3
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 March 31, 2002
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 March 31, 2002
Common Stock, $0.001 11,345,250
i
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Heading Page
Item 1. Consolidated Financial Statements 1
Consolidated Balance Sheets March 31, 2002
And December 31, 2001 2
Consolidated Statements of Operations three months
Ended March 31, 2002 and March 31, 2001 3
Consolidated Statement of Stockholders Equity 4
Consolidated Statements of Cash Flows three months
Ended March 31, 2002 and 2001 5
Notes to Consolidated Financial Statements 6
Item 2. Managements Discussion and Analysis and
Results 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 March 31, 2002, and the
balance sheet of the Company as of December 31, 2001, derived from the Companys
audited financial statements and the unaudited statement of operations and cash
flows for the three months ended March 31, 2002 and 2001, the statements of
stockholders equity for the period from December 31, 1999 through March 31, 2002
are attached hereto and incorporated herein by this reference.
Operating results for the quarters ended March 31, 2002 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2002.
NICHOLAS INVESTMENT COMPANY
FINANCIAL STATEMENTS
March 31, 2002 and December 31, 2001
NICHOLAS INVESTMENT COMPANY
Balance Sheets
ASSETS
March 31, December 31,
2002 2001
(Unaudited)
CURRENT ASSETS
Cash$ 8,257 $ 15,573
Prepaid interest 1,548 -
Accounts receivable 1,000 -
Total Current Assets 10,805 15,573
PROPERTY - NET 529,063 529,582
TOTAL ASSETS $ 539,868 $ 545,155
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,021 $ 1,537
Accrued expenses 23,000 23,000
Notes payable, current
portion 4,314 5,681
Notes payable, current
portion (related party) 1,303 2,187
Total Current Liabilities 30,638 32,405
LONG-TERM LIABILITIES
Notes payable (related party) 295,410 295,410
Notes payable 155,491 155,491
Total Long-Term
Liabilities 450,901 450,901
Total Liabilities 481,539 483,306
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 (327,387) (323,867)
Total Stockholders
Equity 58,329 61,849
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 539,868 $ 545,155
The accompanying notes are an integral part of these financial statements.
NICHOLAS INVESTMENT COMPANY
Statements of Operations
(Unaudited)
For the Three Months Ended
March 31,
2002 2001
REVENUES
Rental revenue $ 13,675 $ 11,765
Total Revenues 13,675 11,765
OPERATING COSTS
Amortization and depreciation 2,330 2,217
General and administrative 4,303 6,593
Total Operating Costs 6,633 8,810
INCOME FROM OPERATIONS 7,042 2,955
OTHER EXPENSE
Interest expense 10,562 9,684
Total Other Expense 10,562 9,684
LOSS BEFORE TAXES (3,520) (6,729)
INCOME TAX EXPENSE - -
NET LOSS $ (3,520) $ (6,729)
BASIC LOSS PER
COMMON SHARE $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 11,345,250 11,345,250
The accompanying notes are an integral part of these financial statements.
NICHOLAS INVESTMENT COMPANY
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 year ended
December 31, 2001 - -
Balance, December 31, 2001 11,345,250 11,345
Net loss for the three months
ended March 31, 2002
(unaudited) - -
Balance, March 31, 2002
(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 year ended
December 31, 2001 - (19,600)
Balance, December 31, 2001 374,371 (323,867)
Net loss for the three months
ended March 31, 2002
(unaudited) - (3,520)
Balance, March 31, 2002
(unaudited) $ 374,371 $(327,387)
The accompanying notes are an integral part of these financial statements.
NICHOLAS INVESTMENT COMPANY
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from operations $ (3,520) $ (6,729)
Adjustments to reconcile
net income to net cash used
by operating activities:
Amortization and
epreciation expense 2,330 2,217
Changes in operating
assets and liabilities:
(Increase) in accounts
receivable (1,000) -
Decrease in accounts
payable 486 2,092
Decrease in accrued
expenses - (10,000)
(Increase) in prepaid
interest (1,548) -
Net Cash (Used) by
Operating Activities (3,252) (12,420)
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvement of
property (1,811) -
Net Cash Used by
Investing Activities (1,811) -
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments in
long-term debt (2,253) (1,279)
Net Cash (Used) by
Financing Activities (2,253) (1,279)
(DECREASE) IN CASH (7,316) (13,699)
CASH AT BEGINNING OF PERIOD 15,573 47,338
CASH AT END OF PERIOD $ 8,257 $ 33,639
Cash paid for:
Interest $ 10,562 $ 9,684
Income taxes $ $ -
Non-Cash Financing
Activities:
The accompanying notes are an integral part of these financial statements.
NICHOLAS INVESTMENT COMPANY
Notes to the Financial Statements
March 31, 2002 and December 31, 2001
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, 2001
Annual Report on Form 10-KSB. Operating results for the three months ended March
31, 2002 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2002.
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.
NOTE 3 - SUBSEQUENT EVENT
On April 1, 2002, the Company entered into an agreement with Virgin Lakes
Development Corp., in which the Company bought 100% of the equity interest
(common stock) of Virgin Lakes Development Corp., in exchange for 6,000,000
shares of the Companys common stock. Further information can be found in the
Companys 8-K dated April 15, 2002.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Going Concern and Ability of the Company to Continue
The Company has a net operating loss carry forward of $327,387 since
inception through March 31, 2002.
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 March 31, 2002 the Company has $10,805 in total current assets
compared to total current assets of $ 15,573 for the same period of 2001. The
current assets are comprised of $8,257 in cash, $1,000 in accounts receivable
and $1,548 in prepaid expenses. The Company has total current liabilities of
$30,638 as of March 31, 2002 compared to current liabilities of $32,405 for the
same period of 2001. The current liabilities are comprised of $ 25,021 in
accrued expenses, $ 4,314 in current portion of mortgages payable and $1,303 in
current portion of notes due to a related party. The Company is involved in a
best efforts financing in order to increase the Companys liquidity and capital
resources.
Results of Operations
For the first quarter ended March 31, 2002 the Company had revenues of
$13,675 and expenses of $17,195 compared to revenues of $11,765 and expenses of
$18,494 as of March 31, 2001. The reason for the increase in revenues is due to
the fact that the Company had a vacancy for one month in one of its properties
in the first quarter of 2001. General and Administrative expense dropped $2,090
when compared to the same period the year before. Interest expense increased $
878 for the three months ended March 31, 2002 compared to the same period the
year before because of a second mortgage that was taken out on the Manos
property in the second half of 2001.
Net Operating Loss
The Company has accumulated approximately $327,387 of net operating losses
carryforwards as of March 31, 2002, 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 2022. 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.
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
None.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
a. Form 10SBA filed by reference on March 7, 2001.
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: May 13, 2002
By:/S/ John Kirchner
John Kirchner
President
S-1