FORM 10-Q

(Mark One)

NICHOLAS INVESTMENT COMPANY, INC.
(Exact Name of Registrant as Specified in Its Charter)

 

NICHOLAS INVESTMENT COMPANY, INC.

 

		PAGE NUMBER

PART I - FINANCIAL INFORMATION			3
Item 1.		Financial Statements	3
		Balance Sheet	3
		Schedule of Investments	4
		Statements of Operations	5
		Statements of Cash Flows	6
		Notes to Consolidated Financial Statements	7
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	11
PART II - OTHER INFORMATION
SIGNATURE PAGE			16
SARBANNES-OXLEY CERTIFICATIONS

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	ASSETS
					March 31, 2004 (Unaudited)			December 31, 2003
CURRENT ASSETS
	Cash			$	8,320		$	18,193
	Accounts receivable				1,875			-
Total Current Assets					10,195			18,193
FIXED ASSETS, NET					13,340			7,862
OTHER ASSETS
	Investment in marketable securities (Note 2)				228,000			-
	Investment in affiliated companies (Note 2)				1,770,961			469,691
	Deposit				3,271			6,544
	Total Other Assets				2,002,232			476,235
	TOTAL ASSETS			$	2,025,767		$	502,290
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable			$	27,006		$	28,135
	Accrued expenses				7,052			3,661
	Convertible debentures, net				134,695			102,296
	Total Current Liabilities				168,753			134,092
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
	Preferred stock Series C; $0.001 par value; 12,000,000 shares authorized; 12,000,000 shares and 12,000,000 shares issued and outstanding, respectively				12,000			12,000
	Common stock; $0.001 par value; 500,000,000 shares authorized; 4,388,266 and 2,346,596 shares issued and outstanding, respectively				4,388			2,346
	Additional paid-in capital				2,602,619			2,395,411
	Deferred consulting expense				(9,333)			(19,002)
	Accumulated deficit				(752,660)			(2,022,557)
	Total Stockholders' Equity				1,857,014			368,198
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	2,025,767		$	502,290

 

Company		Description of Business		Percent Ownership		Cost			Fair Value			Affiliation
Javelin Holdings		Management Consulting		100%	$	84,000		$	376,000		(2)	Yes
Sino UJE		Distribution		-0-	$	93,691		$	93,691			No
					$	177,691		$	469,691

 

 

(1) Fair value determined by the Company's Board of Directors using the following formula:
50% of the average of (4 X 2004 first quarter Revenue of $372,000) plus net assets of $195,000=$1,683,000 and (4 X 2004 first quarter earnings of $303,000) plus net assets of $195,000=$3,831,000=$1,426,000.

(2) Fair value determined by the Company's Board of Directors using the following formula:
(1 X 2003 Revenue of $306,184) plus net assets of $70,037=$376,221 rounded to $376,000. See also Note 2 for further explanation on the Company's methods of determining fair values.
 

The accompanying notes are an integral part of these financial statements.

 

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NICHOLAS INVESTMENT COMPANY, INC.
Statements of Operations
(Unaudited)

The accompanying notes are an integral part of these financial statements.

 

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NICHOLAS INVESTMENT COMPANY, INC.
Notes to the Financial Statements
March 31, 2004 and December 31, 2003
 

NOTE 1 - CONDENSED FINANCIAL STATEMENTS
 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the consolidated financial position as of March 31, 2004, and the results of operations and cash flows for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2003, audited financial statements. The results of operations for the periods ended March 31, 2004 and 2003 are not necessarily indicative of the operating results for the full years.
 

NOTE 2 - INVESTMENTS
 

The Company currently has investments in four entities. The first is an investment in a wholly-owned, unconsolidated subsidiary, Javelin Holdings, Inc. The Company issued 200,000 shares of its common stock to affiliated officers for the acquisition of Javelin Holdings, Inc. (Javelin) on November 15, 2003. The shares were valued at $0.48 per share which was the closing price on the date of issue. Javelin is in the business of providing management, consulting and other services to small and micro cap companies. The second is an investment in a 95% owned unconsolidated entity, Sino UJE, Ltd. The Company issued 150,000 shares of common stock in exchange for approximately 95% of the capital of Sino UJE. The Company subsequently advanced a total of $310,461 to Sino UJE. Sino UJE is a distribution company for western-manufactured medical and industrial products into the Asian markets. The Company's remaining two investments, Exus Global, Inc. and HydroFlo, Inc., consist of convertible preferred stock in these two companies which was paid to Javelin Holdings in exchange for debt forgiveness. As a point of practice, Javelin Holdings upstreams all of its stock holdings to the Company.

As required by ASR 118, the investment committee of the company is required to assign a fair value to all investments. To comply with Section 2(a)(41) of the Investment Company Act and Rule 2a-4 under the Investment Company Act, it is incumbent upon the board of directors to satisfy themselves that all appropriate factors relevant to the value of securities for which market quotations are not readily available have been considered and to determine the method of arriving at the fair value of each such security. To the extent considered necessary, the board may appoint persons to assist them in the determination of such value, and to make the actual calculations pursuant to the board's direction. The board must also, consistent with this responsibility, continuously review the appropriateness of the method used in valuing each issue of security in the company's portfolio. The directors must recognize their responsibilities in this matter and whenever technical assistance is requested from individuals who are not directors, the findings of such intervals must be carefully reviewed by the directors in order to satisfy themselves that the resulting valuations are fair.

No single standard for determining "fair value...in good faith" can be laid down, since fair value depends upon the circumstances of each individual case. As a general principle, the current "fair value" of an issue of securities being valued by the board of directors would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on a multiple of earnings, or a discount from market of a similar freely traded security, or yield to maturity with respect to debt issues, or a combination of these and other methods. Some of the general factors which the directors should consider in determining a valuation method for an individual issue of securities include: 1) the fundamental analytical data relating to the investment, 2) the nature and duration of restrictions on disposition of the securities, and 3) an evaluation
 

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NICHOLAS INVESTMENT COMPANY, INC.
Notes to the Financial Statements
March 31, 2004 and December 31, 2003
 

NOTE 2 - INVESTMENTS (Continued)
 

of the forces which influence the market in which these securities are purchased and sold. Among the more specific factors which are to be considered are: type of security, financial statements, cost at date of purchase, size of holding, discount from market value of unrestricted securities of the same class at time of purchase, special reports prepared by analysis, information as to any transactions or offers with respect to the security, existence of merger proposals or tender offers affecting the securities, price and extent of public trading in similar securities of the issuer or comparable companies, and other relevant matters.

The board has arrived at the following valuation method for its investments. Where there is not a readily available source for determining the market value of any investment, either because the investment is not publicly traded, or is thinly traded, and in absence of a recent appraisal, the value of the investment shall be based on the following criteria:
 

1. Total amount of the Company's actual investment ("AI"). This amount shall include all loans, purchase price of securities, and fair value of securities given at the time of exchange.
2. Total revenues for the preceding twelve months ("R").
3. Earnings before interest, taxes and depreciation ("EBITD")
4. Estimate of likely sale price of investment ("ESP")
5. Net assets of investment ("NA")
6. Likelihood of investment generating positive returns (going concern).
 

The estimated value of each investment shall be determined as follows:
 

• Where no or limited revenues or earnings are present, then the value shall be the greater of the investment's a) net assets, b) estimated sales price, or c) total amount of actual investment.

• Where revenues and/or earnings are present, then the value shall be the greater of one time (1x) revenues or three times (3x) earnings, plus the greater of the net assets of the investment or the total amount of the actual investment.

• Under both scenarios, the value of the investment shall be adjusted down if there is a reasonable expectation that the Company will not be able to recoup the investment or if there is reasonable doubt about the investments ability to continue as a going concern.
   

Based on the previous methodology, the Company determined that it's investment in Javelin should be valued at $1,426,000 and $376,000 as of March 31, 2004 and December 31, 2003, respectively. Accordingly, an unrealized gain of $1,050,000 and $280,000 has been recorded for the periods ended March 31, 2004 and December 31, 2003, respectively.

The investment is Sino UJE (Sino) consisted of a loan of $310,461 and $93,691 at March 31, 2004 and December 31, 2003, respectively and a 95% ownership interest acquired by the issuance of the Company's common stock valued at $34,500 in January 2004.

The Company has determined that since Sino continues to meet its monthly budgets with respect to revenues, expenses and cash flows that the value of the loan is not impaired. After the acquisition in January 2004, the investment and loans to Sino are being valued using the procedures described above.

The investment in Hydroflo consists of 200,000 shares of Preferred Stock which can be converted into common stock at a 3:1 basis, for total of 600,000 shares of common stock. Inasmuch as the common stock of Hydroflo is traded on the OTCBB, a quote and valuation of the stock is readily obtainable. As of March 31, 2004, the stock dropped to around $0.33-0.50 per share. The value of the Hydroflo shares should therefore be based on the most recently available stock price. Accordingly, the Hydroflo preferred stock

 

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NICHOLAS INVESTMENT COMPANY, INC.
Notes to the Financial Statements
March 31, 2004 and December 31, 2003
 

NOTE 2 - INVESTMENTS (Continued)
 

should be valued at $200,000 (200,000 X 3 X $0.33/share).

The investment in Exus Global consists of 500,000 shares of Preferred Stock which can be converted into common stock at a 1:1 basis, for a total of 500,000 shares of common stock. Inasmuch as the common stock of Exus is traded on the OTCBB, a quote and valuation of the stock is readily obtainable. As of March 31, 2004, Exus common stock traded at $0.06 per share. Accordingly, the Exus preferred stock should be valued at $30,000 (500,000 X $0.06/share).

The Company has not retained independent appraisers to assist in the valuation of the portfolio investments because the cost was determined to be prohibitive for the current levels of investments.
 

NOTE 3 - EQUITY TRANSACTIONS
 

During January 2004, the Company issued 500,001 shares of its free trading common stock for cash at $.06 per share for cash proceeds of $30,000.

On January 15, 2004, the Company issued 150,000 shares of its free trading common stock for a 95% ownership interest in Sino UJE. The shares were valued at $.23 per share, which represents the fair market value of the shares as of the date of issuance, for a total issuance amount of $34,500.

On February 23, 2004, the Company issued 200,000 shares of its free trading common stock for cash at $.03 per share for cash proceeds of $6,000.

During March 2004, the Company issued 925,000 shares of its free trading common stock upon the conversion of convertible debentures totaling $27,750. The shares were valued at $.03 per share, which represents 50% of the fair market value of the shares as of the date of notice of conversion.

During March 2004, the Company issued 100,002 shares of its free trading common stock upon the conversion of convertible debentures totaling $6,000. The shares were valued at $.06 per share, which represents 50% of the fair market value of the shares as of the date of notice of conversion.

On March 10, 2004, the Company issued 166,667 share of its free trading common stock for cash at $.03 per share for cash proceeds of $5,000.
 

NOTE 4 - SIGNIFICANT EVENTS
 

Convertible Debentures

During the three months ended March 31, 2004, the Company raised $100,000 of operating capital in the form of convertible debentures. The debentures have varying terms of six to twelve months, accrue interest at 8% per annum, and convert at a discount of 50% of the closing bid for the Company's common stock on the date of conversion.

Upon issuance of the debentures, the Company recognized a debt discount related to the beneficial conversion feature of the debentures totaling $100,000. This amount will be amortized over the respective terms of the debentures. As of March 31, 2004, $14,446 of the recorded debt discount has been amortized to interest expense, and an additional $881 has been recorded as interest related to the stated 8% interest rate associated with the debentures.

 

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NICHOLAS INVESTMENT COMPANY, INC.
Notes to the Financial Statements
March 31, 2004 and December 31, 2003

 

NOTE 4 - SIGNIFICANT EVENTS (continued)
 

Subsequent Events

On April 1, 2004, the Company issued 200,000 shares of its free trading common stock upon the conversion of convertible debentures totaling $6,000. The shares were valued at $.03 per share, which represents 50% of the fair market value of the shares as of the date of notice of conversion.

On April 7, 2004, the Company issued a convertible debenture in the amount of $65,000 as consideration for cash received. The debenture accrues interest at an annual rate of 8% and is due August 15, 2004. The debenture may be converted into shares of the Company's free trading common stock at a price per share equal to 50% of the closing bid price of the common stock on the date that the Company receives notice from the holder.

 

 

 

 

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

 

GENERAL

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts may contain forward-looking statements that involve a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated by management. Potential risks and uncertainties include, among other factors, general business conditions, government regulations, manufacturing practices, competitive market conditions, success of the Company's business strategy, delay of orders, changes in the mix of products sold, availability of suppliers, concentration of sales in markets and to certain customers, changes in manufacturing efficiencies, development and introduction of new products, fluctuations in margins, timing of significant orders, and other risks and uncertainties currently unknown to management.

CRITICAL ACCOUNTING POLICIES

The Company's financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States of America ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. Valuations based on estimates are reviewed by us for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include acquisitions, valuation of long-lived and intangible assets, and the realizability of deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

Valuation Of Long-Lived And Intangible Assets

The recoverability of long lived assets requires considerable judgment and is evaluated on an annual basis or more frequently if events or circumstances indicate that the assets may be impaired. As it relates to definite life intangible assets, we apply the impairment rules as required by SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Assets to Be Disposed Of" as amended by SFAS No. 144, which also requires significant judgment and assumptions related to the expected future cash flows attributable to the intangible asset. The impact of modifying any of these assumptions can have a significant impact on the estimate of fair value and, thus, the recoverability of the asset.

Income Taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. As of March 31, 2004, we estimated the allowance on net deferred tax assets to be one hundred percent of the net deferred tax assets.

Valuation of Investments

As required by ASR 118, the investment committee of the company is required to assign a fair value to all investments. To comply with Section 2(a)(41) of the Investment Company Act and Rule 2a-4 under the Investment Company Act, it is incumbent upon the board of directors to satisfy themselves that all appropriate factors relevant to the value of securities for which market quotations are not readily available have been considered and to determine the method of arriving at the fair value of each such security. To the extent considered necessary, the board may appoint persons to assist them in the determination of such value, and to make the actual calculations pursuant to the board's direction. The board must also, consistent with this responsibility, continuously review the appropriateness of the method used in valuing each issue of security in the company's portfolio. The directors must recognize their responsibilities in this matter and whenever technical assistance is requested from individuals who are not directors, the findings of such intervals must be carefully reviewed by the directors in order to satisfy themselves that the resulting valuations are fair.

 

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No single standard for determining "fair value...in good faith" can be laid down, since fair value depends upon the circumstances of each individual case. As a general principle, the current "fair value" of an issue of securities being valued by the board of directors would appear to be the amount which the owner might reasonably expect to receive for them upon their current sale. Methods which are in accord with this principle may, for example, be based on a multiple of earnings, or a discount from market of a similar freely traded security, or yield to maturity with respect to debt issues, or a combination of these and other methods. Some of the general factors which the directors should consider in determining a valuation method for an individual issue of securities include: 1) the fundamental analytical data relating to the investment, 2) the nature and duration of restrictions on disposition of the securities, and 3) an evaluation of the forces which influence the market in which these securities are purchased and sold. Among the more specific factors which are to be considered are: type of security, financial statements, cost at date of purchase, size of holding, discount from market value of unrestricted securities of the same class at time of purchase, special reports prepared by analysis, information as to any transactions or offers with respect to the security, existence of merger proposals or tender offers affecting the securities, price and extent of public trading in similar securities of the issuer or comparable companies, and other relevant matters.

The board has arrived at the following valuation method for its investments. Where there is not a readily available source for determining the market value of any investment, either because the investment is not publicly traded, or is thinly traded, and in absence of a recent appraisal, the value of the investment shall be based on the following criteria:
 

1. Total amount of the Company's actual investment ("AI"). This amount shall include all loans, purchase price of securities, and fair value of securities given at the time of exchange.
2. Total revenues for the preceding twelve months ("R").
3. Earnings before interest, taxes and depreciation ("EBITD")
4. Estimate of likely sale price of investment ("ESP")
5. Net assets of investment ("NA")
6. Likelihood of investment generating positive returns (going concern).
 

The estimated value of each investment shall be determined as follows:

• Where no or limited revenues or earnings are present, then the value shall be the greater of the investment's a) net assets, b) estimated sales price, or c) total amount of actual investment.

• Where revenues and/or earnings are present, then the value shall be the greater of one time (1x) revenues or three times (3x) earnings, plus the greater of the net assets of the investment or the total amount of the actual investment.

• Under both scenarios, the value of the investment shall be adjusted down if there is a reasonable expectation that the Company will not be able to recoup the investment or if there is reasonable doubt about the investments ability to continue as a going concern.
   

The Company has not retained independent appraises to assist in the valuation of the portfolio investments because the cost was determined to be prohibitive for the current levels of investments.

COMPANY STRATEGY

In December 2002, Management determined that the value of its operating businesses were substantially below book and determined to liquidate each of these holdings. In April 2003, the Company exchanged all of its ownership in each of these companies in exchange for hold harmless agreements.

On June 4, 2003, the Company issued two million (2,000,000) shares of Series B Preferred Stock to MRG California in exchange for $5,000 and a further commitment to provide working capital to the Company. These preferred Series B shares entitled the holder to 100 votes per share of preferred stock, effectively giving voting control of the Company to MRG California. On September 17, 2003, MRG sold all of the Preferred Series B stock to Shane Traveller, the Company's Chief Financial Officer, in exchange for $5,000. In addition, the Company repaid to MRG a total of $28,500 representing all monies advanced to the Company by MRG and legal expenses incurred. On November 10, 2003, the Company issued 8,450,000 shares of Series C Convertible Preferred Stock to Mr. Traveller in exchange for all of the outstanding shares of Series B Preferred Stock, which were then cancelled. The Series C Preferred Stock is non-voting stock, but can convert into common stock on a 1:1 basis.
 

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On October 10, 2003, the Company's Board of Directors unanimously approved a resolution to effect a 1 for 200 reverse split of the Company's common stock, which was subsequently approved by a vote of the shareholders. This reverse split was done to better position the capital structure of the Company in order to raise investment money to implement the Company's business strategy.

On November 18, 2003, the Company acquired 100% of the common stock of Javelin Holdings, Inc., a California-based private company that provides management consulting, accounting, and financial services to public companies, in exchange for 200,000 shares of the Company's restricted common stock. Prior to the acquisition by the Company, Javelin Holdings was controlled by members of the Company's board of directors.

On November 20, 2003, the Company's Board of Directors elected to be regulated as a business investment company under the Investment Company Act of 1940. As a business development company ("BDC"), the Company is required to maintain at least 70% of its assets invested in "eligible portfolio companies", which are loosely defined as any domestic company which is not publicly traded or that has assets less than $4 million.

On January 15, 2004, the Company acquired 95% of the common stock of Sino UJE, LTD, a Hong Kong corporation located in Temecula, CA that distributes medical and industrial supplies in China, in exchange for 150,000 shares of free-trading common stock of NIVM and a working capital line of credit for $1,000,000. Sino has an extensive distribution network in China that is supplied by a group of Original Equipment Manufacturers (OEM's) in Europe and the US that are exclusively represented in China by Sino. This world-wide network gives NIVM even greater potential to increase stock liquidity and raise investment money.

Currently, there are no additional commitments for material expenditures. It should be noted that the Company's auditors HJ Associates, LLC. have expressed in their audit opinion letter accompanying the financial statements for the year ended December 31, 2003 that there is substantial doubt about the Company's ability to continue as a going concern.

RESULTS OF OPERATIONS

Quarter ended March 31, 2004 compared to quarter ended March 31, 2003

During the quarter ended March 31, 2004, the Company incurred a net profit of $1,269,897 compared to a loss of $19,099 for the same quarter of 2003. The profit generated in 2004 resulted from an unrealized gain on the Company's investment in Javelin Holdings of $1,050,000 plus revenue from investments of approximately $410,000. The loss in 2003 related to operations which were discontinued in fiscal 2002. As of December 31, 2002, the Company's Board of Directors determined to abandon its current operational strategy and elected to spin-off all of its operating assets. Accordingly, all operations associated with such operations were classified as "discontinued operations" in the fiscal year 2003 financial statements.

Operating expenses were $120,936 and $18,696 for the quarters ended March 31, 2004 and 2003, respectively. The increase is attributed to the commencement of operations associated with operating as a business development company in late 2003, whereas the Company was not operational during the first two quarters of 2003. Operating expenses in the quarter ended March 31, 2004 included $94,464 in "Professional Fees" which included accounting, legal and consulting fees.

Interest expense for the quarter ended March 31, 2004 was $69,540, compared to $0 for the quarter ended March 31, 2003. The increase is attributed to the addition of convertible debentures during late 2003 and early 2003.

Liquidity and Capital Resources

The accompanying financial statements have been prepared in conformity with principles of accounting applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred operating losses from inception and has generated an accumulated deficit of $752,760. The Company requires additional capital to meet its operating requirements. Management plans to increase cash flows through the sale of securities (see following paragraph below) and, through its on going profitable operations. There are no assurances that such plans will be successful. No adjustments have been made to the accompanying financial statements as a result of this uncertainty.
 

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As of March 31, 2004, the Company had total cash and current assets of $10,195 and current liabilities of $168,753. The Company generated cash for operations through the issuance of common stock and notes payable as well as from profits from operations. Commencing September 1, 2003, the Company began issuing subordinated convertible debentures. The debentures bear interest at 8%, mature sixty (60) days from the date of issuance, and are convertible into restricted common stock at a discount to market of 50% from the closing bid price on the date of conversion. Through March 31, 2004, a total of $331,500 ($100,000 this quarter) had been raised under these terms and $107,250 ($33,750 this quarter) had been converted and $9,000 has been paid back leaving a balance due as of March 31, 2004 of $220,250. An additional $65,000 of operating capital was raised through the sale of convertible debentures on April 7, 2004. These debentures are based on the same terms and conditions as indicated above. On November 20, 2003, the Company filed a notification with the Commission of its intent to raise capital through the issuance of securities exempt from registration under Regulation E of the Securities Act of 1933. This exemption allows the Company to sell up to $5,000,000 of securities exempt from registration. During the quarter ended March 31, 2004, the Company raised $41,000 through the sale of 866,668 shares of common stock through the use of the Regulation E exemption.

There is no assurance that the Company will be able to raise any additional funds through the issuance of the remaining convertible debentures or that any funds made available will be adequate for the Company to continue as a going concern. Further, if the Company is not able to generate positive cash flow from operations, or is unable to secure adequate funding under acceptable terms, there is substantial doubt that the company can continue as a going concern.

PART II.

Other Information
 

Item 1.	Legal Proceedings
	The Company is not presently a party to any legal actions.
Item 2.	Changes in Securities
	866,668 shares of common stock sold for cash of $41,000 under a Regulation E exemption. 1,025,002 shares of common stock issued on the conversion of $33,750 in debentures under a Regulation E exemption. 150,000 shares of common stock issued for the acquisition of 95% of the common stock of Sino UJE, Ltd. under a Regulation E exemption.
Item 3.	Defaults Upon Senior Securities
	None

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Item 4.	Submission of Matters to Vote of Security Holders
	None
Item 5.	Other Information
	None
Item 6.	Exhibits and Reports on Form 8-K
	99.1 Chief Executive Officer Certification as Adopted Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002. 99.2 Chief Financial Officer Certification as Adopted Pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002.