SUMMARY OF SIGNIFICANT POLICIES

9 Months Ended

Dec. 31, 2020

Nature of Operations

The Company is a small-loan consumer finance company headquartered in Greenville, South Carolina that offers short-term small loans, medium-term larger loans, related credit insurance products and ancillary products and services to individuals who have limited access to other sources of consumer credit. The Company offers income tax return preparation services to its loan customers and other individuals.

Seasonality

The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand generally occurs from October through December, its third fiscal quarter. Loan demand is generally lowest and loan repayment highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. Consequently, the Company experiences significant seasonal fluctuations in its operating results and cash needs. Operating results for the Company's third fiscal quarter are generally lower than in other quarters and operating results for its fourth fiscal quarter are generally higher than in other quarters.

Allowance for credit losses

Refer to Note 5, “Finance Receivables and Allowance for Credit Losses,” in this Quarterly Report on Form 10-Q for information regarding the Company's adoption of the CECL allowance model on April 1, 2020 and a description of the methodology it utilizes.

Reclassification

The Company has made certain adjustments to its treatment of historic tax credits purchased during fiscal 2020 since it filed its Report on Form 10-Q for the quarterly period ended December 31, 2019. The adjustments correctly present the Company’s election to account for historic tax credits purchased using the income statement method in conjunction with the flow-through method. Under this approach, the deferred tax liability related to the difference between the book and tax basis in the underlying historic tax credit investment is recorded in the tax provision and reversed over the same period as the amortization of the historic tax credit investment. As a result of these corrections, the below line items have been adjusted as follows:


CONSOLIDATED STATEMENT OF OPERATIONS
	Three months ended December 31, 2019						Nine months ended December 31, 2019
	As originally filed		Adjustments		As revised		As originally filed		Adjustments		As revised
Insurance income, net and other income	$	16,854,871	$	(83,124)	$	16,771,747	$	47,868,789	$	(83,124)	$	47,785,665
Total revenues	147,079,208		(83,124)		146,996,084		427,094,307		(83,124)		427,011,183
Other expense	17,631,727		434,096		18,065,823		34,287,303		434,096		34,721,399
Total general and administrative expense	90,123,631		434,096		90,557,727		250,352,377		434,096		250,786,473
Total expenses	152,473,279		434,096		152,907,375		417,692,277		434,096		418,126,373
Income (loss) before income taxes	(5,394,071)		(517,220)		(5,911,291)		9,402,030		(517,220)		8,884,810
Income tax expense	$	429,997	$	(73,704)	$	356,293	$	2,397,698	$	1,633,123	$	4,030,821

Net income (loss)	$	(5,824,068)	$	(443,516)	$	(6,267,584)	$	7,004,332	$	(2,150,343)	$	4,853,989

Recently Adopted Accounting Standards

Measurement of Credit Losses on Financial Instruments

ASU 2016-13 (and all subsequent ASUs on this topic) introduce the CECL model, a new credit loss methodology, replacing multiple existing impairment methods in current GAAP, which generally require that a loss be incurred before it is recognized. The amendments in this ASU require loss estimates be determined over the lifetime of the asset and broaden the information that an entity must consider in developing its expected credit losses. The ASU does not specify a method for measuring expected credit losses and allows an entity to apply methods that reasonably reflect its expectations of the credit loss estimate based on the entity’s size, complexity, and risk profile. In addition, the disclosures of credit quality indicators in relation to the amortized cost of financing receivables, a current disclosure requirement, are further disaggregated by year of origination.

The Company adopted this ASU (and all subsequent ASUs on this topic) as of April 1, 2020 using the modified retrospective approach. The adoption of this pronouncement resulted in the recognition of a $28.6 million increase in the allowance for credit losses on our opening balance sheet as of April 1, 2020, with a corresponding net-of-tax $21.2 million reduction in retained earnings and a $7.4 million increase to deferred income taxes, net.

Recently Issued Accounting Standards Not Yet Adopted

We reviewed all newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the consolidated financial statements as a result of future adoption.