UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q SB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter report ended September 30, 2001
or
( ) 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 000-31899
NICHOLAS INVESTMENT COMPANY, INC.
(Exact name of small business issuer as registrant as specified in charter)
Nevada 33-0788293
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2220 Otay Lake Rd., #50925, Eastlake, CA 91915
(Address of principal executive office)
Registrants telephone no., including area code (619) 421-5492
N/A
(Former name, changed since last report)
Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), Yes [X] No [ ] and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the last practicable date.
Class Outstanding as of September 30, 2001
Common Stock, $0.001 11,345,250
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TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 1
Consolidated Balance Sheets September 30, 2001
And December 31, 2000 2
Consolidated Statements of Operations nine months
Ended September 30, 2001
and September 30, 2000 3
Consolidated Statement of Stockholders Equity 4
Consolidated Statements of Cash Flows nine months
Ended September 30, 2001
and September 30, 2000 5
Notes to Consolidated Financial Statements 6
Item 2. Managements Discussion and Analysis and
Result of Operations 7-8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Security 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matter to a Vote of 8
Securities Holders
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures S-1
ii
PART 1 FINANCIAL INFORMATION
Item 1. Financial Statement
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of September 30, 2001, and
the related audited balance sheet of the Company as of December 31, 2000, the
unaudited statement of operations and cash flows for the nine months ended
September 30, 2001 and 2000 the audited statements of stockholders equity for
the period from December 31, 1998 through December 31, 2000 and the unaudited
Statement of Stock Holders Equity for the period of January 1, 2001 through
September 30, 2001 are attached hereto and incorporated herein by this
reference.
Operating results for the quarters ended September 30, 2001 are not
necessarily indicative of the results that can be expected for the year ending
December 31, 2001.
NICHOLAS INVESTMENT COMPANY
FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000
1
NICHOLAS INVESTMENT COMPANY
Balance Sheets
ASSETS
September 30, December 31,
2001 2000
(Unaudited)
CURRENT ASSETS
Cash$ 18,280 $ 47,338
Total Current Assets 18,280 47,338
PROPERTY - NET 531,911 538,561
TOTAL ASSETS $550,191 $585,899
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,382 $ 2,115
Accrued expenses 23,000 40,000
Notes payable, current portion 9,961 9,242
Total Current Liabilities 34,343 51,357
LONG-TERM LIABILITIES
Notes payable 445,483 453,093
Total Long-Term Liabilities 445,483 453,093
Total Liabilities 479,826 504,450
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERs EQUITY
Common stock: $0.001 par value,
authorized 100,000,000
shares; 11,345,250 shares issued
and outstanding 11,345 11,345
Additional paid-in capital 374,371 374,371
Accumulated deficit (315,351) (304,267)
Total Stockholders Equity 70,365 81,449
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 550,191 $ 585,899
NICHOLAS INVESTMENT COMPANY
Statements of Operations
(Unaudited)
For the
Three Months Ended
September 30,
2001 2000
REVENUES
Rental revenue $ 13,400 $ 11,825
Total Revenues 13,400 11,825
OPERATING COSTS
Amortization and depreciation 2,217 2,217
General and administration 1,325 5,827
Total Operating Costs 3,542 8,044
INCOME (LOSS) FROM OPERATIONS 9,858 3,781
OTHER EXPENSE
Interest expense 8,994 8,665
Total Other Expense 8,994 8,665
INCOME (LOSS) BEFORE TAXES 864 (4,884)
INCOME TAX EXPENSE - -
NET INCOME (LOSS) $ 864 $ (4,884)
BASIC INCOME (LOSS) PER
COMMON SHARE $ 0.00 $ (0.00)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 11,345,250 11,345,250
For the
Nine Months Ended
September 30,
2001 2000
REVENUES
Rental revenue $ 37,415 $ 36,253
Total Revenues 37,415 36,253
OPERATING COSTS
Amortization and depreciation 6,650 6,650
General and administration 14,499 15,249
Total Operating Costs 21,149 21,899
INCOME (LOSS) FROM OPERATIONS 16,266 14,354
OTHER EXPENSE
Interest expense 27,350 25,786
Total Other Expense 27,350 25,786
INCOME (LOSS) BEFORE TAXES (11,084) (11,432)
INCOME TAX EXPENSE - -
NET INCOME (LOSS) $ (11,084) $ (11,432)
BASIC INCOME (LOSS) PER
COMMON SHARE $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 11,345,250 11,192,695
The accompanying notes are an integral part of these financial statements
NICHOLAS INVESTMENT COMPANY, INC.
Statements of Stockholders Equity
Common Stock
Shares Amount
Balance, December 31, 1999 10,795,250 $ 10,795
March 16, 2000 common stock
issued at $0.20 per share for
conversion of related party debt 550,000 550
Net loss for the year ended
December 31, 2000 - -
Balance, December 31, 2000 11,345,250 11,345
Net loss for the nine months
ended September 30, 2001
(unaudited) - -
Balance, September 30, 2001
(unaudited) 11,345,250 $ 11,345
Additional
Paid-In Accumulated
Capital Deficit
Balance, December 31, 1999 $ 264,921 $(218,520)
March 16, 2000 common stock
issued at $0.20 per share for
conversion of related party debt 109,450 -
Net loss for the year ended
December 31, 2000 - (85,747)
Balance, December 31, 2000 374,371 (304,267)
Net loss for the nine months
ended September 30, 2001
(unaudited) - (11,084)
Balance, September 30, 2001
(unaudited) $ 374,371 $(315,351)
The accompanying notes are an integral part of these financial statements
NICHOLAS INVESTMENT COMPANY, INC.
Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from operations $ (11,084) $ (11,432)
Adjustments to reconcile net
income to net cash used by operating
activities:
Amortization and depreciation expense 6,650 6,650
Changes in operating assets and liabilities:
(Increase) decrease in accounts payable (733) 3,217
Decrease in accrued expenses (17,000) (1,306)
Increase in security deposit - 1,100
Net Cash Provided (Used) by
Operating Activities (22,167) (1,771)
CASH FLOWS FROM INVESTING ACTIVITIES - -
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments in long-term debt (6,891) (3,270)
Net Cash Provided (Used) by
Financing Activities (6,891) (3,270)
DECREASE IN CASH AND
CASH EQUIVALENTS (29,058) (5,041)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 47,338 15,491
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 18,280 $ 10,450
Cash paid for:
Interest $ 18,356 $ 25,786
Income tax $ - $ -
Non-Cash Financing Activities:
Common stock issued for
conversion of debt $ - $ 110,000
The accompanying notes are an integral part of these financial statements
NICHOLAS INVESTMENT COMPANY, INC.
Notes to the Financial Statements
September 30, 2001 and December 31, 2000
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in accordance with such
rules and regulations. The information furnished in the interim condensed
consolidated financial statements include normal recurring adjustments and
reflects all adjustments, which, in the opinion of management, are necessary for
a fair presentation of such financial statements. Although management believes
the disclosures and information presented are adequate to make the information
not misleading, it is suggested that these interim condensed consolidated
financial statements be read in conjunction with the Companys most recent
audited financial statements and notes thereto included in its December 31, 2000
Annual Report on Form 10-KSB. Operating results for the nine months ended
September 30, 2001 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001.
NOTE 2 - GOING CONCERN
The Companys financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other material
assets, nor does it have an established source of revenues sufficient to cover
its operating costs and to allow it to continue as a going concern. It is the
intent of the Company to complete a limited offering of its common stock. In the
interim, shareholders of the Company have committed to meeting its minimal
operating expenses; however, there can be no assurance that the plans of
management will prove successful.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Going Concern and Ability of the Company to Continue
The Company had a net operating loss carry forward of $315,351 since
inception through September 30, 2001.
The Companys consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues sufficient to cover its
operating costs and allow it to continue as a going concern. Management believes
that the Company will soon be able to generate revenues sufficient to cover its
operating costs. In the interim, the Company intends to raise additional capital
through private placements of its common stock.
Liquidity and Capital Resources
As of September 30, 2001 the Company had total current assets of $18,280.
The current assets aree comprised of $18,280 in cash. The Company is involved in
a best efforts financing in order to increase the Companys liquidity and capital
resources.
Results of Operations
For the three months ended September 20, 2001 the company had revenues of
$13,400, operating costs of $3,542, interest expense of $8,994 and net income of
$864. This is compared to revenues of $11,825, operational costs of $8,044,
interest expense of $8,665 and a net loss of $(4,884) for the same period of
2000.
For the nine months ended September 30, 2001 the Company had revenues of
$37,415, operating costs of $21,149, interest expense of $27,350 and a net loss
of $(11,084). This is compared to revenues of $36,253, operating costs of
$21,889, interest expense of $25,786 and a net loss of $(11,432) for the same
period of 2000.
Net Operating Loss
The Company has accumulated approximately $316,214 of net operating losses
carryforwards as of June 30, 2001, which maybe offset against taxable income and
income taxes in future years. The use of these to losses to reduce future income
taxes will depend on the generation of sufficient taxable income prior to the
expiration of the net loss carryforwards. The carryforwards expire in the year
2016. In the event of certain changes in control of the Company, there will be
an annual limitation on the amount of carryforwards, which can be used.
7
Sale of Common Capital Stock
None.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company wished to advise readers that actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those expressed on or implied by the statements, including, but not limited to,
the following: the ability of the Company to successfully meet its cash and
working capital needs, the ability of the Company to successfully market its
product, and other risks detailed in the Companys periodic report filings with
the Securities and Exchange Commission.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITES
None.
ITEM 4. SUBMISSION OF MATTERS TO BE A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
The Company cleared its 10SB with the SEC on May 17, 2001.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. Form 10QSB filed by reference on August 14, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed in its behalf by the
undersigned hereto duly authorized.
NICHOLAS INVESTMENT COMPANY INC.
Dated: November 8, 2001
By:/S/ John Kirchner
John Kirchner
President
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