UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC  20549

                           FORM 10-KSB

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

               For the fiscal year ended March 31, 2002


   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.
            (Name of Small Business Issuer in its Charter)

       British Columbia, Canada                   8736-3354
   (State or Other Jurisdiction of             (I.R.S. Employer
    Incorporation or Organization)           Identification No.)

                       Nicholas Financial, Inc.
                 2454 McMullen Booth Road, Building C
                      Clearwater, Florida  33759
        (Address of Principal Executive Offices) (Zip Code)

           Issuer's Telephone Number, Including Area Code:
                            (727) 726-0763


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

    Securities registered under Section 12(g) of the Exchange Act:
                   Common Stock, $0.01 Par Value

Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes  X    No

Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB.

The issuer's revenues for its most recent fiscal year ended
March 31, 2002 were $20,218,125.As of May 31, 2002, 4,993,764 shares
of the Registrant's Common Stock, 0.01 par value, were outstanding,
and the aggregate market value of the shares held by non-affiliates
was approximately $13,874,787

DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the issuer's definitive Proxy Statement for the Annual
Meeting of Stockholders currently scheduled to be held on August 7,
2002, expected to be filed with the Commission pursuant to Regulation
14A, on or about July 2, 2002, are incorporated by reference in Part
III of this Annual Report on Form 10-KSB.

Transitional Small Business Disclosure Format  (check one) :  Yes
No  X



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 1

                       NICHOLAS FINANCIAL, INC.
                       FORM 10-KSB ANNUAL REPORT
                           TABLE OF CONTENTS

PART I                                                   Page No.

     Item 1.  Description of Business..........................3
     Item 2.  Description of Property.........................12
     Item 3.  Legal Proceedings...............................12
     Item 4.  Submission of Matters to a Vote of
               Security Holders...............................12

PART II

     Item 5.  Market for Common Equity and Related
               Stockholder Matters............................13
     Item 6.  Management's Discussion and Analysis of
               Financial Condition and Results
               of Operations..................................14
     Item 7.  Financial Statements............................20
     Item 8.  Changes In and Disagreements With Accountants
               on Accounting and Financial Disclosure.........41

PART III

     Item 9.  Directors, Executive Officers, Promoters
               and Control Persons; Compliance with
               Section 16 (a) of the Exchange Act.............41
     Item 10. Executive Compensation..........................41
     Item 11. Security Ownership of Certain Beneficial
               Owners and Management and Related Stockholder
               Matters........................................42
     Item 12. Certain Relationships and Related
               Transactions...................................42
     Item 13. Exhibits and Reports on Form 8-K................43


 2

Forward-Looking Information

      This  report  on  Form  10-KSB 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  and
information that is based on management's beliefs and assumptions,  as
well  as information currently available to management.  When used  in
this  document,  the  words  "anticipate," "estimate,"  "expect,"  and
similar   expressions   are   intended  to  identify   forward-looking
statements.    Although  Nicholas  Financial,  Inc.,   including   its
subsidiaries ("the Company"), believes that the expectations reflected
in  such  forward-looking statements are reasonable, it  can  give  no
assurance  that  such  expectations will prove  to  be  correct.  Such
statements   are   subject   to  certain  risks,   uncertainties   and
assumptions.   Should  one  or more of these  risks  or  uncertainties
materialize, or should underlying assumptions prove incorrect,  actual
results  may  vary  materially from those  anticipated,  estimated  or
expected.   Among  the key factors that may cause  actual  results  to
differ  materially from those projected in forward-looking  statements
include  fluctuations  in  the  economy,  the  degree  and  nature  of
competition,  fluctuations  in interest  rates,  demand  for  consumer
financing in the markets served by the Company, the Company's products
and  services,  increases in the default rates experienced  on  retail
installment  sales  contracts,  adverse  regulatory  changes  in   the
Company's  existing and future markets, and the Company's  ability  to
expand  its  business, including its ability to complete  acquisitions
and  integrate the operations of acquired businesses, to  recruit  and
retain qualified employees, to expand into new markets and to maintain
profit  margins  in  the  face of increased pricing  competition.  All
forward-looking  statements  included in  this  report  are  based  on
information  available  to the Company on the  date  hereof,  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 reports on Forms  10-QSB
and 10-KSB and annual reports to shareholders.

 3
                                PART I

Item 1.     Description of 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 conducted through its two wholly-owned subsidiaries formed
pursuant to the laws of the State of Florida, Nicholas Financial, Inc.
("Nicholas  Financial")  and Nicholas Data  Services,  Inc.,  ("NDS").
Nicholas  Financial is a specialized consumer finance company  engaged
primarily  in  acquiring  and  servicing installment  sales  contracts
("Contracts")  for  purchases of new and used  automobiles  and  light
trucks.  To  a  lesser extent, Nicholas Financial  also  makes  direct
consumer loans and sells consumer-finance related products ("Insurance
Products").   NDS is engaged in designing, developing,  marketing  and
supporting industry specific computer application software  for  small
businesses located primarily in the Southeast United States.  Nicholas
Financial's  financing activities accounted for approximately  98%  of
consolidated  revenues for each of the fiscal years  ended  March  31,
2002 and 2001. NDS's activities accounted for approximately 2% of such
revenues during the same periods.

       Nicholas  Financial-Canada,  Nicholas  Financial  and  NDS  are
hereafter collectively referred to as the "Company".  Unless otherwise
specified,  all financial information herein is designated  in  United
States currency.

      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.

Automobile Finance Business - Indirect Loans

      The  Company  is engaged in the business of providing  financing
programs, primarily on behalf of purchasers of new and used  cars  and
light  trucks who meet the Company's credit standards, but who do  not
meet  the  credit standards of traditional lenders, such as banks  and
credit unions, because of the age of the vehicle being financed and/or
the  customer's job instability or credit history. Unlike  traditional
lenders, which look primarily to the credit history of the borrower in
making  lending  decisions and typically finance new automobiles,  the
Company  is  willing  to  purchase  installment  sales  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 installment sales 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 installment sales Contract.

     The Company's automobile finance programs are currently conducted
in  Florida,  Georgia, North Carolina, South Carolina  and  Ohio  only
under the name Nicholas Financial, Inc. The Company currently operates
fifteen  branch offices in Florida, three branch offices  in  Georgia,
three  branch  offices  in  North Carolina and  one  branch  in  South
Carolina.   As  of  March  31,  2002  the  Company  had  non-exclusive
agreements with approximately 750 dealers for the purchase  of  retail
installment sales contracts (the "Contracts") that meet the  Company's
financing  criteria.   The dealer agreements  require  the  dealer  to
originate Contracts in accordance with the Company's guidelines.

     The obligors under the Contracts typically make down payments, in
the form of cash or trade-in, ranging from 5% to 20% 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,  accident and  health  insurance  and/or
credit life insurance, are generally financed over a period of  12  to
60 months. Accident and health insurance coverage enables the borrower
to make required payments under the Contract in the event the borrower
becomes unable to work because of illness or accident and credit  life
insurance pays the borrower's obligations under the Contract upon  his
or her death.

 4

      The Company purchases Contracts from the automobile dealer at  a
negotiated price that is less than the original principal amount being
financed  (the  discount) by the purchaser  of  the  automobile.   The
amount of the discount depends upon factors such as the age and  value
of  the  automobile  and the creditworthiness  of  the  purchaser.  In
certain  markets, competition determines the discount that the Company
can  charge. Historically, the Contracts purchased by the Company have
been  purchased at discounts that range from 1% to 15% of the original
principal  amount of the Contract.  In addition to the  discount,  the
Company  charges  the  dealer a processing fee  of  $75  per  Contract
purchased.  As  of March 31, 2002, substantially all of the  Company's
loan  portfolio  consisted of Contracts that  were  purchased  without
recourse against the dealer.  Although substantially all the Contracts
in  the  Company's loan portfolio were acquired without recourse,  the
dealer  remains  liable  to the Company for liabilities  arising  from
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 purchases a Contract only after the dealer and  the
Company  arrive at a negotiated price for the Contract and the  dealer
has provided the Company with the requisite proof that the vehicle  is
properly titled, that the Company has a perfected first priority  lien
on  the  financed vehicle, that the customer has obtained the required
collision  insurance naming the Company as loss  payee  and  that  the
installment sales 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 through maturity.

      The  Company  requires the owner of the vehicle  to  obtain  and
maintain  collision insurance, naming the Company as the  loss  payee,
with  a  deductible of not more than $500. The Company does not  offer
collision insurance. Both the Company and the dealers offer purchasers
of  vehicles  certain  other  "add on products".  These  products  are
offered  by  the dealer on behalf of the Company or by the  automobile
dealer  on behalf of the dealership at the time of sale. They  consist
of  a  roadside  assistance  plan, extended warranty  protection,  gap
insurance, credit life insurance, credit accident and health insurance
and  credit property insurance. If the purchaser so desires, the  cost
of  these  products may be included in the amount financed  under  the
Contract.  As of March 31, 2002 and 2001, approximately 19%  and  20%,
respectively,  of the borrowers under Contracts in the Company's  loan
portfolio had elected to purchase "add on products".

      The  following table sets forth certain information for each  of
the  fiscal  years ended March 31, 2002, 2001 and 2000,  respectively,
relating to the Company's automobile finance business:

                                 2002         2001         2000
                             -------------------------------------
     Contracts purchased -
     Face value              $56,935,868  $51,193,231  $41,507,381

     Number of Contracts
      purchased                    6,918        6,400        5,264

     Weighted APR(1)              24.57%       24.70%       24.67%

     Discount                      8.67%        8.36%        8.63%

 (1) "APR" means the annual interest rate payable by the borrower.

 5

Direct Consumer Loans

     The Company is licensed to originate direct consumer loans in the
majority  of  its branch locations. The size of the loan  and  maximum
interest  rate  that can be charged varies from State  to  State.  The
average  loan  made  to date by the Company had an  initial  principal
balance  of  approximately $3,500. The Company  does  not  expect  the
average  loan  size to increase significantly within  the  foreseeable
future.  The  Company  offers loans primarily to borrowers  under  the
Contracts previously purchased by the Company.  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
approximately 90% of the direct consumer 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  direct
consumer  loan  program was implemented in April  1995  and  currently
accounts  for  less than 5% of total revenue for the Company.   As  of
March  31,  2002,  loans made by the Company pursuant  to  its  direct
consumer  loan  program constituted approximately 4% of the  aggregate
principal amount of the Company's loan portfolio.

      In connection with its direct consumer loan program, the Company
also  offers  health and accident insurance coverage and  credit  life
insurance  to borrowers. Borrowers in approximately 68% of  the  1,416
direct consumer loan transactions outstanding as of March 31, 2002 had
elected  to  purchase insurance coverage offered by the Company.   The
cost  of  this  insurance is included in the amount  financed  by  the
borrower.

      The  following table sets forth certain information for each  of
the  fiscal  years ended March 31, 2002, 2001 and 2000,  respectively,
relating to the Company's direct consumer loan business:

                                2002       2001        2000
                           --------------------------------------
     Loans purchased -
      Face value            $4,100,180  $3,816,245   $3,364,897

     Number of loans
     purchased                   1,279       1,143        1,011

     Weighted APR(1)            25.85%      25.82%       26.07%


(1) "APR" means the annual interest rate payable by the borrower.

Financing Sources

      The  Company  finances  the acquisition of  Contracts  with  its
retained  earnings, cash flow from operations, loans  from  investors,
insiders  and  a  revolving line of credit with Bank  of  America.  In
August  2000, the Company expanded its line of credit capacity to  $60
million, extended the maturity date of such line to November 30,  2002
and  reduced the rate of interest payable under the line. In  February
2001, the Company further expanded its line of credit capacity to  $75
million.  The Company is currently negotiating to extend  its  current
maturity  date. No assurance can be given that the size  of  the  line
will  be  increased or that the maturity date will be extended  beyond
November 30, 2002. The failure to do so could have a material  adverse
effect  on the business, financial condition and results of operations
of the Company.

      The  Bank of America line of credit is secured by all assets  of
the  Company. The interest rate payable by the Company on funds  drawn
under  the  line of credit is based on either the current  prime  rate
published  by  Bank  of America or several Libor pricing  options.  In
addition to interest, the Company also pays a monthly fee to  Bank  of
America equal to .25% of the amount available under the line of credit
that  has  not been drawn upon. As of March 31, 2002, the Company  had
drawn approximately $54 million under the line of credit.

 6

Underwriting Guidelines

      The  Company's typical customer is 30 years old, has  a  monthly
gross  income of $1,700 and a credit history that fails  to  meet  the
lending  standards of most banks and credit unions.  Among the  credit
problems  experienced by the Company's customers that  resulted  in  a
poor  credit  history are: unpaid revolving credit  card  obligations;
unpaid  medical  bills;  unpaid student loans; prior  bankruptcy;  and
evictions  for  nonpayment  of rent.  The Company  believes  that  its
customer profile is similar to that of its direct competitors.

      Prior to its approval of the purchase of a Contract, the Company
is  provided with a standardized credit application completed  by  the
consumer   which  contains  information  relating  to  the  consumer's
background,  employment, and credit history. The Company also  obtains
credit  reports from Equifax, TRW or TransUnion which are  independent
reporting  services.  The Company verifies the  consumer's  employment
history,   income  and  residence.  In  most  cases,   consumers   are
interviewed by telephone by a Company application processor.

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

      The  Company  continues to utilize its Loss Recovery  Department
("LRD")  to  perform on-site audits of branch compliance with  Company
buying  guidelines. LRD 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.  LRD
reports  directly to the Accounting and Administrative  Management  of
the Company. The Company believes that an independent review and audit
of  its branches that is not tied to the sales function of the Company
is   imperative  in  order  to  assure  the  information  obtained  is
impartial.

      The  Company uses essentially the same criteria in  analyzing  a
direct  consumer  loan  as  it does in analyzing  the  purchase  of  a
Contract. Lending decisions regarding direct consumer loans  are  made
based  upon  a  review  of  the customer's  loan  application,  credit
history,  job stability, income, in-person interviews with  a  Company
loan  officer and the value of the collateral offered by the  borrower
to secure the loan.  To date, since approximately 90% 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  the
automobile installment sale agreement is a significant factor  in  the
lending  decision.  The decision process with respect to the  purchase
of Contracts is similar, although the customer's prior payment history
with  automobile loans is weighted more heavily in the decision making
process  and the collateral value of the automobile being financed  is
considered.

      After reviewing the information included in the loan application
and  taking  the  other factors into account, Company  representatives
categorize   the   borrower   using   internally   developed    credit
classifications  of  "A", indicating higher creditworthiness,  through
"D",  indicating  lower  creditworthiness. In  the  absence  of  other
factors, such as a favorable payment history on a Contract held by the
Company,  the  Company generally makes direct consumer loans  only  to
individuals rated in categories "B" or higher.  Contracts are financed
for  individuals who fall within all four acceptable rating categories
utilized, "A" through "D".  Usually borrowers who fall within the  two
highest  categories are purchasing a two to four year old, low mileage
used  automobile  from the inventory of a new car or franchise  dealer
while  borrowers in the two lowest categories are purchasing an older,
high mileage automobile from an independent used automobile dealer.

 7

      Upon  credit  approval of the customer and the  receipt  of  all
required  title  and  insurance documentation, the  Company  pays  the
dealer  for the Contract. The Company typically purchases the Contract
for  a  price that approximates the wholesale value of the  automobile
being financed.  The amount the Company is willing to pay a dealer for
a  particular Contract depends upon the credit rating of the customer.
The  Company  will pay more (e.g. purchase the Contract at  a  smaller
discount  from  the original principal amount) for  Contracts  as  the
credit  risk of the customer improves. The discounts from the  initial
principal amount of Contracts purchased by the Company range  from  1%
to 15% and average 8%.

Servicing and Monitoring of Contracts

      The  Company  requires  all customers  to  obtain  and  maintain
collision  insurance  covering damage  to  the  vehicle.   Failure  to
maintain  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 legal  and
contractual  right  to  force  place  its  own  collateral  protection
insurance policy which covers loss due to physical damage to  vehicles
not covered by collision insurance.

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

      The  delinquency report is an aging report that  provides  basic
information  regarding each account and indicates  accounts  that  are
past due.  The report includes information such as the account number,
address  of the borrower, home and work phone numbers of the borrower,
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.

      Accounts that are less than 120 days matured are included on the
delinquency report on the first day that the contract is contractually
past  due. After an account has matured more than 120 days, it is  not
included on the delinquency report until it is 11 days past due.  Once
an  account  becomes  30 days past due, repossession  proceedings  are
implemented  unless  the  borrower  provides  the  Company   with   an
acceptable explanation for the delinquency and displays a willingness,
an  ability to make the payment, and an agreed upon plan to return the
account  to current status.  When an account is 60 days past due,  the
Company   ceases   amortization  of  the  Contract  and   repossession
proceedings are initiated.  At 120 days delinquent, if the vehicle has
not  yet been repossessed, the account is written off.  Once a vehicle
has  been  repossessed, the related loan balance no longer appears  on
the delinquency report.  It then appears on the Company's repossession
report and is sold, either at auction or to an automobile dealer.

      When  an  account  becomes delinquent, the  Company  immediately
contacts the borrower to determine the reason for the delinquency  and
to  determine if arrangements for payment can appropriately  be  made.
Once  payment arrangements acceptable to the Company have  been  made,
the  information is entered in its database and is used to generate  a
"Promises  Report",  which  is utilized by the  collection  staff  for
account follow up.

      The  Company generates an insurance report to monitor compliance
with  the  insurance obligations imposed upon borrowers.  This  report
includes  the  account  number,  name and  address  of  the  borrower,
information regarding the insurance carrier, summarizes the  insurance
coverage,  identifies the expiration date of the policy, and  provides
basic  information  regarding  payment  dates  and  the  term  of  the
Contract.   This  report assists the Company in identifying  borrowers
whose  insurance  policy is up for renewal or  in  jeopardy  of  being
canceled.   The  Company sends written notices to,  and  makes  direct
contact with, borrowers whose insurance policies are about to lapse or
be  canceled.   If  the borrower fails to provide  proof  of  coverage
within  30  days of notice, the Company has the option  of  purchasing
insurance  and adding the cost and applicable finance charges  to  the
balance of the Contract.

 8

       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 borrower, 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 and 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 notes other information that may be  helpful  to
the Company such as the condition of the vehicle.

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

      The Company's policy is to aggressively pursue legal remedies to
collect  deficiencies from customers. Delinquency notices are sent  to
customers and verbal requests for payment are made beginning  when  an
account  becomes 11 days delinquent.  When an account becomes 30  days
delinquent   and  the  borrower  has  not  made  payment  arrangements
acceptable to the Company or has failed to respond to the requests for
payment,  a  repossession request form is prepared by the  responsible
branch  office  employee for approval by the branch  manager  for  the
vicinity  in  which the borrower lives. Once the repossession  request
has  been  approved, first by the Branch Manager and secondly  by  his
District Manager, it must then be approved by a corporate officer. The
repossessor delivers the vehicle to a secure location specified by the
Company  where  it  is held. The Company maintains relationships  with
several licensed repossession firms which repossess vehicles for  fees
that  range  from  $150  to  $350 for each  vehicle  repossessed.   As
required by Florida, Georgia, North Carolina, South Carolina and  Ohio
law, the customer is notified by certified letter the vehicle has been
repossessed  and  to  regain the vehicle they must  make  arrangements
satisfactory to the Company and pay the amount owed under the Contract
within ten days after delivery of the letter.  The minimum requirement
for return of the vehicle is payment of all past due amounts under the
Contract and all expenses associated with the repossession incurred by
the  Company.  If satisfactory arrangements for return of the  vehicle
are not made within the statutory period, the Company then sends title
to  the  vehicle  to the state title transfer department,  which  then
registers  the  vehicle in the name of the Company. The  Company  then
either  sells  the  vehicle to a dealer or has it  transported  to  an
automobile  auction for sale. On average, approximately 30 days  lapse
between  the  time the Company takes possession of a vehicle  and  the
time  it  is  sold by a dealer or at auction.  During its most  recent
fiscal  year,  repossessed  vehicles have been  sold  at  prices  that
average approximately $1,500 to $2,000 less than the price paid by the
Company for the Contract. When the Company determines that there is  a
reasonable  likelihood  of recovering part or all  of  any  deficiency
against  the  borrower under the Contract, it pursues  legal  remedies
available  to  it  including  law  suits,  judgement  liens  and  wage
garnishments. Historically, the Company has recovered approximately 10-
15% of deficiencies from such borrowers. Proceeds from the disposition
of the vehicles are not included in the percentage range shown above.

 9

Marketing and Advertising

      The  Company's  Contract marketing efforts are  directed  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 25 mile radius  of  each  branch
office. The Branch Manager provides dealers with information regarding
the Company and the general terms upon which the Company is willing to
purchase  Contracts.  The Company presently has no plans to  implement
any  other forms of advertising for the purchase of Contracts such  as
radio or newspaper advertisements.

      Currently,  the  primary  method  utilized  by  the  Company  in
soliciting borrowers under its direct consumer loan program is 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. The Company to some extent uses direct  mail
marketing  to  those customers who meet the criteria  for  a  consumer
loan.


The  Industry

      The non-prime automobile finance market is highly fragmented and
historically  has  been serviced by a variety of  financial  entities,
including   captive   finance   subsidiaries   of   major   automobile
manufactures,  banks, independent finance companies,  and  small  loan
companies.  Many  of  these  financial entities  do  not  consistently
provide financing to this market. Although prime borrowers represent a
large  segment  of  the automobile financing market,  there  are  many
potential  purchasers  of  automobiles who do  not  qualify  as  prime
borrowers.  Purchasers  considered by  the  Company  to  be  non-prime
borrowers  are  generally  unable to obtain  credit  from  traditional
sources  of  automobile financing. The Company believes that,  because
these potential purchasers represent a substantial market, there is  a
demand  by  automobile dealers with respect to financing for non-prime
borrowers   that  has  not  been  effectively  served  by  traditional
automobile financing sources.


Computerized Information System

      The Company's utilizes integrated computer systems developed  by
NDS  to  enhance its ability to respond to customer inquiries  and  to
monitor the performance of its indirect and direct loan portfolio  and
the   performance  of  individual  borrowers  under  Contracts.    All
personnel   are   provided  with  instant,  simultaneous   access   to
information  from a single shared database.  The Company  has  created
specialized programs to automate the tracking of loans from inception.
The  capacity  of the networking system includes the Company's  branch
office   locations.   See  the  discussion  above  under  the  caption
"Servicing and Monitoring of Contracts" for a summary of the different
reports prepared by the Company.

 10

Strategy

      The  Company's  principal business strategy is to  continue  its
growth  and  to increase its profitability through greater penetration
in  its  current  markets, controlled geographic  expansion  into  new
markets  and selective portfolio acquisitions. As of the date of  this
report, the Company has no commitments or agreements in principle with
respect  to  any portfolio acquisitions. The Company also  intends  to
continue its expansion through the increased origination of additional
direct  consumer  loans.  The  Company  is  currently  expanding   its
automobile  financing program in the State of Ohio.  The  Company  has
targeted  certain geographic locations within the State of Ohio  where
it  believes there is a sufficient market for its automobile financing
program. The Company is currently purchasing Contracts in the State of
Ohio utilizing employees who reside in that state. These employees are
developing  their  respective markets in  Ohio  and  the  Company  has
created  a  Central  Buying  Office in its Corporate  Headquarters  to
purchase, process and service these Contracts. The Company's  strategy
is  to monitor these new markets and ultimately decide where and  when
to  open  actual branch locations. As of May 15, 2002 the Company  had
signed  two  lease obligations for branch locations in  Cleveland  and
Columbus  Ohio. No assurances can be given, however, that any  further
such expansion will occur. The Company is also analyzing other markets
in  States  the  Company  does not currently operate  in,  however  no
assurance  can  be given that any expansion will occur  in  these  new
markets.

Competition

       The   consumer  finance  industry  is  fragmented  and   highly
competitive.   There  are  numerous financial service  companies  that
provide consumer credit in the markets served by the Company including
banks, other consumer finance companies, and captive finance companies
owned  by  automobile  manufacturers and  retailers.   Many  of  these
companies  have significantly greater resources than the Company.  The
Company  does not believe that increased competition for the  purchase
of  Contracts will cause a reduction in the interest rate  payable  by
the  purchaser of the automobile.  However, increased competition  for
the  purchase of Contracts will enable automobile dealers to shop  for
the best price, thereby giving rise to an erosion in the discount from
the initial principal amount at which the Company would be willing  to
purchase Contracts.

     The Company's target market consists of persons who are generally
unable  to  obtain  traditional used car financing  because  of  their
credit  history, the vehicle's mileage or age.  The Company  has  been
able to expand its automobile finance business in the non-prime credit
market by offering to purchase Contracts on terms that are competitive
with those of other companies which purchase automobile receivables in
that  market segment.  Because of the daily contact that many  of  its
employees  have with automobile dealers located throughout the  market
areas  served by it, the Company is generally aware of the terms  upon
which  its  competitors  are  offering  to  purchase  Contracts.   The
Company's  policy  is  to  modify its terms  if  necessary  to  remain
competitive.  The  Company has no intention  and  will  not  sacrifice
credit  quality, its purchasing criteria or prudent business practices
in  order to meet the competition or be driven by unrealizable  growth
expectations. The Company expects to analyze new lending programs  and
marketing  methods  which may be implemented  with  the  objective  of
increasing  profits and or its market share, including the possibility
of  offering to purchase portfolios of seasoned Contracts from dealers
in bulk transactions from $100,000 to $10,000,000.

     The Company's ability to compete effectively with other companies
offering similar financing arrangements depends upon maintaining close
business  relationships with dealers of new  and  used  vehicles.   No
single  dealer out of the approximately 750 dealers that  the  Company
has  contractual  relationships with accounted  for  over  3%  of  its
business volume for the fiscal years ended March 31, 2002 or 2001.

 11

Regulation

      The  Company's  financing operations are subject to  regulation,
supervision  and  licensing under various  Federal,  State  and  local
statutes  and ordinances.  Additionally, the procedures that  must  be
followed  by  the  Company  in connection  with  the  repossession  of
vehicles  securing Contracts are regulated by each of  the  states  in
which  the  Company  does business. To date, the Company's  operations
have  been  conducted exclusively in the States of  Florida,  Georgia,
North Carolina, South Carolina and Ohio. Accordingly, the laws of such
states  as  well  as  applicable Federal laws,  govern  the  Company's
operations.  Compliance with existing laws and regulations  applicable
to  the Company has not had a material adverse effect on the Company's
operations  to  date.  Management  believes  that  it  maintains   all
requisite licenses and permits and is in material compliance with  all
applicable Local, State and Federal regulations.

     The Company maintains a Retail Installment Seller's License and a
Sales  Finance Company License with the Florida Department of  Banking
and  Finance,  the  Georgia Secretary of State  (Business  Services  &
Regulation)  ,  the  North  Carolina Secretary  of  State,  the  South
Carolina  Secretary of State and the Ohio Secretary of State. Pursuant
to  regulations  of  the  State  of Florida  governing  the  Company's
financing  business activities, the Department of Banking and  Finance
conducts  an  on site audit of each of the Company's Florida  branches
periodically  to  monitor compliance with the applicable  regulations.
The  regulations govern, among other matters, licensure  requirements,
requirements  for maintenance of proper records, payment  of  required
fees to the States of Florida, Georgia, North Carolina, South Carolina
and  Ohio,  maximum  interest rates that may be charged  on  loans  to
finance  used  vehicles and proper disclosure to  customers  regarding
financing terms.


Employees

      The Company's executive management and various support functions
are centralized at the Company's Corporate Headquarters in Clearwater,
Florida.   As  of March 31, 2002 the Company employed a total  of  118
persons,  five of whom work for NDS and 113 of whom work for  Nicholas
Financial.  The Company provides paid holidays, vacation,  sick  time,
jury  time, health and life insurance, long-term disability insurance,
dental  insurance  and  a  retirement plan  that  includes  a  Company
matching formula on employee contributions as well as a Company profit
sharing  contribution for all qualified employees.  No  employees  are
covered  by a collective bargaining agreement and the Company believes
it has good relations with its employees.

 12

Item 2. Description of Properties

     The Company leases its Headquarters and branch office facilities.
Its  Headquarters, located at 2454 McMullen Booth Road, Building C  in
Clearwater, Florida, consist of approximately 6,800 square feet.   The
Company  occupies  the  space pursuant to a lease  that  commenced  on
January  1, 2000 and expires on November 30, 2002. The current monthly
rent  is  $7,855. The Company is currently negotiating to  expand  its
corporate  facility  by either negotiating for  additional  space  and
extending its current lease or relocating its corporate facility to  a
new location.

      Each  of  the  Company's 22 branch offices located  in  Florida,
Georgia,  North Carolina and South Carolina consists of  approximately
1,200 square feet. These offices are located in office parks, shopping
centers  or  strip malls and are occupied pursuant to leases  with  an
initial  term  of from two to five years at annual rates ranging  from
approximately  $8.00 to $16.00 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 is not a party to any pending legal proceedings other
than  ordinary routine litigation incidental to its business  none  of
which,  in  the  opinion of management, will have a  material  adverse
effect  on  the Company's business, financial position or  results  of
operations.


Item 4. Submission of Matters to a Vote of Security Holders

      No  matters were submitted to a vote of security holders  during
the quarter ended March 31, 2002.


 13

                               PART II



Item 5. Market for Common Equity and Related Stockholder Matters

     Since December 23, 1997, the Company's Common Stock has traded on
the  NASDAQ  SmallCap  System.  Effective May 5, 1999,  the  Company's
trading  symbol changed from "NICKF" to "NICK". Share information with
respect  to  the Common Stock is set forth in the "Selected  Quarterly
Data" table included below.

      As  of  March 31, 2002, there were approximately 500 holders  of
record  of  the  Company's Common Stock. Holders of Common  Stock  are
entitled  to  receive dividends if and when declared by the  Board  of
Directors  out of funds legally available therefore. To date,  it  has
been the Company's policy to retain earnings to finance the growth  of
its  business. Accordingly, the Company has not declared or  paid  any
cash  dividends since its inception and does not anticipate  declaring
or  paying any cash dividends in the foreseeable future. Any dividends
on  the  Common Stock will be at the sole discretion of the  Board  of
Directors  and  will depend upon the Company's profitability,  capital
requirements,   requirements  of  the  Company's  lenders,   statutory
restrictions and other factors deemed relevant by the Company's  Board
of Directors.




     The following table reflects the high and low sale prices for the
Company's  Common Stock for each of the periods indicated as  reported
by  the NASDAQ Stock Market and as restated for the two-for-one  stock
split  effected  pursuant  to  a  100% stock  dividend,  completed  on
September 10, 2001.

Price Range of Common Stock:


                                               
                                             High        Low
Fiscal Year ended March 31, 2002
     First Quarter ............             $3.75       $2.40
     Second Quarter.........                 5.50        3.15
     Third Quarter...........                4.75        3.54
     Fourth Quarter............              4.50        3.65

                                             High        Low
Fiscal Year ended March 31, 2001
     First Quarter ............             $2.81       $2.25
     Second Quarter.........                 2.63        2.25
     Third Quarter...........                2.50        2.06
     Fourth Quarter............              2.72        2.16




"The information  set  forth in the second paragraph (and accompanying
table) under  the  caption  "Item 11.  Security  Ownership  of Certain
Beneficial  Owners  and Management and Related Stockholder Matters" of
this Annual Report on Form 10-KSB is incorporated herein by reference."

 14

Critical Accounting Policy

   The  Company's critical accounting policy relates to the  allowance
for  losses on loans. It is based on management's opinion of an amount
that  is  adequate  to  absorb losses in the existing  portfolio.  The
allowance  for  credit losses is established through a  provision  for
loss based on management's evaluation of the risk inherent in the loan
portfolio,  the composition of the portfolio, specific impaired  loans
and  current  economic conditions. Such evaluation, which  includes  a
review of all loans on which full collectibility may not be reasonably
assured,  considers among other matters, the estimated net  realizable
value  or  the  fair  value  of  the underlying  collateral,  economic
conditions, historical loan loss experience, management's estimate  of
probable  credit losses and other factors that warrant recognition  in
providing for an adequate credit loss allowance.

Item  6.  Management's Discussion and Analysis of Financial  Condition
and Results of Operations


Overview

     Consolidated net income increased in the fiscal year ended  March
31,  2002 to $3,932,139 or $0.75 per diluted share from $3,410,877  or
$0.68  per  diluted  share in the fiscal year ended  March  31,  2001.
Earnings for the year were favorably impacted by significant growth in
the outstanding loan portfolio.




The following table sets forth certain financial data:

----------------------------------------------------------------------
                                             Years Ended March 31
Select Portfolio Information                 2002            2001
----------------------------------------------------------------------
                                                   

Average Net Finance Receivables(1)        $84,388,641     $73,076,939

Average Indebtedness(2)                    50,907,525      46,166,602

Interest Income                            19,852,758      17,386,318

Interest Expense                            3,898,400       3,761,689

Net Interest Income                        15,954,358      13,624,629
----------------------------------------------------------------------
Gross Portfolio Yield(3)                       23.53%          23.79%

Average Cost of Borrowed Funds(2)               7.66%           8.15%

Net Interest Spread(4)                         15.87%          15.64%
----------------------------------------------------------------------
Net Portfolio Yield(3)                         18.91%          18.64%
----------------------------------------------------------------------
Write-off  to Liquidation                       8.62%           7.21%

Net Charge-Off Percentage                       7.63%           6.16%


 15

(1)Average  net  finance  receivables represent  the  average  of  net
  finance  receivables  throughout the year.  Net finance  receivables
  represents  gross  finance  receivables less  any  unearned  finance
  charges related to those receivables.

(2)Average  indebtedness represents the average outstanding borrowings
  under  its  line  of  credit, subordinated debt and  notes  payable.
  Average  cost  of  borrowed  funds represents  interest  expense  as
  percentage of average indebtedness.

(3)Gross portfolio yield represents interest income as a percentage of
  average  finance  receivables.  Net portfolio yield  represents  net
  interest income as a percentage of average finance receivables.

(4)Net interest spread represents the gross  portfolio  yield less the
  average cost of borrowed funds.


Fiscal 2002 compared to Fiscal 2001

Interest Income and Loan Portfolio

     Interest  income  on  finance receivables, predominantly  finance
charge  income,  increased 14% to $19.9 million in  fiscal  2002  from
$17.4  million  in  fiscal  2001. The net finance  receivable  balance
totaled $76.1 million at March 31, 2002, an increase of 17% from $65.0
million  at  March  31,  2001.  The gross finance  receivable  balance
increased 17% to $120.5 million at March 31, 2002 from $103.2  million
at  March 31, 2001. The primary reason interest revenue increased  was
the increase in the outstanding loan portfolio. The primary reason net
finance  receivables  increased  was the  opening  of  two  additional
offices  and the increased receivable base of several existing  branch
offices.

Computer Software Business

       In fiscal 2002, the revenues of NDS were $365,367 compared with
fiscal  2001  revenues of $410,708, a decrease of 11%. Operating  loss
for  fiscal  2002 was $(11,408) compared with an operating  income  of
$25,137  for fiscal 2001. The Company expects both operating  revenues
and  income of NDS to remain relatively stable, although no  assurance
can be given in this regard.

Operating Expenses

     Operating  expenses  excluding provision for  credit  losses  and
interest  expense increased to $8.1 million in fiscal 2002  from  $7.0
million   in   fiscal  2001.  This  increase  of  16%  was   primarily
attributable  to  the  opening  of two  additional  branch  locations,
increasing  the  number  of  employees  in  several  existing   branch
locations  and also increasing the number of corporate personnel.  The
Company  increased  its work force from 95 employees  at  the  end  of
fiscal 2001 to 118 employees at the end of fiscal 2002.

Interest Expense

     Interest  expense  increased to $3.9 million in  fiscal  2002  as
compared to $3.8 million in fiscal 2001. This increase was due  to  an
increase in average outstanding borrowings from $46.2 million to $50.9
million.  The average cost of borrowed funds decreased from 8.15%  for
fiscal 2001 to 7.66% for fiscal 2002.


 16


Analysis of Credit Losses

    Because of the nature of the borrowers under the Contracts and its
direct  consumer loan program, the Company considers the establishment
of  adequate reserves for credit losses to be imperative.  The Company
segregates  its  Contracts  into pools for  purposes  of  establishing
reserves  for losses.  Each such pool consists of the loans  purchased
by  a  Company branch office during a three month period. The  average
pool  consists  of  74 Contracts with an aggregate  initial  principal
amount  of  approximately $600,141. As of March 31, 2002, the  Company
had 365 active pools.

     The  Company pools Contracts according to branch location because
the  branches  purchase  contracts in  different  markets  located  in
Florida,  Georgia,  North  Carolina,  South  Carolina  and  Ohio.  All
Contracts  purchased by a branch during a fiscal  quarter  comprise  a
pool.  This method of pooling by branch and quarter allows the Company
to  evaluate  the  different markets where the branches  operate.  The
pools  also  allow  the Company to evaluate the  different  levels  of
customer  income, stability, credit history, and the types of vehicles
purchased in each market.

     A  pool  retains an amount equal to 100% of the discount  into  a
reserve  for  credit  losses. In situations  where,  at  the  date  of
purchase, the discount is determined to be insufficient to absorb  all
potential  losses  associated  with the  pool,  a  portion  of  future
unearned  income associated with that specific pool will be  added  to
the  reserves for credit losses until total reserves have reached  the
appropriate  level.  Subsequent to the purchase, if  the  reserve  for
credit  losses is determined to be inadequate for a pool which is  not
fully  liquidated,  then  a charge to income is  used  to  reestablish
adequate reserves. If a pool is fully liquidated and has any remaining
reserves, the excess reserves are recognized as income.

     In  analyzing  a pool, the Company considers the  performance  of
prior  pools originated by the branch office, the performance of prior
Contracts  purchased from the dealers whose Contracts are included  in
the  current  pool,  the  credit rating of  the  borrowers  under  the
Contracts  in  the  pool, and current market and economic  conditions.
Each  pool  is analyzed monthly to determine if the loss reserves  are
adequate  and  adjustments  are made if  they  are  determined  to  be
necessary.  As of March 31, 2002, the Company had established reserves
for  losses on Contracts of $15,565,684 or 12.92% of gross outstanding
receivables under the Contracts.

 17




      The  following tables present certain information regarding  the
delinquency rates experienced by the Company with respect to Contracts
and under its direct consumer loan program:

                                    Year Ended          Year Ended
                                  March 31, 2002       March 31, 2001
                              ------------------------------------------
                                             
Contracts
Gross Balance Outstanding           $115,683,683        $98,797,992


                               Dollar                Dollar
Delinquencies                  Amount   Percent      Amount   Percent
-------------              -----------  --------   ---------  --------
30 to 59 days               $2,004,990    1.73%   $1,363,532    1.38%
60 to 89 days                  400,486    0.35%      328,964    0.33%
90 + days                      276,096    0.24%      182,951    0.19%
                             ---------   ------    ---------   ------
Total Delinquencies         $2,681,572            $1,875,447

Total Delinquencies as a
percent of outstanding balance            2.32%                 1.90%



Direct Loans
Gross Balance Outstanding             $4,771,275         $4,406,187

Delinquencies
-------------
30 to 59 days                   33,992    0.71%       56,781    1.29%
60 to 89 days                    5,081    0.11%        2,436    0.06%
90 +  days                       1,842    0.04%        9,659    0.22%
                              --------   -------     -------   -------
Total Delinquencies            $40,915               $68,876

Total Delinquencies as
apercent of outstanding balance           0.86%                 1.56%



     The provision for credit losses was $1,912,918 in fiscal 2002  as
compared to $1,470,744 in fiscal 2001. This increase was primarily the
result of a 17% increase in the net portfolio over the prior year. The
Company  decreased its total reserve percentage from 13.34%  of  gross
finance receivables for the fiscal year ended March 31, 2001 to 12.92%
for the fiscal year ended March 31, 2002. Management believes that the
reserve  adjustments made during fiscal 2002 are consistent  with  its
reserve methodology.

Income Taxes

      The  provision for income taxes increased 10% to  $2,338,419  in
fiscal  2002 from $2,120,855 in fiscal 2001 primarily as a  result  of
higher pretax income. The Company's effective tax rate decreased  from
38.34% in fiscal 2001 to 37.29% in fiscal 2002.

 18

Net Income

      As  a  result  of the above factors, net income  increased  from
$3,410,877 in fiscal 2001 to $3,932,139 in fiscal 2002.


Liquidity and Capital Resources

The  Company's  cash flows for fiscal 2002 and 2001 are summarized  as
follows:

                                       Fiscal        Fiscal
                                        2002           2001

Cash provided by (used in):
  Operations                        $ 7,291,571      $ 5,780,282
  Investing activities -
   (primarily purchase of
    installment contracts)          (13,166,260)     (14,644,237)
  Financing activities                5,605,733        8,924,967
                                    -----------------------------
Net (decrease) increase in cash     $  (268,956)     $    61,012
                                    =============================

      The  Company's primary use of working capital during fiscal year
2002 was the funding of the purchase of Contracts.  The Contracts were
financed substantially through borrowings on the Company's $75 million
line  of credit.  The line of credit, which expires in November  2002,
is  secured primarily by Contracts, and available borrowings are based
on  a  percentage of qualifying Contracts. As of March  31,  2002  the
Company  had  approximately $21 million available under  the  line  of
credit. Since inception, the Company has also funded a portion of  its
working  capital needs from cash flows from operating activities.  The
Company is currently negotiating to extend its current maturity  date.
No  assurance can be given that the size of the line will be increased
or that the maturity date will be extended beyond November 30, 2002.

      The  self-liquidating nature of installment Contracts and  other
loans enables the Company to assume a higher debt-to-equity ratio than
in most businesses. The amount of debt the Company incurs from time to
time  under  these financing mechanisms depends on the Company's  need
for  cash and ability to borrow under the terms of its line of credit.
The  Company  believes that borrowings available  under  the  line  of
credit  as  well  as cash flow from operations and, if necessary,  the
issuance  of additional subordinated debt and or additional securities
in  the  capital  markets, will be sufficient to meet its  short  term
funding needs.

 19

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  have  been
offset by the Company's continued emphasis on stringent operating  and
cost  controls.  Management  believes  that  the  Company's  financial
position  has  enabled it to negotiate favorable  interest  rates.  No
assurances  can be given that the Company will be able to continue  to
do so in the future.

      The  Company believes the current downturn in the economy  would
increase  the  number  of  purchasers  of  automobiles  financed  with
Contracts.  During a modest downturn in economic activity more  people
will experience a reduction in income because of downsizing, fewer and
smaller  raises, and the necessity of accepting lower paying jobs.  In
addition,  it  may  be difficult for individuals who have  financially
over-extended themselves to meet their debt obligations and  they  may
find  it  necessary  to  purchase used rather  than  new  automobiles.
Although the number of potential customers can be expected to increase
during  periods of slow economic activity, the number of  defaults  in
payment  obligations can also be expected to increase with a resulting
increase in repossessions of vehicles securing Contracts.  The Company
believes  the net effect of such a continued downturn in  the  economy
would be unfavorable to the operating results of the Company.

Future Expansion

      The  Company currently intends to continue its expansion through
the  purchase of additional Contracts and the expansion of its  direct
consumer loan program.  In order to increase the size of the Company's
portfolio of Contracts, it will be necessary for the Company  to  open
additional branch offices and increase the size of its revolving  line
of  credit  arrangement,  either with its current  lender  or  another
lender.   The  Company,  from time to time, has  and  will  meet  with
private  investors  and  financial  institutions  that  specialize  in
investing  in subordinated debt. The Company also intends to  continue
its  policy of not paying dividends and using earnings from operations
to  purchase  Contracts  or make direct consumer  loans.  The  Company
believes  that opportunity for growth continues to exist  in  Florida,
Georgia,  North  Carolina, South Carolina  and  Ohio  and  intends  to
continue  its  expansion activities in those states.  The  Company  is
currently expanding its automobile financing program in the  State  of
Ohio. The Company has targeted certain geographic locations within the
State  of Ohio where it believes there is a sufficient market for  its
automobile  financing  program. The Company  is  currently  purchasing
Contracts in the State of Ohio utilizing employees who reside  in  the
State of Ohio. These employees are developing their respective markets
in  Ohio  and the Company has created a Central Buying Office  in  its
Corporate   Headquarters  to  purchase,  process  and  service   these
Contracts. The Company's strategy is to monitor these new markets  and
ultimately  decide where and when to open actual branch locations.  As
of  May  15,  2002  the Company had signed two lease  obligations  for
branch locations in Cleveland and Columbus Ohio. No assurances can  be
given,  however,  that  any  further such expansion  will  occur.  The
Company is also analyzing other markets in States the Company does not
currently  operate  in, however no assurance can  be  given  that  any
expansion will occur in these new markets.

 20

Item 7. Financial Statements

The following financial statements are filed as part of this report
(see pages 20-39)

  Report of Independent Certified Public Accountants..........21

  Audited Consolidated Financial Statements

  Consolidated Balance Sheets.................................22
  Consolidated Statements of Income...........................23
  Consolidated Statements of Stockholders' Equity.............24
  Consolidated Statements of Cash Flows.......................25
  Notes to Consolidated Financial Statements..................26



 21

       Report of Independent Certified Public Accountants

To the Board of Directors of
Nicholas Financial, Inc.

We  have audited the accompanying consolidated balance sheets  of
Nicholas  Financial, Inc. and subsidiaries as of March  31,  2002
and  2001,  and  the related consolidated statements  of  income,
shareholders'  equity and cash flows for the  years  then  ended.
These   financial  statements  are  the  responsibility  of   the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.

We  conducted  our  audits in accordance with auditing  standards
generally accepted in the United States. Those standards  require
that we plan and perform the audit to obtain reasonable assurance
about  whether  the  financial statements are  free  of  material
misstatement.  An  audit includes examining,  on  a  test  basis,
evidence  supporting the amounts and disclosures in the financial
statements.  An  audit  also includes  assessing  the  accounting
principles used and significant estimates made by management,  as
well  as evaluating the overall financial statement presentation.
We  believe  that our audits provide a reasonable basis  for  our
opinion.

In  our  opinion,  the  financial statements  referred  to  above
present  fairly,  in  all  material  respects,  the  consolidated
financial  position of Nicholas Financial, Inc. and  subsidiaries
at March 31, 2002 and 2001, and the consolidated results of their
operations  and  their cash flows for the  years  then  ended  in
conformity with accounting principles generally accepted  in  the
United States.



May 31, 2002

							/s/Ernst & Young

 22




            Nicholas Financial, Inc. and Subsidiaries
                   Consolidated Balance Sheets



                                                     March 31
                                                 2002         2001
						        -------------------------
                                                  
Assets
Cash                                        $    51,239  $   320,195
Finance receivables, net                     76,067,387   65,040,868
Accounts receivable                              14,444       14,468
Prepaid expenses and other assets               516,653      549,186
Property and equipment, net                     370,849      333,759
Deferred income taxes                           488,455    1,070,888
                                            -------------------------
Total assets                                $77,509,027  $67,329,364
                                            =========================
Liabilities and shareholders' equity
Line of credit                              $53,273,426  $47,823,426
Drafts payable                                  419,116      387,028
Notes payable-related party                     542,282      968,008
Accounts payable                              3,400,859    3,017,503
Derivatives                                   1,151,458            -
Income taxes payable                             69,852       93,819
Deferred revenues                               655,556      611,729
						        -------------------------
Total liabilities                            59,512,549   52,901,513

Shareholders' equity:

Preferred stock, no par: 5,000,000 shares
 authorized;none issued and outstanding               -            -
Common stock, no par: 50,000,000 shares
 authorized; 4,993,764 and 4,634,216 shares
 issued and outstanding, respectively         4,402,960    3,601,292
Other comprehensive loss                     (1,165,180)           -
Retained earnings                            14,758,698   10,826,559
						        -------------------------
Total shareholders' equity                   17,996,478   14,427,851
						        -------------------------
Total liabilities and shareholders' equity  $77,509,027  $67,329,364
                                            =========================

See accompanying notes.


 23



            Nicholas Financial, Inc. and Subsidiaries
                Consolidated Statements of Income


                                              Year ended March 31
                                                 2002      2001
						        -------------------------
                                                   
Revenue:
 Interest income on finance receivables     $19,852,758   $17,386,318
 Sales                                          365,367       410,708
						        -------------------------
                                             20,218,125    17,797,026
Expenses:
 Cost of sales                                   78,615        84,870
 Marketing                                      565,626       445,869
 Administrative                               7,302,275     6,356,555
 Provision for credit losses                  1,912,918     1,470,744
 Depreciation                                   189,733       145,567
 Interest expense                             3,898,400     3,761,689
						        -------------------------
                                             13,947,567    12,265,294
						        -------------------------
Operating income before income taxes          6,270,558     5,531,732

Income tax expense:
 Current                                      1,755,986     2,075,855
 Deferred                                       582,433        45,000
						        -------------------------
                                              2,338,419     2,120,855
						        -------------------------
Net income                                  $ 3,932,139   $ 3,410,877
                                            =========================

Earnings per share:
 Basic                                             $.81          $.73
                                            =========================
 Diluted                                           $.75          $.68
                                            =========================

Weighted average shares - basic               4,869,078     4,673,198
                                            =========================
Weighted average shares - diluted             5,263,966     5,137,732
                                            =========================

See accompanying notes.


 24


            Nicholas Financial, Inc. and Subsidiaries
         Consolidated Statement of Shareholders' Equity


                                                      Accumulated
                                                         Other         Total
                      Common Stock         Retained  Comprehensive  Shareholders'
                    Shares       Amount    Earnings      Loss          Equity
                   ---------------------------------------------------------------
                                                     
Balance at April    4,704,016  $3,711,602  $7,415,682   $        -   $11,127,284
Issuance of common
 stock                  2,000       3,400           -            -         3,400
Issued in
 connection with
 services rendered          -      23,600           -            -        23,600
Repurchase and
 retirement of
 common stock         (71,800)   (169,794)          -            -      (169,794)
Settlement of
 accounts receivable
 from shareholder
 related to exercise
 of options                 -      32,484           -            -        32,484
Net income                  -           -   3,410,877            -     3,410,877
                   ---------------------------------------------------------------
Balance at
 March 31, 2001     4,634,216   3,601,292  10,826,559            -    14,427,851
                   ---------------------------------------------------------------
Issuance of common
 stock                 35,534      64,488           -            -        64,488
Issued in
 connection with
 services rendered     13,404      26,800           -            -        26,800
Repurchase and
 retirement of
 common stock          (1,000)     (3,550)          -            -        (3,550)
Issued in
 connection with
 employee bonus
 plan                     500       2,135           -            -         2,135
Shares issued in
 connection with
 the conversion
 of debt              311,110     711,795           -            -       711,795
Mark to market -
 interest rate
 swaps                      -           -           -   (1,165,180)   (1,165,180)
Net income                  -           -   3,932,139            -     3,932,139
                   ---------------------------------------------------------------
Balance at
 March 31, 2002     4,993,764  $4,402,960 $14,758,698  $(1,165,180)  $17,996,478
                   ===============================================================

See accompanying notes.


 25



            Nicholas Financial, Inc. and Subsidiaries
              Consolidated Statements of Cash Flows


                                                Year ended March 31
                                                2002           2001
                                           ---------------------------
                                                    
Cash flows from operating activities
Net income                                  $ 3,932,139    $ 3,410,877

Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation                                  189,733        145,567
  Provision for credit losses                 1,912,918      1,470,744
  Deferred income taxes                         582,433         45,000
  Changes in operating assets and
   liabilities:
  Accounts receivable                                24          6,454
  Prepaid expenses and other assets              32,533       (132,902)
  Accounts payable                              589,843        321,881
  Drafts payable                                 32,088        387,028
  Income taxes payable                          (23,967)        48,854
  Deferred revenues                              43,827         93,011
  Other liabilities                                   -        (16,232)
                                           ---------------------------
Net cash provided by operating activities     7,291,571      5,780,282

Investing activities
Increase in finance receivables, net of
 principal collected                        (12,939,437)   (14,496,505)
Purchase of property and equipment,
 net of disposals                              (226,823)      (147,732)
                                           ---------------------------
Net cash used in investing activities       (13,166,260)   (14,644,237)

Financing activities
Issuance (repayment) of notes
 payable-related party                           83,000       (350,000)
Net proceeds from line of credit              5,450,000      9,408,877
Sale (repurchase) of common stock                72,733       (133,910)
                                           ---------------------------
Net cash provided by financing activities     5,605,733      8,924,967
                                           ---------------------------
Net decrease in cash                           (268,956)        61,012
Cash, beginning of year                         320,195        259,183
                                           ---------------------------
Cash, end of year                            $   51,239     $  320,195
                                           ===========================

Supplemental disclosure of noncash investing
 and financing activities
Stock issued in connection with
 services rendered                           $   26,800     $        -
                                           ===========================
Conversion of debt to common stock           $  700,000     $        -
                                           ===========================
Conversion of accrued interest to notes
 payable - related party                     $  191,274     $        -
                                           ===========================

See accompanying notes.


 26

            Nicholas Financial, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements
                         March 31, 2002


1. Organization

Nicholas Financial, Inc. (NFI, Canada or the Company) 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 is engaged principally in the development, marketing
and support of computer application software. NFI is engaged
principally in providing installment sales financing. Both NDS
and NFI are based in Florida, U.S.A. The accompanying financial
statements are stated in U.S. dollars and are presented in
accordance with accounting principles generally accepted in the
United States.

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of
NFI, Canada and its wholly-owned subsidiaries, NDS and NFI,
collectively referred to as the Company. All intercompany
transactions and balances have been eliminated.

Property and Equipment

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

          Automobiles                           3 years
          Equipment                             5 years
          Furniture and fixtures                7 years
          Leasehold improvements             Lease term

Allowance for Loan Losses

The allowance for loan losses is increased by charges against
earnings and decreased by charge-offs (net of recoveries). In
addition to the allowance for loan losses, a nonrefundable dealer
reserve has been established using unearned interest and dealer
discounts to absorb potential credit losses. To the extent actual
credit losses exceed these reserves, a bad debt provision is
recorded; and to the extent credit losses are less than the
reserve, the reserve is accreted into income as an adjustment to
the interest yield over the term of the underlying finance
receivables.

 27


2. Summary of Significant Accounting Policies (continued)

Management's periodic evaluation of the adequacy of the allowance
is based on the Company's past loan experience, known and
inherent risks in the portfolio, adverse situations that may
affect the borrower's ability to repay, the estimated value of
any underlying collateral, and current economic conditions.

Drafts Payable

Drafts payable represent checks disbursed for loan purchases
which have not yet been funded through the line of credit.
Amounts clear within one to two business days of period end are
then added to the line of credit.

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 financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. 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.

Revenue Recognition

Interest income on finance receivables is recognized using the
interest method. Accrual of interest income on finance
receivables is suspended when a loan is contractually delinquent
for 60 days or more or the collateral is repossessed, whichever
is earlier.

Revenues resulting from the sale of hardware and software are
recognized when persuasive evidence of an agreement exists,
delivery of the products has occurred, no significant Company
obligation with regard to implementation remain, the fee is fixed
or determinable and collectibility is probable. If the fee due
from the customer is not fixed or determinable, revenue is
recognized as payments become due from the customer. If
collectibility is not considered probable, revenue is recognized
when the fee is collected. Arrangements that included software
services are evaluated to determine whether those services are
essential to the functionality of

 28

2. Summary of Significant Accounting Policies (continued)

other elements of the arrangement. When software services are
considered essential, revenue under the arrangement is recognized
using contract accounting. When software services are not
considered essential, the revenue related to the software
services is recognized as the services are performed. The
unamortized amounts are included in the caption "deferred
revenues."

Earnings Per Share

Basic earnings per share excludes any dilutive effects of common
stock equivalents such as options, warrants, and convertible
securities. Diluted earnings per share includes the effects of
dilutive options, warrants, and convertible securities. Basic and
diluted earnings per share have been computed as follows:



                                                Year ended March 31
                                                 2002          2001
                                            ----------------------------
                                                      
Numerator:
Numerator for basic earnings per share -
 Net income available to common stockholders   $3,932,139    $3,410,877
Effect of dilutive securities:
 Convertible debt                                  17,491        59,489
                                               -------------------------
Numerator for dilutive earnings per share -
income available to common stockholders
after assumed conversions                      $3,949,630    $3,470,366
                                               =========================
Denominator:
Denominator for basic earnings per share -
 weighted average shares                       $4,869,078    $4,673,198
Effect of dilutive securities: (A)
 Employee stock options                           292,956       117,298
 Convertible debt                                 101,932       347,236
                                               -------------------------
Denominator for diluted earnings per share -
 adjusted weighted-average shares and
 assumed conversions                           $5,263,966    $5,137,732
                                               =========================
Earnings per share - basic                           $.81          $.73
                                               =========================
Earnings per share - diluted                         $.75          $.68
                                               =========================

Footnote A:
Options                                                 -        84,000

The options above were outstanding but not included in the
computation of diluted earnings per share because the effect
would be antidilutive.


 29

2. Summary of Significant Accounting Policies (continued)

Stock Option Accounting

The Company has elected to follow Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (APB 25)
and related interpretations in accounting for its stock option
grants and to present the disclosure requirements relating to
stock-based compensation plans required by Financial Accounting
Standards Board Statement No. 123, Accounting for Stock-Based
Compensation (FAS 123).

Financial Instruments

The Company's financial instruments consist of finance
receivables, accounts receivable, line of credit, notes
payable-related party and accounts payable. For each of these
financial instruments, the carrying value approximates its fair
value.

The Company's financial instruments that are exposed to
concentrations of credit risk are primarily finance receivables,
which are concentrated in the states of Florida, Georgia and
North Carolina. The Company provides credit during the normal
course of business and performs ongoing credit evaluations of it
customers. The Company maintains allowances 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.

Use of Estimates

The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying
notes. The most significant of these estimates relates to the
determination of the allowance for credit losses and related
reserves. Actual results could differ from those estimates.

Accumulated Other Comprehensive Income

Prior to the adoption of Statement of Financial Accounting
Standard (SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities, as amended. SFAS No. 133, comprehensive
net income equaled net income. Accumulated other comprehensive
loss is composed entirely of the fair value of cash flow hedges.

 30

2. Summary of Significant Accounting Policies (continued)

Statement of Cash Flows

Cash paid for income taxes for the years ended March 31, 2002 and
2001 was approximately $1,780,000 and $2,027,000, respectively.
Cash paid for interest for the years ended March 31, 2002 and
2001 was approximately $3,972,000 and $3,705,000, respectively.

Derivatives

On April 1, 2001, the Company adopted SFAS No. 133. SFAS No. 133
requires the recognition of all derivative instruments as either
assets or liabilities in the consolidated balance sheet at fair
value. The accounting for changes in the fair value (i.e., gains
or losses) of a derivative instrument depends on whether it has
been designated and qualifies as part of a hedging relationship
and further, on the type of hedging relationship. For those
derivative instruments that are designated and qualify as hedging
instruments, a company must designate the hedging instrument,
based on the exposure being hedged, as either a fair value hedge,
cash flow hedge, or a hedge of a net investment in a foreign
operation. Derivative instruments are not used for speculative
purposes.

Recent Accounting Pronouncement

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (SFAS 144), which is
effective for fiscal periods beginning after December 15, 2001.
This statement supersedes SFAS 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
The accounting model for long-lived assets to be disposed of by
sales applies to all long-lived assets, including discontinued
operations, and replaces the provisions of Accounting Principles
Board (APB) Opinion No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business. Under
the provisions of APB 30, a segment of a business to be disposed
of was measured at the lower of its carrying amount or net
realizable value, adjusted for expected future operating losses,
whereas SFAS 121 used fair value less cost to sell and excluded
future operating losses from the framework established in
SFAS 121, for long-lived assets to be disposed of by sale. SFAS
No. 144 requires that those long-lived assets be measured at the
lower of the carrying amount or fair value less cost to sell,
whether reported in continuing operations or in discontinued
operations. Therefore, discontinued operations will no longer be
measured at net realizable value or include amounts for operating
losses that have not yet

 31

2. Summary of Significant Accounting Policies (continued)

occurred. SFAS No. 144 also broadens the reporting for
discontinued operations to include all components of an entity
with operations that can be distinguished from the rest of the
entity and that will be eliminated from the ongoing operations of
the entity in a disposal transaction. The adoption of SFAS 144
will not have a material impact on the earnings and financial
position of the Company.

Reclassification

Certain prior year amounts have been reclassified to conform to
the 2002 presentation.




3. Finance Receivables

Finance receivables consist of consumer automobile finance
installment contracts and are detailed as follows:

                                         2002         2001
                                    --------------------------
                                           
    Finance receivables, gross      $120,454,958  $103,204,179
     Less:
     Unearned interest               (28,821,887)  (24,391,597)
                                    --------------------------
                                      91,633,071    78,812,582

     Nonrefundable dealer reserve    (11,259,898)  (10,306,699)
     Allowance for credit losses      (4,305,786)   (3,465,015)
                                    --------------------------
     Finance receivables, net       $ 76,067,387  $ 65,040,868
                                    ==========================



The terms of the receivables range from 12 to 60 months and bear
a weighted average effective interest rate of 24% for both 2002
and 2001, respectively.

 32




3. Finance Receivables (continued)

The following table sets forth a reconciliation of the changes in
nonrefundable dealer reserves for the years ended March 31:

                                           2002         2001
                                      ---------------------------
                                             
     Balance at beginning of year     $ 10,306,699  $ 8,444,103
     Discounts acquired on new volume    9,384,892    8,449,361
     Recoveries                            886,451      696,588
     Accreted to income                 (2,781,776)  (2,330,757)
     Losses absorbed                    (6,536,368)  (4,952,596)
                                      ---------------------------
     Balance at end of year           $ 11,259,898  $ 10,306,699
                                      ===========================
     Reserve as a percent of gross
      finance receivables                    9.35%         9.99%
                                      ===========================


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

                                            2002        2001
                                      ---------------------------
     Balance at beginning of year     $  3,465,015  $  2,524,611
     Current year provision              1,912,918     1,470,744
     Recoveries                             15,676        10,564
     Accreted to income                   (141,729)     (190,724)
     Losses absorbed                      (946,094)     (350,180)
                                      ---------------------------
     Balance at end of year           $  4,305,786  $  3,465,015
                                      ===========================

     Reserve as a percent of gross
      finance receivables                    3.57%         3.36%
                                      ===========================


 33




4. Property and Equipment

                                     Accumulated      Net Book
                             Cost    Depreciation      Value
                       ---------------------------------------

                                         
     2002
     Automobiles         $  262,238   $  119,149   $  143,089
     Equipment              449,007      319,664      129,343
     Furniture and
      fixtures              176,256      112,033       64,223
     Leasehold
      improvements          187,637      153,443       34,194
                       ---------------------------------------
                         $1,075,138     $704,289     $370,849
                       =======================================
     2001
     Automobiles         $  169,944     $ 58,670     $111,274
     Equipment              372,079      252,871      119,208
     Furniture and
      fixtures              155,542      101,412       54,130
     Leasehold
      improvements          169,521      120,374       49,147
                       ---------------------------------------
                         $  867,086     $533,327     $333,759
                       =======================================



5. Line of Credit

The Company has a $75,000,000 line of credit facility (the Line)
with Bank of America, of which approximately $54,000,000 was
outstanding at March 31, 2002. Borrowings under the Line bear
interest at the Bank of America prime rate or several Libor
pricing options. Pledged as collateral for this credit facility
are all of the assets of Nicholas Financial, Inc. and Nicholas
Data Services, Inc.  The Line expires on November 30, 2002.

The Company is party to interest rate swap agreements which are
derivative instruments. For derivative instruments that are
designated and qualify as a cash flow hedge (i.e., hedging the
exposure to variability in expected future cash flows that is
attributable to a particular risk, such as interest rate risk),
the effective portion of the gain or loss on the derivative
instrument is reported as a component of comprehensive income and
reclassified into earnings in the same period or periods during
which the hedged transaction affects earnings. The remaining gain
or loss on the derivative instrument in excess of the cumulative
change in the present value of the future cash flows of the
hedged item, if any, is recognized in current earnings during the
period of change.

 34

5. Line of Credit (continued)

The Companies have entered into interest rate swap agreements
that effectively convert a portion of its floating-rate debt to a
fixed-rate basis, thus reducing the impact of interest rate
changes on future interest expense. At March 31, 2002,
approximately $50,000,000 of the Company's borrowings have been
designated as the hedged items to interest rate swap agreements.
Under the swap agreements, the Company received an average
variable rate of 5.37% and paid an average fixed rate of 7.66%
during the year ended March 31, 2002. A loss of $1,165,180
related to the fair value of the swaps at March 31, 2002 has been
recorded in comprehensive income. Amounts of net losses on
derivative instruments expected to be reclassified from
comprehensive income to earnings in the next 12 months are not
expected to be material.

On May 11, 1999, the Company entered into an interest rate swap
with a notional amount of $10 million at a fixed rate of 5.81%,
maturing on May 24, 2002. On May 21, 1999, the Company entered
into two interest rate swaps with notional amounts of $5 million
each, at fixed rates of 5.81% and 6.08%, maturing on May 24, 2001
and May 24, 2004, respectively.

On August 18, 1999, the Company terminated a $5-million swap
maturing on May 24, 2004 in exchange for $52,000. In addition the
Company entered into an interest rate swap with a notional amount
of $10 million at a fixed rate of 5.80%.

On May 17, 2000, the Company entered into an interest rate swap
with a notional amount of $10 million at a fixed rate of 6.87%.

On March 30, 2001, the Company entered into an interest rate swap
with a notional amount of $10 million at a fixed rate of 4.89%,
maturing on March 30, 2003.

On  October  5,  2001, the Company entered into an interest  rate
swap  with  a notional amount of $10 million at a fixed  rate  of
3.85%, maturing on October 5, 2004.

The Company has also entered into various interest rate option
agreements with maturities through May 17, 2004.

The Company utilizes the above noted interest rate swaps to
manage its interest rate exposure. The swaps effectively convert
a portion of the Company's floating rate debt to a fixed rate,
more closely matching the interest rate characteristics of the
Company's finance receivables.

 35




6. Notes Payable-Related Party


Notes payable to shareholders, directors and individuals related
thereto at March 31:

                                                   2002       2001
                                               ----------------------
                                                     
     Note payable, unsecured, with interest
     at varying rates up to 12%, quarterly
     interest payments due through November
     2001, at which time the entire
     principal balance and unpaid interest
     is due, subordinated to the Line. The
     note is convertible at the option of
     the holder, into common shares at
     prices from $2.25 to $3.00 per share.      $       -   $700,000


     Note payable, unsecured, interest at
     9.5% principal and interest due upon
     30-day demand.                               480,544    219,270

     Note payable, unsecured, interest at
     9.5% principal and interest due upon
     30-day demand.                                61,738     48,738
                                               ----------------------
                                                 $542,282   $968,008
                                               ======================



The company incurred interest expense on the above notes of
approximately $80,000 and $150,000 for the years ended March 31,
2002 and 2001, respectively.




7. Income Taxes

The provision for income taxes reflects an effective U.S tax
rate, which differs from the corporate tax rate (34%) for the
following reasons:

                                               2002        2001
                                         --------------------------
                                                 
 Provision for income taxes at federal
  statutory rate                            $2,131,990  $1,880,789
  Increase resulting from:
  State income taxes, net of
   federal benefit                             228,701     202,109
  Other                                        (22,272)     37,957
                                           ------------------------
                                            $2,338,419  $2,120,855
                                           ========================


 36




7. Income Taxes (continued)

The Company's deferred tax assets consist of the following as of
March 31:

                                               2002      2001
                                             ---------------------
                                                 
 Allowance for credit losses not currently
   deductible for tax purposes               $ 372,927  $1,005,497
   Other items                                 115,528      65,391
                                             ---------------------
                                             $ 488,455  $1,070,888
                                             =====================



NFI, Canada has income tax loss carryforward balances of
approximately Cdn$318,000 (2001-Cdn$298,000) which are available
to reduce future taxable income.

For the years ended March 31, 2002 and 2001, the Company would
have recorded deferred tax assets of approximately $93,000 and
$93,000, respectively, due primarily to these Canadian income tax
loss carryforwards. The assets, however, are offset entirely by a
valuation allowance due to the relative uncertainty surrounding
the realization of the assets.

8. Shareholders' Equity

The Company has an employee stock incentive plan (the SIP) for
officers, directors and key employees under which 653,866 shares
of common stock were reserved for issuance as of March 31, 2002.
Options currently granted by the Company generally vest over a
five-year period.

The Company has elected to follow APB 25, and related
Interpretations in accounting for its employee stock options
because, as discussed below, the alternative fair value
accounting provided for under FAS 123 requires use of option
valuation models that were not developed for use in valuing
employee stock options. Under APB 25, if the exercise price of
the Company's employee stock options equals the market price of
the underlying stock on the date of grant, no compensation
expense is recognized.

 37

8. Shareholders' Equity (continued)

Pro forma information regarding net income and earnings per share
as required by FAS 123 has been determined as if the Company has
accounted for its employee stock options and warrants granted
subsequent to December 31, 1994 under the fair value method of
that Statement. The fair value for these options and warrants was
estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions for
2002 and 2001:

                                          2002      2001
                                      -----------------------
     Risk free rate of return            4.92%      5.00%
     Volatility factor                   0.390      .0405
     Expected life                     7 years   10 years
     Expected dividends                   None       None

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option
valuations models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company's employee stock options and warrants have
characteristics significantly different from those of traded
options and warrants, and because changes in the subjective input
assumptions can materially effect the fair value estimate, in
management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its
employee stock options and warrants.

For purposes of pro forma disclosures, the estimated fair value
of the options and warrants is amortized to expense over the
option and warrant's vesting period. The Company's pro forma
information is as follows:

                                            2002       2001
                                        ----------------------
     Pro forma net income               $3,829,314  $3,271,584
     Pro forma earnings per share:
     Basic                                   $0.79       $0.70
     Diluted                                 $0.73       $0.65

 38

8. Shareholders' Equity (continued)




The following table reflects activity within the SIP for the
years noted:

                                 2002                2001
                        ------------------------------------------
                                    Weighted             Weighted
                           Options   Average   Options    Average
                              &     Exercise      &      Exercise
                           Warrants   Price    Warrants    Price
                        ------------------------------------------
                                              
   Outstanding-beginning
    of year                599,400    $2.01    1,184,066   $2.31
     Granted               131,000    3.38        91,000    2.74
     Exercised             (35,534)   1.81        (2,000)   1.70
     Canceled/expired      (41,000)   2.52      (673,666)   2.55
                        ------------          ------------
   Outstanding-end of
    year                   653,866    2.26       599,400    2.01
                        ============          ============
   Exercisable at end
    of year                403,045    1.89       266,160    1.82
                        ============          ============
   Weighted-average fair
    value of options
    granted during the
    year                             $1.52                 $1.61




                                      Weighted    Currently Exercisable
                          Weighted     Average                Weighted
                          Average    Remaining               Average
                          Exercise   Contractual              Exercise
                Shares     Price       Life       Shares      Price
               -----------------------------------------------------------
                                             
$1.00 to 1.99   327,800    $1.70     6.19 years   299,240    $1.70
 2.00 to 2.99   208,066     2.49     7.78 years   103,805     2.42
 3.00 to 3.99   118,000     3.39     9.32 years         -        -
   Total        653,866    $2.26     7.26 years   403,045    $1.89


 39


9. Employee Benefit Plans

The Company has a 401(k) profit sharing plan under which all
employees are eligible to participate. Employee contributions are
voluntary and subject to Internal Revenue Service limitations.
The Company matches, based on annually determined factors,
employee contributions provided the employee completes certain
levels of service annually. For the years ended March 31, 2002
and 2001, the Company recorded expenses of approximately $59,000
and $27,000, respectively, related to this plan. All employees
who were eligible under the plan received a profit sharing
contribution based on their total compensation in relation to the
total compensation of all eligible employees. For the years ended
March 31, 2002 and 2001, the Company recorded expenses of
$116,000 and $125,000, respectively, related to this plan.

10. Commitments

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

Year ending March 31:
----------------------
     2003                                      $369,305
     2004                                       173,587
     2005                                        70,501
     2006                                        20,811
     2007                                         6,937
                                              -----------
                                               $641,141

Rent expense for the years ended March 31, 2002 and 2001 was
approximately $404,000 and $362,000, respectively.

 40




11. Segment Information

The segments presented have been identified based on the
difference in the products and services of the Company's two
wholly owned subsidiaries. Internal financial results for each
subsidiary are presented to and reviewed by the senior management
of the Company. Substantially all of the Company's operations are
in the United States. The industry segments are as follows:

                                     Computer
                                    Application
                          General    Software
                         Financing  and Support   Corporate      Total
                         ---------------------------------------------------
                                                  
     2002
    Interest income
     and sales          $19,852,758  $365,367            -     $20,218,125
    Operating income
     (loss) before
     income taxes         6,281,966   (11,408)           -       6,270,558
    Income tax expense    2,342,725    (4,306)           -       2,338,419
    Identifiable assets  77,470,957   213,382        5,572      77,689,911
    Net capital
     expenditures           226,823         -            -         226,823
    Depreciation            189,725         8            -         189,733

     2001
    Interest income
     and sales           17,386,318   410,708            -      17,797,026
    Operating income
     (loss) before
     income taxes         5,521,553    25,137      (14,958)      5,531,732
    Income tax expense    2,111,149     9,706            -       2,120,855
    Identifiable assets  67,049,298   191,757        1,281      67,242,336
    Net capital
     expenditures           147,732         -            -         147,732
    Depreciation            145,498        69            -         145,567



 41


Item 8. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure

     None.

                              PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons

     The information set forth under the caption "Proposal 1: Election
of  Directors" in the Proxy Statement and Information Circular,  dated
on  or  about  July  2, 2002, for the 2002 Annual General  Meeting  of
Members  of  the  Company  to  be held  August  7,  2002  (the  "Proxy
Statement"),  the  information set forth under the caption  "Executive
Officers and Compensation" in the Proxy Statement, and the information
set  forth  under  the  caption "Section 16 (a)  Beneficial  Ownership
Reporting  Compliance" in the Proxy Statement are incorporated  herein
by reference.


Item 10. Executive Compensation

      The information set forth under the caption  "Executive Officers
and  Compensation"  in the Proxy Statement is incorporated  herein  by
reference.

 42

Item  11.  Security Ownership of Certain Beneficial Owners, Management
and Related Stockholder Matters

      The  information set forth under the caption "Voting Shares  and
Ownership  of Management and Principal Holders" in the Proxy Statement
is incorporated herein by reference.

     Securities Authorized for Issuance Under Equity Compensation
Plans




The  following table sets forth certain information, as of  March  31,
2002, with respect to compensation plans under which equity securities
of the Company are authorized for issuance:

                 EQUITY COMPENSATION PLAN INFORMATION
-----------------------------------------------------------------------
                                                         Number of
                                                         Securities
                                                         Remaining
                                                         Available for
                     Number of         Weighted -        Future Issuance
                     Securities to     Average           Under Equity
                     be Issued         Exercise          Compensation
                     Upon Exerciseof   Price of          Plans
                     Outstanding       Outstanding       Excluding
                     Options,          Options,          Securities
                     Warrants and      Warrants and      Reflected in
 Plan Category       Rights            Rights            Column(a)
------------------------------------------------------------------------
 Column                 (a)              (b)                  (c)
------------------------------------------------------------------------
                                                 
Equity Compensation
Plans Approved by
Security Holders      653,866          $2.26               286,134


Equity Compensation
Plans Not Approved
by Security Holders       Nil       NotApplicable              Nil
------------------------------------------------------------------------
TOTAL                 653,866          $2.26               286,134
------------------------------------------------------------------------



Item 12.  Certain Relationships and Related Transactions

       The   information   set  forth  under  the   caption   "Certain
Relationships  and  Related Transactions" in the  Proxy  Statement  is
incorporated herein by reference.

 43


Item 13. Exhibits and Reports on Form 8-K

                Exhibit Index

3.1     Articles of Incorporation and By-Laws of Nicholas Financial,
         Inc.

        Incorporated by reference to the Company's Form 10-SB (File
         No. 0-26680) filed on March 13, 1996

4.1     Specimen Stock Certificate

        Incorporated by reference to Exhibit 4.1 to the Company's Form
         10-SB (File No. 0-26680) filed on March 13, 1996

10.1.1  Loan  and Security Agreement dated March 31, 1993  between BA
         Business Credit, Inc. and Nicholas Financial, Inc.

        Incorporated by reference to Exhibit 10.1.1 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.2  Amendment No. 1 to Loan Agreement dated January 14, 1994

        Incorporated by reference to Exhibit 10.1.2 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.3  Temporary Line Increase Agreement dated March 28, 1994

        Incorporated by reference to Exhibit 10.1.3 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.4  Amendment No. 2 to Loan Agreement dated June 3, 1994

        Incorporated by reference to Exhibit 10.1.4 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.5  Amendment No. 3 to Loan Agreement dated July 5, 1994

        Incorporated by reference to Exhibit 10.1.5 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.6  Amendment No. 4 to Loan Agreement dated March 31, 1995

        Incorporated by reference to Exhibit 10.1.6 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.7  Amendment No. 5 to Loan Agreement  dated July 13, 1995

        Incorporated  by reference to Exhibit 10.1.7 to the Company's
         Form 10-KSB for the fiscal year ended March 31, 1996

 44

10.1.8  Amendment No. 6 to Loan Agreement  dated May 13, 1996

        Incorporated by reference to Exhibit 10.1.8 to the Company's
         Form 10-QSB for the three months ended June 30, 1996

10.1.9  Amendment No. 7 to Loan Agreement dated July 5, 1997

        Incorporated by reference to Exhibit 10.1.9 to the Company's
         Form 10-QSB for the three months ended September 30, 1997

10.1.10 Amendment No. 8 to Loan Agreement dated September 18, 1998

        Incorporated by reference to Exhibit 10.2.0 to the Company's
         Form 10-QSB for the three months ended September 30, 1998

10.1.11 Amendment No. 9 to Loan Agreement dated November 25, 1998

        Incorporated by reference to Exhibit 10.2.1 to the Company's
         Form 10-QSB for the three months ended December 31, 1998

10.1.12 Amendment No. 10 to Loan Agreement dated November 24, 1999

        Incorporated by reference to Exhibit 10.2.2 to the Company's
         Form 10-QSB for the three months ended December 31, 1999

10.1.13 Amendment No. 11 to Loan Agreement dated August 1, 2000

        Incorporated by reference to Exhibit 10.1.13 to the Company's
         Form 10-KSB for the fiscal year ended March 31, 2001.

10.1.14 Amendment No. 12 to Loan Agreement dated March 16, 2001

        Incorporated by reference to Exhibit 10.1.14 to the Company's
         Form 10-KSB for the fiscal year ended March 31, 2001.

10.2.1  Employee Stock Option Plan

        Incorporated by reference to the Company's definitive Proxy
         Statement, dated June 29, 1999, relating to the Company's
         1999 Annual Meeting of  Stockholders as filed on June 29,
         1999.

10.2.2  Non-Employee Stock Option Plan

        Incorporated by reference to the Company's definitive Proxy
         Statement, dated June 29, 1999, relating to the Company's
         1999 Annual Meeting of Stockholders as filed on June 29,
         1999.

10.3.1  Employment Contract, dated November 22, 1999, between Nicholas
         Financial, Inc. and Ralph Finkenbrink, Senior Vice President
         of Finance

        Incorporated by reference to Exhibit 10.2.1 to the Company's
         Form 10-QSB for the three months ended  December 31, 1999

10.3.2  Employment  Contract, dated March 16, 2001,  between  Nicholas
         Financial, Inc. and Peter L. Vosotas, President and Chief
         Executive Officer

21      Subsidiaries of Nicholas Financial, Inc.

        Incorporated by reference to the Company's Form 10-SB
         (File No. 0-26680) filed on March 13, 1996

24       Powers of Attorney (included on signature page hereto)

         Exhibits  10.2.1, 10.2.2, 10.3.1 and 10.3.2 represent
          management contracts and compensatory plans.

         (b) Reports on Form 8-K

          The Company did not  file  any current reports on  Form  8-K
          during the fourth quarter of the fiscal year ended March 31,
          2002.

 46

                               SIGNATURES

     In accordance with 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 25, 2002               By:  /s/ Peter L. Vosotas
                                   Peter L. Vosotas
                                   Chairman, Chief Executive Officer
                                   and President

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

      In  accordance with 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/ Peter L. Vosotas      Chairman of the Board,    June 25, 2002
Peter L. Vosotas          Chief Executive Officer,
                          President and Director

/s/ Ralph T. Finkenbrink  Vice President-Finance    June 25, 2002
Ralph T. Finkenbrink      (Principal Financial
                           Officer)


/s/ Ellis P. Hyman        Director                  June 25, 2002
Ellis P. Hyman


/s/ Stephen Bragin        Director                  June 25, 2002
Stephen Bragin


/s/ Alton R. Neal         Director                  June 25, 2002
Alton R. Neal