-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nr+vq/hJSXBk6Hme8COAy43u0ZSZZ85RnU5Qx2PP3H+nLCRe8T1s7hGC11jGYavp DtueFGF0gprushiKQ0CIlw== 0001123312-02-000011.txt : 20020821 0001123312-02-000011.hdr.sgml : 20020821 20020821081041 ACCESSION NUMBER: 0001123312-02-000011 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NICHOLAS INVESTMENT CO INC CENTRAL INDEX KEY: 0001123312 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330788829 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-31899 FILM NUMBER: 02744257 BUSINESS ADDRESS: STREET 1: P O BOX 370420 CITY: SAN DIEGO STATE: CA ZIP: 92137 MAIL ADDRESS: STREET 1: NICHOLAS INVESTMENT CO INC STREET 2: P O BOX 370420 CITY: SAN DIEGO STATE: CA ZIP: 92137 FORMER COMPANY: FORMER CONFORMED NAME: NICHOLAS INVESTMENT INC DATE OF NAME CHANGE: 20000905 10QSB 1 juneq.txt JUNE 30, 2002 5 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 June 30, 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.) 5017 Cliffrose Drive, Las Vegas, NV 89130 (Address of principal executive office) Registrants telephone no., including area code (702) 396-1890 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 June 30, 2002 Common Stock, $0.001 17,805,250 i TABLE OF CONTENTS PART 1. FINANCIAL INFORMATION Heading Page Item 1. Consolidated Financial Statements 1 Consolidated Balance Sheets June 30, 2002 And December 31, 2001 2 Consolidated Statements of Operations six months Ended June 30, 2002 and June 30, 2001 3 Consolidated Statement of Stockholders Equity 4 Consolidated Statements of Cash Flows six months Ended June 30, 2002 and June 30, 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 June 30, 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 six months ended June 30, 2002 and 2001, the statements of stockholders equity for the period from April 17, 2001 through June 30, 2002 are attached hereto and incorporated herein by this reference. Operating results for the quarters ended June 30, 2002 are not necessarily indicative of the results that can be expected for the year ending December 31, 2002. NICHOLAS INVESTMENT COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS June 30, 2002 and December 31, 2001 NICHOLAS INVESTMENT COMPANY, INC. AND SUBSIDIARIES Consolidated Balance Sheets ASSETS June 30, December 31, 2002 2001 (Unaudited) CURRENT ASSETS Cash$ 980 $ - Contracts receivable 17,631 19,013 Accounts receivable related party 12,000 - Deposits 315 315 Total Current Assets 30,926 19,328 FIXED ASSETS (NET) 139,087 115,921 TOTAL ASSETS $ 170,013 $ 135,249 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Cash overdraft $ - $ 2,444 Accounts payable 37,607 13,928 Accrued expenses 21,000 2,018 Notes payable 34,500 - Notes payable related party 5,798 - Total Current Liabilities 98,905 18,390 Total Liabilities 98,905 18,390 MINORITY INTEREST IN NET ASSETS 12,031 16,027 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 100,000,000 shares authorized; 17,805,250 and 6,000,000 shares issued and outstanding at June 30, 2002, and December 31, 2001, respectively 17,805 6,000 Additional paid-in capital 294,426 153,660 Accumulated deficit (253,154) (58,828) Total Stockholders' Equity (Deficit) 59,077 100,832 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 170,013 $ 135,249 NICHOLAS INVESTMENT COMPANY, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) From inception For the six For the three on April 17, months ended months ended 2001, through June 30, June 30, June 30, 2002 2002 2001 REVENUES $ 31,035 $ 6,747 $ - COST OF SERVICES 28,588 419 - GROSS PROFIT 2,447 6,328 - OPERATING EXPENSES General and administrative 29,952 29,946 44,888 Consulting and professional 144,290 144,290 200 Officer compensation 21,000 21,000 - Depreciation 5,040 2,530 - Total Operating Expenses 200,282 197,766 45,088 OPERATING LOSS (197,835) (191,438) (45,088) OTHER (EXPENSE) Interest expense (487) (487) - Total Other (Expense) (487) (487) - NET LOSS BEFORE MINORITY INTEREST (198,322) (191,925) (45,088) MINORITY INTEREST IN LOSS 3,996 2,122 1,335 NET LOSS $ (194,326) $ (189,803) $ (43,753) BASIC LOSS PER SHARE $ (0.02) $ (0.01) $ (0.01) WEIGHTED AVERAGE SHARES OUTSTANDING 11,856,754 17,778,583 6,000,000 NOTE: The Company commenced activity on April 17, 2001. As such, this presentation of the statement of operations omits the comparative figures for the three and six months ended June 30, 2001. NICHOLAS INVESTMENT COMPANY, INC. AND SUBSIDIARIES Statements of Stockholders Equity Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Inception, April 17, 2001 $ - $ - $ - - Common stock issued for organizational and management services at $0.01 per share 1,762,500 1,763 13,238 - Common stock issued for cash at $0.125 per share 160,000 160 19,840 - Capital contribution - - 4,920 - Common stock issued for assets and in reorganization of Town Square, LLC 1,815,000 1,815 53,243 - Common stock issued for approximately 70% of the outstanding common stock of H&L Specialties 1,000,000 1,000 32,049 - Common stock issued for approximately 86% of the outstanding common stock of Shadow Ridge Water Company 1,262,500 1,262 30,370 - Net loss for the period ended December 31, 2001 - - - (58,828) Balance, December 31, 2001 6,000,000 6,000 153,660 (58,828) Recapitalization (Unaudited) 11,345,250 11,345 (5,346) - Common stock issued for services at $0.25 per share (Unaudited) 300,000 300 74,700 - Common stock issued for services at $0.35 per share (Unaudited) 160,000 160 55,840 - Capital contribution (Unaudited) - - 15,572 - Net loss for the three months ended March 31, 2002 (Unaudited) - - - (194,326) Balance, March 31, 2002 (Unaudited) 17,805,250 $ 17,805 $ 294,426 $(253,154) NICHOLAS INVESTMENT COMPANY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) From inception on For the six April 17, months ended 2001, through June 30, June 30, 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(194,326) $ (43,753) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 5,040 - Common stock issued for services 131,000 15,000 Changes in operating assets and liabilities: (Increase) decrease in contracts receivable 1,382 (7,100) (Increase) accounts receivable related party (12,000) - (Increase) in deposits and prepaid expenses - (5,000) Increase in accounts payable 23,677 5,972 Increase in accrued liabilities 18,982 - Net Cash Used by Operating Activities (26,245) (34,881) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of fixed assets (12,633) (5,335) Recapitalization 6,000 - Net Cash Used by Investing Activities (6,633) (5,335) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in bank overdraft (2,444) - Proceeds from notes payable 34,500 - Proceeds from notes payable related party 5,798 8,213 Proceeds from the issuance of common stock - 20,000 Minority interest (3,996) 12,829 Net Cash Provided by Financing Activities 33,858 41,042 NET INCREASE IN CASH 980 826 CASH AT BEGINNING OF PERIOD - - CASH AT END OF PERIOD $ 980 $ 826 NOTE: The Company commenced activity on April 17, 2001. As such, this presentation of the statements of cash flows omits the comparative figures for the three and six months ended June 30, 2001. NICHOLAS INVESTMENT COMPANY, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) (Unaudited) From inception on For the six April 17, months ended 2001, through June 30, June 30, 2002 2001 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR: Income taxes $ - $ - Interest $ - $ - NON-CASH FINANCING ACTIVITIES Stock issued for services $131,000 $ 15,000 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 six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. NOTE 2 - RECAPITALIZATION On April 1, 2002, Nicholas Investment Company, Inc. (Nicholas), and Virgin Lakes Development Corporation (Virgin Lakes), completed an Agreement of Reorganization whereby Nicholas issued 6,000,000 shares of its common stock in exchange for all of the outstanding common stock of Virgin Lakes. Immediately prior to the Agreement of Reorganization, Nicholas had 11,345,250 shares of common stock issued and outstanding. The acquisition was accounted for as a recapitalization of Virgin Lakes because the management of Virgin Lakes controlled Nicholas after the acquisition was completed. At the effective date of the transaction, each share of Virgin Lakes was converted into 2.89 shares of Nicholas. Virgin Lakes was treated as the acquiring entity for accounting purposes and Nicholas was the surviving entity for legal purposes. There was no adjustment to the carrying value of the assets or liabilities of Virgin Lakes and its wholly owned subsidiaries, nor was there any adjustment to the carrying value of the net assets of Nicholas. All references to shares of common stock have been retroactively restated. Virgin Lakes Development Corporation, has three subsidiaries, The Town Square, LLC (100% owned), Shadow Ridge Water Company (86% owned), and H & L Specialties (70% owned). All of the entities, including Nicholas Investment Company, Inc., are collectively referred to as the Company. NOTE 3 - GOING CONCERN The Companys condensed consolidated financial statements have been prepared using generally accepting 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, however, has a deficit in working capital, a deficit in stockholders equity and does not have sufficient cash or other current assets nor sufficient revenues to cover its operating costs and to allow it to continue as a going concern. The Company intends to continue its attempts to raise capital through planned debt and equity offerings. The Company also expects an increase in revenues as the Shadow Ridge Subdivision enters the construction phase. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. 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 $253,154 since inception through June 30, 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 June 30, 2002 the Company has $30,926 in total current assets compared to total current assets of $ 19,328 as of December 31, 2001. The current assets are comprised of $980 in cash, $29,631 in accounts receivable and $315 in deposits. It should be noted that $12,000 of the accounts receivable is due from a related party. The Company has total current liabilities of $98,905 as of June 30, 2002 compared to current liabilities of $18,390 as of December 31, 2001. The current liabilities are comprised of $ 37,607 in accounts payable, $21,000 in accrued expenses, and $ 40,478 in notes payable. It should be noted that $5,798 of the notes payable is due to a related party. The Companys management realizes that there is a impairment to liquidity. As of June 30, 2002 the Company has a .31 to 1 current ratio. The Company is involved in a best efforts financing in order to increase the Companys liquidity and capital resources. Results of Operations For the three months ended June 30, 2002 the Company had revenues of $6,747, cost of services performed of $419, and operating expenses of $ 197,766. For the three months ended June 30, 2002 the Company also had interest expense of $487 and a minority interest in the operating loss of $2,122. For the three months ended June 30, 2002 the Company had a net loss of ($189,803). Included in the net operating loss was $131,000 in common stock issuances that were issued for services rendered in the quarter. For the six months ended June 30, 2002 the Company had revenues of 31,035, cost of services performed of $28,588, and operating expenses of $ 200,282. For the six months ended June 30, 2002 the Company also had interest expense of $487 and a minority interest in the operating loss of $3,996. For the six months ended June 30, 2002 the Company had a net loss of ($194,326) Included in the net operating loss was $131,000 in common stock issuances that were issued for services rendered in the quarter ending June 30, 2002. Net Operating Loss The Company has accumulated approximately $253,154 of net operating loss carryforwards as of June 30, 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. Recapitalization On April 1, 2002, Nicholas Investment Company, Inc. and Virgin Lakes Development Corporation completed an Agreement of Reorganization whereby Nicholas issued 6,000,000 shares of its common stock in exchange for all the outstanding common stock of Virgin Lakes. Immediately prior to the Agreement of Reorganization, Nicholas had 11,345,250 shares of common stock issued and outstanding. The acquisition was accounted for as a recapitalization of Virgin Lakes because the management of Virgin Lakes controlled Nicholas after the acquisition was completed. At the effective date of the transaction, each share of Virgin Lakes was converted into 2.89 shares of Nicholas. Virgin Lakes was treated as the acquiring entity for accounting purposes and Nicholas was the surviving entity for legal purposes. There was no adjustment to the carrying value of the assets or liabilities of Virgin Lakes and its wholly owned subsidiaries, nor was there any adjustment to the carrying value of the net assets of Nicholas. All references to shares of common stock have been retroactively restated. Virgin Lakes Development Corporation , has three subsidiaries, The Town Square, LLC (100% owned), Shadow Ridge Water Company (86% owned), and H&L Specialties (70% owned). All of the entities, including Nicholas Investment Company, Inc., are collectively referred to as the Company. 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 On April 1, 2002 the Company issued 11,345,250 shares of common stock to the shareholders of Nicholas Investment Company in order to recapitalize the Company. On April 1, 2002 the Company issued 300,000 shares of common stock at $.25 per share for consideration of $75,000 to one entity for services rendered in conjunction with the above mentioned recapitalization. The shares were issued under section 4(2) of the 1933 Securities Act and bear a restrictive legend. On April 16, 2002 the Company issued 160,000 shares of common stock at $.25 per share for consideration of $56,000 to one entity for services rendered. The shares were issued under section 4(2) of the 1933 Securities Act and bear a restrictive legend. As of June 30, 2002 the Company had 17,805,250 shares issued and outstanding. 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: August 16, 2002 By: __________________ Darryl Schuttloffel President CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Nicholas Investment Company (the Company) on Form 10-Q(SB) for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the Report), I Darryl Schuttloffel , Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Darryl Schuttloffel Chief Executive Officer Dated: August 16, 2002 S-1 -----END PRIVACY-ENHANCED MESSAGE-----