1000045--6/29/2006--NICHOLAS_FINANCIAL

related topics

{debt, indebtedness, cash}

{condition, economic, financial}

{personnel, key, retain}

{cost, regulation, environmental}

{system, service, information}

{acquisition, growth, future}

{loan, real, estate}

{operation, natural, condition}

{stock, price, operating}

{stock, price, share}

{competitive, industry, competition}

{customer, product, revenue}

{financial, litigation, operation}

The following factors, as well as other factors not set forth below, may adversely effect the business, operations, financial condition or results of operations of the Company (sometimes referred to in this section as we us or our ). Our profitability and future growth depend on our continued access to bank financing. The terms of our indebtedness impose significant restrictions on us. We will require a significant amount of cash to service our indebtedness and meet our other liquidity needs. Our substantial indebtedness could adversely affect our financial condition. Our high level of indebtedness could have important consequences for our business. For example, We may experience high delinquency rates in our loan portfolios, which could reduce our profitability. We depend upon our relationships with our dealers. Our success depends upon our ability to implement our business strategy. Our business is highly dependent upon general economic conditions. Decreased auction proceeds resulting from the depressed prices at which used automobiles may be sold during periods of economic slowdown or recession will reduce our profitability. An increase in market interest rates may reduce our profitability. Our growth depends upon our ability to retain and attract a sufficient number of qualified employees. The loss of one of our key executives could have a material adverse effect on our business. We are subject to risks associated with litigation. We are subject to many laws and governmental regulations, and any material violations of or changes in these laws or regulations could have a material adverse effect on our financial condition and business operations. Our Chief Executive Officer and certain members of the Mahan family hold a significant percentage of our common stock and may take actions adverse to your interests. Our stock is not heavily traded, which may limit your ability to resell your shares. We operate in a competitive market. We may experience problems with our integrated computer systems or be unable to keep pace with developments in technology.

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1000045--6/29/2006--NICHOLAS_FINANCIAL_INC