<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 DECEMBER 31, 1996
                              
                              
   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                         34619
  (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  January 31, 1997  there were 6,990,544  shares of
common
                       stock outstanding
                               
 This Form 10-QSB consists of 17 pages. Exhibits are indexed
                            at page 16.
<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 December 31, 1996......3

  Condensed Consolidated Statements of Income for the three and
   nine months ended December 31, 1996 and 1995.....................4
                                
  Condensed Consolidated Statements of Cash Flows for the
   nine months ended December 31, 1996 and 1995.....................5
                                
  Notes to the Condensed Consolidated Financial Statements..........6

  Item 2. Management's Discussion and Analysis of the Financial
   Condition and Results of Operations..............................8

Part II. Other Information

  Item 1. Legal Proceedings........................................14

  Item 2. Changes in Securities....................................14 

  Item 3. Defaults upon Senior Securities..........................14

  Item 4. Submission of Matters to a Vote of Security Holders......14
 
  Item 5. Other Information........................................14
 
  Item 6. Exhibits and Reports on Form 8-K.........................14

  Signatures.......................................................15 
 
  Index of Exhibits................................................16

  Exhibit 1.1- Statement Regarding Computation 
   of Per Share Earnings...........................................17 

<PAGE> 3

                     Nicholas Financial, Inc.

              Condensed Consolidated Balance Sheet

                           (Unaudited)

<TABLE>
<CAPTION>
                                                      December 31,
                                                          1996
                                                    -------------
<S>                                                <C>
Assets
Cash                                                    $188,785
Accounts receivable                                       19,433
Finance receivables, net                              21,225,550
Prepaid expenses and other assets                        312,961
Deferred income taxes                                    343,715
Property and equipment, net                              194,911
Prepaid income taxes                                     137,114
Deferred loan costs                                        5,625
                                                    -------------
Total assets                                         $22,428,094
                                                    =============
Liabilities
Line of credit                                       $13,755,594
Notes payable - related party                          1,756,095
Deferred revenues                                        203,221
Accounts payable                                         675,270
Other liabilities                                        227,375
                                                    -------------
                                                      16,617,555
                                                    -------------
Shareholders' equity
Preferred stock, no par: 5,000,000 shares
authorized;                                                    -
none issued and outstanding
Common stock, no par: 20,000,000 shares
authorized; 6,990,544  shares issued and               
outstanding                                            3,712,003

Retained earnings                                      2,098,536
                                                    -------------
                                                       5,810,539
                                                    -------------
Total liabilities and shareholders' equity           $22,428,094
                                                    =============

</TABLE>

See accompanying notes.

<PAGE>  4

                     Nicholas Financial, Inc.

            Condensed Consolidated Statements of Income

                            (Unaudited)
<TABLE>
<CAPTION>

                                   Three months endedNine months ended
                                     December 31                December 31
                                 1996          1995         1996         1995
                             --------------------------------------------------
<S>                         <C>          <C>            <C>         <C>

Revenue:
Interest income on
 finance receivables          $1,344,454   $1,363,638     $4,192,414   $3,801,948
Sales                            112,301      145,822        349,613      435,930
                             -----------------------------------------------------
                               1,456,755    1,509,460      4,542,027    4,237,878
Expenses:
Cost of sales                     23,053       36,779         70,609      102,008
Marketing                         59,708       56,015        181,122      149,495
Administrative                   602,004      535,318      1,725,467    1,558,626
Provision for credit losses      177,000      177,673        363,121      297,437
Deferred compensation expense    (29,347)        (479)           600      128,349
Depreciation and amortization     20,843       22,719         63,030       75,060
Interest expense                 395,867      411,177      1,214,469    1,120,059
                             -----------------------------------------------------
                               1,249,128    1,239,202      3,618,418    3,431,034
                             -----------------------------------------------------
Operating income before
income taxes                     207,627      270,258        923,609      806,844
                                    
Income tax expense (benefit):
Current                          (77,033)     187,470        212,804      445,706
Deferred                         159,113      (88,710)       142,083     (137,861)
                            ------------------------------------------------------
                                  82,080       98,760        354,887      307,845
                            ------------------------------------------------------
Net Income                      $125,547     $171,498       $568,722     $498,999
                            ======================================================

Primary Earnings per Share         $0.02        $0.03          $0.09        $0.09
                            ====================================================== 
Fully Diluted Earnings
   per Share                       $0.02        $0.03          $0.09        $0.08
                            ======================================================
Weighted average number
of  common and common 
 equivalent shares - Primary   7,017,927    6,097,587      7,017,927    6,097,587
                            ------------------------------------------------------
Weighted average number of
  common and common equivalent
  shares - Fully Diluted       7,017,927    6,250,674      7,017,927    6,250,674
                            ------------------------------------------------------

</TABLE>

See accompanying notes.

<PAGE>  5

                     Nicholas Financial, Inc.

           Condensed Consolidated Statements of Cash Flows

                             (Unaudited)
<TABLE>
<CAPTION>
                                        Nine months ended December 31
                                            1996           1995
                                       ------------------------------
<S>                                     <C>             <C>
Operating activities
Net income                                $568,722        $498,999
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
Depreciation of property and equipment      60,500          63,500
Provision for credit losses                363,121         297,437
Amortization of intangible assets
  and deferred loan costs                   16,534          11,560
Deferred compensation expense                  600         128,349
Deferred income taxes                      142,083        (137,861)

Changes in operating assets
  and liabilities:
Accounts receivable                          5,721            (327)
Prepaid expenses and other assets          (42,261)       (261,090)
Deferred revenues                           14,327          57,542
Accounts payable                          (175,988)       (503,348)
Other liabilities                          198,569         291,898
Prepaid income taxes                      (137,114)              -
Income taxes payable                      (122,082)         27,534
                                       ----------------------------
-Net cash provided by operating
  activities                               892,732         474,193

Investing activities
Increase in finance receivables,
    net of principal collected          (3,261,887)     (5,424,432)
Purchase of property and equipment         (74,994)        (56,947)
Increase in deferred loan costs                  -          (6,805)
                                       ----------------------------
-Net cash used by investing activities   (3,336,881)    (5,488,184)

Financing activities
Net proceeds from notes payable-
 related party and line of
 credit borrowings                         154,791       4,865,514
Proceeds from sale of the
  Company's common stock                 1,987,352          57,794
                                       ---------------------------
-Net cash provided by financing
  activities                             2,142,143       4,923,308
                                       ---------------------------
-Net decrease in cash                    (302,006)         (90,683)

Cash, beginning of period                  490,791         283,342
                                       ----------------------------
-Cash, end of period                      $188,785        $192,659
                                       =============================
</TABLE>

See accompanying notes.

<PAGE> 6

                     Nicholas Financial, Inc.

   Notes to the Condensed Consolidated Financial Statements

                          (Unaudited)

                       December 31, 1996
                               
                               
                               
                               
1. Basis of Presentation

The accompanying unaudited condensed consolidated financial
statements 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 month and nine month
periods ended December 31, 1996 are not necessarily indicative
of the results that may be expected for the entire year ended
March 31, 1997. 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, 1996.

2. Earnings Per Share

Net Income per share is based upon the weighted average number
of shares outstanding, adjusted for the dilutive effect of
stock options and warrants. Supplementary earnings per share
data described in APB 15 is not materially different from the
net income per share which is presented.

3. Finance Receivables

Finance receivables consist of consumer automobile finance
installment contracts and are detailed as follows:
<TABLE>
   <S>                                     <C>
    Finance receivables, gross contract     $31,589,307
    Less:
       Unearned interest                     (6,755,188)
                                           -------------
                                             24,834,119
       Nonrefundable dealer reserves         (2,682,010)
       Allowance for credit losses             (926,559)
                                           -------------
       Finance receivables, net             $21,225,550
                                           =============
</TABLE>

The terms of the receivables range from 6 to 60 months and bear
a weighted average effective interest rate of 25%.

<PAGE>  7

4. Line of Credit

The Company has a $25,000,000 line of credit facility (the
Line) with BA Business Credit, Inc. which expires on June 3,
1998. Borrowings under the Line bear interest at the Bank of
America prime rate plus 1.25% and 1.00%, when the outstanding
balance exceeds $10,000,000 and $15,000,000, respectively (9.5%
at December 31, 1996).  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
the unconditional guarantee of it's subsidiaries, Canadian
parent and Peter L. Vosotas the majority shareholder.


5. Notes Payable - Related Party

Notes payable related party 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 1998, 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  $2.00 per share.                    $1,300,000

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 
$2.75 per share.                                              200,000

Notes payable, unsecured interest at 12%,
principal and interest due through May 1998.                  233,341

Note payable, unsecured, interest at 12%,quarterly 
interest due through August 1997, at which time the
entire principal balance is due.                               22,754
                                                          ------------
                                                           $1,756,095
                                                          ============
</TABLE>

6. Impact of New Accounting Pronouncement Statement of Financial 
Accounting Standards No 123, "Accounting for Stock-Based Compensation 
" ("SFAS 123"), effective for the Company in fiscal 1997, provides an 
alternative method for accounting for stock-based compensation and 
requires certain disclosures regarding the fair value of stock-based
compensation. The Company does not expect to adopt the
alternative method of accounting for stock-based compensation
and, accordingly, the adoption of SFAS 123 will not have any
effect on the Company's financial position or results of
operations. The Company expects to expand its disclosure of
stock-based compensation plans to include pro forma fair value
information for grants in it's fiscal 1997 Annual Report.

<PAGE>  8

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

   The  Company  is  a  Florida-based consumer  finance
company, focused  primarily on the purchase of installment loan
contracts from  automobile  dealers  and the origination  of
small  direct consumer loans.  The Contracts are for the
purchase of used  cars and  light  trucks  by  borrowers who
do  not  meet  the  credit standards  of  traditional lenders.
The Company's  small  direct consumer  loans  are  made
primarily  to  borrowers  under   the Contracts.   As  of
December 31, 1996, Contracts  accounted  for approximately
97.1% of the Company's aggregate loan portfolio and
small direct consumer loans accounted for approximately 2.9%.
As of December 31, 1996 the Company operated ten branch
locations in the  state of Florida and on October 14, 1996 the
Company  opened its first branch location in the State of
Georgia for a total  of 11 branches in all.

<TABLE>
<CAPTION>
                               Three Months Ended December 31,   Nine Months Ended December 31, 
                                   1996          1995                1996            1995
                              ----------------------------------------------------------------
<S>                          <C>            <C>                <C>              <C>
Average Net   Finance
Receivables (1)                $24,322,645    $20,917,381        $23,406,466      $19,662,062

Average Indebtedness (2)        15,178,355     15,148,037         15,759,909       13,885,112

Total Revenues                   1,344,454      1,363,638          4,192,414        3,801,948

Interest Expense                   395,867        411,177          1,214,469        1,120,059
                             -----------------------------------------------------------------
Net Interest Income                948,587        952,461          2,977,945        2,681,889
Gross Portfolio Yield(3)            22.11%         26.08%             23.88%           25.78%
Average Cost of
Borrowed Funds (2)                  10.43%         10.86%             10.27%           10.76%
                             -----------------------------------------------------------------
Net Interest Spread (4)             11.68%         15.22%             13.61%           15.03%
Net Portfolio Yield (3)             15.60%         18.21%             16.96%           18.19%
Net Charge-Off Percentage(5)        11.59%         14.30%             10.06%           10.24%
<FN>
_________________
(1) Average  net  finance receivables represents 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  the  Line  of Credit  and
    notes  payablerelated  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 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) Net  charge-off percentage represents net charge-offs
    divided by  average  net finance receivables outstanding
    during  the period.
</TABLE>

<PAGE>  9

Three  months  ended December 31, 1996 compared to  three
months ended December 31, 1995

       Revenue  decreased 3% to $1,456,755 for the  three
months ended  December  31,  1996, from $1,509,460  for  the
comparable period  in  1995.  This  decrease  is  attributed
to  the  gross portfolio yield decreasing from 26.08% for the
three months ended December 31, 1995 to 22.11% for the
comparable period in 1996.

       Operating expenses, excluding provision for credit
losses, deferred compensation expense and interest expense,
increased  to $705,608  for  the  three  months ended December
31,  1996  from $650,831  for  the  three months ended December
31,  1995.  This increase  is  attributed to the opening of one
additional  branch and the increase in transaction volume at
existing branches.

      Interest expense decreased to $395,867 for the three
months ended  December  31,  1996  as  compared  to  $411,177
for   the comparable period in 1995. This decrease is
attributed  to  using the  proceeds from an offering of the
Company's Common  stock  to pay  down  the Company's credit
line.  The average cost of  funds borrowed  by  the Company was
10.43% for the three  months  ended December 31, 1996 as
compared to 10.86% for the comparable period in  1995.

      Provision for credit losses decreased to $177,000 for the three
months period ended December 31, 1996 as compared to $177,673
for the  comparable period in 1995. The decrease is attributed
to  a decrease  in  the net charge-off percentage from 14.30%
for  the three  months  ended December 31, 1995 to 11.59%  for
the  three months ended December 31, 1996.

       Net  income for the three months ended December  31,
1996 decreased  to  $125,547 compared to $171,498 for  the
comparable period  in 1995. The decrease in net income is
attributed to  the reduction  in  portfolio yield  coincided
with  an  increase  in operating expenses.
Nine months ended December 31, 1996 compared to nine months
ended December 31, 1995

   Revenue increased 7% to $4,542,027 for the nine months
ended December  31, 1996, from $4,237,878 for the comparable
period  in 1995.  This increase is attributed to the increase
in net finance receivables.  The gross portfolio yield
decreased to  23.88%  for the  nine  months  ended December 31,
1996 from  25.78%  for  the comparable period in  1995.

       Operating expenses, excluding provision for credit
losses, deferred compensation expense and interest expense,
increased  to $2,040,228  for  the nine months  ended December
31,  1996  from $1,885,189 for the comparable  period in  1995.
This increase  is attributed  to  the  opening  of one
additional  branch  and  the increase in transaction volume at
existing branches.

       Interest  expense  increased to $1,214,469  for  the
nine months ended December 31, 1996 as compared to $1,120,059
for  the comparable  period  in 1995. This increase is
attributed  to  the increase  in average outstanding borrowings
during the comparable periods.   The average cost of funds
borrowed by the Company  was 10.27%  for the nine months  ended
December 31, 1996 as  compared to 10.76% for the comparable
period in  1995.

   Provision for credit losses increased to $363,121 for the
nine months  ended December 31, 1996 as compared to $297,437
for  the comparable  period  in 1995. This increase is
attributed  to  the increase  in  net finance receivables  for
the nine months  ended December  31, 1996 as compared to the
nine months ended  December 31, 1995.

       Net  income  for the nine months ended December  31,
1996 increased  to  $568,722 compared to $498,999 for  the
comparable period in  1995.

<PAGE>  10

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 62 Contracts with  an  aggregate  initial principal  
amount of approximately $429,000.   As of December 31, 1996, the Company
had  113  active pools.  The effective APR for these pools
ranges from 20% to 30%, and  the  discount averages between 10%
and 12%.  Loan pools  are analyzed  monthly  and  the effective
return  for  each  pool  is recomputed, if necessary, based
upon changes during the month.

   The  Company  pools  Contracts according  to  branch
location because  the  branches  purchase Contracts in
different  markets located  in the State of Florida.  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  automobiles purchased in each
market.

   A pool retains an amount equal to 100% of the discount into
a non-refundable dealer reserve.  In situations where the
discount is  determined to be insufficient to absorb all of the
potential losses associated with the pool, unearned income will
be added to reserves until total reserves have reached the
appropriate level. If  the  non-refundable reserve and the
unearned revenue  reserve are  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 excess reserves,  the  excess reserves are credited to
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 December 31, 1996, the Company had  established reserves
for losses on Contracts of  $3,578,161, or 14.88% of net
outstanding receivables. Of the 20% of Contracts that  are
never  fully  paid  the  Company  has  experienced   a
historical  charge-off rate of 9.97%, 9.74% and 3.50% of
average net receivables respectively, for the years ended March 31,
1996, 1995, and 1994.  The experience of the Company is that
the longer the  period  of time during which the borrower has
made  payments under his Contract, the less likelihood there is
of a default.

  The Company utilizes a pooling arrangement similar to that
used in  connection with Contracts in establishing reserves for
direct loans  initiated.   As  of December 31,  1996,  the
Company  had experienced  immaterial  losses under its  direct
consumer  loan program;  however, the program was implemented
in April 1995  and these results cannot be considered
representative of results that will be experienced in the
future.  As of December 31, 1996,  the Company  had
established reserves for losses on direct  consumer loans  of
$30,409 or 3.90% of outstanding receivables under  the loans.

<PAGE>  11

  The Company defines any account that is more than ten days
past due  as  "delinquent."   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>

                                   Nine Months Ended            Year Ended
                                  December  31, 1996          March  31,1996
                                ----------------------      -----------------
--
<S>                              <C>                         <C>
Contracts
Gross Amount Outstanding          $30,671,373                 $27,250,451
</TABLE>
<TABLE>
<CAPTION>
                                    Dollar                        Dollar
Delinquencies                       Amount       Percent*         Amount       Percent
*
                                   ---------    -----------      ---------    ---------
<S>                              <C>            <C>              <C>          <C>
30 to 59 days                     $1,407,393       4.59%          $1,346,150     4.94%
60 to 89 days                        311,285       1.01%             326,542     1.20%
90   +   days                        159,333       0.52%              44,746     0.16%

Total Delinquencies               $1,878,011                      $1,717,438
*Total Delinquencies as
 percent of outstanding balance                    6.12%                         6.30%
Direct Loans
Net Amount Outstanding            $  775,875                      $  559,123
Delinquencies
30 to 59 days                        $18,621       2.40%          $      321     0.06%
60 to 89 day                               0       0.00%               3,197     0.57%
90   +   days                              0       0.00%                   0     0.00%

Total Delinquencies                  $18,621                          $3,518
*Total Delinquencies as a
percent of outstanding balance                     2.40%                         0.63%
</TABLE>

Income Taxes

   The  provision  for  income taxes for the three  months  ended
December  31,  1996  decreased to $82,080 from  $98,760  for
the comparable  period  in  1995. The Company's  effective  tax
rate increased  from 36.54% for the three month period ended
December 31,  1995 to 39.53% for the three month period ended
December 31, 1996.

<PAGE>  12

Liquidity and Capital Resources

The  Company's cash flows for the Nine months ended December
31, 1996 and December 31, 1995 are summarized as follows:

<TABLE>
<CAPTION>
                                  Nine months ended  Nine months ended 
                                    December 31,        December 31,
                                       1996                1995
                                 --------------------------------------
 <S>                             <C>                 <C>
  Cash provided by (used in):
     Operating   Activities-      $   892,732         $   474,193

     Investing Activities -
      (primarily  purchase
         of  Contracts)            (3,336,881)         (5,488,184)

     Financing Activities           2,142,143           4,923,308

     Net (decrease) in cash          (302,006)            (90,683)

</TABLE>

   The  Company's primary use of working capital during the
nine months ended December 31, 1996 was the funding of the
purchase of Contracts.    The  Contracts  were  financed
partially   through borrowings on the BankAmerica Line of
Credit.  The Line of Credit is  secured primarily by Contracts
and provides the Company  with financing  to  increase  the
number of  Contracts  for  its  loan portfolio.   Under the
Line of Credit, the Company is subject  to customary  covenants
such as the maintenance of certain financial ratios   and
minimum  net  worth  requirements,   and   certain restrictions
on the payment of cash dividends on the Common Stock and  a
requirement to maintain minimum subordinated indebtedness of
$400,000.

   Since  inception, the Company has funded operations  from
the following sources: borrowings under the line of credit,
proceeds from  the  issuance  of subordinated debt,  funds
provided  from payments  received under Contracts, and cash
flows from operating activities.

   The  decrease in net cash used in investing activities
during the   nine   months  ended  December  31,  1996   was
primarily attributable  to a decrease in the net finance receivable
growth rate  when compared to the growth rate for the
comparable  period in  1995 and  1994.

   In  May  1996, through a series of negotiations,  the
Company increased  its  Line of Credit to $25 million from  $20
million. The Company was also able to increase the percentage
of Contracts that  qualify  for funding and reduce the amount
of  subordinated debt required by BankAmerica.

   The  Company's Registration Statement on Form SB-2  under
the Securities Act of 1933 was declared effective on October 1,
1996. On   October   4,   1996   the  Company  and   its
underwriters Interstate/Johnson Lane agreed to an initial
closing  of  951,647 shares  at  $2.125 per share. The gross
proceeds were  $2,022,250 and  the  net proceeds were
$1,762,785. On October 31,  1996  the Company agreed to a
second and final closing of 150,558 shares at $2.125  per
share. The gross proceeds were $319,936 and  the  net proceeds
were  approximately  $273,000.  The  Company  used  the
proceeds from the offering to repay certain subordinated debt
and outstanding  indebtedness  under its  line  of  credit,
and  the balance  to  general corporate purposes, including
future  branch expansion.  The Company will make additional
capital expenditures as  it  opens new branches and increases
the number of employees. The  Company  believes  the  cash flow
from  operations,  current borrowing  capacity under the Line
of Credit and other  available financing alternatives will be
adequate to meet anticipated needs for  working  capital and
capital expenditures, but no  assurance can  be  given that the
Line of Credit will be increased or  that alternative  sources
of  capital  will  be  available  on  terms acceptable to
permit the Company to finance future expansion.

<PAGE> 13

Bulk Receivable Acquisition

     On  January  28,  1997  the  Company  successfully
acquired approximately  $3,850,000 in gross contracts
outstanding  from  a new/used car dealership located in 
the State of  Florida.  The contracts  bear an average APR 
of 21.5% and  an average remaining maturity  of 24 months. 
The acquisition represents approximately a 12% increase in 
the total assets of the Company. The  Company intends to 
pursue other possible bulk transactions in the future.

Future 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, it will be necessary for the
Company  to open  additional branch offices and increase the
size of its Line of Credit, either with BankAmerica or another
lender.

   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   primarily   there.   The  Company   has
identified Pensacola,  Jacksonville and Boca Raton as areas in
Florida,  and Valdosta  and  Atlanta  as areas in Georgia
where  it  may  open additional branch offices during fiscal
1997.

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.

<PAGE>  14

<TABLE>
<CAPTION>
                  Part II - Other Information
                               
<S>      <C>
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.
          (b)  Reports on Form 8-K  - No reports on From 8-K

                were filed during the fiscal quarter ending

                December 31, 1996

</TABLE>

<PAGE>  15

                          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 January 31, 1997.
<TABLE>
<CAPTION>
                    NICHOLAS FINANCIAL, INC.
                          (Registrant)
 <S>                           <C>
  Date: January 31, 1997        /s/ Peter L. Vosotas
                                --------------------
                                Peter L. Vosotas 
                                Chairman,   President,
                                Chief Executive Officer
                                (Principal Executive Officer)


  Date: January 31, 1997        /s/ Ralph T. Finkenbrink
                                -------------------------
                                Ralph T. Finkenbrink
                                (Principal  Financial Officer
                                and Accounting Officer)
                                
</TABLE>
<PAGE>   16
<TABLE>
<CAPTION>
                         EXHIBIT INDEX
                               
    Exhibit Document
   <S>      <C>
    1.1      Schedule  for  Computation of Earnings  Per
             Share

</TABLE>

<PAGE>  17
<TABLE>
<CAPTION>

                    Nicholas Financial, Inc.
                           Exhibit 1.1

         Schedule for Computation of Earnings Per Share

                           (Unaudited)


                                        Three Months            Nine Months
                                     Ended December 31,       Ended December 31,
                                      1996       1995       1996        1995
                                  ------------------------------------------------
   <S>                             <C>         <C>         <C>          <C>
    Net income                      $ 125,547   $ 171,498   $ 568,722    $ 498,999
                                  ================================================ 
Weighted average number of
    common shares outstanding
    during the period               6,897,743   5,827,247   6,897,743    5,827,247
 
    Add: Primary common equivalent
    shares determined using the
    "treasury stock" method
    representing shares issuable
    upon exercise of stock options
    and warrants                      120,184     270,340     120,184       270,340
                                   ------------------------------------------------
    Weighted average number of 
    shares used in Primary
    EPS calculation                 7,017,927   6,097,587   7,017,927     6,097,587
                                  =================================================
    Add: Fully Diluted common
    equivalent shares determined
    using the "treasury stock"
    method representing shares
    issuable upon exercise of
    stock options and warrants        120,184    423,427      120,184       423,427
                                  -------------------------------------------------
    -Weighted average number of
    shares used in Fully Diluted
    EPS calculation                 7,017,927  6,250,674    7,017,927     6,250,674
                                  =================================================
    Primary Earnings Per Share          $0.02      $0.03        $0.09         $0.09
                                  =================================================
    Fully Diluted Earnings
    Per Share                           $0.02      $0.03        $0.09         $0.08
                                  =================================================

</TABLE>