U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________________
TO ____________________.
Nicole Industries, Inc.
-----------------------
(Name of Small Business Issuer as specified in its charter)
NEVADA 000-27079 68-0422343
------ ------- ----------
(State or other jurisdiction of SEC File (I.R.S. incorporation or
organization) Number Employer I.D. No.)
83-888 Ave. 51
Coachella, CA 92236
---------------------------
(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (760) 398-9700
Indicate by check mark whether the Registrant (i) 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 (of for such
shorter period that the Registrant was
required to file such reports) and (ii) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable
date.
Common Stock $0.001 par value 100,000,000
----------------------------------------------------------
No Exhibits Included.
General
The condensed consolidated financial statements of Nicole Industries, Inc.
included herein, have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Although certain
information normally included in financial statements prepared in accordance
with generally accepted accounting principles has been condensed or omitted,
Nicole Industries, Inc.'s management believes that the disclosures are
adequate to make the information presented not misleading. The condensed
financial statements for the three and nine months ended September 30, 2000
should be read in conjunction with the financial statements and notes thereto
included in this report and Nicole Industries, Inc.'s Form 10-KSB with
attached financials of December 31, 1999.
The condensed financial statements included herein reflect all normal
recurring adjustments that, in the opinion of management, are necessary for
a fair presentation. The results for the interim period are not necessarily
indicative of trends or results to be expected for a full year.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL
CONDITION
The Company has not commenced operations and has no working capital. The
Company's principal asset is its indirect stock interest in Aluminum Korea
Co. Ltd., a corporation organized under the laws of Korea ("Aluko Korea"). The
financial information provided with this Report reflects the consolidated
financial information for the Company and Aluko Korea.
Item 3. Agreement and Plan of Reorganization
On July 21, 2000 the company agreed to issue 93,000,000 shares of its common
stock to Aluko USA, a Delaware Corporation, against the delivery of
31,627,075 shares of common stock of Aluminum Korea Co. Ltd., a corporation
organized under the laws of Korea ("Aluko Korea"). The shares of the common
stock of Aluko Korea owned by the company represent 50.01% of the issued and
outstanding voting stock of Aluko Korea. As a result of the company's
stock issuance, Aluko USA will own 93% of the outstanding stock of the company.
Aluko Korea was founded in 1986 and is the largest manufacturer in Korea of
etched and formed aluminum foils in electrolytic capacitors. Etched and
formed aluminum foil is an essential raw material for electrolytic capacitors.
On July 21, 2000 , and in connection with the company's issuance of the shares
of common stock to Aluko USA, Dempsey K. Mork and Randall A. Baker, the two
existing officers and directors of the company appointed the successor
officers and directors and then resigned. The newly appointed directors of
the company are Ju Young Park and Min-Kyung Park.
Mr. Ju Young Park is President and Chief Executive Officer of the company.
Mr. Park is a founder and the President of Aluko Korea. He received his
Bachelor of Science degree in mechanical engineering from Hanyang University
in South Korea. Prior to founding Aluko Korea, Mr. Park worked for seventeen
years with Daewo Electronics Corporation. Prior to leaving Daewo Electronics,
Mr. Park was General Manager in charge of its Research and Development.
Ms. Min-Kyung Park is the Chief Financial Officer and Secretary of the
company. She joined Aluko Korea in 1999. She graduated from Iwho Women's
University in Korea and studied at Oregon State University.
Company Overview
Through its operating company named Aluko that was founded in 1986, the
company has been a leading manufacturer of etched and formed aluminum foils.
The company is ISO9002 certified to meet the world standard. Aluminum foil is
a main raw material for electrolytic capacitors that are commonly used for
both industrial and household electronics. Aluko is a fast growing company in a
very stable market environment because of the extensive usage of capacitors in
all electronics.
Products
Etched aluminum foils: Cathode foils, Anode foils, Formed aluminum foils
Selective List of Customers
Japan: Sanyo, Matsushita, Hitachi, Elna
Europe: Siemens, Philips, Aerovox
Korea: Samsung, Daewoo.
Others Countries: Taiwan, China, Hong Kong, Singapore, India,
Product Description
Etched and formed aluminum foil is essential to electrolytic capacitors as a
raw material. By charging and discharging electricity, the capacitor is a
primary passive component in electrical circuits including resistors and
inductors. In order to obtain a higher electric charge, the capacitor
must have a higher capacitance, which can be established by enlarging the
surface area of the electrode material. An etching process is the solution
technique used toenlarge the surface area of aluminum foil. After etching
has been completed, the aluminum foil surface is then laminated with
a hydro-oxide layer through the forming process.
Market Forecasting
Electrolytic capacitors account for 25% of the global capacitor market.
According to Yano Economic Research, the market is expected to grow 8.3%
annually over the next 5 consecutive years with the explosive demand of
digital equipments. The aluminum foil
market will show the similar growth rate as capacitor market since there is
strong correlation between two products. Total sales of electrolytic
aluminum capacitors recorded around $3.2 billion in 1999. Total sales of
cathode foils was $104 million in 1999 and that of anode foils was $1.1 billion.
Profitability & Market Environments
Regardless of high profitability, entrance barriers to the business remain as
high due to the technological difficulties in the manufacturing processes.
Aluko currently enjoys around 22.4% average gross margin rate with
approximately 10% net profit while competitors reach 15.8% of gross margin.
Through its continuous cost-reducing measures and superior technological
innovation and improvement in quality, Aluko is planning to expand its
production capacity to reach 15% market share in the world within the next
3 years.
In Asia, Aluko is able to maintain its competitiveness against Japanese and
European counterparts through superior quality and price advantages.
Chinese and Taiwanese aluminum foil makers are not expected to pose a serious
threat to Aluko in terms of product quality.
Aluko is steadily gaining market share from Japanese competitors. Currently,
Aluko is a major supplier of cathode foils to Japanese capacitor manufacturers.
Since 1994, Sanyo has been purchasing 90% of its essential cathode foils
from Aluko and Hitachi began to fill 50% of its needs from Aluko in 1996.
Matsushita designated Aluko as its priority-order supplier in 1999. Elna is also
increasing its volume of business with Aluko.
Philips, a Dutch multinational, has been Aluko's customer for 10 years.
Siemens in Germany and Aerovox in England use Aluko's products after Aluko
successfully passed their quality test. The U.S. market is getting more
attention because high quality capacitors are in great demand for
HDTV and electric vehicles. Japanese capacitor makers, such as Matsushita and
Chemi-Con, have begun local production in the U.S. Aluko will make further
inroads into the U.S. by supplying products to Matsushita New Demand
Accumulated production of HDTV by 2010 is expected to be 207,754,000 units
according to forecasting by the American Electronics Association. Since HDTV
requires 3 times more capacitors than conventional TV, the business potential
for aluminum foils manufacturers is enormous. The introduction of electric
and/or hybrid vehicle will boost up the demand of electrolytic capacitors
even further. Because an electric vehicle consumes 30 times more capacitor
than conventional TV sets, it is expected that the demand of aluminum foils
will increase accordingly.
Recent development of Nicole's Korean Subsidiary
Aluko (Korea) execute stock assignment for the acquisition of Daewoo
Electronic Components
To accomplish a more rapid and strategic growth, Aluko participated in
investment opportunity to acquire the major stake of Daewoo Electronic
components Co. Ltd. in May 2000. Through an open bidding, the consortium led
by Aluko became the only preferred candidate and "Memorandum of Understanding"
was signed in August by which shall form the basis for the acquisition.
On October 27,2000 Daewoo Electronic components' creditors union unanimously
decided Aluko's consortium as a new owner of the company. Aluko currently
has about 90% interest of the consortium . On November 1,2000 Aluko and
selling party reached the definitive stock assignment for the acquisition
transaction of Daewoo Electronic Components. Total purchasing price,
representing the 24% stake of Daewoo Electronic Components, is 15.3 billion
Korean Won or 13.5 million US Dollars and will be paid by Feb.2001.
Overview of Daewoo Electronic Components Co.
The company is a major electronic component manufacturer in South Korea.
Established in 1973 as an aluminum electronic capacitor manufacturer, the
company has successfully expanded its business into a wide range of
electronic components. In 1985, the company became the first South Korean
domestic company to manufacture tantalum solid electrolytic capacitors.
Currently, the company operates 3 production sites in South Korea and several
overseas affiliates including active subsidiaries in the UK, China, Mexico
and Vietnam. The company's sales revenue before consolidation amounted to
KRW 262.3 billion or USD 231 million and total assets equaled KRW 284.8
billion or USD 251million as of December 31, 1999. The company has been
listed on the KSE (Korean Stock Exchange) since 1989.
The company produces diversified range of electronic components for both
traditional electronics industries segment and fast growing hi-tech sectors
such as entertainment, information and telecommunication industries. The
company has successfully developed DY, FBT and E/T in several versions for
HDTVs, wide-screen, flat-surface and LCD TVs. Especially, TA, CE and HIC are
core components used in high-tech communications hardware, personal computers,
and automobile parts, which is predicted to grow substantially in ver near
the future.
Official Name Change
Aluko's registered official name in Korea used to be Aluminum Korea. However,
it has been widely called as Aluko by general public and investors. To match
with the public recognition, Aluko's Board of Directors approved the change of
its official company name from Aluminum Korea Co. Ltd to Aluko Co., Ltd on
September 15, 2000. The company's logo that was originally designed from the
letter "ALUKO " will remain unchanged.
Reverse Split of Aluko (Korea) Stock
Due to Aluko shareholders' demand, the Board of Director approved 1 for 5
reverse split. By this decision, the par value of the common stock is changed
from KRW 100 to KRW 500 and the number of authorized common stock was
changed from 100,000,000 shares to 20,000,000 shares and the outstanding
common stocks was also changed from 63,241,500 shares to 12,648,300 shares.
The reverse split was announced and became effective as of November 1,
2000. Accordingly, the number of the shares that IAT, WOS of Nicole, holds has
been adjusted from 31,627,075 to 6,325,415.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
On August 4, 2000, the company filed an 8-K to report the Agreement and
Plan of Reorganization between the company and Aluko USA, Inc.
On October 5, 2000, the company filed an amendment to the 8-K filed
August 4, 2000, which included the company's financial statements relating
to the Agreement and Plan of Reorganization between the company and Aluko
USA, Inc. and information on Aluko Korea.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Nicole Industries, Inc.
Date: 11/19/2000 By: /s/ Ju Young Park
---------- ------------------------
Ju Young Park, President
Nicole Industries, Inc.
Consolidated Balance Sheet
(Unaudited)
09/30/200012/31/1999
----------------------
ASSETS
Cash and bank deposits 5,170,127 1,349
Marketable securities 4,221,496 -0-
Accounts and notes receivable 4,161,461 -0-
Inventories 4,695,761 -0-
Short-term loans 169,767 -0-
Prepaid expenses
and other current assets 2,059,961 -0-
Investments in securities 6,011,738 -0-
Land 1,875,338 -0-
Buildings and structures 2,886,107 -0-
Machinery and equipment 4,743,529 -0-
Transportation equipment,
tools and furniture 234,279 -0-
Construction in-progress 3,171,265 -0-
Long-term Loan -0- -0-
Other assets and deferred charges234,555 -0-
-------- --------
Total assets 39,635,384 1,349
========== =====
LIABILITIES
Short-term borrowings 18,871,526 -0-
Accounts and notes payable 3,011,299 -0-
Accrued liabilities 794,357 -0-
Other current liabilities 64,420 -0-
Current portion of
long-term debt 445,637 -0-
Long-term debt, less
current portion 1,760,182 40,000
Severance and retirement
benefits 665,865 -0-
Other liabilities 2,324,350 -0-
-------- --------
Total liabilities 27,937,636 40,000
Minority interest 5,778,636 -0-
STOCKHOLDER'S EQUITY
Common stock 100,000 1,385
Capital surplus 5,696,150 -0-
Retained earnings 116,982 (40,036)
Accumulated other
comprehensive income(loss) 5,980 -0-
----------- --------
Total stockholders' equity 5,919,112 (38,651)
Total liabilities and
stockholders' equity 39,635,384 1,349
========== =====
Nicole Industries, Inc.
Consolidated Statement of Income and Retained Earnings
(Unaudited)
3months ended9months ended
09/30/200009/30/2000
----------------------
Sales 5,753,961 5,753,961
Cost of goods 4,335,779 4,335,779
----------------------
Gross Margin 1,418,182 1,418,182
Selling, general and
administrative expenses 793,856 803,931
----------------------
Operating income 624,325 614,250
Non-operating income
Interest income 37,579 37,579
Realized foreign currency
translation gains 13,297 13,297
Other 28,188 28,188
----------------------
79,065 79,065
Non-operating expenses
Interest expense 232,966 232,966
Realized foreign currency
translation loss 15,065 15,065
Other 25,526 25,526
----------------------
273,557 273,557
----------------------
Income before income taxes 429,833 419,758
Provision for income taxes 50,578 50,578
Minority Income 212,163 212,163
----------------------
Net income 167,093 157,018
========== ========
Beginning Retained Earnings (50,111) (40,036)
----------------------
Ending Retained Earnings 116,982 116,982
Nicole Industries, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
9 months ended9 months ended
09/30/200009/30/1999
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 157,018 (20)
Net adjustment to reconcile
net cash used 514,215 -0-
----------------------
NET CASH FLOWS FROM
OPERATING ACTIVITIES 671,233 (20)
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs (269,392) -0-
Retirement of long-term
borrowing (5,010,332) -0-
----------------------
NET CASH FLOWS FROM
INVESTING ACTIVITIES (5,279,724) -0-
CASH FLOWS FROM FINANCING ACTIVITIES
ISSUE CAPITAL STOCK 282,595 -0-
CASH OF SUBSIDIARY(7/31) 3,595,059 -0-
New Borrowing 5,899,615 -0-
----------------------
NET CASH FLOWS FROM
FINANCING ACTIVITIES 9,777,269 -0-
NET INCREASE IN CASH 5,168,778 (20)
CASH AT BEGINNING OF YEAR 1,349 1,369
----------------------
CASH AT ENDING OF YEAR 5,170,127 1,349
NICOLE INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Nicole Industries, Inc. was organized under the laws of the State of Nevada on
January 3, 1996. The Company was incorporated primarily to engage in any
lawful activity.
Principles of Consolidation
Subsidiary companies in which we directly or indirectly own more than 50% of
the outstanding voting securities are generally accounted for under the
consolidation method of accounting. Under this method, the subsidiary
company's assets and results of operations are reflected within our
Consolidated Balance Sheet and Consolidated Statements of Operations.
Participation of other shareholders in the earnings or losses of a
consolidated subsidiary company is reflected in the caption "Minority interest"
or "Minority income" in our Consolidated financial Statements. The minority
interest (balance sheet) and minority income (statement of operations) items
adjust our consolidated financial statements so that they reflect only
our share of the earnings or losses of the consolidated subsidiary company.
The effect of a subsidiary company's net results of operations on our net
results of operations is generally the same under either the consolidation
method of accounting or the equity method of accounting, because under each
of these methods only our share of the earnings or losses of a subsidiary
company is reflected in our net results of operations in the
Consolidated Statements of Operations.
Aluminum Korea Co. Ltd. is the only subsidiary which is included in our
Consolidated Financial Statements under this consolidated method of reporting.
NOTE 2 STOCK TRANSACTIONS
The Articles of Incorporation authorized the Company to issue up to 25,000
shares of capital stock at no par value.
On May 15, 1996, 16,001 shares were issued to individuals in return for
services rendered.
On October 6, 1998, the Articles of Incorporation were amended to authorize
the Company to issue 100,000,000 shares of capital stock, at a par value of
$.001.
On October 15, 1998, the Board of Directors issued a 39 to 1 forward split of
its capital stock shares.
On December 15, 1998, the Board of Directors agreed to sell up to 1,500,000
shares of its common stock at the stated par value of $.001.
As of December 31, 1998, 1,993,039 shares of common stock were issued and
outstanding.
On July 11, 2000, Nicole Industries, Inc, entered into an agreement and plan
of reorganization. Under the agreement, it issued 93,000,000 shares of
common stock to the owners of Aluko USA, Inc., a Delaware Corporation, in
return for all outstanding shares of Aluko, USA, Inc. Aluko, USA, Inc.
through its wholly owned subsidiary, IAT Korea, Inc. owns 50.01% of Aluko,
Korea. Please see additional information in Note .
NOTE 3 RELATED PARTY TRANSACTIONS
On May 15, 1996, shares of capital stock were issued to individuals in return
for services rendered. These individuals include officers of the corporation.
Beginning in 1996, the corporation issued a note payable to the President of
the Corporation in the amount of $10,000 each year. The note was in payment
for administrative expenses paid on behalf of the corporation by the President.
This transaction was not recorded in prior years. Accordingly a prior period
adjustment in the amount of $40,000 is made.
NOTE 4 INVESTMENT IN WHOLLY OWNED SUBSIDIARY
As of June 11, 2000, the corporation acquired a wholly owned subsidiary, IAT,
Korea. IAT Korea owns 50.01% share in Aluko, Korea, a Korean Manufacturer of
electrolytic capacitors. The investment in IAT Korea is maintained on the
equity method of accounting.
