FORM 10-SB/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under section 12(b) or (g) of the Securities Exchange Act of 1934
NICHOLAS INVESTMENT COMPANY, INC.
(Name of small business issuer in its charter)
NEVADA 33-0788293
(States of other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3838 Camino Del Rio No. Suite # 333, San Diego, CA. 92108
(Address of principal executive offices) (Zip Code)
Issuers telephone number (619) 421-5492
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
to be so registered each class is to be registered
N/A N/A
Securities registered under Section 12 (g) of the Exchange Act:
Common stock, par value $.001 per share
(Title of class)
(Title of class)
At December 31, 1999, the aggregate market value of the voting stock held
by non affiliates is undeterminable and is considered to be 0.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of December 31,1999, the registrant had 10,795,250 shares of common
stock issued and outstanding. As of September 30, 2000 the registrant had
11,345,250 shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
part of the form 10-KSB (e.g., part I, part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) any proxy or other
information statement; and (3) Any prospectus filed pursuant to rule 424 (b) or
(c ) under the Securities Act of 1933: None
NICHOLAS INVESTMENT COMPANY, INC.
FORM 10 - SB/A
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business . . . . .4
ITEM 2. Managements Discussion and Analysis or Plan of Operation . 5
ITEM 3. Description of Property . . . . . . . . . . . . . 8-9
ITEM 4. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . 9-10
ITEM 5. Directors, Executive Officers, Promoters and
Control Persons . . . . . . . . . . . . . . 10-11
ITEM 6. Executive Compensation . . . . . . . . . . . 11
ITEM 7. Certain Relationships and Related Transactions . . 11-12
ITEM 8. Description of Securities. . . . . . . . . . . . . 12
PART II
ITEM 1. Market Price of and Dividends on Registrants Common Equity and
Other Shareholder Matters . . . . . . . . . 12-13
ITEM 2. Legal Proceedings . . . . . . . . . . . . . . . . . 14
ITEM 3. Changes in and Disagreements with Accountants . . . . 14
ITEM 4. Recent Sales of Unregistered Securities . . . . . . . 14
ITEM 5. Indemnification of Directors and Officers . . . . . . 15-16
PART F / S
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 17-46
PART III
ITEM 1. Index to Exhibits . . . . . . . . . . . . . . . . S- 1
ITEM 2. Description of Exhibits . . . . . . . . . . . . . S- 1
Signatures . . . . . . . . . . . . . . . . . . . S- 2
FORM 10 - SB
PART I
ITEM 1. Description of Business
Nicholas Investment Company, Inc. (the Company) was incorporated under the
laws of Nevada on January 22, 1998, as a start up enterprise, to engage in any
lawful activity as shall be appropriate under laws of the State of Nevada.
Primarily, the Company is in the business of acquiring and leasing real estate.
The Company raised $202,800.00 in 1998 and purchased four single family
dwellings.
The Company was formed to invest in Real Estate, own rental properties,
notes secured by deeds of trust(s), discounted notes, or smaller properties
ready for development. Rental income, note and trust deed receipts, and
occasional rental property and development property sales will be the primary
source of income.
The goal of the company is to own rental properties free and clear as funds
become available. With no or reduced mortgages to pay for bank loans charging
interest and fees, these funds become fully available to the company. Rental
income is the main source of funds, without mortgages these monies become fully
available to the company minus the normal costs of maintenance, repairs and
management.
The initial portfolio consists of smaller rental properties, single family
homes. Smaller properties when free and clear of debt, are easier to sell when
and if desired and are usually easier to acquire. Being free and clear or debt
these properties will not be severely affected by the effects of cyclic
recessions. The company has acquired four single family residential properties.
All four properties are rented with a gross monthly rental income of $ 3,775.00.
The purchase price of all four units was $ 558,000.00 and are subject to $
398,549.00 in unpaid mortgages.
Marketing
Marketing is the function of John N. Kirchner, the Companys President. The
marketing consists of negotiating terms when purchasing, leasing, and/or selling
assets owned by the Company.
Research and Development
Research is the function of John N. Kirchner, the Companys President. When
purchasing properties to be utilized by the Company for rental purposes or
resale, market research is required for ascertaining proper rental amounts to be
expected by the Company together with the possibility of an increase in property
values . The Company intends to develop unimproved or raw land in the future
which will require research with Title Insurance Companys as well as
Contractors.
Employees
Presently, the Company has 2 part time employees. Management intends to hire
additional employees only as needed and as funds are available. In such cases
compensation to management and employees will be consistent with prevailing
wages for service rendered.
Facilities
The Company currently has its offices located at 2220 Otay Lakes Rd. #
50295, Eastlake, CA. 91915, furnished by its president.
Legal
The Company is not a party to any material pending legal proceedings and no
such action by, or to the best of its knowledge, against the Company has been
threatened.
ITEM 2. Managements Discussion and Analysis or Plan of Operation
Overview
The Company became incorporated in January 22, 1998 under the laws of the
state of Nevada. The Company was originally organized to invest in real estate,
rental properties, notes secured by deeds of trust(s), discounted notes or
smaller properties ready for development. Company has realized rental revenues
as of the date hereof, management anticipates to increase acquisitions and sales
by the end of fourth quarter or early in the first quarter of 2001.
The Companys current capital was provided by the founders of the Company
and by two private placements for sale of common stock. Management believes that
the Companys cash requirement can be satisfied with existing capital for ninety
days, if sales are sufficient to handle current operating costs.
In the event, outside funding is necessary, the Company will investigate
the possibility of interim financing, either debt or equity, to provide capital.
Although, management has not made any arrangements or definitive agreements, the
Company would consider private funding or the private placements of its
securities and/or a public offering. If the Company experiences a substantial
delay in rental revenues and is unable to secure public financing from the sale
of its securities then mortgage financing would be considered.
The Company has an inventory of four rental properties as herein described.
( a ) 7520 New Salem St. ( c ) 6216 Aagee St. # 126
San Diego, CA. San Diego, CA.
( b ) 9250 Town Center Dr. # 1 ( e ) 2950 Manos Dr.
San Diego, CA. San Diego, CA.
Management does not anticipate hiring additional employees until dictated
by a substantial increase in acquisitions or sales and that is further dependent
on the Company having sufficient capital.
Net Operating Loss
The Company has accumulated approximately $229,952 of net operating loss
carry forwards as of September 30, 2000,, which may be offset against taxable
income and income taxes in future years. The use of these losses to reduce
income taxes will depend on the generation of sufficient taxable income prior to
the expiration of the net operating loss carryforwards. The carryforwards expire
in the year 2015. In the event of certain changes in control of the Company,
there will be an annual limitation on the amount of net operating loss
carryforwards which can be used. No tax benefit has been reported in the
financial statements for the year ended December 31, 1999 or the nine months
ended September 30, 2000.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard (SFAS) No. 128, Earnings Per Share and Statement of
Financial Accounting Standards No. 129 Disclosures of Information About an
Entitys Capital Structure. SFAS No. 128 provides a different method of
calculating earnings per share than is currently used in accordance with
Accounting Principles Board Opinion No. 15, Earnings Per Share. SFAS No. 128
provides for the calculation of Basic and Dilutive earnings per share. Basic
earnings per share includes no dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, similar to
fully diluted earnings per share. SFAS no. 129 establishes standards for
disclosing information about an entitys capital structure. SFAS no. 128 and
SFAS no. 129 are effective for financial statements issued for periods ending
after December 15, 1997. Their implementation is not expected to have a material
effect on the financial statements.
The Financial Accounting Standards Board has also issued SFAS No. 131, No.
130, Reporting Comprehensive Income and SFAS no. 131, Disclosures about
Segments of an Enterprise and Related Information. SFAS No. 130 establishes
standards for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distributors to
owners. Among other disclosures, SFAS no. 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that displays with the
same prominence as other financial statements. SFAS no. 131 supersedes SFAS no.
14 Financial Reporting for Segments of a Business Enterprise. SFAS no. 131
establishes standards on the way that public companies report financial
information abut operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for disclosure
regarding products and services, geographic areas and major customer. SFAS no.
131 defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Because of the recent issuance of the standard,
management has been unable to fully evaluate the impact, if any the standard may
have on future financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation of the
standard.
Inflation
In the opinion of management, inflation will not have a material effect on
the operations of the Company.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward-looking statements.
The Company wishes 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 in or implied by the statements, including, but
not limited to, the following: the ability of the Company to 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.
Results of Operations
A summary of our balance sheets for the years ended December 31, 1998 and
1999 and for interim statements for September 30, 2000 are as follows:
Years Ended Nine Months
December 31, September 30,
1998 1999 2000
Cash/Cash Equivalent $ 31,913 $ 15,491 $ 10,450
Total Current Assets 31,319 15,491 10,450
Total Assets $583,783 558,495 546,804
Current Liabilities $ 10,176 $118,328 $ 11,339
Long Term Liabilities 338,963 382,971 379,701
Total Liabilities $399,139 $501,299 $391,040
Stockholders Equity $184,644 $ 57,196 $155,764
Total Liabilities &
Stockholders Equity $583,783 $558,495 $546,804
The following summarizes the results of the Companys operations for the
years ended December 31, 1998 and 1999 and the interim period September 30,
2000.
From Inception
Nine Months Years Ended January 22,
Ended December 31 1998 through
September 30, 2000 1998 1999 September30, 2000
REVENUES
Rental Income $ 36,253 $ 32,550 $ 46,315 $ 115,178
Total Revenue 36,253 32,550 46,315 115,178
OPERATING COSTS
Amortization &
Depreciation $ 6,650 $ 7,262 $ 8,866 $ 22,778
General &
Administrative 15,249 94,139 132,195 241,583
Total Expense $ 21,899 $ 101,401 $ 141,061 $ 264,361
INCOME (LOSS) FROM
OPERATION $ 14,354 $ (68,851) $ 94,686 $ (149,183)
OTHER EXPENSE
Interest $ 25,786 $ (22,221) $ (32,762) $ 80,769
Loss Before Taxes (11,432) (91,072) (127,448) (229,952)
NET LOSS (11,432) (91,072) (127,448) (229,952)
Basic Loss Per
Common Share (.00) (0.01) (0.01)
Weighted Average
Number Of Common
Shares Outstanding 11,345,250 8,940,570 10,795,250
ITEM 3. Description of Property
The Company owns and leases four (4) properties on San Diego county
California. The properties are as follows:
6216 Agee St., #126, San Diego, CA 92122 condo unit
2 bed, 2 bath 1150 square feet
Purchase price: $125,000.00
Present loan balance: $73,112.78
Annual income: $10,500.00
Loan interest: 8.75%
RE taxes: $1,411.48
P&I Monthly: $600.00
9250 Towne Center Dr. #1, San Diego, CA 92121 condo unit
2 bed, 2 bath 1100 square feet
Purchase price: $130,000.00
Present loan balance: $86,515.70
Annual income: $11,400.00
Loan interest: 7.02%
RE taxes: $1,470.18
P&I monthly: $600.00
7520 New Salem St., San Diego, CA 92126 single family home
3 bed, 2 bath 1450 square feet
Purchase prices: $155,000.00
Present loan balance: $119,588.93
Annual income: $16,200.00
Loan interest: 8.5%
RE taxes: $2,253.88
P&I monthly: $926.55
2952 Manos Dr., San Diego, CA 92139 single family home
Purchase price: $148,000.00
Present loan balance: $110,159.62
Annual income: $13,800.00
Loan interest: 8.69%
RE taxes: $1,533.28
P&I monthly: $889.83
Second trust deed balance: $4,217.68
2nd TD interest rate: 10%
2nd P&I: $100.00
ITEM 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best of the Companys
knowledge, as of August 17, 2000, with respect to each person known by the
Company to own beneficially more than 5% of the outstanding Common Stock, each
director and all directors and officers as a group.
Name and Title of Type of Amount Percentage
Address Class Ownership Shares Owned
John Kirchner Common Beneficial 400,000 3.5%
PO Box 81848
San Diego, CA 92138
Lynn D. Shaeffer Common Beneficial 3,020,836 27%
PO Box 81848
San Diego, CA 92138
Wayne Kirchner Common Beneficial 2,916,666 26%
PO Box 81165
San Diego, CA 92138
Deborah L. Wayne Common Beneficial 2,916,666 26%
PO Box 81165
San Diego, CA 92138
Pfishski Corporation Common Beneficial 400,000 3.5%
3838 Camino Del Rio So. # 333
San Diego, Ca. 92108
Management as a Group 9,354,168 82%
Other 5% Investors
Jonathan MacMillan Common Beneficial 520,833 5%
PO Box 81165
San Diego, CA 92138
Brittany Kirchner Common Beneficial 520,833 5%
PO Box 81165
San Diego, CA 92138
(1) Wife of John Kirchner (2) (3) Son and daughter of John Kirchner (4) Pfishski
Corporation is controlled by John Kirchner (5)Grandson of John Kirchner (6)
granddaughter of John Kirchner. Management as a group together with Jonathan
MacMillan (4) and Brittany Kirchner (5) represent 92% of outstanding common
shares of the Company.
The above percentages are based on 11,345,250 outstanding common shares as
of September 30, 2000.
ITEM 5. Directors, Executive Officers, Promoters and Control Persons
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name Age Position
John N. Kirchner 66 Chairman, President and CEO
Deborah L. Wayne 47 Vice President, Director
Lynn D. Shaeffer 49 Secretary/Treasures, Director
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. Directors will be
elected at the annual meetings to serve for one year terms. There are no
agreements with respect to the election of directors. The Company has not
compensated its directors for service on the Board of Directors or any committee
thereof. Any non-employee director of the Company shall be reimbursed for
expenses incurred for attendance at meetings of the Board of Directors and any
committee of the Board of Directors. The Executive Committee of the Board of
Directors, to the extent permitted under Nevada law, consists of the two
directors and exercises all of the power and authority of the Board of Directors
in the management of the business and affairs of the Company between meetings of
the Board of Directors. Each executive officer is appointed by and serves at the
discretion of the Board of Directors.
None of the officers and/or directors of the Company are officers or
directors of any other publicly traded corporation, nor have any of the
affiliates or promoters of the Company filed any bankruptcy petition, been
convicted in or been the subject of any pending criminal proceedings, or the
subject or any order, judgment, or decree involving the violation of any state
or federal securities laws within the past five years.
The directors will initially devote their time to the Companys affairs on
an as needed basis, the exact amount of which is undetermined at this time. John
N. Kirchner, currently devotes approximately 25 to 30 hours per week to the
Companys business. If the Company begins to generate revenues, the Companys
Vice President, will devote approximately 10 to 15 hours a week primarily as the
Companys property manager. Both persons are prepared to increase the time they
devote to the Company should such a need arise. Presently, there are no other
persons whose activities are material to the Companys operations other than the
Companys corporate counsel.
The business experience of each of the persons listed above during the past
five years is as follows:
John N. Kirchner, is Chairman and President/ CEO of Nicholas Investment
Company. Kirchner has in excess of twenty-five years experience in finance and
real estate. He has held offices as Chairman of the Board of First Western Bank;
Chairman of the Board of Union Land Title Company, President of Dynamic
Investment Company Inc., a real estate development firm, founder and Chairman of
American Thrift and Loan; and President of the San Diego Board of Realtors.
Kirchner has extensive experience in the management and development of real
properties.
Deborah L. Wayne, is Vice President of Nicholas Investment Company and
property manager. Wayne has been a California Real Estate Broker since 1983. Her
main field of experience is rental property management and development of real
properties.
Lynn D. Shaeffer, is Vice President and secretary of Nicholas Investment
Company. Shaeffer graduated from the University of Hawaii in 1973, and has been
a dental hygienist in the San Diego area for many years. Ms. Shaeffer has served
as Vice President of Wayne Financial Inc. and Pfishski Corporation. She has been
instrumental in real estate finance and real estate property management for both
the above companies. Ms. Shaeffer is married to John N. Kirchner the Companies
Chairman and President.
ITEM 6. Executive Compensation
The Company does not have a bonus, profit sharing, or deferred compensation
plan for the benefit of its employees, officers or directors. Since the Companys
inception, it has not paid any salaries or other compensation to its officers,
directors or employees. Further, the Company has not entered into an employment
agreement with any of its officers, directors or any other persons and no such
agreements are anticipated in the immediate future.
ITEM 7. Certain Relationships and Related Transactions
The Companys officers and directors are subject to the doctrine of
corporate opportunities only insofar as it applies to business opportunities in
which the Company has indicated an interest, either through its proposed
business plan or by way of an express statement of interest contained in the
Companys minutes. If directors are presented with business opportunities that
may conflict with business interests identified by the Company, such
opportunities must be promptly disclosed to the Board of Directors and made
available to the Company. In the event the Board shall reject an opportunity so
presented and only in that event, any of the Companys officers and directors
may avail themselves of such an opportunity. Every effort will be made to
resolve any conflicts that may arise in favor of the Company. There can be no
assurance, however, that these efforts will be successful.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.001 per share, of which 10,795,250 shares were issued and outstanding as
of December 31, 1999 and 11,345,250 as of September 30, 2000 respectively. All
shares of Common Stock have equal rights and privileges with respect to voting,
liquidation and dividend rights. Each share of Common Stock entitles the holder
thereof to (i) one non-cumulative vote for each share held of record on all
matters submitted to a vote of the stockholders; (ii) to participate equally and
to receive any and all such dividends as may be declared by the Board of
Directors out of funds legally available therefor; and (iii) to participate pro
rata in any distribution of assets available for distribution upon liquidation
of the Company. Stockholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or any other securities. The Common Stock is
not subject to redemption and carries no subscription or conversion rights. All
outstanding shares of Common Stock are fully paid and non-assessable.
PART II
ITEM 1. Market Price of and Dividends on the Registrants Common Equity and
Other Shareholder Matters
Prior to the filing of this registration statement, no shares of the
Companys Common Stock have been registered with the Securities and Exchange
Commission (the Commission) or any state securities agency of authority. The
Companys Common Stock is eligible to be traded in the over-the-counter market
upon the filing of this Form 10SB and the clearings and comments thereto by the
Commission.
The ability of an individual shareholder to trade their shares in a particular
state may be subject to various rules and regulations of that state. A
number of states require that an issues securities be registered in their
state or appropriately exempted from registration before the securities are
permitted to trade in that state. Presently, the Company has no plans to
register its securities in any particular state. Further, most likely the
Companys shares will be subject to the provisions of Section 15(g) and
Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), commonly referred to as the penny stock rule. Section
15(g) sets forth certain requirements for transactions in penny stocks and
rule 15g-9(d)(1) incorporates the definition of penny stock as that used in
Rule 3a51-1 of the d that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that
has a market price less than $5.00 per share, subject to certain exception. Rule
3a51-1 provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
issuers net tangible assets; or exempted from the definition by the Commission.
If the Companys shares are deemed to be a penny stock, trading in the shares
will be subject to additional sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors, generally persons with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such security and must have
received the purchasers written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker-dealers to
trade and/or maintain a market in the Companys Common Stock and may affect the
ability of shareholders to sell their shares.
As of December 31, 1998 and December 31, 1999 there were 21 shareholders
and as September 30, 2000 there were 35 shareholders respectfully of record of
the Companys Common Stock. Because the Company does not presently trade, no
trading history is presented herein.
As of December 31, 1999 and September 30, 2000, the Company had issued and
outstanding 10,795,250 and 11,345,250 shares respectfully. Of this total,
3,550,000 shares were issued in private transactions in the third and fourth
quarter of 1998. These 3,550,000 shares are deemed restricted securities as
defined by the Act and certificates representing such shares bear an appropriate
restrictive legend. The remaining 4,250,000 shares were issue in December 1998
following the Companys offering pursuant to Regulation D, Rule 504 of the Act.
An additional 178,000 shares were issued, pursuant to Rule 504 in March of 1999.
These 4,428,000 shares do not bear a restrictive legend.
Of the Companys total shares outstanding, 4,428,000 shares may be sold,
transferred or otherwise traded in the public market, should one develop, unless
held by an affiliate or controlling shareholder of the Company. Of these
4,428,000 shares, the Company has identified no shares as being held by
affiliates of the Company.
The 3,550,000 shares considered restricted securities are held presently by
affiliates and/or controlling shareholders of the Company. These shares may be
sold pursuant to Rule 144 in the future, subject to the volume and other
limitations set forth under Rule 144. In general, under Rule 144 as currently in
effect, a person (or persons whose shares are aggregated) who has beneficially
owned restricted shares of the Company for at least one year, including any
person who may be deemed to be an affiliate of the Company (as the term
affiliate is defined under the Act), is entitled to sell, within any three-month
period, an amount of shares that does not exceed the greater of (i) the average
weekly trading volume in the Companys Common Stock, as reported through the
automated quotation system of a registered securities association, during the
four calendar weeks preceding such sale or (ii) 1% of the shares then
outstanding. A person who is not deemed to be an affiliate of the Company and
has not been an affiliate for the most recent three months, and who has held
restricted shares for a least two years would be entitled to sell such shares
without regard to the resale limitations of Rule 144.
Generally, the shares of restricted stock may not be sold or otherwise
transferred unless first registered under the Act or unless there is an
appropriate exemption from registration available.
Dividend Policy
The Company has not declared or paid cash dividends or made distributions
in the past, and the Company does not anticipate that it will pay cash dividends
or make distributions in the foreseeable future. The Company currently intends
to retain and invest future earnings to finance its operations.
ITEM 2. Legal Proceedings
There presently are no material pending legal proceedings to which the
Company or any of its subsidiaries in a party or to which any of its property is
subject and, to the best of its knowledge, no such actions against the Company
are contemplated or threatened.
ITEM 3. Changes in and Disagreements with Accountants
There have been no changes in or disagreements with accountants.
ITEM 4. Recent Sales of Unregistered Securities
The Company was incorporated January 22, 1998 under the laws of state of Nevada.
The Company was originally organized to invest in real estate, rental
properties, notes secured by deeds of trust(s), discounted notes, or smaller
properties ready for development.
On March 18, 1998 the Company issued 10,416,667 shares of common stock of
$00.1 par value for $.02 per share or $208,333.00. On May 18, 1998 the Company
issued 14,000 shares to fourteen (14) people pursuant to section 4 (2) 4 (6) of
the securities act of 1934 for $.20 per share or $2,800.00. The Company acquired
four single family residential properties. All four properties are rented with a
gross monthly income of $3,775.00. The purchase price of all four units was
$558,000.00 and are subject to $398,549.00 in unpaid mortgages. A 504 regulation
D offering for public sale of shares was filed February 5, 1999 and 150,000
shares were exchanged to the public for debt at $.10 per share.
Each purchaser was required to complete and sign a written subscription
Agreement representing that they had read the Disclosure Statement and that the
offering was subject to various risks. Pursuant to Rule 504(b)(1) of Regulation
D, the provisions of Rule 502(c) and (d) shall not apply to offers and sales
made under Rule 504. Generally, Rule 502(d) provides that: exempt as provided
in Rule 504(b)(1), securities acquired in a transaction under Regulation D shall
have the status of securities acquired in a transaction under Section 4(2) of
the Act and cannot be resold without registration under the Act or an exemption
therefrom . . . .
Because the Companys intent and good faith belief was that the offering
qualified under Rule 504(b)(1) of Regulation D, purchasers of the Companys
Common Stock may be permitted to resell their shares without registration under
the Act pursuant to Rule 502(d). As such, certificates representing these shares
do not bear any restrictive legends.
ITEM 5. Indemnification of Directors and Officers
As permitted by the provisions of the Nevada Revised Statutes (the NRS),
the Company has the power to indemnify any person made a party to an action,
suit or proceeding by reason of the fact that they are or were a director,
officer, employee or agent of the Company, against expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by them in
connection with any such action, suit or proceeding if they acted in good faith
and in a manner which they reasonably believed to be in, or not opposed to, the
best interest of the Company and, in any criminal action or proceeding, they had
no reasonable cause to believe their conduct was unlawful. Termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which they
reasonably believed to be in or not opposed to the best interests of the
Company, and, in any criminal action or proceeding, they had no reasonable cause
to believe their conduct was unlawful.
The Company must indemnify a director, officer, employee or agent of the
Company who is successful, on the merits or otherwise, in the defense of any
action, suit or proceeding, or in defense of any claim, issue, or matter in the
proceeding, to which they are a party because they are or were a director,
officer employee or agent of the Company against expenses actually and
reasonably incurred by them in connection with the defense.
The Company may provide to pay the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding as the
expenses are incurred and in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that they are not entitled to be indemnified by
the Company.
The NRS also permits a corporation to purchase and maintain liability
insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the Company, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against them and liability and expenses incurred by them
in their capacity as a director, officer, employee or agent, or arising out of
their status as such, whether or not the Company has the authority to indemnify
them against such liability and expenses. Presently, the Company does not carry
such insurance.
Transfer Agent
The Company has designated Holladay Stock Transfer, Inc., 2939 North 67th
Place, Scottsdale, Arizona 85251, as its transfer agent.
PART F / S
The Companys financial statements for the fiscal year ended December 31,
1998, 1999 and for the nine months ended September 30, 2000 have been examined
to the extent indicated in their reports by HJ Associates, Inc., independent
certified public accountants, and have been prepared in accordance with
generally accepted accounting principles and pursuant to Regulation S-B as
promulgated by the Securities and Exchange Commission and are included herein in
response to Item 15 of this Form 10-SB.
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
Balance Sheets
ASSETS
September 30, December 31,
2000 1999
(Unaudited)
CURRENT ASSETS
Cash$ 10,450 $ 15,491
Total Current Assets 10,450 15,491
PROPERTY - NET (Note 3) 536,354 543,004
TOTAL ASSETS $546,804 $558,495
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accrued expenses $ - $ 1,306
Accounts payable 3,217 -
Security deposit 1,100 -
Accounts payable -
related party - 110,000
Notes payable, current
portion (Note 4) 7,022 7,022
Total Current Liabilities 11,339 118,328
LONG-TERM LIABILITIES
Notes payable (Note 4) 379,701 382,971
Total Long-Term
Liabilities 379,701 382,971
Total Liabilities 391,040 501,299
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY
Common stock: $0.001 par value, authorized 100,000,000
shares; 11,345,250 and 10,795,250 shares issued and
outstanding,
respectively 11,345 10,795
Additional paid-in capital 374,371 264,921
Deficit accumulated
during development stage (229,952) 218,520)
Total Stockholders
Equity 155,764 57,196
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 546,804$ 558,495
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
Statements of Operations
(Unaudited)
For the For the
Three Months Ended Nine months ended
September 30 Septmeber 30
2000 1999 2000
REVENUES
Rental revenue $ 11,825 $ 11,625 $ 115,178
Total Revenues 11,825 11,625 36,253
OPERATING COSTS
Amortization and depreciation 2,217 2,217 6,650
General and administrative 5,827 5,011 15,249
Total Operating Costs 8,044 7,228 21,899
INCOME (LOSS) FROM
OPERATIONS 3,781 4,397 14,354
OTHER EXPENSE
Interest expense 8,665 8,603 25,786
Total Other Expense 8,665 8,603 25,786
LOSS BEFORE TAXES (4,884) (4,206) (11,432)
INCOME TAX EXPENSE - - -
NET LOSS $ (4,884) $ (4,206) $ (11,432)
BASIC INCOME (LOSS) PER
COMMON SHARE $ (0.00) $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 11,345,250 10,795,250 11,192,695
From
Inception on
For the January 22
Nine months Ended 1998 through
September 30 September 30
1999 2000
REVENUES
Rental revenue $ 34,750 $ 115,178
Total Revenues 34,750 115,178
OPERATING COSTS
Amortization and depreciation 6,650 22,778
General and administrative 15,583 241,583
Total Operating Costs 22,233 264,361
INCOME (LOSS) FROM
OPERATIONS 12,517 (149,183)
OTHER EXPENSE
Interest expense 23,706 80,769
Total Other Expense 23,706 80,769
LOSS BEFORE TAXES (11,189) (229,952)
INCOME TAX EXPENSE - -
NET LOSS $ (11,189) $ (229,95)
BASIC INCOME (LOSS) PER
COMMON SHARE $ (0.00)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 10,795,250
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Statements of Stockholders Equity
Deficit
Accumulated
Additional During
Common Stock Paid-in Development
Shares Amount Capital Stage
Inception, January 22,
1998 - $ - $ - $ -
March 18, 1998 common stock
issued at $0.02 per share for
cash 10,416,667 10,417 189,583 -
May 18, 1998 common stock
issued at $0.20 per share for
cash 14,000 14 2,786 -
July 10, 1998 common stock
issued at $0.20 per share for
services 364,583 364 72,552 -
Net loss from inception to
December 31, 1998 - - - (91,072)
Balance, December 31,
1998 10,795,250 10,795 264,921 (91,072)
Net loss for the year ended
December 31, 1999 - - - (127,448)
Balance, December 31,
1999 10,795,250 10,795 264,921 (218,520)
March 16, 2000 common stock
issued at $0.20 per share for
conversion of debt
(unaudited) 550,000 550 109,450 -
Net loss for the nine months
ended September 30, 2000
(unaudited) - - - (11,432)
Balance, September 30, 2000
(unaudited) 11,345,250 $ 11,345 $ 374,371 $(229,952)
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the For the
three months ended nine months ended
September 30 September 30
2000 1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from
operations $ (4,884) $ (4,206) $ (11,432)
Adjustments to reconcile net income to
net cash used by operating activities:
Common stock issued for services - - -
Amortization and depreciation
expense 2,217 2,217 6,650
Changes in operating assets and liabilities:
Decrease in accounts payable 1,300 - 3,217
Decrease in accrued expenses - - (1,306)
Increase in security deposit - - 1,100
Net Cash (Used) by Operating
Activities (1,367) (1,989) (1,771)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property - - -
Net Cash (Used) by Investing
Activities - - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments in long-term debt (1,085) (1,258) (3,270)
Common stock issued for cash - - -
Net Cash Provided (Used)
by Financing
Activities (1,085) (1,258) (3,270)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,452) (3,247) (5,041)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 12,902 21,475 15,491
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 10,450 $ 18,228 $ 10,450
Cash paid for:
Interest $ 8,665 $ 8,603 $ 25,786
Income taxes $ - $ - $ -
Non-Cash Financing Activities:
Real estate purchased for
notes payable $ - $ - $ -
Common stock issued for
conversion of debt $ - $ - $ 110,000
From
Inception on
For the January 22
Nine months ended 1998 through
September 30 September 30
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from operations $ (11,189) $(229,952)
Adjustments to reconcile net income to
net cash used by operating activities:
Common stock issued for services - 72,916
Amortization and depreciation expense 6,650 22,778
Changes in operating assets and liabilities:
Decrease in accounts payable (5,000) 113,217
Decrease in accrued expenses - -
Increase in security deposit - 1,100
Net Cash (Used) by Operating Activities (9,539) (19,941)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property - (157,666)
Net Cash (Used) by Investing Activities - (157,666)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments in long-term debt (4,146) (14,743)
Common stock issued for cash - 202,800
Net Cash Provided (Used) by Financing
Activities (4,146) 188,057
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (13,685) 10,450
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 31,913 -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 18,228 $ 10,450
Cash paid for:
Interest $ 23,706 $ 80,769
Income taxes $ - $ -
Non-Cash Financing Activities:
Real estate purchased for notes payable $ - $ 401,466
Common stock issued for conversion of debt $ - $ 110,000
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On January 22, 1998, the Company was incorporated under the laws of Nevada
as Nicholas Investment Company, Inc. to engage in any lawful activity as shall
be appropriate under laws of the State of Nevada. Primarily, the Company is in
the business of acquiring and leasing real estate. The Company is considered a
development stage company as defined by SFAS #7.
The Company has authorized 100,000,000 shares of $0.001 par value common
stock.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Companys financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
c. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
d. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the financial
statements as follows:
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Numerator - loss $ (4,884) $ (4,206) $ (11,432) $ (11,189)
Denominator - weighted
average number of
shares outstanding 11,345,250 10,795,250 11,192,695 10,795,250
Loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Fully diluted earnings (loss) per share is not presented, as any common
stock equivalents are antidilutive in nature.
NICHOLAS INVESTMENT COMPANY, INC. (A Development Stage Company) Notes to
the Financial Statements September 30, 2000 and December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Provision for Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. Under Statement 109,
the liability method is used in accounting for income taxes. No income taxes
have been accrued due to net operating losses incurred by the Company. The
Company has net operating loss carryovers of approximately $229,000 which expire
by the year 2020. The potential benefit of the loss carryovers has been offset
by a valuation allowance in full.
f. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a fair
presentation. Such adjustments are of a normal recurring nature.
NOTE 3 - PROPERTY
The Company has rental properties that the Company rents for occupant
purposes. All properties have a 39.5 year life using the straight-line method of
depreciation, and no salvage value. The properties and depreciation for the year
ending December 31, 1999 are as follows:
Name Cost of
of Property Property
September 30, December 31,
2000 1999
(Unaudited)
Agee Street $ 84,460 $ 84,460
Manos Drive 106,589 106,589
New Salem 83,887 83,887
Town Center Drive 75,282 75,282
Land 208,914 208,914
Total 559,132 559,132
Less: accumulated depreciation (22,778) (16,128
Total Property $ 536,354 $ 543,004
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2000 and December 31, 1999
NOTE 4 - NOTES PAYABLE
September 30, December 31,
2000 1999
(Unaudited)
Notes payable consisted of the following:
Note payable to Oakmont Mortgage Company,
Inc., dated March 20, 1997, 8.4% variable rate
not to be greater than 9.5%, secured by deed
of trust, monthly principal and interest payments
of $885, due April 1, 2027 $ 116,994 $ 117,679
Note payable to Frances A. Kirchner, dated
December 5, 1995, bearing interest at 8.75%,
fixed interest rate, secured by deed of trust,
monthly principal and interest payments of
$600. Due December 26, 2005 73,179 73,756
Note payable to Frances Kirchner, dated
March 12, 1997, bearing interest at 7.02% fixed
interest rate, secured by deed of trust, monthly
principal and interest payments of $600 until
paid in full 86,609 87,425
Note payable to Mission Federal Credit Union,
dated July 1, 1994, bearing interest at 4.6%
variable rate not to be greater than 10.6%,
secured by deed of trust, monthly principal and
interest payments of $612 due July 10, 2024 109,941 111,133
Total notes payable 386,723 389,993
Less: current portion (7,022) (7,02)
Total Long-term Debt $ 379,701 $ 382,971
Maturities of long-term debt are as follows:
Period Ending September 30,
2000 $ 7,022
2001 7,577
2002 8,176
2003 8,823
2004 9,521
2005 and thereafter 345,604
Total $386,723
NICHOLAS INVESTMENT COMPANY, INC. (A Development Stage Company) Notes to
the Financial Statements September 30, 2000 and December 31, 1999
NOTE 5 - 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.
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
C O N T E N T S
Independent Auditors Report................................................ 3
Balance Sheet.............................................................. 4
Statements of Operations................................................... 5
Statements of Stockholders Equity.......................................... 6
Statements of Cash Flows................................................... 7
Notes to the Financial Statements.......................................... 8
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Nicholas Investment Company, Inc.
(A Development Stage Company)
San Diego, California
We have audited the accompanying balance sheet of Nicholas Investment Company,
Inc. (a development stage company), as of December 31, 1999 and the related
statements of operations, stockholders equity and cash flows for the years
ended December 31, 1999, 1998 and from inception on January 22, 1998 through
December 31, 1999. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nicholas Investment Company,
Inc. (a development stage company) as of December 31, 1999 and the results of
its operations and its cash flows for the years ended December 31, 1999, 1998
and from inception on January 22, 1998 through December 31, 1999 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Managements plans in regard to these
matters are also described in Note 5. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
July 20, 2000
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1999
CURRENT ASSETS
Cash$ 15,491
Total Current Assets 15,491
PROPERTY - NET (Note 3) 543,004
TOTAL ASSETS $558,495
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accrued expenses $ 1,306
Accounts payable - related party (Note 6) 110,000
Notes payable, current portion (Note 4) 7,022
Total Current Liabilities 118,328
LONG-TERM LIABILITIES
Notes payable (Note 4) 382,971
Total Long-Term Liabilities 382,971
Total Liabilities 501,299
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY
Common stock: $0.001 par value, authorized 100,000,000 shares;
10,795,250 shares issued and outstanding 10,795
Additional paid-in capital 264,921
Deficit accumulated during development stage (218,520)
Total Stockholders Equity 57,196
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 558,495
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
Statements of Operations
From
Inception on
January 22,
For the Years Ended 1998 Through
December 31, December 31,
1999 1998 1999
REVENUES
Rental revenue $ 46,375 $ 32,550 $ 78,925
Total Revenues 46,375 32,550 78,925
OPERATING COSTS
Amortization and depreciation 8,866 7,262 16,128
General and administrative 132,195 94,139 226,334
Total Operating Costs 141,061 101,401 242,462
LOSS FROM OPERATIONS (94,686) (68,851) (163,537)
OTHER EXPENSE
Interest expense 32,762 22,221 54,983
Total Other Expense 32,762 22,221 54,983
LOSS BEFORE TAXES (127,448) (91,072) (218,520)
INCOME TAX EXPENSE - - -
NET LOSS $ (127,448) $ (91,072) $ (218,520)
BASIC LOSS PER COMMON SHARE $ (0.01) $ (0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,795,250 8,940,570
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Statements of Stockholders Equity
Deficit
Accumulated
Additional During
Common Stock Paid-in Development
Shares Amount Capital Stage
Inception, January 22, 1998 - $ - $ - $ -
March 18, 1998 common stock
issued at $0.02 per share for
cash 10,416,667 10,417 189,583 -
May 18, 1998 common stock
issued at $0.20 per share for
cash 14,000 14 2,786 -
July 10, 1998 common stock
issued at $0.20 per share for
services 364,583 364 72,552 -
Net loss from inception to
December 31, 1998 - - - (91,072)
Balance, December 31,
1998 10,795,250 10,795 264,921 (91,072)
Net loss for the year ended
December 31, 1999 - - - (127,448)
Balance, December 31,
1999 10,795,250 $ 10,795 $ 264,921 $ (218,520)
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
January 22
For the years ended 1998 through
December 31 December 31
1999 1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from operations $ (127,448) $ (91,072) $ (218,520)
Adjustments to reconcile net income to
net cash used by operating activities:
Common stock issued for services - 72,916 72,916
Amortization and
depreciation expense 8,866 7,262 16,128
Changes in operating assets and liabilities:
Increase in accounts payable 105,000 5,000 110,000
Increase in accrued expenses 1,306 - 1,306
Net Cash (Used) by Operating
Activities (12,276) (5,894) (18,170)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property - (157,666) (157,666)
Net Cash (Used) by Investing Activities - (157,666) (157,666)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments in long-term debt (4,146) (7,327) (11,473)
Common stock issued for cash - 202,800 202,800
Net Cash Provided (Used) by Financing
Activities (4,146) 195,473 191,327
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (16,422) 31,913 15,491
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 31,913 - -
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 15,491 $ 31,913 $ 15,491
Cash paid for:
Interest $ 32,762 $ 22,221 $ 54,983
Income taxes $ - $ - $ -
Non-Cash Financing Activities:
Real estate purchased for
notes payable $ - $ 401,466 $ 401,466
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On January 22, 1998, the Company was incorporated under the laws of Nevada
as Nicholas Investment Company, Inc. to engage in any lawful activity as shall
be appropriate under laws of the State of Nevada. Primarily, the Company is in
the business of acquiring and leasing real estate. The Company is considered a
development stage company as defined by SFAS #7.
The Company has authorized 100,000,000 shares of $0.001 par value common
stock.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Companys financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
c. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
d. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the financial
statements as follows:
Loss Shares Per Share
(Numerator) (Denominator) Amount
For the year ended
December 31, 1999 $ (127,448) 10,975,250 $ (0.01)
For the year ended
December 31, 1998 $ (91,072) 8,940,570 $ (0.01)
Fully diluted earnings (loss) per share is not presented, as any common
stock equivalents are antidilutive in nature.
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Provision for Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. Under Statement 109,
the liability method is used in accounting for income taxes. No income taxes
have been accrued due to net operating losses incurred by the Company. The
Company has net operating loss carryovers of approximately $218,000 which expire
by the year 2020. The potential benefit of the loss carryovers has been offset
by a valuation allowance in full.
NOTE 3 - PROPERTY
The Company has rental properties that the Company rents for occupant
purposes. All properties have a 39.5 year life using the straight-line method of
depreciation, and no salvage value. The properties and depreciation for the year
ending December 31, 1999 are as follows:
Name Cost of
of Property Property
Agee Street $ 84,460
Manos Drive 106,589
New Salem 83,887
Town Center Drive 75,282
Land 208,914
Total 559,132
Less: accumulated depreciation (16,128)
Total Property $ 543,004
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 4 - NOTES PAYABLE
December 31,
1999
Notes payable consisted of the following:
Note payable to Oakmont Mortgage Company, Inc., dated
March 20, 1997, 8.4% variable rate not to be greater than
9.5%, secured by deed of trust, monthly principal and
interest payments of $885, due April 1, 2027 $ 117,679
Note payable to Frances A. Kirchner, dated December 5,
1995, bearing interest at 8.75%, fixed interest rate,
secured by deed of trust, monthly principal and interest
payments of $600. Due December 26, 2005 73,756
Note payable to Frances Kirchner, dated March 12, 1997,
bearing interest at 7.02% fixed interest rate, secured by
deed of trust, monthly principal and interest payments of
$600 until paid in full 87,425
Note payable to Mission Federal Credit Union, dated July 1,
1994, bearing interest at 4.6% variable rate not to be
greater than 10.6%, secured by deed of trust, monthly
principal and interest payments of $612 due July 10, 2024 111,133
Total notes payable 389,993
Less: current portion (7,022
Total Long-term Debt $ 382,971
Maturities of long-term debt are as follows:
Year Ending December 31,
2000 $ 7,022
2001 7,577
2002 8,176
2003 8,823
2004 9,521
2005 and thereafter 348,874
Total $389,993
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 5 - 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.
NOTE 6 - SUBSEQUENT EVENT
In January and March of 2000, the Company issued 550,000 shares of common
stock to related party management companies at $0.20 per share for services
performed during 1999, valued at $110,000.
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998
C O N T E N T S
Independent Auditors Report.............................................. 3
Balance Sheet............................................................ 4
Statement of Operations.................................................. 5
Statement of Stockholders Equity......................................... 6
Statement of Cash Flows.................................................. 7
Notes to the Financial Statements........................................ 8
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Nicholas Investment Company, Inc.
(A Development Stage Company)
San Diego, California
We have audited the accompanying balance sheet of Nicholas Investment Company,
Inc. (a development stage company), as of December 31, 1998 and the related
statements of operations, stockholders equity and cash flows from inception on
January 22, 1998 through December 31, 1998. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nicholas Investment Company,
Inc. (a development stage company) as of December 31, 1998 and the results of
its operations and its cash flows from inception on January 22, 1998 through
December 31, 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Managements plans in regard to these
matters are also described in Note 5. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
February 12, 1999
.
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1998
CURRENT ASSETS
Cash $ 31,913
Total Current Assets 31,913
PROPERTY - NET (Note 3) 551,870
TOTAL ASSETS $583,783
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,000
Notes payable, current portion (Note 4) 5,176
Total Current Liabilities 10,176
LONG-TERM LIABILITIES
Notes payable (Note 4) 388,963
Total Long-Term Liabilities 388,963
Total Liabilities 399,139
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY
Common stock: $0.001 par value, authorized 100,000,000 shares;
10,795,250 shares issued and outstanding 10,795
Additional paid-in capital 264,921
Deficit accumulated during development
stage (91,072)
Total Stockholders Equity 184,644
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY $ 583,783
NICHOLAS INVESTMENT COMPANY
(A Development Stage Company)
Statement of Operations
From
Inception on
January 22,
1998 Through
December 31,
1998
REVENUES
Rental revenue $ 32,550
Total Revenues 32,550
OPERATING COSTS
Amortization and depreciation 7,262
General and administrative 94,139
Total Operating Costs 101,401
LOSS FROM OPERATIONS (68,851)
OTHER EXPENSE
Interest expense (22,221)
Total Other Expense (22,221)
LOSS BEFORE TAXES (91,072)
INCOME TAX EXPENSE -
NET LOSS $ (91,072)
BASIC LOSS PER COMMON SHARE $ (0.01)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,940,570
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Statement of Stockholders Equity
Deficit
Accumulated
Additional During
Common Stock Paid-in Development
Shares Amount Capital Stage
Inception, January 22,
1998 - $ - $ - $ -
March 18, 1998 common stock
issued at $0.02 per share for
cash 10,416,667 10,417 189,583 -
May 18, 1998 common stock
issued at $0.20 per share for
cash 14,000 14 2,786 -
July 10, 1998 common stock
issued at $0.20 per share for
services 364,583 364 72,552 -
Net loss from inception on
January 22, 1998 through
December 31, 1998 - - - (91,072)
Balance, December 31, 1998 10,795,250 $ 10,795 $ 264,921 $ (91,072)
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Statement of Cash Flows
From
Inception on
January 22,
1998 through
December 31,
1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from operations $ (91,072)
Adjustments to reconcile net income to net cash used by
operating activities:
Common stock issued for services 72,916
Amortization and depreciation expense 7,262
Changes in operating assets and liabilities:
Increase in accounts payable 5,000
Net Cash (Used) by Operating Activities (5,894)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property (157,666)
Net Cash (Used) by Investing Activities (157,666)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments in long-term debt (7,327)
Common stock issued for cash 202,800
Net Cash Provided by Financing Activities 195,473
INCREASE IN CASH AND CASH EQUIVALENTS 31,913
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 31,913
Cash paid for:
Interest $ 22,221
Income taxes $ -
Non-Cash Financing Activities:
Real estate purchased for notes payable $ 401,466
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On January 22, 1998, the Company was incorporated under the laws of Nevada
as Nicholas Investment Company, Inc. to engage in any lawful activity as shall
be appropriate under laws of the State of Nevada. Primarily, the Company is in
the business of acquiring and leasing real estate. The Company is considered a
development stage company as defined by SFAS #7.
The Company has authorized 100,000,000 shares of $0.001 par value common
stock. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Companys financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
c. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
d. Basic Loss Per Common Share
Basic loss per common share has been calculated based on the weighted
average number of shares of common stock outstanding during the period.
e. Provision for Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes Under Statement 109,
the liability method is used in accounting for income taxes. No income taxes
have been accrued due to net operating losses incurred by the Company. The
Company has net operating loss carryovers of approximately $91,000 which expire
by the year 2013. The potential benefit of the loss carryovers has been offset
by a valuation allowance in full.
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 3 - PROPERTY
The Company has rental properties that the Company rents for occupant purposes.
All properties have a 39.5 year life using the straight-line method of
depreciation, and no salvage value. The properties and depreciation for the year
ending December 31, 1998 are as follows:
Name Cost of
of Property Property
Agee Street $ 84,460
Manos Drive 106,589
New Salem 83,887
Town Center Drive 75,282
Land 208,914
Total 559,132
Less: accumulated depreciation (7,262)
Total Property $ 551,870
NOTE 4 - NOTES PAYABLE
December 31,
1998
Notes payable consisted of the following:
Note payable to Oakmont Mortgage Company, Inc., dated
March 20, 1997, 8.4% variable rate not to be greater than
9.5%, secured by deed of trust, monthly principal and
interest payments of $885, due April 1, 2027 $116,329
Note payable to Frances A. Kirchner, dated December 5,
1995, bearing interest at 8.75%, fixed interest rate,
secured by deed of trust, monthly principal and interest
payments of $600. Due December 26, 2005 75,554
Note payable to Frances Kirchner, dated March 12, 1997,
bearing interest at 7.02% fixed interest rate, secured by
deed of trust, monthly principal and interest payments of
$600 due upon demand 89,528
Balance forward $281,411
NICHOLAS INVESTMENT COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 4 - NOTE PAYABLE (Continued)
Balance forward $ 281,411
Note payable to Mission Federal Credit Union, dated July 1,
1994, bearing interest at 4.6% variable rate not to be
greater than 10.6%, secured by deed of trust, monthly
principal and interest payments of $612 due July 10, 2024 112,728
Total notes payable 394,139
Less: current portion (5,176
Total Long-term Debt $ 388,963
Maturities of long-term debt are as follows:
Year Ending December 31,
1999 $ 5,176
2000 5,517
2001 5,885
2002 6,361
2003 6,876
2004 and thereafter 364,324
Total $394,139
NOTE 5 - 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.
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement.
Exhibit Number Exhibit Name
3.1 Article of Incorporation..
3.2 By-Laws of Registrant
27. Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly organized.
NICHOLAS INVESTMENT COMPANY, INC.
(Registrant)
Date: _______________ 2000 By:/s/ John N. Kirchner
John N. Kirchner
President
