<PAGE> 1
_______________________________________________________________
_______________________________________________________________
                                
         UNITED STATES SECURITIES AND EXCHANGE COMMISSION      
                       Washington, DC  20549
                                
                            FORM 10-QSB
                                
  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES ACT OF 1934 FOR THE PERIOD ENDED JUNE 30, 1998



    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

       For the transition period from ________ to _________.
                                
                  Commission file number: 0-26680
                                
                                
                     NICHOLAS FINANCIAL, INC.
      (Exact name of registrant as specified in its Charter)


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

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

                          (813) 726-0763
       (Registrant's telephone number, Including area code)
                                
                          Not applicable
     (Former name, former address and former fiscal year, if
                      changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports  required to be filed by Section 13 and  15(d)  of  the
Securities Exchange Act of 1934 during the preceding 12  months
(or  for  such shorter periods that the Registrant was required
to  file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X   No ____.
                                
                                
    As of July 31, 1998 there were 2,357,013 shares of common
                        stock outstanding
                                
             This Form 10-QSB consists of 17 pages.
_______________________________________________________________
_______________________________________________________________

<PAGE> 2
                                
                    Nicholas Financial, Inc.
                         Form 10-QSB
                            Index


Part I.  Financial Information                              Page

Item 1.  Financial Statements (Unaudited)

Condensed Consolidated Balance Sheet 
    as of June 30, 1998.......................................3

Condensed Consolidated Statements of Income for
    the three months ended June 30, 1998......................4

Condensed Consolidated Statements of Cash Flows
    for the three months ended June 30, 1998..................5

Notes to the Condensed Consolidated 
    Financial Statements......................................6

Item 2.  Management's Discussion and Analysis of the
         Financial Condition and Results of Operations.......10

Part II. Other Information

Item 1.  Legal Proceedings...................................15

Item 2.  Changes in Securities...............................15

Item 3.  Defaults upon Senior Securities.....................15

Item 4.  Submission of Matters to a Vote of
          Security Holders...................................15

Item 5.  Other Information...................................15

Item 6.  Exhibits and Reports on Form 8-K....................15

         Signatures..........................................16

         Index of Exhibits...................................17


<PAGE> 3
<TABLE>
<CAPTION>
                                
                     Nicholas Financial, Inc.
               Condensed Consolidated Balance Sheet
                            (Unaudited)

                                                       June 30,
                                                         1998
                                                   ---------------
<S>                                                  <C>
Assets                                                           
Cash                                                 $    40,967
Finance receivables, net                              35,013,135
Accounts receivable                                       20,202
Prepaid expenses and other assets                        422,922
Property and equipment, net                              208,056
Deferred income taxes                                    990,778
                                                   ---------------
Total assets                                         $36,696,060
                                                   ===============
Liabilities                                                     
Line of credit                                       $25,630,594
Notes payable - related party                          1,615,595
Accounts payable                                       1,712,743
Income taxes payable                                     191,004
Deferred revenues                                        287,590
Other liabilities                                         22,483
                                                    --------------
                                                      29,460,009
                                                                
Shareholders' equity                                            

Preferred stock, no par: 5,000,000 shares                       
authorized; none issued and outstanding                        -

Common  stock, no  par: 50,000,000 shares                         
authorized; 2,357,013  shares  issued and               
outstanding                                            3,740,069

Retained earnings                                      3,495,982
                                                    --------------
                                                       7,236,051
                                                    --------------
Total liabilities and shareholders' equity           $36,696,060
                                                    ==============
See accompanying notes.
</TABLE>

<PAGE> 4
<TABLE>
<CAPTION>
                                
                    Nicholas Financial, Inc.
            Condensed Consolidated Statements of Income
                            (Unaudited)


                                               Three months ended
                                                    June 30
                                               1998          1997
                                           ------------------------
<S>                                       <C>          <C>
Revenue:
 Interest income on finance receivables    $2,078,087   $1,691,808
 Sales                                        109,793      109,481
                                           ------------------------
                                            2,187,880    1,801,289
Expenses:
 Cost of sales                                 22,701       21,377
 Marketing                                     73,492       67,620
 Administrative                               855,229      699,185
 Provision for credit losses                  184,457      132,322
 Depreciation and amortization                 25,451       25,500
 Interest expense                             603,063      499,234
                                           ------------------------
                                            1,764,393    1,445,238
                                           ------------------------
Operating income before income taxes          423,487      356,051

Income tax expense (benefit):
 Current                                      203,263      201,505
 Deferred                                     (40,000)     (62,000)
                                           ------------------------
                                              163,263      139,505
                                           ------------------------
Net Income                                   $260,224     $216,546
                                           ========================

Earnings per share - Basic                      $0.11        $0.09
                                           ========================
Earnings per share - Diluted                    $0.11        $0.09
                                           ========================
See accompanying notes.
</TABLE>

<PAGE> 5
<TABLE>
<CAPTION>

                    Nicholas Financial, Inc.
          Condensed Consolidated Statements of Cash Flows
                            (Unaudited)

                                         Three months ended June 30
                                            1998           1997
                                        ----------------------------
<S>                                     <C>            <C>
Operating activities
Net income                               $   260,224    $   216,546
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
Depreciation of property and equipment        25,451         25,500
Provision for credit losses                  184,457        132,322
Deferred income taxes                        (40,000)       (62,000)
Changes in operating assets 
 and liabilities:
Accounts receivable                            3,203         17,700
Prepaid expenses and other assets           (176,077)        14,785
Deferred revenues                             46,461        (16,379)
Accounts payable                             (29,715)      (136,031)
Other liabilities                              1,083           (700)
Income taxes payable                          21,122        146,667
                                        -----------------------------
Net cash provided by operating 
 activities                                  296,209        338,410

Investing activities
Increase in finance receivables,
 net of principal collected               (2,773,181)    (1,270,193)
Purchase of property and equipment           (10,021)       (31,060)
                                        -----------------------------
Net cash used by investing activities     (2,783,202)    (1,301,253)

Financing activities
Net proceeds from line of credit
 borrowings and notes payable-
 related party                             2,224,000        935,500     
                                        ----------------------------
Net cash provided by financing 
 activities                                2,224,000        935,500
                                        ----------------------------
Net decrease in cash                        (262,993)       (27,343)

Cash, beginning of period                    303,960        108,148
                                        ----------------------------
Cash, end of period                          $40,967        $80,805
                                        ============================
See accompanying notes.
</TABLE>

<PAGE> 6

                     Nicholas Financial, Inc.
     Notes to the Condensed Consolidated Financial Statements
                           (Unaudited)
                                
                          June 30, 1998
                                

1. Basis of Presentation

The   accompanying  unaudited  condensed  consolidated  financial
statements  of Nicholas Financial Inc (the "Company")  have  been
prepared  in   accordance   with  generally  accepted  accounting
principles  for   interim  financial  information  and  with  the
instructions  to  Form  10-QSB  pursuant  to  the  Securities and
Exchange Act of 1934, as amended in Article 10 of Regulation  SB,
as  amended.   Accordingly,   they  do  not  include  all of  the
information   and   footnotes   required  by  generally  accepted
accounting principles for complete financial statements.  In  the
opinion  of  management, all adjustments  (consisting  of  normal
recurring  accruals) considered necessary for a fair presentation
have  been included. Operating results for the three months ended
June  30, 1998 are not necessarily indicative of the results that
may  be  expected for the year ended March 31, 1999. For  further
information,  refer to the consolidated financial statements  and
footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended March 31, 1998.

2. Earnings Per Share

In   1997,  the  Financial  Accounting  Standards  Board   issued
Statement of Financial Accounting Standards No. 128, Earnings per
Share. Statement 128 replaced the previously reported primary and
fully  diluted earnings per share with basic and diluted earnings
per  share. Unlike primary earnings per share, basic earnings per
share  excludes  any dilutive effects of options,  warrants,  and
convertible  securities.  Diluted  earnings  per  share  is  very
similar  to  the previously reported fully diluted  earnings  per
share.  Effective  December  31, 1997  the  Company  adopted  the
provisions  of Statement 128. All earnings per share amounts  for
all periods have been presented, and where necessary, restated to
conform to the Statement 128 requirements.

<PAGE> 7

                     Nicholas Financial, Inc.
     Notes to the Condensed Consolidated Financial Statements
                            (Unaudited)
                                
                           June 30, 1998


<TABLE>
<CAPTION>

         The following table sets forth the computation of Basic
                 and Fully Diluted Earnings per Share:
                                
                                
                                
                                           Three months ended June 30,
                                                1998          1997
                                          -----------------------------
<S>                                         <C>            <C>
Numerator:                                                     
                                                               
 Numerator for basic earnings per                              
  share - Net income available to
  common stockholders                        $260,224       $216,546
  
 Effect of dilutive securities:                                
    Convertible debt                          $24,909              -
                                            --------------------------
    Numerator for dilutive earnings
     per share -income available to
     common stockholders after assumed                       
     conversions                            $ 285,133      $ 216,546
                                            ==========================
Denominator:                                                   
 Denominator for basic earnings per                            
 share - weighted average shares             2,357,013      2,330,181
  
 Effect of dilutive securities: (A)                            
  Employee stock options                             -         22,324
  Convertible debt                             264,798              -
                                            --------------------------
 Dilutive potential common shares              264,798         22,324
  Denominator for diluted earnings 
   per share - adjusted  weighted-
   average shares and assumed 
   conversions                               2,621,811      2,352,505
                                            ==========================
Earnings per share - basic                       $0.11          $0.09
                                            ==========================
Earnings per share - diluted                     $0.11          $0.09
                                            ==========================
Footnote A:                                                    
     The following options and warrants
 were outstanding  but  not included in
 the  computation  of  diluted earnings
 per share  because the  exercise price
 was  greater  than  the average market
 price   of   the  common  shares  and,
 therefore,     the  effect   would  be
 antidilutive.
       
    Options                                     230,700        85,500
    Warrants                                    333,333       333,333

</TABLE>

<PAGE> 8

                     Nicholas Financial, Inc.
     Notes to the Condensed Consolidated Financial Statements
                            (Unaudited)
                                
                           June 30, 1998





3. Finance Receivables

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

<TABLE> 
    <S>                                         <C>
     Finance receivables, gross contract         $54,992,834
     Less:
         Unearned interest                       (12,900,505)
                                                 ------------
                                                  42,092,329

         Nonrefundable dealer reserves            (5,725,234)
         Allowance for credit losses              (1,353,960)
                                                 ------------
         Finance receivables, net                $35,013,135
                                                 ============
</TABLE>

The terms of the receivables range from 6 to 60 months and bear a
weighted average effective interest rate of 24%.


4. Line of Credit

The  Company has a $30,000,000 line of credit facility (the Line)
with  BA  Business Credit, Inc. which expires on June  30,  2000.
Borrowings  under the Line bear interest at the Bank  of  America
prime rate plus 0.50%. The Company also has several LIBOR pricing
options  available.   If  the  outstanding  balance  falls  below
$10,000,000 the Line bears interest at the Bank of America  prime
rate  plus 1.75%.  Pledged as collateral for this credit facility
are  all  of  the  assets  of Nicholas Financial,  Inc.  and  its
subsidiaries.

<PAGE> 9

                     Nicholas Financial, Inc.
     Notes to the Condensed Consolidated Financial Statements
                            (Unaudited)
                                
                           June 30, 1998





5. Notes Payable - Related Party

Notes payable consisted of the following:

<TABLE>
<S>                                                       <C>
Notes   payable,  unsecured,  with  interest   at
varying   rates   up   to  12%,   quarterly   and
semiannual  interest payments  due  through  June
2001,  at which time the entire principal balance
and  unpaid interest is due, subordinated to  the
Line. The notes are convertible at the option  of
the  holder,  into common shares at  prices  from
$5.00 to $6.00 per share.                                  $1,150,000

Note   payable,  unsecured,  interest   at   12%,
quarterly  interest due through  April  2000,  at
which   time   the  entire  balance  and   unpaid
interest  is due, subordinated to the Line.   The
note  is convertible at the option of the holder,
into common shares at $8.25 per share.                        200,000

Notes   payable,  unsecured,  interest  at   12%,
principal and interest due through May 1999.                  245,041
                                                            
Note   payable,  unsecured,  interest   at   12%,
quarterly  interest due through August  1999,  at
which time the entire principal balance is due.                20,554
                                                          ------------
                                                           $1,615,595
                                                          ============
</TABLE>

6. Comprehensive Income

     As  of  April 1,  1998,  the  Company adopted Statement 130,
Reporting   Comprehensive   Income,    issued  by  the  Financial
Accounting  Standards  Board. Statement 130 establishes new rules
for  the  reporting  and  display of comprehensive income and its
components;  however,  the  adoption  of  this  Statement  has no
material  impact  on  the  Company's  net income or stockholders'
equity.

<PAGE> 10

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS
Introduction

   Consolidated net income increased for the three  month  period
ended June 30, 1998 to $260,224 from $216,546 for the three month
period  ended June 30, 1997. Earnings were favorably impacted  by
an  increase in the outstanding loan portfolio. The Company's NDS
subsidiary  did  not  contribute  significantly  to  consolidated
operations  in  the three month periods ended June  30,  1998  or
1997.

<TABLE>
<CAPTION>
                                           Three Months Ended June 30,
                                             1998              1997
                                           ---------------------------
<S>                                        <C>            <C>
Average Net Finance Receivables(1)          $40,782,423    $31,719,569

Average Indebtedness(2)                      26,022,255     20,277,855

Total Revenues                                2,078,087      1,691,808

Interest Expense                                603,063        499,234
                                           ---------------------------
Net Interest Income                           1,475,024      1,192,574

Gross Portfolio Yield (3)                        20.38%         21.33%

Average Cost of Borrowed Funds(2)                 9.27%          9.85%
                                           ---------------------------
Net Interest Spread (4)                          11.11%         11.49%

Net Portfolio Yield (3)                          14.47%         15.04%

Write-off to Liquidation (5)                      7.03%          9.23%

Net Charge-Off Percentage (6)                     6.00%          8.46%

</TABLE>

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

(2) Average   indebtedness  represents  the  average  outstanding
    borrowings  under  the  Line  of Credit  and  notes  payable-
    related  party.   Average cost of borrowed  funds  represents
    interest expense as a percentage of average indebtedness.

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

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

(5) Liquidation  is  defined as beginning receivable balance plus
    current  period  purchases   minus  voids  and  minus  ending
    receivable balance.

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

<PAGE> 11

Three months ended June 30, 1998 compared to three  months  ended
June 30, 1997

 Interest Income and Loan Portfolio

       Interest  revenue increased 23% to $2.1  million  for  the
period  ended  June 30, 1998, from $1.7 million  for  the  period
ended  June 30, 1997. The net finance receivable balance  totaled
$35.0 million at June 30, 1998, an increase of 29% from the $27.1
million  at  June 30, 1997. The gross finance receivable  balance
increased  35%  to  $55.0 million at June  30,  1998  from  $40.8
million  at  June  30, 1997. The primary reason interest  revenue
increased was the increase in the outstanding loan portfolio. The
gross  portfolio yield decreased from 21.33% for the period ended
June  30, 1997 to 20.38% for the period ended June 30, 1998.  The
primary  reason that the gross portfolio yield decreased is  that
contracts purchased in the most recent 12 months carried a  lower
weighted  APR than those contracts purchased in the preceding  12
month  period.  The  primary reason that net finance  receivables
increased  was  the  opening  of three  additional  branches  and
increasing the transaction volume in several existing branches.

 Computer Software Business

  Sales for the period ended June 30, 1998 were $109,793 compared
to $109,481 for the period ended June 30, 1997.

 Operating Expenses

       Operating expenses, excluding provision for credit  losses
and  interest expense, increased to $976,873 for the period ended
June  30, 1998 from $813,682 for the period ended June 30,  1997.
This  increase  of   20%   was primarily   attributable   to  the
opening  of three additional branches. The Company also  incurred
additional  operating expenses as the result  of  increasing  its
number  of  regional  managers from two  to  three,  as  well  as
increasing the number of home-office personnel.

 Interest Expense

      Interest expense increased to $603,063 for the period ended
June  30, 1998 as compared to $499,234 for the period ended  June
30,  1997.  This  increase  was due to  an  increase  in  average
outstanding borrowings from $20.3 million to $26.0 million during
the  comparable periods. The impact of this increase was  offset,
in part by a decrease in  the average cost of funds borrowed from
9.85% for the period ended  June 30, 1997 to 9.27% for the period
ended June 30, 1998 .


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 batches its Contracts  into  pools  for
purposes  of  establishing reserves for losses.  Each  such  pool
consists of the loans processed by a Company branch office during
a fiscal quarter.  The average pool consists of 68 Contracts with
an  aggregate initial principal amount of approximately $520,000.
As of June 30, 1998, the Company had 167 active pools.

   The  Company  pools Contracts according to  branch  locations,
which  are located in the States of Florida and Georgia.  Pooling
by  branch  and  quarter  allows  the  Company  to  evaluate  the
different  markets where the branches operate.  The  pools  allow
the  Company to evaluate the performance of the branch personnel,
who  are  given  the  responsibility  at  the  branch  level   to
underwrite and service their loan portfolio.

   A  pool retains an amount equal to 100% of the discount  as  a
reserve  for  credit losses. In situations where 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.  If the reserve for credit losses established
at  inception  is  exhausted  for  a  pool  which  is  not  fully
liquidated,  then a charge to income will be used to  reestablish
the  reserves.   If  a  pool  is fully  liquidated  and  has  any
remaining reserves, the excess reserves are recognized as income.

<PAGE> 12

   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 June 30, 1998, the Company had
reserves  for losses on Contracts of $7,009,311, or  17%  of  net
outstanding receivables as compared to $4,751,769 (15%)  for  the
period ended June 30, 1997.

   Because of the small number of direct consumer loans currently
outstanding, a reserve for losses is established at the time  the
loan  is made. As of June 30, 1998, the Company had reserves  for
losses  on  direct  loans of $69,883 or  7%  of  net  outstanding
receivables as compared to $50,713 (7%) for the period ended June
30,  1997.  When the volume of such loans increases, the  Company
intends to utilize a pooling arrangement similar to that used  in
connection with Contracts in establishing reserves.  As  of  June
30,  1998, the Company had not experienced material losses  under
its direct consumer loan program.

   The  provision for credit losses was $184,457  for  the  three
month period ended June 30, 1998 as compared to $132,322 for  the
three  month  period ended June 30, 1997. This increase  was  due
primarily  to  the  29%  increase in the net  finance  receivable
balance as of June 30, 1998 compared to June 30, 1997.

<PAGE> 13

   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:

<TABLE>
<CAPTION>

                                  Three months ended        Three months ended
                                    June 30, 1998              June 30, 1997
                                  ------------------        ------------------
<S>                             <C>  <C>     <C>            <C>  <C>    <C>
Contracts
Gross Balance Outstanding            $53,698,222                 $39,870,229

                                  Dollar                     Dollar
Delinquencies                     Amount     Percent*        Amount     Percent*
------------------               --------    --------       --------    --------

30 to 59 days                    $1,830,953    3.41%        $1,485,071    3.72%
60 to 89 days                       409,741    0.76%           303,133    0.76%
90   +   days                       225,804    0.42%            62,144    0.16%
                                 ----------  --------       -----------  -------
Total Delinquencies              $2,466,498                 $1,850,348

*Total Delinquencies as
 percent of outstanding balance                4.59%                      4.64%

Direct Loans
Net Balance Outstanding               $1,032,810                   $ 764,032

Delinquencies
------------------

30 to 59 days                       $ 3,662    0.35%           $ 1,728    0.23%
60 to 89 days                           762    0.07%               971    0.13%
90 + days                               682    0.07%               800    0.10%
                                    -------    -----            ------    -----
Total Delinquencies                 $ 5,106                    $ 3,499

*Total Delinquencies as a
percent of outstanding balance                 0.50%                      0.46%

</TABLE>

Income Taxes

  The Company's effective tax rate remained relatively consistent
at 38.55% and 39.18% for the three months ended June 30, 1998 and
1997, respectively.

<PAGE> 14

Liquidity and Capital Resources

The Company's cash flows for the three months ended June 30, 1998
and June 30, 1997 are summarized as follows:

<TABLE>
<CAPTION>

                                  Three months ended     Three months ended
                                       June 30,               June 30,
                                         1998                   1997
                                  ------------------     ------------------
<S>                                <C>                     <C>

  Cash provided by (used in):
   Operating Activities -           $   296,209             $   338,410
   Investing Activities -
   (primarily purchase of 
          Contracts)                 (2,783,202)             (1,301,253)

   Financing Activities               2,224,000                 935,500
                                     -----------             -----------
  Net increase(decrease) in cash       (262,993)                (27,343)

</TABLE>

      The  Company's  primary use of working capital  during  the
three  months  ended June 30, 1998 was funding  the  purchase  of
Contracts.   The  Contracts were financed  substantially  through
borrowings from the Company's Line of credit. The line of  credit
is  secured primarily by Contracts, and available borrowings  are
based  on  a percentage of qualifying Contracts. As of  June  30,
1998  the Company had approximately $4.4 million available  under
the  Line of credit. Since inception, the Company has also funded
a  portion  of its working capital needs through cash flows  from
operating  activities. The Company is currently negotiating  with
its lending source to increase its Line of credit from 30 million
to 35 million.

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


Future Expansion

      The  Company currently operates thirteen branch  locations,
eleven  in the State of Florida and two in the State of  Georgia.
The  Company expects to evaluate several markets in the southeast
for possible expansion.

      The  Company 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 its loan
portfolio of Contracts, the Company believes it will be necessary
to  increase  the  size  of its Line of Credit.  The  Company  is
currently  negotiating with its lending source  to  increase  its
Line of credit from 30 million to 35 million.

      The  Company believes that opportunity for growth continues
to  exist  in  the  States of Florida and Georgia   and  for  the
foreseeable future intends generally to concentrate its expansion
activities  in  those states. The Company has identified  Orlando
and Atlanta as likely areas where it may open additional branches
during fiscal 1999.


Impact of Year 2000

     The Company has completed an assessment that it will have to
modify portions of its software so that its computer systems will
function  properly  with respect to dates in the  year  2000  and
thereafter. The total Year 2000 project cost is estimated  to  be
immaterial.  The Company's NDS software subsidiary has  designed,
implemented  and  maintained  all in-house computer  systems.  To
date  the Company has not incurred any material expenses  related
to the  Year 2000 issue and does not expect to incur any material
costs.

      The  project  is  expected to be completed  no  later  than
December  31, 1998, which is prior to any anticipated  impact  on
its   operating   systems.  The  Company   believes   that   with
modifications  to  existing  software  and  conversions  to   new
software,  the  Year  2000 Issue will not  pose  any  significant
operational problems for its computer systems.

<PAGE> 15


Forward-Looking Information

   This  10-QSB  contains various forward-looking statements  and
information   that   are  based  on  management's   beliefs   and
assumptions,  as  well  as  information  currently  available  to
management.   When used in this document, the words "anticipate",
"estimate",  "expect", and similar expressions  are  intended  to
identify   forward-looking  statements.   Although  the   Company
believes  that the expectations reflected in such forward-looking
statements  are  reasonable; it can give no assurance  that  such
expectations  will  prove  to be correct.   Such  statements  are
subject to certain risks, uncertainties and assumptions.   Should
one  or  more  of  these risks or uncertainties  materialize,  or
should underlying assumptions prove incorrect, actual results may
vary  materially from those anticipated, estimated  or  expected.
Among  the  key  factors that may have a direct  bearing  on  the
Company's operating results are fluctuations in the economy,  the
degree  and nature of competition, demand for consumer  financing
in  the markets served by the Company, the Company's products and
services,   increases  in  the  default  rates   experienced   on
Contracts,  adverse regulatory changes in the Company's  existing
and future markets, the Company's ability to expand its business,
including its ability to complete acquisitions and integrate  the
operations   of  acquired  businesses,  to  recruit  and   retain
qualified  employees, to expand into new markets and to  maintain
profit margins in the face of increased pricing competition.


                   Part II - Other Information


Item 1.   Legal Proceedings - None

Item 2.   Changes in Securities - None

Item 3.   Defaults upon Senior Securities - None

Item 4.   Submission of Matters to a Vote of Security
            Holders -None

Item 5.   Other Information - None

Item 6.   (a)  Exhibits - See exhibit index following the
            signature page.


<PAGE> 16


                           SIGNATURES

   In  accordance with the requirements of the Securities Act  of
1934, the Registrant certifies that it has reasonable grounds  to
believe that it meets all of the requirements for filing on  Form
10-QSB  and authorized this Report to be signed on its behalf  by
the undersigned, in the City of Clearwater, State of Florida,  on
August 14, 1998.
                                
                                
                    NICHOLAS FINANCIAL, INC.
                          (Registrant)


  Date: August 14, 1998             /s/ Peter L. Vosotas
                                    ---------------------------
                                        Peter L. Vosotas
                                        Chairman, President,
                                        Chief Executive Officer
                                        (Principal Executive
                                         Officer)


  Date: August 14, 1998             /s/ Ralph T. Finkenbrink
                                    ----------------------------
                                        Ralph T. Finkenbrink
                                        (Principal Financial
                                         Officer and Accounting
                                         Officer)

<PAGE> 17

                          EXHIBIT INDEX

    Exhibit      Document
  ----------    ------------
    None