year	Contracts		Principal Amount		Amount		Average			Average
/Quarter	Originated		Originated#		Financed*^		APR*			Term*
2020		3,142	$	12,638	$	4,017		28.2	%		25
4		720		3,104		4,310	28.6		%		25
3		1,137		4,490		3,949	28.4		%		24
2		739		2,988		4,043	27.4		%		25
1		546		2,056		3,765	28.2		%		24
2019		1,918	$	7,741	$	4,036	26.4		%		25
4		236		1,240		4,654	27.3		%		24
3		738		2,999		4,063	25.9		%		25
2		495		1,805		3,646	26.5		%		25
1		449		1,697		3,779	25.7		%		28
2018		2,036	$	7,642	$	3,754	25.2		%		29
4		380		1,445		3,752		25.0	%		29
3		622		2,218		3,566	25.2		%		28
2		501		1,953		3,897		25.1	%		29
1		533		2,026		3,801		25.4	%		30
*Each average included in the tables is calculated as a simple average.
^Average amount financed is calculated as a single loan amount.
#Bulk portfolio purchase excluded for period-over-period comparability.

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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 used and new vehicles. No single dealer out of the approximately 8,700 dealers with which the Company currently has active contractual relationships represents a significant amount of the Company’s business volume for any of the fiscal years ended March 31, 2020 or 2019.

Regulation

The Company’s financing operations are subject to regulation, supervision and licensing under many federal, state and local statutes, regulations and ordinances. Additionally, the procedures that the Company must follow regarding 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, Nevada, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin (as of March 31, 2020, the Company has exited Maryland, Texas and Virginia).  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:

• State consumer regulatory agency requirements. Pursuant to state regulations, on-site or off-site examinations can be conducted for any of the locations listed below. Examinations 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.  

• State licensing requirements. The Company files a notification or obtains a license to acquire Contracts within the following states: Alabama, Florida, Illinois, Indiana, Kansas, Michigan, Missouri, Pennsylvania, South Carolina, and Wisconsin.  Furthermore, some states require dealers to maintain a Retail Installment Seller’s License, and where applicable, the Company only conducts business with dealers who hold such a license.  For Direct Loan activities, the Company obtains licenses from each state to allow us to offer consumer loans within the following states:

• 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.

• 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.

• 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.

• Electronic Signatures in Global and National Commerce Act. The Electronic Signatures in Global and National Commerce Act (“ESIGN”) requires the Company to provide consumers with clear and conspicuous disclosures before the consumer gives consent to authorize the use of electronic signatures, electronic contracts, and electronic records.

• 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, as well as, ensure the accuracy and integrity of consumer information reported to credit reporting agencies.

• 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 and places limitations on collection and repossession activity.

• Military Lending Act. The Military Lending Act (“MLA”) requires the Company to limit the military annual percentage rate (“MAPR”) that the Company may charge to a maximum of 36 percent, requires certain disclosures to military consumers, and provides other substantive consumer protections on credit extended to Servicemembers and their families.

• 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.

• 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.

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

• Dodd-Frank Wall Street Reform and Consumer Protection Act of 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 the Company’s business. The CFPB issued rules regarding the supervision and examination of non-depository “larger participants” in the automobile finance business. At this time, the Company is not deemed a larger participant.

Failure to comply with these laws or regulations could have a material adverse effect on the Company by, among other things, limiting the jurisdictions in which the Company may operate, restricting the Company’s ability to realize the value of the collateral securing the Contracts, and 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 the Company’s operating environment in substantial and unpredictable ways and may have a material adverse effect on the Company’s business.

In particular, the Dodd-Frank Act and regulations promulgated thereunder, including the rules regarding supervision and examination issued by the CFPB, are likely to affect the Company’s cost of doing business, may limit or expand the Company’s permissible activities, may affect the competitive balance within the Company’s industry and market areas and could have a material adverse effect on the Company. The Company’s management continues to assess the Dodd-Frank Act’s probable impact on the Company’s 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 the Company in particular, is uncertain at this time.

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In addition to the CFPB, other state and federal agencies have the ability to regulate aspects of the Company’s business. For example, the Dodd-Frank Act provides a mechanism for state Attorneys General to investigate the Company. In addition, the Federal Trade Commission has jurisdiction to investigate aspects of the Company’s business. The Company expects 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 the Company.

Dealers with which the Company does 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 the Company.

The sale of vehicle service contracts and other ancillary products by dealers in connection with Contracts assigned to the Company from dealers is also subject to state laws and regulations. As the Company is the holder of the Contracts that may, in part, finance these products, some of these state laws and regulations may apply to the Company’s servicing and collection of the Contracts. Although these laws and regulations may not significantly affect the Company’s 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 the Company’s business in these jurisdictions. Any regulation or restriction of the Company’s 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. 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 the Company is 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 the Company’s business, financial condition or results of operations.

For more information, please refer to the risk factors titled “On October 5, 2017, the CFPB released the final rule Payday, Vehicle Title and Certain High-Cost Installment Loans under the Dodd Frank Act, which as adopted could potentially have a material adverse effect on our operations and financial performance”, “The CFPB has broad authority to pursue administrative proceedings and litigation for violations of federal consumer financing laws” and “Pursuant to the authority granted to it under the Dodd-Frank Act, the CFPB adopted rules that subject larger nonbank automobile finance companies 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”, which are incorporated herein by reference.

Employees

The Company’s management and various support functions are centralized at the Company’s corporate headquarters in Clearwater, Florida. As of March 31, 2020, the Company employed a total of 260 persons, of which 48 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 have in the past experienced and may in the future experience high delinquency and loss rates in our portfolios.  This has reduced and may continue to reduce our profitability. In addition, our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on our financial position, liquidity and results of operations.

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Our consolidated net income for the year ended March 31, 2020 was $3.5 million as compared to net loss of $3.6 million for the year ended March 31, 2019. 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 Contracts and Direct Loans are to non-prime borrowers, who are unable to obtain financing from traditional sources due primarily to their credit history. Contracts and Direct Loans made to these individuals generally entail a higher risk of delinquency, default, repossession, and higher losses than loans made to consumers with better credit.

Our underwriting standards and collection procedures may not offer adequate protection against the risk of default, especially in periods of economic uncertainty and wage stagnation 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 Contract or Direct Loan balance and costs of recovery.

Our ability to accurately forecast performance and determine an appropriate provision and allowance for credit losses, is critical to our business and financial results. The allowance for credit losses is established through a provision for credit losses based on management’s evaluation of the risk inherent in the portfolio, the composition of the portfolio, specific impaired Contracts and Direct Loans, and current economic conditions. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policy” in Item 7 of this Form 10-K and “Management’s Report on Internal Control over Financial Reporting” in Item 9A of this Form 10-K, both of which are incorporated herein by reference.

There can be no assurance that our performance forecasts will be accurate. In periods with changing economic conditions, such as is the case currently, accurately forecasting the performance of Contract and Direct Loans is more difficult. Our allowance for losses is an estimate, and if actual Contract and Direct Loan losses are materially greater than our allowance for losses, or more generally, if our forecasts are not accurate, our financial position, liquidity and results of operations could be materially adversely affected. For example, uncertainty surrounding the full economic impact of COVID-19 on our customers has made historical information on credit losses slightly less reliable in the current environment, and there can be no assurances that we have accurately estimated loan losses.

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.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued the ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, the amendments in this ASU require the measurement of all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The ASU also requires additional disclosures related to estimates and judgments used to measure all expected credit losses. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Recently, the FASB voted to delay the implementation date for this accounting standard, for smaller reporting companies, the new effective date is beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements and is collecting and analyzing data that will be needed to produce historical inputs into any models created as a result of adopting this ASU. At this time, the Company believes the adoption of this ASU will likely have a material effect and is expected to increase the overall allowance for credit losses.

The extent to which COVID-19 and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict. COVID-19 has had and is likely to continue to have a material adverse impact on our results of operations and financial condition and heightens many of our known risks.

The outbreak of the global pandemic of COVID-19 and resultant economic effects of preventative measures taken across the United States and worldwide have been weighing on the macroeconomic environment, negatively

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impacting consumer confidence, employment rates and other economic indicators that contribute to consumer spending behavior and demand for credit.The extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. While the magnitude of the impact from COVID-19 is uncertain, we could see

• a decline in purchase volume, which ultimately impacts the growth of our loan receivables;

• a decline in the growth of our interest income, due to reductions in benchmark interest rates and an expectation that we will provide, for a temporary period of time, forbearance in terms of interest and fee waivers for our cardholders impacted by COVID-19; and

• increases in our delinquencies and net charge-off rate and our allowance for credit losses, given the recent increases in filings for unemployment benefits in the U.S.

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

In addition, the spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, developing social distancing plans for our employees and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or as we determine is in the best interests of our employees, partners and customers. The outbreak has adversely impacted and may further adversely impact our workforce and operations and the operations of our partners, customers, suppliers and third-party vendors, throughout the time period during which the spread of COVID-19 continues and related restrictions remain in place, and even after the COVID-19 outbreak has subsided. In particular, we may experience financial losses due to a number of operational factors, including:

• third-party disruptions, including potential outages at third-party data centers and other suppliers;

• an increased volume of unanticipated customer and regulatory requests for information and support, or additional regulatory requirements, which could require additional resources and costs to address, including, for example, government initiatives to reduce or eliminate payments costs.

Even after the COVID-19 outbreak has subsided, our business may continue to experience materially adverse impacts as a result of the virus’s economic impact, including the availability and cost of funding and any recession that has occurred or may occur in the future. There are no comparable recent events that provide guidance as to the effect COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change.

We do not yet know the full extent of the impacts on our business, our operations or the economy as a whole.

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, some of 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:

• interest rates charged;

• the quality of credit accepted;

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• dealer discount;

• amount paid to dealers relative to the wholesale book value;

• the flexibility of Contract and Direct Loan terms offered; and

• 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 used and new vehicles. We may not be able to compete successfully in this market or against these competitors. In recent years, it has become increasingly difficult for the Company to match or exceed pricing of its competitors, which has generally resulted in declining Contract acquisition rates during the 2019 and 2020 fiscal years.

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 on Contracts purchased for the fiscal years ended March 31, 2020 and 2019 was 7.9% and 8.2%, respectively. The Company’s average APR on Contracts purchased for the fiscal years ended March 31, 2020 and 2019, was 23.4% and 23.5%, respectively. These competitive factors continue to exist and may impact our ability to secure quality loans on our preferred terms in significant quantities.

In addition, the number of Contracts and Direct Loans under which customers decided to discontinue contractually required payments to us after they were approved by other lenders for new vehicle financing has recently increased. We are particularly vulnerable to the effects of these practices because of our focus on providing financing with respect to used vehicles.

Our business depends on our continued access to bank financing on acceptable terms.

Prior to March 2019, we financed our operations through traditional bank credit facilities and cash flows generated from operations.  On March 29, 2019, we entered into a new senior secured credit facility (the “Credit Facility”).   Our ability to access capital through our existing facility, or undertake a future facility, or other debt or equity transactions on economically favorable terms or at all, depends in large part on factors that are beyond our control, including:

• Conditions in the securities and finance markets generally, and for securitized instruments in particular;

• A negative bias toward our industry;

• General economic conditions and the economic health of our earnings, cash flows and balance sheet;

• Security or collateral requirements;

• The credit quality and performance of our customer receivables;

• Regulatory restrictions applicable to us;

• Our overall business and industry prospects;

• Our overall sales performance, profitability, cash flow, balance sheet quality, and regulatory restrictions;

• Our ability to provide or obtain financial support for required credit enhancement;

• Our ability to adequately service our financial instruments;

• Our ability to meet debt covenant requirements; and

• Prevailing interest rates.

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Our existing and future levels of indebtedness could adversely affect our financial health, ability to obtain financing in the future, ability to react to changes in our business and ability to fulfill our obligations under such indebtedness.

As of March 31, 2020, we had aggregate outstanding indebtedness, under our Credit Facility of $126.8 million compared to $145 million as of March 31, 2019. This level of indebtedness could:

• Make it more difficult for us to satisfy our obligations with respect to our outstanding notes and other indebtedness, resulting in possible defaults on and acceleration of such indebtedness;

• Require us to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of such cash flows to fund working capital, acquisitions, new store openings, capital expenditures and other general corporate purposes;

• Limit our ability to obtain additional financing for working capital, acquisitions, new store openings, capital expenditures, debt service requirements and other general corporate purposes;

• Limit our ability to refinance indebtedness or cause the associated costs of such refinancing to increase;

• Increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations (because a portion of our borrowings are at variable rates of interest); and

• Place us at a competitive disadvantage compared to our competitors with proportionately less debt or comparable debt at more favorable interest rates which, as a result, may be better positioned to withstand economic downturns.

Any of the foregoing impacts of our level of indebtedness could have a material adverse effect on us.

Our Credit Facility is subject to certain defaults and negative covenants.

The Credit Facility loan documents contain customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, and sales of receivables. Such loan documents also restrict the Company’s ability, without lenders’ consent, to modify its credit policies or make changes to its form of Direct Loan contract or its form of dealer agreement.  If an event of default occurs, the lenders could increase borrowing costs, restrict the our ability to obtain additional advances under the Credit Facility, accelerate all amounts outstanding under the Credit Facility, enforce their interest against collateral pledged under the Credit Facility or enforce their rights under the guarantees.

If we fail to maintain an effective system of internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately and timely report our financial results, which could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.

Effective internal control over financial reporting and disclosure controls and procedures are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud and to operate successfully as a public company. As further described in Item 9A. Controls and Procedures, our management has concluded that, because of material weaknesses, our internal control over financial reporting and our disclosure controls and procedures were not effective as of March 31, 2019 or as of March 31, 2020.  The Company has and will continue to enhance its controls and expects to remediate the material weaknesses. However, we cannot be certain that these measures will be successful or that we will be able to prevent future significant deficiencies or material weaknesses. Inadequate internal control over financial reporting or inadequate disclosure controls and procedures could cause investors to lose confidence in our reported financial information, which could hurt our reputation and have a negative effect on the trading price of our stock and our access to capital.

Uncertainty about the continuing availability of LIBOR may adversely affect our business.

The interest rates under our Credit Facility are calculated by reference to LIBOR. On July 27, 2017, the United Kingdom’s Financial Conduct Authority, the authority that regulates LIBOR, announced that it intends to stop compelling banks to submit rates required for the calculation of LIBOR after 2021, and it is unclear whether new methods of calculating LIBOR will be established. Various industry groups continue to discuss replacement

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benchmark rates, the process for amending existing LIBOR-based contracts, and the potential economic impacts ofdifferent alternatives. For example, the U.S Federal Reserve, in conjunction with the Alternative Reference RatesCommittee, is considering replacing U.S. dollar LIBOR with a newly created index, calculated based on repurchaseagreements backed by treasury securities.

If LIBOR ceases to exist after 2021, then the administrative agent will select a broadly accepted comparable successor rate, if one exists, or such other successor rate determined by the administrative agent to maintain the lender’s then-current yield. It is not possible to predict the effect of these changes, or reforms, tax legislation impacts, or the establishment of alternative reference rates in the United Kingdom, the United States or elsewhere, and such changes may result in, among other things, increased volatility and illiquidity in markets for instruments that currently rely on LIBOR and increased borrowing costs.

On October 5, 2017, the CFPB released the final rule Payday, Vehicle Title and Certain High-Cost Installment Loans under the Dodd Frank Act, which as adopted could potentially have a material adverse effect on our operations and financial performance.

In 2017, the CFPB adopted rules applicable to payday, title and certain high‑cost installment loans.  The rules address the underwriting of covered short-term loans and longer-term balloon-payment loans, including payday and vehicle title loans, as well as related reporting and recordkeeping provisions.  These provisions have become known as the “mandatory underwriting provisions” and include rules for lenders to follow to determine whether or not consumers have the ability to repay the loans according to their terms.  On February 6, 2019, the CFPB proposed to rescind the ability to repay provisions and delay the compliance date for the mandatory underwriting provisions until November 19, 2020.  If this rule becomes effective it could have a materially adverse effect on our current business and make it less profitable.  Additionally, the CFPB may target specific features of loans by rulemaking that could cause us to cease offering certain products, or 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. The CFPB could also implement rules that limit our ability to continue servicing our financial products and services.

The CFPB has broad authority to pursue administrative proceedings and litigation for violations of federal consumer financing laws.  

The CFPB has the authority to 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 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 defines a “larger participant” of automobile financing if it has at least 10,000 aggregate annual originations. The Company does not meet the threshold of at least 10,000 aggregate annual direct loan originations, and therefore would not fall under the CFPB’s supervisory authority. The CFPB issued rules regarding the supervision and examination of non-depository “larger participants” in the automobile finance business. 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. At such time, if we become or the CFPB defines us as a larger participant, we will be subject to examination by the CFPB for, among other things,

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ECOA compliance; unfair, deceptive or abusive acts or practices (“UDAAP”) compliance; and the adequacy of our compliance management systems.

We have continued to evaluate our existing compliance management 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 could 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:

• licensing requirements;

• requirements for maintenance of proper records;

• payment of required fees to certain states;

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

• debt collection practices;

• proper disclosure to customers regarding financing terms;

• privacy regarding certain customer data;

• interest rates on loans to customers;

• late fees and insufficient fees charged;

• telephone solicitation of Direct Loan customers; and

• 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.

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

Our future growth and development are significantly dependent upon the skills and experience of our senior management team and our ability to retain that team.

We do not maintain key-man life insurance policies on any of these executives. The loss of services of one or more of the executives could have a material adverse effect on our business, results of operations, and financial condition.  See Item 9A.  Controls and Procedures in this Annual Report, the text of which is incorporated herein by reference.

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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:

• usury laws;

• disclosure inaccuracies;

• wrongful repossession;

• violations of bankruptcy stay provisions;

• certificate of title disputes;

• fraud;

• breach of contract; and

• 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.

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.

With the recent change in senior management, the Company’s business strategy has been redefined.  This strategy includes remaining committed to the branch-based model, focusing on financing primary transportation to and from work for the subprime borrower, pricing based on risk (rate, yield, advance, etc.), and a commitment to the underwriting discipline required for optimal portfolio performance.

Our failure or inability to execute any element of our business strategy could have a material adverse effect on our business and financial condition.

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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, has exerted increased pressure on us to reduce our interest rates, fees, and dealer discount rates in order to maintain our market share. Any further reductions in our interest rates, fees or dealer discount rates could have a material adverse impact on our profitability or financial condition.

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. Newer, more expensive vehicles securing our larger dollar loans are more susceptible to wholesale pricing fluctuations than are older vehicles and also experience depreciation at a much greater rate.  Until the Company’s portfolio has been successfully converted to primarily consisting of our target vehicle (primary transportation to and from work for the subprime borrower), the Company expects to be affected by softer auction activity and reduced vehicle values.

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 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.  However, the interest rate swap agreements in effect for most of the past five years matured during the fiscal year ended March 31, 2018, and we have not entered into new arrangements. We will continue to evaluate interest rate swap pricing and we may or may not enter into interest rate swap agreements in the future.

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

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.

In February 2019, we converted from our internally developed loan operating system to a third-party loan operating system.  This system is used 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 the system conversion 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.

In fact, delays completing the system integration with the accounting system contributed to a material weakness in our internal control over financial reporting for the fiscal year ended March 31, 2019.  See Item 9A.  Controls and Procedures in this Annual Report, the text of which is incorporated herein by reference.

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, and share such data with third parties. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy.

Any failure, interruption, or breach in our cyber security, including through employee misconduct or any failure of our back-up systems or failure to maintain adequate security surrounding customer information, could result in reputational harm, disruption in the management of our customer relationships, or the inability to originate, process and service our products. Further, any of these cyber security and operational risks could result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to lawsuits by customers for identity theft or other damages resulting from the misuse of their personal information and possible financial liability, any of which could have a material adverse effect on our results of operations, financial condition and liquidity. In addition, regulators may impose penalties or require remedial action if they identify weaknesses in our security systems, and we may be required to incur significant costs to increase our cyber security to address any vulnerabilities that may be discovered or to remediate the harm caused by any security breaches. As part of our business, we may share confidential customer information and proprietary information with clients, vendors, service providers, and business partners. The information systems of these third parties may be vulnerable to security breaches and we may not be able to ensure that these third parties have appropriate security controls in place to protect the information we share with them. If our confidential information is intercepted, stolen, misused, or mishandled while in possession of a third party, it could result in reputational harm to us, loss of customer business, and additional regulatory scrutiny, and it could expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our results of operations, financial condition, and liquidity.

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.

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We partially rely on third parties to deliver services, and failure by those parties to provide these services or meet contractual requirements could have a material adverse effect on our business, financial condition and results of operations.

We depend on third-party service providers for many aspects of our business operations, including loan origination, title processing, and online payments, which increases our operational complexity and decreases our control. We rely on these service providers to provide a high level of service and support, which subjects us to risks associated with inadequate or untimely service. If a service provider fails to provide the services that we require or expect, or fails to meet contractual requirements, such as service levels or compliance with applicable laws, a failure could negatively impact our business by adversely affecting our ability to process customers’ transactions in a timely and accurate manner, otherwise hampering our ability to service our customers, or subjecting us to litigation or regulatory risk for poor vendor oversight. We may be unable to replace or be delayed in replacing these sources and there is a risk that we would be unable to enter into a similar agreement with an alternate provider on terms that we consider favorable or in a timely manner. Such a failure could have a material and adverse effect on our business, financial condition, and results of operations.

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.

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, 2020 was approximately 8,000 shares, which makes ours a thinly traded stock. Thinly traded stocks pose several risks for investors because they have wider spreads and less displayed size than other stocks that trade in higher volumes or an active trading market. Other risks posed by thinly traded stocks include difficulty selling the stock, challenges attracting market makers to make markets in the stock, and difficulty with financings. 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 also 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. These risks could affect a shareholder’s ability 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.

21

Changes in U.S. federal, state and local tax law or interpretations of existing tax law could increase our tax burden or otherwise adversely affect our financial condition or results of operations.

We are subject to taxation at the federal, state, and local levels in the United States. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The changes included in TCJA are broad and complex. The final transition impacts of TCJA may differ from the estimates provided elsewhere in this Annual Report, possibly materially, due to, among other things, changes in interpretations of TCJA, any legislative action to address questions that arise because of TCJA, any changes in accounting standards for income taxes or related interpretations in response to TCJA, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates. The estimated impact of the new law is based on management’s current knowledge and assumptions and recognized impacts could be materially different from current estimates.

In response to the global impacts of COVID-19 on U.S. companies and citizens, the government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) on March 27, 2020. The CARES Act included several tax relief options for companies, which resulted in the following provisions available to the Company.

• In May 2020, the Company elected to carryback its fiscal year 2019 net operating losses of $9.7 million to 2013, thus generating a refund of $3.5 million and an income tax benefit of $1.4 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2013.

• The Company plans to carryback its fiscal year 2020 net operating losses of $3.0 million to 2014, thus generating an anticipated refund of $1.0 million and an income tax benefit of $0.4 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2014.

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 $18.25 per square foot. The current lease relating to this space was entered into effective April 1, 2015 and expires on March 31, 2023.

As of March 31, 2020, each of the Company’s 43 branch offices located in Alabama, Florida, Georgia, Illinois,  Indiana, Kentucky, Michigan, Missouri, Nevada, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, and Wisconsin consists of approximately 1,700 square feet of office space (Nevada and Wisconsin are expansion states with no local branch office). The Company acquires Contracts in Nevada and Wisconsin through its virtual expansion office operations based in the Charlotte, North Carolina branch location. 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 $13.00 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.

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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, 2020 and 2019, respectively.

Fiscal year ended March 31, 2020	High		Low
First Quarter	$	9.94	$	7.92
Second Quarter	$	9.90	$	8.07
Third Quarter	$	9.60	$	8.24
Fourth Quarter	$	9.10	$	4.76

Fiscal year ended March 31, 2019	High		Low
First Quarter	$	9.50	$	8.36
Second Quarter	$	12.50	$	9.01
Third Quarter	$	12.42	$	9.07
Fourth Quarter	$	10.95	$	8.50

As of June 19, 2020, there were approximately 120 holders of record of the Company’s common shares.  

The Company has not declared and paid cash dividends on its common shares in the recent past and has no current plans to declare or pay any cash dividends in the foreseeable future. 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.

Earnings from U.S. subsidiaries are permanently invested in the U.S. The Company has not provided any Canadian income tax or U.S. withholding tax on unremitted earnings. If a dividend was paid to the Company from the current or accumulated earnings and profits of the U.S. subsidiary, the dividend would be subject to a U.S. withholding tax of 5%. The gross dividend (i.e., before payment of the withholding tax) would generally be included in the Company's Canadian taxable 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.

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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 the shareholder’s 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. The benefit of any deduction for foreign taxes may be negatively impacted by the overall limitation on deducting income and other taxes. 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.

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, 2020, 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, 2015 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.

	04/1/2015		04/1/2016		04/1/2017		04/1/2018		04/1/2019		04/1/2020
Nicholas Financial, Inc.	$	100.00	$	77.02	$	75.87	$	64.74	$	64.24	$	41.68
NASDAQ Composite		100.00		99.37		120.63		144.13		157.71		157.12
Dow Jones US General Financial    Index		100.00		91.27		114.84		145.91		148.90		136.38

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Unregistered Sales of Equity Securities and Use of Proceeds

The tables below sets forth the information with respect to purchase made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our shares of common stock during the Fiscal Year 2020:

	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs
Period	(In thousands, except for average price paid per share)
October 1, 2019 to October 31, 2019		14	$	8.84		14	$	8,876
November 1, 2019 to November 30, 2019		5		8.82		5		8,832
December 1, 2019 to December 31, 2019		5		8.98		5	$	8,787
Total		24	$	8.88		24
	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs
Period	(In thousands, except for average price paid per share)
January 1, 2020 to January 31, 2020		12	$	8.51		12	$	8,685
February 1, 2020 to February 29, 2020		21		8.22		21		8,512
March 1, 2020 to March 31, 2020		62		7.76		62	$	8,031
Total		95	$	7.96		95

In May 2019, the Company’s Board of Directors (“Board”) authorized a new stock repurchase program allowing for the repurchase of up to $8.0 million of the Company’s outstanding shares of common stock in open market purchases, privately negotiated transactions, or through other structures in accordance with applicable federal securities laws. The authorization was effective immediately.

The timing and actual number of sharers will depend on a variety of factors, including stock price, corporate and regulatory requirements and other market and economic conditions. The Company’s stock repurchase program may be suspended or discontinued at any time.

In August 2019, the Company’s Board authorized additional repurchase of up to $1.0 million of the Company’s outstanding shares.

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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, 2020, 2019, 2018, 2017, and 2016. The selected consolidated financial data has 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 and, for the fiscal years ended March 31, 2018, 2017 and 2016 and as of March 31, 2018, 2017 and 2016, that are included in our annual reports for such fiscal years. Quarterly results of operations are incorporated herein by reference to Note 13 – Quarterly Results of Operations (Unaudited) in the notes to the consolidated financial statements included elsewhere in this Report.

	Fiscal Year ended March 31, (In thousands, except earnings per share numbers)
	2020			2019			2018			2017			2016
Statement of Operations Data
Interest and fee income on finance receivables	$	62,095		$	71,300		$	83,917		$	90,466		$	90,707
Interest expense		8,515			9,504			10,137			9,222			9,007
Provision for credit losses		16,901			32,836			37,450			37,177			26,278
Salaries and employee benefits		18,804			18,998			19,868			21,437			22,313
Change in fair value of interest rate swaps		-			-			17			(222	)		24
Other expenses		15,628			14,550			13,282			14,112			12,980
		59,848			75,888			80,754			81,726			70,602
Operating income (loss) before income taxes		2,247			(4,588	)		3,163			8,740			20,105
Income tax expense (benefit)		(1,219	)		(940	)		4,261			3,331			7,726
Net income (loss)	$	3,466		$	(3,648	)	$	(1,098	)	$	5,409		$	12,379
Earnings (loss) per share – basic:	$	0.45		$	(.46	)	$	(.14	)	$	.70		$	1.60
Weighted average shares outstanding		7,702			7,861			7,819			7,664			7,622
Earnings (loss) per share – diluted:	$	0.45		$	(.46	)	$	(.14	)	$	.69		$	1.59
Weighted average shares outstanding		7,703			7,861			7,819			7,726			7,692

	As of and for the Fiscal Year ended March 31, (In thousands, except number of branch locations)
	2020			2019			2018			2017			2016
Balance Sheet Data
Total assets	$	238,084		$	252,420		$	280,840		$	333,612		$	325,309
Finance receivables, net		199,781			202,042			266,573			317,205			311,837
Debt		126,830			145,000			165,750			213,000			211,000
Shareholders’ equity		107,579			104,885			108,437			108,860			102,849
Operating Data
Return on average assets		1.44	%		(1.41	%)		(0.36	%)		1.64	%		3.94	%
Return on average equity		3.27	%		(3.36	%)		(1.01	%)		5.11	%		12.85	%
Gross portfolio yield (1)		27.41	%		26.40	%		25.60	%		26.04	%		27.10	%
Pre-tax yield (1)		0.99	%		(1.70	%)		0.98	%		2.46	%		6.02	%
Total delinquencies over 30 days, excluding    Chapter 13 bankruptcy accounts		9.91	%		9.89	%		8.67	%		9.92	%		5.50	%
Net charge-off percentage (1)		10.01	%		13.39	%		10.65	%		9.37	%		7.56	%
Automobile Finance Data & Direct Loan    Origination
Contracts purchased/Direct Loans originated	$	89,334		$	85,240		$	117,217		$	179,617		$	196,853
Average dealer discount on Contracts purchased		7.90	%		8.22	%		7.41	%		7.08	%		7.51	%
Average contractual rate on Contracts &    Direct Loans purchased		23.12	%		22.98	%		22.54	%		22.40	%		22.81	%
Number of branch locations	43				53			60			65			67

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(1) See the definitions set forth in the notes to the Portfolio Summary table under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview.”

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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. Nicholas Financial is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new 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 years ended March 31, 2020 and 2019. A second Florida subsidiary, Nicholas Data Services, Inc. (“NDS”), serves as an intermediate holding company for Nicholas Financial. In addition, NF Funding I, LLC (“NF Funding I”) is a wholly-owned, special purpose financing subsidiary of Nicholas Financial.  

Nicholas Financial-Canada, Nicholas Financial, NDS, NF Funding I are collectively referred to herein as the “Company”.

Introduction

The Company’s consolidated revenues decreased from $71.3 million for the fiscal year ended March 31, 2019 to $62.1 million for the fiscal year ended March 31, 2020. The Company’s diluted earnings per share increased from a loss of $0.46 per share for the fiscal year ended March 31, 2019 to a net income of $0.45 per share for the fiscal year ended March 31, 2020. The Company reported a $2.2 million operating income for the year ended March 31, 2020 compared to operating loss of $4.6 million for the year ended March 31, 2019. The increase was a result of:

• focused disciplined underwriting and risk-based pricing;

• increased year-over-year gross portfolio yield;

• a change in the charge-off policy from 181 days to 121 days, resulting in a one-time gross charge-off of $6.4 million of finance receivables;

• decreased net charge-off percentage due to improvement in the provision for credit losses

• the closing or consolidating of 11 branches in fiscal year 2020, which represented approximately 26% of the Company’s network, as of March 31, 2020 resulting in reduced expenses; and

• reduction in workforce due to the branch closures, which impacted approximately 20 employees and represented 9% of the Company workforce, as of March 31, 2020 resulting in charges associated with severance payments.

The Company’s consolidated net income for the fiscal year ended March 31, 2020 was $3.5 million as compared to net loss of $3.6 million for the fiscal year ended March 31, 2019.

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The gross portfolio yield of the portfolio for the fiscal years ended March 31, 2020 and 2019, was 27.41% and 26.40%, respectively. Primarily as a result of increased competition within the industry and the Company’s decision not to sacrifice pricing for volume, the average dealer discount as a percent of finance receivables associated with new volume for the fiscal years ended March 31, 2020 and 2019 was 7.9% and 8.2%, respectively.   The increase in APR (and therefore overall yield) on new purchases in fiscal 2020 as compared with fiscal 2019 was primarily driven by the Company’s recommitment to its core principles of disciplined underwriting and, risk-based pricing.

Portfolio Summary	Fiscal Year ended March 31, (In thousands)
	2020			2019
Average finance receivables (1)	$	226,541		$	270,106
Average indebtedness (2)	$	132,552		$	136,386
Interest and fee income on finance receivables		62,095			71,300
Interest expense		8,515			9,504
Net interest and fee income on finance receivables	$	53,580		$	61,796
Portfolio yield (3)		27.41	%		26.40	%
Interest expense as a percentage of average finance    receivables		3.76	%		3.52	%
Provision for credit losses as a percentage of average    finance receivables		7.46	%		12.16	%
Net portfolio yield (3)		16.19	%		10.72	%
Operating expenses as a percentage of average finance    receivables		15.20	%		12.42	%
Pre-tax yield as a percentage of average finance    receivables (4)		0.99	%		(1.70	)%
Net charge-off percentage (5)		10.01	%		13.39	%
Allowance percentage (6)		4.93	%		6.28	%

(1) Average finance receivables represent the average of finance receivables throughout the period.

(2) Average indebtedness represents the average outstanding borrowings under the Credit Facility.

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

(4) Pre-tax yield represents net portfolio yield minus administrative expenses (marketing, salaries, employee benefits, depreciation, and administrative), as a percentage of average finance receivables.

(5) Write-off to liquidation percentage is defined as net charge-offs divided by liquidation. Liquidation is defined as beginning finance receivables balance plus current period purchases and originations minus ending finance receivables balance.

(6) Net charge-off percentage represents net charge-offs divided by average finance receivables outstanding during the period.

COVID-19

While the magnitude and duration of the impact from COVID-19 on our business remains uncertain, it may negatively affect our business and financial condition.

While the Company’s results of operations in April and May 2020 appeared to be resilient to downward pressure exerted by macroeconomic conditions, such as significant increases in unemployment across the country, there can be no assurance that this apparent resilience can be sustained.

The government stimulus checks, which briefly increased daily cash collections in April 2020, the expansion of unemployment benefits by the CARES Act to allow individuals to receive their weekly unemployment benefit for a maximum of 39 weeks, and the fact that unemployed customers are expected to be eligible to receive Pandemic Unemployment Compensation (“PUC”) equal to an additional $600 per week through July 31, 2020, collectively are

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expected to have a beneficial effect on the Company. The Company continued to experience strong cash collections in May 2020 and experienced positive trending on gross charge-off balances in April 2020 and May 2020.

However, the extent to which the COVID-19 pandemic will impact our business, financial condition, results of operations or cash flows will depend on numerous evolving factors that we are unable to accurately predict at this time. The length and scope of the restrictions imposed by various governments and success of efforts to find a suitable vaccine, among other factors, will determine the ultimate severity of the COVID-19 impact on our business. However, it is likely that prolonged periods of difficult market conditions could have material adverse impacts on our business, financial condition, results of operations and cash flows.

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. Because of the nature of the customers under the Company’s Contracts and Direct Loan program, the Company considers the establishment of adequate reserves for credit losses to be imperative.

During the first quarter of fiscal 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies.  The change in the Company’s method for calculating the allowance for credit losses was accounted for as a change in estimate. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms.  A trailing six-month net charge-off percentage, annualized, applied to ending finance receivables is also more in line with the industry practice, which typically uses a trailing twelve-month net charge-off methodology.  Management believes a trailing six-month will more quickly reflect changes in the portfolio.  

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, the estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and the adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision would be recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio.

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 most 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 generally purchases Contracts on an individual basis.

The Company utilizes the branch model, which allows for Contract purchasing to be done at 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 provide reasonable assurance that the Contracts that the Company purchases have common risk characteristics. The Company utilizes its District Managers to evaluate their respective branch locations for adherence to these underwriting guidelines, as well as approve underwriting exceptions. The Company also utilizes internal audit (“IA”) to assure adherence to its underwriting guidelines. Any Contract that does not meet the Company’s underwriting guidelines can be submitted by a branch manager for approval from the Company’s District Managers or senior management.

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Fiscal 2020 Compared to Fiscal 2019

Interest and Fee Income on Finance Receivables

Interest and fee income on finance receivables, predominantly finance charge income, decreased to $62.1 million in fiscal 2020 as compared to $71.3 million in fiscal 2019. The average finance receivables totaled $226.5 million for the fiscal year ended March 31, 2020, a decrease of 16.1% from $270.1 million for the fiscal year ended March 31, 2019. Purchasing volume has continued to decrease from fiscal 2019 as a result of tightening the Company’s credit underwriting standards and a reduction in auto sales year over year.  

Competition also continued to affect the Company’s ability to acquire Contracts, furthermore, the Company’s renewed strategic focus on financing primary transportation to and from work for the subprime borrower has impacted the Company’s ability to acquire Contracts at desired yields. The average APR on new Contract purchases decreased slightly from 23.5% for fiscal year 2019 to 23.4% for fiscal year 2020. Concurrently, the dealer discount on new Contract purchases decreased from 8.2% for fiscal year 2019 to 7.9% for fiscal year 2020. Related to desired yields, the Company’s strategy focused on risk-based pricing (rate, yield, advance, term, etc.) and a commitment to the underwriting discipline required for optimal portfolio performance as opposed to chasing competition for the sake of simply generating volume.

The gross portfolio yield increased to 27.4% for the fiscal year ended March 31, 2020 as compared to 26.4% for the fiscal year ended March 31, 2019. The gross portfolio yield increased primarily due to increase in the average portfolio APR from 22.98% for the fiscal year 2019 to 23.12% for fiscal year 2020. The net portfolio yield increased to 16.2% for the fiscal year ended March 31, 2020 from 10.7% for the fiscal year ended March 31, 2019. The net portfolio yield increased primarily due to a decrease in the provision for credit losses as a percentage of finance receivables, as described under “Analysis of Credit Losses” below.  Additionally, the Company recorded lower interest expenses for the fiscal year 2020, which also increased net portfolio yield.

Operating Expenses

Operating expenses increased slightly to $34.4 million for the fiscal year ended March 31, 2020 compared to $33.5 million for the fiscal year ended March 31, 2019 as a result of increases across expense accounts, including but not limited to acceleration of dealers’ spiffs expenses, bank/custody fees, professional/consulting fees, and repossessions/collection expenses.  Marketing expenses decreased approximately $0.9 million from the prior year due to the Company no longer capitalizing bonus (“Spiffs”) paid to the dealers in fiscal year 2020.  The Company accounted for this change as a change in accounting estimate.  Beginning in fiscal 2019, spiffs are expensed when incurred.  Salaries and employee benefits decreased by approximately $0.2 million, resulting from a reduction in the number of employees, which was offset by increases in bonuses and benefits to employees.  Administrative expense increased approximately $1.7 million primarily due to increases of $0.6 million in collateral protection insurance charges, $0.5 million in repossession and recovery expenses, and $0.5 million in bank and custody fees.

Interest Expense

Interest expense decreased to $8.5 million for the fiscal year ended March 31, 2020, as compared to $9.5 million for the fiscal year ended March 31, 2019, due to a decrease in average outstanding debt and interest rate. The average outstanding debt during the year ended March 31, 2020 decreased to $132.6 million from $136.4 million during the year ended March 31, 2019. The following table summarizes the Company’s average cost of borrowed funds for the fiscal years ended March 31:

	2020			2019
Variable interest under the line of credit and credit    facility		2.67	%		2.97	%
Credit spread under the line of credit and credit    facility		3.75	%		4.00	%
Average cost of borrowed funds		6.42	%		6.97	%

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LIBOR rates have decreased (0.99% as of March 31, 2020 compared to 2.49% as of March 31, 2019) and the Company’s credit spread under the line of credit decreased (3.75% as of March 31, 2020 compared to 4.00% as of March 31, 2019). For further discussions regarding interest rates see “Note 5 – Credit Facility”.

Analysis of Credit Losses

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

	For the year ended March 31, 2020
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	16,575		$	357		$	16,932
Provision for credit losses		16,096			805			16,901
Charge-offs		(29,174	)		(663	)		(29,837	)
Recoveries		6,936			230			7,166
Balance at end of year	$	10,433		$	729		$	11,162

	For the year ended March 31, 2019
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	19,433		$	833		$	20,266
Provision for credit losses		32,715			121			32,836
Charge-offs		(37,514	)		(638	)		(38,152	)
Recoveries		1,941			41			1,982
Balance at end of year	$	16,575		$	357		$	16,932

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms. A trailing six-month, annualized, is also more in line with the industry practice, which uses a trailing twelve-month. Management believes a trailing six-month more accurately reflects changes in the portfolio.  Using the prior method (discussed below), the allowance and provision expense for the first quarter of fiscal 2019 would have been approximately $151,000 lower.

As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019. This one-time charge-off, of approximately $6.4 million, was excluded from the March 31, 2019 allowance for credit losses calculation.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision is recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio. Conversely, the Company could identify abnormalities in the composition of the portfolio, which would indicate the calculation is overstated and management judgement may be required to determine the allowance of credit losses for both Contracts and Direct Loans.

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The provision for credit losses decreased to $16.9 million for the fiscal year ended March 31, 2020 from $32.8 million for the fiscal year ended March 31, 2019, largely due to the 16.1% decrease in the average finance receivables.  

Net charge-offs decreased to 10.0% for the fiscal year ended March 31, 2020 from 13.4% for the fiscal year ended March 31, 2019, primarily resulting from the Company changing its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019, in a one-time charge-off.

The delinquency percentage for Contracts more than thirty days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2020 was 10.2%, a slight increase from 10.1% as of March 31, 2019. The delinquency percentage for Direct Loans more than thirty days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2020 was 4.6%, an increase from 3.8% as of March 31, 2019.

In accordance with Company 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, 2020 and March 31, 2019 the Company granted deferrals to approximately 13.8% and 13.2%, respectively, of total Contracts and Direct Loans. The increase in the total number of deferrals in fiscal 2020 compared to fiscal 2019 was primarily the result of a spike on March 31, 2020. However, the Company experienced increased collections on finance receivables on gross charge-off balances in April 2020 and May 2020.

Income Taxes

The Company recorded a tax benefit of approximately $1.2 million during fiscal 2020 compared to a $0.9 million income tax benefit during fiscal 2019.  The Company’s effective tax rate in fiscal 2020 was (54.3)% compared to 20.5% in fiscal 2019.  For further discussion regarding income taxes see “Note 7 – Income Taxes”.

Liquidity and Capital Resources

The Company’s cash flows are summarized as follows:

	Fiscal Year ended March 31, (In thousands)
	2020			2019
Cash provided by (used in):
Operating activities	$	10,485		$	14,044
Investing activities		(3,676	)		44,159
Financing activities		(19,767	)		(23,187	)
Net increase (decrease) in cash	$	(12,958	)	$	35,016

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The Company’s primary use of working capital for the fiscal year ended March 31, 2020 was funding the purchase of Contracts, which are financed substantially through cash from principal and interest payments received, and the Company’s line of credit.

On March 29, 2019, NF Funding I, a special purpose financing subsidiary of Nicholas Financial, entered into a senior secured credit facility (the “Credit Facility”) pursuant to a credit agreement with Ares Agent Services, L.P., as administrative agent and collateral agent, and the lenders that are party thereto (the “Credit Agreement”). The Company’s prior line of credit was paid off in connection with this Credit Facility. As of March 31, 2020, the total amount outstanding under the Credit Facility was $126.8 million. The Company decreased the total amount outstanding to $119.0 million on May 31, 2020.

Pursuant to the Credit Agreement, the lenders agreed to extend to the Company a line of credit of up to $175,000,000, which will be used to purchase Contracts from Nicholas Financial on a revolving basis pursuant to a related receivables purchase agreement between NF Funding I and Nicholas Financial (the “Receivables Purchase Agreement”). Under the terms of the Receivables Purchase Agreement, Nicholas Financial sells to NF Funding I the receivables under Contracts. Nicholas Financial continues to service the Contracts transferred to NF Funding I pursuant to a related servicing agreement (the “Servicing Agreement”).

The availability of funds under the Credit Facility is generally limited to 82.5% of the value of non-delinquent receivables, and outstanding advances under the Credit Facility will accrue interest at a rate of LIBOR plus a credit spread, which is currently 3.75%. The commitment period for advances under the Credit Facility is three years. At the end of the commitment period, the outstanding balance would be paid off over a four-year amortization period.

The Company will continue to depend on the availability the Credit Facility, together with cash from operations, to finance future operations. The Credit Agreement and the other loan documents contain customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, and sales of receivables. See “Risk Factors—Our Credit Facility is subject to certain defaults and negative covenants.” If an event of default occurs under the Credit Facility, the Company’s lenders could increase the Company’s borrowing costs, restrict the Company’s ability to obtain additional borrowings under the facility, accelerate all amounts outstanding under the facility, or enforce their interest against collateral pledged under the facility, or enforce their rights under guarantees.

On May 27, 2020, the Company obtained a loan in the amount of $3,243,900 from Fifth Third Bank in connection with the U.S. Small Business Administration’s Paycheck Protection Program (the “PPP Loan”) pursuant to a Note by the Company in favor of Fifth Third Bank in such principal amount. Pursuant to the Paycheck Protection Program, all or a portion of the PPP Loan may be forgiven if the Company uses the proceeds of the PPP Loan for its payroll costs and other expenses in accordance with the requirements of the Paycheck Protection Program. While, the Company intends to use the proceeds of the PPP Loan for payroll costs and other covered expenses and intends to seek full forgiveness of the PPP Loan as soon as permitted under the Paycheck Protection Program, there can be no assurance that the Company will obtain any forgiveness of the PPP Loan.

If the PPP Loan is not fully forgiven, the Company will remain liable for the full and punctual payment of the outstanding principal balance plus accrued and unpaid interest. The PPP Loan accrues interest at a rate per annum equal to 1.00% and an initial payment of accrued and unpaid interest is due on December 27, 2020. The outstanding principal balance plus accrued and unpaid interest is due on May 27, 2022. The PPP Loan is unsecured and is a non-resource obligation. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The note contains events of default and other provisions customary for a loan of this type.

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.

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Contractual Obligations

The following table summarizes the Company’s material obligations as of March 31, 2020.

	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	$	3,036	$	1,355	$	1,360	$	136	$	185
Credit facility		126,830		—		31,707		63,415		31,708
Interest on credit facility		32,570		8,142		15,267		8,143		1,018
Total	$	162,436	$	9,497	$	48,334	$	71,694	$	32,911

The Company’s $175.0 million commitment period for advances under the Credit Facility terminates March 31, 2022. At the end of the commitment period, the outstanding balance would be paid off over a four-year amortization period. The pricing of the Credit Facility is 375 basis points above 30-day LIBOR. The unused line fee on the Credit Facility is 0.50%.  Interest on outstanding borrowings under the Credit Facility as of March 31, 2020, is based on an effective interest rate of 6.42%. The effective interest rate used in the above table does not contemplate the possibility of entering into 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

We are subject to interest rate risk. As of March 31, 2020, $126.8 million, or 100% of our total debt, was subject to floating interest rates. A hypothetical increase in the variable interest rates of 1% or 100 basis points would result in an annual pre-tax increase of interest expense of approximately $1.3 million.

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Item 8. Financial Statements and Supplementary Data

The following financial statements are filed as part of this Report:

Report of Independent Registered Public Accounting Firm	37
Audited Consolidated Financial Statements
Consolidated Balance Sheets	38
Consolidated Statements of Income (Loss)	39
Consolidated Statements of Shareholders’ Equity	40
Consolidated Statements of Cash Flows	41
Notes to the Consolidated Financial Statements	43

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Nicholas Financial, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nicholas Financial, Inc. and Subsidiaries (the Company) as of March 31, 2020 and 2019, the related consolidated statements of income (loss), shareholders’ equity and cash flows, for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company's auditor since 2018.

Raleigh, North Carolina

June 22, 2020

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Nicholas Financial, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands)

	March 31,
	2020			2019
Assets
Cash	$	16,802		$	35,595
Restricted cash		7,882			2,047
Finance receivables, net		199,781			202,042
Repossessed assets		1,340			1,924
Operating lease right-of-use assets		2,598			-
Prepaid expenses and other assets		1,126			1,378
Income taxes receivable		4,898			1,654
Property and equipment, net		482			656
Deferred income taxes		3,909			7,124
Total assets	$	238,818		$	252,420
Liabilities and shareholders’ equity
Credit facility	$	126,830		$	145,000
Unamortized debt issuance costs		(2,575	)		(2,381	)
Net long-term debt		124,255			142,619
Operating lease liabilities		2,652			-
Accounts payable and accrued expenses		4,332			4,916
Total liabilities		131,239			147,535
Shareholders’ equity:
Preferred stock, no par: 5,000 shares authorized; none issued		—			—
Common stock, no par: 50,000 shares authorized; 12,639 and 12,624    shares issued respectively; 7,806 and 7,910 shares outstanding,    respectively		34,867			34,660
Treasury stock: 4,833 and 4,714 common shares, at cost, respectively		(71,438	)		(70,459	)
Retained earnings		144,150			140,684
Total shareholders’ equity		107,579			104,885
Total liabilities and shareholders’ equity	$	238,818		$	252,420
The following table represents the assets and liabilities of our consolidated variable interest entity as of March 31:
Assets	2020			2019
Restricted cash	$	7,882		$	2,047
Finance receivables, net		165,966			187,584
Repossessed assets		1,277			-
Total assets	$	175,125		$	189,631
Liabilities
Credit facility	$	124,255		$	142,619
Accounts payable and accrued expenses		597			-
Total liabilities	$	124,852		$	142,619

See accompanying notes to the Consolidated Financial Statements.

38

Nicholas Financial, Inc. and Subsidiaries

Consolidated Statements of Income (Loss)

(In thousands, except per share amounts)

	Fiscal Year ended March 31,
	2020			2019
Interest and fee income on finance receivables	$	62,095		$	71,300
Expenses:
Marketing		1,548			2,446
Salaries and employee benefits		18,804			18,998
Administrative		13,393			11,724
Provision for credit losses		16,901			32,836
Amortization of intangibles		55			-
Depreciation		337			380
Goodwill impairment charge		295			-
Interest expense		8,515			9,504
Total expenses		59,848			75,888
Operating income (loss) before income taxes		2,247			(4,588	)
Income tax benefit		(1,219	)		(940	)
Net income (loss)	$	3,466		$	(3,648	)
Earnings (loss) per share:
Basic	$	.45		$	(.46	)
Diluted	$	.45		$	(.46	)

See accompanying notes to the Consolidated Financial Statements.

39

Nicholas Financial, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(In thousands)

	Common Stock											Total
	Shares			Amount		Treasury Stock			Retained Earnings			Shareholders' Equity
Balance at March 31, 2018		7,895		$	34,564	$	(70,459	)	$	144,332		$	108,437
Net loss		—			—		—			(3,648	)		(3,648	)
Issuance of restricted stock awards		25			—		—			—			—
Exercise of stock options		12			16		—			—			16
Cancellation of restricted stock awards		(22	)		—		—			—			—
Share-based compensation		—			80		—			—			80
Balance at March 31, 2019		7,910		$	34,660	$	(70,459	)	$	140,684		$	104,885
Net income		—			—		—			3,466			3,466
Issuance of restricted stock awards		39			—		—			—			—
Exercise of stock options		2			5		—			—			5
Cancellation of restricted stock awards		(26	)		—		—			—			—
Treasury stock repurchases		(119	)		—		(979	)		—			(979	)
Share-based compensation		—			202		—			—			202
Balance at March 31, 2020		7,806		$	34,867	$	(71,438	)	$	144,150		$	107,579

See accompanying notes to the Consolidated Financial Statements.

40

Nicholas Financial, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

	Fiscal Year ended March 31,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	3,466		$	(3,648	)
Adjustments to reconcile net income (loss) to net cash provided by    operating activities:
Depreciation		337			380
Amortization of intangibles		55			-
Amortization of debt issuance costs		429			-
Amortization of operating of lease right-of-use assets		1,913			-
Gain on sale of property and equipment		(23	)		(62	)
Goodwill impairment charge		295			-
Repossessed assets		677			193
Provision for credit losses		16,901			32,836
Amortization of dealer discounts		(8,031	)		(10,641	)
Amortization of insurance and fee commissions		(2,615	)		(1,797	)
Accretion of purchase price discount		(746	)		-
Deferred income taxes		3,215			(835	)
Principal reduction on operating lease liabilities		(1,841	)		-
Share-based compensation		202			80
Changes in operating assets and liabilities:
Accrued interest receivable		(275	)		(157	)
Prepaid expenses and other assets		304			(110	)
Accounts payable and accrued expenses		(744	)		(2,046	)
Income taxes receivable		(3,244	)		(149	)
Unearned insurance and fee commissions		210			-
Net cash provided by operating activities		10,485			14,044
Cash flows from investing activities:
Purchase and origination of finance receivables		(89,334	)		(85,240	)
Principal payments received		106,248			129,530
Net assets acquired from branch acquisitions, primarily loans		(20,483	)		-
Purchase of property and equipment		(130	)		(228	)
Proceeds from sale of property and equipment		23			97
Net cash (used in) provided by investing activities		(3,676	)		44,159
Cash flows from financing activities:
Repayments on credit facility		(38,950	)		(165,750	)
Proceeds from the credit facility		20,780			145,000
Payment of loan originations fees		(623	)		(2,453	)
Proceeds from exercise of stock options		5			16
Repurchases of treasury stock		(979	)		-
Net cash used in financing activities		(19,767	)		(23,187	)
Net (decrease) increase in cash		(12,958	)		35,016
Cash and restricted cash, beginning of year		37,642			2,626
Cash and restricted cash, end of year	$	24,684		$	37,642
Supplemental Disclosures:
Interest paid, includding debt originations cost, during the year	$	8,187		$	11,600
Income taxes paid during the year		6			44
Leased assets obtained in exchange for new operating lease liabilities		4,058			-

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The following table reconciles cash and restricted cash from the Consolidated Balance Sheets to the statements above:
	Fiscal Year ended March 31,
	2020		2019
Cash	$	16,802	$	35,595
Restricted cash		7,882		2,047
Total cash and restricted cash	$	24,684	$	37,642

See accompanying notes to the Consolidated Financial Statements.

42

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. NFI is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. NFI also offers direct consumer loans (“Direct Loans”) and sells consumer-finance related products. In addition, NF Funding I, LLC (“NF Funding I”), is a wholly-owned, special purpose financing subsidiary of NFI.  All three companies 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”).

2. Summary of Significant Accounting Policies

Consolidation

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

Segment Reporting

The Company reports operating segments in accordance with FASB Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assesses performance.  FASB ASC Topic 280 requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way the operating segments where determined and other items.

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

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.

Restricted Cash

Restricted cash includes cash and cash equivalents for which the Company’s ability to withdraw funds is contractually limited.  The Company’s restricted cash consist of cash restricted for debt serving of the Company’s variable interest entity.  

Finance Receivables

Finance receivables are recorded at cost, net of unearned dealer discounts, unearned insurance and commissions (see “Revenue Recognition”), and the allowance for credit losses (See Note 3).  Beginning in the fiscal year ended March 31, 2019, the Company ceased capitalizing compensation to the dealers. This change resulted in an increase in marketing expenses of approximately $1.0 million for the fiscal year ended March 31, 2019.

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Allowance for Credit Losses

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms. A trailing six-month, annualized, is also more in line with the industry practice, which uses a trailing twelve-month. Management believes a trailing six-month will more accurately reflect changes in the portfolio.  Using the prior method (discussed below), the allowance and provision expense for the first quarter of fiscal 2019 would have been approximately $151,000 lower.

As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019. This one-time charge-off, of approximately $6.4 million, was excluded from the March 31, 2019 allowance for credit losses calculation.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision is recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio. Conversely, the Company could identify abnormalities in the composition of the portfolio, which would indicate the calculation is overstated and management judgement may be required to determine the allowance of credit losses for both Contracts and Direct Loans.

Repossessed Assets

Repossessed assets 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 is 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
Software	7 years
Leasehold improvements	Lesser of lease term or useful life (generally 6 - 7 years)

Goodwill

Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill impairment exists when the fair value of a reporting unit is less than the carrying value. Goodwill is tested for impairment annually, as of the last day of the fiscal year, or more frequently whenever events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Goodwill is tested for impairment at the reporting unit level. The Company has one reporting unit, which is the same level as the Company’s one operating segment, the consumer finance company. The Company has the option of either assessing qualitative factors to determine whether it is more likely than not that the carrying value of our reporting unit exceeds its fair value or proceeding directly to a quantitative test. The Company elected to perform the quantitative impairment test at March 31, 2020.

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The quantitative impairment test compares the fair value of the reporting unit to its carrying value, including goodwill. The fair value of a reporting unit refers to the price that would be received to sell the reporting unit in an orderly transaction between market participants at the measurement date. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If the fair value exceeds its carrying value, the goodwill of the reporting unit is not considered impaired. However, if the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment loss equal to that excess.

As the Company only has one reporting unit, the Company estimated the fair value of the reporting unit using a market based approach, with the primary input being the Company’s market capitalization at the measurement date, adjusted for a control premium. Based upon the impairment test at March 31, 2020, the Company concluded that its recorded balance of goodwill was impaired and recorded an impairment charge of $0.3 million, which resulted in a full write-off of the Company’s goodwill balance (See Note 5).

Impairment of Long-Lived Assets

The Company assesses impairment of long-lived assets, including property and equipment and intangible assets, whenever changes or events indicate that the carry amount may not be recoverable. The Company assesses impairment of these assets generally at the branch level based on profitability of the branch and the Company’s plans for branch closings. The Company will write down such assets to fair value, based on operational results, if impairment has occurred.  The Company did not record any impairment charges for the long-lived assets for the fiscal year ended 2020 or 2019.

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.

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. There were no unrecognized tax positions as of March 31, 2020 or 2019.    

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions the Company is no longer subject to U.S. federal and state tax examinations for fiscal years prior to 2016.

We are subject to taxation at the federal, state, and local levels in the United States. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The changes included in TCJA are broad and complex. The final transition impacts of TCJA may differ from the estimates provided elsewhere in this Annual Report, possibly materially, due to, among other things, changes in interpretations of TCJA, any legislative action to address questions that arise because of TCJA, any changes in accounting standards for income taxes or related interpretations in response to TCJA, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates. The estimated impact of the new law is based on management’s current knowledge and assumptions and recognized impacts could be materially different from current estimates.

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The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. See Note 7 for details regarding the impact of Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) by the U.S. government on March 27, 2020.

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 61 days or more, or the collateral is repossessed, whichever is earlier. The Company reverses the accrual of interest income when the loan is contractually delinquent 61 days or more.

As of March 2019, non-performing assets, defined as 61 or more days past due, a Chapter 7 bankruptcy account, or a Chapter 13 bankruptcy that has not been confirmed by the courts, for which the accrual of interest income is suspended.  Upon confirmation of a bankruptcy chapter 13 (BK13), the account is charged-off.  Upon notification of a bankruptcy chapter 7, an account is monitored for collection.  In the event the debtors’ balance is 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.  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 (see Note 3).

A dealer discount represents the difference between the finance receivable 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, 2020 and 2019, were 7.9% and 8.2%, respectively.

Unearned insurance and fee commissions 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, involuntary unemployment insurance, and forced placed automobile insurance. These commissions are amortized over the life of the Contract using the interest method.

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Income (Loss) Per Share

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities.  Earnings (loss) per share is calculated using the two-class method, as such awards are more dilutive under this method than the treasury stock method. Ordinarily, 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. Ordinarily, diluted loss per share includes the dilutive effect of additional potential common shares from stock compensation awards. For the year ended March 31, 2020, Company experienced net income. For the year ended March 31, 2019, the Company experienced net loss, which is not allocated to participating securities as their effect is antidilutive.  Income (loss) per share has 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)
	2020			2019
Numerator:
Net income (loss) per consolidated statements of    income (loss)	$	3,466		$	(3,648	)
Less: Allocation of income (loss) to participating    securities		(32	)		—
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Basic income (loss) per share computation:
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Weighted average common shares outstanding,    including shares considered participating    securities		7,774			7,861
Less: Weighted average participating securities    outstanding		(72	)		—
Weighted average shares of common stock		7,702			7,861
Basic income (loss) per share	$	.45		$	(0.46	)
Diluted income (loss) per share computation:
Income (loss) allocated to common stock	$	3,434		$	(3,648	)
Undistributed earnings re-allocated to participating    securities		32			—
Numerator for diluted income (loss) per share	$	3,466		$	(3,648	)
Weighted average common shares outstanding for    basic income (loss) per share		7,702			7,861
Incremental shares from stock options		1			—
Weighted average shares and dilutive potential    common shares		7,703			7,861
Diluted income (loss) per share	$	.45		$	(0.46	)

Diluted income (loss) per share does not include the effect of certain stock options as their impact would be anti-dilutive. Approximately68,600 stock options were not included in the computation of diluted loss per share for the year ended March 31, 2019, because their effect would have been anti-dilutive.

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Share-Based Payments

The grant date fair value of share awards is recognized in earnings over the requisite service period (presumptively, the vesting period), net of estimated forfeitures. 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 shares and performance units are measured at the market price of a share on a grant date. Restricted shares have a three-year service period. Performance units include a performance period (generally ending at the end of the fiscal year in which the units were granted) followed by a two-year service period. At the end of the performance period, these units effectively become restricted shares for the remaining two-year service period at which time they become vested.

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 receivable is a part of finance receivables), and a Credit Facility. Financial instruments that are exposed to concentrations of credit risk are primarily finance receivables and cash.

For the year ended, March 31, 2020, the Company operated in 16 states through 43 branch locations. Of the finance receivables total as of March 31, 2020, Florida represented 29%, North Carolina represented 13%, Ohio represented 12%, and Georgia represented 10%. Of the remaining 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.

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Variable Interest Entity

In March 2019, the Company entered into a new senior secured credit facility collateralized by customer financed receivables by transferring the receivables into a bankruptcy-remote variable interest entity (VIE).  Under the terms of the transaction, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. The Company retained the servicing of the portfolio and receives a monthly fee of 2.5% (annualized) based on the outstanding balance of the financed receivables, and the Company currently holds all of the residual equity, monthly fees are eliminated in the consolidated financial statements. In addition, the Company, rather than the VIE, will retain certain credit insurance income together with certain recoveries related to credit insurance and on charge-offs of the financed receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as the Company consolidates the VIE.

The Company consolidated the VIE’s when the Company determines that it is the primary beneficiary, the Company has the power to direct the activities that most significantly impact the performance of the VIE and it has the obligation to absorb losses and has the right to receive residual returns is significant.

Statements of Cash Flows

Cash paid for income taxes for the years ended March 31, 2020 and 2019 was approximately $6 thousand and $44 thousand, respectively. Cash paid for interest, including debt origination costs for the years ended March 31, 2020 and 2019 was approximately $8.2 million and $11.6 million, respectively.

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current presentation.  Such reclassifications had no impact on previously reported net loss or shareholders’ equity.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. The amendments in this update are effective for public entities who are SEC filers for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted the guidance on March 31, 2020 and applied it to the Company’s goodwill impairment test at March 31, 2020 (See Note 5).

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. “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. Upon adoption, the Company added the impact of the full operating lease terms, using the present value of future minimum lease payments to the balance sheet. The Company adopted the guidance on April 1, 2019 and the adoption of this guidance did not have a material impact on its Consolidated Financial Statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued the ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, the amendments in this ASU require the measurement of all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss

49

estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The ASU also requires additional disclosures related to estimates and judgments used to measure all expected credit losses. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Recently, the FASB voted to delay the implementation date for this accounting standard, for smaller reporting companies, the new effective date is beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements and is collecting and analyzing data that will be needed to produce historical inputs into any models created as a result of adopting this ASU. At this time, the Company believes the adoption of this ASU will likely have a material effect and is expected to increase the overall allowance for credit losses.

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 used and new 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. In March 2019, the Company changed its charge off policy from 181 days past due to 121 days past due.  In addition, Chapter 13 Bankruptcies, once confirmed by the courts, are also charged off.  This policy change resulted in a one-time charge of approximately $6.4 million during the 4^th quarter of fiscal 2019.  This policy change was made because current management believes it is more in line with industry standards, considering the sub-prime nature of our customers.  In the event of repossession, the charge-off will occur after standard collection practices by the Company, as determined by the residency state of a customer. This practice is consistent with the sub-prime industry.  

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

	(In thousands)
	2020			2019
Finance receivables	$	219,366		$	228,994
Accrued interest receivable		3,164			2,889
Unearned dealer discounts		(8,056	)		(10,083	)
Unearned insurance and fee commissions		(2,616	)		(2,826	)
Purchase price discount		(915	)		-
Finance receivables, net of unearned		210,943			218,974
Allowance for credit losses		(11,162	)		(16,932	)
Finance receivables, net	$	199,781		$	202,042

Contracts

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 predominantly for used vehicles. As of March 31, 2020, the average model year of vehicles collateralizing the portfolio was a 2011 vehicle. The terms of the Contracts range from 12 to 60 months and bear an average contractual interest rate of 22.6% and 22.7% as of March 31, 2020 and 2019, respectively.

Direct Loans

Direct Loans are typically for amounts ranging from $1,000 to $15,000 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

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represents a 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, 2020, loans made by the Company pursuant to its Direct Loan program constituted approximately 5% of the aggregate principal amount of the Company’s loan portfolio. The terms of the Direct Loans range from 12 to72 months and bear an average contractual interest rate of 27.3% and 26.0% as of March 31, 2020 and 2019, respectively.

Allowance for Credit Losses

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms. A trailing six-month, annualized, is also more in line with the industry practice, which uses a trailing twelve-month. Management believes a trailing six-month will more accurately reflect changes in the portfolio.

As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019. This one-time charge-off, of approximately $6.4 million, was excluded from the March 31, 2019 allowance for credit losses calculation.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision is recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio. Conversely, the Company could identify abnormalities in the composition of the portfolio, which would indicate the calculation is overstated and management judgement may be required to determine the allowance of credit losses for both Contracts and Direct Loans.

The following presents the activity in our allowance for credit losses, shown below and on the next page:

	For the year ended March 31, 2020
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	16,575		$	357		$	16,932
Provision for credit losses		16,096			805			16,901
Charge-offs		(29,174	)		(663	)		(29,837	)
Recoveries*		6,936			230			7,166
Balance at end of year	$	10,433		$	729		$	11,162
*For the year ended March 31, 2020, the Company completed bulk sales of charge-off accounts, which included $1.6 million of bankruptcy accounts and $0.1 million of non-performing accounts.

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	For the year ended March 31, 2019
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	19,433		$	833		$	20,266
Provision for credit losses		32,715			121			32,836
Charge-offs		(37,514	)		(638	)		(38,152	)
Recoveries		1,941			41			1,982
Balance at end of year	$	16,575		$	357		$	16,932

A performing account is defined as an account that is less than 61 days past due. The Company defines an automobile contract as delinquent when more than 25% of a payment contractually due by a certain date has not been paid by the immediately following due date, which date may have been extended within limits specified in the servicing agreements or as a result of a deferral. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable.

In certain circumstances, the Company will grant obligors one-month payment extensions. The only modification of terms in those circumstances is to advance the obligor’s next due date by one month and extend the maturity date of the receivable. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, the Company considers such extensions to be insignificant delays in payments rather than troubled debt restructurings.

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. As of February 2019, the Company  changed the charge-off policy from 181 days contractually delinquent to 121 days contractually delinquent. This change aligned the Company’s charge-off policy with practices within the subprime auto financing segment. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more details.

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)
	2020						2019
	Contracts		Direct Loans		Total		Contracts		Direct Loans		Total
Performing accounts	$	201,045	$	11,649	$	212,694	$	213,542	$	7,889	$	221,431
Non-performing accounts		6,202		195		6,397		7,453		110		7,563
Total		207,247		11,844		219,091		220,995		7,999		228,994
Chapter 13 bankruptcy		274		1		275		-		-		-
Finance receivables	$	207,521	$	11,845	$	219,366	$	220,995	$	7,999	$	228,994

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	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2020	$	207,247	$	14,977		$	4,290		$	1,893		$	19		$	21,179
				7.23	%		2.07	%		0.91	%		0.01	%		10.22	%
March 31, 2019	$	220,995	$	14,897		$	5,155		$	2,288		$	10		$	22,350
				6.74	%		2.33	%		1.04	%		0.00	%		10.11	%

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Direct Loans	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2020	$	11,844	$	344		$	136		$	59			—		$	539
				2.90	%		1.15	%		0.50	%		0.00	%		4.55	%
March 31, 2019	$	7,999	$	197		$	79		$	31		$	-		$	307
				2.46	%		0.99	%		0.39	%		0.00	%		3.84	%

4. Property and Equipment

Property and equipment as of March 31, 2020 and 2019 is summarized as follows:

	(In thousands)
	Cost		Accumulated Depreciation		Net Book Value
2020
Automobiles	$	451	$	396	$	55
Software		160		23		137
Equipment		1,571		1,439		132
Furniture and fixtures		575		519		56
Leasehold improvements		1,207		1,105		102
	$	3,964	$	3,482	$	482
2019
Automobiles	$	488	$	415	$	73
Software		127		3		124
Equipment		1,535		1,263		272
Furniture and fixtures		535		465		70
Leasehold improvements		1,187		1,070		117
	$	3,872	$	3,216	$	656

5. Goodwill and Intangibles

On April 30, 2019, the Company completed an acquisition of three branches, representing substantially all of the assets, of ML Credit Group, LLC (d/b/a Metrolina Credit Company) (“Metrolina”). Two acquired branches are located in the state of North Carolina and one branch is located in South Carolina. Based on its evaluation of the agreement, the Company accounted for the acquisition as a business combination. The Company allocated the purchase price to the acquired assets and liabilities based on their fair values. As of March 31, 2020, the accounting related to this acquisition was completed by the Company. The final determination of the fair value of the customer lists and goodwill were completed within the twelve-month measurement period from the date of the acquisition as required by FASB ASC Topic 805-10-25. The Company recorded the following assets and liabilities in its accounting for this acquisition and the changes in the carrying amount of goodwill, are as shown on the next page.

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	As of
	March 31, 2020
Acquisitions:
Number of branches acquired through business combinations	3
Purchase price	$	20,483
Tangible assets:
Finance receivable, net		20,097
Other assets		144
Assumed liabilities		(160	)
Total net tangible assets		20,081
Excess of purchase prices over carrying value of net tangible assets	$	402
Indirect dealer network relationships	$	64
Direct customer relationships		43
Goodwill		295
Total goodwill and intangible assets	$	402
	For year ended
	March 31, 2020
Balance as of April 1, 2019	$	-
Goodwill acquired during the year		295
Goodwill impairment charge		(295	)
Balance as of March 31, 2020	$	-

The Company completed the annual impairment test for goodwill at the reporting unit level pursuant to Accounting Standards Codification (“ASC”) 350 – Intangibles – Goodwill and Other (ASC 350), as amended by ASU 2017-04, which the Company adopted during the current year A reporting unit is defined under GAAP as the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management.  Our single operating segment comprises a single reporting unit, based on the level at which segment management regularly reviews and measures the business operating results.  The Company has one operating segment, which is the consumer finance company.

ASC 350 requires the Company to test goodwill for impairment annually and more frequently if indicators of impairment exist.  Testing goodwill for impairment requires management to compare the fair value of a reporting unit with its carrying amount, including goodwill.  While the qualitative assessment may change how goodwill impairment testing is performed, it does not affect the timing or measurement of goodwill impairment.

ASC 350 also provides for an optional qualitative assessment for testing goodwill for impairment (qualitative assessment) that may allow the Company to skip the annual quantitative impairment test.  The qualitative assessment permits companies to assess whether it is more likely than not (i.e., a likelihood of greater than 50%) that the fair value of a reporting unit is less than its carrying amount.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date, which is March 31, 2020. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available.

The fair value of a reporting unit is the amount at which the unit as a whole could be sold in a current transaction between willing parties (i.e., other than in a forced or liquidation sale). If a public company has only one reporting unit (or a company owns a publicly traded subsidiary that represents a reporting unit), then the market capitalization of the public company (or its public subsidiary) provides certain evidence about the fair value of that reporting unit.

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During the year ended March 31, 2020, the Company experienced a significant decrease in stock prices, which was significant driver of the goodwill impairment charge. As of March 31, 2020, the closing stock price was $5.84, and the fiscal year monthly average share price was $8.51. The total number of common shares outstanding was approximately 7.8 million for the period ending, March 31, 2020. Based upon the impairment test at March 31, 2020, the Company concluded that the reporting unit fair value, adjusted for a control premium, was less than the carrying amount of the reporting unit of $107.6 million. The goodwill impairment loss recognized was $0.3 million, which is limited to the total amount of goodwill allocated to the reporting unit.

Definite-lived intangible assets principally consist of customer-related assets including contract indirect dealer network relationships and direct customer relationships. These assets are amortized over their estimated useful lives and evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The evaluation compares the cash inflows expected to be generated from each intangible asset to its carrying value. If cash flows attributable to the intangible asset are less than the carrying value, the asset is considered impaired and written down to its estimated fair value. No material impairments of definite-lived intangible assets have been recognized in the periods presented in the consolidated financial statements.

For the twelve months ended as of March 31, 2020, the Company incurred approximately $278,000 in expenses related to the purchase of the Metrolina assets.

6. Credit Facility

Senior Secured Credit Facility

On March 29, 2019, NF Funding I, a wholly-owned, special purpose financing subsidiary of NFI entered into a senior secured credit facility (the “Credit Facility”) pursuant to a credit agreement with Ares Agent Services, L.P., as administrative agent and collateral agent, and the lenders that are party thereto (the “Credit Agreement”). The Company’s prior credit facility was paid off in connection with this Credit Facility.

Pursuant to the Credit Agreement, the lenders have agreed to extend to the NF Funding I a line of credit of up to $175,000,000, which will be used to purchase motor vehicle retail installment sale contracts from NFI on a revolving basis pursuant to a related receivables purchase agreement between NF Funding I and NFI (the “Receivables Purchase Agreement”). Under the terms of the Receivables Purchase Agreement, NFI will sell to NF Funding I the receivables under the installment sale contracts. NFI will continue to service the motor vehicle retail installment sale contracts transferred to NF Funding I pursuant to a related servicing agreement (the “Servicing Agreement”).

The availability of funds under the Credit Facility is generally limited to 82.5% of the value of non-delinquent receivables, and outstanding advances under the Credit Facility will accrue interest at a rate of LIBOR plus 3.75%. The commitment period for advances under the Credit Facility is three years. At the end of the commitment period, the outstanding balance will convert to a term loan and require monthly principal and interest payments over a four-year amortization period.

In connection with the Credit Facility, NFI has guaranteed the NF Funding I’s obligations under the Credit Agreement up to 10% of the highest aggregate principal amount outstanding under the Credit Agreement at any time pursuant to the Limited Guaranty. The Company is also obligated to cover any losses of the lender parties resulting from certain “bad acts” of the Company or its subsidiaries, such as fraud, misappropriation of funds or unpermitted disposition of the assets.

Pursuant to a related security agreement (the “Security Agreement”), NF Funding I granted a security interest in substantially all of its assets as collateral for its obligations under the Credit Facility. In addition, NFI pledged the equity interests of NF Funding I as additional collateral.

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The Credit Agreement and the other loan documents contain customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, investments, and sales of receivables. If an event of default occurs, the lenders could increase borrowing costs, restrict the NF Funding I’s ability to obtain additional advances under the Credit Facility, accelerate all amounts outstanding under the Credit Facility, enforce their interest against collateral pledged under the Credit Facility or enforce their rights under the Company’s guarantees.

Once sold to the NF Funding I, the assets described above will be separate and distinct from the Company’s own assets and will not be available to its creditors should the Company become insolvent, although they will be presented on a consolidated basis on the Company’s balance sheet.

Future maturities of debt as of March 31, 2020 are as follows:

(in thousands)
Year Ended March 31,
2021	$	—
2022		—
2023		31,707
2024		31,707
2025		31,708
Thereafter		31,708
	$	126,830

7. Fair Value Disclosures

Financial Instruments Not Measured at Fair Value

The Company’s financial instruments consist of cash and restricted cash, finance receivables, repossessed assets, and the Credit Facility. For the cash and the credit facility, the carrying value approximates fair value.

Finance receivables, net, approximates fair value based on the price paid to acquire Contracts.  The price 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 generally range from 12 to 72 months.  Beginning in December 2017, the maximum initial term of a Contract was reduced to 60 months.  The initial terms of the Direct Loans generally range from 12 to 60 months.  If liquidated outside of the normal course of business, the amount received may not be the carrying value.  

Repossessed assets are valued at the lower of the finance receivable balance prior to repossession or the estimated net realizable value of the repossessed asset.  The Company estimates the net realizable value using the projected cash value upon liquidation plus insurance claims outstanding, if any.  

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Based on current market conditions, any new or renewed credit facility would contain pricing that approximates the Company’s current Credit Facility. Based on these market conditions, the fair value of the Credit Facility as of March 31, 2019 was estimated to be equal to the book value. The interest rate for the Credit Facility is a variable rate based on LIBOR pricing options.

	Fair Value Measurement Using (In thousands)						Fair		Carrying
Description	Level 1		Level 2		Level 3		Value		Value
Cash and restricted cash:
March 31, 2020	$	24,684	$	—	$	—	$	24,684	$	24,684
March 31, 2019	$	37,642	$	—	$	—	$	37,642	$	37,642
Finance receivables:
March 31, 2020	$	—	$	—	$	199,781	$	199,781	$	199,781
March 31, 2019	$	—	$	—	$	202,042	$	202,042	$	202,042
Repossessed assets:
March 31, 2020	$	—	$	—	$	1,340	$	1,340	$	1,340
March 31, 2019	$	—	$	—	$	1,924	$	1,924	$	1,924
Credit facility:
March 31, 2020	$	—	$	126,830	$	—	$	126,830	$	126,830
March 31, 2019	$	—	$	145,000	$	—	$	145,000	$	145,000

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. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as a Level 3.  

8. Income Taxes

 The provision for income taxes (income tax benefits) consists of the following for the years ended March 31:

	(In thousands)
	2020			2019
Current:
Federal	$	(4,440	)	$	(39	)
State		6			(66	)
Total current		(4,434	)		(105	)
Deferred:
Federal		3,008			(844	)
State		207			9
Total deferred		3,215			(835	)
Income tax benefit	$	(1,219	)	$	(940	)

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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)
Deferred Tax Assets	2020		2019
Allowance for credit losses not currently deductible    for tax purposes	$	2,948	$	4,431
Share-based compensation		320		276
Federal and state net operating loss carryforwards		458		2,293
Right of use liability		462		-
Other items		249		201
Total deferred tax assets		4,437		7,201
Deferred tax liabilities
Right of use asset		457		-
Other items		71		77
Total deferred tax liabilities		528		77
Deferred income taxes	$	3,909	$	7,124

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

	(In thousands)
	2020			2019
Provision (benefit) for income taxes at Federal statutory rate	$	479		$	(845	)
Increase (decrease) resulting from:
Federal Fiscal Year 2020 NOL rate differential		(414	)		-
Federal Fiscal Year 2019 NOL rate differential		(1,362	)		-
State income taxes, net of Federal benefit		91			(206	)
Tax Reform – Rate Change		-			160
Other		(13	)		(49	)
Income tax expense (benefit)	$	(1,219	)	$	(940	)

The Company’s effective tax rate decreased to (54.3)% in fiscal 2020 from 20.5% in fiscal 2019, resulting from the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).  

In response to the global impacts of COVID-19 on U.S. companies and citizens, the government enacted the CARES Act on March 27, 2020. The CARES Act included several tax relief options for companies, which resulted in the following provisions available to the Company.

•In May 2020, the Company elected to carryback its fiscal year 2019 net operating losses of $9.7 million to 2013, thus generating a refund of $3.5 million and an income tax benefit of $1.4 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2013.

•The Company plans to carryback its fiscal year 2020 net operating losses of $3.0 million to 2014, thus generating an anticipated refund of $1.0 million and an income tax benefit of $0.4 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2014.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.  A significant piece of objective positive evidence evaluated was the cumulative pre-tax income over the three-year period ended March 31, 2020, cumulative pre-tax income for the next three years, and substantial federal NOL rate differentials, previously noted. As of

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March 31, 2020, a valuation allowance was not required.  The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income are reduced.

The Company considers the earnings of the Company’s U.S. subsidiaries to be indefinitely invested outside Canada on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and the Company’s specific plans for reinvestment of those subsidiary earnings.  The Company has not recorded a deferred tax liability related to the Canadian income taxes and U.S. withholding taxes on approximately $144.2 million of undistributed earnings of the U.S. subsidiaries indefinitely invested outside Canada.  If the Company decided to repatriate the U.S. earnings, it would need to adjust its income tax provision in the period the Company determined that the earnings will no longer be indefinitely invested outside of Canada.

9. Leases

The Company adopted a new lease accounting standard in April 2019. See Note 2, “Summary of Significant Accounting Policies,” for an overview of the transition to this standard.

The Company maintains lease agreements related to its branch network and for its corporate headquarters. The branch lease agreements range from one to five years and generally contain options to extend from one to three years. The corporate headquarters lease agreement expires in April 2020 and the Company is in the process of negotiating a new lease agreement. All of the Company’s lease agreements are considered operating leases. None of the Company’s lease payments are dependent on a rate or index that may change after the commencement date, other than the passage of time.

The Company’s lease liability was $2.7 million as of March 31, 2020. This liability is based on the present value of the remaining minimum rental payments using a discount rate that is determined based on the Company’s incremental borrowing rate on its senior revolving credit facility. The lease asset was $2.6 million as of March 31, 2020.

The Company has made several policy elections related to lease assets and liabilities. The Company elected to utilize the package of transition practical expedients, which includes not reassessing the following at adoption: (i) whether existing contracts contained leases, (ii) the existing classification of leases as operating or financing, or (iii) the initial direct costs of leases. In addition, the Company did not use hindsight to determine the lease term or include options to extend for leases existing at the transition date.

The Company had elected the practical expedient of combining lease and non-lease components for its real estate leases in calculating the present value of the fixed payments without having to perform an allocation between the types of lease components. Future minimum lease payments under non-cancellable operating leases in effect as of March 31, 2020, are as follows:

in thousands
2021	$	1,355
2022		865
2023		495
2024		88
2025		48
Thereafter		185
Total future minimum lease payments		3,036
Present value adjustment		(384	)
Operating lease liability	$	2,652

The following table reports information about the Company’s lease cost for the twelve months ended March 31, 2020 (in thousands):

Lease cost:
Operating lease cost	$	1,777
Variable lease cost		435
Total lease cost	$	2,212

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The following table reports other information about the Company’s leases for the twelve months ended March 31, 2020 (dollar amounts in thousands):

Other Lease Information
Operating Lease - Operating Cash Flows (Fixed Payments)	$	1,913
Operating Lease - Operating Cash Flows (Liability Reduction)	$	1,841
Weighted Average Lease Term - Operating Leases		2.5 years
Weighted Average Discount Rate - Operating Leases		6.5%

Rent expense for the fiscal years ended March 31, 2020 and 2019 was approximately $2.2 million and $2.6 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.

10. Share-Based Payments

The Company has share awards outstanding under two share-based compensation plans (the “Equity Plans”). The Company believes that such awards generally 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, restricted stock units, performance shares, performance units, 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. Vesting of performance units generally does not commence until 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 its obligations under the Equity Plans. Cash dividends, if any, are not paid on unvested performance units or unexercised options but are paid on unvested restricted stock awards.

The Company did not grant any options during the years ended March 31, 2020 or 2019.

A summary of option activity under the Equity Plans as of March 31, 2020, and changes during the year are presented below.

	(Shares and Aggregate Intrinsic Value in thousands)
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at March 31, 2019		72		$	10.71		4.10	$	51
Granted		—			—
Exercised		(2	)		3.49
Forfeited		(8	)		12.02
Outstanding at March 31, 2020		62		$	11.67		3.13	$	-
Exercisable at March 31, 2020		57		$	10.63		2.70	$	-

The total intrinsic value of options exercised during the years ended March 31, 2020 and 2019 was approximately $7,000 and $98,000, respectively.

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During the fiscal year ended March 31, 2020, approximately 2,000 options were exercised at exercise prices ranging from $1.20 to $4.18 per share.  During the same period, approximately 8,000 options were forfeited at exercise prices ranging from $10.87 to $12.68 per share.

During the fiscal year ended March 31, 2019, approximately 12,000 options were exercised at exercise prices ranging from $0.77 to $4.18 per share. During the same period, approximately 67,000 options were forfeited at exercise prices ranging from $10.87 to $14.36 per share.

Cash received from options exercised during the fiscal years ended March 31, 2020 and 2019 totaled approximately $5,000 and $16,000, respectively. As of March 31, 2020, the Company had no unrecognized compensation related to options grants. For the year ended, March 31, 2020 and March 31, 2019, respectively, the Company had approximately $0 and $10,000 of total unrecognized compensation cost related to options granted.

A summary of the status of the Company’s non-vested restricted shares under the Equity Plan as of March 31, 2020, and changes during the year then ended is presented below.

	(Shares and Aggregate Intrinsic Value 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, 2019		45		$	10.51		1.96		404
Granted		39			9.47
Vested		(8	)		9.49
Forfeited		(26	)		10.57
Non-vested at March 31, 2020		50		$	9.65		1.40	$	341

The Company awarded approximately 39,000 restricted shares during the fiscal year ended March 31, 2020. There are no performance shares included within the 39,000 restricted shares granted that resulted from the Company meeting a performance threshold. During the same period there were approximately 26,000 restricted shares forfeited.  With the adoption of ASU 2016-09 on January 1, 2017, the Company no longer reduces stock-based compensation by estimated forfeitures. Instead the Company accounts for forfeitures when they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is at least equal to the portion of the grant‑date value of the award tranche that is actually vested at that date.

As of March 31, 2020, there was approximately $208,000 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 1.4 years.

11. 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 2020 later in the year.

12. Commitments and Contingencies

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.

13. Variable Interest Entity

In March 2019, the Company entered into a new senior secured credit facility collateralized by customer financed receivables by transferring the receivables into a bankruptcy-remote variable interest entity (VIE).  Under the terms of the transaction, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. The Company retained the servicing of the portfolio and receives a monthly fee of 2.5% (annualized) based on the outstanding balance of the

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financed receivables, and the Company currently holds all of the residual equity. In addition, the Company, rather than the VIE, will retain certain credit insurance income together with certain recoveries related to credit insurance and on charge-offs of the financed receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as the Company consolidates the VIE.

The Company consolidated the VIE’s when the Company determines that it is the primary beneficiary, the Company has the power to direct the activities that most significantly impact the performance of the VIE and it has the obligation to absorb losses and has the right to receive residual returns is significant.  The Company determined it is the primary beneficiary of the VIE.

The assets of the VIE serve as collateral for the obligations of the VIE.  The lender has no recourse to assets outside of the VIE.

The following table presents the assets and liabilities held by the VIE (for legal purposes, the assets and the liabilities of the VIE will remain distinct from the Company):

	2020		2019
Assets
Restricted cash	$	7,882	$	2,047
Finance receivables, net		165,966		187,584
Repossessed assets		1,277		-
Total assets	$	175,125	$	189,631
Liabilities
Credit facility	$	124,255	$	142,619
Accounts payable and accrued expenses		597		-
Total liabilities	$	124,852	$	142,619

14. Stock Plans

In May 2019, the Company’s Board of Directors (“Board”) authorized a new stock repurchase program allowing for the repurchase of up to $8.0 million of the Company’s outstanding shares of common stock in open market purchases, privately negotiated transactions, or through other structures in accordance with applicable federal securities laws. The authorization was effective immediately.

The timing and actual number of sharers will depend on a variety of factors, including stock price, corporate and regulatory requirements and other market and economic conditions. The Company’s stock repurchase program may be suspended or discontinued at any time.

In August 2019, the Company’s Board authorized additional repurchase of up to $1.0 million of the Company’s outstanding shares.

The table below summarizes treasury share transactions under the Company’s stock repurchase program.

	Twelve months ended March 31, (In thousands)
	2020					2019
	Number of Shares		Amount			Number of Shares		Amount
Treasury shares at the beginning of period		4,714	$	(70,459	)		4,714	$	(70,459	)
Treasury shares purchased		119		(979	)		-		-
Treasury shares at the end of period		4,833	$	(71,438	)		4,714	$	(70,459	)

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15. Subsequent Events

Paycheck Protection Program: On May 27, 2020, the Company obtained a loan in the amount of $3,243,900 from Fifth Third Bank in connection with the U.S. Small Business Administration’s Paycheck Protection Program (the “PPP Loan”). Pursuant to the Paycheck Protection Program, all or a portion of the PPP Loan may be forgiven if the Company uses the proceeds of the PPP Loan for its payroll costs and other expenses in accordance with the requirements of the Paycheck Protection Program. The Company intends to use the proceeds of the PPP Loan for payroll costs and other covered expenses and intends to seek full forgiveness of the PPP Loan as soon as permitted under the Paycheck Protection Program.

If the PPP Loan is not fully forgiven, the Company will remain liable for the full and punctual payment of the outstanding principal balance plus accrued and unpaid interest. The PPP Loan accrues interest at a rate per annum equal to 1.00% and an initial payment of accrued and unpaid interest is due on December 27, 2020. The outstanding principal balance plus accrued and unpaid interest is due on May 27, 2022. The PPP Loan is unsecured. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default and other provisions customary for a loan of this type.

Point Predictive, Inc.: On June 10th 2020  Point Predictive Inc., the San Diego-based company that provides machine learning solutions to lenders, announced today that Nicholas Financial has selected the company’s risk scoring solutions to help them better segment high and low risk applications to improve the customer and dealer experience during the financing process.

Share Repurchases: For the period April 1, 2020 through June 21, 2020, the Company repurchased an additional 4,712 shares of our common stock for $27 thousand at an average price of $5.82 per share.  The total shares repurchased through June 21, 2020 under the plan in aggregate is 123,751 shares of common stock for $1.0 million at average price of $8.05.

COVID-19: The Company has discussed COVID-19 throughout the 10-K, including but not limited, to forward-looking information, Item 1. Business, Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Notes to the Consolidated Financial Statements

16. Quarterly Results of Operations (Unaudited)

	Fiscal Year ended March 31, 2020 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total revenue	$	16,641	$	15,585	$	14,973	$	14,896
Interest expense		2,488		2,298		1,886		1,843
Provision for credit losses		4,385		4,000		4,597		3,919
Non-interest expense		8,971		8,927		7,950		8,584
Operating income before income taxes		797		360		540		550
Income tax expense (benefit)		206		92		229		(1,746	)
Net income	$	591	$	268	$	311	$	2,296
Earnings per share:
Basic	$	0.07	$	0.03	$	0.04	$	0.31
Diluted	$	0.07	$	0.03	$	0.04	$	0.31

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	Fiscal Year ended March 31, 2019 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
Total revenue	$	18,759	$	19,404	$	16,740		$	16,397
Interest expense		2,540		2,386		2,303			2,275
Provision for credit losses		5,426		8,374		7,871			11,165
Non-interest expense		8,801		7,966		7,847			8,934
Operating income before income taxes		1,992		678		(1,281	)		(5,977	)
Income tax expense (benefit)		572		96		(376	)		(1,232	)
Net income (loss)	$	1,420	$	582	$	(905	)	$	(4,745	)
Earnings (loss) per share:
Basic	$	0.18	$	0.07	$	(0.12	)	$	(0.60	)
Diluted	$	0.18	$	0.07	$	(0.12	)	$	(0.60	)

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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 the 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 its 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, 2020. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2020.  Notwithstanding the material weaknesses described in Management’s Report on Internal Control over Financial Reporting below, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that the consolidated financial statements included in this Annual Report present fairly, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with accounting principles generally accepted in the United States.

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 its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of March 31, 2020, 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 this evaluation, management has concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2020 as a result of material weaknesses.  A material weakness is a deficiency or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company has considered the material weaknesses from the prior year, which has been incorporated into the current year material weaknesses. Management turnover was one of many contributing factors to the lack of Comprehensive SOX Compliance Program.  Similarly, the lack of segregation of duties was one of several design gaps and design control deficiencies across multiple business processes.  The Company is reporting two material weaknesses for the year ended, March 31, 2020, which are further discussed on the next page.

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The Company completed a review of all activities performed or scheduled under the SOX Compliance program. Management started reperformance of key activities, including testing of design effectiveness of identified key controls.  As result of these actions, the Company has noted two material weaknesses for:

1) Lack of Comprehensive SOX Compliance Program

Deficiencies were identified in key activities which prevented the Company from achieving full compliance with Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

2) Test of Design Effectiveness

Starting in the fourth quarter of Fiscal 2020, the Company identified several design gaps and design control deficiencies across multiple business processes and information technology general controls, which impacted the testing of operating effectiveness.

Notwithstanding the material weaknesses, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that the consolidated financial statements included in this Annual Report present fairly, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with accounting principles generally accepted in the United States.  

Remedial Actions

The Company plans to take the remedial actions to address the current material weaknesses:

• The Company has identified key activities to establish a comprehensive SOX Compliance Program, including the proper sequencing of them.  Management will complete risk assessments, as part of the planning and scoping activities.  The activities are scheduled to be completed during the first half of Fiscal 2021.

• The Company will start the test of design effectiveness in the second quarter of Fiscal 2021, which will provide adequate time for remediation activities before testing of operating effectiveness.

• The Company will start the test of operating effectiveness during the second half of Fiscal 2021, including reporting and aggregation of all control deficiencies, including evaluation of them individually and in the aggregate.

Management believes the foregoing efforts will effectively remediate the material weaknesses.  As management continues to evaluate and work to improve internal control over financial reporting, management may determine to take additional measures to address control deficiencies or determine to modify or supplement the remediation plan described above.  Management cannot assure you, however, when the Company will remediate such weaknesses, nor can management be certain of whether additional actions will be required or the costs of any such actions.

Attestation report of the registered public accounting firm

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the Company’s fiscal quarter ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting, except as identified in Management’s Report on Internal Control over Financial Reporting above.  

Item 9B. Other Information

None

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The relevant information to be set forth in the definitive Proxy Statement and Information Circular for the 2020 Annual General Meeting of Shareholders of the Company (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. A copy of the code of ethics is posted on the Company’s web site at www.nicholasfinancial.com. The Company intends to satisfy the disclosure requirements under Item 5.05 of 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 relevant information to be set forth in the Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth certain information, as of March 31, 2020, 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		62	$	10.71		662
Equity Compensation Plans    Not Approved by Security Holders	None		Not Applicable		None
TOTAL		62	$	10.71		662

The relevant information to be set forth in the Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, Director Independence and Board of Directors

The relevant information to be set forth in the Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The relevant information to be set forth in the Proxy Statement is incorporated herein by reference.

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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

3.1Articles of Nicholas Financial, Inc. (1)

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

4.1Form of Common Stock Certificate (3)

4.2Description of the Registrant’s Securities

10.1Second 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)

10.2Amendment 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)

10.3Amendment 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)

10.4Amendment 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)

10.5Amendment 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)

10.6Amendment No. 5, dated as of December 30, 2016, 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 (9)

10.7Amendment No. 6 to Second Amended and Restated Loan and Security Agreement, dated June 30,

2017, among Nicholas Financial, Inc., Bank of America, N.A., and each of the Lenders party thereto (10)

10.8Waiver and Amendment No. 7 to Second Amended and Restated Loan and Security Agreement, dated

November 8, 2017, among Nicholas Financial, Inc., Bank of America, N.A., and the Lenders party thereto (11)

10.9Waiver and Amendment No. 8 to Second Amended and Restated Loan and Security Agreement, dated

March 30, 2018, among Nicholas Financial Inc., Bank of America, N.A., and the Lenders thereto (12)

10.10Waiver and Amendment No. 9 to Second Amended and Restated Loan and Security Agreement, dated

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November 2, 2018, among Nicholas Financial, Inc., Bank of America, N.A., and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 6, 2018 (13)

10.11 Waiver and Amendment No. 10 to Second Amended and Restated Loan and Security Agreement, dated February 12, 2019, among Nicholas Financial, Inc., Bank of America, N.A., and the Lenders party thereto incorporated in this filing. (14)

10.12 Credit Agreement dated as of March 29, 2019 by and among NF Funding I, LLC, Ares Agent Services, L.P., as administrative agent and collateral agent, and the lenders that are party thereto (15)

10.13 Consent and First Amendment to Credit Agreement dated as of August 19. 2019 by and amount NF Funding, LLC, Ares Agent Services, L.P., as administrative agent and collateral agent, and the lenders that are party thereto (16)

10.14 Receivables Purchase Agreement dates as of March 29, 2019 by and between NF Funding I, LLC and Nicholas Financial, Inc. (17)

10.15 Servicing Agreement dates as of March 29, 2019 by and among Ares Agent Services, L.P., as administrative agent, NF Funding I, LLC and Nicholas Financial, Inc. (18)

10.16 Limited Guaranty dated as of March 29, 2019 by Nicholas Financial, Inc. in favor of Ares Agent Services, L.P., as administrative agent and collateral agent (19)

10.17 Security Agreement dated as of March 29, 2019 by and between NF Funding I, LLC, Ares Agent Services, L.P., as collateral agent (20)

10.18 ISDA Master Agreement, dated as of March 30, 1999, between Bank of America, N.A. and Nicholas Financial, Inc. (21)

10.19 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 (22)

10.20 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 (23)

10.21Note dated May 27, 2020 by the Company in favor of Fifth Third Bank (24)

10.22.1 Purchase and Sale Agreement, dated December 11, 2019, by and between Platinum Auto Finance of Tampa Bay, LLC

10.22.2 Purchase and Sale Agreement, dated January 30, 2020, by and between Platinum Auto Finance of Tampa Bay, LLC

10.22.3 Purchase and Sale Agreement, dated February 20, 2020, by and between Platinum Auto Finance of Tampa Bay, LLC

10.23Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (25) *

10.24Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Stock Option Award (26)*

10.25Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Restricted Stock Award (27)*

10.26Form of Nicholas Financial, Inc. 2015 Omnibus Incentive Plan Performance Share Award (28)*

10.27 Employment Agreement between the Company and Douglas W. Marohn, dated as of December 5, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-k filed on December 6, 2018) (29)*

10.28 Employment Agreement between the Company and Kelly M. Malson, dated as of December 5, 2018  (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-k filed on December 6, 2018) (30)*

10.29Form of Dealer Agreement and Schedule thereto listing dealers that are parties to such agreements (31)

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21Subsidiaries of Nicholas Financial, Inc. (32)

23.1Consent of RSM, LLP

24Powers of Attorney (included on signature page hereto)

31.1Certification of President and Chief Executive Officer

31.2Certification of Chief Financial Officer

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

32.2Certification 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 Form 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 10.1 to the Company's Current Report on Form 8-K, dated January 11, 2017, as filed with the SEC on January 11, 2017.

(10) Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated August 1, 2017, as filed with the SEC on August 1, 2017.

(11) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017, as filed with the SEC on November 9, 2017.

(12) Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated April 4, 2018, as filed with the SEC on April 4, 2018.

(13) Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, for the fiscal quarter ended September 30, 2018, as filed with the SEC on November 14, 2018.

(14) Incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, for the fiscal quarter ended December 31, 2018, as filed with the SEC on February 14, 2019.

(15) Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated March 29, 2019, as filed with the SEC on April 1, 2019.

70

(16) Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated August 16, 2019, as filed with the SEC on August 19, 2019.

(17) Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated March 29, 2019, as filed with the SEC on April 1, 2019.

(18) Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, dated March 29, 2019, as filed with the SEC on April 1, 2019.

(19) Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K, dated March 29, 2019, as filed with the SEC on April 1, 2019.

(20) Incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K, dated March 29, 2019, as filed with the SEC on April 1, 2019.

(21) 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

(22) 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.

(23) 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.

(24) Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated June 4, 2020, as filed with the SEC on June 6, 2020.

(25) 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.

(26) Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the SEC on June 14, 2016.

(27) Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the SEC on June 14, 2016.

(28) Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the SEC on June 14, 2016.

(29) Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated December 5, 2018, as filed with the SEC on December 6, 2018.

(30) Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated December 5, 2018, as filed with the SEC on December 6, 2018.

(31) Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2017, as filed with the SEC on June 14, 2017

(32) 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.

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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.

	NICHOLAS FINANCIAL, INC.
Dated: June 22, 2020	By:	/s/ Douglas Marohn
		Douglas Marohn
		President and Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Douglas Marohn, his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his 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 attorney-in-fact and agent 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 might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, 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/ Douglas Marohn	President, Chief Executive Officer, and Director (Principal Executive Officer)	June 22, 2020
Douglas Marohn
/s/ Irina Nashtatik	Interim Chief Financial Officer (Principal Financial and Accounting Officer)	June 22, 2020
Irina Nashtatik
/s/ Jeffrey C. Royal	Chairman of the Board of Directors	June 22, 2020
Jeffrey C. Royal
/s/ Robin Hastings	Director	June 22, 2020
Robin Hastings
/s/ Adam K. Peterson	Director	June 22, 2020
Adam K. Peterson
/s/ Jeremy Q. Zhu	Director	June 22, 2020
Jeremy Q. Zhu

72

EX-10.22.1

Exhibit 10.22.1

BULK RECEIVABLES PURCHASE AND SALE AGREEMENT
(LIMITED RECOURSE)

This Bulk Receivables Purchase and Sale Agreement (Limited Recourse) is entered into this 11th day of December, 2019 (the "Closing Date"), between Nicholas Financial, Inc., a Florida Corporation ("Buyer"), and Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company ("Seller").

WHEREAS, Seller wishes to sell and Buyer wishes to buy all of Seller's rights, title and interest in and to certain retail installment sales contracts secured by liens on motor vehicles and certain promissory notes and security interests in motor vehicles securing such notes (collectively the "Receivables" and each a "Receivable").

NOW, THEREFORE, in consideration of these premises and of the mutual covenants and agreements hereinafter contained, the receipt and adequacy of which are hereby acknowledged, the Buyer and Seller hereby agree as follows:

ARTICLE I
DEFINITIONS

Whenever used herein, the following words and phrases, unless the context otherwise requires, will have the following meanings:

"Accrued Interest":As of any date of determination with respect to a Receivable, the accrued

and unpaid interest of such Receivable.

"Agreement":

"Authorized Officer":

This Receivables Purchase and Sale Agreement, together with all exhibits hereto and all subsequent written amendments and supplements hereto and thereto.

With respect to any Person, any of the Chief Executive Officer, the President, the Treasurer, the Chief Financial Officer, any Vice President or any Assistant Treasurer of such Person, or any other officer of such Person authorized to act on behalf of such Person.

"Bill of Sale":The Bill of Sale in the form attached hereto as Exhibit A.

"Business Day": Any day other than a Saturday or Sunday, or a day on which banking institutions in Tampa, Florida are authorized or obligated by law or executive order to be closed.

"Buyer":As defined in the first paragraph of this Agreement.

"Certificate of Title": A document issued by a jurisdiction that evidences the owner(s) and lien holder(s), if any, of a motor vehicle registered in such jurisdiction.

"Closing": The simultaneous delivery by Buyer and Seller on the Closing Date of documents and funds as provided for hereunder, as well as the performance by Buyer and Seller of all acts herein provided to be performed on the Closing Date.

"Closing Date":As defined in the first paragraph of this Agreement.

 

"Collections"

With respect to any Receivable, all cash collections and other cash proceeds of or relating to such Receivable, including, without limitation, (i) Scheduled Payments, (ii) prepayments, (iii) any late fees, (iv) any guaranty amounts, (v) any insurance proceeds (including any GAP benefits or waiver amount), (vi) any rebates, (vii) any liquidation proceeds or recoveries and (viii) all other cash proceeds of Related Security with respect to such Receivable.

"Contract": With respect to a Receivable, either (i) the motor vehicle retail installment sales contract or (ii) the promissory note evidencing an Obligor's obligation to pay the indebtedness provided for therein and evidencing a security interest in the Financed Vehicle.

"Contract Rate": With respect to a Receivable, the annualized rate of interest to be paid by the Obligor as set forth on the related Contract, which may or may not be the same as the federal Truth-in Lending Act / Regulation Z Annual Percentage Rate.

"Conveyed Property":As defined in Section 2.1 of this Agreement.

"Current Performing Contract": A Performing Contract where, as of the Cut-Off Date, the Obligor is less than thirty (30) days past due with respect to all payments due thereunder.

"Current Servicer":Platinum Auto Finance

"Cut-Off Date":

"Damages":

Close of business on the date set forth as the "Cut-Off Date" on the Receivables Schedule, which date shall be the last day on which Seller accrues Interest with respect to Receivables on its servicing and accounting system(s).

With respect to a Person and a specified event, the losses, liabilities, reasonable costs and expenses actually incurred and appropriately documented by such Person resulting from such specified event.

"Delinquent Performing Contract":A Performing Contract where, as of the Cut-Off Date, payments

due on the Contract are thirty (30) days or more past due.

"Deposit Amount":Such amount retained by Buyer from the Purchase Price as set forth in

Section 3.3.

"Electronic Data File":The information and data provided by Seller to Buyer pursuant to Section

10.2(b) and set forth in Exhibit C.

"Financed Vehicle"A new or used motor vehicle, together with all accessions thereto, securing

an Obligor's indebtedness under the respective Receivable.

"Non-Performing Contract":Any contract that is not a Performing Contract or a Delinquent Performing

Contract.

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"Material Adverse Effect":

means, with respect to Buyer, a material adverse effect on (i) the financial condition, business, operations or properties of such Person, taken as a whole, (ii) the ability of such Person to perform its obligations hereunder, (iii) the legality, validity or enforceability of this Agreement, or (iv) the legality, validity or enforceability of Buyer's interest in the Receivables.

"Obligor":The Person or Persons (other than the Seller) who executed a Contract and

is or are liable for all obligations thereunder.

With respect to a Receivable, as of a date of determination, the sum of (i) the Unpaid Principal Balance, plus (ii) all accrued and unpaid interest calculated at the Contract Rate and in accordance with the terms and conditions of the Contract.

A Contract where, as of the Cut-Off Date, (i) the Seller has no evidence that the Obligor intends to discontinue making all required payments under the Contract, (ii) the Seller has no evidence that Buyer will not be able to make contact with the Obligor following the Closing Date or that the Obligor is otherwise a "skip" risk, (iii) the account evidenced by the Contract, or the vehicle which secures the Contract, is not in the process of repossession, repossession hold, insurance claim, litigation or impoundment, (iv) the Contract is secured by a fully operable vehicle, and (v) the Obligor under the Contract has not filed, nor had filed against it a petition in bankruptcy.

Any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereto), unincorporated organization or government or any agency or political subdivision thereof.

The price paid on the Closing Date by Buyer to Seller for the Receivables purchased by Buyer on the Closing Date as calculated as provided in Section 3.1 hereof .

"Payoff':

"Performing Contract":

"Person":

"Purchase Price":

"Receivables File":The documents described in Section 10.2(d) of this Agreement.

"Receivables Schedule":

"Recourse Period"

The schedule listing the Receivables to be purchased by Buyer on the Closing Date, substantially in the form of attached Exhibit B and containing the information set forth therein, and delivered in accordance with Section 10.2(a).

With respect to a particular Receivable and the related Contract, that period of time set forth in the Receivables Schedule, in accordance with Section 3.2(c), during which Seller owes to Buyer the recourse obligations set forth in Section 3.2.

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"Related Security":With respect to any Receivable:

(i) all of Seller's right, title and interest in and to the Contract and the Financed Vehicle;

(ii) all security interests, liens, real property and/or personal property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to the Receivable or otherwise, together with all financing statements or registration applications filed against an Obligor describing any collateral securing such Receivable;

(iii) all letters of credit, insurance, guarantees and other agreements or arrangements of whatever character from time to time supporting or securing payment of the Receivable, whether pursuant to the Contract related to the Receivable or otherwise; and,

(iv) the related Contract, all books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights), accounts and all general intangibles relating to such Receivable and the related Obligor.

"Repurchase Price":As defined in Section 5.4(b) of this Agreement.

"Scheduled Payment":

With respect to any Contract, the periodic payments payable under the terms of such Contract, excluding, without limitation, any sales and use tax or similar tax payments, insurance premiums or other charges due under the terms of such Contract and not due and owing to Seller under such Contract.

"Seller":As defined in the first paragraph of this Agreement.

"Servicing File": With respect to each Receivable, the file delivered by Seller to Buyer, consisting of all documents necessary to service the Receivables.

"Servicing Transfer Date":The Closing Date.

"Unpaid Principal Balance":

With respect to a Receivable, as of a date of determination, the Obligor's original principal balance minus the cumulative principal portion of each installment received prior to such date from the Obligor and applied to reduce such balance, the application of such installment having been determined in accordance with the terms and conditions of the Contract.

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ARTICLE II

PURCHASE AND SALE

Section 2.1.Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, on the Closing Date, Seller hereby agrees to sell, assign, transfer, set over, and convey to Buyer, and Buyer agrees to purchase and accept, subject to the terms of this Agreement, (a) all of Seller's right, title and interest in and to those certain Receivables (together with the Related Security) identified on the Receivables Schedule; (b) all of the rights under any lender's single interest insurance policy relating to a Financed Vehicle for the benefit of the creditor of the related Contract (to the extent that such rights may be assigned or otherwise conveyed); (c) all documents contained in the related Receivables File and the Servicing File; and, (d) all proceeds derived from any of the foregoing, other than the Purchase Price, paid pursuant to this Agreement (collectively, the "Conveyed Property").

Section 2.2.True Sales.

(a)It is the express intention of Buyer and Seller that each transfer of Conveyed Property hereunder constitutes a true sale by Seller to Buyer that is absolute and irrevocable and that provides Buyer with the full benefits of ownership of the Conveyed Property, and not a pledge of such Conveyed Property by Seller to Buyer to secure a debt or other obligation of Seller. Consequently, the sale of each Conveyed Property shall be reflected as a sale on Seller's business records and financial statements. However, in the event that, notwithstanding the intent of the parties, any Conveyed Property is deemed not to have been transferred to Buyer, then (i) this Agreement also shall be deemed to be and hereby is a security agreement within the meaning of the UCC, and (ii) the conveyance by Seller provided for in this Agreement shall be deemed to be a grant by Seller to Buyer of, and Seller hereby grants to Buyer, a security interest in and to all of Seller's right, title and interest in, to and under the Conveyed Property, whether now or hereafter existing or created, to secure (1) the rights of Buyer hereunder, and (2) without limiting the foregoing, the payment and performance of Seller's obligations to Buyer.

(b)Buyer and Seller shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Conveyed Property, such security interest would be deemed to be a perfected security interest of first priority in favor of Buyer under applicable law and will be maintained as such throughout the term of this Agreement. Seller hereby authorizes Buyer or its designee to file one or more UCC financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Conveyed Property of Seller, in each case whether now existing or hereafter generated by Seller. Unless otherwise agreed to by the parties, Seller agrees to pay all reasonable out-of-pocket costs and expenses of Buyer, excluding fees and expenses of counsel, in connection with the perfection as against third parties of Buyer's right, title and interest in and to the Conveyed Property and the enforcement of any obligations of Seller under this Agreement.

Section 2.3.Examination of Receivables Files. Seller shall, prior to the date that is more than two (2) Business Days prior to the Closing Date, at Buyer's option, make the related Receivables Files available to Buyer or its designee(s), as applicable, for examination during normal business hours at Seller's offices or other location as agreed by Buyer and Seller. Buyer shall not be required to conduct, or have conducted on its behalf, any such examination. The fact that Buyer or its designee(s) have conducted or have determined not to conduct any partial or complete examination of the Receivables Files shall not affect (i) Buyer's (or any of its assignees') rights to demand repurchase in accordance with this Agreement, (ii) any of Seller's representations, warranties, covenants, or promises herein, or (iii) any other relief or remedy provided for in this Agreement.

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ARTICLE HI

PURCHASE PRICE

Section 3.1.Purchase Price. The Purchase Price for each Receivable listed on the Receivables Schedule (together with the Related Security) shall be the percentage of par as stated in the Receivables Schedule, multiplied by the Unpaid Principal Balance as of the Cut-Off Date with respect to such Receivable. On the Closing Date, Buyer shall pay to Seller the Purchase Price as set forth in Section 10.3. Buyer shall own and be entitled to receive with respect to each purchased Receivable all Collections (whether or not received or recovered) from and after the Cut-Off Date, including, without limitation, (1) all principal due and owing on the Receivables, (2) all Accrued Interest on the Receivables; and (3) all other charges or payments due and owing and collections on the Receivables, in each case from and after the Cut-Off Date.

Section 3.2.Seller's Recourse Obligations.

(a)Seller understands and agrees that Buyer will not purchase Receivables hereunder unless Seller provides the recourse set forth herein.

(b)As an inducement to Buyer to purchase the Receivables hereunder, Seller hereby irrevocably and unconditionally agrees to repurchase any Receivable which meets or met the conditions for repurchase set forth below during the Recourse Period (as hereinafter defined).

(c)With respect to a particular Receivable and related Contract sold hereunder, the Recourse Period shall begin on the Closing Date and shall end when the Obligor has indefeasibly paid Buyer in full, in the Obligor's own funds, all Scheduled Payment specified for such Contract's Recourse Period set forth on the Receivables Schedule.

(d)Conditions for Repurchase. A Contract and related Receivable shall be subject to repurchase by Seller in the event the Obligor(s) thereunder, during the Recourse Period but not thereafter,

(i)Fail(s) to make a Schedule Payment, directly to Buyer, on or before the date same is due, in Obligor's own funds;

(ii)Fail(s) to maintain full-coverage insurance on the Financed Vehicle;

(iii)Causes or permits, directly or indirectly and for any reason or no reason, the repossession, taking, impoundment, replevin or sequestration of the Financed Vehicle, whether voluntarily or involuntarily, and whether by Seller, Buyer, or any other Person;

(iv)Causes or permits, directly or indirectly and for any reason or no reason, physical damage to the Financed Vehicle such that the related insurance company declares or determines the Financed Vehicle a "total loss" or similar designation, without regard to when such declaration or determination is made; or,

(v)Breaches any term of the Contract in any respect;

(vi)First payment default.

(e)Timing of Repurchase: Notice to Seller. At any time, Seller shall pay to Buyer the Repurchase Price with respect to a particular Receivable, in immediately available funds, within five (5)

6

 

days of Buyer's transmission to Seller of notice that such Receivable meets or met, during the Recourse Period, the conditions for repurchase set forth in Section 3.2(d).

Section 3.3.Deposit Amount / Seller's Right to Set-Off. The Deposit Amount shall be equal to

$n/a, which amount shall be retained by Buyer out of the Purchase Price to ensure that (i) the
Seller and/or the Current Servicer transmit to Buyer all payments received by either such party after the Cut-Off Date with respect to Conveyed Property as set forth in Section 3.4, and (ii) Seller timely pays Buyer the Repurchase Price for any Receivable required to be repurchased pursuant to Sections 3.2 and 5.4. If Seller or Current Servicer, as applicable, shall fail to promptly remit such payments to Buyer, Buyer shall

be permitted to deduct the full amount of such payments from the Deposit Amount. Onn/a

Buyer shall remit to Seller, via wire transfer to such account as Seller shall direct, the Deposit Amount less amounts deducted in accordance herewith, and shall provide Seller a detailed accounting of the amounts so deducted.

Section 3.4.Payments Received by Seller On or After the Cut-Off Date. Buyer shall provide prompt written notice ("Notice") to Seller and the Current Servicer of any payments that it believes the Seller or the Current Servicer has received and which the Buyer is entitled to under the terms hereof, and Seller and/or Current Servicer agree to give Buyer Notice of any payments, with respect to the Conveyed Property, that it receives on or after the Cut-Off Date. Seller agrees to remit (or cause the Current Servicer to remit), within two Business Days of receipt of any Notice it receives from Buyer, or two days of the date of any such notice it gives to Buyer, any such payments that Seller has received to which Buyer is entitled hereunder. In the event that Seller or Current Servicer disputes that it has ever received a payment that is identified in a Notice, it shall give prompt written notice to Buyer that it has not, in fact, received any such payment. Upon receipt of such notice from Seller or Current Servicer, Buyer shall be obligated to submit written evidence to Seller and Current Servicer, which evidence must be reasonably satisfactory to Seller and Current Servicer, that such payment has, in fact, been received by Seller or Current Servicer. Upon written confirmation of Seller and Current Servicer of their receipt of such evidence (which confirmation will be sent to Buyer), Seller and Current Servicer, as applicable, shall be obligated to remit the full amount of such payment to Buyer.

ARTICLE IV
TRANSFER

Section 4.1.Transfer Documentation; Notice.

(a)Notifying the Obligors of Buyer's ownership and servicing of the Receivables and related Contracts by the mailing of a letter, in the form attached as Exhibit D hereto, within five (5) Business Days of the Closing Date.

(b)Notifying the Obligors of Buyer's ownership and servicing of the Contracts during any in-person, telephonic, electronic, or other interactions with Obligors.

(c)With respect to a Financed Vehicle, providing to Buyer any documentation necessary to evidence clear chain of title to Seller. Seller has the obligation to transfer or change the lien holder of record on any Certificate of Title with respect to a Financed Vehicle, and any transfer or change of record lien holder shall be made at Seller's expense. Transfer or change of lien holder must take place within 30 days following the recourse period for the Financed Vehicle.

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ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER

Section 5.1.General Representations and Warranties. Seller hereby represents and warrants to Buyer, as of the Closing Date, as follows:

(a)Organization and Good Standing. Seller is an entity duly organized, validly existing and in good standing under the laws of its state of organization, and has the corporate power and authority and all government licenses, authorizations, consents and approvals required in each jurisdiction in which its business is now conducted, to own its assets and to transact the business in which it is currently engaged. Seller is duly qualified to do business as a foreign entity where required and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would adversely affect Buyer's enforcement of the Contracts.

(b)Authorization; Binding Obligations. Seller has the power and authority to make, execute, deliver, and perform this Agreement and all of the transactions contemplated under this Agreement and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies.

(c)No Violations. The execution, delivery, and performance of this Agreement by Seller will not violate any provision of its articles of incorporation, bylaws or standing resolutions, any existing law or regulation or any order or decree of any court. or constitute a material breach of any mortgage, indenture, contract, or other agreement to which Seller is a party or by which Seller may be bound.

(d)Litigation. No litigation or administrative proceeding of or before any court, tribunal, or governmental body is currently pending, or to the knowledge of Seller threatened, against Seller or any of its properties or with respect to this Agreement which, if adversely determined, would have a Material Adverse Effect on the transactions contemplated by this Agreement.

(e)Licensing. Seller has obtained and currently holds all government licenses, authorizations, consents and approvals required to (i) sell the Financed Vehicles, (2) originate and purchase the Receivables, and (iii) service and collect the Receivables, in each jurisdiction in which Seller sells Financed Vehicles, originates or purchases Receivables, and services and collects Receivables.

Taxes. Seller has filed or caused to be filed all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be due on such returns, except any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings and (ii) with respect to which no adverse claim has been imposed upon any Receivables.

(g)Solvency. As of the date of this Agreement, and after giving effect to the transactions contemplated by this Agreement, Seller will not (1) be insolvent (either because its financial condition is such that the sum of its debts is greater than the fair market value of its assets or because the fair saleable value of its assets is less than the amount required to pay its probable liabilities on its existing debts as they mature); (2) have unreasonably small capital with which to engage in its business; or (3) have incurred debts beyond its ability to pay as they become due.

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Section 5.2.Representations and Warranties With Respect to Receivables. For each Receivable sold by Seller and purchased by Buyer hereunder. Seller represents and warrants to Buyer that, as of the Closing Date:

(a)Lawful Assignment. The Receivable has not been originated in and is not subject to the laws of any jurisdiction under which the transfer of such Receivable to Buyer pursuant to this Agreement is unlawful, void, or voidable or renders the related Contract unenforceable. Seller has not entered into any agreement with the related Obligor that prohibits, restricts, or conditions the assignment, pledge, or sale of any portion of such Receivable.

(b)Ownership; Origination. Seller originated or purchased the Receivable for fair value and in accordance with prudent and reasonable origination policies and procedures, and took possession thereof in the ordinary course of its business, and such Receivable was not at the time of Seller's origination or purchase thereof subject to a security interest. Seller has not sold, assigned or pledged the Receivable to any Person and, prior to the transfer of the Receivable by Seller to Buyer, has good and marketable title thereto free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest (except for any of the foregoing released prior to or in connection with the sale and transfer in accordance herewith) and was the sole owner thereof with full right to transfer the Receivable to Buyer. Seller acknowledges that Buyer has no obligation to any dealer with respect to dealer participations and shall indemnify and hold Buyer and its assigns harmless with respect to same.

(c)Certificate of Title. Seller has obtained a Certificate of Title (or the functional equivalent thereof for jurisdictions that do not deliver a Certificate of Title to secured lenders) for the Financed Vehicle.

(d)No Brand on Certificate of Title. The Certificate of Title for the Financed Vehicle does not bear any brand, notation, or word(s) indicating prior vehicle history, damage, or chronic problem, including without limitation words such as "damaged", "totaled", "salvaged", "rebuilt", "warranty returned", "reconditioned", "junked", or any brand, notation, or word(s) of similar meaning or import.

(e)Marking Records. On or before the Closing Date, the Seller will have caused the portions of its electronic ledger relating to Conveyed Property to be clearly and unambiguously marked to indicate that such Contracts have been sold to Buyer.

(f)Receivables File. With respect to such Receivable, the related Receivables File contains, in all material respects, the documents required to be contained therein pursuant to this Agreement.

(g)No Waivers or Extension. With respect to such Receivable, the terms of the related Contract have not been waived, altered, or modified in any material respect, except by instruments or documents identified in the Receivables File or in the Servicing File.

(h)Contract in Force. With respect to such Receivable, the related Contract has not been satisfied or subordinated in whole or in part or rescinded, and the Financed Vehicle securing the Contract has not been released from the lien of the Contract in whole or in part.

(i)Selection Procedures. No selection procedures believed to be adverse to Buyer have been utilized in selecting the Receivables sold hereunder from among those Receivables that meet the criteria contained herein. Seller has not engaged in any activity or committed any action intended, or the natural consequence of which is, to give any Receivable the appearance of compliance with this Agreement and these representations and warranties which such Receivable, absent such activity or action by Seller, would otherwise not comply with this Agreement or these representations or warranties.

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(j)Compliance with Law. The Contract and the sale of the related motor vehicle complied at the time it was originated and upon the execution of this Agreement, and complies at the time of its sale to Buyer hereunder, in all material respects with all applicable federal, state, and local laws, regulations, and ordinances, including but not limited to the Fair Credit Reporting Act, the Equal Credit Opportunity Act and Regulation B, the Truth-in-Lending Act and Regulation Z, and FTC rules and regulations.

(k)Binding Obligation. Such Receivable represents the genuine, legal, valid, and binding payment obligation of the Obligor, enforceable by the holder thereof in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

(1)No Defenses. No right of rescission, setoff, counterclaim or any other defense (including defenses arising out of violations of usury laws) has been asserted or threatened with respect to such Receivable.

(m)No Default. Except for payment delinquencies continuing for a period of not more than sixty (60) days, no default, breach, violation, or event permitting acceleration under the terms of such Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, breach, violation, or event permitting acceleration under the terms of such Receivable has arisen. Such Receivable is not a write-off.

(n)Down Payment. The Obligor on such Receivable has fully paid the down payment, with his/her own funds, as set forth in the related Contract.

(o)Collections. Seller does not know of any fact that indicates the uncollectability by Buyer of any Contract, and no condition exists that materially or adversely affects the value of the Receivable or jeopardizes any security therefor.

(p)No Repossession. The Financed Vehicle securing the Receivable shall have not been foreclosed upon or repossessed by Seller or any other party.

(q)The information contained in the Receivables Schedule, as set forth in Section 10.2(a) and Exhibit B, including without limitation the identification of Current Performing Contracts, Delinquent Performing Contracts, Non-Performing Contracts, and Performing Contracts, is true and correct as of the Cut-Off Date.

(r)The information and data contained in the Electronic Data File, as set forth in Section 10.2(b) and Exhibit C, is true and correct as of the Cut-Off Date.

(s)The Receivable represents a consumer obligation of an Obligor, purchased for personal, family, or household use, and not a commercial obligation of an Obligor.

(t)The Obligor of the Receivable had obtained or agreed to obtain full-coverage physical damage and general liability insurance covering the Financed Vehicle.

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Section 5.3.Covenants of the Seller.

(a)Affirmative Covenants. From the Closing Date until the first day following the date on which all Receivables purchased hereunder are indefeasibly paid in full to Buyer, Seller agrees and covenants that it shall:

(i)Maintain all necessary licenses, permits and other approvals, in all jurisdictions where the failure to do so would have a Material Adverse Effect.

(ii)Keep and maintain all of its properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted).

(iii)Take all actions necessary to preserve and keep in full force and effect its existence, maintain the continuous operation of its business and comply with each requirement of law in all material respects.

(iv)Use commercially reasonable efforts to maintain systems, personnel and facilities, including back-up and disaster recovery capability, that will enable it to perform its obligations under this Agreement.

(v)File or cause to be filed all federal, state and local tax returns that are required to be filed by it and pay or cause to be paid all taxes shown to be due and payable on taxes or assessments (except only such taxes or assessments the validity of which are being contested in good faith by appropriate proceedings).

(b)Negative Covenants. From the Closing Date until the first day following the date on which all Receivables purchased hereunder have been indefeasibly paid in full to Buyer, Seller agrees that is shall not do any of the following:

(i)Assert any claims or set-off rights against any Scheduled Payments.

(ii)In the fulfillment of Seller's obligations under this Agreement, engage in, or allow or permit any person under its direct control or direction to engage in, any fraudulent activity or other activity which would constitute a violation of a requirement of law in any material respect.

(iii)Solicit, encourage, or otherwise suggest an Obligor in any manner breach any term of the Contract related to a Receivable.

(iv)Sell, lease, or otherwise transfer or deliver to an Obligor any motor vehicle, without regard to the means or method of such transfer or delivery, or purchase or originate any receivable related to the purchase of any motor vehicle by such Obligor; provided, that with respect to a particular Obligor, such covenant shall expire and be of no further force or effect upon the indefeasible payment in full to Buyer of all amounts due and owing from such Obligor.

(v)Except for fees imposed on Obligors with respect to payment, late payment or nonpayment as permitted in the related Contract, accept or receive or agree to accept or receive any rebate, refund, commission, fee, kickback or rakeoff, whether cash or otherwise and whether paid by or originating with an Obligor or any other party (including, but not limited to, brokers and agents), as a result of or in any way related to any Receivable or in connection with the sale, disposition, transfer or servicing of any Receivable.

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Section 5.4.Remedy for Breach of Representation, Warranty, or Covenant; Repurchase.

(a)The representations, warranties, covenants, and promises of Seller set forth herein shall survive the sale of Receivables to Buyer and shall inure to the benefit of Buyer and its successors and assigns, notwithstanding any restrictive or qualified endorsement on any Contract.

(i)In the event of a breach by Seller of any material representation, warranty, covenant, or promise in this Agreement with respect to any Receivable, the party discovering such breach will provide written notice to the other party. Within ten (10) calendar days of notice to Seller of any such breach, Seller shall repurchase such Receivable and the Related Security by paying Buyer the Repurchase Price in good funds.

(ii)In the event Seller is required to repurchase a Receivable, Buyer shall deliver to Seller the related Contract File and shall assign to Seller all of Buyer's right, title, and interest in and to the related Conveyed Property, free and clear of any and all claims, liens, and encumbrances, except for those which existed at the time of Buyer's purchase thereof from Seller. Buyer shall accomplish such delivery and assignment within a reasonable period of time following Buyer's receipt in full of the Repurchase Price from Seller.

(b)The "Repurchase Price" of a Receivable shall be the percentage of par as stated in the Receivables Schedule, multiplied by the Unpaid Principal Balance as of the date the Repurchase Price is paid to Buyer with respect to such Receivable, plus any accrued unpaid interest, plus any accrued unpaid fees.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

Section 6.1.Buyer Representations and Warranties. Buyer hereby represents and warrants to Seller, as of the Closing Date, as follows:

(a)Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged. Buyer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect on the Buyer's ability to perform its obligations hereunder.

(b)Authorization: Binding Obligations. Buyer has the power and authority to make, execute, deliver, and perform this Agreement and all of its transactions contemplated under this Agreement and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies.

(c)No Consent Required. Buyer is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau, or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement.

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(d)No Violations. The execution, delivery, and performance of this Agreement by Buyer will not violate any provision of any existing law or regulation or any order or decree of any court or the Certificate of Incorporation or Bylaws of Buyer, or constitute a material breach of any mortgage, indenture, contract, or other agreement to which Buyer is a party or by which Buyer may be bound.

(e)Litigation. No litigation or administrative proceeding of or before any court, tribunal, or governmental body is currently pending, or to the knowledge of Buyer threatened, against Buyer or any of its properties or with respect to this Agreement which, if adversely determined, would in the opinion of Buyer have a Material Adverse Effect on the transactions contemplated by this Agreement.

(f)Approvals, Licensing, Etc. All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights, and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency, that are necessary or advisable in connection with the execution and delivery by Buyer of this Agreement and other documents have been duly taken, given, or obtained, as the case may be, are in full force and effect to be entered into in connection herewith, are not subject to any pending proceedings or appeals (administrative, judicial, or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and other documents to be entered into in connection herewith on the part of Buyer and the performance by Buyer of its obligations hereunder and thereunder.

ARTICLE VII
SERVICING

Section 7.1.Transfer and Assignment. Effective as of the Servicing Transfer Date, (a) Seller shall transfer, delegate, and assign all of its rights, duties and obligations regarding the servicing of the Conveyed Property, including all rights to receive payment, to Buyer and (b) Buyer shall assume all of the Seller's such duties and obligations and accept all of Seller's such rights. After the execution of this Agreement and prior to the Servicing Transfer Date, Seller or the Current Servicer shall service the Contracts that will be, after the Closing, Conveyed Property in accordance with its current customary practices. Seller shall forward all payments received with respect to Conveyed Property after the Cutoff Date to the Buyer, within one business day after Buyer's receipt of such payment, via overnight delivery or wire with faxed listing of account(s) for credit.

ARTICLE VIII

FURTHER ASSURANCES

Section 8.1.Further Assurances.

(a)In order to protect and secure Buyer's rights hereunder, Seller, upon the request of and at the expense of the Buyer or its assigns, shall perform or cause to be done and performed, every reasonable act necessary or advisable to put Buyer in position to enforce the payment of the Contracts and to carry out the intent of this Agreement, including the execution of documents such as applications for certificates of title and Uniform Commercial Code financing statements assigning Seller's security interests in the motor vehicles securing the Contracts, and the execution of, and if necessary, the recordation of, additional documents, including separate endorsements and assignments, upon request of Buyer.

(b)In order to protect and secure Buyer's rights hereunder, Seller, within one (1) business day of its receipt of any correspondence, notification, notice, or similar document related to or concerning any Contract purchased by the Buyer hereunder, shall forward same to Buyer.

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Section 8.2.Returned Payments.

(a)Buyer agrees to pay to Seller, within two (2) business days after notice from Seller, amounts equal to any Obligor checks or other payments originally tendered to Seller by Obligor(s) and returned unpaid for insufficient funds or other reasons after the Cut-Off Date, and Seller shall provide to Buyer copies of documents evidencing the returned checks or payments.

(b)In the event Seller repurchases a Receivable pursuant to Section 3.2 or 5.4, Seller agrees to pay to Buyer, within two (2) business days after notice from Buyer, amounts equal to any Obligor checks or other payments tendered to Buyer with respect to such contract prior to such repurchase and returned unpaid for insufficient funds or other reasons, and Buyer shall provide to Seller copies of documents evidencing the returned checks or payments.

ARTICLE IX

BROKERAGE AND OTHER THIRD-PARTY FEES

Section 9.1.Brokers. Buyer and Seller each represent and warrant to the other that it has not dealt with any Person entitled to a brokerage fee or commission in connection with this Agreement.

ARTICLE X

DELIVERABLES; CLOSING

Section 10.1. Closing Location. The Closing hereunder will take place by fax or email transmission with originals forwarded by overnight courier for next business day delivery.

Section 10.2. Seller Deliverables.

(a)Receivables Schedule. Seller shall deliver to Buyer the Receivables Schedule setting forth the Receivables to be sold to Buyer by 12:00 noon (eastern standard time) one (1) Business Day prior to the Closing Date (unless otherwise agreed to by the parties). The Receivables Schedule shall be substantially in the form attached hereto as Exhibit B, shall be signed by an Authorized Officer of Seller, and shall contain such information as set forth therein and below. SELLER, BY ACCEPTING THE PURCHASE PRICE PAID WITH RESPECT TO THE CONVEYED PROPERTY, SHALL BE DEEMED TO HAVE CERTIFIED, REPRESENTED AND WARRANTED TO BUYER, WITH RESPECT TO THE RECEIVABLES AND RELATED SECURITY TO BE SOLD BY IT ON SUCH PURCHASE DATE, THAT ALL INFORMATION AND DATA CONTAINED IN THE RECEIVABLES SCHEDULE IS CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE, WITH THE SAME EFFECT AS THOUGH MADE ON AND AS OF SUCH DAY.

(i)account number for each Contract;

(ii)name of each Obligor party to a Contract;

(iii)year, make, model, and vehicle identification number of each motor vehicle which is security for a Contract;

(iv)Unpaid Principal Balance on each Contract as of the Cut-Off Date;

(v)Purchase Price on each Contract calculated as of the Cut-Off Date;

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(b)Contents of Electronic Data File. Seller shall deliver to Buyer the Electronic Data File, or information and data sufficient for the creation of same, including all information and data set forth in Exhibit C, with respect to the Receivables sold to Buyer by 12:00 noon (eastern standard time) two (2) Business Days prior to the Closing Date (unless otherwise agreed to by the parties). Seller understands and agrees that Buyer intends to and shall rely upon Seller's provision of such information and data, whether created by Seller or not, in loading or boarding the Conveyed Property onto Buyer's account servicing system(s). SELLER, BY ACCEPTING THE PURCHASE PRICE PAID WITH RESPECT TO THE CONVEYED PROPERTY, SHALL BE DEEMED TO HAVE CERTIFIED, REPRESENTED AND WARRANTED TO BUYER, WITH RESPECT TO THE RECEIVABLES AND RELATED SECURITY TO BE SOLD BY IT ON SUCH PURCHASE DATE, THAT ALL INFORMATION AND DATA CONTAINED IN THE ELECTRONIC DATA FILE IS CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE, WITH THE SAME EFFECT AS THOUGH MADE ON AND AS OF SUCH DAY.

(c)Bill of Sale. Seller, in conjunction with the payment of the Purchase Price, shall execute and deliver to Buyer a Bill of Sale with respect to the related Conveyed Property substantially in the form attached hereto as Exhibit A.

(d)Receivables File. Seller, in conjunction with the payment of the Purchase Price, shall forward, by overnight courier for next business-day delivery, or in person, to Buyer the following with respect to each Receivable:

(i)The original Contract. If the original contract is unavailable, Seller must provide the electronic version stamped on each page of the contract "True and Correct Copy of the Original" and signed by an officer verifying such with a notary.

(ii)Obligor credit files including the original application, credit investigation and such other credit information contained therein, or copies of same if the original of such document is not available.

(iii)The title file, which shall include the Certificate of Title (to the extent the state of origin has such Certificate of Title or notice of recorded lien on Seller's name) for the Financed Vehicle.

(iv)The Servicing File, including Obligor payment and collection records.

(v)Obligor insurance files, including without limitation property insurance insuring the Financed Vehicle, gap insurance, warranties, and such other insurance information contained therein, or copies of same if the original of such document is not available.

(vi)The Bill of Sale with respect to the Financed Vehicle.

(vii)Any other documents related to the Financed Vehicle or the Obligor that Buyer may reasonably require.

(viii)REMEDY FOR FAILURE TO DELIVER RECEIVABLES FILE. In the event Seller fails to deliver, with respect to any particular Receivable, the Receivables File to the reasonable satisfaction of Buyer and in accordance with Section 10.2(d), Buyer may at its sole option require Seller to immediately repurchase such Receivable. If Buyer requires Seller to immediately repurchase such Receivable, Seller shall repurchase such Receivable and the Related Security by paying to Buyer the Repurchase Price in good funds within five (5) Business Days

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following Buyer's notice hereunder. In the event Seller is required to repurchase the Contract hereunder, Buyer shall deliver to Seller, upon payment by the Seller of the Repurchase Price, the related Contract File and shall assign to Seller all of Buyer's right, title, and interest in and to the related Conveyed Property, free and clear of any and all claims, liens, and encumbrances, except for those which existed at the time of Buyer's purchase thereof from Seller.

Section 10.3. Payment of Purchase Price. Subject to Seller's complying on the Closing Date in all material respects with the terms and conditions of this Agreement, Buyer shall pay seventy five percent (75%) of the Purchase Price to Seller on the Closing Date, by wire transfer, in immediately available funds, to such account(s) as directed by Seller. Buyer shall place the remaining twenty five percent (25%) in escrow to be held for thirty (30) days which shall be further reduced by the amount due under the repurchase provisions in section 3.2, as applicable.

ARTICLE XI
NOTICES

Section 11.1. Notices. Any notice, demand or communication which either party desires or is required to give to the other party in connection with the Agreement must be in writing and must be either served personally or sent by fax and a reliable tracking method, addressed to the other party, as follows, or to such other fax number and/or address as either party hereafter specifies in accordance with this Article XI:

IF TO BUYER:

Nicholas Financial, Inc.

2454 McMullen Booth Road, Building C, Clearwater, FL 33759

Fax (727) 914-2411Attn: Doug Marohn

Title: President and CEO

IF TO SELLER:

Platinum Auto Finance of Tampa Bay, LLC
25 N. Main Avenue Clearwater, FL 33765
Attn: Legal Department

Fax (727) 216-6262

ARTICLE XII

MISCELLANEOUS

Section 12.1. Termination. Either party may terminate this Agreement prior to the delivery by Seller to Buyer of the Receivables Schedule.

Section 12.2. Mandatory Delivery. The sale and delivery of each Contract on the Closing Date is mandatory from and after the date of the delivery of the Receivables Schedule, it being specifically understood and agreed that each Contract is unique and identifiable on the date thereof and that an award of money damages would be insufficient to compensate Buyer for the losses and damages incurred by Buyer (including damages to prospective purchasers of the Contracts) in the event of Seller's failure to deliver each of the related Contracts on the Closing Date. Seller hereby agrees that it holds such Contracts in custody for Buyer subject to Buyer's (a) right to reject any Contract under the terms of this Agreement, and (b) obligation to pay the related Purchase Price. All rights and remedies of Buyer under this Agreement are distinct from, and cumulative with, any other rights or remedies under this Agreement or afforded by

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law or equity and all such rights and remedies may be exercised concurrently, independently or successively.

Section 12.3. Entire Agreement. This Agreement together with all exhibits and schedules hereto constitutes the entire agreement between the parties hereto and supersedes any and all representations, promises and statements, oral and written, made in connection with the subject matter of this Agreement and the negotiation hereof, and no such representation, promise or statement not written herein will be binding on the parties. This Agreement may not be varied or altered or its provisions waived except by an agreement in writing executed by duly authorized agents of both parties hereto. This Agreement will be binding upon and inure to the benefit of the parties hereto and each of their respective successors and assigns.

Section 12.4. Governing Law; Jurisdiction and Venue.

(a)This Agreement will be interpreted, construed, and enforced in accordance with the laws of the State of Florida without reference to that state's laws or rules pertaining to conflict of laws.

(b)EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY: (i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE MIDDLE DISTRICT OF FLORIDA, AND APPELLATE COURTS FROM ANY THEREOF, OR THE COURTS OF THE STATE OF FLORIDA, WITHIN THE COUNTY OF PINELLAS, IN THE EVENT THE FEDERAL COURT LACKS OR DECLINES JURISDICTION; (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN ARTICLE XI OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED; AND (iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

Section 12.5. Severability. Any provision of this Agreement, which is prohibited or unenforceable in any jurisdiction, will, as to such jurisdiction, be ineffective to the extent of each prohibition or unenforceability without invalidating the remaining provision hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provisions in any other jurisdiction.

Section 12.6. Captions. Captions are for convenience of reference only and are not to be considered as defming or limiting in any way the scope of intent of the provision hereof.

Section 12.7. Waivers; Cumulative Remedies. The waiver of any breach, term, provision or condition of this Agreement may not be construed to be a subsequent waiver of any other breach, term, provisions or condition. All remedies afforded by this Agreement for a breach hereof will be cumulative, that are, in addition to all other remedies provided for herein or at law or in equity.

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Section 12.8. Construction. Unless otherwise specifically provided, references in this Agreement to Sections and Exhibits are to Sections and Exhibits of or to this Agreement. All Exhibits hereto are incorporated herein by the references thereto in this Agreement. The designations of the parties to this Agreement and any pronouns referring to any party, wherever used, must be so construed as to include the plural as well as the singular number, and whenever the context permits, any gender includes all other genders and the singular number includes the plural. As used in this Agreement, the words "includes" and "including" are not limiting, and the words "hereof' and "hereunder" and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.

Section 12.9. Counterparts. This Agreement may be executed in two or more counterparts and by different parties on separate counterparts of duplicate originals, each of which must be deemed an original, but all of which together will constitute but one and the same instrument.

Section 12.10. Assignment. Neither Seller nor Buyer may assign any of its rights or obligations hereunder without the prior written consent of the other party.

Section 12.11. Dispute Resolution.

(a)In the event of any claim, suit, or controversy (collectively, a "claim") involving any matter governed by or related to this Agreement, the parties shall first use their diligent and good faith efforts to resolve the dispute by exchanging relevant information and negotiating in good faith, including not less than one conference call.

(b)Attorneys' Fees; Costs of Collection. In the event of any claim involving or arising from Seller's breach of any material representation, warranty, term, or condition of this Agreement, or from Seller's failure to perform any obligation to Buyer arising hereunder or otherwise, Seller agrees to pay reasonable losses or expenses incurred by Buyer as a result of such breach or failure to perform, including attorneys' fees, and any expenses paid or incurred by Buyer in connection with the collection of any amount due from Seller to Buyer hereunder.

Section 12.12. Confidentiality. Each of Buyer and Seller will keep confidential and will not divulge to any party, without the other party's prior written consent, the terms of this Agreement; provided, that any party may make such disclosure to its affiliates, attorneys, agents and accountants, the rating agencies, investors and potential investors and in any report or as otherwise required by law or by its regulators.

Section 12.13. No Partnership or Joint Venture; No Origination. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, or joint venture. Notwithstanding anything herein to the contrary, in no event shall the parties hereto, or any third party deem or construe Buyer as the originator of the Conveyed Property.

Section 12.14. Indemnification. Seller shall indemnify and hold Buyer, its parents, affiliates, subsidiaries, shareholders, officers, directors, employees, attorneys and agents (each, a "Buyer Indemnified Party") harmless from and against any and all Claims, actions, and proceedings asserted or brought by a third party, and from and against any and all costs, expenses, damages, and liabilities incurred or suffered by any Buyer Indemnified Party (including without limitation attorneys' fees, consultant fees, in-house counsel fees, costs or expenses) resulting from, attributable to, or arising out of (1) the breach or inaccuracy of any representation or warranty of Seller in this Agreement, (2) Seller's breach of any covenant, obligation, promise, agreement or term in this Agreement, or (3) Seller's breach of any requirement of law in the performance of its obligations under this Agreement, including without limitation in the origination and/or servicing of any Receivable; provided, however, that in no event shall

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Seller be obligated for any claims, expenses, losses, or damages resulting from the willful misconduct of Buyer or its employees.

Section 12.15. Inspection. From the Closing Date until the first day following the date on which all Receivables purchased hereunder are indefeasibly paid in full to Buyer, Seller shall permit, on not less than two (2) days prior written notice, any person who is reasonably designated by Buyer to visit and inspect Seller's records relating to Receivables and will cause its personnel to assist in any examination of such records by the Buyer or its authorized agents. The examination referred to in this Section 12.15 will be conducted in a manner which does not unreasonably interfere with the Seller's normal operations or customer or employee relations.

Section 12.16. Timely Payment of Amounts Due. Any payment or money due from Seller to Buyer hereunder which is not paid within the time specified, or if no time is specified, within ten (10) days after demand for payment is made, shall accrued interest at the rate of one and one-half percent (1¹/₂%) per month or the highest rate allowed by applicable law, whichever is higher.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

NICHOLAS FINANCIAL, INC. as Buyer

By:  /s/ Doug Marohn

Name:Doug Marohn

Title:       President and CEO

PLATINUM AUTO FINANCE OF TAMPA BAY, LLC as Seller

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:       CEO

EXHIBIT A
BILL OF SALE

Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company, ("Seller"), pursuant to the Bulk Receivables Purchase and Sale Agreement dated as of even date hereof (the "Agreement"), by and between Seller and Nicholas Financial, Inc.„ a Florida Corporation ("Buyer"), for good and valuable consideration paid by Buyer, the receipt and sufficiency of which are hereby acknowledged, does hereby sell, assign, transfer, set over and convey, subject to the terms of the Agreement, the Conveyed Property, unto Buyer, its successors and assigns, for its and their own use forever.

Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Agreement.

This Bill of Sale and the covenants and agreements contained herein shall be binding upon Seller, its successors and assigns, and shall inure to the benefit of Buyer, its successors and assigns.

THIS BILL OF SALE IS MADE WITHOUT ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT.

IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed in its name by a duly authorized representative this 11 day of December, 2019.

Platinum Auto Finance of Tampa Bay, LLC as Seller

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:          CEO

A-1

EXHIBIT B

RECEIVABLES SCHEDULE

Schedule 1: [ ] ([ ]) Page[s] Attached Hereto With List of Contracts

Cut-Off Date:December 9, 2019

Buyer:Nicholas Financial, Inc.

Seller:Platinum Auto Finance of Tampa Bay, LLC

Closing Date:December 11, 2019

Purchase Price Percentage of Par:0.95% Percent

Recourse Period: For Contracts with monthly Scheduled Payments: 2 payments For Contracts with semi-monthly Scheduled Payments: 4 payments

TOTAL PURCHASE PRICE FOR ALL CONTRACTS ON THIS SCHEDULE: $1,047,295.34

THIS SCHEDULE OF CONTRACTS IS ISSUED PURSUANT TO AND IS SUBJECT TO ALL THE TERMS AND CONDITIONS OF THE RECEIVABLES PURCHASE AND SALE AGREEMENT DATED December 11, 2019, BETWEEN BUYER AND SELLER.

SELLER HEREBY CERTIFIES, REPRESENTS AND WARRANTS TO BUYER THAT THE INFORMATION ATTACHED HERETO AS SCHEDULE 1 IS, TO THE BEST OF SELLER'S KNOWLEDGE, CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE.

Platinum Auto Finance of Tampa Bay, LLC as Seller

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:          CEO

B-1

Schedule 1 to Exhibit B

 

EXHIBIT C

CONTENTS OF ELECTRONIC DATA FILE

[Values marked with asterisk * are required]

DESCRIPTION

*ACCOUNT NUMBER IN SELLER SERVICING SYSTEM

*OBLIGOR FIRST NAME

*OBLIGOR LAST NAME

*OBLIGOR CURRENT STREET ADDRESS

OBLIGOR EMAIL ADDRESS

*OBLIGOR SOCIAL SECURITY NUMBER

OBLIGOR DATE OF BIRTH IN MM/DD/YYYY FORMAT

*OBLIGOR CURRENT HOME PHONE NUMBER

OBLIGOR CURRENT MOBILE PHONE NUMBER

OBLIGOR CURRENT WORK PHONE NUMBER

OBLIGOR DRIVER'S LICENSE NUMBER

OBLIGOR CURRENT EMPLOYER

*OBLIGOR CURRENT GROSS MONTHLY INCOME

OBLIGOR CURRENT EMPLOYMENT IN YEARS AND MONTHS

OBLIGOR CURRENT RESIDENCE STATUS: OWN, RENT, OTHER

OBLIGOR CURRENT RESIDENCE IN YEARS AND MONTHS

OBLIGOR CURRENT CREDIT SCORE

*CONTRACT INTEREST ACCRUAL METHOD: DAILY SIMPLE INTEREST (SIMPLE) OR PRE COMPUTED (PRECOMP) A.K.A. RULE OF 78'S

*CONTRACT DATE OR ORIGINATION DATE

*AMOUNT FINANCED

*ANNUAL PERCENTAGE RATE (APR)

*FINANCE CHARGE

*NUMBER OF PAYMENTS OR CONTRACT TERM

*REGULAR PAYMENT AMOUNT

INDICATES IF REGULAR PAYMENTS ARE SCHEDULED ONCE A MONTH (MONTHLY)

DATE OF LAST REGULAR MONTHLY PAYMENT OR MATURITY DATE

*DATE OF FIRST REGULAR MONTHLY PAYMENT

*DATE OF THE NEXT REGULAR SCHEDULED PAYMENT

*ACCOUNT PAYOFF AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

*PRINCIPAL BALANCE AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

 

*INTEREST BALANCE AS OF THE PORTFOLIO SALE DATE: THE AMOUNT OF INTEREST THAT HAS ACCRUED FROM THE LAST PAYMENT TO THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

LATE CHARGES OWED AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

*AMOUNT OF LAST PAYMENT

*DATE OF LAST PAYMENT

TOTAL NUMBER OF REGULAR PAYMENTS MADE

*AMOUNT PAID FOR GAP INSURANCE

*AMOUNT PAID FOR VEHICLE WARRANTY

*DOWN PAYMENT

*THE BALANCE OF THE PURCHASE DISCOUNT AS OF THE INTEREST ACCRUED THROUGH DATE (CUTOFF DATE)

*ACCOUNT BALANCE PURCHASED BY BUYER

*PRICE PAID FOR RECEIVABLE (AFTER DISCOUNT)

*VEHICLE IDENTIFICATION NUMBER (VIN)

*VEHICLE MODEL YEAR

*VEHICLE MAKE

*VEHICLE MODEL

*CASH PRICE OF VEHICLE

VEHICLE COLOR

VEHICLE MILEAGE

*VEHICLE VALUE

VALUATION DATE

*TITLE NUMBER

TRACKING DEVICE NUMBER, IF THE VEHICLE IS EQUIPPED WITH A GPS TRACKING DEVICE.

*CO-OBLIGOR FIRST NAME

*CO-OBLIGOR LAST NAME

*CO-OBLIGOR CURRENT STREET ADDRESS

CO-OBLIGOR EMAIL ADDRESS

*CO-OBLIGOR SOCIAL SECURITY NUMBER

CO-OBLIGOR DATE OF BIRTH

CO-OBLIGOR CURRENT HOME PHONE NUMBER

CO-OBLIGOR CURRENT MOBILE PHONE NUMBER

CO-OBLIGOR CURRENT WORK PHONE NUMBER

CO-OBLIGOR DRIVER'S LICENSE NUMBER

CO-OBLIGOR CURRENT EMPLOYER

*DATE PAYMENT DUE

*DATE PAYMENT MADE

*HOW PAYMENT MADE

*AMOUNT OF PAYMENT. NEGATIVE AMOUNTS SHOULD BE EXCLUDED.

*DEALER LEGAL NAME

 

PRIMARY CONTACT FIRST NAME

PRIMARY CONTACT LAST NAME

PRIMARY CONTACT TITLE

DEALER CURRENT STREET ADDRESS

PRIMARY CONTACT EMAIL ADDRESS

PRIMARY CONTACT PHONE NUMBER

REFERENCE RELATIONSHIP TO OBLIGOR

REFERENCE FIRST NAME

REFERENCE LAST NAME

REFERENCE CURRENT STREET ADDRESS

REFERENCE CURRENT CITY

REFERENCE CURRENT STATE

REFERENCE CURRENT ZIP CODE

REFERENCE EMAIL ADDRESS

REFERENCE HOME PHONE

REFERENCE MOBILE PHONE

REFERENCE WORK PHONE

*COLLECTION NOTES WITH DATES

 

EXHIBIT D

FORM OF NOTICE OF TRANSFER

TO BE SENT TO OBLIGOR

<Date>

CUSTOMER NAME

ADDRESS

CITY STATE ZIP

<ACCOUNT NUMBER>

Dear CUSTOMER

Please be advised that on December 11, 2019 your account with Platinum Auto Finance was sold and assigned to Nicholas Financial, Inc.. Please be assured that this is a normal transaction and in no way affects your payments, payment due dates, the terms of your contract or liability. Any payments received from you after December 9, 2019 will be endorsed and forwarded to Nicholas Financial, Inc.

All future payments and correspondence should be made payable to Nicholas Financial, Inc., and mailed to the following address:

BUYER PAYMENT ADDRESS

You may pay online at www.nicholasfinancial.com

You may also pay via the phone by calling 800-237-2721.

If you should have any questions concerning this transfer, please contact Nicholas Financial, Inc., at 2454 McMullen Booth Road, Building C, Clearwater, FL 33759.

Sincerely,

Platinum Auto Finance

AUTO FINANCE

EXHIBIT E

RATIFICATION

On December 11, 2019, Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company having an address at 25 N. Main Avenue Clearwater, FL 33765 ("SELLER"), assigned and sold all interest in the attached list of vehicles (Schedule 1) to Nicholas Financial, Inc., a Florida Corporation, having an address at 2454 McMullen Booth Road, Building C, Clearwater, FL 33759 ("BUYER") for consideration. This document ratifies that agreement.

PLATINUM AUTO FINANCE OF TAMPA BAY, LLC as Seller

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:         CEO

NICHOLAS FINANCIAL, INC. as Buyer

By:  /s/ Doug Marohn

Name:Doug Marohn

Title:President and CEO

Schedule 1 to Exhibit E- VIN List of Vehicles

VIN KM8JM12B58U735635 KMHDH4AE6DU787722 1J4GL48K06W190174 1N6BAOED3AN3 12493 1C4RDHDG8CC129849 WDDGF5HB8DA817352 2A8HR54P58R151830 1J4NF2GB4AD502277 5XXGM4A74DG252392 WDDGF54X18F044444 1HGCS22829A009569 3GSCL33P19S520555 1J4FA24108L603170 5NPE24AF7G H365928 JA32U1FU4AU008432 19U UA9F56AA001169 1FTRW12WX7FB88322 19UUA66218A008853 5TEUX42N58Z474292 KMHHN65F66U212354 1ZVFT80N955157349 3VWDX7AJ3CM325589 1YVHP81A695M06671 5FNRL38895B118681 WBAVA33508K053046 1GNDS13S162219150 2HGFA16569H519094 1GNEC13Z93R305730 JH4CU26659C030596 1FMZU74K54UA70989 1FTYR15E43PB63068 5GAER23768J130159 19UUA66286A039790 JTKDE177870167155 4T3ZE11A99U015630 1FAHP3GN9BW129037 2C3KA33V79H632280 1GCEC14X48Z226169

 

2C3LA43R58H115510 1G8ZV57B29F185945 5NMSG3AB9AH385369 KNDJF724377356262 3C4PDCABXDT556751 1G1PC5SH6C7294515 1C4NJCBA2ED725822 1HGCP26898A144378 1GCHC33697F526419 KN DJT2A21B7271991 2GTEK13M181212748 2GTEC13Z661286446 JNRASO8U26X104513 1FMYU94146KB18107 2G1WB58K381369094 1FTPW14546KB62185 WBAVA37558NL57093 JN8DRO9Y64W908802 2CN DL33F586037649 2FMDK38C27BB44830 5GTDN 136268278748 1N6ED26TX4C414394 1D7HU18N15S359730 5TDZK23C67S093875 4T1BE32KX6U138989 2T2HA31U36C105967 1FA6P0H77G5107301 1N4AL21E09N503275 4T1BK36B46U092420 JTEGD21A840091798 4USBT33525LS55192 JTJHA31U150088323 2G1FD1E32F9209593 1C3CDZAB9DN730329 5XYKT3A6XEG487293 1G1PE5SB2D7140889 1G1RA6E47DU128617 1N4AL3AP5EC318667 1G4GA5ED4BF183497 5N1AR1NNXAC603635 1HGCP36868A059925 2C4RDGBG4DR507316 5GADT13S262305493 1G1ZD5EU7CF285102 2CKDL73F576049643

 

3D4GG67V99T523549 1GNKVLED6BJ 196540 1FMEU73E47UB26144 2FMDK38C58BA25106 3GSCL33P59S553963 2FM DK38C89BA54861 1FADP3F27DL239806 2G1WC5E34D1172648 1D7HU18227J546330 1GMDV33L06D229611 1LNHM94R29G606906 1C3CDZABXDN 616923 1ZVBP8EN0A5140963 5NPEB4AC1EH920763 1FM5K7D83DGC50186 JTEDS41A282026170 2C3LA73W16H483347 JNKBY01F58M551225 3FA6P0H93DR308056 5TELU42N85Z005472 3FA6P0H76ER168813 1N4AL3AP5GN371084 1GKKVTED2BJ367894 5XYZT3LB3GG358789 5NPDH4AE4GH685175 3N1AB7APXHL712083 KNADM4A36F6443004 1GNLREED4AS152887 1FTEW1CM1BFC08011 1NXBU4EE8AZ231243 1C3CCCAB4GN152709 1N4AL3AP2FC110733 JN1CV6AR8DM769717 3FA6P0H79DR138767 3C4PDCBG9GT218899 3GCPKSE34BG346719 JN8AZ1MU2CW111538 1G1PG5SB2G7226007 1FADP3F22FL252417 1FMEU7EE9AUA55754 1GNFK13018R188273 JTHBJ46G272008213 3MZBN1U74HM123328 3N1AB7AP6JL624105 3G KEC16Z05G211831

 

4M2CN8B78AKJ25965 1C3CDZAB3CN 165302 2C3KA53G17H893494 1C3LC55D29N516605 YV1612FS7E2270652 1FMPU15L43LC31011 1J4FA49S25P316589 WBA3N7C51EF718186 SAJWA1CB1BLV15277 5N1DR2MM7JC625054 5N1AA0ND9BN608887 4JGBB86E49A479238 1G4PS5SK3F4219570 2G1WB58K981214579 3N1AB7AP6HY350787 1VWAA7A34JCO27671 4T1BE46K58U766610 2FMTK3J87FBC41215 1LNHL9DR6BG605587 3VWDX7AJXBM056604 1G4PR5SKOG4102039 3FA6P0H71GR275304 5NMZT3LB2JH076561 1VWAT7A37HC011534 3N1AB7APXJY336011 1GTR1VE03CZ345937 1N4AL3AP1HC209806

 

EX-10.22.2

Exhibit 10.22.2

BULK RECEIVABLES PURCHASE AND SALE AGREEMENT (LIMITED RECOURSE)

This Bulk Receivables Purchase and Sale Agreement (Limited Recourse) is entered into this 30th day of January, 2020 (the "Closing Date"), between Nicholas Financial, Inc., a Florida Corporation ("Buyer"), and Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company ("Seller").

WHEREAS, Seller wishes to sell and Buyer wishes to buy all of Seller's rights, title and interest in and to certain retail installment sales contracts secured by liens on motor vehicles and certain promissory notes and security interests in motor vehicles securing such notes (collectively the "Receivables" and each a "Receivable").

NOW, THEREFORE, in consideration of these premises and of the mutual covenants and agreements hereinafter contained, the receipt and adequacy of which are hereby acknowledged, the Buyer and Seller hereby agree as follows:

ARTICLE I
DEFINITIONS

Whenever used herein, the following words and phrases, unless the context otherwise requires, will have the following meanings:

"Accrued Interest":As of any date of determination with respect to a Receivable, the accrued

and unpaid interest of such Receivable.

"Agreement":

"Authorized Officer":

This Receivables Purchase and Sale Agreement, together with all exhibits hereto and all subsequent written amendments and supplements hereto and thereto.

With respect to any Person, any of the Chief Executive Officer, the President, the Treasurer, the Chief Financial Officer, any Vice President or any Assistant Treasurer of such Person, or any other officer of such Person authorized to act on behalf of such Person.

"Bill of Sale":The Bill of Sale in the form attached hereto as Exhibit A.

"Business Day": Any day other than a Saturday or Sunday, or a day on which banking institutions in Tampa, Florida are authorized or obligated by law or

executive order to be closed.

"Buyer":As defined in the first paragraph of this Agreement.

"Certificate of Title": A document issued by a jurisdiction that evidences the owner(s) and lien holder(s), if any, of a motor vehicle registered in such jurisdiction.

"Closing": The simultaneous delivery by Buyer and Seller on the Closing Date of documents and funds as provided for hereunder, as well as the performance by Buyer and Seller of all acts herein provided to be performed on the Closing Date.

"Closing Date":As defined in the first paragraph of this Agreement.

 

"Collections"

With respect to any Receivable, all cash collections and other cash proceeds of or relating to such Receivable, including, without limitation, (i) Scheduled Payments, (ii) prepayments, (iii) any late fees, (iv) any guaranty amounts, (v) any insurance proceeds (including any GAP benefits or waiver amount), (vi) any rebates, (vii) any liquidation proceeds or recoveries and (viii) all other cash proceeds of Related Security with respect to such Receivable.

"Contract": With respect to a Receivable, either (i) the motor vehicle retail installment sales contract or (ii) the promissory note evidencing an Obligor's obligation to pay the indebtedness provided for therein and evidencing a security interest in the Financed Vehicle.

"Contract Rate": With respect to a Receivable, the annualized rate of interest to be paid by the Obligor as set forth on the related Contract, which may or may not be the same as the federal Truth-in Lending Act / Regulation Z Annual Percentage Rate.

"Conveyed Property":As defined in Section 2.1 of this Agreement.

"Current Performing Contract": A Performing Contract where, as of the Cut-Off Date, the Obligor is less than thirty (30) days past due with respect to all payments due thereunder.

"Current Servicer":Platinum Auto Finance

"Cut-Off Date":

"Damages":

Close of business on the date set forth as the "Cut-Off Date" on the Receivables Schedule, which date shall be the last day on which Seller accrues Interest with respect to Receivables on its servicing and accounting system(s).

With respect to a Person and a specified event, the losses, liabilities, reasonable costs and expenses actually incurred and appropriately documented by such Person resulting from such specified event.

"Delinquent Performing Contract":A Performing Contract where, as of the Cut-Off Date, payments

due on the Contract are thirty (30) days or more past due.

"Deposit Amount":Such amount retained by Buyer from the Purchase Price as set forth in

Section 3.3.

"Electronic Data File":The information and data provided by Seller to Buyer pursuant to Section

10.2(b) and set forth in Exhibit C.

"Financed Vehicle"A new or used motor vehicle, together with all accessions thereto, securing

an Obligor's indebtedness under the respective Receivable.

"Non-Performing Contract": Any contract that is not a Performing Contract or a Delinquent Performing Contract.

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"Material Adverse Effect":

means, with respect to Buyer, a material adverse effect on (i) the financial condition, business, operations or properties of such Person, taken as a whole, (ii) the ability of such Person to perform its obligations hereunder, (iii) the legality, validity or enforceability of this Agreement, or (iv) the legality, validity or enforceability of Buyer's interest in the Receivables.

"Obligor":The Person or Persons (other than the Seller) who executed a Contract and

is or are liable for all obligations thereunder.

With respect to a Receivable, as of a date of determination, the sum of (i) the Unpaid Principal Balance, plus (ii) all accrued and unpaid interest calculated at the Contract Rate and in accordance with the terms and conditions of the Contract.

A Contract where, as of the Cut-Off Date, (i) the Seller has no evidence that the Obligor intends to discontinue making all required payments under the Contract, (ii) the Seller has no evidence that Buyer will not be able to make contact with the Obligor following the Closing Date or that the Obligor is otherwise a "skip" risk, (iii) the account evidenced by the Contract, or the vehicle which secures the Contract, is not in the process of repossession, repossession hold, insurance claim, litigation or impoundment, (iv) the Contract is secured by a fully operable vehicle, and (v) the Obligor under the Contract has not filed, nor had filed against it a petition in bankruptcy.

Any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereto), unincorporated organization or government or any agency or political subdivision thereof

The price paid on the Closing Date by Buyer to Seller for the Receivables purchased by Buyer on the Closing Date as calculated as provided in Section 3.1 hereof .

"Payoff":

"Performing Contract":

"Person":

"Purchase Price":

"Receivables File":The documents described in Section 10.2(d) of this Agreement.

"Receivables Schedule":

"Recourse Period"

The schedule listing the Receivables to be purchased by Buyer on the Closing Date, substantially in the form of attached Exhibit B and containing the information set forth therein, and delivered in accordance with Section 10.2(a).

With respect to a particular Receivable and the related Contract, that period of time set forth in the Receivables Schedule, in accordance with Section 3.2(c), during which Seller owes to Buyer the recourse obligations set forth in Section 3.2.

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"Related Security":With respect to any Receivable:

(i) all of Seller's right, title and interest in and to the Contract and the Financed Vehicle;

(ii) all security interests, liens, real property and/or personal property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to the Receivable or otherwise, together with all financing statements or registration applications filed against an Obligor describing any collateral securing such Receivable;

(iii) all letters of credit, insurance, guarantees and other agreements or arrangements of whatever character from time to time supporting or securing payment of the Receivable, whether pursuant to the Contract related to the Receivable or otherwise; and,

(iv) the related Contract, all books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights), accounts and all general intangibles relating to such Receivable and the related Obligor.

"Repurchase Price":As defined in Section 5.4(b) of this Agreement.

"Scheduled Payment":

With respect to any Contract, the periodic payments payable under the terms of such Contract, excluding, without limitation, any sales and use tax or similar tax payments, insurance premiums or other charges due under the terms of such Contract and not due and owing to Seller under such Contract.

"Seller":As defined in the first paragraph of this Agreement.

"Servicing File": With respect to each Receivable, the file delivered by Seller to Buyer, consisting of all documents necessary to service the Receivables.

"Servicing Transfer Date":The Closing Date.

"Unpaid Principal Balance":

With respect to a Receivable, as of a date of determination, the Obligor's original principal balance minus the cumulative principal portion of each installment received prior to such date from the Obligor and applied to reduce such balance, the application of such installment having been determined in accordance with the terms and conditions of the Contract.

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ARTICLE II

PURCHASE AND SALE

Section 2.1.Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, on the Closing Date, Seller hereby agrees to sell, assign, transfer, set over, and convey to Buyer, and Buyer agrees to purchase and accept, subject to the terms of this Agreement, (a) all of Seller's right, title and interest in and to those certain Receivables (together with the Related Security) identified on the Receivables Schedule; (b) all of the rights under any lender's single interest insurance policy relating to a Financed Vehicle for the benefit of the creditor of the related Contract (to the extent that such rights may be assigned or otherwise conveyed); (c) all documents contained in the related Receivables File and the Servicing File; and, (d) all proceeds derived from any of the foregoing, other than the Purchase Price, paid pursuant to this Agreement (collectively, the "Conveyed Property").

Section 2.2.True Sales.

(a)It is the express intention of Buyer and Seller that each transfer of Conveyed Property hereunder constitutes a true sale by Seller to Buyer that is absolute and irrevocable and that provides Buyer with the full benefits of ownership of the Conveyed Property, and not a pledge of such Conveyed Property by Seller to Buyer to secure a debt or other obligation of Seller. Consequently, the sale of each Conveyed Property shall be reflected as a sale on Seller's business records and financial statements. However, in the event that, notwithstanding the intent of the parties, any Conveyed Property is deemed not to have been transferred to Buyer, then (i) this Agreement also shall be deemed to be and hereby is a security agreement within the meaning of the UCC, and (ii) the conveyance by Seller provided for in this Agreement shall be deemed to be a grant by Seller to Buyer of, and Seller hereby grants to Buyer, a security interest in and to all of Seller's right, title and interest in, to and under the Conveyed Property, whether now or hereafter existing or created, to secure (1) the rights of Buyer hereunder, and (2) without limiting the foregoing, the payment and performance of Seller's obligations to Buyer.

(b)Buyer and Seller shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Conveyed Property, such security interest would be deemed to be a perfected security interest of first priority in favor of Buyer under applicable law and will be maintained as such throughout the term of this Agreement. Seller hereby authorizes Buyer or its designee to file one or more UCC financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Conveyed Property of Seller, in each case whether now existing or hereafter generated by Seller. Unless otherwise agreed to by the parties, Seller agrees to pay all reasonable out-of-pocket costs and expenses of Buyer, excluding fees and expenses of counsel, in connection with the perfection as against third parties of Buyer's right, title and interest in and to the Conveyed Property and the enforcement of any obligations of Seller under this Agreement.

Section 2.3.Examination of Receivables Files. Seller shall, prior to the date that is more than two (2) Business Days prior to the Closing Date, at Buyer's option, make the related Receivables Files available to Buyer or its designee(s), as applicable, for examination during normal business hours at Seller's offices or other location as agreed by Buyer and Seller. Buyer shall not be required to conduct, or have conducted on its behalf, any such examination. The fact that Buyer or its designee(s) have conducted or have determined not to conduct any partial or complete examination of the Receivables Files shall not affect (i) Buyer's (or any of its assignees') rights to demand repurchase in accordance with this Agreement, (ii) any of Seller's representations, warranties, covenants, or promises herein, or (iii) any other relief or remedy provided for in this Agreement.

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ARTICLE III

PURCHASE PRICE

Section 3.1.Purchase Price. The Purchase Price for each Receivable listed on the Receivables Schedule (together with the Related Security) shall be the percentage of par as stated in the Receivables Schedule, multiplied by the Unpaid Principal Balance as of the Cut-Off Date with respect to such Receivable. On the Closing Date, Buyer shall pay to Seller the Purchase Price as set forth in Section 10.3. Buyer shall own and be entitled to receive with respect to each purchased Receivable all Collections (whether or not received or recovered) from and after the Cut-Off Date, including, without limitation, (1) all principal due and owing on the Receivables, (2) all Accrued Interest on the Receivables; and (3) all other charges or payments due and owing and collections on the Receivables, in each case from and after the Cut-Off Date.

Section 3.2.Seller's Recourse Obligations.

(a)Seller understands and agrees that Buyer will not purchase Receivables hereunder unless Seller provides the recourse set forth herein.

(b)As an inducement to Buyer to purchase the Receivables hereunder, Seller hereby irrevocably and unconditionally agrees to repurchase any Receivable which meets or met the conditions for repurchase set forth below during the Recourse Period (as hereinafter defined).

(c)With respect to a particular Receivable and related Contract sold hereunder, the Recourse Period shall begin on the Closing Date and shall end when the Obligor has indefeasibly paid Buyer in full, in the Obligor's own funds, all Scheduled Payment specified for such Contract's Recourse Period set forth on the Receivables Schedule.

(d)Conditions for Repurchase. A Contract and related Receivable shall be subject to repurchase by Seller in the event the Obligor(s) thereunder, during the Recourse Period but not thereafter,

(i)Fail(s) to make a Schedule Payment, directly to Buyer, on or before the date same is due, in Obligor's own funds;

(ii)Fail(s) to maintain full-coverage insurance on the Financed Vehicle;

(iii)Causes or permits, directly or indirectly and for any reason or no reason, the repossession, taking, impoundment, replevin or sequestration of the Financed Vehicle, whether voluntarily or involuntarily, and whether by Seller, Buyer, or any other Person;

(iv)Causes or permits, directly or indirectly and for any reason or no reason, physical damage to the Financed Vehicle such that the related insurance company declares or determines the Financed Vehicle a "total loss" or similar designation, without regard to when such declaration or determination is made; or,

(v)Breaches any term of the Contract in any respect;

(vi)First payment default.

(e)Timing of Repurchase; Notice to Seller. At any time, Seller shall pay to Buyer the Repurchase Price with respect to a particular Receivable, in immediately available funds, within five (5)

6

 

days of Buyer's transmission to Seller of notice that such Receivable meets or met, during the Recourse Period, the conditions for repurchase set forth in Section 3.2(d).

Section 3.3.Deposit Amount / Seller's Right to Set-Off. The Deposit Amount shall be equal to

$n/a. , which amount shall be retained by Buyer out of the Purchase Price to ensure that (i) the
Seller and/or the Current Servicer transmit to Buyer all payments received by either such party after the Cut-Off Date with respect to Conveyed Property as set forth in Section 3.4, and (ii) Seller timely pays Buyer the Repurchase Price for any Receivable required to be repurchased pursuant to Sections 3.2 and 5A. If Seller or Current Servicer, as applicable, shall fail to promptly remit such payments to Buyer, Buyer shall

be permitted to deduct the full amount of such payments from the Deposit Amount. On n/a ,
Buyer shall remit to Seller, via wire transfer to such account as Seller shall direct, the Deposit Amount less amounts deducted in accordance herewith, and shall provide Seller a detailed accounting of the amounts so deducted.

Section 3.4. Payments Received by Seller On or After the Cut-Off Date. Buyer shall provide prompt written notice ("Notice") to Seller and the Current Servicer of any payments that it believes the Seller or the Current Servicer has received and which the Buyer is entitled to under the terms hereof, and Seller and/or Current Servicer agree to give Buyer Notice of any payments, with respect to the Conveyed Property, that it receives on or after the Cut-Off Date. Seller agrees to remit (or cause the Current Servicer to remit), within two Business Days of receipt of any Notice it receives from Buyer, or two days of the date of any such notice it gives to Buyer, any such payments that Seller has received to which Buyer is entitled hereunder. In the event that Seller or Current Servicer disputes that it has ever received a payment that is identified in a Notice, it shall give prompt written notice to Buyer that it has not, in fact, received any such payment. Upon receipt of such notice from Seller or Current Servicer, Buyer shall be obligated to submit written evidence to Seller and Current Servicer, which evidence must be reasonably satisfactory to Seller and Current Servicer, that such payment has, in fact, been received by Seller or Current Servicer. Upon written confirmation of Seller and Current Servicer of their receipt of such evidence (which confirmation will be sent to Buyer), Seller and Current Servicer, as applicable, shall be obligated to remit the full amount of such payment to Buyer.

ARTICLE IV
TRANSFER

Section 4.1.Transfer Documentation; Notice.

(a)Notifying the Obligors of Buyer's ownership and servicing of the Receivables and related Contracts by the mailing of a letter, in the form attached as Exhibit D hereto, within five (5) Business Days of the Closing Date.

(b)Notifying the Obligors of Buyer's ownership and servicing of the Contracts during any in-person, telephonic, electronic, or other interactions with Obligors.

(c)With respect to a Financed Vehicle, providing to Buyer any documentation necessary to evidence clear chain of title to Seller. Seller has the obligation to transfer or change the lien holder of record on any Certificate of Title with respect to a Financed Vehicle, and any transfer or change of record lien holder shall be made at Seller's expense. Transfer or change of lien holder must take place within 30 days following the recourse period for the Financed Vehicle.

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ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER

Section 5.1.General Representations and Warranties. Seller hereby represents and warrants to Buyer, as of the Closing Date, as follows:

(a)Organization and Good Standing. Seller is an entity duly organized, validly existing and in good standing under the laws of its state of organization, and has the corporate power and authority and all government licenses, authorizations, consents and approvals required in each jurisdiction in which its business is now conducted, to own its assets and to transact the business in which it is currently engaged. Seller is duly qualified to do business as a foreign entity where required and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would adversely affect Buyer's enforcement of the Contracts.

(b)Authorization; Binding Obligations. Seller has the power and authority to make, execute, deliver, and perform this Agreement and all of the transactions contemplated under this Agreement and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies.

(c)No Violations. The execution, delivery, and performance of this Agreement by Seller will not violate any provision of its articles of incorporation, bylaws or standing resolutions, any existing law or regulation or any order or decree of any court, or constitute a material breach of any mortgage, indenture, contract, or other agreement to which Seller is a party or by which Seller may be bound.

(d)Litigation. No litigation or administrative proceeding of or before any court, tribunal, or governmental body is currently pending, or to the knowledge of Seller threatened, against Seller or any of its properties or with respect to this Agreement which, if adversely determined, would have a Material Adverse Effect on the transactions contemplated by this Agreement.

(e)Licensing. Seller has obtained and currently holds all government licenses, authorizations, consents and approvals required to (i) sell the Financed Vehicles, (2) originate and purchase the Receivables, and (iii) service and collect the Receivables, in each jurisdiction in which Seller sells Financed Vehicles, originates or purchases Receivables, and services and collects Receivables.

(f)Taxes. Seller has filed or caused to be filed all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be due on such returns, except any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings and (ii) with respect to which no adverse claim has been imposed upon any Receivables.

(g)Solvency. As of the date of this Agreement, and after giving effect to the transactions contemplated by this Agreement, Seller will not (1) be insolvent (either because its financial condition is such that the sum of its debts is greater than the fair market value of its assets or because the fair saleable value of its assets is less than the amount required to pay its probable liabilities on its existing debts as they mature); (2) have unreasonably small capital with which to engage in its business; or (3) have incurred debts beyond its ability to pay as they become due.

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Section 5.2. Representations and Warranties With Respect to Receivables. For each Receivable sold by Seller and purchased by Buyer hereunder Seller represents and warrants to Buyer that, as of the Closing Date:

(a)Lawful Assignment. The Receivable has not been originated in and is not subject to the laws of any jurisdiction under which the transfer of such Receivable to Buyer pursuant to this Agreement is unlawful, void, or voidable or renders the related Contract unenforceable. Seller has not entered into any agreement with the related Obligor that prohibits, restricts, or conditions the assignment, pledge, or sale of any portion of such Receivable.

(b)Ownership; Origination. Seller originated or purchased the Receivable for fair value and in accordance with prudent and reasonable origination policies and procedures, and took possession thereof in the ordinary course of its business, and such Receivable was not at the time of Seller's origination or purchase thereof subject to a security interest. Seller has not sold, assigned or pledged the Receivable to any Person and, prior to the transfer of the Receivable by Seller to Buyer, has good and marketable title thereto free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest (except for any of the foregoing released prior to or in connection with the sale and transfer in accordance herewith) and was the sole owner thereof with full right to transfer the Receivable to Buyer. Seller acknowledges that Buyer has no obligation to any dealer with respect to dealer participations and shall indemnify and hold Buyer and its assigns harmless with respect to same.

(c)Certificate of Title. Seller has obtained a Certificate of Title (or the functional equivalent thereof for jurisdictions that do not deliver a Certificate of Title to secured lenders) for the Financed Vehicle.

(d)No Brand on Certificate of Title. The Certificate of Title for the Financed Vehicle does not bear any brand, notation, or word(s) indicating prior vehicle history, damage, or chronic problem, including without limitation words such as "damaged", "totaled", "salvaged", "rebuilt", "warranty returned", "reconditioned", "junked", or any brand, notation, or word(s) of similar meaning or import.

(e)Marking Records. On or before the Closing Date, the Seller will have caused the portions of its electronic ledger relating to Conveyed Property to be clearly and unambiguously marked to indicate that such Contracts have been sold to Buyer.

(f)Receivables File. With respect to such Receivable, the related Receivables File contains, in all material respects, the documents required to be contained therein pursuant to this Agreement.

(g)No Waivers or Extension. With respect to such Receivable, the terms of the related Contract have not been waived, altered, or modified in any material respect, except by instruments or documents identified in the Receivables File or in the Servicing File.

(h)Contract in Force. With respect to such Receivable, the related Contract has not been satisfied or subordinated in whole or in part or rescinded, and the Financed Vehicle securing the Contract has not been released from the lien of the Contract in whole or in part.

(i)Selection Procedures. No selection procedures believed to be adverse to Buyer have been utilized in selecting the Receivables sold hereunder from among those Receivables that meet the criteria contained herein. Seller has not engaged in any activity or committed any action intended, or the natural consequence of which is, to give any Receivable the appearance of compliance with this Agreement and these representations and warranties which such Receivable, absent such activity or action by Seller, would otherwise not comply with this Agreement or these representations or warranties.

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(j )Compliance with Law. The Contract and the sale of the related motor vehicle complied at the time it was originated and upon the execution of this Agreement, and complies at the time of its sale to Buyer hereunder, in all material respects with all applicable federal, state, and local laws, regulations, and ordinances, including but not limited to the Fair Credit Reporting Act, the Equal Credit Opportunity Act and Regulation B, the Truth-in-Lending Act and Regulation Z, and FTC rules and regulations.

(k)Binding Obligation. Such Receivable represents the genuine, legal, valid, and binding payment obligation of the Obligor, enforceable by the holder thereof in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

(¹)No Defenses. No right of rescission, setoff, counterclaim or any other defense (including defenses arising out of violations of usury laws) has been asserted or threatened with respect to such Receivable.

(m)No Default. Except for payment delinquencies continuing for a period of not more than sixty (60) days, no default, breach, violation, or event permitting acceleration under the terms of such Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, breach, violation, or event permitting acceleration under the terms of such Receivable has arisen. Such Receivable is not a write-off.

(n)Down Payment. The Obligor on such Receivable has fully paid the down payment, with his/her own funds, as set forth in the related Contract.

(o)Collections. Seller does not know of any fact that indicates the uncollectability by Buyer of any Contract, and no condition exists that materially or adversely affects the value of the Receivable or jeopardizes any security therefor.

(p)No Repossession. The Financed Vehicle securing the Receivable shall have not been foreclosed upon or repossessed by Seller or any other party.

(q)The information contained in the Receivables Schedule, as set forth in Section 10.2(a) and Exhibit B, including without limitation the identification of Current Performing Contracts, Delinquent Performing Contracts, Non-Performing Contracts, and Performing Contracts, is true and correct as of the Cut-Off Date.

(r)The information and data contained in the Electronic Data File, as set forth in Section 10.2(b) and Exhibit C, is true and correct as of the Cut-Off Date.

(s)The Receivable represents a consumer obligation of an Obligor, purchased for personal, family, or household use, and not a commercial obligation of an Obligor.

(t)The Obligor of the Receivable had obtained or agreed to obtain full-coverage physical damage and general liability insurance covering the Financed Vehicle.

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Section 5.3.Covenants of the Seller.

(a)Affirmative Covenants. From the Closing Date until the first day following the date on which all Receivables purchased hereunder are indefeasibly paid in full to Buyer, Seller agrees and covenants that it shall:

(i)Maintain all necessary licenses, permits and other approvals, in all jurisdictions where the failure to do so would have a Material Adverse Effect.

(ii)Keep and maintain all of its properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted).

(iii)Take all actions necessary to preserve and keep in full force and effect its existence, maintain the continuous operation of its business and comply with each requirement of law in all material respects.

(iv)Use commercially reasonable efforts to maintain systems, personnel and facilities, including back-up and disaster recovery capability, that will enable it to perform its obligations under this Agreement.

(v)File or cause to be filed all federal, state and local tax returns that are required to be filed by it and pay or cause to be paid all taxes shown to be due and payable on taxes or assessments (except only such taxes or assessments the validity of which are being contested in good faith by appropriate proceedings).

(b)Negative Covenants. From the Closing Date until the first day following the date on which all Receivables purchased hereunder have been indefeasibly paid in full to Buyer, Seller agrees that is shall not do any of the following:

(i)Assert any claims or set-off rights against any Scheduled Payments.

(ii)In the fulfillment of Seller's obligations under this Agreement, engage in, or allow or permit any person under its direct control or direction to engage in, any fraudulent activity or other activity which would constitute a violation of a requirement of law in any material respect.

(iii)Solicit, encourage, or otherwise suggest an Obligor in any manner breach any term of the Contract related to a Receivable.

(iv)Sell, lease, or otherwise transfer or deliver to an Obligor any motor vehicle, without regard to the means or method of such transfer or delivery, or purchase or originate any receivable related to the purchase of any motor vehicle by such Obligor; provided, that with respect to a particular Obligor, such covenant shall expire and be of no further force or effect upon the indefeasible payment in full to Buyer of all amounts due and owing from such Obligor.

(v)Except for fees imposed on Obligors with respect to payment, late payment or nonpayment as permitted in the related Contract, accept or receive or agree to accept or receive any rebate, refund, commission, fee, kickback or rakeoff, whether cash or otherwise and whether paid by or originating with an Obligor or any other party (including, but not limited to, brokers and agents), as a result of or in any way related to any Receivable or in connection with the sale, disposition, transfer or servicing of any Receivable.

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Section 5.4. Remedy for Breach of Representation, Warranty, or Covenant; Repurchase.

(a)The representations, warranties, covenants, and promises of Seller set forth herein shall survive the sale of Receivables to Buyer and shall inure to the benefit of Buyer and its successors and assigns, notwithstanding any restrictive or qualified endorsement on any Contract.

(i)In the event of a breach by Seller of any material representation, warranty, covenant, or promise in this Agreement with respect to any Receivable, the party discovering such breach will provide written notice to the other party. Within ten (10) calendar days of notice to Seller of any such breach, Seller shall repurchase such Receivable and the Related Security by paying Buyer the Repurchase Price in good funds.

(ii)In the event Seller is required to repurchase a Receivable, Buyer shall deliver to Seller the related Contract File and shall assign to Seller all of Buyer's right, title, and interest in and to the related Conveyed Property, free and clear of any and all claims, liens, and encumbrances, except for those which existed at the time of Buyer's purchase thereof from Seller. Buyer shall accomplish such delivery and assignment within a reasonable period of time following Buyer's receipt in full of the Repurchase Price from Seller.

(b)The "Repurchase Price" of a Receivable shall be the percentage of par as stated in the Receivables Schedule, multiplied by the Unpaid Principal Balance as of the date the Repurchase Price is paid to Buyer with respect to such Receivable, plus any accrued unpaid interest, plus any accrued unpaid fees.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

Section 6.1.Buyer Representations and Warranties. Buyer hereby represents and warrants to Seller, as of the Closing Date, as follows:

(a)Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged. Buyer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect on the Buyer's ability to perform its obligations hereunder.

(b)Authorization: Binding Obligations. Buyer has the power and authority to make, execute, deliver, and perform this Agreement and all of its transactions contemplated under this Agreement and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies.

(c)No Consent Required. Buyer is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau, or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement.

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(d)No Violations. The execution, delivery, and performance of this Agreement by Buyer will not violate any provision of any existing law or regulation or any order or decree of any court or the Certificate of Incorporation or Bylaws of Buyer, or constitute a material breach of any mortgage, indenture, contract, or other agreement to which Buyer is a party or by which Buyer may be bound.

(e)Litigation. No litigation or administrative proceeding of or before any court, tribunal, or governmental body is currently pending, or to the knowledge of Buyer threatened, against Buyer or any of its properties or with respect to this Agreement which, if adversely determined, would in the opinion of Buyer have a Material Adverse Effect on the transactions contemplated by this Agreement.

(f)Approvals, Licensing, Etc. All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights, and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency, that are necessary or advisable in connection with the execution and delivery by Buyer of this Agreement and other documents have been duly taken, given, or obtained, as the case may be, are in full force and effect to be entered into in connection herewith, are not subject to any pending proceedings or appeals (administrative, judicial, or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and other documents to be entered into in connection herewith on the part of Buyer and the performance by Buyer of its obligations hereunder and thereunder.

ARTICLE VII
SERVICING

Section 7.1.Transfer and Assignment. Effective as of the Servicing Transfer Date, (a) Seller shall transfer, delegate, and assign all of its rights, duties and obligations regarding the servicing of the Conveyed Property, including all rights to receive payment, to Buyer and (b) Buyer shall assume all of the Seller's such duties and obligations and accept all of Seller's such rights. After the execution of this Agreement and prior to the Servicing Transfer Date, Seller or the Current Servicer shall service the Contracts that will be, after the Closing, Conveyed Property in accordance with its current customary practices. Seller shall forward all payments received with respect to Conveyed Property after the Cutoff Date to the Buyer, within one business day after Buyer's receipt of such payment, via overnight delivery or wire with faxed listing of account(s) for credit.

ARTICLE VIII

FURTHER ASSURANCES

Section 8.1.Further Assurances.

(a)In order to protect and secure Buyer's rights hereunder, Seller, upon the request of and at the expense of the Buyer or its assigns, shall perform or cause to be done and performed, every reasonable act necessary or advisable to put Buyer in position to enforce the payment of the Contracts and to carry out the intent of this Agreement, including the execution of documents such as applications for certificates of title and Uniform Commercial Code financing statements assigning Seller's security interests in the motor vehicles securing the Contracts, and the execution of, and if necessary, the recordation of, additional documents, including separate endorsements and assignments, upon request of Buyer.

(b)In order to protect and secure Buyer's rights hereunder, Seller, within one (1) business day of its receipt of any correspondence, notification, notice, or similar document related to or concerning any Contract purchased by the Buyer hereunder, shall forward same to Buyer.

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Section 8.2. Returned Payments.

(a)Buyer agrees to pay to Seller, within two (2) business days after notice from Seller, amounts equal to any Obligor checks or other payments originally tendered to Seller by Obligor(s) and returned unpaid for insufficient funds or other reasons after the Cut-Off Date, and Seller shall provide to Buyer copies of documents evidencing the returned checks or payments.

(b)In the event Seller repurchases a Receivable pursuant to Section 3.2 or 5A, Seller agrees to pay to Buyer, within two (2) business days after notice from Buyer, amounts equal to any Obligor checks or other payments tendered to Buyer with respect to such contract prior to such repurchase and returned unpaid for insufficient funds or other reasons, and Buyer shall provide to Seller copies of documents evidencing the returned checks or payments.

ARTICLE IX

BROKERAGE AND OTHER THIRD-PARTY FEES

Section 9.1.Brokers. Buyer and Seller each represent and warrant to the other that it has not dealt with any Person entitled to a brokerage fee or commission in connection with this Agreement.

ARTICLE X

DELIVERABLES; CLOSING

Section 10.1. Closing Location. The Closing hereunder will take place by fax or email transmission with originals forwarded by overnight courier for next business day delivery.

Section 10.2. Seller Deliverables.

(a)Receivables Schedule. Seller shall deliver to Buyer the Receivables Schedule setting forth the Receivables to be sold to Buyer by 12:00 noon (eastern standard time) one (1) Business Day prior to the Closing Date (unless otherwise agreed to by the parties). The Receivables Schedule shall be substantially in the form attached hereto as Exhibit B, shall be signed by an Authorized Officer of Seller, and shall contain such information as set forth therein and below. SELLER, BY ACCEPTING THE PURCHASE PRICE PAID WITH RESPECT TO THE CONVEYED PROPERTY, SHALL BE DEEMED TO HAVE CERTIFIED, REPRESENTED AND WARRANTED TO BUYER, WITH RESPECT TO THE RECEIVABLES AND RELATED SECURITY TO BE SOLD BY IT ON SUCH PURCHASE DATE, THAT ALL INFORMATION AND DATA CONTAINED IN THE RECEIVABLES SCHEDULE IS CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE, WITH THE SAME EFFECT AS THOUGH MADE ON AND AS OF SUCH DAY.

(i)account number for each Contract;

(ii)name of each Obligor party to a Contract;

(iii)year, make, model, and vehicle identification number of each motor vehicle which is security for a Contract;

(iv)Unpaid Principal Balance on each Contract as of the Cut-Off Date;

(v)Purchase Price on each Contract calculated as of the Cut-Off Date;

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(b)Contents of Electronic Data File. Seller shall deliver to Buyer the Electronic Data File, or information and data sufficient for the creation of same, including all information and data set forth in Exhibit C, with respect to the Receivables sold to Buyer by 12:00 noon (eastern standard time) two (2) Business Days prior to the Closing Date (unless otherwise agreed to by the parties). Seller understands and agrees that Buyer intends to and shall rely upon Seller's provision of such information and data, whether created by Seller or not, in loading or boarding the Conveyed Property onto Buyer's account servicing system(s). SELLER, BY ACCEPTING THE PURCHASE PRICE PAID WITH RESPECT TO THE CONVEYED PROPERTY, SHALL BE DEEMED TO HAVE CERTIFIED, REPRESENTED AND WARRANTED TO BUYER, WITH RESPECT TO THE RECEIVABLES AND RELATED SECURITY TO BE SOLD BY IT ON SUCH PURCHASE DATE, THAT ALL INFORMATION AND DATA CONTAINED IN THE ELECTRONIC DATA FILE IS CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE, WITH THE SAME EFFECT AS THOUGH MADE ON AND AS OF SUCH DAY.

(c)Bill of Sale. Seller, in conjunction with the payment of the Purchase Price, shall execute and deliver to Buyer a Bill of Sale with respect to the related Conveyed Property substantially in the form attached hereto as Exhibit A.

(d)Receivables File. Seller, in conjunction with the payment of the Purchase Price, shall forward, by overnight courier for next business-day delivery, or in person, to Buyer the following with respect to each Receivable:

(i)The original Contract. If the original contract is unavailable, Seller must provide the electronic version stamped on each page of the contract "True and Correct Copy of the Original" and signed by an officer verifying such with a notary.

(ii)Obligor credit files including the original application, credit investigation and such other credit information contained therein, or copies of same if the original of such document is not available.

(iii)The title file, which shall include the Certificate of Title (to the extent the state of origin has such Certificate of Title or notice of recorded lien on Seller's name) for the Financed Vehicle.

(iv)The Servicing File, including Obligor payment and collection records.

(v)Obligor insurance files, including without limitation property insurance insuring the Financed Vehicle, gap insurance, warranties, and such other insurance information contained therein, or copies of same if the original of such document is not available.

(vi)The Bill of Sale with respect to the Financed Vehicle.

(vii)Any other documents related to the Financed Vehicle or the Obligor that Buyer may reasonably require.

(viii)REMEDY FOR FAILURE TO DELIVER RECEIVABLES FILE. In the event Seller fails to deliver, with respect to any particular Receivable, the Receivables File to the reasonable satisfaction of Buyer and in accordance with Section 10.2(d), Buyer may at its sole option require Seller to immediately repurchase such Receivable. If Buyer requires Seller to immediately repurchase such Receivable, Seller shall repurchase such Receivable and the Related Security by paying to Buyer the Repurchase Price in good funds within five (5) Business Days

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following Buyer's notice hereunder. In the event Seller is required to repurchase the Contract hereunder, Buyer shall deliver to Seller, upon payment by the Seller of the Repurchase Price, the related Contract File and shall assign to Seller all of Buyer's right, title, and interest in and to the related Conveyed Property, free and clear of any and all claims, liens, and encumbrances, except for those which existed at the time of Buyer's purchase thereof from Seller.

Section 10.3. Payment of Purchase Price. Subject to Seller's complying on the Closing Date in all material respects with the terms and conditions of this Agreement, Buyer shall pay seventy five percent (75%) of the Purchase Price to Seller on the Closing Date, by wire transfer, in immediately available funds, to such account(s) as directed by Seller. Buyer shall place the remaining twenty five percent (25%) in escrow to be held for thirty (30) days which shall be further reduced by the amount due under the repurchase provisions in section 3.2, as applicable.

ARTICLE XI
NOTICES

Section 11.1. Notices Any notice, demand or communication which either party desires or is required to give to the other party in connection with the Agreement must be in writing and must be either served personally or sent by fax and a reliable tracking method, addressed to the other party, as follows, or to such other fax number and/or address as either party hereafter specifies in accordance with this Article XI:

IF TO BUYER:

Nicholas Financial, Inc.

2454 McMullen Booth Road, Building C, Clearwater, FL 33759

Fax (727) 914-2411

Attn: Doug Marohn

Title: President and CEO

IF TO SELLER:

Platinum Auto Finance of Tampa Bay, LLC
25 N. Main Avenue Clearwater, FL 33765
Attn: Legal Department

Fax (727) 216-6262

ARTICLE XII

MISCELLANEOUS

Section 12.1. Termination. Either party may terminate this Agreement prior to the delivery by Seller to Buyer of the Receivables Schedule.

Section 12.2. Mandatory Delivery. The sale and delivery of each Contract on the Closing Date is mandatory from and after the date of the delivery of the Receivables Schedule, it being specifically understood and agreed that each Contract is unique and identifiable on the date thereof and that an award of money damages would be insufficient to compensate Buyer for the losses and damages incurred by Buyer (including damages to prospective purchasers of the Contracts) in the event of Seller's failure to deliver each of the related Contracts on the Closing Date. Seller hereby agrees that it holds such Contracts in custody for Buyer subject to Buyer's (a) right to reject any Contract under the terms of this Agreement, and (b) obligation to pay the related Purchase Price. All rights and remedies of Buyer under this Agreement are distinct from, and cumulative with, any other rights or remedies under this Agreement or afforded by

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law or equity and all such rights and remedies may be exercised concurrently, independently or successively.

Section 12.3. Entire Agreement. This Agreement together with all exhibits and schedules hereto constitutes the entire agreement between the parties hereto and supersedes any and all representations, promises and statements, oral and written, made in connection with the subject matter of this Agreement and the negotiation hereof, and no such representation, promise or statement not written herein will be binding on the parties. This Agreement may not be varied or altered or its provisions waived except by an agreement in writing executed by duly authorized agents of both parties hereto. This Agreement will be binding upon and inure to the benefit of the parties hereto and each of their respective successors and assigns.

Section 12.4. Governing Law; Jurisdiction and Venue.

(a)This Agreement will be interpreted, construed, and enforced in accordance with the laws of the State of Florida without reference to that state's laws or rules pertaining to conflict of laws.

(b)EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY• (i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE MIDDLE DISTRICT OF FLORIDA, AND APPELLATE COURTS FROM ANY THEREOF, OR THE COURTS OF THE STATE OF FLORIDA, WITHIN THE COUNTY OF PINELLAS, IN THE EVENT THE FEDERAL COURT LACKS OR DECLINES JURISDICTION; (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN ARTICLE XI OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED; AND (iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

Section 12.5. Severabilitv. Any provision of this Agreement, which is prohibited or unenforceable in any jurisdiction, will, as to such jurisdiction, be ineffective to the extent of each prohibition or unenforceability without invalidating the remaining provision hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provisions in any other jurisdiction.

Section 12.6. Captions. Captions are for convenience of reference only and are not to be considered as defining or limiting in any way the scope of intent of the provision hereof.

Section 12.7. Waivers; Cumulative Remedies. The waiver of any breach, term, provision or condition of this Agreement may not be construed to be a subsequent waiver of any other breach, term, provisions or condition. All remedies afforded by this Agreement for a breach hereof will be cumulative, that are, in addition to all other remedies provided for herein or at law or in equity.

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Section 12.8. Construction. Unless otherwise specifically provided, references in this Agreement to Sections and Exhibits are to Sections and Exhibits of or to this Agreement. All Exhibits hereto are incorporated herein by the references thereto in this Agreement. The designations of the parties to this Agreement and any pronouns referring to any party, wherever used, must be so construed as to include the plural as well as the singular number, and whenever the context permits, any gender includes all other genders and the singular number includes the plural. As used in this Agreement, the words "includes" and "including" are not limiting, and the words "hereof" and "hereunder" and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.

Section 12.9. Counterparts. This Agreement may be executed in two or more counterparts and by different parties on separate counterparts of duplicate originals, each of which must be deemed an original, but all of which together will constitute but one and the same instrument.

Section 12.10. Assignment. Neither Seller nor Buyer may assign any of its rights or obligations hereunder without the prior written consent of the other party.

Section 12.11. Dispute Resolution.

(a)In the event of any claim, suit, or controversy (collectively, a "claim") involving any matter governed by or related to this Agreement, the parties shall first use their diligent and good faith efforts to resolve the dispute by exchanging relevant information and negotiating in good faith, including not less than one conference call.

(b)Attorneys' Fees; Costs of Collection. In the event of any claim involving or arising from Seller's breach of any material representation, warranty, term, or condition of this Agreement, or from Seller's failure to perform any obligation to Buyer arising hereunder or otherwise, Seller agrees to pay reasonable losses or expenses incurred by Buyer as a result of such breach or failure to perform, including attorneys' fees, and any expenses paid or incurred by Buyer in connection with the collection of any amount due from Seller to Buyer hereunder.

Section 12.12. Confidentiality. Each of Buyer and Seller will keep confidential and will not divulge to any party, without the other party's prior written consent, the terms of this Agreement; provided, that any party may make such disclosure to its affiliates, attorneys, agents and accountants, the rating agencies, investors and potential investors and in any report or as otherwise required by law or by its regulators.

Section 12.13. No Partnership or Joint Venture; No Origination. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, or joint venture. Notwithstanding anything herein to the contrary, in no event shall the parties hereto, or any third party deem or construe Buyer as the originator of the Conveyed Property.

Section 12.14. Indemnification. Seller shall indemnify and hold Buyer, its parents, affiliates, subsidiaries, shareholders, officers, directors, employees, attorneys and agents (each, a "Buyer Indemnified Party") harmless from and against any and all Claims, actions, and proceedings asserted or brought by a third party, and from and against any and all costs, expenses, damages, and liabilities incurred or suffered by any Buyer Indemnified Party (including without limitation attorneys' fees, consultant fees, in-house counsel fees, costs or expenses) resulting from, attributable to, or arising out of (1) the breach or inaccuracy of any representation or warranty of Seller in this Agreement, (2) Seller's breach of any covenant, obligation, promise, agreement or term in this Agreement, or (3) Seller's breach of any requirement of law in the performance of its obligations under this Agreement, including without limitation in the origination and/or servicing of any Receivable; provided, however, that in no event shall

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Seller be obligated for any claims, expenses, losses, or damages resulting from the willful misconduct of Buyer or its employees.

Section 12.15. Inspection. From the Closing Date until the first day following the date on which all Receivables purchased hereunder are indefeasibly paid in full to Buyer, Seller shall permit, on not less than two (2) days prior written notice, any person who is reasonably designated by Buyer to visit and inspect Seller's records relating to Receivables and will cause its personnel to assist in any examination of such records by the Buyer or its authorized agents. The examination referred to in this Section 12.15 will be conducted in a manner which does not unreasonably interfere with the Seller's normal operations or customer or employee relations.

Section 12.16. Timely Payment of Amounts Due. Any payment or money due from Seller to Buyer hereunder which is not paid within the time specified, or if no time is specified, within ten (10) days after demand for payment is made, shall accrued interest at the rate of one and one-half percent (1¹A%) per month or the highest rate allowed by applicable law, whichever is higher.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

NICHOLAS FINANCIAL, INC. as Buyer

By:  /s/ Doug Marohn

Name:Doug Marohn

Title:      President and CEO

PLATINUM AUTO FINANCE OF TAMPA BAY, LLC as Seller

By: /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:      CEO

 

EXHIBIT A
BILL OF SALE

Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company, ("Seller"), pursuant to the Bulk Receivables Purchase and Sale Agreement dated as of even date hereof (the "Agreement"), by and between Seller and Nicholas Financial, Inc., a Florida Corporation ("Buyer"), for good and valuable consideration paid by Buyer, the receipt and sufficiency of which are hereby acknowledged, does hereby sell, assign, transfer, set over and convey, subject to the terms of the Agreement, the Conveyed Property, unto Buyer, its successors and assigns, for its and their own use forever.

Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Agreement.

This Bill of Sale and the covenants and agreements contained herein shall be binding upon Seller, its successors and assigns, and shall inure to the benefit of Buyer, its successors and assigns.

THIS BILL OF SALE IS MADE WITHOUT ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT.

IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed in its name by a duly authorized representative this 30th day of January, 2020.

Platinum Auto Finance of Tampa Bay, LLC as Seller

  By:  /s/ Michael Kaplanis

  Name:Michael Kaplanis

  Title:CEO

A-1

 

Exhibit 10.22.2

EXHIBIT B

RECEIVABLES SCHEDULE

Schedule 1: 2 Page[s] Attached Hereto With List of Contracts

Cut-Off Date:January 28, 2020

Buyer:Nicholas Financial, Inc.

Seller:Platinum Auto Finance of Tampa Bay, LLC

Closing Date:January 30, 2020

Purchase Price Percentage of Par:0.95% Percent

Recourse Period: For Contracts with monthly Scheduled Payments: 2 payments For Contracts with semi-monthly Scheduled Payments: 4 payments

TOTAL PURCHASE PRICE FOR ALL CONTRACTS ON THIS SCHEDULE:

$848,664.05

THIS SCHEDULE OF CONTRACTS IS ISSUED PURSUANT TO AND IS SUBJECT TO ALL THE TERMS AND CONDITIONS OF THE RECEIVABLES PURCHASE AND SALE AGREEMENT DATED January 30, 2020, BETWEEN BUYER AND SELLER.

SELLER HEREBY CERTIFIES, REPRESENTS AND WARRANTS TO BUYER THAT THE INFORMATION ATTACHED HERETO AS SCHEDULE 1 IS, TO THE BEST OF SELLER'S KNOWLEDGE, CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE.

Platinum Auto Finance of Tampa Bay, LLC as Seller

By:  /s/ Michael Kaplanis

By::  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:   CEO

B-1

Exhibit 10.22.2

Schedule 1 to Exhibit B

Account 150343 152244 149677 152198 151951 149408 145448 148384 145707 151940 148845 152558 126818

50935 151490 132130 148788

50890

152569

51992 150534 134660 148418

54041 150220 137359 137382 138462 146135 125705 148395 148407

55660 137438 136910 150927 149644 132523 129316 140083 149846 149026

 

145752

148621

130903

62848
150770
151030
135638
151670
152200
152424

6216

152570

148654

61106

62781
138114
150040
133580
138686
139058
152356
149352
148632
149891
138260
137966
141433

 

EXHIBIT C

CONTENTS OF ELECTRONIC DATA FILE

[Values marked with asterisk * are required]

DESCRIPTION

*ACCOUNT NUMBER IN SELLER SERVICING SYSTEM

*OBLIGOR FIRST NAME

*OBLIGOR LAST NAME

*OBLIGOR CURRENT STREET ADDRESS

OBLIGOR EMAIL ADDRESS

*OBLIGOR SOCIAL SECURITY NUMBER

OBLIGOR DATE OF BIRTH IN MM/DD/YYYY FORMAT

*OBLIGOR CURRENT HOME PHONE NUMBER

OBLIGOR CURRENT MOBILE PHONE NUMBER

OBLIGOR CURRENT WORK PHONE NUMBER

OBLIGOR DRIVER'S LICENSE NUMBER

OBLIGOR CURRENT EMPLOYER

*OBLIGOR CURRENT GROSS MONTHLY INCOME

OBLIGOR CURRENT EMPLOYMENT IN YEARS AND MONTHS

OBLIGOR CURRENT RESIDENCE STATUS: OWN, RENT, OTHER

OBLIGOR CURRENT RESIDENCE IN YEARS AND MONTHS

OBLIGOR CURRENT CREDIT SCORE

*CONTRACT INTEREST ACCRUAL METHOD: DAILY SIMPLE INTEREST (SIMPLE) OR PRE COMPUTED (PRECOMP) A.K.A. RULE OF 78'S

*CONTRACT DATE OR ORIGINATION DATE

*AMOUNT FINANCED

*ANNUAL PERCENTAGE RATE (APR)

*FINANCE CHARGE

*NUMBER OF PAYMENTS OR CONTRACT TERM

*REGULAR PAYMENT AMOUNT

INDICATES IF REGULAR PAYMENTS ARE SCHEDULED ONCE A MONTH (MONTHLY)

DATE OF LAST REGULAR MONTHLY PAYMENT OR MATURITY DATE

*DATE OF FIRST REGULAR MONTHLY PAYMENT

*DATE OF THE NEXT REGULAR SCHEDULED PAYMENT

*ACCOUNT PAYOFF AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

*PRINCIPAL BALANCE AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

 

*INTEREST BALANCE AS OF THE PORTFOLIO SALE DATE: THE AMOUNT OF INTEREST THAT HAS ACCRUED FROM THE LAST PAYMENT TO THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

LATE CHARGES OWED AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

*AMOUNT OF LAST PAYMENT

*DATE OF LAST PAYMENT

TOTAL NUMBER OF REGULAR PAYMENTS MADE

*AMOUNT PAID FOR GAP INSURANCE

*AMOUNT PAID FOR VEHICLE WARRANTY

*DOWN PAYMENT

*THE BALANCE OF THE PURCHASE DISCOUNT AS OF THE INTEREST ACCRUED THROUGH DATE (CUTOFF DATE)

*ACCOUNT BALANCE PURCHASED BY BUYER

*PRICE PAID FOR RECEIVABLE (AFTER DISCOUNT)

*VEHICLE IDENTIFICATION NUMBER (VIN)

*VEHICLE MODEL YEAR

*VEHICLE MAKE

*VEHICLE MODEL

*CASH PRICE OF VEHICLE

VEHICLE COLOR

VEHICLE MILEAGE

*VEHICLE VALUE

VALUATION DATE

*TITLE NUMBER

TRACKING DEVICE NUMBER, IF THE VEHICLE IS EQUIPPED WITH A GPS TRACKING DEVICE.

*CO-OBLIGOR FIRST NAME

*CO-OBLIGOR LAST NAME

*CO-OBLIGOR CURRENT STREET ADDRESS

CO-OBLIGOR EMAIL ADDRESS

*CO-OBLIGOR SOCIAL SECURITY NUMBER

CO-OBLIGOR DATE OF BIRTH

CO-OBLIGOR CURRENT HOME PHONE NUMBER

CO-OBLIGOR CURRENT MOBILE PHONE NUMBER

CO-OBLIGOR CURRENT WORK PHONE NUMBER

CO-OBLIGOR DRIVER'S LICENSE NUMBER

CO-OBLIGOR CURRENT EMPLOYER

*DATE PAYMENT DUE

*DATE PAYMENT MADE

*HOW PAYMENT MADE

*AMOUNT OF PAYMENT. NEGATIVE AMOUNTS SHOULD BE EXCLUDED.

*DEALER LEGAL NAME

 

PRIMARY CONTACT FIRST NAME

PRIMARY CONTACT LAST NAME

PRIMARY CONTACT TITLE

DEALER CURRENT STREET ADDRESS

PRIMARY CONTACT EMAIL ADDRESS

PRIMARY CONTACT PHONE NUMBER

REFERENCE RELATIONSHIP TO OBLIGOR

REFERENCE FIRST NAME

REFERENCE LAST NAME

REFERENCE CURRENT STREET ADDRESS

REFERENCE CURRENT CITY

REFERENCE CURRENT STATE

REFERENCE CURRENT ZIP CODE

REFERENCE EMAIL ADDRESS

REFERENCE HOME PHONE

REFERENCE MOBILE PHONE

REFERENCE WORK PHONE

*COLLECTION NOTES WITH DATES

 

EXHIBIT D

FORM OF NOTICE OF TRANSFER

TO BE SENT TO OBLIGOR

AUTO FINANCE

<Date>

CUSTOMER NAME

ADDRESS

CITY STATE ZIP

<ACCOUNT NUMBER>

Dear CUSTOMER

Please be advised that on January 30, 2020 your account with Platinum Auto Finance was sold and assigned to Nicholas Financial, Inc.. Please be assured that this is a normal transaction and in no way affects your payments, payment due dates, the terms of your contract or liability. Any payments received from you after January 30, 2020 will be endorsed and forwarded to Nicholas Financial, Inc.

All future payments and correspondence should be made payable to Nicholas Financial, Inc., and mailed to the following address:

BUYER PAYMENT ADDRESS

You may pay online at www.nicholasfinancial.com

You may also pay via the phone by calling 800-237-2721.

If you should have any questions concerning this transfer, please contact Nicholas Financial, Inc., at 2454 McMullen Booth Road, Building C, Clearwater, FL 33759.

Sincerely,

Platinum Auto Finance

 

EXHIBIT E

RATIFICATION

On January 30, 2020, Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company having an address at 25 N. Main Avenue Clearwater, FL 33765 ("SELLER"), assigned and sold all interest in the attached list of vehicles (Schedule 1) to Nicholas Financial, Inc., a Florida Corporation, having an address at 2454 McMullen Booth Road, Building C, Clearwater, FL 33759 ("BUYER") for consideration. This document ratifies that agreement.

PLATINUM AUTO FINANCE OF TAMPA BAY, LLC as Seller

By:  /s/ Michael KaplanisName:Michael Kaplanis

Title:        CEO

NICHOLAS FINANCIAL, INC. as Buyer

By:  /s/ Doug Marohn
Name:Doug Marohn

Title:       President and CEO

 

Schedule 1 to Exhibit E- VIN List of Vehicles

1HGCR2F54HA291028 3G NAXJ EVUS572111 1C3CDFEB8FD363442 5N PE34AF3FH088044 3FA6POLUXJ R169082 1HGCR2F34FA204711 1GTR1TEC8FZ435023 3C4PDCABXJT242433 1FT7W2BT5FEA75031 3N 1CP5CUXKL531008 3FADP4BJOH M169153 JA4AP3AU1GZ041238 4T1BF1FK4GU222674 1N4AL3APXGC225758 4A4AP3AU4FE038662 WBAWL73587PX48091 3C4PDCAB9HT695338 1FADP3F21FL263585 3FA6POD95J R225679 1C3CCCABOG N 160421 KNMAT2MTXKP528263 1FTEX1CM1EFB94273 3N 1AB7APXJY248334 1N4AL3AP1DC237423 M L32F4FJ9 KH F17239 3N 10E2CP5EL380176 3FADP4BJ6EM19704R KNDJP3A52E7008448 2G1105S3XH9162480 19XFC2F57GE060925 5XXGT4L31JG 181290 1N4AL3AP8H N329588 1C3CCBCG3EN 172272 5YFBURH E4FP214151 2T1 BU RH E6GC746177 3CZRM3H52CG702134 JM3KE4DY3G0622031 2GNALBEK9F1157113 5N PEC4AB9DH546664 2C3CCAAGODH731992 1G1FB1RXXG0164420

 

3N1AB7AP7GY239132
5UXWX5C55CL717408
KMHEC4A40FA130462
WDDEJ77X39A020349
1C3CCCAB4FN529697
3MYDLBYV5HY168692
5N PE34AF9FH132256
1C3CCCAB5FN599774
1G4PP5SK2D4211068
1VWBN7A35DC082143
WVWDM7AJ6EW008856
JM1CW2CL5E0164915
5XYZU3LB3GG334652
2GKALMEK1F6377325
3N1AB7AP1GY235898
3GTP1VE01BG235457
1FADP3F21EL455474
3N1CN7AP1GL859231
5NPEB4ACXDH720981
1N6BAOCHXAN313503
3D4PG6FV7AT105741
KMHDH4AEXGU635298
4T1BK1EB4EU098237
1G4PP5SK2D4226038
1GCRCSE09BZ429090
5NPEB4AC6BH120021
JM3ER2W57A0333265
4JGBB86E18A401417

 

EX-10.22.3

Exhibit 10.22.3

BULK RECEIVABLES PURCHASE AND SALE AGREEMENT (LIMITED RECOURSE)

This Bulk Receivables Purchase and Sale Agreement (Limited Recourse), (the "Bulk Agreement") is entered into this 20th day of February, 2020 (the "Closing Date"), between Nicholas Financial, Inc., a Florida Corporation ("Buyer"), and Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company and Finanza Acceptance LLC, collectively referred to herein as ("Seller").

WHEREAS, Seller wishes to sell and Buyer wishes to buy all of Seller's rights, title and interest in and to certain retail installment sales contracts secured by liens on motor vehicles and certain promissory notes and security interests in motor vehicles securing such notes (collectively the "Receivables" and each a "Receivable"; and

WHEREAS, this Agreement is contingent on Fortress Credit Corp's sign off on Seller's sale of the Receivables and release of Seller's obligations as memorialized in the Revolving Credit Agreement dated June 27, 2019 between Seller and Fortress Credit Corp.

NOW, THEREFORE, in consideration of these premises and of the mutual covenants and agreements hereinafter contained, the receipt and adequacy of which are hereby acknowledged, the Buyer and Seller hereby agree as follows:

ARTICLE I
DEFINITIONS

Whenever used herein, the following words and phrases, unless the context otherwise requires, will have the following meanings:

"Accrued Interest":As of any date of determination with respect to a Receivable, the accrued

and unpaid interest of such Receivable.

"Agreement":

"Authorized Officer":

This Receivables Purchase and Sale Agreement, together with all exhibits hereto and all subsequent written amendments and supplements hereto and thereto.

With respect to any Person, any of the Chief Executive Officer, the President, the Treasurer, the Chief Financial Officer, any Vice President or any Assistant Treasurer of such Person, or any other officer of such Person authorized to act on behalf of such Person.

"Bill of Sale":The Bill of Sale in the form attached hereto as Exhibit A.

"Business Day": Any day other than a Saturday or Sunday, or a day on which banking institutions in Tampa, Florida are authorized or obligated by law or

executive order to be closed.

"Buyer":As defined in the first paragraph of this Agreement.

"Certificate of Title": A document issued by a jurisdiction that evidences the owner(s) and lien holder(s), if any, of a motor vehicle registered in such jurisdiction.

1

 

"Closing":

"Closing Date": "Collections"

The simultaneous delivery by Buyer and Seller on the Closing Date of documents and funds as provided for hereunder, as well as the performance by Buyer and Seller of all acts herein provided to be performed on the Closing Date.

As defined in the first paragraph of this Agreement.

With respect to any Receivable, all cash collections and other cash proceeds of or relating to such Receivable, including, without limitation, (i) Scheduled Payments, (ii) prepayments, (iii) any late fees, (iv) any guaranty amounts, (v) any insurance proceeds (including any GAP benefits or waiver amount), (vi) any rebates, (vii) any liquidation proceeds or recoveries and (viii) all other cash proceeds of Related Security with respect to such Receivable.

"Contract": With respect to a Receivable, either (i) the motor vehicle retail installment sales contract or (ii) the promissory note evidencing an Obligor's obligation to pay the indebtedness provided for therein and evidencing a security interest in the Financed Vehicle.

"Contract Rate": With respect to a Receivable, the annualized rate of interest to be paid by the Obligor as set forth on the related Contract, which may or may not be the same as the federal Truth-in Lending Act / Regulation Z Annual Percentage Rate.

"Conveyed Property":As defined in Section 2.1 of this Agreement.

"Current Performing Contract": A Performing Contract where, as of the Cut-Off Date, the Obligor is less than thirty (30) days past due with respect to all payments due thereunder.

"Current Servicer": "Cut-Off Date":

"Damages":

Platinum Auto Finance

Close of business on the date set forth as the "Cut-Off Date" on the Receivables Schedule, which date shall be the last day on which Seller accrues Interest with respect to Receivables on its servicing and accounting system(s).

With respect to a Person and a specified event, the losses, liabilities, reasonable costs and expenses actually incurred and appropriately documented by such Person resulting from such specified event.

"Delinquent Performing Contract":A Performing Contract where, as of the Cut-Off Date, payments

due on the Contract are thirty (30) days or more past due.

"Deposit Amount":Such amount retained by Buyer from the Purchase Price as set forth in

Section 3.3.

"Electronic Data File":The information and data provided by Seller to Buyer pursuant to Section

10.2(b) and set forth in Exhibit C.

2

 

"Financed Vehicle" A new or used motor vehicle, together with all accessions thereto, securing an Obligor's indebtedness under the respective Receivable.

"Non-Performing Contract": Any contract that is not a Performing Contract or a Delinquent Performing Contract.

"Material Adverse Effect": means, with respect to Buyer, a material adverse effect on (i) the financial condition, business, operations or properties of such Person, taken as a whole, (ii) the ability of such Person to perform its obligations hereunder, (iii) the legality, validity or enforceability of this Agreement, or (iv) the legality, validity or enforceability of Buyer's interest in the Receivables.

"Obligor": The Person or Persons (other than the Seller) who executed a Contract and is or are liable for all obligations thereunder.

With respect to a Receivable, as of a date of determination, the sum of (i) the Unpaid Principal Balance, plus (ii) all accrued and unpaid interest calculated at the Contract Rate and in accordance with the terms and conditions of the Contract.

A Contract where, as of the Cut-Off Date, (i) the Seller has no evidence that the Obligor intends to discontinue making all required payments under the Contract, (ii) the Seller has no evidence that Buyer will not be able to make contact with the Obligor following the Closing Date or that the Obligor is otherwise a "skip" risk, (iii) the account evidenced by the Contract, or the vehicle which secures the Contract, is not in the process of repossession, repossession hold, insurance claim, litigation or impoundment, (iv) the Contract is secured by a fully operable vehicle, and (v) the Obligor under the Contract has not filed, nor had filed against it a petition in bankruptcy.

Any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereto), unincorporated organization or government or any agency or political subdivision thereof

The price paid on the Closing Date by Buyer to Seller for the Receivables purchased by Buyer on the Closing Date as calculated as provided in Section 3.1 hereof .

"Payoff":

"Performing Contract":

"Person":

"Purchase Price":

"Receivables File":The documents described in Section 10.2(d) of this Agreement.

"Receivables Schedule":

"Recourse Period"

The schedule listing the Receivables to be purchased by Buyer on the Closing Date, substantially in the form of attached Exhibit B and containing the information set forth therein, and delivered in accordance with Section 10.2(a).

With respect to a particular Receivable and the related Contract, that period of time set forth in the Receivables Schedule, in accordance with Section 3.2(c), during which Seller owes to Buyer the recourse obligations set forth in Section 3.2.

3

 

"Related Security":With respect to any Receivable:

(i) all of Seller's right, title and interest in and to the Contract and the Financed Vehicle;

(ii) all security interests, liens, real property and/or personal property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to the Receivable or otherwise, together with all financing statements or registration applications filed against an Obligor describing any collateral securing such Receivable;

(iii) all letters of credit, insurance, guarantees and other agreements or arrangements of whatever character from time to time supporting or securing payment of the Receivable, whether pursuant to the Contract related to the Receivable or otherwise; and,

(iv) the related Contract, all books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights), accounts and all general intangibles relating to such Receivable and the related Obligor.

"Repurchase Price":As defined in Section 5.4(b) of this Agreement.

"Scheduled Payment":

With respect to any Contract, the periodic payments payable under the terms of such Contract, excluding, without limitation, any sales and use tax or similar tax payments, insurance premiums or other charges due under the terms of such Contract and not due and owing to Seller under such Contract.

"Seller":As defined in the first paragraph of this Agreement.

"Servicing File": With respect to each Receivable, the file delivered by Seller to Buyer, consisting of all documents necessary to service the Receivables.

"Servicing Transfer Date":The Closing Date.

"Unpaid Principal Balance":

With respect to a Receivable, as of a date of determination, the Obligor's original principal balance minus the cumulative principal portion of each installment received prior to such date from the Obligor and applied to reduce such balance, the application of such installment having been determined in accordance with the terms and conditions of the Contract.

4

 

ARTICLE II

PURCHASE AND SALE

Section 2.1.Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, on the Closing Date, Seller hereby agrees to sell, assign, transfer, set over, and convey to Buyer, and Buyer agrees to purchase and accept, subject to the terms of this Agreement, (a) all of Seller's right, title and interest in and to those certain Receivables (together with the Related Security) identified on the Receivables Schedule; (b) all of the rights under any lender's single interest insurance policy relating to a Financed Vehicle for the benefit of the creditor of the related Contract (to the extent that such rights may be assigned or otherwise conveyed); (c) all documents contained in the related Receivables File and the Servicing File; and, (d) all proceeds derived from any of the foregoing, other than the Purchase Price, paid pursuant to this Agreement (collectively, the "Conveyed Property").

Section 2.2.True Sales.

(a)It is the express intention of Buyer and Seller that each transfer of Conveyed Property hereunder constitutes a true sale by Seller to Buyer that is absolute and irrevocable and that provides Buyer with the full benefits of ownership of the Conveyed Property, and not a pledge of such Conveyed Property by Seller to Buyer to secure a debt or other obligation of Seller. Consequently, the sale of each Conveyed Property shall be reflected as a sale on Seller's business records and financial statements. However, in the event that, notwithstanding the intent of the parties, any Conveyed Property is deemed not to have been transferred to Buyer, then (i) this Agreement also shall be deemed to be and hereby is a security agreement within the meaning of the UCC, and (ii) the conveyance by Seller provided for in this Agreement shall be deemed to be a grant by Seller to Buyer of, and Seller hereby grants to Buyer, a security interest in and to all of Seller's right, title and interest in, to and under the Conveyed Property, whether now or hereafter existing or created, to secure (1) the rights of Buyer hereunder, and (2) without limiting the foregoing, the payment and performance of Seller's obligations to Buyer.

(b)Buyer and Seller shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Conveyed Property, such security interest would be deemed to be a perfected security interest of first priority in favor of Buyer under applicable law and will be maintained as such throughout the term of this Agreement. Seller hereby authorizes Buyer or its designee to file one or more UCC financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Conveyed Property of Seller, in each case whether now existing or hereafter generated by Seller. Unless otherwise agreed to by the parties, Seller agrees to pay all reasonable out-of-pocket costs and expenses of Buyer, excluding fees and expenses of counsel, in connection with the perfection as against third parties of Buyer's right, title and interest in and to the Conveyed Property and the enforcement of any obligations of Seller under this Agreement.

Section 2.3.Examination of Receivables Files. Seller shall, prior to the date that is more than two (2) Business Days prior to the Closing Date, at Buyer's option, make the related Receivables Files available to Buyer or its designee(s), as applicable, for examination during normal business hours at Seller's offices or other location as agreed by Buyer and Seller. Buyer shall not be required to conduct, or have conducted on its behalf, any such examination. The fact that Buyer or its designee(s) have conducted or have determined not to conduct any partial or complete examination of the Receivables Files shall not affect (i) Buyer's (or

5

 

any of its assignees') rights to demand repurchase in accordance with this Agreement, (ii) any of Seller's representations, warranties, covenants, or promises herein, or (iii) any other relief or remedy provided for in this Agreement.

ARTICLE III

PURCHASE PRICE

Section 3.1.Purchase Price. The Purchase Price for each Receivable listed on the Receivables Schedule (together with the Related Security) shall be the percentage of par as stated in the Receivables Schedule, multiplied by the Unpaid Principal Balance as of the Cut-Off Date with respect to such Receivable. On the Closing Date, Buyer shall pay to Seller the Purchase Price as set forth in Section 10.3. Buyer shall own and be entitled to receive with respect to each purchased Receivable all Collections (whether or not received or recovered) from and after the Cut-Off Date, including, without limitation, (1) all principal due and owing on the Receivables, (2) all Accrued Interest on the Receivables; and (3) all other charges or payments due and owing and collections on the Receivables, in each case from and after the Cut-Off Date.

Section 3.2.Seller's Recourse Obligations.

(a)Seller understands and agrees that Buyer will not purchase Receivables hereunder unless Seller provides the recourse set forth herein.

(b)As an inducement to Buyer to purchase the Receivables hereunder, Seller hereby irrevocably and unconditionally agrees to repurchase any Receivable which meets or met the conditions for repurchase set forth below during the Recourse Period (as hereinafter defined).

(c)With respect to a particular Receivable and related Contract sold hereunder, the Recourse Period shall begin on the Closing Date and shall end when the Obligor has indefeasibly paid Buyer in full, in the Obligor's own funds, all Scheduled Payment specified for such Contract's Recourse Period set forth on the Receivables Schedule.

(d)Conditions for Repurchase. A Contract and related Receivable shall be subject to repurchase by Seller in the event the Obligor(s) thereunder, during the Recourse Period but not thereafter,

(i)Fail(s) to make a Schedule Payment, directly to Buyer, on or before the date same is due, in Obligor's own funds;

(ii)Fail(s) to maintain full-coverage insurance on the Financed Vehicle;

(iii)Causes or permits, directly or indirectly and for any reason or no reason, the repossession, taking, impoundment, replevin or sequestration of the Financed Vehicle, whether voluntarily or involuntarily, and whether by Seller, Buyer, or any other Person;

(iv)Causes or permits, directly or indirectly and for any reason or no reason, physical damage to the Financed Vehicle such that the related insurance company declares or determines

6

 

the Financed Vehicle a "total loss" or similar designation, without regard to when such declaration or determination is made; or,

(v)Breaches any term of the Contract in any respect;

(vi)First payment default.

(e)Timing of Repurchase; Notice to Seller. At any time, Seller shall pay to Buyer the Repurchase Price with respect to a particular Receivable, in immediately available funds, within five (5) days of Buyer's transmission to Seller of notice that such Receivable meets or met, during the Recourse Period, the conditions for repurchase set forth in Section 3.2(d).

Section 3.3.Deposit Amount / Seller's Right to Set-Off. The Deposit Amount shall be equal to

$ n/a . , which amount shall be retained by Buyer out of the Purchase Price to ensure that (i) the
Seller and/or the Current Servicer transmit to Buyer all payments received by either such party after the Cut-Off Date with respect to Conveyed Property as set forth in Section 3.4, and (ii) Seller timely pays Buyer the Repurchase Price for any Receivable required to be repurchased pursuant to Sections 3.2 and 5.4. If Seller or Current Servicer, as applicable, shall fail to promptly remit such payments to Buyer, Buyer shall

be permitted to deduct the full amount of such payments from the Deposit Amount. On n/a Buyer shall remit to Seller, via wire transfer to such account as Seller shall direct, the Deposit Amount less amounts deducted in accordance herewith, and shall provide Seller a detailed accounting of the amounts so deducted.

Section 3.4. Payments Received by Seller On or After the Cut-Off Date. Buyer shall provide prompt written notice ("Notice") to Seller and the Current Servicer of any payments that it believes the Seller or the Current Servicer has received and which the Buyer is entitled to under the terms hereof, and Seller and/or Current Servicer agree to give Buyer Notice of any payments, with respect to the Conveyed Property, that it receives on or after the Cut-Off Date. Seller agrees to remit (or cause the Current Servicer to remit), within two Business Days of receipt of any Notice it receives from Buyer, or two days of the date of any such notice it gives to Buyer, any such payments that Seller has received to which Buyer is entitled hereunder. In the event that Seller or Current Servicer disputes that it has ever received a payment that is identified in a Notice, it shall give prompt written notice to Buyer that it has not, in fact, received any such payment. Upon receipt of such notice from Seller or Current Servicer, Buyer shall be obligated to submit written evidence to Seller and Current Servicer, which evidence must be reasonably satisfactory to Seller and Current Servicer, that such payment has, in fact, been received by Seller or Current Servicer. Upon written confirmation of Seller and Current Servicer of their receipt of such evidence (which confirmation will be sent to Buyer), Seller and Current Servicer, as applicable, shall be obligated to remit the full amount of such payment to Buyer.

ARTICLE IV
TRANSFER

Section 4.1.Transfer Documentation; Notice.

7

 

(a)Notifying the Obligors of Buyer's ownership and servicing of the Receivables and related Contracts by the mailing of a letter, in the form attached as Exhibit D hereto, within five (5) Business Days of the Closing Date.

(b)Notifying the Obligors of Buyer's ownership and servicing of the Contracts during any in-person, telephonic, electronic, or other interactions with Obligors.

(c)With respect to a Financed Vehicle, providing to Buyer any documentation necessary to evidence clear chain of title to Seller. Seller has the obligation to transfer or change the lien holder of record on any Certificate of Title with respect to a Financed Vehicle, and any transfer or change of record lien holder shall be made at Seller's expense. Transfer or change of lien holder must take place within 30 days following the recourse period for the Financed Vehicle.

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER

Section 5.1.General Representations and Warranties. Seller hereby represents and warrants to Buyer, as of the Closing Date, as follows:

(a)Organization and Good Standing. Seller is an entity duly organized, validly existing and in good standing under the laws of its state of organization, and has the corporate power and authority and all government licenses, authorizations, consents and approvals required in each jurisdiction in which its business is now conducted, to own its assets and to transact the business in which it is currently engaged. Seller is duly qualified to do business as a foreign entity where required and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would adversely affect Buyer's enforcement of the Contracts.

(b)Authorization; Binding Obligations. Seller has the power and authority to make, execute, deliver, and perform this Agreement and all of the transactions contemplated under this Agreement and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies.

(c)No Violations. The execution, delivery, and performance of this Agreement by Seller will not violate any provision of its articles of incorporation, bylaws or standing resolutions, any existing law or regulation or any order or decree of any court, or constitute a material breach of any mortgage, indenture, contract, or other agreement to which Seller is a party or by which Seller may be bound.

(d)Litigation. No litigation or administrative proceeding of or before any court, tribunal, or governmental body is currently pending, or to the knowledge of Seller threatened, against Seller or any of its properties or with respect to this Agreement which, if adversely determined, would have a Material Adverse Effect on the transactions contemplated by this Agreement.

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(e)Licensing. Seller has obtained and currently holds all government licenses, authorizations, consents and approvals required to (i) sell the Financed Vehicles, (2) originate and purchase the Receivables, and (iii) service and collect the Receivables, in each jurisdiction in which Seller sells Financed Vehicles, originates or purchases Receivables, and services and collects Receivables.

(f)Taxes. Seller has filed or caused to be filed all tax returns and reports required by law to have been filed by it and has paid all taxes, assessments and governmental charges thereby shown to be due on such returns, except any such taxes, assessments or charges (i) that are being diligently contested in good faith by appropriate proceedings and (ii) with respect to which no adverse claim has been imposed upon any Receivables.

(g)Solvency. As of the date of this Agreement, and after giving effect to the transactions contemplated by this Agreement, Seller will not (1) be insolvent (either because its financial condition is such that the sum of its debts is greater than the fair market value of its assets or because the fair saleable value of its assets is less than the amount required to pay its probable liabilities on its existing debts as they mature); (2) have unreasonably small capital with which to engage in its business; or (3) have incurred debts beyond its ability to pay as they become due.

Section 5.2. Representations and Warranties With Respect to Receivables. For each Receivable sold by Seller and purchased by Buyer hereunder Se ler represents and warrants to Buyer that, as of the Closing Date:

(a)Lawful Assignment. The Receivable has not been originated in and is not subject to the laws of any jurisdiction under which the transfer of such Receivable to Buyer pursuant to this Agreement is unlawful, void, or voidable or renders the related Contract unenforceable. Seller has not entered into any agreement with the related Obligor that prohibits, restricts, or conditions the assignment, pledge, or sale of any portion of such Receivable.

(b)Ownership; Origination. Seller originated or purchased the Receivable for fair value and in accordance with prudent and reasonable origination policies and procedures, and took possession thereof in the ordinary course of its business, and such Receivable was not at the time of Seller's origination or purchase thereof subject to a security interest. Seller has not sold, assigned or pledged the Receivable to any Person and, prior to the transfer of the Receivable by Seller to Buyer, has good and marketable title thereto free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest (except for any of the foregoing released prior to or in connection with the sale and transfer in accordance herewith) and was the sole owner thereof with full right to transfer the Receivable to Buyer. Seller acknowledges that Buyer has no obligation to any dealer with respect to dealer participations and shall indemnify and hold Buyer and its assigns harmless with respect to same.

(c)Certificate of Title. Seller has obtained a Certificate of Title (or the functional equivalent thereof for jurisdictions that do not deliver a Certificate of Title to secured lenders) for the Financed Vehicle.

(d)No Brand on Certificate of Title. The Certificate of Title for the Financed Vehicle does not bear any brand, notation, or word(s) indicating prior vehicle history, damage, or chronic problem, including

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without limitation words such as "damaged", "totaled", "salvaged", "rebuilt", "warranty returned", "reconditioned", "junked", or any brand, notation, or word(s) of similar meaning or import.

(e)Marking Records. On or before the Closing Date, the Seller will have caused the portions of its electronic ledger relating to Conveyed Property to be clearly and unambiguously marked to indicate that such Contracts have been sold to Buyer.

(f)Receivables File. With respect to such Receivable, the related Receivables File contains, in all material respects, the documents required to be contained therein pursuant to this Agreement.

(g)No Waivers or Extension. With respect to such Receivable, the terms of the related Contract have not been waived, altered, or modified in any material respect, except by instruments or documents identified in the Receivables File or in the Servicing File.

(h)Contract in Force. With respect to such Receivable, the related Contract has not been satisfied or subordinated in whole or in part or rescinded, and the Financed Vehicle securing the Contract has not been released from the lien of the Contract in whole or in part.

(i)Selection Procedures. No selection procedures believed to be adverse to Buyer have been utilized in selecting the Receivables sold hereunder from among those Receivables that meet the criteria contained herein. Seller has not engaged in any activity or committed any action intended, or the natural consequence of which is, to give any Receivable the appearance of compliance with this Agreement and these representations and warranties which such Receivable, absent such activity or action by Seller, would otherwise not comply with this Agreement or these representations or warranties.

(j)Compliance with Law. The Contract and the sale of the related motor vehicle complied at the time it was originated and upon the execution of this Agreement, and complies at the time of its sale to Buyer hereunder, in all material respects with all applicable federal, state, and local laws, regulations, and ordinances, including but not limited to the Fair Credit Reporting Act, the Equal Credit Opportunity Act and Regulation B, the Truth-in-Lending Act and Regulation Z, and FTC rules and regulations.

(k)Binding Obligation. Such Receivable represents the genuine, legal, valid, and binding payment obligation of the Obligor, enforceable by the holder thereof in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

(¹)No Defenses. No right of rescission, setoff, counterclaim or any other defense (including defenses arising out of violations of usury laws) has been asserted or threatened with respect to such Receivable.

(m)No Default. Except for payment delinquencies continuing for a period of not more than sixty (60) days, no default, breach, violation, or event permitting acceleration under the terms of such Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute

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a default, breach, violation, or event permitting acceleration under the terms of such Receivable has arisen. Such Receivable is not a write-off.

(n)Down Payment. The Obligor on such Receivable has fully paid the down payment, with his/her own funds, as set forth in the related Contract.

(o)Collections. Seller does not know of any fact that indicates the uncollectability by Buyer of any Contract, and no condition exists that materially or adversely affects the value of the Receivable or jeopardizes any security therefor.

(p)No Repossession. The Financed Vehicle securing the Receivable shall have not been foreclosed upon or repossessed by Seller or any other party.

(q)The information contained in the Receivables Schedule, as set forth in Section 10.2(a) and Exhibit B, including without limitation the identification of Current Performing Contracts, Delinquent Performing Contracts, Non-Performing Contracts, and Performing Contracts, is true and correct as of the Cut-Off Date.

(r)The information and data contained in the Electronic Data File, as set forth in Section 10.2(b) and Exhibit C, is true and correct as of the Cut-Off Date.

(s)The Receivable represents a consumer obligation of an Obligor, purchased for personal, family, or household use, and not a commercial obligation of an Obligor.

(t)The Obligor of the Receivable had obtained or agreed to obtain full-coverage physical damage and general liability insurance covering the Financed Vehicle.

Section 5.3.Covenants of the Seller.

(a)Affirmative Covenants. From the Closing Date until the first day following the date on which all Receivables purchased hereunder are indefeasibly paid in full to Buyer, Seller agrees and covenants that it shall:

(i)Maintain all necessary licenses, permits and other approvals, in all jurisdictions where the failure to do so would have a Material Adverse Effect.

(ii)Keep and maintain all of its properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted).

(iii)Take all actions necessary to preserve and keep in full force and effect its existence, maintain the continuous operation of its business and comply with each requirement of law in all material respects.

(iv)Use commercially reasonable efforts to maintain systems, personnel and facilities, including back-up and disaster recovery capability, that will enable it to perform its obligations under this Agreement.

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(v)File or cause to be filed all federal, state and local tax returns that are required to be filed by it and pay or cause to be paid all taxes shown to be due and payable on taxes or assessments (except only such taxes or assessments the validity of which are being contested in good faith by appropriate proceedings).

(b)Negative Covenants. From the Closing Date until the first day following the date on which all Receivables purchased hereunder have been indefeasibly paid in full to Buyer, Seller agrees that is shall not do any of the following:

(i)Assert any claims or set-off rights against any Scheduled Payments.

(ii)In the fulfillment of Seller's obligations under this Agreement, engage in, or allow or permit any person under its direct control or direction to engage in, any fraudulent activity or other activity which would constitute a violation of a requirement of law in any material respect.

(iii)Solicit, encourage, or otherwise suggest an Obligor in any manner breach any term of the Contract related to a Receivable.

(iv)Sell, lease, or otherwise transfer or deliver to an Obligor any motor vehicle, without regard to the means or method of such transfer or delivery, or purchase or originate any receivable related to the purchase of any motor vehicle by such Obligor; provided, that with respect to a particular Obligor, such covenant shall expire and be of no further force or effect upon the indefeasible payment in full to Buyer of all amounts due and owing from such Obligor.

(v)Except for fees imposed on Obligors with respect to payment, late payment or nonpayment as permitted in the related Contract, accept or receive or agree to accept or receive any rebate, refund, commission, fee, kickback or rakeoff, whether cash or otherwise and whether paid by or originating with an Obligor or any other party (including, but not limited to, brokers and agents), as a result of or in any way related to any Receivable or in connection with the sale, disposition, transfer or servicing of any Receivable.

Section 5.4. Remedy for Breach of Representation, Warranty, or Covenant; Repurchase.

(a)The representations, warranties, covenants, and promises of Seller set forth herein shall survive the sale of Receivables to Buyer and shall inure to the benefit of Buyer and its successors and assigns, notwithstanding any restrictive or qualified endorsement on any Contract.

(i)In the event of a breach by Seller of any material representation, warranty, covenant, or promise in this Agreement with respect to any Receivable, the party discovering such breach will provide written notice to the other party. Within ten (10) calendar days of notice to Seller of any such breach, Seller shall repurchase such Receivable and the Related Security by paying Buyer the Repurchase Price in good funds.

(ii)In the event Seller is required to repurchase a Receivable, Buyer shall deliver to Seller the related Contract File and shall assign to Seller all of Buyer's right, title, and interest in and to the related Conveyed Property, free and clear of any and all claims, liens, and encumbrances,

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except for those which existed at the time of Buyer's purchase thereof from Seller. Buyer shall accomplish such delivery and assignment within a reasonable period of time following Buyer's receipt in full of the Repurchase Price from Seller.

(b)The "Repurchase Price" of a Receivable shall be the percentage of par as stated in the Receivables Schedule, multiplied by the Unpaid Principal Balance as of the date the Repurchase Price is paid to Buyer with respect to such Receivable, plus any accrued unpaid interest, plus any accrued unpaid fees.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

Section 6.1.Buyer Representations and Warranties. Buyer hereby represents and warrants to Seller, as of the Closing Date, as follows:

(a)Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged. Buyer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a Material Adverse Effect on the Buyer's ability to perform its obligations hereunder.

(b)Authorization: Binding Obligations. Buyer has the power and authority to make, execute, deliver, and perform this Agreement and all of its transactions contemplated under this Agreement and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies.

(c)No Consent Required. Buyer is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau, or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement.

(d)No Violations. The execution, delivery, and performance of this Agreement by Buyer will not violate any provision of any existing law or regulation or any order or decree of any court or the Certificate of Incorporation or Bylaws of Buyer, or constitute a material breach of any mortgage, indenture, contract, or other agreement to which Buyer is a party or by which Buyer may be bound.

(e)Litigation. No litigation or administrative proceeding of or before any court, tribunal, or governmental body is currently pending, or to the knowledge of Buyer threatened, against Buyer or any of its properties or with respect to this Agreement which, if adversely determined, would in the opinion of Buyer have a Material Adverse Effect on the transactions contemplated by this Agreement.

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(f)Approvals, Licensing, Etc. All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights, and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency, that are necessary or advisable in connection with the execution and delivery by Buyer of this Agreement and other documents have been duly taken, given, or obtained, as the case may be, are in full force and effect to be entered into in connection herewith, are not subject to any pending proceedings or appeals (administrative, judicial, or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and other documents to be entered into in connection herewith on the part of Buyer and the performance by Buyer of its obligations hereunder and thereunder.

ARTICLE VII
SERVICING

Section 7.1.Transfer and Assignment. Effective as of the Servicing Transfer Date, (a) Seller shall transfer, delegate, and assign all of its rights, duties and obligations regarding the servicing of the Conveyed Property, including all rights to receive payment, to Buyer and (b) Buyer shall assume all of the Seller's such duties and obligations and accept all of Seller's such rights. After the execution of this Agreement and prior to the Servicing Transfer Date, Seller or the Current Servicer shall service the Contracts that will be, after the Closing, Conveyed Property in accordance with its current customary practices. Seller shall forward all payments received with respect to Conveyed Property after the Cutoff Date to the Buyer, within one business day after Buyer's receipt of such payment, via overnight delivery or wire with faxed listing of account(s) for credit.

ARTICLE VIII

FURTHER ASSURANCES

Section 8.1.Further Assurances.

(a)In order to protect and secure Buyer's rights hereunder, Seller, upon the request of and at the expense of the Buyer or its assigns, shall perform or cause to be done and performed, every reasonable act necessary or advisable to put Buyer in position to enforce the payment of the Contracts and to carry out the intent of this Agreement, including the execution of documents such as applications for certificates of title and Uniform Commercial Code financing statements assigning Seller's security interests in the motor vehicles securing the Contracts, and the execution of, and if necessary, the recordation of, additional documents, including separate endorsements and assignments, upon request of Buyer.

(b)In order to protect and secure Buyer's rights hereunder, Seller, within one (1) business day of its receipt of any correspondence, notification, notice, or similar document related to or concerning any Contract purchased by the Buyer hereunder, shall forward same to Buyer.

Section 8.2. Returned Payments.

(a)Buyer agrees to pay to Seller, within two (2) business days after notice from Seller, amounts equal to any Obligor checks or other payments originally tendered to Seller by Obligor(s) and

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returned unpaid for insufficient funds or other reasons after the Cut-Off Date, and Seller shall provide to Buyer copies of documents evidencing the returned checks or payments.

(b)In the event Seller repurchases a Receivable pursuant to Section 3.2 or 5A, Seller agrees

to pay to Buyer, within two (2) business days after notice from Buyer, amounts equal to any Obligor checks or other payments tendered to Buyer with respect to such contract prior to such repurchase and returned unpaid for insufficient funds or other reasons, and Buyer shall provide to Seller copies of documents evidencing the returned checks or payments.

ARTICLE IX

BROKERAGE AND OTHER THIRD-PARTY FEES

Section 9.1.Brokers. Buyer and Seller each represent and warrant to the other that it has not dealt with any Person entitled to a brokerage fee or commission in connection with this Agreement.

ARTICLE X

DELIVERABLES; CLOSING

Section 10.1. Closing Location. The Closing hereunder will take place by fax or email transmission with originals forwarded by overnight courier for next business day delivery.

Section 10.2. Seller Deliverables.

(a)Receivables Schedule. Seller shall deliver to Buyer the Receivables Schedule setting forth the Receivables to be sold to Buyer by 12:00 noon (eastern standard time) one (1) Business Day prior to the Closing Date (unless otherwise agreed to by the parties). The Receivables Schedule shall be substantially in the form attached hereto as Exhibit B, shall be signed by an Authorized Officer of Seller, and shall contain such information as set forth therein and below. SELLER, BY ACCEPTING THE PURCHASE PRICE PAID WITH RESPECT TO THE CONVEYED PROPERTY, SHALL BE DEEMED TO HAVE CERTIFIED, REPRESENTED AND WARRANTED TO BUYER, WITH RESPECT TO THE RECEIVABLES AND RELATED SECURITY TO BE SOLD BY IT ON SUCH PURCHASE DATE, THAT ALL INFORMATION AND DATA CONTAINED IN THE RECEIVABLES SCHEDULE IS CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE, WITH THE SAME EFFECT AS THOUGH MADE ON AND AS OF SUCH DAY.

(i)account number for each Contract;

(ii)name of each Obligor party to a Contract;

(iii)year, make, model, and vehicle identification number of each motor vehicle which is security for a Contract;

(iv)Unpaid Principal Balance on each Contract as of the Cut-Off Date;

(v)Purchase Price on each Contract calculated as of the Cut-Off Date;

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(b)Contents of Electronic Data File. Seller shall deliver to Buyer the Electronic Data File, or information and data sufficient for the creation of same, including all information and data set forth in Exhibit C, with respect to the Receivables sold to Buyer by 12:00 noon (eastern standard time) two (2) Business Days prior to the Closing Date (unless otherwise agreed to by the parties). Seller understands and agrees that Buyer intends to and shall rely upon Seller's provision of such information and data, whether created by Seller or not, in loading or boarding the Conveyed Property onto Buyer's account servicing system(s). SELLER, BY ACCEPTING THE PURCHASE PRICE PAID WITH RESPECT TO THE CONVEYED PROPERTY, SHALL BE DEEMED TO HAVE CERTIFIED, REPRESENTED AND WARRANTED TO BUYER, WITH RESPECT TO THE RECEIVABLES AND RELATED SECURITY TO BE SOLD BY IT ON SUCH PURCHASE DATE, THAT ALL INFORMATION AND DATA CONTAINED IN THE ELECTRONIC DATA FILE IS CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE, WITH THE SAME EFFECT AS THOUGH MADE ON AND AS OF SUCH DAY.

(c)Bill of Sale. Seller, in conjunction with the payment of the Purchase Price, shall execute and deliver to Buyer a Bill of Sale with respect to the related Conveyed Property substantially in the form attached hereto as Exhibit A.

(d)Receivables File. Seller, in conjunction with the payment of the Purchase Price, shall forward, by courier delivery, or in person, to Buyer, within 14 business days of the Closing Date, the following with respect to each Receivable:

(i)The original Contract. If the original contract is unavailable, Seller must provide the electronic version stamped on each page of the contract "True and Correct Copy of the Original" and signed by an officer verifying such with a notary.

(ii)Obligor credit files including the original application, credit investigation and such other credit information contained therein, or copies of same if the original of such document is not available.

(iii)The title file, which shall include the Certificate of Title (to the extent the state of origin has such Certificate of Title or notice of recorded lien on Seller's name) for the Financed Vehicle.

(iv)The Servicing File, including Obligor payment and collection records.

(v)Obligor insurance files, including without limitation property insurance insuring the Financed Vehicle, gap insurance, warranties, and such other insurance information contained therein, or copies of same if the original of such document is not available.

(vi)The Bill of Sale with respect to the Financed Vehicle.

(vii)Any other documents related to the Financed Vehicle or the Obligor that Buyer may reasonably require.

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(viii)REMEDY FOR FAILURE TO DELIVER RECEIVABLES FILE. In the event Seller fails to deliver, with respect to any particular Receivable, the Receivables File to the reasonable satisfaction of Buyer and in accordance with Section 10.2(d), Buyer may at its sole option require Seller to immediately repurchase such Receivable. If Buyer requires Seller to immediately repurchase such Receivable, Seller shall repurchase such Receivable and the Related Security by paying to Buyer the Repurchase Price in good funds within five (5) Business Days following Buyer's notice hereunder. In the event Seller is required to repurchase the Contract hereunder, Buyer shall deliver to Seller, upon payment by the Seller of the Repurchase Price, the related Contract File and shall assign to Seller all of Buyer's right, title, and interest in and to the related Conveyed Property, free and clear of any and all claims, liens, and encumbrances, except for those which existed at the time of Buyer's purchase thereof from Seller.

(ix)Seller and Buyer alternatively agree to consider the ability for Wells Fargo to
convert the files in their possession over to Buyer's accounts, which shall be determined post Closing Date.

Section 10.3. Payment of Purchase Price. Subject to Seller's complying on the Closing Date in all material respects with the terms and conditions of this Agreement, Buyer shall pay sixteen million, two hundred eleven thousand, seven hundred forty six dollars and eighty two cents ($16,211,746.82) of the Purchase Price to Seller on the Closing Date, by wire transfer, in immediately available funds, to such account(s) as directed by Seller. Seller has determined the account to be that of Fortress Credit Corp and has provided wire details to Buyer. Buyer shall place the remaining one million, eight hundred four thousand, two hundred ninety eight dollars and twenty nine cents ($1,804,298.29) in escrow to be held for thirty (30) days which shall be further reduced by the amount due under the repurchase provisions in section 3.2, as applicable. The remaining monies in escrow shall be paid to Seller by wire transfer to Seller's account.

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ARTICLE XI
NOTICES

Section 11.1. Notices Any notice, demand or communication which either party desires or is required to give to the other party in connection with the Agreement must be in writing and must be either served personally or sent by fax and a reliable tracking method, addressed to the other party, as follows, or to such other fax number and/or address as either party hereafter specifies in accordance with this Article XI:

IF TO BUYER:

Nicholas Financial, Inc.

2454 McMullen Booth Road, Building C, Clearwater, FL 33759

Fax (727) 914-2411

Attn: Doug Marohn

Title: President and CEO

IF TO SELLER:

Platinum Auto Finance of Tampa Bay, LLC

25 N. Main Avenue Clearwater, FL 33765

Attn: Legal Department

Fax (727) 216-6262

ARTICLE XII

MISCELLANEOUS

Section 12.1. Termination. Either party may terminate this Agreement prior to the delivery by Seller to Buyer of the Receivables Schedule.

Section 12.2. Mandatory Delivery. The sale and delivery of each Contract on the time designated in 10.2 (d) is mandatory from and after the date of the delivery of the Receivables Schedule, it being specifically understood and agreed that each Contract is unique and identifiable on the date thereof and that an award of money damages would be insufficient to compensate Buyer for the losses and damages incurred by Buyer (including damages to prospective purchasers of the Contracts) in the event of Seller's failure to deliver each of the related Contracts by the time designated in 10.2 (d). Seller hereby agrees that it holds such Contracts in custody for Buyer subject to Buyer's (a) right to reject any Contract under the terms of this Agreement, and (b) obligation to pay the related Purchase Price. All rights and remedies of Buyer under this Agreement are distinct from, and cumulative with, any other rights or remedies under this Agreement or afforded by law or equity and all such rights and remedies may be exercised concurrently, independently or successively.

Section 12.3. Entire Agreement. This Agreement together with all exhibits and schedules hereto constitutes the entire agreement between the parties hereto and supersedes any and all representations, promises and statements, oral and written, made in connection with the subject matter of this Agreement and the negotiation hereof, and no such representation, promise or statement not written herein will be binding on the parties. This Agreement may not be varied or altered or its provisions waived except by an agreement in writing executed by duly authorized agents of both parties hereto. This Agreement will be

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binding upon and inure to the benefit of the parties hereto and each of their respective successors and assigns.

Section 12.4. Governing Law; Jurisdiction and Venue.

(a)This Agreement will be interpreted, construed, and enforced in accordance with the laws of the State of Florida without reference to that state's laws or rules pertaining to conflict of laws.

(b)EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY• (i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE MIDDLE DISTRICT OF FLORIDA, AND APPELLATE COURTS FROM ANY THEREOF, OR THE COURTS OF THE STATE OF FLORIDA, WITHIN THE COUNTY OF PINELLAS, IN THE EVENT THE FEDERAL COURT LACKS OR DECLINES JURISDICTION; (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN ARTICLE XI OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED; AND (iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

Section 12.5. Severabilitv. Any provision of this Agreement, which is prohibited or unenforceable in any jurisdiction, will, as to such jurisdiction, be ineffective to the extent of each prohibition or unenforceability without invalidating the remaining provision hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provisions in any other jurisdiction.

Section 12.6. Captions. Captions are for convenience of reference only and are not to be considered as defining or limiting in any way the scope of intent of the provision hereof.

Section 12.7. Waivers; Cumulative Remedies. The waiver of any breach, term, provision or condition of this Agreement may not be construed to be a subsequent waiver of any other breach, term, provisions or condition. All remedies afforded by this Agreement for a breach hereof will be cumulative, that are, in addition to all other remedies provided for herein or at law or in equity.

Section 12.8. Construction. Unless otherwise specifically provided, references in this Agreement to Sections and Exhibits are to Sections and Exhibits of or to this Agreement. All Exhibits hereto are

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incorporated herein by the references thereto in this Agreement. The designations of the parties to this Agreement and any pronouns referring to any party, wherever used, must be so construed as to include the plural as well as the singular number, and whenever the context permits, any gender includes all other genders and the singular number includes the plural. As used in this Agreement, the words "includes" and "including" are not limiting, and the words "hereof" and "hereunder" and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.

Section 12.9. Counterparts. This Agreement may be executed in two or more counterparts and by different parties on separate counterparts of duplicate originals, each of which must be deemed an original, but all of which together will constitute but one and the same instrument.

Section 12.10. Assignment. Neither Seller nor Buyer may assign any of its rights or obligations hereunder without the prior written consent of the other party.

Section 12.11. Dispute Resolution.

(a)In the event of any claim, suit, or controversy (collectively, a "claim") involving any matter governed by or related to this Agreement, the parties shall first use their diligent and good faith efforts to resolve the dispute by exchanging relevant information and negotiating in good faith, including not less than one conference call.

(b)Attorneys' Fees; Costs of Collection. In the event of any claim involving or arising from Seller's breach of any material representation, warranty, term, or condition of this Agreement, or from Seller's failure to perform any obligation to Buyer arising hereunder or otherwise, Seller agrees to pay reasonable losses or expenses incurred by Buyer as a result of such breach or failure to perform, including attorneys' fees, and any expenses paid or incurred by Buyer in connection with the collection of any amount due from Seller to Buyer hereunder.

Section 12.12. Confidentiality. Each of Buyer and Seller will keep confidential and will not divulge to any party, without the other party's prior written consent, the terms of this Agreement; provided, that any party may make such disclosure to its affiliates, attorneys, agents and accountants, the rating agencies, investors and potential investors and in any report or as otherwise required by law or by its regulators.

Section 12.13. No Partnership or Joint Venture; No Origination. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, or joint venture. Notwithstanding anything herein to the contrary, in no event shall the parties hereto, or any third party deem or construe Buyer as the originator of the Conveyed Property.

Section 12.14. Indemnification. Seller shall indemnify and hold Buyer, its parents, affiliates, subsidiaries, shareholders, officers, directors, employees, attorneys and agents (each, a "Buyer Indemnified Party") harmless from and against any and all Claims, actions, and proceedings asserted or brought by a third party, and from and against any and all costs, expenses, damages, and liabilities incurred or suffered by any Buyer Indemnified Party (including without limitation attorneys' fees, consultant fees, in-house counsel fees, costs or expenses) resulting from, attributable to, or arising out of (1) the breach or inaccuracy of any representation or warranty of Seller in this Agreement, (2) Seller's

20

 

breach of any covenant, obligation, promise, agreement or term in this Agreement, or (3) Seller's breach of any requirement of law in the performance of its obligations under this Agreement, including without limitation in the origination and/or servicing of any Receivable; provided, however, that in no event shall Seller be obligated for any claims, expenses, losses, or damages resulting from the willful misconduct of Buyer or its employees.

Section 12.15. Inspection. From the Closing Date until the first day following the date on which all Receivables purchased hereunder are indefeasibly paid in full to Buyer, Seller shall permit, on not less than two (2) days prior written notice, any person who is reasonably designated by Buyer to visit and inspect Seller's records relating to Receivables and will cause its personnel to assist in any examination of such records by the Buyer or its authorized agents. The examination referred to in this Section 12.15 will be conducted in a manner which does not unreasonably interfere with the Seller's normal operations or customer or employee relations.

Section 12.16. Timely Payment of Amounts Due. Any payment or money due from Seller to Buyer hereunder which is not paid within the time specified, or if no time is specified, within ten (10) days after demand for payment is made, shall accrued interest at the rate of one and one-half percent (1¹A%) per month or the highest rate allowed by applicable law, whichever is higher.

[SIGNATURES FOLLOW]

21

 

By:               /s/ Michael Kaplanis

Name:        Michael Kaplanis

Title:          CEO

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

NICHOLAS FINANCIAL,INC. as Buyer

By:  /s/ Doug MarohnName:Doug Marohn

Title:President and CEO

PLATINUM AUTO FINANCE OF TAMPA BAY, LLC as Seller

FINANZA ACCEPTANCE LLC as Seller

By:                  /s/ Michael Kaplanis

Name:          Michael Kaplanis

Title:            CEO

22

 

EXHIBIT A
BILL OF SALE

Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company, ("Seller"), pursuant to the Bulk Receivables Purchase and Sale Agreement dated as of even date hereof (the "Agreement"), by and between Seller and Nicholas Financial, Inc., a Florida Corporation ("Buyer"), for good and valuable consideration paid by Buyer, the receipt and sufficiency of which are hereby acknowledged, does hereby sell, assign, transfer, set over and convey, subject to the terms of the Agreement, the Conveyed Property, unto Buyer, its successors and assigns, for its and their own use forever.

Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Agreement.

This Bill of Sale and the covenants and agreements contained herein shall be binding upon Seller, its successors and assigns, and shall inure to the benefit of Buyer, its successors and assigns.

THIS BILL OF SALE IS MADE WITHOUT ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT.

IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed in its name by a duly authorized representative this 20th day of February, 2020.

Platinum Auto Finance of Tampa Bay, LLC as Seller

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:CEO

FINANZA ACCEPTANCE LLC as Seller

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:CEO

A-1

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:    CEO

$18,016,045.11

THIS SCHEDULE OF CONTRACTS IS ISSUED PURSUANT TO AND IS SUBJECT TO ALL THE TERMS AND CONDITIONS OF THE RECEIVABLES PURCHASE AND SALE AGREEMENT DATED February 20, 2020, BETWEEN BUYER AND SELLER.

SELLER HEREBY CERTIFIES, REPRESENTS AND WARRANTS TO BUYER THAT THE INFORMATION ATTACHED HERETO AS SCHEDULE 1 IS, TO THE BEST OF SELLER'S  KNOWLEDGE, CURRENT, TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON AND AS OF THE CUT-OFF DATE.

Platinum Auto Finance of Tampa Bay, LLC as Seller

EXHIBIT B

RECEIVABLES SCHEDULE

Schedule 1: 2 Page[s] Attached Hereto With List of Contracts

Cut-Off Date:February 17, 2020

Buyer:Nicholas Financial, Inc.

Seller:Platinum Auto Finance of Tampa Bay, LLC

Closing Date:February 20, 2020

Purchase Price Percentage of Par:0.95% Percent

Recourse Period: For Contracts with monthly Scheduled Payments: 2 payments For Contracts with semi-monthly Scheduled Payments: 4 payments

TOTAL PURCHASE PRICE FOR ALL CONTRACTS ON THIS SCHEDULE:

By:  /s/ Michael Kaplanis

Name:Michael Kaplanis

Title:CEO

FINANZA ACCEPTANCE LLC as Seller

B-1

Schedule 1 to Exhibit B

2176 ACCOUNTS listed below:

1031

2504

4056

5057

6474

1109

2548

4089

5068

6496

1121

2582

4090

5103

6519

1233

2593

4102

5204

6520

1244

2605

4135

5215

6564

1288

2650

4191

5226

6575

1345

2706

4203

5316

6632

1378

2717

4214

5383

6676

1389

2751

4247

5394

6687

1413

2920

4269

5484

6700

1514

2953

4292

5529

6766

1547

2964

4304

5541

6788

1569

2986

4359

5620

6845

1570

3033

4382

5664

6889

1604

3055

4405

5709

6902

1615

3077

4416

5776

6913

1637

3112

4427

5800

6980

1648

3246

4461

5855

6991

1693

3268

4472

5866

7059

1738

3325

4494

5877

7060

1839

3336

4528

5888

7082

1873

3459

4539

5899

7093

1884

3471

4551

5901

7138

1929

3482

4562

5912

7172

1930

3561

4584

5945

7183

1963

3606

4607

5978

7228

1996

3640

4641

5989

7240

2009

3651

4663

6003

7251

2010

3673

4685

6014

7307

2076

3718

4708

6070

7329

2144

3741

4719

6104

7374

2234

3796

4731

6115

7385

2267

3820

4742

6126

7396

2290

3864

4764

6272

7419

2302

3886

4775

6283

7464

2324

3954

4887

6294

7486

2335

3976

4898

6340

7509

2368

3987

4944

6373

7521

2379

3998

4999

6395

7565

2425

4012

5002

6407

7600

2481

4045

5013

6441

7633

 

7677

8803

10492

14395

17938

7701

8869

10526

14463

18007

7723

8892

10706

14520

18018

7789

8948

10740

14542

18029

7857

8959

10896

14834

18030

7914

8971

11044

14957

18085

7925

8982

11235

14991

18096

7936

8993

11325

15015

18120

7969

9006

11459

15048

18300

7970

9028

11527

15059

18401

7992

9039

11752

15060

18456

8005

9095

11910

15116

18467

8027

9118

12146

15138

18535

8038

9141

12315

15240

18557

8049

9152

12348

15329

18568

8050

9185

12450

15497

18647

8061

9219

12539

15510

18704

8072

9231

12618

15532

18748

8106

9297

12652

15543

18838

8128

9310

12810

15756

18849

8139

9321

12911

15879

18883

8207

9387

12988

15880

18940

8229

9433

12999

15925

18995

8230

9444

13114

16005

19109

8241

9466

13136

16319

19143

8252

9477

13170

16331

19176

8285

9556

13293

16511

19233

8308

9590

13350

16566

19266

8319

9602

13361

16577

19334

8320

9624

13383

16667

19413

8331

9668

13619

16702

19424

8342

9691

13675

16746

19457

8353

9736

13811

16825

19491

8409

9758

13822

16948

19536

8487

9769

13855

17051

19569

8498

9859

13912

17231

19570

8511

9893

13956

17286

19592

8522

9950

14014

17309

19604

8588

9994

14025

17400

19615

8599

10076

14047

17488

19671

8601

10122

14058

17501

19727

8690

10223

14159

17602

19806

8724

10256

14171

17613

19828

8757

10289

14182

17646

19851

8779

10290

14249

17714

19907

 

19930

21887

28705

38548

42789

20000

21922

29504

38582

42824

20088

21955

30078

39088

42846

20099

22013

30810

39336

43061

20112

22103

31068

39358

43083

20123

22114

31271

39370

43454

20134

22136

31293

39415

43588

20178

22169

31417

39628

43623

20325

22170

31664

39729

43690

20392

22237

31811

39921

43702

20505

22282

32069

40080

43724

20516

22305

32474

40349

43735

20583

22327

32676

40383

43780

20662

22338

32744

40473

43814

20695

22350

33105

40518

43881

20707

22372

33138

40529

43892

20741

22495

33497

40675

44040

20763

22585

33655

40822

44084

21012

22596

33688

40877

44129

21034

22653

33756

41025

44163

21056

22664

33767

41148

44264

21067

22710

33790

41159

44275

21090

22822

34050

41328

44309

21135

22844

34498

41362

44400

21157

22901

34757

41407

44411

21179

22934

34869

41519

44444

21315

22956

34960

41542

44556

21360

22990

35040

41564

44590

21393

23025

35051

41609

44679

21405

23069

35321

41654

44747

21449

23070

35624

41711

44781

21506

23081

35714

41733

44837

21618

23104

36131

41845

44859

21630

23137

36276

41902

44860

21641

23159

36647

41935

44905

21663

23193

36793

41991

44916

21674

23216

36917

42093

44972

21685

23238

37356

42161

45052

21719

23249

37660

42206

45074

21720

23306

37671

42228

45108

21731

23339

37761

42396

45119

21775

23351

37873

42408

45142

21797

23362

38256

42509

45209

21809

23373

38368

42688

45355

21865

25634

38492

42712

45445

 

45490

48101

49966

51363

52915

45591

48123

50003

51385

52959

45614

48156

50014

51453

52971

45670

48213

50036

51475

53006

45704

48246

50047

51486

53039

45771

48279

50058

51554

53107

45883

48280

50069

51565

53129

45951

48291

50070

51576

53130

46031

48381

50104

51598

53163

46097

48404

50159

51633

53185

46132

48426

50171

51644

53196

46143

48437

50182

51666

53219

46233

48482

50193

51699

53231

46288

48516

50249

51701

53242

46323

48549

50261

51712

53286

46334

48594

50272

51789

53321

46356

48774

50294

51802

53343

46424

48796

50384

51824

53411

46446

48853

50452

51868

53466

46468

48886

50586

51879

53488

46491

48909

50610

51914

53512

46514

48954

50665

52218

53545

46615

49056

50687

52274

53826

46626

49078

50733

52296

53949

46840

49090

50777

52353

53972

46862

49168

50834

52364

54175

46963

49191

50845

52476

54311

47065

49214

50867

52522

54355

47100

49236

50902

52533

54434

47212

49258

50979

52544

54489

47289

49304

50980

52566

54535

47335

49326

51004

52577

54580

47380

49416

51015

52588

54591

47403

49438

51093

52601

54692

47469

49449

51116

52645

54726

47571

49450

51138

52690

54962

47593

49483

51149

52702

54984

47627

49573

51161

52724

55019

47728

49696

51217

52779

55109

47739

49731

51239

52803

55165

47773

49797

51240

52825

55301

47863

49809

51273

52869

55312

47931

49876

51307

52881

55446

47953

49922

51330

52892

55536

48088

49944

51352

52904

55626

 

55738

57864

59530

61319

62657

55895

57886

59563

61353

62703

55918

57965

59585

61386

62725

55941

57998

59596

61476

62770

56054

58001

59619

61522

62792

56212

58045

59709

61544

62804

56302

58056

59721

61634

62837

56335

58078

59754

61656

62859

56380

58089

59800

61667

62882

56436

58124

59866

61678

62893

56469

58146

60004

61702

62927

56504

58292

60149

61779

62949

56706

58427

60172

61870

62972

56829

58438

60217

61881

63018

56874

58450

60239

61915

63029

56908

58539

60329

61926

63120

56942

58551

60341

61959

125176

56953

58618

60363

61971

125244

57011

58652

60385

61982

125255

57055

58708

60420

62006

125299

57112

58731

60486

62017

125312

57134

58775

60509

62028

125323

57145

58786

60521

62040

125334

57202

58832

60543

62051

125356

57257

58843

60554

62084

125413

57268

58887

60587

62107

125424

57314

58900

60701

62130

125446

57336

58922

60723

62152

125479

57392

58966

60734

62174

125503

57426

58999

60778

62219

125536

57460

59046

60846

62253

125558

57482

59103

60914

62275

125569

57527

59136

60925

62309

125570

57538

59158

60947

62310

125581

57549

59215

60958

62343

125592

57550

59248

61050

62376

125626

57594

59271

61083

62387

125660

57606

59293

61094

62411

125716

57639

59327

61139

62433

125761

57662

59338

61162

62444

125806

57730

59349

61195

62466

125840

57752

59350

61207

62512

125862

57763

59439

61218

62589

125907

57785

59507

61230

62590

125929

57853

59529

61308

62613

125930

 

125974

127246

128731

130082

131320

126021

127268

128786

130093

131342

126032

127381

128821

130105

131397

126098

127437

128843

130127

131443

126100

127448

128854

130150

131454

126111

127471

128900

130217

131476

126199

127505

128977

130240

131498

126212

127527

128988

130251

131511

126223

127538

129013

130262

131599

126289

127572

129024

130273

131612

126324

127628

129035

130329

131623

126368

127639

129057

130363

131645

126380

127729

129068

130374

131667

126391

127785

129080

130431

131724

126436

127853

129091

130486

131757

126469

127875

129103

130510

131768

126492

127909

129125

130521

131780

126515

128012

129169

130532

131803

126526

128023

129226

130543

131814

126537

128034

129237

130587

131858

126616

128045

129248

130600

131881

126649

128078

129259

130611

131926

126728

128089

129349

130633

131959

126739

128113

129361

130677

131971

126740

128157

129394

130699

131982

126773

128168

129417

130701

131993

126784

128180

129428

130734

132017

126830

128191

129440

130745

132039

126874

128236

129451

130756

132095

126919

128269

129495

130790

132129

126931

128292

129518

130802

132141

126942

128304

129530

130857

132163

126953

128315

129619

130868

132196

126964

128359

129675

130891

132208

126997

128371

129686

130914

132219

127011

128382

129697

130925

132220

127022

128393

129709

130958

132242

127033

128405

129710

130970

132253

127044

128450

129765

131016

132275

127099

128517

129776

131027

132286

127167

128562

129822

131083

132297

127189

128595

129877

131128

132310

127190

128607

129945

131140

132321

127202

128618

130048

131218

132365

127224

128720

130060

131274

132376

 

132398

133670

134840

135964

136842

132411

133737

134862

135997

136954

132488

133759

134873

136000

136976

132512

133849

134895

136022

136998

132567

133850

134918

136066

137102

132613

133872

134930

136101

137269

132668

133883

134941

136112

137270

132679

133951

134952

136123

137427

132680

133973

135010

136134

137539

132758

134008

135043

136145

137618

132769

134019

135065

136189

137641

132781

134053

135098

136190

137685

132792

134097

135100

136224

137731

132826

134110

135122

136257

137742

132859

134121

135133

136268

137898

132871

134132

135177

136279

137911

132949

134211

135212

136280

137922

132950

134222

135256

136291

138024

132961

134233

135335

136303

138046

132972

134244

135357

136336

138079

132983

134255

135368

136369

138293

133007

134277

135391

136370

138305

133018

134288

135403

136381

138338

133063

134299

135414

136404

138361

133096

134390

135436

136426

138383

133108

134402

135469

136437

138394

133119

134413

135470

136459

138439

133175

134424

135537

136493

138473

133197

134468

135559

136505

138507

133210

134491

135593

136550

138574

133221

134514

135605

136583

138585

133254

134525

135649

136594

138596

133333

134604

135672

136606

138608

133344

134615

135706

136617

138697

133355

134637

135739

136639

138709

133366

134648

135762

136640

138710

133388

134659

135773

136673

138754

133399

134682

135784

136684

138798

133401

134693

135795

136718

138811

133467

134738

135818

136729

138855

133535

134750

135829

136730

138901

133546

134783

135830

136741

138967

133568

134794

135841

136763

139115

133579

134806

135874

136774

139227

133603

134839

135908

136796

139238

 

139250

141769

142603

143503

144414

139261

141770

142625

143525

144470

139306

141837

142636

143558

144515

139317

141848

142669

143581

144526

139351

141859

142670

143592

144537

139407

141860

142726

143626

144548

139429

141893

142737

143637

144560

139430

141905

142748

143659

144571

139441

141927

142760

143660

144582

139485

141938

142782

143716

144593

139575

141950

142805

143727

144616

139621

141961

142816

143738

144627

139665

141994

142827

143761

144638

139698

142007

142872

143772

144649

139700

142018

142883

143783

144650

139711

142041

142894

143806

144683

139722

142063

142939

143828

144694

139788

142074

142962

143840

144706

139823

142085

143019

143862

144728

139834

142108

143042

143918

144739

139867

142119

143064

143930

144740

139889

142142

143075

143941

144762

140005

142175

143086

143963

144784

140038

142197

143110

143974

144818

140049

142210

143121

143996

144830

140106

142221

143132

144009

144852

140128

142232

143143

144010

144863

140140

142243

143187

144021

144874

140162

142265

143198

144032

144896

140173

142298

143222

144065

144908

140207

142344

143266

144100

144919

140791

142366

143277

144111

144964

140993

142377

143288

144144

144975

141152

142388

143301

144155

144997

141163

142412

143312

144166

145000

141309

142423

143345

144177

145022

141343

142434

143356

144188

145044

141354

142445

143389

144199

145077

141444

142478

143413

144212

145088

141501

142490

143424

144245

145099

141589

142502

143435

144256

145189

141624

142513

143446

144267

145190

141657

142546

143468

144290

145224

141725

142568

143479

144335

145257

141758

142591

143491

144380

145280

 

145303

146191

146988

147822

148610

145336

146236

147013

147833

148665

145347

146247

147024

147844

148676

145358

146270

147035

147855

148687

145392

146292

147068

147888

148700

145437

146315

147079

147899

148711

145471

146326

147091

147901

148722

145493

146348

147103

147912

148744

145505

146371

147114

147934

148755

145527

146416

147125

147956

148766

145538

146427

147136

147967

148777

145549

146438

147158

147978

148801

145550

146449

147170

148014

148812

145561

146472

147204

148025

148823

145572

146483

147215

148036

148834

145583

146494

147226

148047

148867

145628

146506

147237

148058

148878

145640

146517

147259

148069

148889

145651

146528

147260

148070

148890

145673

146539

147282

148081

148902

145684

146540

147305

148115

148913

145695

146562

147327

148137

148924

145718

146584

147350

148148

148946

145730

146595

147361

148159

148957

145741

146630

147428

148160

148968

145774

146641

147473

148171

148991

145808

146652

147518

148182

149015

145820

146663

147541

148193

149037

145842

146674

147563

148205

149059

145853

146708

147574

148216

149071

145875

146731

147585

148429

149082

145909

146742

147608

148441

149093

145910

146753

147619

148452

149105

145921

146764

147620

148463

149127

145932

146775

147642

148485

149149

145943

146809

147664

148496

149183

145965

146854

147675

148508

149206

145976

146865

147697

148520

149228

146012

146898

147709

148531

149240

146023

146900

147721

148542

149251

146034

146911

147743

148553

149262

146045

146933

147754

148564

149273

146089

146944

147765

148575

149295

146090

146966

147776

148586

149307

146124

146977

147811

148597

149318

 

149329

150039

150635

151388

149330

150051

150646

151399

149341

150084

150668

151434

149363

150095

150679

151445

149374

150107

150680

151467

149385

150118

150691

151489

149396

150129

150714

151502

149420

150130

150758

151513

149431

150141

150769

151535

149442

150163

150792

151557

149453

150185

150804

151568

149464

150196

150815

151579

149475

150219

150826

151580

149486

150231

150848

151591

149509

150242

150871

151603

149510

150253

150882

151614

149521

150264

150905

151647

149565

150275

150916

151658

149576

150286

150949

151681

149587

150297

150950

151692

149598

150310

150961

151726

149600

150321

150972

151737

149611

150332

150983

151748

149622

150354

150994

151760

149655

150365

151007

151771

149666

150376

151018

151782

149688

150387

151029

151805

149699

150398

151052

151816

149701

150400

151085

151849

149723

150411

151119

151872

149767

150433

151120

151883

149778

150444

151131

151894

149789

150455

151142

151906

149802

150466

151153

151917

149813

150488

151164

151928

149824

150512

151197

151962

149879

150523

151209

149936

150545

151221

149947

150556

151243

149958

150567

151254

149969

150578

151265

149981

150590

151276

150006

150602

151300

150017

150613

151311

150028

150624

151366

 

EXHIBIT C

CONTENTS OF ELECTRONIC DATA FILE

[Values marked with asterisk * are required]

DESCRIPTION

*ACCOUNT NUMBER IN SELLER SERVICING SYSTEM

*OBLIGOR FIRST NAME

*OBLIGOR LAST NAME

*OBLIGOR CURRENT STREET ADDRESS

OBLIGOR EMAIL ADDRESS

*OBLIGOR SOCIAL SECURITY NUMBER

OBLIGOR DATE OF BIRTH IN MM/DD/YYYY FORMAT

*OBLIGOR CURRENT HOME PHONE NUMBER

OBLIGOR CURRENT MOBILE PHONE NUMBER

OBLIGOR CURRENT WORK PHONE NUMBER

OBLIGOR DRIVER'S LICENSE NUMBER

OBLIGOR CURRENT EMPLOYER

*OBLIGOR CURRENT GROSS MONTHLY INCOME

OBLIGOR CURRENT EMPLOYMENT IN YEARS AND MONTHS

OBLIGOR CURRENT RESIDENCE STATUS: OWN, RENT, OTHER

OBLIGOR CURRENT RESIDENCE IN YEARS AND MONTHS

OBLIGOR CURRENT CREDIT SCORE

*CONTRACT INTEREST ACCRUAL METHOD: DAILY SIMPLE INTEREST (SIMPLE) OR PRE COMPUTED (PRECOMP) A.K.A. RULE OF 78'S

*CONTRACT DATE OR ORIGINATION DATE

*AMOUNT FINANCED

*ANNUAL PERCENTAGE RATE (APR)

*FINANCE CHARGE

*NUMBER OF PAYMENTS OR CONTRACT TERM

*REGULAR PAYMENT AMOUNT

INDICATES IF REGULAR PAYMENTS ARE SCHEDULED ONCE A MONTH (MONTHLY)

DATE OF LAST REGULAR MONTHLY PAYMENT OR MATURITY DATE

*DATE OF FIRST REGULAR MONTHLY PAYMENT

*DATE OF THE NEXT REGULAR SCHEDULED PAYMENT

*ACCOUNT PAYOFF AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

*PRINCIPAL BALANCE AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

 

*INTEREST BALANCE AS OF THE PORTFOLIO SALE DATE: THE AMOUNT OF INTEREST THAT HAS ACCRUED FROM THE LAST PAYMENT TO THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

LATE CHARGES OWED AS OF THE INTEREST ACCRUED THROUGH DATE (CUT-OFF DATE)

*AMOUNT OF LAST PAYMENT

*DATE OF LAST PAYMENT

TOTAL NUMBER OF REGULAR PAYMENTS MADE

*AMOUNT PAID FOR GAP INSURANCE

*AMOUNT PAID FOR VEHICLE WARRANTY

*DOWN PAYMENT

*THE BALANCE OF THE PURCHASE DISCOUNT AS OF THE INTEREST ACCRUED THROUGH DATE (CUTOFF DATE)

*ACCOUNT BALANCE PURCHASED BY BUYER

*PRICE PAID FOR RECEIVABLE (AFTER DISCOUNT)

*VEHICLE IDENTIFICATION NUMBER (VIN)

*VEHICLE MODEL YEAR

*VEHICLE MAKE

*VEHICLE MODEL

*CASH PRICE OF VEHICLE

VEHICLE COLOR

VEHICLE MILEAGE

*VEHICLE VALUE

VALUATION DATE

*TITLE NUMBER

TRACKING DEVICE NUMBER, IF THE VEHICLE IS EQUIPPED WITH A GPS TRACKING DEVICE.

*CO-OBLIGOR FIRST NAME

*CO-OBLIGOR LAST NAME

*CO-OBLIGOR CURRENT STREET ADDRESS

CO-OBLIGOR EMAIL ADDRESS

*CO-OBLIGOR SOCIAL SECURITY NUMBER

CO-OBLIGOR DATE OF BIRTH

CO-OBLIGOR CURRENT HOME PHONE NUMBER

CO-OBLIGOR CURRENT MOBILE PHONE NUMBER

CO-OBLIGOR CURRENT WORK PHONE NUMBER

CO-OBLIGOR DRIVER'S LICENSE NUMBER

CO-OBLIGOR CURRENT EMPLOYER

*DATE PAYMENT DUE

*DATE PAYMENT MADE

*HOW PAYMENT MADE

*AMOUNT OF PAYMENT. NEGATIVE AMOUNTS SHOULD BE EXCLUDED.

*DEALER LEGAL NAME

 

PRIMARY CONTACT FIRST NAME

PRIMARY CONTACT LAST NAME

PRIMARY CONTACT TITLE

DEALER CURRENT STREET ADDRESS

PRIMARY CONTACT EMAIL ADDRESS

PRIMARY CONTACT PHONE NUMBER

REFERENCE RELATIONSHIP TO OBLIGOR

REFERENCE FIRST NAME

REFERENCE LAST NAME

REFERENCE CURRENT STREET ADDRESS

REFERENCE CURRENT CITY

REFERENCE CURRENT STATE

REFERENCE CURRENT ZIP CODE

REFERENCE EMAIL ADDRESS

REFERENCE HOME PHONE

REFERENCE MOBILE PHONE

REFERENCE WORK PHONE

*COLLECTION NOTES WITH DATES

 

EXHIBIT D

FORM OF NOTICE OF TRANSFER

TO BE SENT TO OBLIGOR

AUTO FINANCE

<Date>

CUSTOMER NAME

ADDRESS

CITY STATE ZIP

<ACCOUNT NUMBER>

Dear CUSTOMER

Please be advised that on February 20, 2020 your account with Platinum Auto Finance was sold and assigned to Nicholas Financial, Inc.. Please be assured that this is a normal transaction and in no way affects your payments, payment due dates, the terms of your contract or liability. Any payments received from you after February 20, 2020 will be endorsed and forwarded to Nicholas Financial, Inc.

All future payments and correspondence should be made payable to Nicholas Financial, Inc., and mailed to the following address:

BUYER PAYMENT ADDRESS

You may pay online at www.nicholasfinancial.com

You may also pay via the phone by calling 800-237-2721.

If you should have any questions concerning this transfer, please contact Nicholas Financial, Inc., at 2454 McMullen Booth Road, Building C, Clearwater, FL 33759.

Sincerely,

Platinum Auto Finance

 

By:    /s/ Michael Kaplanis
Name:    Michael Kaplanis

Title:CEO

NICHOLAS FINANCIAL, INC. as Buyer

By:              /s/ Doug Marohn

Name:           Doug Marohn

Title:President and CEO

Schedule 1 to Exhibit E- VIN List of Vehicles

EXHIBIT E

RATIFICATION

On February 20, 2020, Platinum Auto Finance of Tampa Bay, LLC, a Florida limited liability company having an address at 25 N. Main Avenue Clearwater, FL 33765 ("SELLER"), assigned and sold all interest in the attached list of vehicles (Schedule 1) to Nicholas Financial, Inc., a Florida Corporation, having an address at 2454 McMullen Booth Road, Building C, Clearwater, FL 33759 ("BUYER") for consideration. This document ratifies that agreement.

PLATINUM AUTO FINANCE OF TAMPA BAY, LLC as Seller

By:/s/ Michael Kaplanis

Name:Michael Kaplanis

Title:CEO

FINANZA ACCEPTANCE LLC as Seller

 

Exhibit 10.22.3

2176 VINS listed below:

1GKFC33J49R224151 2A4RR5DG6BR610764 4T1BE46K37U118763 1N4AL2APXAN448291 4T1BF3EK2AU579078 1FMEU6DE4AUB 14141 5TDZK23C28S224690 2FMDK38C27BB68173 2B3CA4CVXAH245105 JN8AZ08W65W433723 4T1BK36B15U020170 1GCEC19V67Z126970 JN8AZ08T66W403502 1FTPW12596KB69846 2FMDK38C68BA94659 1N4AL3AP4GN329425 2T3WFREV6EW080957 5N1BAO8D38N631932 1LNHL9DR3BG604557 2B3CA3CV5AH198317 WMWRF33588TF68425 1D7HA18D05S118418 1LNHL9DR7CG804343 2C3CCAAG9DH685174 WVWMN7AN2BE718810 1N4AL3AP7FC275600 1FTRX14W78FA17877 JN1CV6EK1AM 104781 1J4GK58K57W545513 1GCEC14X78Z273597 KMHTC6AD2DU149982 1C3CDZAG3EN220491 3VWDX7ADBM313357 3VWRM71K59M023964 1J8GS48K87C507557 1HGCS2B82BA003051 5NPET46CX9H560503 5NPEC4AC1DH521251 WVWMN7AN8BE718827 1GNSKAEO9BR315273 2T1BU4EE9CC835453 5NPDH4AE3GH754888 1N4AL3AP7DN420619

1G11C5SAXGF158540 KM^-HGC46E69U037040 1N6AD0ER7CC449613 1FTPW12546FA11195 4T1BF1FK4EU446511 5NPEB4AC6DH778442 1GCRCSE06BZ3 84402 KMHDH4AE6FU438157 3VWF17AT2FM634583 4T3ZK3BB7AU023676 1N4AL2EP6BC109163 5XXGN4A71DG127962 1NXBU4EE3AZ264862 1C3CDZAG5DN572342 1FMJK1K55AEB63191 JHLRE38777C064687 1GKDS13SX72182114 1GNLRFEDXAJ203501 JM1BL1L7XC1698582 JN8AS58T88W023601 JN8AZ1MU9CW106112 3GNBACFUXB S653715 WBAWL13549PX24600 3D4GG57V79T244286 1FMCUOGXOEUB23183 1A8HX58238F149988 2C3CDXBG6DH663504 2G1WF5E3XD 1225926 1ZVFT84N3 75297880 4T1CA38P26U 102734 3N1CN7AP9EL830878 WBAFR7C5OBC600466 5GAEV23768J191474 1N6AD0ER1CC483983 1J4GL58K57W645835 1J4GB59167L 160758 KMHDH4AE9DU5 19215 1N6ADOER8CC406043 JTHBL46F3 75007233 2D4GP44LX7R204006 1FMFU17557LA49625 19UUA8F25AA005780 1N6BAOCH5CN330504

2G1WG5E37D1205436 JN8AS5MTODW503471 1GNFC13C99R224333 WBAPH7G53BNN04398 1FTYR14U06PA59657 2GKFLVEK7D6134563 1N4AL3AP5FC449096 3FAHPOJG2CR350086 1FTPW12V17FB82181 2G1FC1EV8A9188360 5TFRT54168X021551 JNKCV61F19M053752 KNAFX4A84E5096370 1GKLRMED9AJ178785 JA4MS41X97U010702 1GCEC14X67Z646126 3GTP1VE0OCG103971 1J4NT1GA3BD 132287 3VWDP7AJODM232482 5NPEC4AB5DH754279 JTDZN3EU6C3 048336 2HGFA1F53AH558293 1N4AL3AP0DC298276 1D4HD58286F143118 1J8GP28K69W530651 JN8AF5MV6BT007546 1J4FA24147L205197 3C4PDCAB5ET173947 5UXZW005OBL661878 1YVHZ8BH3B5M18658 JTDKN3DU2C1581721 2A4RR8D1XAR457804 1LNHM94R49G630592 JN8AZ18W59W145932 1FAHP2KT8AG149868 WBA3B1C56DF462549 1FADP3F2XFL233856 2CNALPEW7A6320146 4JGCB65E39A100501 1ZVHT8ON295139516 19XFB2F55DE097678 1J8HH48P97C510420 SNPEB4ACXBH174843

1N4AL2AP7CC222692 3N1AB7AP5FL660715 JN8AS5MT1BW189276 1FMFU17537LA86690 JNKAY01E07M310397 1G1ZE5E09AF321685 2T2GK31U57CO24219 5NPDH4AE7DH259721 WBAVA37578NL17730 1N4AL21E19N401984 KNAFX4A64G5439759 5NPEB4AC1DH518076 2C4RDGCG6GR 181795 5NPEB4AC1DH772015 2HGFG1B86AH511418 2T1KU4EEXAC463022 1FADP3K27DL298215 1G1PC5SB2E7106071 KMTICT4AE5GU956112 1J4PP2GK7AW173181 2CNALPEW7A63 84347 KMHD74LFOHU149707 1N4AL2AP5CC179504 1FADP3F21DL275121 5XXGM4A71CG069529 KNADM4A32F6484231 1N4BA41E68C800146 3C4PDCABXFT596430 2T1BU4EEXCC786005 1YVHZ8CH4B5M27223 1C4NJPBB3FD274997 3FADP4BJ7EM204217 1D7HU18288J 151442 1GNLRFEDXAS101027 JS2RE9A84B6 110279 2HGFG12808H582205 KMHDH4AE5FU456827 5J8TB1H29AA003334 1C3CCCAB9FN657580 5N1AT2MT2FC871965 1HGCP2F34BA154490 1C3CCBBB6DN577398 1ZVHT8ON385118091

JF1GH7G64AG823748 19UUA66256A014698 1HGCP26349A020668 1FAHP2DW5CG118636 2HGFG4A51CH704765 1N4AL3AP1DN501079 1HGCP26429A132703 1FMJK1H57BEF37616 3VW267AJ9GM222550 KNAFK4A65G5484899 1GNLRGED9AS 129908 KNDPB3AC7E7611158 5N1AR18U68C607775 JN8AS5MT8FW661785 2C3CDXBG1EH193397 5YFBU4EE7DP094706 JN8AS5MTXFW162034 JHMAP21438S000442 1N4AA51E59C809374 3GYFNGE32CS526225 5NPEC4AC3DH659647 1G4PS5SKXD4169148 1N4AA5AP4BC849730 3C4PDCBGXET192360 1J4FA44S36P727380 1FADP3F27DL294529 KMHDH4AE7BUO96633 KNDMG4C74C6476511 2GNALBEK4C 1290969 2C3CDXCT1EH338241 WDBTJ56H47F205492 4T1BE46K08U240885 1C4NJCBAOFD3 97253 1FADP3L98EL203903 1D4PU4GK4BW607670 JM3ER2W3XA0346803 1FTPW12V88FB56064 1J4AA2D19AL105999 JTEBUl7RX30018951 5KBCP3F80AB 003315 1FT8W3BT3BEA00185 JNKAY01E27M302804 5N1AT2MV9GC781764

 

2HGFA16649H340190 1C3CCCAB5GN148314 1J4RS4GG1BC591432 1FTPX14524NC01591 2C3CCABG7CH273784 2FMDK4KC2BBA26249 4F2CY0C7XAKM02080 JTKJF5C78B3 016675 1N6BA06A18N323023 5GAER13D09J197793 JTMZD33V675048121 5XYKT3A15CG288041 1N6BAO7A35N523122 WDDGF54X39F232058 1D4SD6GTOBC681975 JTLKE50E391088394 1G11C5SL7FF256313 1G1PG5SBOG7225146 1FTRW12W26FA22858 NMOLS7BN8DT133552 1FM5K7D88DGC06457 JN8AZ1MW4CW201632 1FTWW31PX7EA81642 2CTALMEC3B6257612 3GYFNBEY6BS597960 2GNALAEK6F6439657 1GTHK29K37E507582 1G1PE5SB4E7119396 2C3CDYAG4DH652055 1FADP3F29EL279872 3VWDX7AJ2BM327395 3VWDP7AJODM244342 2G1FS1EW4B9109294 1J4GB39149L756863 1N4AL3AP3EC115499 5TDZA22C96S455443 1G4PR5SK6F4103145 1G11D5SL8FF266152 JH4CU2F68BC005780 1HGCT1B35FA004695 JM1BM1U76G1322334 1GNFK13027R214426 1G6DG5EG5A0123457 2G1WB58K179243641 WVWMP7AN7CE5 14502

1N4AL2AP1CC201191 5N1AR1NN5AC604224 JA32W8FV9BU009881 1FAHP2E8OFG165089 1FADP3F21DL275121 1GNDS13S082153435 3N1AB7AP4EY228084 1D4PT4GX8BW505917 4T1BE46K19U918464 2GNALDEC5B 1287839 1ZVBP8AN0A5106723 5GAER23748J237453 1FADP3K29GL216800 1FMCUOEG6CKB02429 ZFBCFADH9EZO 19962 1G8MN35B69Y103723 WAlAY74L99D028504 1N6AA07B97N225312 1FMPU16506LA12874 1D3HA18218J107759 1ZVHT8ON6 85158200 1FTRW12W48KB 82346 1GNIRHED9AS101743 5N1AR1NNXAC603800 1FTPX12VX6NB41422 2C4RC1BG7DR770111 1GNEC13Z83R274535 1J8FF28W58D538493 1ZVBP8AN2A51 80208 1FMRU17WX4LA23586 1FMCU041X5KC79100 2HNYD1880511528464 1D7HA18268S578198 1GCEK19Z85Z211490 5NPEB4AC7CH324957 1YVHZ8CH6A5M34706 1J4PS4GK4AC163297 1FMFU175X7LA64489 JM3TB2MAXA0200804 5N1AR18U87C636323 1GNKRFED3BJ341698 5N1AR18U06C658041 1J4GL48K85W502059 1FAHP3F22CL455613 JN8AS58T58W004830

1G1PF5SCOC7310400 JN8AS58T18W011564 3VWD17AJ1EM416445 JS2YC416796200958 2B3KA53H17H786340 1FTEX1C83AFD84783 1G1ZC5E15BF333803 1FADP3E23DL129675 3D7KR28D65G761643 1N6BAO7A06N508031 4T1BK46K69U091876 JTHCK262185020783 1ZVFT8ON265 140989 2CKDL63F876024486 JTEGD21A360147956 1FTPW12575FB73773 JN8AS5MT4AW027074 JTKDE177X60123799 5TETU62N15Z059367 1ZVFT84N365262027 2C3JA53G95H124640 1ZVHT8ON785 117297 WDDGF54X99R047477 5NMSG13D08H190967 5NMSH13E47H015772 JH4CL96816C032208 KNDJT2A64C73 65481 2CNDL23F686283328 1N4AL21E29N514410 1J4GS48K76C168130 1FADP3F24EL251767 1J4FA39S35P352012 JN8AS5MT4BW187697 1GYEE637290103690 1J8FT28W68D799088 KM8JM12B99U970492 1HGCM56786A149702 JTLKE50EX91066408 5N1AR18U65C785326 1C3CCBABXCN168661 JTHBH96S065022699 2B3KA33V59H562193 1FTRX18L52NB01404 1GYEC63N46R138484 1J4FA29106P755867

3FAHPOHGOBR330780 3VWDX7ADCM309505 5N1AN08U59C505262 3FADP0L38AR112622 1FAHP2EW6BG159225 1HGCP2F84AA172143 1G4PP5SK4D4220483 KNDKG3A45A77 11578 YV4CY982671350427 4T1BF1FK9CU527694 1FMFU19537LA87738 1A4GJ45R67B201842 KNADN4A3XD6 189260 JH4CL96838C003876 1FMRU17W94LB40446 1FTSW31P54EC40710 5GRGN23U45H125147 3GCEC14V66G268791 WBAVB735X8P102096 19UUA66247A047144 5NPEB4AC8CH490999 1J4FA49S65P314909 1G6DW67V490165568 3N1AB7AP1EL663691 1N4AL2AP2BN420521 1D7HA18N84J123735 JN8AZ08T37W524098 1D3HB13T99S805514 2T1BU4EEXAC525342 1GKES63M172131197 JTEHD20V556035325 2A4RR5DG7BR647239 1J8GP28K68W144634 2A8HR54P38R687823 2G4WC582961313609 2A4RR6DG5BR784203 KNDJH741595037425 1N4AL2AP4CC211651 1J4FA49S41P364511 1FTPW12525KD45991 JA32U1FU2AU013371 3GCEC14X06G142685 NMOLS7DN8AT007510 5NPEC4AC4BH095021 5N1AA08B36N743797

SAJWA82C65SG35866 JNKAY01E46M103669 1D7HAl 8N14 S652213 1B3LC76M98N690208 19UUA76508A001294 2GNALDEK4C63 63143 1C3CDFBB4GD689485 5GAER23D79J140688 1GCHK23668F 176567 1D7HA18206S530855 WDDGF54X58F099835 3C3CH-DR8CT128358 1D7HA18N18J150975 19UUA86269A018422 1G2ZF57B884181397 1GNFC16007J 149566 JM3ER293 080195220 4A3AL25F77E050344 2CNDL13F776012125 1ZVFT82HX65143114 1GYEC63 T45R 184197 1FBNE3BL8BDB03425 1J8GP28K49W554933 1GCHK23U34F 179077 JNKAY01E76M114004 3GNEK13 TO3G128029 1J8GL58K36W112489 3GNEC13T03G328843 JN8AS5MT4AW022926 5LMFU27R14LJ39209 1FMCU03759KC99086 1D7HA18N54J227129 JN8AZ08W67W657495 1D7HU18D05 S248934 5N1AR18U76C627224 1FTRX14W97NA00549 2HGFA16527H313087 4T1BF3EK4AU089130 KMHDH4AE1BU148077 1FTPX12525NB25388 1N4AL3AP3DC102962 1G8ZS57BX9F125503 3N1AB7AP7FY263042 19UUA86509A016627 1G6KD57936U226603

 

2T1BU4EE0AC428764 1FTNW20P54EA17172 1N4BA41E98C829043 5NPEB4AC4DH626935 1D7HA18N65J652523 3VWRJ71K88M167080 5N1AR18U08C657202 5LMFU27R43LJ27523 KMHDH4AE1DU794237 1D7HA18NO6S523060 1FMFU20556LA09348 5LMFU28595LJ09761 19UUA8F21AA005226 1FTNX20P33EC03854 KMHDH4AE3CU273759 KMHDH4AEXBUO95069 WDDGF8BB4CR228292 JNKBV61F07M807314 1N4AL2EP9BC122375 1GYEE637180198516 2FTRX17244CA49104 5GADS13S362212212 1C3CDZAB2DN631125 3D7HA18NX2G176189 1J8HG48K37C670848 2HGFA1F37AH520614 1J8HS48P77C526763 1D7HAl 8N95 S185642 5NMSH13E89H248380 3FADP4AJ2FM107557 1G11B5SLOEF275500 3GNEC12Z26G117850 3GYFK66N56G180682 3FADP0L36AR328503 JN8AS58T39W047497 1D8GU58KX7W614410 JTHBK262672054391 5IFEV54168X068376 JM1BL1VFOC1511175 1ZVBP8AM6C5263196 1N6ED27T03C460278 JTKJF5C78B3 000962 WDDGF54X88F177945 3FAHPOJGOCR327793 2G1FB1EV3A9159173

3N1CN7AP6FL899061 3D7KS19D78G114671 1GCHK23192F197084 JM1BL1H67A1289212 JM3TB2MA6A0211511 2G1FF1EV2A9170539 3C4PDCABODT541790 JM3ER2W51A0315571 5FNYF284X6B046661 1J4GK48K27W7 18267 1GNLVFED2AS 127827 W04GN5EC4B1004236 1GCEK19B75E224550 3C4PDCBB1DT565742 WVWAK73C48E085985 1FTPX14V06NB23623 1GNDT13SX82245939 1G1ZG57B69F105989 1FTPX12V27NA03245 1N4AL21E18N462430 5N1AN08U88C504220 3N1AB7APXDL736121 2D4RN4DE2AR140468 2HJYK16237H551214 2A4RR5D18AR162599 2FMDK38C08BA75377 1G1RD6E4XDU127615 1N4AA51E69C842478 1FMEU33K47UA 15172 1FTRX02W57KD22443 1FTSX205X5EB82991 JTKJF5C78B3004638 5XYKU4A2XBG016806 2V4RW3D13AR236617 2GCEC13J381241123 1N4AL21E39N492577 1FMEU6DE7AUA46174 1GCEK19J48Z295936 1N6BA07A25N570061 5FNYF18107B021334 1C3CCBABXCN273247 5N1AR18U37C636696 1D4HD58D14F176928 1FTPW145X4KC40935 1G1ZB5E1XBF324887

1YVHZ8BH5C5M30781 3FAHP06ZX8R194932 5J8TB18558A017266 1GCHC29U54E189572 KMTITC6AD4CU027347 1C3CCBBG9DN703197 KM8JM12B39U114458 3N1BC1CP9BL446333 1J8HH58237C547814 1GTHK29U05E260195 3GNAL4EK1DS581401 2G1FA1EDXB9129891 JN8AS5MV5BW251750 1FAHP36N29W215527 1ZVFT84N755232088 KNDJF724487499190 5NPEB4AC2BH201033 2GCEK19T231285795 JM3ER2WM0A03 12135 1D7HA16K68J196245 1FTNW21PX3ED05640 KNAFT4A22B5342562 YV1MS672782359846 JM1BL1VF9B 1475470 1FTPW14VX6KC38038 1NXBU40E79Z063386 5NPEB4AC5CH342261 YV1CZ852251196157 KNAFU6A20B5462076 3 TMJU62N97M046213 KNDJT2A2X137204418 1FTPW12V18KC85092 5NPEC4AC1BH032894 JN8AS5MV6BW254883 3FA6POHR5DR3 12657 3VWD17AJ9FM3 00055 1FTSX21R18EA67153 4T1BF1FK8DU693027 3FA6P0H74DR165312 2HGFB2F51CH313420 1HGCP2F65CA093226 3FA6P0H77DR179771 5NPDH4AE2DH331778 3N1CN7AP1EL821172 1D7HA18207S132188

2C3CA5CV8AH 155315 1N4AL3AP6DC123837 5NPDH4AE8EH508741 1N4AL3AP3EC263846 1G1PA5SH6E7155378 3FA6P0HR8DR269481 KNAFX4A65E5207734 1G11D5RR4DF112285 1FAHP3F25CL106686 JTHBJ46G672023975 5XXGM4A72EG350628 3FA6P0H79DR371970 1C3CDZAB1DN648594 JH4CL96858C000591 JS2YA5A53C63 00064 5NPEC4AC4DH585946 1G11D5SL2FF126159 5NPEB4AC6DH702624 1N4AL3AP2EC424140 3FAHPOHA9BR235761 1G11D5SL5FF210928 1VWAT7A34EC080435 2G1WB5E36E1132530 3MZBM1U75FM170240 1GNKRGED6CJ131488 2C3CDXAT9DH608074 19XFB2F54CE062807 1FAHP2D98EG163275 1VWAT7A32FC038878 2GTEK13 T461207340 5FNRL38748B097332 3FAHPOJG9BR105977 5NPEB4AC7CH441857 3VWD17AJ8FM298086 2HGFA1F5OBH546877 1FMEU65E66UB24854 3FAHPOHA5BR189474 JTEGD21A370166184 1C3CDZAB5EN116024 1HGCP26808A069974 1FAHP2DW6AG160052 1N4AL3APOFN3 17447 KMHDH4AE4BU151104 2C3CDXBG4FH790075 2HGFG1B81AH508457

1G11A5SL5EF255746 3FA6P0HR9DR263544 5NPDH4AE9EH463938 1N4AL2AP1CN416283 1GKEV33708J134017 1N4AL2AP3CN448555 2G1WB5E34G1114398 1N4AL2AP6CC180788 3 TMJU4GN9BM112958 1C3CCBAB2EN168592 1C3CCCAB2FN759013 3VWDP7AJ8DM393694 5XXGM4A74EG350789 4T1BF1FK2FU031544 1C3CDZCB7CN157569 2CNALDEW0A6347333 2C3CCACG5CH1 82415 4T1BF1FK6EU754084 3N1CN7APOFL804123 4JGBB86E07A275162 1GYEK63N53R191838 5XXGT4L31GG001654 1GKKRNED4DJ213190 1N4AL2AP6BC109833 1HGCP36818A076227 5XXGN4A71CG057877 5NPEB4AC2EH863344 1G4HP57268U104379 2D4RN4DEXAR254296 5FNRL38717B 127207 JM3TB28A990178445 1GNFK13008R103505 3FAHPOHAXCR194185 1N4AL2AP1BC169986 5J6RE38329L017638 1G1PC5SB4F7196423 1N4AL3AP7GC161520 1C3CCCABOFN719562 19XFB2F56EE239098 3N1AB7AP2FY310414 1N4AA5AP2AC810438 5TBRT54187S456875 1N4AL3AP7FC467504 1C3CCCABOFN741366 5NMSG73D89H252779

 

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

KMTITC6AD3DU111046 JM3TB28A990179837 1G11D5SL8FF297160 3D4PG4FB0BT539950 KMTICT4AEXFU908104 1N4AA5AP7AC872918 5XXGM4A70DG174693 1C3CDFBB5FD 140537 2A4RR5DG9BR675589 5NPDH4AEODH232232 JTHCK262175012942 5NPEC4AC3EH822055 WVWMN7AN4BE714029 1FADP3K27EL3 01969 2C3CDXBG2CH203495 1N4AA5AP3DC816396 3N1AB7AP3FY253124 1N4AA5AP4AC827838 1C3CCCAB2FN745628 2C3CDXBG4FH716770 1G4GC5EG5AF267072 1C3CCCAB2FN679422 5NPEB4AC8DH603691 1FAHP2D89EG168573 1G1PA5SH3E7334932 JM1BL1SF2A1121597 1C3CCCAB3FN741670 KNAFX4A65F5340222 5FNRL38608B401358 4T1BK1FK4CU005468 2GKALMEKOE6125421 1C4NJCEAOED502528 2G1FA1E39E9163915 1B3CB3HA5BD246898 KNAFK4A60E5245998 3N1AB7AP4EL606479 5NPE24AF8GH283447 1G4GD5E39CF232712 19UUA66258A022965 5LMFU275X8LJ04008 1HGCP2F33CA116315 2CNALBEC5B6309995 JNKCV54EX6M712792 1G1PC5SB7F7137737 2T1BURHE1FC414498

3VWD17AJ2FM332474 1J8HH48K66C134858 2GNALBEKXE63 75286 2G1WB5E33E1124949 3VWD67AJ1GM261044 2GNFLFEK5F6197768 1N4AL3AP4GC 151480 1C3CCCAB6GN 155143 2G1FC1ED5B9116458 2GNALBEC2B 1193213 5NPDH4AE7DH220160 3C3CFFAR9DT515670 WBAVB77558NM05955 19UUA66288A034219 1FAHP2DWXCG117997 1C3CCCAB2FN723614 1N6AA06E28N304494 1FAHP2E83FG162400 5NPDH4AE5EH5 17283 3C3CFFAR0FT662947 1C4NJDEB3DD 192436 WDCGG5GB1AF486437 1G1PA5SHOF7173506 JM1BM1U72E1184983 KNDJP3A51F7788802 1HGCP2F32CA169586 4A4AP3AU3EE028879 1HGCP2F82BA136694 1ZVHT8ON975341900 4T1BF1FK3CU103136 1VWAP7A37CC033093 KNDMB5C16G6151882 3FA6POHD6HR111862 1ZVFT80N575258505 1N4AL2APXCC186142 1N4AL3APOEC402606 5NPDH4AE8DH3 79706 JN8AZ1MWXCW235638 4M2CU81Z38KJ47517 1HGCP26828A159367 3N1AB7AP3FL670563 1C3CCCAB3FN674584 4T1BF1FKXEU372530 1C3CCCABXGN164976 5NPE24AFOGH363146

2A4RR6DXXAR207052 1C4NJPBA1CD674284 1N4AL3APOGC206801 5NPEC4AC9DH771644 1G6DF577790136710 JM1GJ1U66F1167658 SAJWAOES6DPS65439 2C3CCAAG9EH127892 1G1PF5SC7C7328375 19XFB2F50EE035090 3N1AB7AP7FY258438 4T1BF1FK5GU603594 1G11E5SA3DF243628 3C3C1FERXCT169492 1FMCUOGX7DUC38345 JNKCV61E39M3 00258 1N4AA5AP6DC829336 1C3CCCAB2FN531870 5NPE24AF6GH410972 KNAGM4A73B5077826 1N4AL3AP4GC 171499 1FADP3E26EL255997 5NPEC4ACXDH625771 3VWDP7AJ2DM288939 5NPE24AF9GH3 87476 JTMZD35V3 85106412 2T1BU4EE0DCO26554 2GNALAEKOF6190031 1FADP3F26EL104494 KMBHT6KD5DU084310 JTDBU4EE3A9119392 1N4AL21E39C149831 KNDJP3A5XE7059325 1FMCU9GX4EUC61314 1N4AL3AP9FC476138 2GNALBEK0E6296855 1FAHP2JW6BG175253 1N4AL2AP4CC152715 1ZVFT82H755210587 1GCEK19C08Z287012 2HGFB2F5XFH565655 4JGBF86E78A3 74664 1N4AA5AP7CC868161 1G11C5SL5FF139524 3VW4A7AJ8DM3 89243

2G1WG5E39C11 82532 5NPE24AF1GH333802 RIMGE8H5OCS004748 JN8AF5MR7CT107076 5NPE34AF3FH064567 5NPE34AF9FH054710 1FMCUOG96EUD45499 3C6JR6AT5FG616164 3FADP4BJ7FM113711 2C3CDXCT6CH260827 JHLRE48758C055526 1G11E5 SA5DF3 09614 3N10E2CP0FL3 64002 1N4AL2AP7CC2 11420 2G1WG5E31D1195194 JHLRE4H41BCO24691 1N4AL3AP9DN525209 1N4AL3AP6DN513678 KNAFU4A2XC5571019 KMHDH4AE9BU120219 4T4BF3EK8AR064253 1N4AL3AP0DN513966 JN8AZ1MUOBW053024 3D4GG57VX9T557655 1D7HU18288S573530 5NMSH73E39H250749 3FAHPOHA7CR239762 KMBD35LE1DU054088 1GNKREED4BJ132187 1D7HU18N24J257728 3FAHPOJA4CR296690 3FAHPOHG8CR422625 JN8AF5MVXBT020218 1G8ZS57B48F245683 1G11C5SL2EF280730 3MEHMOJG4BR601433 1G1ZD5E73BF201558 2CNDL13F496233247 19XFA16909E028842 2D4RN3DG6BR639366 1GKEK13T56J118158 3FADP4BJ8BM225704 2G1WC5E38C 1104853 1G1ZB5E06CF247086 1C3CCBCG3DN609461

 

1N4AL3AP6DC232654 2CNDL63F266192027 WO4GN5ECX61107693 1G11F5SR6DF132395 1G4HD572X8U174556 1FTKR1ADOAPA78566 1FMCUOD71BKA97446 1FTYR14D87PA23281 4T1BF1FKOFU032269 1GCNKPEAXBZ3 14165 3GSDL43N78S690572 1G6KA5E63BU123127 1FMCUOC7OCKB40421 1GCEK19029Z262457 2CNDL63F276249117 3D4PG5FV6AT147246 5NPEB4AC3BH123801 3GSCL33P78S504892 2GNALBEK5E6235551 1FTRF04516KC83209 1G1JC5SH3D4200938 1FMCU9EGlAKD 12969 1J4FA29S45P350733 2G4WD582181347608 1GKER13D09J 132798 1D7HU18D45J649988 1N4AL2AP0CN570337 1GCNCPEX6DZ181098 1GNFK13057J219716 1FTPW14V38KC47246 JN8AZO8W26W5 11285 5TDZT34A07S297538 1G6DE5EY4B0104415 5S3ET13M982801201 2FMDK36C97BB37506 1G1JD5SH9H4127741 1G1ZA5EUOBF319730 1FMIIK8D88CGB00172 3N1AB7AP3FY250790 1FTFX1EF6EKD33307 1G1ZJ57788F249085 1GKKRPED2BJ3 58625 1G1PC5SB5E7290759 WDBTK75G95T049207 KMTITC6AD7CU074937

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1NXBU4EE9AZ3 07889 5NMSH13E59H237854 2G1WB55K289112806 1B3CB4HA4AD618574 1G1AL55F167721748 KM8JN12D55U210505 3N1BC13E68L377530 5NPET46C69H537784 2C3CDXHG9JH176266 WDDNG8GB7AA287359 1J8GP58K98W202351 5YFBURHE2HP593363 1G1PC5SG4G7212035 4T1BF1FK7GU176404 KNDJT2A14B7732933 JM1GJ1V54F1218791 1N4AL3AP8DC915343 3GTEK23M89G281418 1N4AL3APXGN354796 2GNALCEK8H1614437 1C4NJPBB6HD103390 1MEFM55S43A614293 4M2YU811X7KJ 10673 1G8AL52F15Z135804 KM8SC13D55U962455 JM1BK323451283693 3GNDA23P76S586949 1N4BL21E37N471343 1ZVFT8ONX55 125557 1N4AL2AP4CC251342 knafx4a61g5506737 5NPDH4AE4CH069857 3N1CN7AP8CL889501 JN8AZ08T44W228471 1FTFW1CF4CFA35785 5NPE24AF3FH236356 2B3CA3CV7AH271414 1N4AL3AP2HN339341 5NPEB4AC5EH939820 KMIIHT6KD4CU069795 WBAXE-15C5XDDW12990 4T3ZA3BB9AU031989 WD4PE7CC2D5813157 1GCEC19C67Z649646 1N4AA5AP3BC848181

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1N4AL3AP8HC 149698 1C3CCCAB2HN504851 2C3CDXBG7CH119818 KNDJN2A29G7254678 3C63DPJLOCG309011 1D7RB1CTXBS663201 1N4AL3AP3HC155604 2GNFLNE31D6240762 1GCHK53K89F117147 WBALM73589E165292 2C3CDXHG1DH552821 3GNEC12097G182875 1FADP3K26FL279898 WDDHF5GB6BA283951 1C6RR6KT4DS618639 5XXGT4L36HG148022 1GNFC26049R285077 WDDGF4F1B2EA957831 1C3CCCAB9FN670264 3C4PDCBG7HT538417 1N4AL3AP6HC212605 1G6AJ5SXXE0112162 2C3CDXBGXDH705642 1G4PP5SK8F4202040 1FT7W2AT8JEB90359 2T2BK1BA8AC054230 2GCEC13C371605136 2T1BURF1E8HC867178 1GCRCREC7JZ 185067 JN1CV6AP2CM931953 1HGCR2F33GA104584 1N6BD0CT8FN732548 1GCEC14077E530962 WDBUF56X28B318007 1N4AL3AP4GC132380 3C4PDCAB3ET284030 1G6KD57Y08U107515 5NPDH4AE3DH285863 WAlEFCFS6FRO09606 1D7HU18D85S359148 1N4AL3AP5GC185217 WBANV93558CZ64605 6G2VX12G74L193891 1FMNE1BW9EDA93482 JN8AS5MT4FW664554

JTNKARJE6GJ500829 1J4FA54147L136125 3N1AB7AP7HL677244 WDDGF4HB4CR213212 2T1BURHE3FC3 00695 1GCEK29019Z270071 5TFRT54169X028050 WAUAFAFLXBN051860 1HGCR2F38FA202217 2T1BURHE9GC676805 JA4AP3AU4GZ041170 WPOAB2A74BL061682 JH4KB266X9C002228 3GYFNBE33ES638635 WBA3N3C5XEF7 11343 1C4PJLCBXGW191699 1N4AL3APXJC 122069 WDDGF5EB8AR086357 WAUAFAFL8CNO19183 WDBWK5EAXAF229897 5XXGT4L33GG026300 4T1BF1FK9EU445337 JM1CW2BL9C0105168 KMIIDH4AE6GU623732 3 TMKU72NO8M013807 WDDGF54X69R067685 3C4PDCBG0CT368376 KMTICT5AEXDU108843 3N1AB7AP4GY265381 5NPE24AF4FH 154166 1ZVBP8EM5E5210888 4T1BF1FKXCU168663 JN8AZ18W69W100952 3N10E2CP7EL3 90711 1N4AL3AP9HC 112028 5NPDH4AE6DH3 67845 3GNAL3EK3DS602775 1N4AL3AP6JC212089 5LMCDC98GUJ32011 2C3KA53G48H255418 1J4FA39S24P726513 2C4RC1BGXFR587529 1J4GA59127L172182 3N1AB7AP0EY261485 1J4BA3H13AL124083

1G11B5SA8DF159281 1GNFC23059R256644 3N1AB7AP3FY361985 3MZBN1L711-1M113020 JTHBA1D21G5018090 1FTEX1CM3CFA99758 1N4AL3APOJC196309 1N4AL3AP1JC117682 2LMDJ6JK5BBJ22534 2G1165S30F9245914 5XYKW4A22CG262275 4T1BF3EKXBU619490 1FTRW12W68FA50746 4T1BF1FKOFU024172 3D7JV1EP4BG583467 1C4BJWEG8CL119092 JN1AZ34E26M351191 1G6AB5RA0D0135429 1G1ZE5ST2GF3 10096 2T1BURHE8GC645769 WBA3A5G54FNS83570 5GTEN13EX88113626 WDDGF5EB5AR103941 3VW2B7AJ6JM248011 5TFRT54187X005740 2T1BURHE8GC689089 1C4RJECT4EC234686 4T1BF1FK5HU723767 WDDNG71X97A033322 1G1105S39HU190905 5XYZU3LB2HG401808 1G1BF5 SM6H71 82996 3GYFNAE35CS556574 1GYEE637870180044 1N4AL3AP3DN403882 1C4NJPBA9ED779495 1N4AL3APHIN365804 WBASP4C51BC341618 1G1JC5SH9C4101801 WDDHF5KB8DA700335 KNMAT2MV7HP531132 5UXFE4C57AL277284 JTNB11HK3J3009840 3N1AB7AP7EY271916 KMIIHT6KDOAU019019

 

1N4AA5AP3DC837281 1G1YY22G3Y5116429 ML32F3FJ9KHF06770 KNDJP3A55H7424062 1N4AL3APXHC233733 1VWAT7A38HC054201 WBA3A5C58DF353391 5XXGN4A7XDG242043 1D7HU18248J179674 5NMZT3LB5JHO76876 3VWD67AJ3GM297866 1J8GA69187L114159 WVWBN7AN7DE5 10299 KNMAT2MT9GP603736 JN1BV7AP5FM354843 1N4AL3AP4HC201540 WDDSJ4GB2FN200884 1J4GA59167L148662 5XXGT4L38JG196692 1D7HAl8P37J522168 1J4BA5H11AL163928 5XYPG4A52KG515946 2HGFG21558H709558 3VWD17AJ0GM333026 1G1PE5SB6G7193602 2GTEC19J581275670 3FA6P0K94DR126990 1FADP3L96DL207706 5XXGT4L32JG221621 1N4AL3AP5JC274776 WP0CA2987YU622937 1N4AA6AP3GC442706 1FADP3F23EL3 00781 2C3CCAET4DH674106 2G1105S36H9149886 KNMAT2MT7GP693016 1VWAS7A37FC108877 1GCJK33142F163903 1FMCUOGX8EUA28371 2G1FC1E32D9234221 JTKJF5C74F3 096949 WDDEJ71XX7A001741 5NPD84LF7HH039054 3N1AB7AP5HY277685 5XXGN4A71FG403298

5GRGN23U43H130667 1N4AL3AP6GN344783 KNAFX4A89F5357817 4JGBB8GB4AA597704 1VWBS7A36FC063922 KNDJP3A54H74 18656 2G1105SA2H9168921 JN1CV6AR1BM400596 1N4AL3APOHC185627 1GYEE637590119513 1GCRCREC5JZ1 81650 2T2ZK1BA6FC183881 WDDSJ4EB7EN061482 1GC1KYCG2DF232091 1N4AL3AP3HC203389 3N1CB7AP4HY224789 19XFC2F78GE237077 3N1AB7AP8GY320916 1G6DF577490147602 1N4AA6AP3JC392106 1N4AL3AP6HC288633 WVWBP7AN9FE803716 SALSH23486A908557 WVWHV7AJ9CW043757 KNDJN2A25F7207162 1N4AA6AP9GC445772 5TFRM5F19AX004758 3GCEK13J08G299393 SYFBURHE1KP942648 5YFBURF1EOJP745887 3N1AB7AP6JY265888 KNDJN2A25H7486924 1FMCUOG96DUD49194 KMHCT4AEXHU289927 2C3CK6CT3AH331222 3VW267AJOGM228110 2GKALSEK4D63 71522 3N6CMOKN6FK690314 1N4AL3AP6FC295210 1D7HA16K27J574639 1G4GF5G3XEF271836 1G1AZ3773DR254780 5NPD84LF5HH038520 4T1BF1FK2GU235245 KMTITC6ADOHU3 10268

2C4RDGBG4HR731224 JN1BY1AP9FM541118 JN1AZ4EH4CM564007 1C4NJPBAOGD669762 1HGFA16569L000534 1C3CCCAB8HN504465 3KPF24AD8KE050801 3C4PDCBG4HT572959 2C4RDGCG9HR629870 3N1AB7AP8HL656158 2T1BU4EE0BC743372 1G1BE5SM5H7252541 1FMCU9G97GUA86237 2T1BURHEXHC828575 5TETU62N58Z588583 5NPE34AF2FH 191584 1FTFW1CT2DFA72213 3N1AB7AP2GY3 02170 5NPEC4AC7BH134376 1N4AA5AP2EC472478 KNDPC3ACXF7670350 WBAPH53589A435672 WVWDM7AJ9DW136345 ZACCJAAW1GPE29834 KNAFX4A8XE5176546 KMTICT5AE5HU335184 5XXGT4L36JG198585 JM3TB2CA7C0343522 3VW2B7AJXHM292121 5NPD84LF6JH253507 3GYFNAEY7B S659358 WMWSX1C52CT300396 JTMZFREV3FD055669 5NPDH4AEXFH623942 2C3CCAKTXCH147691 KM8SM4HF8EU087719 1C3CCCAB4FN521311 3C4PDCAB5JT254098 2C4RC1BGXER3 64289 KNDJN2A27H78 84412 1G1ZC5STOHF211039 3FA6P0H79GR345888 2G1105S37J9111220 5NPE24AF8HH449192 5XXGT4L31HG134271

1G1ZD5ST7JF146323 JN1CV6AR6AM460047 2C4RDGCG6ER155338 1G6DA5EY7B0162501 JTMYK4DVXAD003699 4T4BF1FK3GR572416 KM8JT3AF3FU101661 2T1BURHEOGC609171 1G1ZB5ST3JF 193242 SAJWAOES5DPS84709 WBAXG5C55CDY29512 1C3CCCAB7GN136472 5NPD84LF4HH192636 1G1105S3OHU190873 WDDGF4HB1CA627336 1VWAS7A35GC013705 WDDGF4HB8EG251007 1GNUCJEOXAR227238 3N1AB7AP3FY3 14052 3VW267AJ8GM3 84475 3N1AB7AP6JL624833 3KPFL4A77JE251143 1G1PC5SHOG7159021 4T1BF1FK1GU199287 3VW2B7AJ1HM314345 1C3CCCBB6FN663934 4T1B11HKOJU004783 3VW267AJ6GM3 91604 3GNAXJEV2JS531597 3VW267AJ3GM3 82312 1G4GB5GR7EF240799 3N1AB7AP8GY250124 3VWD67AJ5GM395197 1FA6P0H76G5109590 1FM5K7B98FGB 13761 3MYDLBYV2JY3 02984 WVWBP7AN9EE529416 1C4NJDBB5GD780492 1G1FB1RS4K0108423 3VW267AJ7GM405610 1G1BC5SMXJ7130446 1FA6P0HD0G5134376 ML32A5HJ4KH003085 5XYZT3LB6EG148670 3KPA24AB0JE066529

1N4AL3AP3HC 118746 1FADP5AUXGL120124 JTMWFREV4D5006877 3FA6P0H73GR129907 1G1PC5SB3E7447026 JM3KFBDL1H0183600 KNAFX4A89E5161584 5FNRL5H2XHB001011 3KPFL4A74JE171833 ML32A3HJ1KH013383 5NPDH4AE2GH729299 4T1B11HK4JU080264 3C4PDCAB7FT679717 1C6RR7TT2KS513275 1VWAT7A30GC051968 5NPD84LFOHH026064 3FADP4EJ7JM114586 2C4RDGEG9JR147810 JTHCE1BL8D5008267 1C3CCCBBOFN510627 KNDJN2A23F7152565 ZAM57XSA2E1103580 1G4PP5SK7C4177675 5NPE34AFOFH208270 1N4AL3AP1JC127368 4T1BF1FK8GU604576 1C3CCCABXGN 165593 4JGDA5HB6EA3 64809 KMTICT4AE2HU352907 3VW267AJ8GM3 90793 KNDJP3A50H7421652 ML32F3FJ9JHF13250 5NPDH4AE5GH796446 KMTIFH4JG7DA214307 3FA6P0G77GR183955 ML32F3FJ3KHF15142 2GKFLNE35H6260872 ML32F3FJ9KHF 15100 ZACCJABB2HPE88825 2T1BURHE9HC765873 3FA6POHDXGR350457 WDDHF5KB3EA777289 JM1BM1M78E1162275 19XFB2F93CE017893 4T4BF1FK6ER403729

 

KNDJN2A23F7803306 3N1AB7AP6HY271670 5NPE24AF2GH428711 1G11D5SL7FF331833 1G4GB5G30FF274306 1GNKVJED5CJ 152552 2GNALBEK2H1589562 1G1PC5SB1D7125614 1FADP3K23JL252148 KNDPC3AC6F7674475 3FA6P0HD0GR352377 1G11C5SA6DF200875 3VW267AJOGM3 19524 KNMAT2MT2JP5 17725 4T1BF1FK3CU194229 2T1BURHE3GC634758 2HGFC2F57GH553039 1GNSKKKC9KR223181 1N4AL3APXHC262682 5XXGM4A71EG330788 2GKALMEKXD6229669 1N4AL3AP1FC455218 1FADP3F23EL108339 1N4AL3APOFC218493 1FMCU9JD3HUD43621 1HGCR2F3XHA131802 2G1WB5E32F1162738 WDDGF8AB6DR261989 KMHDH6AEODU000663 5NPD74LF61111212808 5NPD84LF5JH247228 5NPE34AF8GH409707 5NPDH4AE3CI1113122

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

5XYKT3A6XFG589162 KMTICT4AE9HU341824 1FADP3F20EL3 07347 3VWPL7AJ8DM688982 2GNALFEKXC6352854 3N1AB7AP2GL679630 1HGCR2F8XGA149047 1G4PR5SK9E4240725 3N1AB7AP4FY327747 WBAPM5C50BE578349 3FA6P0H78GR231462 3FA6P0LU2HR145367 1G1ZD5STXTF194415 3VWVA7AT1CM641919 1G11C5SA9GF125660 ML32F3FJOKHF18144 1C4NJPFAOHD207942 ML32F3FJ6KHF09707 2C3CDXHG4CH280313 4A4AR4AU3FE039222 2T1BURHE9FC234590 1C3CCCBG7FN638746 KMHD84LF2HU243360 5NPEC4AB8CH467744 5NPE24AF3GH359060 1G1ZD5ST3JF256043 JA32U2FU1HU005701 1G1PE5SB5F7276405 5NPD74LF5KH456957 1N4AL3AP2GC 147542 2G1WB5E30E1116324 3N1AB7AP4HY325161 1N4AL3AP3JC 131048

1G1FB1RX5J0121823 3C4PDCAB3JT 184231 1FA6P0H70G5123548 5NPE24AF1JH619012 WVWBP7AN8EE537653 1G1ZE5ST9HF269905 2C3CCARGOGH230433 KMTITG6AFXKU008595 JTDKN3DU9F1911522 WBA8E1G35HNU15773 5YFBU4EE2CP012105 1GKKRNED9DJ263454 5XYPG4A35KG592941 KMTIGC4DD8CU170867 ML32F3FJ5KHF05387 2T1BURHE3GC683801 1N4AL3AP5JC281033 KNDPBCAC1F7781145 2G1115S30G9140158 1FTEW1CMOCKD35163 KMHDH4AE9GU585784 2C3CDXBG7EH295898 1G11H5SA7DF292614 2C3CDXCTOGH241437 3FA6POHDXHR188766 1G1ZE5ST7GF351033 5XYZGDABXCG104780 1ZVBP8CF8C5273937 1FADP3K22JL280300 4T1BK1FK5FU567285 5NPDH4AE5DH368341 4T1BF1FK6GU125119 WBAPK5C58BA661217

3N1CN7APXJL818720 2G1115SL3F9166039 2C3CCAGG7GH198616 1N4AL3AP2DC163011 3N1AB7AP4FY348520 KMTICT4AE3HU3 73121 1N4AL3AP3JC164082 1N4AA5AP7DC804963 3GTU1VEC5FG418802 1GNALBEK2FZ125983 55 SWF4JBOGU142875 2C3CDYAG2CH291827 JA4AD3A3OGZ021028 1C4NJPBA2GD806328 WBAFR9C51BC758424 1HGCR2F54GA240921 3VWD67AJ4GM391710 5NPEC4AC2EH831443 1YVHZ8DH2D5M04511 JTMZFREVXHJ135023 5NPE34AF9FH097086 1VWBS7A38FC065378 3N1CN7AP3FL936017 5NPD84LF41111061447 3KPFL4A7OHE 132473 1N4AL3AP3JC 157634 1FAHP3J29CL445345 3FA6P0HD1HR268196 3C4PDCDG7FT650046

 

EX-4.2

Exhibit 4.2

Description of Securities

General

The following description of the common shares, without par value (the “common shares”) and preference shares, without par value (the “preference shares”) of Nicholas Financial, Inc. (the “Company,” “we,” “us,” and “our”) summarizes material rights of our common shares and preference shares, as contained in our Notice of Articles and Articles and any amendments thereto. This summary is not a complete description of the rights associated with our common shares and preference shares. For more detailed information, please see the forms of our Notice of Articles and Articles, which are incorporated as exhibits to this Annual Report on Form 10-K.  In the discussion below, “BCBCA” means the Business Corporations Act (British Columbia), as amended.

Share Capital

The Company’s authorized share capital consists of 50,000,000 common shares and 5,000,000 preference shares, issuable in series. Our common shares are listed on the NASDAQ under the symbol “NICK.”

Common Shares

The shareholders of the Company are entitled to one vote for each common share on all matters to be voted on by the shareholders, except matters that relate only to the class of preference shares, and each shareholder does not have cumulative voting rights. Accordingly, the holders of a majority of the common shares entitled to vote in any election of directors can elect all of the directors standing for election, if they so choose.  A plurality of total votes cast (i.e., a simple majority) is required for the election of directors.   At least three-quarters of the votes cast is required to pass a special resolution at a meeting of shareholders; otherwise, an ordinary resolution passed by a simple majority of the votes cast is sufficient.  At a meeting of shareholders, the following business is special business requiring a special resolution, except as otherwise noted:

(1) at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

(2) at an annual general meeting, all business is special business except for the following:

(a)	business relating to the conduct of or voting at the meeting;
(b)	consideration of any financial statements of the Company presented to the meeting;

(c) consideration of any reports of the directors or auditor;

(d) the setting or changing of the number of directors;

(e) the election or appointment of directors;

(f) the appointment of an auditor;

(g) the setting of the remuneration of an auditor;

(h) business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;

(i) any other business which, under the Company’s Articles or the BCBCA, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

Our Articles provide for each director to serve three-year terms, and the Company’s board of directors is currently divided into three separate staggered terms of directors. Shareholders of the Company are not entitled to cumulative voting in the election of directors. Each common share is equal to every other common share, and all common shares participate equally on liquidation, dissolution or winding up of our Company, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding up our affairs after the Company has paid out its liabilities and subject to the preference of any then outstanding preference shares. There are no limitations on the right of nonresident or foreign owners of the common shares to hold or vote the common shares. All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held and the shareholders are entitled to receive such dividends as may be declared by our board of directors out of funds legally available for such purpose, and subject to any rights applicable to the then outstanding preference shares, to receive pro rata the remaining property of the Company upon dissolution. No common shares have been issued subject to call or assessment. Holders of common shares have no pre-emptive rights,

conversion rights, redemption rights, or sinking fund provisions applicable to the common shares.  The rights, preferences and privileges of the common shares are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preference shares which we may issuein the future.

Preference Shares

Our Articles permit the issuance of preference shares in one or more series having the preferences, rights, conditions, restrictions, limitations and prohibitions determined by the board of directors in accordance with the Articles.  There are currently no outstanding preference shares.

Dividend Policy

We have neither declared nor paid any dividends on our outstanding common shares since our inception and we do not anticipate that we will do so in the foreseeable future. The declaration of dividends on any class of shares is within the discretion of the board of directors, subject to the BCBCA out of legally available funds, and will depend on the assessment of, among other factors, earnings, capital requirements and our operating and financial condition. At the present time, anticipated capital requirements are such that we intend to follow a policy of retaining earnings in order to finance the further development of the business.

Indemnification

Subject to the BCBCA, the Company must indemnify a director, former director or alternate director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and alternate director is deemed to have contracted with the Company.  The Company may indemnify any person under our Articles.  We may, and do, maintain a policy of insurance for the benefit of directors, officers and employees against liability incurred by such individual acting in their capacity as a director, officer or employee.

Under Section 161 of the BCBCA, and subject to Section 163 of the BCBCA, we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by an eligible party in respect of that proceeding if the eligible party (a) has not been reimbursed for those expenses, and (b) is wholly successful, on the merits or otherwise, in the outcome of the proceeding or is substantially successful on the merits in the outcome of the proceeding.

Under Section 162 of the BCBCA, and subject to Section 163 of the BCBCA, we may pay, as they are incurred in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party in respect of the proceeding, provided that we must not make such payments unless we first receive from the eligible party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited under Section 163, the eligible party will repay the amounts advanced.

Under Section 163 of the BCBCA, we must not indemnify an eligible party against eligible penalties to which the eligible party is or may be liable or pay the expenses of an eligible party in respect of that proceeding under Sections 160, 161 or 162 of the BCBCA, as the case may be, if any of the following circumstances apply:

• if the indemnity or payment is made under an earlier agreement to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, we were prohibited from giving the indemnity or paying the expenses by our Articles;

• if the indemnity or payment is made otherwise than under an earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, we are prohibited from giving the indemnity or paying the expenses by our Articles;

• if, in relation to the subject matter of the eligible proceeding, the eligible party did not act honestly and in good faith with a view to the best interests of our company or the associated corporation, as the case may be; or

• in the case of an eligible proceeding other than a civil proceeding, if the eligible party did not have reasonable grounds for believing that the eligible party’s conduct in respect of which the proceeding was brought was lawful.

If an eligible proceeding is brought against an eligible party by or on behalf of the Company or by or on behalf of an associated corporation, we must not either indemnify the eligible party against eligible penalties to which the eligible party is or may be liable, or pay the expenses of the eligible party under Sections 160, 161 or 162 of the BCBCA, as the case may be, in respect of the proceeding.

Under Section 164 of the BCBCA, the Supreme Court of British Columbia may, on application of our company or an eligible party:

• order us to indemnify an eligible party against any liability incurred by the eligible party in respect of an eligible proceeding;

• order us to pay some or all of the expenses incurred by an eligible party in respect of an eligible proceeding;

• order the enforcement of, or payment under, an agreement of indemnification entered into by us;

• order us to pay some or all of the expenses actually and reasonably incurred by any person in obtaining an order under Section 164 of the BCBCA; or

• make any other order the court considers appropriate.

Section 165 of the BCBCA provides that we may purchase and maintain insurance for the benefit of an eligible party or the heirs and personal or other legal representatives of the eligible party against any liability that may be incurred by reason of the eligible party being or having been a director or officer of, or holding or having held a position equivalent to that of a director or officer of, the Company or an associated corporation.

Under the BCBCA, the Articles may affect our power or obligation to give an indemnity or pay expenses to the extent that the Articles prohibit giving the indemnity or paying the expenses. As indicated above, this is subject to the overriding power of the Supreme Court of British Columbia under Section 164 of the BCBCA.

We believe that the foregoing policies and provisions of our Articles are necessary to attract and retain qualified officers and directors. Insofar as indemnification for liabilities arising under the applicable securities legislation may be permitted with respect to our directors, officers or persons controlling the registrant pursuant to the foregoing provisions.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the BCBCA and will be governed by the final adjudication of such issue.

Limitations on Shareholder Proposals

Under the BCBCA, shareholder proposals may be made by registered or beneficial owners of shares entitled to vote at general meetings of shareholders who have been the registered or beneficial owner of such shares for an uninterrupted period of at least two years before the date of signing of the proposal, and who together in the aggregate constitute at least 1% of the issued shares that carry on the right to vote at general meetings or have a fair market value of shares in excess of CAD$2,000. Those registered or beneficial holders must, alongside the proposal, submit and sign a declaration providing the requisite information under the BCBCA. To be a valid proposal, the proposal must be submitted at least three months before the anniversary of the previous year’s annual reference date.

Requisitioning of Meetings of Shareholders

Our Articles provide that special shareholder meetings for any purpose may generally only be called by our board of directors. However, the BCBCA does contain provisions for shareholders holding at least 5% of the total issued and outstanding shares to requisition shareholder meetings. Upon receiving a shareholder requisition stating in 1,000 words or less the business to be transacted, the directors must send notice of a general meeting to be held within four months from the date the requisition was received to transact the business stated in the requisition. If the directors do not send the notice of meeting within 21 days after the date the requisition was received, then the requisitioning shareholders may send notice of the general meeting to be held to transact the business stated in the requisition. These provisions could have the effect of delaying or discouraging stockholder actions that are favored by a majority of our outstanding voting stock.

Anti-Takeover Provisions

Issuance of Shares

Our Articles authorize us to issue further common shares upon resolution of our board of directors. Shareholder approval is not necessary to issue our common shares. Issuance of these common shares could have the effect of making it more difficult and more expensive for a person or group to acquire control of us, and could effectively be used as an anti-takeover device.

In addition, the Articles permit the board of directors to: (1) create one or more classes or series of shares, or if none of the shares of a class or series of shares are issued, eliminate that class or series of shares, (2) increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue, (3) subdivide all or any unissued or fully paid issued shares by way of a stock dividend, (4) change any of its unissued or fully paid issued shares without par value into shares with par value, (5) alter the identifying names of any of its shares, or (6) otherwise alter its shares or authorized share capital when

required or permitted to do so by BCBCA. Any of these powers could be used to make it more difficult for a third party to acquire the Company, or to discourage a third party from acquiring the Company.

Size of Board of Directors, Staggered Terms and Removal of Directors

Our Articles provide that:

• the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by our board of directors, but must consist of not less than five (5), nor more than eleven (11) directors at any time;

• each of the directors ceases to hold office immediately before the third annual general meeting after their election or appointment as a director, but are eligible for re-election or re-appointment; and

• vacancies on our board of directors, however the vacancy occurs, may be filled by a majority of directors then in office, even though less than a quorum.

As permitted under the BCBCA and the Articles, the board of directors may also be enlarged by the appointment of additional directors only by the then current board of directors, and is limited to up to one-third of the number of directors previously elected or appointed by the shareholders.

The staggered terms of election of the directors, the limitations on the removal and appointment of directors, and the filling of casual vacancies, could have the effect of making it more difficult for a third party to acquire the Company, or of discouraging a third party from acquiring the Company.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (No. 333-143245 and 333-213117) on Form S-8 of Nicholas Financial, Inc. and Subsidiaries of our report dated June 22, 2020, relating to the consolidated financial statements of Nicholas Financial, Inc. and Subsidiaries, appearing in this Annual Report on Form 10-K of Nicholas Financial, Inc. and Subsidiaries for the year ended March 31, 2020. 

/s/ RSM US LLP

Raleigh, North Carolina

June 22, 2020

EX-31.1

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, Douglas Marohn certify that:

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

2. 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;

3. 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;

4. 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) 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;

b) 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;

c) 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

d) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 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):

a) 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

b) 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.

Date: June 22, 2020	/s/ Douglas Marohn
	Douglas Marohn
	President and Chief Executive Officer

EX-31.2

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, Irina Nashtatik, certify that:

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

2. 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;

3. 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;

4. 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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

a) 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;

b) 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;

c) 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

d) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 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):

a) 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

b) 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.

Date: June 22, 2020	/s/ Irina Nashtatik
	Irina Nashtatik
	Interim Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

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, 2020 (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/ Douglas Marohn

Douglas Marohn

President and Chief Executive Officer

Dated: June 22, 2020

EX-32.2

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 Chief Financial Officer and Vice President of Finance 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, 2020 (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/ Irina Nashtatik

Irina Nashtatik

Interim Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: June 22, 2020

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Property and Equipment (Tables)

12 Months Ended

Mar. 31, 2020

Property Plant And Equipment [Abstract]

Schedule of property and equipment

Property and equipment as of March 31, 2020 and 2019 is summarized as follows:

	(In thousands)
	Cost		Accumulated Depreciation		Net Book Value
2020
Automobiles	$	451	$	396	$	55
Software		160		23		137
Equipment		1,571		1,439		132
Furniture and fixtures		575		519		56
Leasehold improvements		1,207		1,105		102
	$	3,964	$	3,482	$	482
2019
Automobiles	$	488	$	415	$	73
Software		127		3		124
Equipment		1,535		1,263		272
Furniture and fixtures		535		465		70
Leasehold improvements		1,187		1,070		117
	$	3,872	$	3,216	$	656

XML

Quarterly Results of Operations (Unaudited)

12 Months Ended

Mar. 31, 2020

Quarterly Financial Data [Abstract]

Quarterly Results of Operations (Unaudited)

16. Quarterly Results of Operations (Unaudited)

	Fiscal Year ended March 31, 2020 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total revenue	$	16,641	$	15,585	$	14,973	$	14,896
Interest expense		2,488		2,298		1,886		1,843
Provision for credit losses		4,385		4,000		4,597		3,919
Non-interest expense		8,971		8,927		7,950		8,584
Operating income before income taxes		797		360		540		550
Income tax expense (benefit)		206		92		229		(1,746	)
Net income	$	591	$	268	$	311	$	2,296
Earnings per share:
Basic	$	0.07	$	0.03	$	0.04	$	0.31
Diluted	$	0.07	$	0.03	$	0.04	$	0.31

	Fiscal Year ended March 31, 2019 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
Total revenue	$	18,759	$	19,404	$	16,740		$	16,397
Interest expense		2,540		2,386		2,303			2,275
Provision for credit losses		5,426		8,374		7,871			11,165
Non-interest expense		8,801		7,966		7,847			8,934
Operating income before income taxes		1,992		678		(1,281	)		(5,977	)
Income tax expense (benefit)		572		96		(376	)		(1,232	)
Net income (loss)	$	1,420	$	582	$	(905	)	$	(4,745	)
Earnings (loss) per share:
Basic	$	0.18	$	0.07	$	(0.12	)	$	(0.60	)
Diluted	$	0.18	$	0.07	$	(0.12	)	$	(0.60	)

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Finance Receivables (Detail Textuals) - USD ($)		3 Months Ended	12 Months Ended
	Feb. 28, 2019	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Charge-offs		$ 6,400,000
Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Average contractual interest rate		26.00%	27.30%	26.00%
Percentage of direct loan to total loan portfolio			5.00%
Finance receivables
Accounts Notes And Loans Receivable [Line Items]
Charge-offs			$ 29,837,000	$ 38,152,000
Finance receivables | Contracts
Accounts Notes And Loans Receivable [Line Items]
Average contractual interest rate		22.70%	22.60%	22.70%
Maximum
Accounts Notes And Loans Receivable [Line Items]
Criteria for receivable to be delinquent account	181 days			181 days
Maximum | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Finance receivables, net			$ 15,000
Initial term of the direct finance receivables			72 months
Maximum | Finance receivables | Contracts
Accounts Notes And Loans Receivable [Line Items]
Initial term of the indirect finance receivables			60 months
Minimum
Accounts Notes And Loans Receivable [Line Items]
Criteria for receivable to be delinquent account	121 days			121 days
Minimum | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Finance receivables, net			$ 1,000
Initial term of the direct finance receivables			12 months
Minimum | Finance receivables | Contracts
Accounts Notes And Loans Receivable [Line Items]
Initial term of the indirect finance receivables			12 months

XML

Finance Receivables (Detail Textuals 1)		12 Months Ended
	Feb. 28, 2019	Mar. 31, 2020	Mar. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Maximum criteria for receivable to be a performing account		61 days
Percentage of more than payment contractually for delinquent		25.00%
Minimum criteria for receivable to be a non-performing account		61 days
Maximum
Accounts Notes And Loans Receivable [Line Items]
Criteria for receivable to be delinquent account	181 days		181 days
Minimum
Accounts Notes And Loans Receivable [Line Items]
Criteria for receivable to be delinquent account	121 days		121 days

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Share-Based Payments (Detail Textuals 1) - USD ($)	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash received from exercise of option	$ 5,000	$ 16,000
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options exercised	2,000	12,000
Number of stock options forfeited	8,000	67,000
Unrecognized compensation cost	$ 0	$ 10,000
Stock options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price of stock options exercised	$ 1.20	$ 0.77
Exercise price of stock options forfeited	10.87	10.87
Stock options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price of stock options exercised	4.18	4.18
Exercise price of stock options forfeited	$ 12.68	$ 14.36
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 208,000
Number of shares awarded	39,000
Number of share granted employees maximum account reached	39,000
Number of performance shares forfeited	26,000
Weighted-average period expected to be recognized	1 year 4 months 24 days

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Leases - Schedule of Lease Cost (Details) $ in Thousands	12 Months Ended
	Mar. 31, 2020 USD ($)
Lease cost:
Operating lease cost	$ 1,777
Variable lease cost	435
Total lease cost	$ 2,212

XML

Income Taxes - Provision (benefit) for income taxes reflects an effective U.S tax rate, which differs from the corporate tax rate (Details 2) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Schedule Of Income Taxes [Line Items]
Provision (benefit) for income taxes at Federal statutory rate									$ 479	$ (845)
Increase (decrease) resulting from:
State income taxes, net of Federal benefit									91	(206)
Tax Reform – Rate Change										160
Other									(13)	(49)
Income tax expense (benefit)	$ (1,746)	$ 229	$ 92	$ 206	$ (1,232)	$ (376)	$ 96	$ 572	(1,219)	$ (940)
Fiscal Year 2020 Net Operating Losses
Increase (decrease) resulting from:
Federal NOL rate differential									(414)
Fiscal Year 2019 Net Operating Losses
Increase (decrease) resulting from:
Federal NOL rate differential									$ (1,362)

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income (loss)	$ 3,466	$ (3,648)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	337	380
Amortization of intangibles	55
Amortization of debt issuance costs	429
Amortization of operating of lease right-of-use assets	1,913
Gain on sale of property and equipment	(23)	(62)
Goodwill impairment charge	295
Repossessed assets	677	193
Provision for credit losses	16,901	32,836
Amortization of dealer discounts	(8,031)	(10,641)
Amortization of insurance and fee commissions	(2,615)	(1,797)
Accretion of purchase price discount	(746)
Deferred income taxes	3,215	(835)
Principal reduction on operating lease liabilities	(1,841)
Share-based compensation	202	80
Changes in operating assets and liabilities:
Accrued interest receivable	(275)	(157)
Prepaid expenses and other assets	304	(110)
Accounts payable and accrued expenses	(744)	(2,046)
Income taxes receivable	(3,244)	(149)
Unearned insurance and fee commissions	210
Net cash provided by operating activities	10,485	14,044
Cash flows from investing activities:
Purchase and origination of finance receivables	(89,334)	(85,240)
Principal payments received	106,248	129,530
Net assets acquired from branch acquisitions, primarily loans	(20,483)
Purchase of property and equipment	(130)	(228)
Proceeds from sale of property and equipment	23	97
Net cash (used in) provided by investing activities	(3,676)	44,159
Cash flows from financing activities:
Repayments on credit facility	(38,950)	(165,750)
Proceeds from the credit facility	20,780	145,000
Payment of loan originations fees	(623)	(2,453)
Proceeds from exercise of stock options	5	16
Repurchases of treasury stock	(979)
Net cash used in financing activities	(19,767)	(23,187)
Net (decrease) increase in cash	(12,958)	35,016
Cash and restricted cash, beginning of year	37,642	2,626
Cash and restricted cash, end of year	24,684	37,642
Supplemental Disclosures:
Interest paid, includding debt originations cost, during the year	8,187	11,600
Income taxes paid during the year	6	44
Leased assets obtained in exchange for new operating lease liabilities	4,058
Cash	16,802	35,595
Restricted cash	7,882	2,047
Cash and restricted cash, end of year	$ 24,684	$ 37,642

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Fair Value Disclosures (Detail Textuals)	1 Months Ended	12 Months Ended
	Dec. 31, 2017	Mar. 31, 2020
Contract Portfolio | Minimum
Financial Instruments Not Measured At Fair Value [Line Items]
Initial terms of finance receivables		12 months
Contract Portfolio | Maximum
Financial Instruments Not Measured At Fair Value [Line Items]
Initial terms of finance receivables	60 months	72 months
Direct Loans | Minimum
Financial Instruments Not Measured At Fair Value [Line Items]
Initial terms of finance receivables		12 months
Direct Loans | Maximum
Financial Instruments Not Measured At Fair Value [Line Items]
Initial terms of finance receivables		60 months

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Goodwill and Intangibles (Details) - Metrolina $ in Thousands	Mar. 31, 2020 USD ($) Branch
Business Acquisition [Line Items]
Number of branches acquired through business combinations | Branch	3
Purchase price	$ 20,483
Tangible assets:
Finance receivable, net	20,097
Other assets	144
Assumed liabilities	(160)
Total net tangible assets	20,081
Excess of purchase prices over carrying value of net tangible assets	402
Goodwill	295
Total goodwill and intangible assets	402
Indirect Dealer Network Relationships
Tangible assets:
Intangible assets	64
Direct Customer Relationships
Tangible assets:
Intangible assets	$ 43

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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Assets
Cash	$ 16,802	$ 35,595
Restricted cash	7,882	2,047
Finance receivables, net	199,781	202,042
Repossessed assets	1,340	1,924
Operating lease right-of-use assets	2,598
Prepaid expenses and other assets	1,126	1,378
Income taxes receivable	4,898	1,654
Property and equipment, net	482	656
Deferred income taxes	3,909	7,124
Total assets	238,818	252,420
Liabilities and shareholders’ equity
Credit facility	126,830	145,000
Unamortized debt issuance costs	(2,575)	(2,381)
Net long-term debt	124,255	142,619
Operating lease liabilities	2,652
Accounts payable and accrued expenses	4,332	4,916
Total liabilities	131,239	147,535
Shareholders’ equity:
Preferred stock, no par: 5,000 shares authorized; none issued
Common stock, no par: 50,000 shares authorized; 12,639 and 12,624 shares issued respectively; 7,806 and 7,910 shares outstanding, respectively	34,867	34,660
Treasury stock: 4,833 and 4,714 common shares, at cost, respectively	(71,438)	(70,459)
Retained earnings	144,150	140,684
Total shareholders’ equity	107,579	104,885
Total liabilities and shareholders’ equity	238,818	252,420
Variable Interest Entity
Assets
Restricted cash	7,882	2,047
Finance receivables, net	165,966	187,584
Repossessed assets	1,277
Total assets	175,125	189,631
Liabilities and shareholders’ equity
Credit facility	124,255	142,619
Accounts payable and accrued expenses	597
Total liabilities	$ 124,852	$ 142,619

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Variable Interest Entity - Summary of Assets and Liabilities Held by VIE (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Assets
Restricted cash	$ 7,882	$ 2,047
Finance receivables, net	199,781	202,042
Repossessed assets	1,340	1,924
Total assets	238,818	252,420
Liabilities
Credit facility	126,830	145,000
Accounts payable and accrued expenses	4,332	4,916
Total liabilities	131,239	147,535
Variable Interest Entity
Assets
Restricted cash	7,882	2,047
Finance receivables, net	165,966	187,584
Repossessed assets	1,277
Total assets	175,125	189,631
Liabilities
Credit facility	124,255	142,619
Accounts payable and accrued expenses	597
Total liabilities	$ 124,852	$ 142,619

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Quarterly Results of Operations (Unaudited) - Summary (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Quarterly Financial Data [Abstract]
Total revenue	$ 14,896	$ 14,973	$ 15,585	$ 16,641	$ 16,397	$ 16,740	$ 19,404	$ 18,759
Interest expense	1,843	1,886	2,298	2,488	2,275	2,303	2,386	2,540	$ 8,515	$ 9,504
Provision for credit losses	3,919	4,597	4,000	4,385	11,165	7,871	8,374	5,426	16,901	32,836
Non-interest expense	8,584	7,950	8,927	8,971	8,934	7,847	7,966	8,801
Operating income (loss) before income taxes	550	540	360	797	(5,977)	(1,281)	678	1,992	2,247	(4,588)
Income tax expense (benefit)	(1,746)	229	92	206	(1,232)	(376)	96	572	(1,219)	(940)
Net income (loss)	$ 2,296	$ 311	$ 268	$ 591	$ (4,745)	$ (905)	$ 582	$ 1,420	$ 3,466	$ (3,648)
Basic (in dollars per share)	$ 0.31	$ 0.04	$ 0.03	$ 0.07	$ (0.60)	$ (0.12)	$ 0.07	$ 0.18	$ 0.45	$ (0.46)
Diluted (in dollars per share)	$ 0.31	$ 0.04	$ 0.03	$ 0.07	$ (0.60)	$ (0.12)	$ 0.07	$ 0.18	$ 0.45	$ (0.46)

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Commitments and Contingencies

12 Months Ended

Mar. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

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.

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Income Taxes

12 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

 The provision for income taxes (income tax benefits) consists of the following for the years ended March 31:

	(In thousands)
	2020			2019
Current:
Federal	$	(4,440	)	$	(39	)
State		6			(66	)
Total current		(4,434	)		(105	)
Deferred:
Federal		3,008			(844	)
State		207			9
Total deferred		3,215			(835	)
Income tax benefit	$	(1,219	)	$	(940	)

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)
Deferred Tax Assets	2020		2019
Allowance for credit losses not currently deductible    for tax purposes	$	2,948	$	4,431
Share-based compensation		320		276
Federal and state net operating loss carryforwards		458		2,293
Right of use liability		462		-
Other items		249		201
Total deferred tax assets		4,437		7,201
Deferred tax liabilities
Right of use asset		457		-
Other items		71		77
Total deferred tax liabilities		528		77
Deferred income taxes	$	3,909	$	7,124

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

	(In thousands)
	2020			2019
Provision (benefit) for income taxes at Federal statutory rate	$	479		$	(845	)
Increase (decrease) resulting from:
Federal Fiscal Year 2020 NOL rate differential		(414	)		-
Federal Fiscal Year 2019 NOL rate differential		(1,362	)		-
State income taxes, net of Federal benefit		91			(206	)
Tax Reform – Rate Change		-			160
Other		(13	)		(49	)
Income tax expense (benefit)	$	(1,219	)	$	(940	)

The Company’s effective tax rate decreased to (54.3)% in fiscal 2020 from 20.5% in fiscal 2019, resulting from the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).  

In response to the global impacts of COVID-19 on U.S. companies and citizens, the government enacted the CARES Act on March 27, 2020. The CARES Act included several tax relief options for companies, which resulted in the following provisions available to the Company.

• In May 2020, the Company elected to carryback its fiscal year 2019 net operating losses of $9.7 million to 2013, thus generating a refund of $3.5 million and an income tax benefit of $1.4 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2013.

• The Company plans to carryback its fiscal year 2020 net operating losses of $3.0 million to 2014, thus generating an anticipated refund of $1.0 million and an income tax benefit of $0.4 million. The tax benefit is the result of the federal income tax rate differential between the current statutory rate of 21% and the 35% rate applicable to 2014.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.  A significant piece of objective positive evidence evaluated was the cumulative pre-tax income over the three-year period ended March 31, 2020, cumulative pre-tax income for the next three years, and substantial federal NOL rate differentials, previously noted. As of March 31, 2020, a valuation allowance was not required.  The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income are reduced.

The Company considers the earnings of the Company’s U.S. subsidiaries to be indefinitely invested outside Canada on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and the Company’s specific plans for reinvestment of those subsidiary earnings.  The Company has not recorded a deferred tax liability related to the Canadian income taxes and U.S. withholding taxes on approximately $144.2 million of undistributed earnings of the U.S. subsidiaries indefinitely invested outside Canada.  If the Company decided to repatriate the U.S. earnings, it would need to adjust its income tax provision in the period the Company determined that the earnings will no longer be indefinitely invested outside of Canada.

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Property and Equipment

12 Months Ended

Mar. 31, 2020

Property Plant And Equipment [Abstract]

Property and Equipment

4. Property and Equipment

Property and equipment as of March 31, 2020 and 2019 is summarized as follows:

	(In thousands)
	Cost		Accumulated Depreciation		Net Book Value
2020
Automobiles	$	451	$	396	$	55
Software		160		23		137
Equipment		1,571		1,439		132
Furniture and fixtures		575		519		56
Leasehold improvements		1,207		1,105		102
	$	3,964	$	3,482	$	482
2019
Automobiles	$	488	$	415	$	73
Software		127		3		124
Equipment		1,535		1,263		272
Furniture and fixtures		535		465		70
Leasehold improvements		1,187		1,070		117
	$	3,872	$	3,216	$	656

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Variable Interest Entity (Tables)

12 Months Ended

Mar. 31, 2020

Variable Interest Entity [Abstract]

Schedule of Assets and Liabilities Held by VIE

The following table presents the assets and liabilities held by the VIE (for legal purposes, the assets and the liabilities of the VIE will remain distinct from the Company):

	2020		2019
Assets
Restricted cash	$	7,882	$	2,047
Finance receivables, net		165,966		187,584
Repossessed assets		1,277		-
Total assets	$	175,125	$	189,631
Liabilities
Credit facility	$	124,255	$	142,619
Accounts payable and accrued expenses		597		-
Total liabilities	$	124,852	$	142,619

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Summary of Significant Accounting Policies (Detail Textuals)		1 Months Ended	3 Months Ended		12 Months Ended
	Feb. 28, 2019	Mar. 31, 2019 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2020 USD ($) Segment Unit	Mar. 31, 2019 USD ($)
Significant Accounting Policies [Line Items]
Number of reportable segments | Segment					1
Increase in marketing expenses						$ 1,000,000
Allowance for credit losses and provision expense				$ 151,000
Charge-offs			$ 6,400,000
Number of reporting unit | Unit					1
Goodwill impairment charge					$ 295,000
Uncertain tax positions		$ 0	$ 0		$ 0	$ 0
Interest income accrual on finance receivables suspension condition					Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 61 days or more or the collateral is repossessed, whichever is earlier. As of February 2019, Chapter 13 bankruptcy accounts are charged-off. Prior to February 2019, Chapter 13 bankruptcy accounts were accounted for under the cost-recovery method.
Average dealer discount associated with new volume					7.90%	8.20%
Monthly servicing fee percent of outstanding financed receivables		2.50%
Maximum
Significant Accounting Policies [Line Items]
Criteria for receivable to be delinquent account	181 days					181 days
Minimum
Significant Accounting Policies [Line Items]
Criteria for receivable to be delinquent account	121 days					121 days

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Fair Value Disclosures - Summary of financial instruments not measured at fair value (Details 1) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and restricted cash	$ 24,684	$ 37,642
Finance receivables	199,781	202,042
Repossessed assets:	1,340	1,924
Credit facility	126,830	145,000
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and restricted cash	24,684	37,642
Finance receivables	199,781	202,042
Repossessed assets:	1,340	1,924
Credit facility	126,830	145,000
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and restricted cash	24,684	37,642
Finance receivables	0	0
Repossessed assets:	0	0
Credit facility	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and restricted cash	0	0
Finance receivables	0	0
Repossessed assets:	0	0
Credit facility	126,830	145,000
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and restricted cash	0	0
Finance receivables	199,781	202,042
Repossessed assets:	1,340	1,924
Credit facility	$ 0	$ 0

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Organization and Basis of Presentation

12 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

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. NFI is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. NFI also offers direct consumer loans (“Direct Loans”) and sells consumer-finance related products. In addition, NF Funding I, LLC (“NF Funding I”), is a wholly-owned, special purpose financing subsidiary of NFI.  All three companies 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”).

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Consolidated Balance Sheets (Parentheticals) - $ / shares shares in Thousands	Mar. 31, 2020	Mar. 31, 2019
Statement Of Financial Position [Abstract]
Preferred stock, no par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	50,000	50,000
Common stock, shares issued	12,639	12,624
Common stock, shares outstanding	7,806	7,910
Treasury stock, shares	4,833	4,714

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Goodwill and Intangibles - Summary of Goodwill (Details) $ in Thousands	12 Months Ended
	Mar. 31, 2020 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill acquired during the year	$ 295
Goodwill impairment charge	$ (295)

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Variable Interest Entity (Detail Textuals) - USD ($)	1 Months Ended
	Mar. 31, 2019	Mar. 31, 2020
Variable Interest Entity [Abstract]
Monthly servicing fee percent of outstanding financed receivables	2.50%
Recourse to assets		$ 0

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Subsequent Events (Detail Textuals) - USD ($)		3 Months Ended	12 Months Ended		14 Months Ended
	May 27, 2020	Jun. 21, 2020	Mar. 31, 2020	Mar. 31, 2019	Jun. 21, 2020
Debt Instrument [Line Items]
Number of shares repurchased			119,000	0
Aggregate cost of shares repurchased			$ 979,000	$ 0
Subsequent Event
Debt Instrument [Line Items]
Number of shares repurchased		4,712			123,751
Aggregate cost of shares repurchased		$ 27,000			$ 1,000,000
Shares repurchased, average cost per share		$ 5.82			$ 8.05
Subsequent Event | Paycheck Protection Program | Fifth Third Bank
Debt Instrument [Line Items]
Loan obtained	$ 3,243,900
Loan interest rate	1.00%
Accrued and unpaid initial payment date	Dec. 27, 2020
Loan maturity date	May 27, 2022
Prepayment penalties upon early repayment	$ 0

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Leases

12 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

9. Leases

The Company adopted a new lease accounting standard in April 2019. See Note 2, “Summary of Significant Accounting Policies,” for an overview of the transition to this standard.

The Company maintains lease agreements related to its branch network and for its corporate headquarters. The branch lease agreements range from one to five years and generally contain options to extend from one to three years. The corporate headquarters lease agreement expires in April 2020 and the Company is in the process of negotiating a new lease agreement. All of the Company’s lease agreements are considered operating leases. None of the Company’s lease payments are dependent on a rate or index that may change after the commencement date, other than the passage of time.

The Company’s lease liability was $2.7 million as of March 31, 2020. This liability is based on the present value of the remaining minimum rental payments using a discount rate that is determined based on the Company’s incremental borrowing rate on its senior revolving credit facility. The lease asset was $2.6 million as of March 31, 2020.

The Company has made several policy elections related to lease assets and liabilities. The Company elected to utilize the package of transition practical expedients, which includes not reassessing the following at adoption: (i) whether existing contracts contained leases, (ii) the existing classification of leases as operating or financing, or (iii) the initial direct costs of leases. In addition, the Company did not use hindsight to determine the lease term or include options to extend for leases existing at the transition date.

The Company had elected the practical expedient of combining lease and non-lease components for its real estate leases in calculating the present value of the fixed payments without having to perform an allocation between the types of lease components. Future minimum lease payments under non-cancellable operating leases in effect as of March 31, 2020, are as follows:

in thousands
2021	$	1,355
2022		865
2023		495
2024		88
2025		48
Thereafter		185
Total future minimum lease payments		3,036
Present value adjustment		(384	)
Operating lease liability	$	2,652

The following table reports information about the Company’s lease cost for the twelve months ended March 31, 2020 (in thousands):

Lease cost:
Operating lease cost	$	1,777
Variable lease cost		435
Total lease cost	$	2,212

The following table reports other information about the Company’s leases for the twelve months ended March 31, 2020 (dollar amounts in thousands):

Other Lease Information
Operating Lease - Operating Cash Flows (Fixed Payments)	$	1,913
Operating Lease - Operating Cash Flows (Liability Reduction)	$	1,841
Weighted Average Lease Term - Operating Leases		2.5 years
Weighted Average Discount Rate - Operating Leases		6.5%

Rent expense for the fiscal years ended March 31, 2020 and 2019 was approximately $2.2 million and $2.6 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.

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Goodwill and Intangibles

12 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

5. Goodwill and Intangibles

On April 30, 2019, the Company completed an acquisition of three branches, representing substantially all of the assets, of ML Credit Group, LLC (d/b/a Metrolina Credit Company) (“Metrolina”). Two acquired branches are located in the state of North Carolina and one branch is located in South Carolina. Based on its evaluation of the agreement, the Company accounted for the acquisition as a business combination. The Company allocated the purchase price to the acquired assets and liabilities based on their fair values. As of March 31, 2020, the accounting related to this acquisition was completed by the Company. The final determination of the fair value of the customer lists and goodwill were completed within the twelve-month measurement period from the date of the acquisition as required by FASB ASC Topic 805-10-25. The Company recorded the following assets and liabilities in its accounting for this acquisition and the changes in the carrying amount of goodwill, are as shown on the next page.

	As of
	March 31, 2020
Acquisitions:
Number of branches acquired through business combinations	3
Purchase price	$	20,483
Tangible assets:
Finance receivable, net		20,097
Other assets		144
Assumed liabilities		(160	)
Total net tangible assets		20,081
Excess of purchase prices over carrying value of net tangible assets	$	402
Indirect dealer network relationships	$	64
Direct customer relationships		43
Goodwill		295
Total goodwill and intangible assets	$	402
	For year ended
	March 31, 2020
Balance as of April 1, 2019	$	-
Goodwill acquired during the year		295
Goodwill impairment charge		(295	)
Balance as of March 31, 2020	$	-

The Company completed the annual impairment test for goodwill at the reporting unit level pursuant to Accounting Standards Codification (“ASC”) 350 – Intangibles – Goodwill and Other (ASC 350), as amended by ASU 2017-04, which the Company adopted during the current year A reporting unit is defined under GAAP as the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management.  Our single operating segment comprises a single reporting unit, based on the level at which segment management regularly reviews and measures the business operating results.  The Company has one operating segment, which is the consumer finance company.

ASC 350 requires the Company to test goodwill for impairment annually and more frequently if indicators of impairment exist.  Testing goodwill for impairment requires management to compare the fair value of a reporting unit with its carrying amount, including goodwill.  While the qualitative assessment may change how goodwill impairment testing is performed, it does not affect the timing or measurement of goodwill impairment.

ASC 350 also provides for an optional qualitative assessment for testing goodwill for impairment (qualitative assessment) that may allow the Company to skip the annual quantitative impairment test.  The qualitative assessment permits companies to assess whether it is more likely than not (i.e., a likelihood of greater than 50%) that the fair value of a reporting unit is less than its carrying amount.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date, which is March 31, 2020. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available.

The fair value of a reporting unit is the amount at which the unit as a whole could be sold in a current transaction between willing parties (i.e., other than in a forced or liquidation sale). If a public company has only one reporting unit (or a company owns a publicly traded subsidiary that represents a reporting unit), then the market capitalization of the public company (or its public subsidiary) provides certain evidence about the fair value of that reporting unit.

During the year ended March 31, 2020, the Company experienced a significant decrease in stock prices, which was significant driver of the goodwill impairment charge. As of March 31, 2020, the closing stock price was $5.84, and the fiscal year monthly average share price was $8.51. The total number of common shares outstanding was approximately 7.8 million for the period ending, March 31, 2020. Based upon the impairment test at March 31, 2020, the Company concluded that the reporting unit fair value, adjusted for a control premium, was less than the carrying amount of the reporting unit of $107.6 million. The goodwill impairment loss recognized was $0.3 million, which is limited to the total amount of goodwill allocated to the reporting unit.

Definite-lived intangible assets principally consist of customer-related assets including contract indirect dealer network relationships and direct customer relationships. These assets are amortized over their estimated useful lives and evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The evaluation compares the cash inflows expected to be generated from each intangible asset to its carrying value. If cash flows attributable to the intangible asset are less than the carrying value, the asset is considered impaired and written down to its estimated fair value. No material impairments of definite-lived intangible assets have been recognized in the periods presented in the consolidated financial statements.

For the twelve months ended as of March 31, 2020, the Company incurred approximately $278,000 in expenses related to the purchase of the Metrolina assets.

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Variable Interest Entity

12 Months Ended

Mar. 31, 2020

Variable Interest Entity [Abstract]

Variable Interest Entity

13. Variable Interest Entity

In March 2019, the Company entered into a new senior secured credit facility collateralized by customer financed receivables by transferring the receivables into a bankruptcy-remote variable interest entity (VIE).  Under the terms of the transaction, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. The Company retained the servicing of the portfolio and receives a monthly fee of 2.5% (annualized) based on the outstanding balance of the financed receivables, and the Company currently holds all of the residual equity. In addition, the Company, rather than the VIE, will retain certain credit insurance income together with certain recoveries related to credit insurance and on charge-offs of the financed receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as the Company consolidates the VIE.

The Company consolidated the VIE’s when the Company determines that it is the primary beneficiary, the Company has the power to direct the activities that most significantly impact the performance of the VIE and it has the obligation to absorb losses and has the right to receive residual returns is significant.  The Company determined it is the primary beneficiary of the VIE.

The assets of the VIE serve as collateral for the obligations of the VIE.  The lender has no recourse to assets outside of the VIE.

The following table presents the assets and liabilities held by the VIE (for legal purposes, the assets and the liabilities of the VIE will remain distinct from the Company):

	2020		2019
Assets
Restricted cash	$	7,882	$	2,047
Finance receivables, net		165,966		187,584
Repossessed assets		1,277		-
Total assets	$	175,125	$	189,631
Liabilities
Credit facility	$	124,255	$	142,619
Accounts payable and accrued expenses		597		-
Total liabilities	$	124,852	$	142,619

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Share-Based Payments (Tables)

12 Months Ended

Mar. 31, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Schedule of option activity under the equity plans

A summary of option activity under the Equity Plans as of March 31, 2020, and changes during the year are presented below.

	(Shares and Aggregate Intrinsic Value in thousands)
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at March 31, 2019		72		$	10.71		4.10	$	51
Granted		—			—
Exercised		(2	)		3.49
Forfeited		(8	)		12.02
Outstanding at March 31, 2020		62		$	11.67		3.13	$	-
Exercisable at March 31, 2020		57		$	10.63		2.70	$	-

Schedule of non-vested restricted shares under the equity plan

A summary of the status of the Company’s non-vested restricted shares under the Equity Plan as of March 31, 2020, and changes during the year then ended is presented below.

	(Shares and Aggregate Intrinsic Value 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, 2019		45		$	10.51		1.96		404
Granted		39			9.47
Vested		(8	)		9.49
Forfeited		(26	)		10.57
Non-vested at March 31, 2020		50		$	9.65		1.40	$	341

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Organization and Basis of Presentation (Detail Textuals)	12 Months Ended
	Mar. 31, 2020 Subsidiary
United States
Organization And Basis Of Presentation [Line Items]
Number of subsidiaries	2

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Goodwill and Intangibles (Tables)

12 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Intangibles in its Accounting for Acquisition and Changes in Carrying Amount of Goodwill

The Company recorded the following assets and liabilities in its accounting for this acquisition and the changes in the carrying amount of goodwill, are as shown on the next page.

	As of
	March 31, 2020
Acquisitions:
Number of branches acquired through business combinations	3
Purchase price	$	20,483
Tangible assets:
Finance receivable, net		20,097
Other assets		144
Assumed liabilities		(160	)
Total net tangible assets		20,081
Excess of purchase prices over carrying value of net tangible assets	$	402
Indirect dealer network relationships	$	64
Direct customer relationships		43
Goodwill		295
Total goodwill and intangible assets	$	402
	For year ended
	March 31, 2020
Balance as of April 1, 2019	$	-
Goodwill acquired during the year		295
Goodwill impairment charge		(295	)
Balance as of March 31, 2020	$	-

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Consolidation

Consolidation

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

Segment Reporting

Segment Reporting

The Company reports operating segments in accordance with FASB Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assesses performance.  FASB ASC Topic 280 requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way the operating segments where determined and other items.

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

Use of Estimates

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.

Restricted Cash

Restricted Cash

Restricted cash includes cash and cash equivalents for which the Company’s ability to withdraw funds is contractually limited.  The Company’s restricted cash consist of cash restricted for debt serving of the Company’s variable interest entity.  

Finance Receivables

Finance Receivables

Finance receivables are recorded at cost, net of unearned dealer discounts, unearned insurance and commissions (see “Revenue Recognition”), and the allowance for credit losses (See Note 3).  Beginning in the fiscal year ended March 31, 2019, the Company ceased capitalizing compensation to the dealers. This change resulted in an increase in marketing expenses of approximately $1.0 million for the fiscal year ended March 31, 2019.

Allowance for Credit Losses

Allowance for Credit Losses

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms. A trailing six-month, annualized, is also more in line with the industry practice, which uses a trailing twelve-month. Management believes a trailing six-month will more accurately reflect changes in the portfolio.  Using the prior method (discussed below), the allowance and provision expense for the first quarter of fiscal 2019 would have been approximately $151,000 lower.

As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019. This one-time charge-off, of approximately $6.4 million, was excluded from the March 31, 2019 allowance for credit losses calculation.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision is recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio. Conversely, the Company could identify abnormalities in the composition of the portfolio, which would indicate the calculation is overstated and management judgement may be required to determine the allowance of credit losses for both Contracts and Direct Loans.

Repossessed Assets

Repossessed Assets

Repossessed assets 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

Property and equipment is 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
Software	7 years
Leasehold improvements	Lesser of lease term or useful life (generally 6 - 7 years)

Goodwill

Goodwill

Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill impairment exists when the fair value of a reporting unit is less than the carrying value. Goodwill is tested for impairment annually, as of the last day of the fiscal year, or more frequently whenever events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Goodwill is tested for impairment at the reporting unit level. The Company has one reporting unit, which is the same level as the Company’s one operating segment, the consumer finance company. The Company has the option of either assessing qualitative factors to determine whether it is more likely than not that the carrying value of our reporting unit exceeds its fair value or proceeding directly to a quantitative test. The Company elected to perform the quantitative impairment test at March 31, 2020.

The quantitative impairment test compares the fair value of the reporting unit to its carrying value, including goodwill. The fair value of a reporting unit refers to the price that would be received to sell the reporting unit in an orderly transaction between market participants at the measurement date. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If the fair value exceeds its carrying value, the goodwill of the reporting unit is not considered impaired. However, if the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment loss equal to that excess.

As the Company only has one reporting unit, the Company estimated the fair value of the reporting unit using a market based approach, with the primary input being the Company’s market capitalization at the measurement date, adjusted for a control premium. Based upon the impairment test at March 31, 2020, the Company concluded that its recorded balance of goodwill was impaired and recorded an impairment charge of $0.3 million, which resulted in a full write-off of the Company’s goodwill balance (See Note 5).

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company assesses impairment of long-lived assets, including property and equipment and intangible assets, whenever changes or events indicate that the carry amount may not be recoverable. The Company assesses impairment of these assets generally at the branch level based on profitability of the branch and the Company’s plans for branch closings. The Company will write down such assets to fair value, based on operational results, if impairment has occurred.  The Company did not record any impairment charges for the long-lived assets for the fiscal year ended 2020 or 2019.

Income Taxes

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.

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. There were no unrecognized tax positions as of March 31, 2020 or 2019.    

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions the Company is no longer subject to U.S. federal and state tax examinations for fiscal years prior to 2016.

We are subject to taxation at the federal, state, and local levels in the United States. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The changes included in TCJA are broad and complex. The final transition impacts of TCJA may differ from the estimates provided elsewhere in this Annual Report, possibly materially, due to, among other things, changes in interpretations of TCJA, any legislative action to address questions that arise because of TCJA, any changes in accounting standards for income taxes or related interpretations in response to TCJA, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates. The estimated impact of the new law is based on management’s current knowledge and assumptions and recognized impacts could be materially different from current estimates.

The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. See Note 7 for details regarding the impact of Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) by the U.S. government on March 27, 2020.

Revenue Recognition

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 61 days or more, or the collateral is repossessed, whichever is earlier. The Company reverses the accrual of interest income when the loan is contractually delinquent 61 days or more.

As of March 2019, non-performing assets, defined as 61 or more days past due, a Chapter 7 bankruptcy account, or a Chapter 13 bankruptcy that has not been confirmed by the courts, for which the accrual of interest income is suspended.  Upon confirmation of a bankruptcy chapter 13 (BK13), the account is charged-off.  Upon notification of a bankruptcy chapter 7, an account is monitored for collection.  In the event the debtors’ balance is 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.  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 (see Note 3).

A dealer discount represents the difference between the finance receivable 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, 2020 and 2019, were 7.9% and 8.2%, respectively.

Unearned insurance and fee commissions 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, involuntary unemployment insurance, and forced placed automobile insurance. These commissions are amortized over the life of the Contract using the interest method.

Income (Loss) Per Share

Income (Loss) Per Share

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities.  Earnings (loss) per share is calculated using the two-class method, as such awards are more dilutive under this method than the treasury stock method. Ordinarily, 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. Ordinarily, diluted loss per share includes the dilutive effect of additional potential common shares from stock compensation awards. For the year ended March 31, 2020, Company experienced net income. For the year ended March 31, 2019, the Company experienced net loss, which is not allocated to participating securities as their effect is antidilutive.  Income (loss) per share has 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)
	2020			2019
Numerator:
Net income (loss) per consolidated statements of    income (loss)	$	3,466		$	(3,648	)
Less: Allocation of income (loss) to participating    securities		(32	)		—
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Basic income (loss) per share computation:
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Weighted average common shares outstanding,    including shares considered participating    securities		7,774			7,861
Less: Weighted average participating securities    outstanding		(72	)		—
Weighted average shares of common stock		7,702			7,861
Basic income (loss) per share	$	.45		$	(0.46	)
Diluted income (loss) per share computation:
Income (loss) allocated to common stock	$	3,434		$	(3,648	)
Undistributed earnings re-allocated to participating    securities		32			—
Numerator for diluted income (loss) per share	$	3,466		$	(3,648	)
Weighted average common shares outstanding for    basic income (loss) per share		7,702			7,861
Incremental shares from stock options		1			—
Weighted average shares and dilutive potential    common shares		7,703			7,861
Diluted income (loss) per share	$	.45		$	(0.46	)

Diluted income (loss) per share does not include the effect of certain stock options as their impact would be anti-dilutive. Approximately68,600 stock options were not included in the computation of diluted loss per share for the year ended March 31, 2019, because their effect would have been anti-dilutive.

Share-Based Payments

Share-Based Payments

The grant date fair value of share awards is recognized in earnings over the requisite service period (presumptively, the vesting period), net of estimated forfeitures. 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 shares and performance units are measured at the market price of a share on a grant date. Restricted shares have a three-year service period. Performance units include a performance period (generally ending at the end of the fiscal year in which the units were granted) followed by a two-year service period. At the end of the performance period, these units effectively become restricted shares for the remaining two-year service period at which time they become vested.

Fair Value Measurements

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

Financial Instruments and Concentrations

The Company’s financial instruments consist of cash, finance receivables (accrued interest receivable is a part of finance receivables), and a Credit Facility. Financial instruments that are exposed to concentrations of credit risk are primarily finance receivables and cash.

For the year ended, March 31, 2020, the Company operated in 16 states through 43 branch locations. Of the finance receivables total as of March 31, 2020, Florida represented 29%, North Carolina represented 13%, Ohio represented 12%, and Georgia represented 10%. Of the remaining 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.

Variable Interest Entity

Variable Interest Entity

In March 2019, the Company entered into a new senior secured credit facility collateralized by customer financed receivables by transferring the receivables into a bankruptcy-remote variable interest entity (VIE).  Under the terms of the transaction, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. The Company retained the servicing of the portfolio and receives a monthly fee of 2.5% (annualized) based on the outstanding balance of the financed receivables, and the Company currently holds all of the residual equity, monthly fees are eliminated in the consolidated financial statements. In addition, the Company, rather than the VIE, will retain certain credit insurance income together with certain recoveries related to credit insurance and on charge-offs of the financed receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as the Company consolidates the VIE.

The Company consolidated the VIE’s when the Company determines that it is the primary beneficiary, the Company has the power to direct the activities that most significantly impact the performance of the VIE and it has the obligation to absorb losses and has the right to receive residual returns is significant.

Statements of Cash Flows

Statements of Cash Flows

Cash paid for income taxes for the years ended March 31, 2020 and 2019 was approximately $6 thousand and $44 thousand, respectively. Cash paid for interest, including debt origination costs for the years ended March 31, 2020 and 2019 was approximately $8.2 million and $11.6 million, respectively.

Reclassifications

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current presentation.  Such reclassifications had no impact on previously reported net loss or shareholders’ equity.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. The amendments in this update are effective for public entities who are SEC filers for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted the guidance on March 31, 2020 and applied it to the Company’s goodwill impairment test at March 31, 2020 (See Note 5).

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. “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. Upon adoption, the Company added the impact of the full operating lease terms, using the present value of future minimum lease payments to the balance sheet. The Company adopted the guidance on April 1, 2019 and the adoption of this guidance did not have a material impact on its Consolidated Financial Statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued the ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, the amendments in this ASU require the measurement of all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The ASU also requires additional disclosures related to estimates and judgments used to measure all expected credit losses. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Recently, the FASB voted to delay the implementation date for this accounting standard, for smaller reporting companies, the new effective date is beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements and is collecting and analyzing data that will be needed to produce historical inputs into any models created as a result of adopting this ASU. At this time, the Company believes the adoption of this ASU will likely have a material effect and is expected to increase the overall allowance for credit losses.

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.

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Summary of Significant Accounting Policies (Detail Textuals 3) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accounting Policies [Abstract]
Cash paid for income taxes	$ 6	$ 44
Cash paid for interest, including debt origination costs, during the year	$ 8,187	$ 11,600

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Finance Receivables - Activity in allowance for credit losses (Parenthetical) (Details 1) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2020
Accounts Notes And Loans Receivable [Line Items]
Charge-offs	$ 6.4
Non-performing accounts
Accounts Notes And Loans Receivable [Line Items]
Charge-offs		$ 0.1
Bankruptcy
Accounts Notes And Loans Receivable [Line Items]
Charge-offs		$ 1.6

XML

Leases - Schedule of Other Lease Information (Details) $ in Thousands	12 Months Ended
	Mar. 31, 2020 USD ($)
Other Lease Information
Operating Lease - Operating Cash Flows (Fixed Payments)	$ 1,913
Operating Lease - Operating Cash Flows (Liability Reduction)	$ 1,841
Weighted Average Lease Term - Operating Leases	2 years 6 months
Weighted Average Discount Rate - Operating Leases	6.50%

XML

Income Taxes (Detail Textuals) - USD ($) $ in Thousands			3 Months Ended								12 Months Ended
	Mar. 27, 2020	Dec. 31, 2017	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Schedule Of Income Taxes [Line Items]
Income tax benefit			$ 1,746	$ (229)	$ (92)	$ (206)	$ 1,232	$ 376	$ (96)	$ (572)	$ 1,219	$ 940
Federal income tax rate	21.00%	35.00%
Undistributed earnings			$ 144,200								$ 144,200
"CARES Act"
Schedule Of Income Taxes [Line Items]
Decrease in effective tax rate											(54.30%)	20.50%
"CARES Act" | Fiscal Year 2019 Net Operating Losses
Schedule Of Income Taxes [Line Items]
Net operating losses carryback	$ 9,700
Income tax refund	3,500
Income tax benefit	1,400
"CARES Act" | Fiscal Year 2020 Net Operating Losses
Schedule Of Income Taxes [Line Items]
Net operating losses carryback	3,000
Income tax refund	1,000
Income tax benefit	$ 400

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Share-Based Payments - Summary of the status of the company's non-vested restricted shares (Details 1) - Restricted Stock - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Shares
Granted	39,000
Forfeited	(26,000)
Equity Plans
Shares
Non-vested at March 31, 2019	45,000
Granted	39,000
Vested	(8,000)
Forfeited	(26,000)
Non-vested at March 31, 2020	50,000	45,000
Weighted Average Grant Date Fair Value
Non-vested at March 31, 2019	$ 10.51
Granted	9.47
Vested	9.49
Forfeited	10.57
Non-vested at March 31, 2020	$ 9.65	$ 10.51
Weighted Average Remaining Contractual Term
Non-vested at March 31	1 year 4 months 24 days	1 year 11 months 15 days
Aggregate Intrinsic Value
Non-vested at March 31	$ 341	$ 404

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Stock Plans (Detail Textuals) - USD ($)	Aug. 31, 2019	May 31, 2019
New Stock Repurchase Program | Common Stock
Equity Class Of Treasury Stock [Line Items]
Stock repurchase program, authorized amount	$ 1,000,000	$ 8,000,000

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Finance Receivables

12 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Finance Receivables

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 used and new 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. In March 2019, the Company changed its charge off policy from 181 days past due to 121 days past due.  In addition, Chapter 13 Bankruptcies, once confirmed by the courts, are also charged off.  This policy change resulted in a one-time charge of approximately $6.4 million during the 4^th quarter of fiscal 2019.  This policy change was made because current management believes it is more in line with industry standards, considering the sub-prime nature of our customers.  In the event of repossession, the charge-off will occur after standard collection practices by the Company, as determined by the residency state of a customer. This practice is consistent with the sub-prime industry.  

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

	(In thousands)
	2020			2019
Finance receivables	$	219,366		$	228,994
Accrued interest receivable		3,164			2,889
Unearned dealer discounts		(8,056	)		(10,083	)
Unearned insurance and fee commissions		(2,616	)		(2,826	)
Purchase price discount		(915	)		-
Finance receivables, net of unearned		210,943			218,974
Allowance for credit losses		(11,162	)		(16,932	)
Finance receivables, net	$	199,781		$	202,042

Contracts

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 predominantly for used vehicles. As of March 31, 2020, the average model year of vehicles collateralizing the portfolio was a 2011 vehicle. The terms of the Contracts range from 12 to 60 months and bear an average contractual interest rate of 22.6% and 22.7% as of March 31, 2020 and 2019, respectively.

Direct Loans

Direct Loans are typically for amounts ranging from $1,000 to $15,000 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 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, 2020, loans made by the Company pursuant to its Direct Loan program constituted approximately 5% of the aggregate principal amount of the Company’s loan portfolio. The terms of the Direct Loans range from 12 to72 months and bear an average contractual interest rate of 27.3% and 26.0% as of March 31, 2020 and 2019, respectively.

Allowance for Credit Losses

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms. A trailing six-month, annualized, is also more in line with the industry practice, which uses a trailing twelve-month. Management believes a trailing six-month will more accurately reflect changes in the portfolio.

As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019. This one-time charge-off, of approximately $6.4 million, was excluded from the March 31, 2019 allowance for credit losses calculation.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision is recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio. Conversely, the Company could identify abnormalities in the composition of the portfolio, which would indicate the calculation is overstated and management judgement may be required to determine the allowance of credit losses for both Contracts and Direct Loans.

The following presents the activity in our allowance for credit losses, shown below and on the next page:

	For the year ended March 31, 2020
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	16,575		$	357		$	16,932
Provision for credit losses		16,096			805			16,901
Charge-offs		(29,174	)		(663	)		(29,837	)
Recoveries*		6,936			230			7,166
Balance at end of year	$	10,433		$	729		$	11,162
*For the year ended March 31, 2020, the Company completed bulk sales of charge-off accounts, which included $1.6 million of bankruptcy accounts and $0.1 million of non-performing accounts.

	For the year ended March 31, 2019
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	19,433		$	833		$	20,266
Provision for credit losses		32,715			121			32,836
Charge-offs		(37,514	)		(638	)		(38,152	)
Recoveries		1,941			41			1,982
Balance at end of year	$	16,575		$	357		$	16,932

A performing account is defined as an account that is less than 61 days past due. The Company defines an automobile contract as delinquent when more than 25% of a payment contractually due by a certain date has not been paid by the immediately following due date, which date may have been extended within limits specified in the servicing agreements or as a result of a deferral. The period of delinquency is based on the number of days payments are contractually past due, as extended where applicable.

In certain circumstances, the Company will grant obligors one-month payment extensions. The only modification of terms in those circumstances is to advance the obligor’s next due date by one month and extend the maturity date of the receivable. There are no other concessions, such as a reduction in interest rate, forgiveness of principal or of accrued interest. Accordingly, the Company considers such extensions to be insignificant delays in payments rather than troubled debt restructurings.

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. As of February 2019, the Company  changed the charge-off policy from 181 days contractually delinquent to 121 days contractually delinquent. This change aligned the Company’s charge-off policy with practices within the subprime auto financing segment. See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more details.

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)
	2020						2019
	Contracts		Direct Loans		Total		Contracts		Direct Loans		Total
Performing accounts	$	201,045	$	11,649	$	212,694	$	213,542	$	7,889	$	221,431
Non-performing accounts		6,202		195		6,397		7,453		110		7,563
Total		207,247		11,844		219,091		220,995		7,999		228,994
Chapter 13 bankruptcy		274		1		275		-		-		-
Finance receivables	$	207,521	$	11,845	$	219,366	$	220,995	$	7,999	$	228,994

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	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2020	$	207,247	$	14,977		$	4,290		$	1,893		$	19		$	21,179
				7.23	%		2.07	%		0.91	%		0.01	%		10.22	%
March 31, 2019	$	220,995	$	14,897		$	5,155		$	2,288		$	10		$	22,350
				6.74	%		2.33	%		1.04	%		0.00	%		10.11	%

Direct Loans	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2020	$	11,844	$	344		$	136		$	59			—		$	539
				2.90	%		1.15	%		0.50	%		0.00	%		4.55	%
March 31, 2019	$	7,999	$	197		$	79		$	31		$	-		$	307
				2.46	%		0.99	%		0.39	%		0.00	%		3.84	%

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Income Taxes - Significant components of the company's deferred tax assets (Details 1) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Deferred Tax Assets
Allowance for credit losses not currently deductible for tax purposes	$ 2,948	$ 4,431
Share-based compensation	320	276
Federal and state net operating loss carryforwards	458	2,293
Right of use liability	462
Other items	249	201
Total deferred tax assets	4,437	7,201
Deferred tax liabilities
Right of use asset	457
Other items	71	77
Total deferred tax liabilities	528	77
Deferred income taxes	$ 3,909	$ 7,124

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Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Retained Earnings
Balance at Mar. 31, 2018	$ 108,437	$ 34,564	$ (70,459)	$ 144,332
Balance (in shares) at Mar. 31, 2018		7,895
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(3,648)			(3,648)
Issuance of restricted stock awards (in shares)		25
Exercise of stock options	16	$ 16
Exercise of stock options (in shares)		12
Cancellation of restricted stock awards (in shares)		(22)
Share-based compensation	80	$ 80
Balance at Mar. 31, 2019	104,885	$ 34,660	(70,459)	140,684
Balance (in shares) at Mar. 31, 2019		7,910
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	3,466			3,466
Issuance of restricted stock awards (in shares)		39
Exercise of stock options	5	$ 5
Exercise of stock options (in shares)		2
Cancellation of restricted stock awards (in shares)		(26)
Treasury stock repurchases	(979)		(979)
Treasury stock repurchases (in shares)		(119)
Share-based compensation	202	$ 202
Balance at Mar. 31, 2020	$ 107,579	$ 34,867	$ (71,438)	$ 144,150
Balance (in shares) at Mar. 31, 2020		7,806

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Credit Facility - Schedule of Future Maturities of Debt (Detail) $ in Thousands	Mar. 31, 2020 USD ($)
Long Term Debt By Maturity [Abstract]
2023	$ 31,707
2024	31,707
2025	31,708
Thereafter	31,708
Future maturities of debt	$ 126,830

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Goodwill and Intangibles (Detail Textuals) $ / shares in Units, shares in Thousands		12 Months Ended
	Apr. 30, 2019 Branch	Mar. 31, 2020 USD ($) Segment $ / shares shares	Mar. 31, 2019 shares
Business Acquisition [Line Items]
Number of operating segments | Segment		1
Number of reportable segments | Segment		1
Common stock, shares outstanding | shares		7,806	7,910
Goodwill impairment loss to be recognized		$ 295,000
Metrolina
Business Acquisition [Line Items]
Acquisition completion date	Apr. 30, 2019
Number of branches acquired | Branch	3
Share price | $ / shares		$ 5.84
Average share price | $ / shares		$ 8.51
Common stock, shares outstanding | shares		7,800
Goodwill impairment loss to be recognized		$ 300,000
Expense related to asset acquisition		$ 278,000
Metrolina | North Carolina
Business Acquisition [Line Items]
Number of branches acquired | Branch	2
Metrolina | South Carolina
Business Acquisition [Line Items]
Number of branches acquired | Branch	1
Metrolina | Minimum
Business Acquisition [Line Items]
Fair value of a reporting unit is less than its carrying amount		50.00%
Metrolina | Maximum
Business Acquisition [Line Items]
Carrying amount of the reporting unit		$ 107,600,000

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Document and Entity Information - USD ($)
shares in Millions, $ in Millions

12 Months Ended

Mar. 31, 2020

Jun. 19, 2020

Sep. 30, 2019

Cover [Abstract]

Entity Registrant Name

NICHOLAS FINANCIAL INC

Entity Central Index Key

0001000045

Entity Current Reporting Status

Yes

Entity Voluntary Filers

No

Current Fiscal Year End Date

--03-31

Entity Filer Category

Non-accelerated Filer

Entity Well-known Seasoned Issuer

No

Entity Common Stock Shares Outstanding

12.6

Entity Public Float

$ 47.7

Document Type

10-K

Document Annual Report

true

Document Transition Report

false

Document Period End Date

Mar. 31, 2020

Amendment Flag

false

Document Fiscal Year Focus

2020

Document Fiscal Period Focus

FY

Entity Small Business

true

Entity Emerging Growth Company

false

Entity Shell Company

false

Entity Interactive Data Current

Yes

Entity File Number

0-26680

Entity Incorporation, State or Country Code

A1

Entity Tax Identification Number

59-2506879

Entity Address, Address Line One

2454 McMullen Booth Road

Entity Address, Address Line Two

Building C

Entity Address, City or Town

Clearwater

Entity Address, State or Province

FL

Entity Address, Postal Zip Code

33759

City Area Code

(727)

Local Phone Number

726-0763

Title of 12(b) Security

Common shares, no par value

Trading Symbol

NICK

Security Exchange Name

NASDAQ

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive Proxy Statement and Information Circular for the 2020 Annual General Meeting of Shareholders are incorporated by reference in Part III, Items 10 through 14, of this Annual Report on Form 10-K.

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Income Taxes (Tables)

12 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of provision for income taxes

	(In thousands)
	2020			2019
Current:
Federal	$	(4,440	)	$	(39	)
State		6			(66	)
Total current		(4,434	)		(105	)
Deferred:
Federal		3,008			(844	)
State		207			9
Total deferred		3,215			(835	)
Income tax benefit	$	(1,219	)	$	(940	)

Schedule of deferred tax assets and liabilities

	(In thousands)
Deferred Tax Assets	2020		2019
Allowance for credit losses not currently deductible    for tax purposes	$	2,948	$	4,431
Share-based compensation		320		276
Federal and state net operating loss carryforwards		458		2,293
Right of use liability		462		-
Other items		249		201
Total deferred tax assets		4,437		7,201
Deferred tax liabilities
Right of use asset		457		-
Other items		71		77
Total deferred tax liabilities		528		77
Deferred income taxes	$	3,909	$	7,124

Schedule of provision (benefit) for income taxes reflects an effective tax rate

	(In thousands)
	2020			2019
Provision (benefit) for income taxes at Federal statutory rate	$	479		$	(845	)
Increase (decrease) resulting from:
Federal Fiscal Year 2020 NOL rate differential		(414	)		-
Federal Fiscal Year 2019 NOL rate differential		(1,362	)		-
State income taxes, net of Federal benefit		91			(206	)
Tax Reform – Rate Change		-			160
Other		(13	)		(49	)
Income tax expense (benefit)	$	(1,219	)	$	(940	)

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Stock Plans (Tables)

12 Months Ended

Mar. 31, 2019

Equity [Abstract]

Summary of Treasury Share Transactions Under the Company's Stock Repurchase Program

The table below summarizes treasury share transactions under the Company’s stock repurchase program.

	Twelve months ended March 31, (In thousands)
	2020					2019
	Number of Shares		Amount			Number of Shares		Amount
Treasury shares at the beginning of period		4,714	$	(70,459	)		4,714	$	(70,459	)
Treasury shares purchased		119		(979	)		-		-
Treasury shares at the end of period		4,833	$	(71,438	)		4,714	$	(70,459	)

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Summary of Significant Accounting Policies - Summary of estimated useful lives of assets (Details)	12 Months Ended
	Mar. 31, 2020
Automobiles
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Software
Property, Plant and Equipment [Line Items]
Estimated useful lives	7 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Estimated useful lives	Lesser of lease term or useful life (generally 6 - 7 years)

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Employee Benefit Plan

12 Months Ended

Mar. 31, 2020

Employee Benefits And Share Based Compensation [Abstract]

Employee Benefit Plan

11. 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 2020 later in the year.

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Fair Value Disclosures

12 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Disclosures

7. Fair Value Disclosures

Financial Instruments Not Measured at Fair Value

The Company’s financial instruments consist of cash and restricted cash, finance receivables, repossessed assets, and the Credit Facility. For the cash and the credit facility, the carrying value approximates fair value.

Finance receivables, net, approximates fair value based on the price paid to acquire Contracts.  The price 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 generally range from 12 to 72 months.  Beginning in December 2017, the maximum initial term of a Contract was reduced to 60 months.  The initial terms of the Direct Loans generally range from 12 to 60 months.  If liquidated outside of the normal course of business, the amount received may not be the carrying value.  

Repossessed assets are valued at the lower of the finance receivable balance prior to repossession or the estimated net realizable value of the repossessed asset.  The Company estimates the net realizable value using the projected cash value upon liquidation plus insurance claims outstanding, if any.  

Based on current market conditions, any new or renewed credit facility would contain pricing that approximates the Company’s current Credit Facility. Based on these market conditions, the fair value of the Credit Facility as of March 31, 2019 was estimated to be equal to the book value. The interest rate for the Credit Facility is a variable rate based on LIBOR pricing options.

	Fair Value Measurement Using (In thousands)						Fair		Carrying
Description	Level 1		Level 2		Level 3		Value		Value
Cash and restricted cash:
March 31, 2020	$	24,684	$	—	$	—	$	24,684	$	24,684
March 31, 2019	$	37,642	$	—	$	—	$	37,642	$	37,642
Finance receivables:
March 31, 2020	$	—	$	—	$	199,781	$	199,781	$	199,781
March 31, 2019	$	—	$	—	$	202,042	$	202,042	$	202,042
Repossessed assets:
March 31, 2020	$	—	$	—	$	1,340	$	1,340	$	1,340
March 31, 2019	$	—	$	—	$	1,924	$	1,924	$	1,924
Credit facility:
March 31, 2020	$	—	$	126,830	$	—	$	126,830	$	126,830
March 31, 2019	$	—	$	145,000	$	—	$	145,000	$	145,000

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. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as a Level 3.  

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Fair Value Disclosures (Tables)

12 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of financial instruments not measured at fair value

	Fair Value Measurement Using (In thousands)						Fair		Carrying
Description	Level 1		Level 2		Level 3		Value		Value
Cash and restricted cash:
March 31, 2020	$	24,684	$	—	$	—	$	24,684	$	24,684
March 31, 2019	$	37,642	$	—	$	—	$	37,642	$	37,642
Finance receivables:
March 31, 2020	$	—	$	—	$	199,781	$	199,781	$	199,781
March 31, 2019	$	—	$	—	$	202,042	$	202,042	$	202,042
Repossessed assets:
March 31, 2020	$	—	$	—	$	1,340	$	1,340	$	1,340
March 31, 2019	$	—	$	—	$	1,924	$	1,924	$	1,924
Credit facility:
March 31, 2020	$	—	$	126,830	$	—	$	126,830	$	126,830
March 31, 2019	$	—	$	145,000	$	—	$	145,000	$	145,000

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Finance Receivables (Tables)

12 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Schedule of finance receivables consisting of automobile finance installment Contracts and Direct Loans

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

	(In thousands)
	2020			2019
Finance receivables	$	219,366		$	228,994
Accrued interest receivable		3,164			2,889
Unearned dealer discounts		(8,056	)		(10,083	)
Unearned insurance and fee commissions		(2,616	)		(2,826	)
Purchase price discount		(915	)		-
Finance receivables, net of unearned		210,943			218,974
Allowance for credit losses		(11,162	)		(16,932	)
Finance receivables, net	$	199,781		$	202,042

Schedule of activity in allowance for credit losses

The following presents the activity in our allowance for credit losses, shown below and on the next page:

	For the year ended March 31, 2020
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	16,575		$	357		$	16,932
Provision for credit losses		16,096			805			16,901
Charge-offs		(29,174	)		(663	)		(29,837	)
Recoveries*		6,936			230			7,166
Balance at end of year	$	10,433		$	729		$	11,162
*For the year ended March 31, 2020, the Company completed bulk sales of charge-off accounts, which included $1.6 million of bankruptcy accounts and $0.1 million of non-performing accounts.

	For the year ended March 31, 2019
	(In thousands)
	Indirect			Direct			Total
Balance at beginning of year	$	19,433		$	833		$	20,266
Provision for credit losses		32,715			121			32,836
Charge-offs		(37,514	)		(638	)		(38,152	)
Recoveries		1,941			41			1,982
Balance at end of year	$	16,575		$	357		$	16,932

Schedule of an assessment of the credit quality by creditworthiness

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

	(In thousands)
	2020						2019
	Contracts		Direct Loans		Total		Contracts		Direct Loans		Total
Performing accounts	$	201,045	$	11,649	$	212,694	$	213,542	$	7,889	$	221,431
Non-performing accounts		6,202		195		6,397		7,453		110		7,563
Total		207,247		11,844		219,091		220,995		7,999		228,994
Chapter 13 bankruptcy		274		1		275		-		-		-
Finance receivables	$	207,521	$	11,845	$	219,366	$	220,995	$	7,999	$	228,994

Schedule of information regarding delinquency rates

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	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2020	$	207,247	$	14,977		$	4,290		$	1,893		$	19		$	21,179
				7.23	%		2.07	%		0.91	%		0.01	%		10.22	%
March 31, 2019	$	220,995	$	14,897		$	5,155		$	2,288		$	10		$	22,350
				6.74	%		2.33	%		1.04	%		0.00	%		10.11	%

Direct Loans	Balance Outstanding		30 – 59 days			60 –89 days			90-119 days			120+ days			Total
March 31, 2020	$	11,844	$	344		$	136		$	59			—		$	539
				2.90	%		1.15	%		0.50	%		0.00	%		4.55	%
March 31, 2019	$	7,999	$	197		$	79		$	31		$	-		$	307
				2.46	%		0.99	%		0.39	%		0.00	%		3.84	%

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Subsequent Events

12 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

Paycheck Protection Program: On May 27, 2020, the Company obtained a loan in the amount of $3,243,900 from Fifth Third Bank in connection with the U.S. Small Business Administration’s Paycheck Protection Program (the “PPP Loan”). Pursuant to the Paycheck Protection Program, all or a portion of the PPP Loan may be forgiven if the Company uses the proceeds of the PPP Loan for its payroll costs and other expenses in accordance with the requirements of the Paycheck Protection Program. The Company intends to use the proceeds of the PPP Loan for payroll costs and other covered expenses and intends to seek full forgiveness of the PPP Loan as soon as permitted under the Paycheck Protection Program.

If the PPP Loan is not fully forgiven, the Company will remain liable for the full and punctual payment of the outstanding principal balance plus accrued and unpaid interest. The PPP Loan accrues interest at a rate per annum equal to 1.00% and an initial payment of accrued and unpaid interest is due on December 27, 2020. The outstanding principal balance plus accrued and unpaid interest is due on May 27, 2022. The PPP Loan is unsecured. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default and other provisions customary for a loan of this type.

Point Predictive, Inc.: On June 10th 2020  Point Predictive Inc., the San Diego-based company that provides machine learning solutions to lenders, announced today that Nicholas Financial has selected the company’s risk scoring solutions to help them better segment high and low risk applications to improve the customer and dealer experience during the financing process.

Share Repurchases: For the period April 1, 2020 through June 21, 2020, the Company repurchased an additional 4,712 shares of our common stock for $27 thousand at an average price of $5.82 per share.  The total shares repurchased through June 21, 2020 under the plan in aggregate is 123,751 shares of common stock for $1.0 million at average price of $8.05.

COVID-19: The Company has discussed COVID-19 throughout the 10-K, including but not limited, to forward-looking information, Item 1. Business, Item 1A. Risk Factors, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Notes to the Consolidated Financial Statements

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Share-Based Payments - Summary of option activity under the equity plans (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Shares
Exercised	(2,000)	(12,000)
Forfeited	(8,000)	(67,000)
Equity Plans
Shares
Outstanding at March 31, 2019	72,000
Granted	0
Exercised	(2,000)
Forfeited	(8,000)
Outstanding at March 31, 2020	62,000	72,000
Exercisable at March 31, 2020	57,000
Weighted Average Exercise Price
Outstanding at March 31, 2019	$ 10.71
Granted	0
Exercised	3.49
Forfeited	12.02
Outstanding at March 31, 2020	11.67	$ 10.71
Exercisable at March 31, 2020	$ 10.63
Weighted Average Remaining Contractual Term
Outstanding at March 31	3 years 1 month 17 days	4 years 1 month 6 days
Exercisable at March 31, 2020	2 years 8 months 12 days
Aggregate Intrinsic Value
Outstanding at March 31		$ 51

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Leases - Summary of Future Minimum Lease Payments under Non-cancellable Operating Leases (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Leases [Abstract]
2021	$ 1,355
2022	865
2023	495
2024	88
2025	48
Thereafter	185
Total future minimum lease payments	3,036
Present value adjustment	(384)
Operating lease liability	$ 2,652

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Summary of Significant Accounting Policies (Detail Textuals 1)	12 Months Ended
	Mar. 31, 2019 shares
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of stock options not included in the computation of diluted income (loss) per share	68,600

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Finance Receivables - Summary of contracts and direct loans included in finance receivables (Details) - Finance receivables - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Allowance for credit losses	$ (11,162)	$ (16,932)	$ (20,266)
Contracts and direct loans
Accounts Notes And Loans Receivable [Line Items]
Finance receivables	219,366	228,994
Accrued interest receivable	3,164	2,889
Unearned dealer discounts	(8,056)	(10,083)
Unearned insurance and fee commissions	(2,616)	(2,826)
Purchase price discount	(915)
Finance receivables, net of unearned	210,943	218,974
Allowance for credit losses	(11,162)	(16,932)
Finance receivables, net	$ 199,781	$ 202,042

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Finance Receivables - Assessment of credit quality by creditworthiness (Details 2) - Finance receivables - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Total	$ 219,091	$ 228,994
Finance receivables	219,366	228,994
Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total	11,844	7,999
Finance receivables	11,845	7,999
Performing accounts
Accounts Notes And Loans Receivable [Line Items]
Total	212,694	221,431
Performing accounts | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total	11,649	7,889
Non-performing accounts
Accounts Notes And Loans Receivable [Line Items]
Total	6,397	7,563
Non-performing accounts | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total	195	110
Chapter 13 bankruptcy
Accounts Notes And Loans Receivable [Line Items]
Finance receivables	275
Chapter 13 bankruptcy | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Finance receivables	1
Contract Portfolio
Accounts Notes And Loans Receivable [Line Items]
Total	207,247	220,995
Finance receivables	207,521	220,995
Contract Portfolio | Performing accounts
Accounts Notes And Loans Receivable [Line Items]
Total	201,045	213,542
Contract Portfolio | Non-performing accounts
Accounts Notes And Loans Receivable [Line Items]
Total	6,202	$ 7,453
Contract Portfolio | Chapter 13 bankruptcy
Accounts Notes And Loans Receivable [Line Items]
Finance receivables	$ 274

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Schedule of property and equipment estimated useful lives

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

Schedule of computation of basic and diluted earnings (loss) per share

	Fiscal Year ended March 31, (In thousands, except earnings per share numbers)
	2020			2019
Numerator:
Net income (loss) per consolidated statements of    income (loss)	$	3,466		$	(3,648	)
Less: Allocation of income (loss) to participating    securities		(32	)		—
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Basic income (loss) per share computation:
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Weighted average common shares outstanding,    including shares considered participating    securities		7,774			7,861
Less: Weighted average participating securities    outstanding		(72	)		—
Weighted average shares of common stock		7,702			7,861
Basic income (loss) per share	$	.45		$	(0.46	)
Diluted income (loss) per share computation:
Income (loss) allocated to common stock	$	3,434		$	(3,648	)
Undistributed earnings re-allocated to participating    securities		32			—
Numerator for diluted income (loss) per share	$	3,466		$	(3,648	)
Weighted average common shares outstanding for    basic income (loss) per share		7,702			7,861
Incremental shares from stock options		1			—
Weighted average shares and dilutive potential    common shares		7,703			7,861
Diluted income (loss) per share	$	.45		$	(0.46	)

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Stock Plans

12 Months Ended

Mar. 31, 2019

Equity [Abstract]

Stock Plans

14. Stock Plans

In May 2019, the Company’s Board of Directors (“Board”) authorized a new stock repurchase program allowing for the repurchase of up to $8.0 million of the Company’s outstanding shares of common stock in open market purchases, privately negotiated transactions, or through other structures in accordance with applicable federal securities laws. The authorization was effective immediately.

The timing and actual number of sharers will depend on a variety of factors, including stock price, corporate and regulatory requirements and other market and economic conditions. The Company’s stock repurchase program may be suspended or discontinued at any time.

In August 2019, the Company’s Board authorized additional repurchase of up to $1.0 million of the Company’s outstanding shares.

The table below summarizes treasury share transactions under the Company’s stock repurchase program.

	Twelve months ended March 31, (In thousands)
	2020					2019
	Number of Shares		Amount			Number of Shares		Amount
Treasury shares at the beginning of period		4,714	$	(70,459	)		4,714	$	(70,459	)
Treasury shares purchased		119		(979	)		-		-
Treasury shares at the end of period		4,833	$	(71,438	)		4,714	$	(70,459	)

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Credit Facility (Tables)

12 Months Ended

Mar. 31, 2019

Line Of Credit Facility [Abstract]

Schedule of Future Maturities of Debt

Future maturities of debt as of March 31, 2020 are as follows:

(in thousands)
Year Ended March 31,
2021	$	—
2022		—
2023		31,707
2024		31,707
2025		31,708
Thereafter		31,708
	$	126,830

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Share-Based Payments (Detail Textuals)	12 Months Ended
	Mar. 31, 2020 USD ($) EquityPlan shares	Mar. 31, 2019 USD ($)	Aug. 13, 2015 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of share-based compensation plans | EquityPlan	2
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of options exercised | $	$ 7,000	$ 98,000
2006 Plan | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant	1,100,000
Contractual terms of options granted	10 years
2006 Plan | Stock options | Employees and directors | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for stock awards	3 years
2006 Plan | Stock options | Employees and directors | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for stock awards	5 years
2006 Plan | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period for stock awards	3 years
2015 plan | Stock options | Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant			750,000

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Leases (Detail Textuals) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Lessee Lease Description [Line Items]
Operating lease, liability	$ 2,652
Operating lease, right-of-use asset	2,598
Rent expense	$ 2,200	$ 2,600
Branch network lease agreement
Lessee Lease Description [Line Items]
Operating lease, existence of option to extend	true
Operating lease minimum term to extend	1 year
Operating lease maximum term to extend	3 years
Corporate headquarters lease agreement
Lessee Lease Description [Line Items]
Operating lease expiration period	2020-04
Minimum | Branch network lease agreement
Lessee Lease Description [Line Items]
Operating lease, term of contract	1 year
Maximum | Branch network lease agreement
Lessee Lease Description [Line Items]
Operating lease, term of contract	5 years

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Finance Receivables - Information regarding delinquency rates with respect to contracts and direct loans (Details 3) - Finance receivables - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Balance Outstanding	$ 219,091	$ 228,994
Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Balance Outstanding	11,844	7,999
Total	$ 539	$ 307
Total (in percentage)	4.55%	3.84%
Contract Portfolio
Accounts Notes And Loans Receivable [Line Items]
Balance Outstanding	$ 207,247	$ 220,995
Total	$ 21,179	$ 22,350
Total (in percentage)	10.22%	10.11%
30 - 59 days | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total	$ 344	$ 197
Total (in percentage)	2.90%	2.46%
30 - 59 days | Contract Portfolio
Accounts Notes And Loans Receivable [Line Items]
Total	$ 14,977	$ 14,897
Total (in percentage)	7.23%	6.74%
60 – 89 days | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total	$ 136	$ 79
Total (in percentage)	1.15%	0.99%
60 – 89 days | Contract Portfolio
Accounts Notes And Loans Receivable [Line Items]
Total	$ 4,290	$ 5,155
Total (in percentage)	2.07%	2.33%
90 - 119 days | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total	$ 59	$ 31
Total (in percentage)	0.50%	0.39%
90 - 119 days | Contract Portfolio
Accounts Notes And Loans Receivable [Line Items]
Total	$ 1,893	$ 2,288
Total (in percentage)	0.91%	1.04%
120+ days | Direct Loans
Accounts Notes And Loans Receivable [Line Items]
Total (in percentage)	0.00%	0.00%
120+ days | Contract Portfolio
Accounts Notes And Loans Receivable [Line Items]
Total	$ 19	$ 10
Total (in percentage)	0.01%	0.00%

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Summary of Significant Accounting Policies (Detail Textuals 2)	12 Months Ended
	Mar. 31, 2020 State Branch
Significant Accounting Policies [Line Items]
Number of states in which entity operates | State	16
Number of branches | Branch	43
Finance receivables
Significant Accounting Policies [Line Items]
Concentration benchmark	Of the remaining states, no one state represented more than 5% of the total finance receivables.
Finance receivables | Florida | Geographic concentration risk
Significant Accounting Policies [Line Items]
Concentration risk percentage	29.00%
Finance receivables | North Carolina | Geographic concentration risk
Significant Accounting Policies [Line Items]
Concentration risk percentage	13.00%
Finance receivables | Ohio | Geographic concentration risk
Significant Accounting Policies [Line Items]
Concentration risk percentage	12.00%
Finance receivables | Georgia | Geographic concentration risk
Significant Accounting Policies [Line Items]
Concentration risk percentage	10.00%

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Finance Receivables - Activity in allowance for credit losses (Details 1) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Provision for credit losses	$ 3,919	$ 4,597	$ 4,000	$ 4,385	$ 11,165	$ 7,871	$ 8,374	$ 5,426	$ 16,901	$ 32,836
Charge-offs					(6,400)
Finance receivables
Accounts Notes And Loans Receivable [Line Items]
Balance at beginning of year				16,932				20,266	16,932	20,266
Provision for credit losses									16,901	32,836
Charge-offs									(29,837)	(38,152)
Recoveries									7,166	1,982
Balance at end of year	11,162				16,932				11,162	16,932
Finance receivables | Indirect
Accounts Notes And Loans Receivable [Line Items]
Balance at beginning of year				16,575				19,433	16,575	19,433
Provision for credit losses									16,096	32,715
Charge-offs									(29,174)	(37,514)
Recoveries									6,936	1,941
Balance at end of year	10,433				16,575				10,433	16,575
Finance receivables | Direct
Accounts Notes And Loans Receivable [Line Items]
Balance at beginning of year				$ 357				$ 833	357	833
Provision for credit losses									805	121
Charge-offs									(663)	(638)
Recoveries									230	41
Balance at end of year	$ 729				$ 357				$ 729	$ 357

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Stock Plans - Summary of Treasury Share Transactions Under the Company's Stock Repurchase Program (Details) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Equity [Abstract]
Treasury shares at the beginning of period, Number of Shares	4,714	4,714
Treasury shares purchased, Number of Shares	119	0
Treasury shares at the end of period, Number of Shares	4,833	4,714
Treasury shares at the beginning of period, Amount	$ (70,459)	$ (70,459)
Treasury shares purchased, Amount	(979)	0
Treasury shares at the end of period, Amount	$ (71,438)	$ (70,459)

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Credit Facility (Detail Textuals) - Senior Secured Credit Facility - USD ($)		12 Months Ended
	Mar. 29, 2019	Mar. 31, 2020
Line Of Credit Facility [Line Items]
Line of credit facility amount	$ 175,000,000
Debt instrument description of variable rate basis		outstanding advances under the Credit Facility will accrue interest at a rate of LIBOR
Debt Instrument, Basis Spread on Variable Rate	3.75%
Commitment period for advances under Credit Facility	3 years
Amortization period over which outstanding balance of credit facility is paid off	4 years
Maximum
Line Of Credit Facility [Line Items]
Credit Facility available as percentage of value of non-delinquent receivables	82.50%
Percentage of borrowers obligation under credit agreement	10.00%

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Consolidated Statements of Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Interest and fee income on finance receivables	$ 62,095	$ 71,300
Expenses:
Marketing	1,548	2,446
Salaries and employee benefits	18,804	18,998
Administrative	13,393	11,724
Provision for credit losses	16,901	32,836
Amortization of intangibles	55
Depreciation	337	380
Goodwill impairment charge	295
Interest expense	8,515	9,504
Total expenses	59,848	75,888
Operating income (loss) before income taxes	2,247	(4,588)
Income tax benefit	(1,219)	(940)
Net income (loss)	$ 3,466	$ (3,648)
Earnings (loss) per share:
Basic (in dollars per share)	$ 0.45	$ (0.46)
Diluted (in dollars per share)	$ 0.45	$ (0.46)

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Property and Equipment - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Line Items]
Cost	$ 3,964	$ 3,872
Accumulated Depreciation	3,482	3,216
Net Book Value	482	656
Automobiles
Property, Plant and Equipment [Line Items]
Cost	451	488
Accumulated Depreciation	396	415
Net Book Value	55	73
Software
Property, Plant and Equipment [Line Items]
Cost	160	127
Accumulated Depreciation	23	3
Net Book Value	137	124
Equipment
Property, Plant and Equipment [Line Items]
Cost	1,571	1,535
Accumulated Depreciation	1,439	1,263
Net Book Value	132	272
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Cost	575	535
Accumulated Depreciation	519	465
Net Book Value	56	70
Leasehold improvements
Property, Plant and Equipment [Line Items]
Cost	1,207	1,187
Accumulated Depreciation	1,105	1,070
Net Book Value	$ 102	$ 117

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Income Taxes - Provision for income taxes (income tax benefits) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Current:
Federal									$ (4,440)	$ (39)
State									6	(66)
Total current									(4,434)	(105)
Deferred:
Federal									3,008	(844)
State									207	9
Total deferred									3,215	(835)
Income tax expense (benefit)	$ (1,746)	$ 229	$ 92	$ 206	$ (1,232)	$ (376)	$ 96	$ 572	$ (1,219)	$ (940)

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Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Consolidation

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

Segment Reporting

The Company reports operating segments in accordance with FASB Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assesses performance.  FASB ASC Topic 280 requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way the operating segments where determined and other items.

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

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.

Restricted Cash

Restricted cash includes cash and cash equivalents for which the Company’s ability to withdraw funds is contractually limited.  The Company’s restricted cash consist of cash restricted for debt serving of the Company’s variable interest entity.  

Finance Receivables

Finance receivables are recorded at cost, net of unearned dealer discounts, unearned insurance and commissions (see “Revenue Recognition”), and the allowance for credit losses (See Note 3).  Beginning in the fiscal year ended March 31, 2019, the Company ceased capitalizing compensation to the dealers. This change resulted in an increase in marketing expenses of approximately $1.0 million for the fiscal year ended March 31, 2019.

Allowance for Credit Losses

During the first quarter of the fiscal year ended March 31, 2019, the Company began using the trailing six-month net charge-off percentage, annualized, and applied to ending finance receivables to calculate the allowance for credit losses.  This change was made to reflect changes in the Company’s lending policies and underwriting standards, which resulted from the Company changing its business strategies. The Company re-focused on financing primary transportation to and from work for the subprime borrower. This change resulted in purchasing higher yielding loans, with smaller amounts financed and shorter monthly terms. A trailing six-month, annualized, is also more in line with the industry practice, which uses a trailing twelve-month. Management believes a trailing six-month will more accurately reflect changes in the portfolio.  Using the prior method (discussed below), the allowance and provision expense for the first quarter of fiscal 2019 would have been approximately $151,000 lower.

As of March 2019, the Company changed its charge-off policy from 181 days past due to 121 days past due, which resulted in the Company charging-off approximately $6.4 million of finance receivables during the fourth quarter of fiscal 2019. This one-time charge-off, of approximately $6.4 million, was excluded from the March 31, 2019 allowance for credit losses calculation.

In addition, the Company takes into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. If the allowance for credit losses is determined to be inadequate, then an additional charge to the provision is recorded to maintain adequate reserves based on management’s evaluation of the risk inherent in the loan portfolio. Conversely, the Company could identify abnormalities in the composition of the portfolio, which would indicate the calculation is overstated and management judgement may be required to determine the allowance of credit losses for both Contracts and Direct Loans.

Repossessed Assets

Repossessed assets 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 is 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
Software	7 years
Leasehold improvements	Lesser of lease term or useful life (generally 6 - 7 years)

Goodwill

Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Goodwill impairment exists when the fair value of a reporting unit is less than the carrying value. Goodwill is tested for impairment annually, as of the last day of the fiscal year, or more frequently whenever events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Goodwill is tested for impairment at the reporting unit level. The Company has one reporting unit, which is the same level as the Company’s one operating segment, the consumer finance company. The Company has the option of either assessing qualitative factors to determine whether it is more likely than not that the carrying value of our reporting unit exceeds its fair value or proceeding directly to a quantitative test. The Company elected to perform the quantitative impairment test at March 31, 2020.

The quantitative impairment test compares the fair value of the reporting unit to its carrying value, including goodwill. The fair value of a reporting unit refers to the price that would be received to sell the reporting unit in an orderly transaction between market participants at the measurement date. Quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available. If the fair value exceeds its carrying value, the goodwill of the reporting unit is not considered impaired. However, if the carrying value of the reporting unit exceeds its fair value, the Company recognizes an impairment loss equal to that excess.

As the Company only has one reporting unit, the Company estimated the fair value of the reporting unit using a market based approach, with the primary input being the Company’s market capitalization at the measurement date, adjusted for a control premium. Based upon the impairment test at March 31, 2020, the Company concluded that its recorded balance of goodwill was impaired and recorded an impairment charge of $0.3 million, which resulted in a full write-off of the Company’s goodwill balance (See Note 5).

Impairment of Long-Lived Assets

The Company assesses impairment of long-lived assets, including property and equipment and intangible assets, whenever changes or events indicate that the carry amount may not be recoverable. The Company assesses impairment of these assets generally at the branch level based on profitability of the branch and the Company’s plans for branch closings. The Company will write down such assets to fair value, based on operational results, if impairment has occurred.  The Company did not record any impairment charges for the long-lived assets for the fiscal year ended 2020 or 2019.

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.

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. There were no unrecognized tax positions as of March 31, 2020 or 2019.    

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions the Company is no longer subject to U.S. federal and state tax examinations for fiscal years prior to 2016.

We are subject to taxation at the federal, state, and local levels in the United States. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The changes included in TCJA are broad and complex. The final transition impacts of TCJA may differ from the estimates provided elsewhere in this Annual Report, possibly materially, due to, among other things, changes in interpretations of TCJA, any legislative action to address questions that arise because of TCJA, any changes in accounting standards for income taxes or related interpretations in response to TCJA, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates. The estimated impact of the new law is based on management’s current knowledge and assumptions and recognized impacts could be materially different from current estimates.

The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. See Note 7 for details regarding the impact of Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) by the U.S. government on March 27, 2020.

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 61 days or more, or the collateral is repossessed, whichever is earlier. The Company reverses the accrual of interest income when the loan is contractually delinquent 61 days or more.

As of March 2019, non-performing assets, defined as 61 or more days past due, a Chapter 7 bankruptcy account, or a Chapter 13 bankruptcy that has not been confirmed by the courts, for which the accrual of interest income is suspended.  Upon confirmation of a bankruptcy chapter 13 (BK13), the account is charged-off.  Upon notification of a bankruptcy chapter 7, an account is monitored for collection.  In the event the debtors’ balance is 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.  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 (see Note 3).

A dealer discount represents the difference between the finance receivable 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, 2020 and 2019, were 7.9% and 8.2%, respectively.

Unearned insurance and fee commissions 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, involuntary unemployment insurance, and forced placed automobile insurance. These commissions are amortized over the life of the Contract using the interest method.

Income (Loss) Per Share

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities.  Earnings (loss) per share is calculated using the two-class method, as such awards are more dilutive under this method than the treasury stock method. Ordinarily, 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. Ordinarily, diluted loss per share includes the dilutive effect of additional potential common shares from stock compensation awards. For the year ended March 31, 2020, Company experienced net income. For the year ended March 31, 2019, the Company experienced net loss, which is not allocated to participating securities as their effect is antidilutive.  Income (loss) per share has 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)
	2020			2019
Numerator:
Net income (loss) per consolidated statements of    income (loss)	$	3,466		$	(3,648	)
Less: Allocation of income (loss) to participating    securities		(32	)		—
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Basic income (loss) per share computation:
Net income (loss) allocated to common stock	$	3,434		$	(3,648	)
Weighted average common shares outstanding,    including shares considered participating    securities		7,774			7,861
Less: Weighted average participating securities    outstanding		(72	)		—
Weighted average shares of common stock		7,702			7,861
Basic income (loss) per share	$	.45		$	(0.46	)
Diluted income (loss) per share computation:
Income (loss) allocated to common stock	$	3,434		$	(3,648	)
Undistributed earnings re-allocated to participating    securities		32			—
Numerator for diluted income (loss) per share	$	3,466		$	(3,648	)
Weighted average common shares outstanding for    basic income (loss) per share		7,702			7,861
Incremental shares from stock options		1			—
Weighted average shares and dilutive potential    common shares		7,703			7,861
Diluted income (loss) per share	$	.45		$	(0.46	)

Diluted income (loss) per share does not include the effect of certain stock options as their impact would be anti-dilutive. Approximately68,600 stock options were not included in the computation of diluted loss per share for the year ended March 31, 2019, 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), net of estimated forfeitures. 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 shares and performance units are measured at the market price of a share on a grant date. Restricted shares have a three-year service period. Performance units include a performance period (generally ending at the end of the fiscal year in which the units were granted) followed by a two-year service period. At the end of the performance period, these units effectively become restricted shares for the remaining two-year service period at which time they become vested.

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 receivable is a part of finance receivables), and a Credit Facility. Financial instruments that are exposed to concentrations of credit risk are primarily finance receivables and cash.

For the year ended, March 31, 2020, the Company operated in 16 states through 43 branch locations. Of the finance receivables total as of March 31, 2020, Florida represented 29%, North Carolina represented 13%, Ohio represented 12%, and Georgia represented 10%. Of the remaining 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.

Variable Interest Entity

In March 2019, the Company entered into a new senior secured credit facility collateralized by customer financed receivables by transferring the receivables into a bankruptcy-remote variable interest entity (VIE).  Under the terms of the transaction, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. The Company retained the servicing of the portfolio and receives a monthly fee of 2.5% (annualized) based on the outstanding balance of the financed receivables, and the Company currently holds all of the residual equity, monthly fees are eliminated in the consolidated financial statements. In addition, the Company, rather than the VIE, will retain certain credit insurance income together with certain recoveries related to credit insurance and on charge-offs of the financed receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as the Company consolidates the VIE.

The Company consolidated the VIE’s when the Company determines that it is the primary beneficiary, the Company has the power to direct the activities that most significantly impact the performance of the VIE and it has the obligation to absorb losses and has the right to receive residual returns is significant.

Statements of Cash Flows

Cash paid for income taxes for the years ended March 31, 2020 and 2019 was approximately $6 thousand and $44 thousand, respectively. Cash paid for interest, including debt origination costs for the years ended March 31, 2020 and 2019 was approximately $8.2 million and $11.6 million, respectively.

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current presentation.  Such reclassifications had no impact on previously reported net loss or shareholders’ equity.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. The amendments in this update are effective for public entities who are SEC filers for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted the guidance on March 31, 2020 and applied it to the Company’s goodwill impairment test at March 31, 2020 (See Note 5).

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. “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. Upon adoption, the Company added the impact of the full operating lease terms, using the present value of future minimum lease payments to the balance sheet. The Company adopted the guidance on April 1, 2019 and the adoption of this guidance did not have a material impact on its Consolidated Financial Statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued the ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, the amendments in this ASU require the measurement of all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The ASU also requires additional disclosures related to estimates and judgments used to measure all expected credit losses. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Recently, the FASB voted to delay the implementation date for this accounting standard, for smaller reporting companies, the new effective date is beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements and is collecting and analyzing data that will be needed to produce historical inputs into any models created as a result of adopting this ASU. At this time, the Company believes the adoption of this ASU will likely have a material effect and is expected to increase the overall allowance for credit losses.

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.

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Summary of Significant Accounting Policies - Basic and diluted loss per share (Details 1) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net income (loss) per consolidated statements of income (loss)	$ 2,296	$ 311	$ 268	$ 591	$ (4,745)	$ (905)	$ 582	$ 1,420	$ 3,466	$ (3,648)
Less: Allocation of income (loss) to participating securities									(32)
Net income (loss) allocated to common stock									3,434	(3,648)
Basic income (loss) per share computation:
Net income (loss) allocated to common stock									$ 3,434	$ (3,648)
Weighted average common shares outstanding, including shares considered participating securities									7,774	7,861
Less: Weighted average participating securities outstanding									(72)
Weighted average shares of common stock									7,702	7,861
Basic income (loss) per share	$ 0.31	$ 0.04	$ 0.03	$ 0.07	$ (0.60)	$ (0.12)	$ 0.07	$ 0.18	$ 0.45	$ (0.46)
Diluted income (loss) per share computation:
Income (loss) allocated to common stock									$ 3,434	$ (3,648)
Undistributed earnings re-allocated to participating securities									32
Numerator for diluted income (loss) per share									$ 3,466	$ (3,648)
Weighted average common shares outstanding for basic income (loss) per share									7,702	7,861
Incremental shares from stock options									1
Weighted average shares and dilutive potential common shares									7,703	7,861
Diluted income (loss) per share	$ 0.31	$ 0.04	$ 0.03	$ 0.07	$ (0.60)	$ (0.12)	$ 0.07	$ 0.18	$ 0.45	$ (0.46)

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Leases (Tables)

12 Months Ended

Mar. 31, 2020

Leases [Abstract]

Summary of future minimum lease payments under non-cancellable operating leases

Future minimum lease payments under non-cancellable operating leases in effect as of March 31, 2020, are as follows:

in thousands
2021	$	1,355
2022		865
2023		495
2024		88
2025		48
Thereafter		185
Total future minimum lease payments		3,036
Present value adjustment		(384	)
Operating lease liability	$	2,652

Schedule of lease cost

The following table reports information about the Company’s lease cost for the twelve months ended March 31, 2020 (in thousands):

Lease cost:
Operating lease cost	$	1,777
Variable lease cost		435
Total lease cost	$	2,212

Schedule of other lease information

The following table reports other information about the Company’s leases for the twelve months ended March 31, 2020 (dollar amounts in thousands):

Other Lease Information
Operating Lease - Operating Cash Flows (Fixed Payments)	$	1,913
Operating Lease - Operating Cash Flows (Liability Reduction)	$	1,841
Weighted Average Lease Term - Operating Leases		2.5 years
Weighted Average Discount Rate - Operating Leases		6.5%

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Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Mar. 31, 2020

Quarterly Financial Data [Abstract]

Schedule of quarterly results of operations

	Fiscal Year ended March 31, 2020 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Total revenue	$	16,641	$	15,585	$	14,973	$	14,896
Interest expense		2,488		2,298		1,886		1,843
Provision for credit losses		4,385		4,000		4,597		3,919
Non-interest expense		8,971		8,927		7,950		8,584
Operating income before income taxes		797		360		540		550
Income tax expense (benefit)		206		92		229		(1,746	)
Net income	$	591	$	268	$	311	$	2,296
Earnings per share:
Basic	$	0.07	$	0.03	$	0.04	$	0.31
Diluted	$	0.07	$	0.03	$	0.04	$	0.31

	Fiscal Year ended March 31, 2019 (In thousands, except earnings per share amounts)
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
Total revenue	$	18,759	$	19,404	$	16,740		$	16,397
Interest expense		2,540		2,386		2,303			2,275
Provision for credit losses		5,426		8,374		7,871			11,165
Non-interest expense		8,801		7,966		7,847			8,934
Operating income before income taxes		1,992		678		(1,281	)		(5,977	)
Income tax expense (benefit)		572		96		(376	)		(1,232	)
Net income (loss)	$	1,420	$	582	$	(905	)	$	(4,745	)
Earnings (loss) per share:
Basic	$	0.18	$	0.07	$	(0.12	)	$	(0.60	)
Diluted	$	0.18	$	0.07	$	(0.12	)	$	(0.60	)

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Share-Based Payments

12 Months Ended

Mar. 31, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Payments

10. Share-Based Payments

The Company has share awards outstanding under two share-based compensation plans (the “Equity Plans”). The Company believes that such awards generally 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, restricted stock units, performance shares, performance units, 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. Vesting of performance units generally does not commence until 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 its obligations under the Equity Plans. Cash dividends, if any, are not paid on unvested performance units or unexercised options but are paid on unvested restricted stock awards.

The Company did not grant any options during the years ended March 31, 2020 or 2019.

A summary of option activity under the Equity Plans as of March 31, 2020, and changes during the year are presented below.

	(Shares and Aggregate Intrinsic Value in thousands)
Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at March 31, 2019		72		$	10.71		4.10	$	51
Granted		—			—
Exercised		(2	)		3.49
Forfeited		(8	)		12.02
Outstanding at March 31, 2020		62		$	11.67		3.13	$	-
Exercisable at March 31, 2020		57		$	10.63		2.70	$	-

The total intrinsic value of options exercised during the years ended March 31, 2020 and 2019 was approximately $7,000 and $98,000, respectively.

During the fiscal year ended March 31, 2020, approximately 2,000 options were exercised at exercise prices ranging from $1.20 to $4.18 per share.  During the same period, approximately 8,000 options were forfeited at exercise prices ranging from $10.87 to $12.68 per share.

During the fiscal year ended March 31, 2019, approximately 12,000 options were exercised at exercise prices ranging from $0.77 to $4.18 per share. During the same period, approximately 67,000 options were forfeited at exercise prices ranging from $10.87 to $14.36 per share.

Cash received from options exercised during the fiscal years ended March 31, 2020 and 2019 totaled approximately $5,000 and $16,000, respectively. As of March 31, 2020, the Company had no unrecognized compensation related to options grants. For the year ended, March 31, 2020 and March 31, 2019, respectively, the Company had approximately $0 and $10,000 of total unrecognized compensation cost related to options granted.

A summary of the status of the Company’s non-vested restricted shares under the Equity Plan as of March 31, 2020, and changes during the year then ended is presented below.

	(Shares and Aggregate Intrinsic Value 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, 2019		45		$	10.51		1.96		404
Granted		39			9.47
Vested		(8	)		9.49
Forfeited		(26	)		10.57
Non-vested at March 31, 2020		50		$	9.65		1.40	$	341

The Company awarded approximately 39,000 restricted shares during the fiscal year ended March 31, 2020. There are no performance shares included within the 39,000 restricted shares granted that resulted from the Company meeting a performance threshold. During the same period there were approximately 26,000 restricted shares forfeited.  With the adoption of ASU 2016-09 on January 1, 2017, the Company no longer reduces stock-based compensation by estimated forfeitures. Instead the Company accounts for forfeitures when they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is at least equal to the portion of the grant‑date value of the award tranche that is actually vested at that date.

As of March 31, 2020, there was approximately $208,000 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 1.4 years.

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Credit Facility

12 Months Ended

Mar. 31, 2019

Line Of Credit Facility [Abstract]

Credit Facility

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