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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K


(Mark One)


|      |                                                                                   
|----- | ----------------------------------------------------------------------------------
|[ X ] | ANNUAL REPORT UNDER SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year
Ended December 31, 2003



Commission file
number 000-27715



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


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|                                                                       |  |                                             
|---------------------------------------------------------------------- |  | --------------------------------------------
|                                                                       |  |                                             
|Nevada                                                                 |  | 33-0788293                                  
|(State
    or other jurisdiction of
    incorporation or organization) |  | (I.R.S.
    Employer
    Identification No.)
|                                                                       |  |                                             
|43180 Business Park Dr., Suite 202 Temecula, CA         92590         
|(Address of principal executive offices)           
    Zip Code      
|                                                                       |  |                                             
|Registrant's telephone number, including area code:(909) 587-9100     
|                                                                       |  |                                             
|                                                                       | 
|Securities to be registered under
      Section 12(g) of the Act:     
|Common Stock, $0.001 par value
      (Title of Class)                 

Check whether the Issuer (1) 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), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No[X]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non affiliates computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock as March 15, 2004 was $0.06, based on the last sale
price of $0.06 as reported by the Pink Sheets.
The Registrant had 3,688,267 shares of common stock, $0.001 par value,
outstanding as of March 15, 2004.



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NICHOLAS INVESTMENT
  COMPANY, INC.




TABLE OF CONTENTS


PAGE NUMBER PART
      IITEM 1.
      
      BUSINESS
      3DESCRIPTION OF BUSINESS
      3COMPANY
      STRATEGY
      3ITEM 2.
      
      DESCRIPTION OF PROPERTY
      6ITEM 3.
      
      LEGAL
      PROCEEDINGS
      6ITEM 4.
      
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
      6PART IIITEM 5.
      
      MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
      7MARKET
      INFORMATION
      7HOLDERS
      7DIVIDENDS
      7ITEM 6.
      
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
      8ITEM 7.
      
      FINANCIAL STATEMENTS
      12ITEM 8.
      
      CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS
      12PART
      IIIITEM 9.
      
      DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
      12ITEM 10.
      
      EXECUTIVE COMPENSATION
      13REMUNERATION PAID TO EXECUTIVES
      13REMUNERATION PAID TO DIRECTORS
      13EMPLOYMENT AGREEMENTS
      13EMPLOYEE BENEFITS
      13ITEM 11.
      
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      14ITEM 12.
      
      CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
      14ITEM 13.
      
      EXHIBITS AND REPORTS ON FORM 8-K
      15ITEM 14.
      
      PRINCIPAL ACCOUNTANT FEES AND SERVICES
      16SIGNATURES
      16 ii


PART I Forward Looking Statements
  This document includes statements that may constitute forward-looking
  statements made pursuant to the Safe harbor provisions of the Private
  Securities Litigation reform Act of 1995. The Company would like to caution
  certain readers regarding certain forward-looking statements in this document
  and in all if its communications to shareholders and others, on managements
  projections, estimates and all other communications. Statements that are based
  on management's projections, estimates and assumptions are forward-looking
  statements, the words believe, expect, anticipate, intend and similar
  expressions generally identify forward-looking statements. While the Company
  believes in the veracity of all statements made herein, forward-looking
  statements are necessarily based upon a number of estimates, and assumptions
  that, while considered reasonable by the Company, are inherently subject to
  significant business, economic and competitive uncertainties and contingencies
  and know and unknown risks. Many of the uncertainties and contingencies can
  affect events and the Company's actual results and could cause its actual
  results to differ materially from this expressed in any forward-looking
  statements made by, or on behalf, of the Company. ITEM 1. DESCRIPTION OF BUSINESS
    Nicholas Investment Company, Inc. ("the Company" or "NIVI")
  was incorporated under the laws of Nevada on January 22, 1998 to engage in any
  lawful activity as shall be appropriate under laws of the State of Nevada.
  Until April 2003 Nicholas Investment Company was in the business of acquiring
  and leasing real estate. Nicholas Investment raised $202,800.00 in 1998 and
  purchased four single-family dwellings, which were subsequently sold.
    On April 1, 2002, Nicholas Investment Company, Inc.
  (Nicholas), and Virgin Lakes Development Corporation (Virgin Lakes), completed
  an Agreement of Reorganization whereby Nicholas issued 30,000 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
  56,727 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. Virgin
  Lakes Development Corporation, had three subsidiaries, The Town Square, LLC
  (100% owned), Shadow Ridge Water Company (86% owned), and H & L Specialties
  (70% owned). 
    As of December 31, 2002, Management determined that the value
  of these businesses was substantially below book and determined to liquidate
  each of these holdings. As such, all assets, liabilities, and activities of
  these businesses have been included as discontinued operations. An impairment
  loss of $125,521 has been recorded to reduce the value of the assets
  associated with the discontinued operations to zero. In April 2003, the
  Company exchanged all of its ownership in each of these companies in exchange
  for the forgiveness of the related party debts and the assumption of trade
  payables associated with the businesses. 
    On May 14, 2003, two of the Company's officers and Directors
  submitted their resignations. The Company's remaining Director, Darryl
  Schuttloffel, appointed two new Directors and officers and charged them with
  developing and implementing a business strategy. On May 20, 2003, Mr.
  Schuttloffel also resigned as an officer and director of the Company.
    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.
    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.  3
 Investment Strategy
 Nicholas
  Investments intends to make strategic investments in cash-flow positive
  companies with perceived growth potential. The Investment Committee has
  adopted a charter wherein these two criteria a weighed against other criteria
  including strategic fit, investment amount, management ability, etc. In
  principle, the Company will prefer to make investments in companies where
  Nicholas can acquire at least a 51% ownership interest in the outstanding
  capital of the portfolio company.
    
    As a Business Development Company, the Company is required to
  have at lease 70% of its assets in "eligible portfolio companies." It is
  stated in the Investment Committee Charter that the Company will endeavor to
  maintain this minimum asset ratio. Portfolio Investments
    The Company presently has two portfolio investments: Javelin
  Holdings, Inc., a California company specializing in management and financial
  services, and SINO UJE, a Hong Kong company headquartered out of Temecula,
  California that engages in distribution activities throughout Asia. The
  Company owns 100% of the common stock of Javelin Holdings, which it acquired
  in exchange for 200,000 shares of the Company's restricted common stock. As of
  December 31, 2003, the Company's investment in Javelin Holdings was valued at
  $376,000, based on a combination of Javelin's 2003 net revenues plus its net
  assets.
    As of December 31, 2003, the Company had not completed its
  investment transaction with SINO UJE, but had advanced SINO UJE approximately
  $94,000, which amount is reflected as a Note Receivable in the accompanying
  financial statements. In January 2004, the Company acquired approximately 95%
  of the total capital stock of SINO UJE in exchange for 150,000 shares of the
  Company's common stock plus a commitment to provide a line of credit to SINO
  of up to $1,000,000. As this transaction occurred subsequent to 12/31/03, the
  Company has valued its investment in SINO at $94,000, representing the amount
  of the advance to SINO, as of 12/31/03. 
  A discussion of each of the Company's portfolio investments is as follows:
  JAVELIN HOLDINGS, INC.
    Javelin Holdings, a California corporation, was incorporated
  on December 31, 2002 for use as a shell corporation. In June 2003, Javelin
  acquired a 100% interest in Peak Solutions in exchange for 100% of Javelin's
  then-outstanding common stock. This transaction was accounted for as a reverse
  merger since the management of Peak Solutions became the new management of
  Javelin. Accordingly, the historical activity of Javelin described herein
  refers to the activity of Peak Solutions.
    Located in Temecula, California, Javelin is a private
  investment, management and consulting company. Historically, Javelin has
  generated income through the consulting services of its two principals, Mr.
  Steven Peacock and Mr. Shane Traveller. As a consulting operation, Javelin's
  expertise is working with micro-cap and small-cap companies across various
  industries in "turn around" scenarios. In this capacity, Javelin has extensive
  experience in fund-raising, operations, and management. To a limited extent,
  Javelin has provided some direct investment into client companies. The Company
  anticipates increasing its level of direct investment participation in
  companies that have strong management and fundamentals. 
    Going forward, Javelin is expanding its operations to include
  the acquisition of publicly-traded, but inactive, public companies, infusing
  them with capital, and then managing the new companies as they acquire and
  operate subsidiaries. 
    Javelin Holdings fills the current void in financing for
  small, developing companies. Operating as a hybrid between a management group,
  a consultant firm, and a holding company, Javelin expects to generate revenues
  from multiple sources.Revenues
    Javelin's business model generates revenues by both assisting
  client companies in raising capital, and acquiring and operating businesses
  ourselves. Specifically, Javelin anticipates engaging in the following
  activities: 1. Locating and acquiring inactive
    public companies.
    2. Bringing the public vehicles into compliance with the provisions of the
    1933 and 1934 Act and then infusing them with capital.
    3. Using the capital in these companies to invest in operating businesses.
    4. Assisting with the management of the operating companies.
    5. Consulting with publicly-traded clients to assist them with raising
    money.
    6. Making limited, short-term investments into client companies in the form
    of convertible debentures.
    7. Assisting client companies to create liquidity in their stocks through
    public relations, strategic acquisitions, etc.
    8. Financing client companies through private placements and other stock
    sales. 4
 
 In light of all of the above list
  activities, Javelin expects to generate revenues from several areas: Consulting Fees. Javelin has
    heretofore generated fees from consulting to various micro-cap and small-cap
    public companies. Typically trading on either the OTC.BB or "pink sheets,"
    these companies can often benefit from several services offered by Javelin
    including
    assistance with capital raising
    merger/acquisition structure and
    negotiation
    improving stock liquidity, and
    market development
    conversion into business
    development company
    quarterly and annual report
    preparation/SEC compliance
    audit committee and board of
    director services In each instance above, Javelin
    charges consulting fees ranging from hourly billing to flat monthly fees
    payable in either cash or free-trading stock. Purchase of convertible
    debentures. Convertible debentures, while devastating to a company in large
    amounts or when used as long-term financing, can be used effectively and
    without harm in limited quantities and for relatively short-term cash needs.
    A convertible debenture is a debt instrument that allows the holder to
    convert their debt position into common stock, usually at some
    pre-determined discount to market. Because the conversion rate is fixed
    rather than the conversion price, convertible debentures can have the effect
    of spiraling down a stock price through wanton conversion by the holders.
    Javelin will buy debentures from select clients in instances where there is
    limited other convertible debt on the client's books and where the client
    has entered into management contract with Javelin.  Purchase of Stock. Once a public
    company has been "cleaned" (is fully compliant and has a favorable equity
    structure), and is in a position to issue stock, Javelin proposes being a
    primary source of this investment capital for its clients by purchasing
    common stock from them at a discount to market and then selling the stock at
    market rates.  Management Fees. In select
    instances, Javelin will acquire a controlling interest in a public vehicle
    with the intention of cleaning the company up and preparing the company to
    receive a capital infusion. Javelin intends to charge such companies
    management fees as compensation for its efforts to clean up the company,
    provide financing, and ongoing management support. Javelin's intention is to
    centralize all management and overhead of all subsidiary companies in order
    to reduce costs and better control operations. SINO UJE, LTD.
    SINO UJE is a distribution company founded in June 2001 to
  exclusively sell and service western designed and manufactured high-tech
  products in the China market. SINO has direct offices in the USA, Japan, and
  Europe to seek, establish, and manage relationships with its suppliers. Direct
  offices are maintained throughout China which engages in the sales and service
  of the products and services of our suppliers. 
    SINO is currently representing seven companies in China as
  agents/distributors. Since its inception, SINO has actively pursued setting up
  the two divisions: Medical Products and Industrial Products. In this first
  stage of business, effort has been spent setting up local and regional
  distribution throughout the country for the represented products, initiating
  and managing the regulatory approval process for the medical products
  represented, setting up offices, employing and training direct sales and
  service personnel, translating and printing sales and technical tools and
  manuals, and applying for proper business licenses in the different regions of
  China.
  Medical Products Division Market Sector - The market for the SINO's medical
  products and services are the 320,000 hospitals in China that utilize medical
  imaging equipment.
  Industrial Products Division Market Sector - The market for SINO's industrial
  products and services are the industrial markets in China that utilize high
  tech process control instrumentation. These industries include but are not
  limited to steel, pulp/paper, timber/wood products, electronics, plastics,
  petrochemicals, tobacco, converting, and furniture. 5
 Sales and Marketing - SINO sells and services medical and industrial products
  in China through both direct selling activity and relationships with a
  nationwide network of local and regional agents. Direct offices in Shanghai
  and Guangzhou are operational for the direct sales coordination and the
  management of the distribution network.
  Operations - With offices around the world, SINO is in operation 24 hours/day.
  SINO's headquarters are in Temecula, California with satellite offices in
  Japan, Europe and Hong Kong.
  Channels of Distribution - Through both direct selling activity and
  relationships with a network of regional agents, SINO UJE sells its products
  and services throughout China. The fundamental business model, employed by
  SINO, is market share over short-term profits. This separates SINO from the
  standard business practice of most Chinese distribution companies, as the norm
  is to maximize the margin on every transaction with no thought to the medium
  and long-term ramifications of this practice.
    SINO utilizes a network of local and regional distributors in
  China that have been developed over the two years since SINO's inception. This
  distribution network sells and services the products that are supplied by the
  Original Equipment Manufacturers (OEMs) in the USA, Japan and Europe that are
  exclusively represented by SINO.
    SINO's business strategy of market share over short-term
  profits ensures high volume sales of the products and services it represent.
  High volume turnover ensures the OEM's satisfaction with SINO's services and
  promotes lasting relationships. The satisfaction of  suppliers enhances
  our ability to attract other market leaders in any given field or technology.
  
    Within the two product groups and divisions of SINO, there
  will be 14 exclusive suppliers for a total of 28 suppliers. The Medical
  Division and medical market is where SINO is focused initially. With
  additional capital, the Industrial Division will be developed. When mature,
  this model will have 14 suppliers for both product groups. Employees 
    Exclusive of Javelin and SINO operations, Nicholas presently
  has five employees who serve in administrative positions. Management intends
  to hire additional employees only as needed and as funds are available. In
  such cases compensation to management and employees will be considered with
  prevailing wages for services rendered. ITEM 2. DESCRIPTION OF PROPERTY
    Nicholas Investment leases approximately 2,337 square feet at
  43180 Business Park, Dr., Suite 202, Temecula, CA 92590, which it leases on a
  30-month lease for $3,272 per month. The lease expires on June 30, 2006. This
  facility serves as the corporate headquarters for Nicholas, Javelin and SINO.
  Management believes that its facilities are adequate for its present business. ITEM 3. LEGAL PROCEEDINGS
    Nicholas Investment is not a party to any material pending
  legal proceedings and no such action by, or to the best of its knowledge,
  against Nicholas Investment has been threatened. ITEM 4. SUBMISSION OF MATTERS TO A
  VOTE OF SECURITY HOLDERS
    A special meeting of shareholders of Nicholas Investment
  Company, Inc. was held on November 10, 2003 where the following actions were
  taken by a majority vote of shareholders: 
  1. The Company's Articles of Incorporation were amended: 
  a. To effect a one-for-200 reverse stock split of the Company's common stock
  (the "Common Stock") by reducing the number of issued and outstanding shares
  of Common Stock from 165,373,752 to approximately 826,866 (the "Reverse
  Split"); and 
  b. To authorize 550 million shares of capital stock of the Company, of which
  500 million shares relate to Common Stock and 50 million shares relate to
  preferred stock, subject to further designation by the Board of Directors of
  the Company; and 
  c. To permit action upon the written consent of less than all shareholders of
  the Company, pursuant to the Nevada Revised Statute. 
  2. Messer's. Peacock and Traveller were elected members of the Board of
  Directors. 
  3. HJ Associates & Consultants, LLP were approved as the Company's independent
  auditors for the coming year. 
  4. The Company's sale of common stock at prices below net asset value per
  share was approved. 6  PART II ITEM 5. MARKET FOR COMMON EQUITY
  AND RELATED STOCKHOLDERS MATTERSMarket Information 
    The Company's Common Stock has been traded on the Pink Sheets
  since March 2002 under the symbol "NIVI" and since November 2003 under the
  symbol "NIVM." The following table sets forth the trading history of the
  Common Stock on the Pink Sheets for each quarter since March 2002 through
  December 31, 2003, as reported by Dow Jones Interactive. The quotations
  reflect inter-dealer prices, without retail mark-up, markdown or commission
  and may not represent actual transactions. Quarter Endings
      Quarterly High
      Quarterly Low
      Quarterly Close3/29/2002
      60.00
      20.00
      60.006/28/2002
      90.00
      1.40
      1.409/30/2002
      20.00
      0.30
      0.3012/31/2002
      8.00
      0.20
      0.203/31/2003
      2.00
      0.12
      1.606/30/2003
      0.20
      0.12
      0.1209/30/03
      28.00
      4.00
      16.0012/31/03
      .80
      0.21
      0.21 Holders of record As of December 31,
  2003 there were approximately 104 holders of record of the Company's common
  stock. Dividends The Company has
  never paid a cash dividend on its common stock. Payment of dividends is at the
  discretion of the Board of Directors. The Board of Directors plans to retain
  earnings, if any, for operations and does not intend to pay dividends in the
  foreseeable future.
  Recent Sales of Unregistered Securities
    Except as otherwise noted, the securities described in this
  Item 5 were issued pursuant to the exemption from registration provided by
  Section 4(2) of the Securities Act of 1933. Each such issuance was made
  pursuant to individual contracts which are discrete from one another and are
  made only with persons who were sophisticated in such transactions and who had
  knowledge of and access to sufficient information about the Company to make an
  informed investment decision. Among the information provided was the fact that
  the securities issued were restricted. No commissions
  were paid in connection with the transactions described below unless
  specifically noted.
    On April 1, 2002 the Company issued 1,500 shares of common
  stock 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 800 shares of common
  stock 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. 
    600,000 shares of Preferred Convertible stock were issued to
  P.R. Businesses Incorporated for the down payment on the purchase of an office
  building in Las Vegas, NV. The purchase of this property was later abandoned
  and the 600,000 shares of convertible preferred stock were returned to the
  Company and cancelled in 2003. 7  168,500 shares of common stock restricted under Rule 144 and
  valued at par value, were issued to the Directors of the Corporation for their
  respective efforts in obtaining assets for the Corporation, their sharing of
  intellectual assets, and for services to the Company since inception. 
    
    On August 19, 2002, the corporation issued 1,000,000 shares
  of Convertible Preferred Stock valued at $.001 per share to Career Worth
  Incorporated in exchange for 1,000,000 shares of stock in the Career Worth
  Incorporation. In 2003, the Company and Career Worth agreed to unwind this
  transaction and, accordingly, the respective shares of stock were returned.
  The Convertible Preferred Stock was subsequently cancelled by the Company.
    On October 1, 2002, the Company issued a total of 1,500
  shares of common stock to Advantage Services Group in anticipation of
  acquiring this company. The acquisition was never consummated; however, the
  Company did not receive back the stock. The shares issued were restricted
  pursuant to Rule 144.
    During the year ended December 31, 2002, the Company sold a
  total of 20,250 shares of common stock for cash of $42,500. The shares issued
  were restricted under Rule 144.
    In December 2002, the Company issued a total of 410 shares of
  common stock in exchange for 81,835 shares of common stock in a
  partially-owned subsidiary. The shares issued were restricted pursuant to Rule
  144.
    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 approximately $5,000. In addition, the Company reimbursed MRG $28,500,
  which represented all monies advanced to the Company by MRG and legal expenses
  incurred.
    On November 14, 2003, the Board of Directors created and
  approved a new series of preferred stock, Series C Preferred, which consists
  of 12 million shares. The Series C Preferred Stock does not earn interest, is
  not entitled to receive dividends and does not have voting privileges. The
  Series C is convertible into shares of common stock on a 1:1 basis at the
  election of the holder or, in the event of liquidation of the Company, it
  converts automatically. The Series C Preferred, while not voting stock, is
  entitled to name two directors to the Board of Directors. 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. The Series B preferred stock was subsequently cancelled by
  vote of the Board of Directors.
    Between August 2003 and December 31, 2003, the Company raised
  a total of $102,296 through the issuance of convertible debentures. These
  debentures mature in sixty days from the date of issuance and are convertible
  into common stock of the Company at either the option of the holder or the
  Company. In the event of liquidation, the debentures automatically convert
  into common stock.
    On November 20, 2003, the Company issued a total of 2,310,000
  shares of common stock restricted under Rule 144. Of these shares, 200,000
  were issued to Messer's Peacock and Traveller in exchange for 100% of the
  common stock of Javelin Holdings, Inc., a business consulting company of which
  they were the sole owners. The purchase of Javelin Holdings was voted on and
  approved by the independent members of the Board of Directors. The remaining
  2,110,000 shares were issued to nine (9) individuals unrelated to the Company
  as payment for services to be rendered. These shares were subsequently
  cancelled and have been omitted from the computation of issued and outstanding
  shares of common stock.
    As of December 31, 2003, Nicholas Investment had 2,346,596
  shares of common stock outstanding. ITEM 6. MANAGEMENTS DISCUSSION AND
  ANALYSIS OR PLAN OF OPERATION
    The following information should be read in conjunction with
  the consolidated financial statements and notes thereto appearing elsewhere in
  this Form 10-K. Plan of Operation
    Nicholas Investment was 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. The Company
  acquired several rental properties, which were subsequently sold. 8  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.
    As of December 31, 2003, management has recognized that there
  is a deficiency in liquidity. Such deficiency has been noted in the notes to
  the financial statements and the audit opinion. To remedy this situation, the
  Board of Directors authorized management to file Form 1-E with the Commission
  notifying of its intent to sell up to $5 million of the Company's common stock
  under a Regulation E exemption. The Company has also, through a market maker,
  filed a Form 15C-211 with the NASD to seek listing on the "over-the-counter
  bulletin board" (OTCBB). 
    In November 2003, the Company acquired a 100% interest in
  Javelin Holdings, Inc., a private company that performs management and
  financial consulting. Javelin Holdings is a highly profitable enterprise that
  has contributed approximately $139,923 in working capital to the Company since
  the acquisition.
    In January 2004, the Company acquired a 95% interest in SINO
  UJE, a private distribution company specializing in the Asian markets. With
  offices in the U.S., Europe and China, SINO is in the growth mode and expects
  to continue to need capital infusions through mid-2004. Management expects to
  fund these capital infusions into SINO through earnings from Javelin and from
  the sale of common stock under the Regulation E exemption.
    Management plans to continue to make portfolio investments as
  opportunities present themselves.
    Currently, there are no commitments for material expenditures
  other than the line of credit for up to $1,000,000 for SINO UJE. It should be
  noted that the Company's auditors HJ Associates, LLC., have expressed in their
  audit opinion letter that there is substantial doubt about the Company's
  ability to continue as a going concern. Liquidity and Capital Resources
    The Company's financial statements present an impairment in
  terms of liquidity. As of December 31, 2003 the Company had $18,193 in current
  assets and the Company's total assets exceeded total liabilities by
  approximately $368,198. The Company has accumulated $2,022,557 of net
  operating losses through December 31, 2003, which may used to reduce taxes in
  future years through 2022. The use of these losses to reduce future income
  taxes will depend on the generation of sufficient taxable income prior to the
  expiration of the net operating loss carryforwards. The potential tax benefit
  of the net operating loss carryforwards have been offset by a valuation
  allowance of the same amount. The Company has not yet established revenues to
  cover its operating costs. Management believes that the Company will soon be
  able to generate revenues sufficient to cover its operating costs through the
  acquisition of operating subsidiaries. In the event the Company is unable to
  do so, and if suitable financing is unavailable, there is substantial doubt
  about the Company's ability to continue as a going concern.Results of Operation
    For the year ended December 31, 2003 the Company had a net
  loss of $108,683 compared to a net loss of $1,855,046 for year ended December
  31, 2002, and a loss of $58,828 for the period from inception on April 17,
  2001 through December 31, 2001. Most of the loss incurred in 2003 resulted
  from interest expense of approximately $184,000 attributed to the recording of
  a conversion discount on convertible debentures issued during the year. In
  2002 and 2001, the loss was all attributed to discontinued operations. In
  April 2003, the Board of Directors elected to abandon the existing real estate
  holding operations and proceeded to spin off those operations. As a result,
  such operations were classified as discontinued operations in the accompanying
  financial statements. Of the $1,855,046 incurred in 2002, the majority related
  to the recording of common stock issued to the Company's then-officers,
  directors and consultants. None of the Company's current officers have
  received any stock for services. Accounting regulations require the Company to
  value all stock issued at market rates even though the shares issued are
  restricted and the market for the Company's stock is illiquid. During 2002, an
  impairment loss of $125,521 was recorded to reduce the value of the assets
  associated with the discontinued operations to zero.
    Also in 2003, the Company recorded $280,000 in unrealized
  gain on its investment in Javelin Holdings, Inc., compared with a loss of
  $125,521 and $0 for the years 2002 and 2001, respectively. The variance
  results from the Company's discontinuation of all operations during early 2003
  and the subsequent acquisition of Javelin Holdings in November 2003. The
  Company recognized an unrealized gain on its investment in Javelin
  attributable to a rapid increase in Javelin's revenues and profitability
  subsequent to acquisition. 9  RISK FACTORS We are subject to
  various risks that may materially harm our business, financial condition and
  results of operations. If any of these risks or uncertainties actually occurs,
  our business, financial condition or operating results could be materially
  harmed. Quantitative and Qualitative Disclosure about Market Risk
  Our business activities contain elements of risk. We consider the principle
  types of risk to be portfolio valuations and fluctuations in interest rates.
  We consider management of risk essential to conducting our business.
  Accordingly, our risk management systems and procedures are designed to
  identify and analyze our risks, to set appropriate policies and limits, and to
  continually monitor these risks and limits by means of reliable administrative
  and information systems and other policies and programs.
  As a business development company, we invest in illiquid securities including
  debt and equity securities of primarily private companies. Our investments are
  generally subject to restrictions on resale and generally have no established
  trading market. We value substantially all of our investments at fair value as
  determined in good faith by the board of directors in accordance with our
  valuation policy. There is no single standard for determining faire value in
  good faith. As a result, determining fair value requires that judgment be
  applied to the specific facts and circumstances of each portfolio investment
  while employing a consistently applied valuation process for the types of
  investments we make.
  We determine fair value to be the amount for which an investment could be
  exchange in an orderly disposition over a reasonable period of time between
  willing parties other than in forced or liquidation sale. Our valuation policy
  considers the fact that no ready market exists for substantially all of the
  securities in which we invest. Our valuation policy is intended to provide a
  consistent basis for determining the fair value of the portfolio. We will
  record unrealized depreciation on investments when we believe that an
  investment has become impaired, including where collection of a loan or
  realization of an equity security is doubtful, or when the enterprise value of
  the company does not currently support the cost of our debt or equity
  investments. Conversely, we will record unrealized appreciation if we believe
  the underlying portfolio company has appreciated in value and, therefore, our
  equity security has also appreciated in value. The values of investment in
  public securities are determined using quoted market prices discounted for
  restrictions on resale. Without a readily ascertainable market value and
  because of the inherent uncertainty of valuation, the fair value of our
  investments determined in good faith by our board of directors mat differ
  significantly from the values that would have been used had a ready market
  existed for the investments, and the differences could be material. In
  addition, the illiquidity of our investments may adversely affect our ability
  to dispose of debt and equity securities at times when it may otherwise be
  advantageous for us to liquidate such investments. In addition, if we were
  forced to immediately liquidate some or all of the investments in the
  portfolio, the proceeds of such liquidation would be significantly less than
  the current value of such investments.
  Because we can borrow money to make investments, our net investment income
  before net realized and unrealized gains or losses, or net investment income,
  can be dependent upon the difference between the rate at which we borrow funds
  and the rate at which we invest those funds. As a result, there can be no
  assurance that a significant change in the market interest rates will not have
  a material adverse effect on our net investment income. In periods of rising
  interest rates, our cost of funds would increase, which would reduce our net
  investment income. We use a combination of long-term and short-term,
  borrowings and equity capital to finance our investing activities. Our
  long-term fixed rate investments are financed primarily with long-term debt
  and equity. We may use interest rate risk management techniques in an effort
  to limit our exposure to interest rate fluctuations. Such techniques may
  include various interest rate hedging activities to the extent permitted by
  the 1940 Act.We Have Historically Lost Money and Losses May Continue in the Future
  We have historically lost money. Our loss for the fiscal year ended December
  31, 2003 was approximately $108,000 and future losses are likely to occur.
  Accordingly, we may experience significant liquidity and cash flow problems if
  we are not able to raise additional capital as needed and on acceptable terms.
  No assurances can be given that we will be successful in reaching or
  maintaining profitable operations. We Will Need to Raise Additional Capital to Finance Operations
  Our operations have relied almost entirely on external financing to fund our
  operations. Such financing has historically come from a combination of
  borrowings and from the sale of common stock and assets to third parties. We
  will need to raise additional capital to fund our anticipated operating
  expenses and future expansion. Among other things, external financing will be
  required to cover our operating costs. We cannot assure you that financing
  whether from external sources or related parties will be available if needed
  or on favorable terms. The sale of our common stock to raise capital may cause
  dilution to our existing shareholders. Our inability to obtain adequate
  financing will result in the need to curtail business operations. Any of these
  events would be materially harmful to our business and may result in a lower
  stock price. There is Substantial Doubt About Our Ability to Continue as a Going Concern
  Due to Recurring Losses and Working Capital Shortages, Which Means that We May
  Not Be Able to Continue Operations Unless We Obtain Additional Funding 10  The report of our independent accountants on our December 31, 2003 financial
  statements included an explanatory paragraph indicating that there is
  substantial doubt about our ability to continue as a going concern due to
  recurring losses and working capital shortages. Our ability to continue as a
  going concern will be determined by our ability to obtain additional funding.
  Our financial statements do not include any adjustments that might result from
  the outcome of this uncertainty. Our Common Stock May Be Affected By Limited Trading Volume and May
  Fluctuate Significantly
  Prior to this offering, there has been a limited public market for our common
  stock and there can be no assurance that an active trading market for our
  common stock will develop. As a result, this could adversely affect our
  shareholders' ability to sell our common stock in short time periods, or
  possibly at all. Our common stock has experienced, and is likely to experience
  in the future, significant price and volume fluctuations that could adversely
  affect the market price of our common stock without regard to our operating
  performance. In addition, we believe that factors such as quarterly
  fluctuations in our financial results and changes in the overall economy or
  the condition of the financial markets could cause the price of our common
  stock to fluctuate substantially. Substantial fluctuations in our stock price
  could significantly reduce the price of our stock.Our Common Stock is Traded on the "Pink Sheets," Which May Make it More
  Difficult For Investors to Resell Their Shares Due to Suitability Requirements
  Our common stock is currently traded on the "Pink Sheets" which is not a
  regulated market. We anticipate trading on the Over the Counter Bulletin Board
  (OTCBB) in the near term, where we expect it to remain for the foreseeable
  future. Broker-dealers often decline to trade in Pink Sheet and OTCBB stocks
  given that the market for such securities is often limited, the stocks are
  more volatile, and the risk to investors are greater. These factors may reduce
  the potential market for our common stock by reducing the number of potential
  investors. This may make it more difficult for investors in our common stock
  to sell shares to third parties or to otherwise dispose of them. This could
  cause our stock price to decline. We Could Fail to Retain or Attract Key Personnel
  Our future success depends, in significant part, on the continued services of
  Steven R. Peacock and Shane H. Traveller. We cannot assure you that we would
  be able to find an appropriate replacement for key personnel. Any loss or
  interruption of our key personnel's services could adversely affect our
  ability to develop our business plan. We do not have employment agreements
  with Messrs. Peacock and Traveller, nor do we presently maintain key-man life
  insurance policies on them. Nevada Law and Our Charter May Inhibit a Takeover of Our Company That
  Stockholders May Consider Favorable
  Provisions of Nevada law, such as its business combination statute, may have
  the effect of delaying, deferring or preventing a change in control of our
  company. As a result, these provisions could limit the price some investors
  might be willing to pay in the future for shares of our common stock. Our Officers and Directors Have the Ability to Exercise Significant
  Influence Over Matters Submitted for Stockholder Approval and Their Interests
  May Differ From Other Stockholders
  Our executive officers and directors, in the aggregate, have the ability to
  nominate two (2) members to the Board of Directors. Accordingly, our directors
  and executive officers, whether acting alone or together, may have significant
  influence in determining the outcome of any corporate transaction or other
  matter submitted to our Board for approval, including issuing common and
  preferred stock, and appointing officers, which could have a material impact
  on mergers, acquisitions, consolidations and the sale of all or substantially
  all of our assets, and also the power to prevent or cause a change in control.
  The interests of these board members may differ from the interests of the
  other stockholders.We May Change Our Investment Policies Without Further Shareholder Approval
  Although we are limited by the Investment Company Act of 1940 with respect to
  the percentage of our assets that must be invested in qualified investment
  companies, we are not limited with respect to the minimum standard that any
  investment company must meet, nor the industries in which those investment
  companies must operate. We may make investments without shareholder approval
  and such investments may deviate significantly from our historic operations.
  Any change in our investment policy or selection of investments could
  adversely affect our stock price, liquidity, and the ability of our
  shareholders to sell their stock.Our Investments May Not Generate Sufficient Income to Cover Our Operations
  We intend to make investments into qualified companies which we hope will
  provide the greatest overall return on our investment. However, certain of
  those investments may fail, in which case we will not receive any return on
  our investment. In addition, our investments may not generate income, either
  in the immediate future, or at all. As a result, we may have to sell
  additional stock, or borrow money, to cover our operating expenses. The effect
  of such actions could cause our stock price to decline or, if we are not
  successful in raising additional capital, we could cease to continue as a
  going concern. 11  ITEM 7. FINANCIAL STATEMENTS
    See the financial statements annexed to this report. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
    Not applicable. PART III. ITEM 9. DIRECTORS, EXECUTIVE
  OFFICERS, PROMOTERS AND CONTROL PERSONSThe executive officers and directors of the Company as of
  December 31, 2003 are as follows: NAME
      AGE
      POSITIONSteven R. Peacock
      58
      Chief Executive Officer, DirectorWilliam J. Schubert, Jr.
      48
      DirectorTheodore Tanski
      56
      Director The business experience of each of the persons listed above
  is as follows: 
    Steven R. Peacock - Mr. Peacock was appointed to the Board of
  Directors in May 2003 and also serves as the Company's Chief Executive
  Officer. Mr. Peacock is the founding partner of Peak Solutions, a business
  consulting company that specializes in start-up, troubled and small-cap public
  companies. Before starting Peak Solutions, Mr. Peacock was President of
  Peacock Financial, a business development company he founded to invest in and
  acquire real estate, and various other operating businesses. Mr. Peacock has
  over fifteen years of experience in seeking out and identifying emerging
  growth investment opportunities, both startup companies and work-out
  assignments, and twenty years of experience in the real estate development
  industry. Mr. Peacock has an extensive operating knowledge of the Business
  Development Company process, having operated the first BDC on the West Coast
  from 1998 to 2000. During that period, he was directly responsible for raising
  approximately $8M under Regulation E, creating market liquidity for the
  company's stock and building the company's investor base from 250 to over
  4,000 shareholders.
    Theodore Tanski, Director - Mr. Tanski us a highly
  accomplished financial and marketing professional with over 30 years
  experience in investments and client services. Ted is currently Executive Vice
  President and a partner in Beaconsfield Financial Services, Inc., a
  full-service brokerage and investment banking firm, a position he has held
  since 1988. Mr. Tanski has extensive experience in a wide range of financial
  markets as both an investment banker and broker/dealer that includes
  underwriting, private placements, corporate financing, financial research,
  partnership and corporate portfolio management. Prior to his tenure with
  Beaconsfield, Mr. Tanski was a vice president with Shearson Lehman Brothers
  where he managed personal and corporate investment portfolios with a focus on
  international markets. Mr. Tanski holds a B.S. degree from the University of
  Pittsburgh. 
    William J. Schubert, Jr., Director - Mr. Schubert is the
  founder and current president of MedEdge, Inc., a medical device distribution
  company covering the western United States formed in 2001. Before starting
  MedEdge, Mr. Schubert was Chief Executive Officer and Vice Chairman of
  Trimedyne, Inc., a NASDAQ NMS-listed manufacturer of surgical lasers and
  peripherals, a position he held after previously serving as that company's
  Vice President of Sales and Marketing. Before joining Trimedyne, Mr. Schubert
  was the founder and president of Mobile Surgical Technologies, Inc., a mobile
  surgical contractor that provided medical equipment and services to doctors
  and hospitals in the southwestern United States. Mr. Schubert has over 15
  years experience in medical device sales management, and an additional ten
  years experience in sales management in other industries. Mr. Schubert holds a
  B.S. degree in business from Southwest Texas State University.Meetings
    During the year ended December 31, 2003, the Board of
  Directors met on four occasions. Each incumbent Director attended at least 75%
  of the total number of meetings of the Board of Directors. 12  Compensation of Directors
    Our independent directors are compensated $1,000 each per
  month for services provided as a Director. During the year ended December 31,
  2003, our independent directors received a stock grant of 250,000 shares each
  of Series C Convertible Preferred Stock as compensation for their service on
  the Board of Directors. Our independent directors received no other
  consideration in exchange for their services to the company, nor did they
  perform any service that would fall outside the scope of their duties as
  directors. ITEM 10. EXECUTIVE COMPENSATIONSummary Compensation Table
    The following table sets forth the annual and long-term
  compensation for services in all capacities for the year ended December 31,
  2003 paid to Steven R. Peacock, our Chief Executive Officer during 2003. No
  other executive officers received compensation exceeding $100,000 during the
  year ended December 31, 2003. Summary Compensation TableAnnual Compensation
      Long Term
      CompensationAwardsName and Principal
      Position
      
      Year
      
      Salary
      
      Bonus
      
      Other Annual
      Compensation
      
      Restricted Stock
      Award(s)
      
      Securities Underlying
      Options
      
      All Other
      CompensationSteven R. Peacock
      
      2002
      
      $-0-
      
      $-0-
      
      $-0-
      
      --
      
      --
      
      --Chief Executive
      Officer(1)
      
      2003
      
      $15,000
      
      $-0-
      
      $-0-
      
      --
      
      --
      
      -- (1)Mr. Peacock became Chief
    Executive Officer effective as of May 20, 2003. The prior CEO, Darryl
    Schuttloffel did not receive any compensation from the Company during 2003. There were no stock
  options granted during the year ended December 31, 2003. There were no stock
  options outstanding as of December 31, 2003.Employment Agreements
    The Company does not currently have any employment agreements
  in place.Indemnification
    As permitted by the provisions of the General Corporation Law
  of the State of Nevada, the Company has the power to indemnify any person who
  was or is a party or is threatened to be made a party to any threatened,
  pending or completed action, suit or proceeding, whether civil, criminal,
  administrative or investigative, by reason of the fact that the person is or
  was a director, officer, employee or agent of the corporation if such officer
  or director acted in good faith and in a manner reasonably believed to be in
  or not opposed to the best interest of the Company. Any such person may be
  indemnified against expenses, including attorneys' fees, judgments, fines and
  settlements in defense of any action, suit or proceeding. The Company does not
  maintain directors and officers' liability insurance.Compliance With Section 16(a) of the Securities Act of 1934
    Section 16(a) of the Securities Exchange Act of 1934 requires
  directors and executive officers, and persons who own more than 10% of a
  registered class of our equity securities to file with the Securities and
  Exchange Commission initial reports of ownership and reports of changes in
  ownership of Common Stock and other of our equity securities. Officers,
  directors and greater than 10% shareholders are required by SEC regulations to
  furnish the Company with copies of all Section 16(a) forms they file. To our
  knowledge, none of the officers and directors of the company have filed the
  required reports with respect to our stock. 13  ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The
  following table sets forth information, to the best knowledge of the Company,
  as of December 31, 2003, with respect to each person known by Nicholas
  Investment to own beneficially more than 5% of the outstanding Common Stock,
  each director and officer, and all directors and officers as a group. Name and Address (1)
      
      Title of Class
      
      Amount Owned
      
      Percentage of
      Class (2)Steven R. Peacock
      CEO and Director
      
      Common 
      Series C Pref.
      
      125,000
      2,816,666
      
      4.2%
      23.5%Theodore Tanski
      Director
      
      Common
      Series C Pref.
      
      -0-
      250,000
      
      *
      2%William J. Schubert,
      Jr.
      Director
      
      Common
      Series C. Pref.
      
      -0-
      250,000
      
      *
      2%Shane H. Traveller
      CFO
      
      Common
      Series C Pref.
      
      125,000
      2,816,667
      
      4.2%
      23.5%All Directors and
      
      Officers as a group
      
      Series C Pref.
      Common
      
      6,133,333
      250,000
      
      51%
      8.4% (1) Unless indicated otherwise, the
  address for each of the above listed is c/o Nicholas Investment Company at
  43180 Business Park Dr., Suite 202, Temecula, CA 92590.
  (2) The above percentages are based on 2,346,596 outstanding common shares,
  and 12 million shares of Series C preferred stock, as of December 31, 2003.
  ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    The Company's 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 Company's 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 to presented and only in that event, any of the
  Company's 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. 
    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 Peak Solutions, a private partnership controlled by the Company's
  Chief Financial Officer, in exchange for approximately $33,500, which
  represented the original $5,000 plus all monies advanced to the Company by MRG
  and legal expenses incurred. On November 15, 2003, the Company issued
  8,450,000 shares of Series C Convertible Preferred Stock to Peak Solutions
  (now called "Javelin Holdings, Inc.") 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.
    On November 18, 2003, the Company acquired 100% of the
  capital stock of Javelin Holdings, Inc., a privately-held company controlled
  by the Company's Chief Executive and Chief Financial Officers, in exchange for
  200,000 shares of the Company's restricted common stock. The transaction was
  approved by a unanimous vote of the Company's independent directors, who had
  no interest in Javelin. At the time of the acquisition, the 200,000 shares of
  the Company's stock was valued at approximately $40,000. 14  ITEM 13. CONTROLS AND PROCEDURES
    Evaluation of Disclosure Controls and Procedures. Based on an
  evaluation under the supervision and with the participation of the our
  management as of a date within 90 days of the filing date of this Annual
  Report on Form 10-K, our principal executive officer and principal financial
  officer have concluded that our disclosure controls and procedures (as defined
  in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934,
  are effective to ensure that information required to be disclosed in reports
  that we file or submit under the Exchange Act is recorded, processed,
  summarized and reported within the time periods specified in SEC rules and
  forms. 
    Changes in Internal Controls. There were no significant
  changes in our internal controls or in other factors that could significantly
  affect these controls subsequent to the date of their evaluation. There were
  no significant deficiencies or material weaknesses, and therefore there were
  no corrective actions taken. However, the design of any system of controls is
  based in part upon certain assumptions about the likelihood of future events
  and there is no certainty that any design will succeed in achieving its stated
  goal under all potential future considerations, regardless of how remote. ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
  (a)(1)(2) Financial Statements. See index to financial statements and
  supporting schedules.
  (a)(3) Exhibits.
            The following
  exhibits are filed as part of this statement:
            The exhibits
  listed below are required by Item 601 of Regulation S-B. Each management
  contract or compensatory plan or arrangement required to be filed as an
  exhibit to this Form 10-K has been identified. Exhibit No.
      Description
      Location3.1
      Articles of
      Incorporation
      Incorporated by
      reference to corresponding Exhibit previously filed.3.2
      Bylaws
      Incorporated by reference to corresponding Exhibit previously filed.4.1
      Form of Common Stock
      Certificate
      Incorporated by
      reference to corresponding Exhibit previously filed.99.1
      CEO Certification
      Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Sections 302 and
      906 of the Sarbanes-Oxley Act of 2002
      Filed herewith.99.2
      CFO Certification
      Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Sections 302 and
      906 of the Sarbanes-Oxley Act of 2002
      Filed herewith.  (b) Reports on Form 8-K
  Form 8-K filed on February 3, 2003 in which the Company notified the SEC that
  is had cancelled the agreement to acquire the office building as described in
  the Form 8-K filed on October 21, 2002.
  Form 8-K filed on June 12, 2003 in which the Company notified the SEC that the
  Board of Directors had issued 2,000,000 shares of Series B preferred stock to
  MRG California, Inc., such shares entitling the holder to 100 votes per share,
  effectively granting voting control of the Company to MRG. Also, that the
  Company had appointed a new Chief Executive Officer and Chief Financial
  Officer, that the two members of the Board of Directors has resigned, and that
  two new Directors had been appointed. Also, that the Company relocated its
  offices to Corona, California.
  Form 8-K filed on September 18, 2003 in which the Company notified the SEC
  that MRG California had returned the Series B preferred stock to the Company
  and therefore no longer had voting control of the Company, and that the Series
  B preferred stock had been transferred to Peak Solutions, a private
  partnership controlled by the two members of the Company's board of directors.
  Form 8-K filed on November 14, 2003 in which the Company notified the SEC that
  it had accepted the resignation of Shane H. Traveller from the Board of
  Directors. Mr. Traveller remained serving as the Company's Chief Financial
  Officer and Secretary. Messer's Theodore Tanski and William J. Schubert, Jr.
  were elected to fill the vacancies on the Board of Directors. With the
  election of Messer's Tanski and Schubert, the Company's Board of Directors is
  now majority comprised of independent directors.
  Form 8-K filed on November 26, 2003 in which the Company notified the SEC that
  it had acquired 100% of the capital stock of Javelin Holdings, Inc. in
  exchange for 200,000 shares of the Company's restricted common stock. 15   ITEM 14. PRINCIPAL ACCOUNTANT FEES
  AND SERVICES 
  Audit Fees
  The aggregate fees billed by the Company's auditors for the professional
  services rendered in connection with the audit of the Company's annual
  financial statements for fiscal 2003 and 2002 and reviews of the financial
  statements included in the Company's Forms 10-KSB for fiscal 2003 and 2002
  were approximately $17,500 and $17,750, respectively. Audit Related Fees
  The Company's auditors billed $681.00 and $1,450 of other fees relating to S-8
  registration statements for the years ended December 31, 2002 and 2003,
  respectively.Tax Fees
  The Company's auditors did bill $276.00 for a tax compliance issue in fiscal
  2002 but did not bill any additional fees or professional services for tax
  compliance, tax advice, or tax planning for fiscal 2003. All Other Fees
  The aggregate fees billed by the Company's auditors for all other non-audit
  services rendered to the Company, such as attending meetings and other
  miscellaneous financial consulting in fiscal 2003 and 2002 were $0 and $0,
  respectively. SIGNATURES In accordance with Section 13 or 15
  (d) of the Exchange Act. The Registrant caused this report to be signed on its
  behalf by the undersigned, thereunto duly authorized.  NICHOLAS
      INVESTMENT COMPANY, INC.
      By:/S/ Steven R. Peacock
      Steven R. Peacock
      Chief Executive Officer Dated: March 26, 2004
  In accordance with the Exchange Act, this report has been signed below by the
  following persons on behalf of the Registrant and in the capacities and on the
  dates indicated.




|SIGNATURE                                                |  | TITLE                                               |  | DATE          
|-------------------------------------------------------- |  | --------------------------------------------------- |  | --------------
|                                                         |  |                                                     |  |               
|/s/ Steven R.
    Peacock
    Steven R. Peacock          |  | President, Chief
    Executive Officer and Director |  | March 26, 2004
|                                                         |  |                                                     |  |               
|/s/ Theodore Tanski
    Theodore Tanski                  |  | Director                                            |  | March 26, 2004
|                                                         |  |                                                     |  |               
|/s/ William J.
    Schubert, Jr.William J. Schubert, Jr. |  | Director                                            |  | March 26, 2004
|                                                         |  |                                                     |  |               

16

---



NICHOLAS INVESTMENT
COMPANY, INC.
a Nevada corporation
CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Steven R. Peacock,
certify that:

> 1. I have reviewed this annual report
>   on Form 10-K of Nicholas Investment Company, Inc.;
>   2. Based on my knowledge, this annual report does not contain any untrue
>   statement of a material fact or omit to state a material fact necessary to
>   make the statements made, in light of the circumstances under which such
>   statements were made, not misleading with respect to the period covered by
>   this annual report; 
>   3. Based on my knowledge, the financial statements, and other financial
>   information included in this annual report, fairly present in all material
>   respects the financial condition, results of operations and cash flows of the
>   registrant as of, and for, the periods presented in this annual report; 
>   4. The registrant's other certifying officers and I are responsible for
>   establishing and maintaining disclosure controls and procedures (as defined in
>   Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
>   a) designed such disclosure
>     controls and procedures to ensure that material information relating to the
>     registrant, including its consolidated subsidiaries, is made known to us by
>     others within those entities, particularly during the period in which this
>     annual report is being prepared; 
>     b) evaluated the effectiveness of the registrant's disclosure controls and
>     procedures as of a date within 90 days prior to the filing date of this
>     annual report (the "Evaluation Date"); and 
>     c) presented in this annual report our conclusions about the effectiveness
>     of the disclosure controls and procedures based on our evaluation as of the
>     Evaluation Date;
>   5. The registrant's other certifying
>   officers and I have disclosed, based on our most recent evaluation, to the
>   registrant's auditors and the audit committee of registrant's board of
>   directors (or persons performing the equivalent functions):
>   a) all significant deficiencies in
>     the design or operation of internal controls which could adversely affect
>     the registrant's ability to record, process, summarize and report financial
>     data and have identified for the registrant's auditors any material
>     weaknesses in internal controls; and 
>     b) any fraud, whether or not material, that involves management or other
>     employees who have a significant role in the registrant's internal controls;
>     and
>   6. The registrant's other certifying
>   officers and I have indicated in this annual report whether there were
>   significant changes in internal controls or in other factors that could
>   significantly affect internal controls subsequent to the date of our most
>   recent evaluation, including any corrective actions with regard to significant
>   deficiencies and material weaknesses.

Date: March 26, 2004
/S/ Steven R. Peacock
Steven R. Peacock
Chief Executive Officer

---





NICHOLAS INVESTMENT
COMPANY, INC.
a Nevada corporation
CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Shane H. Traveller, certify that:

> 1. I have reviewed this annual report on Form 10-K of Nicholas Investment
>   Company, Inc.;
>   2. Based on my knowledge, this annual report does not contain any untrue
>   statement of a material fact or omit to state a material fact necessary to
>   make the statements made, in light of the circumstances under which such
>   statements were made, not misleading with respect to the period covered by
>   this annual report; 
>   3. Based on my knowledge, the financial statements, and other financial
>   information included in this annual report, fairly present in all material
>   respects the financial condition, results of operations and cash flows of the
>   registrant as of, and for, the periods presented in this annual report; 
>   4. The registrant's other certifying officers and I are responsible for
>   establishing and maintaining disclosure controls and procedures (as defined in
>   Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
>   a) designed such disclosure
>     controls and procedures to ensure that material information relating to the
>     registrant, including its consolidated subsidiaries, is made known to us by
>     others within those entities, particularly during the period in which this
>     annual report is being prepared; 
>     b) evaluated the effectiveness of the registrant's disclosure controls and
>     procedures as of a date within 90 days prior to the filing date of this
>     annual report (the "Evaluation Date"); and 
>     c) presented in this annual report our conclusions about the effectiveness
>     of the disclosure controls and procedures based on our evaluation as of the
>     Evaluation Date;
>   5. The registrant's other certifying
>   officers and I have disclosed, based on our most recent evaluation, to the
>   registrant's auditors and the audit committee of registrant's board of
>   directors (or persons performing the equivalent functions):
>   a) all significant deficiencies in
>     the design or operation of internal controls which could adversely affect
>     the registrant's ability to record, process, summarize and report financial
>     data and have identified for the registrant's auditors any material
>     weaknesses in internal controls; and 
>     b) any fraud, whether or not material, that involves management or other
>     employees who have a significant role in the registrant's internal controls;
>     and
>   6. The registrant's other certifying
>   officers and I have indicated in this annual report whether there were
>   significant changes in internal controls or in other factors that could
>   significantly affect internal controls subsequent to the date of our most
>   recent evaluation, including any corrective actions with regard to significant
>   deficiencies and material weaknesses.

Date: March 26, 2004/S/ Shane H. TravellerShane H. Traveller
Chief Executive Officer





---







Exhibit 99.1

CERTIFICATION

Pursuant to Section 906 of the
Corporate Fraud Accountability Act of 2002 (18 U.S.C. Section 1350, as adopted),
Steven A Peacock, Chief Executive Officer of Nicholas Investment Company, Inc.
(the "Company"), hereby certifies that, to the best of his knowledge:

> 1. the Annual Report on Form 10-K of
>   the Company for the fiscal year ended December 31, 2003 (the Report) fully
>   complies with the requirements of Section 13(a) or 15(d) of the Securities
>   Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
>   2. the information contained in the
>   Report fairly presents, in all material respects, the financial condition and
>   results of operations of the Company.

Dated: March 26, 2004

| | /S/ Steven R. Peacock
    Steven R. Peacock
    CHIEF EXECUTIVE OFFICER
| | -----------------------------------------------------------------------



---



Exhibit 99.2

CERTIFICATION

Pursuant to Section 906 of the
Corporate Fraud Accountability Act of 2002 (18 U.S.C. Section 1350, as adopted),
Shane H. Traveller, Chief Financial Officer of Nicholas Investment Company, Inc.
(the "Company"), hereby certifies that, to the best of his knowledge:

> 1. the Annual Report on Form 10-K of
>   the Company for the fiscal year ended December 31, 2003 (the Report) fully
>   complies with the requirements of Section 13(a) or 15(d) of the Securities
>   Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
>   2. the information contained in the
>   Report fairly presents, in all material respects, the financial condition and
>   results of operations of the Company.

Dated: March 26, 2004



| | /S/ Shane H. Traveller
    Shane H. Traveller 
    CHIEF FINANCIAL OFFICER
| | --------------------------------------------------------------------------



---



NICHOLAS INVESTMENT COMPANY, INC.

FINANCIAL STATEMENTS

December 31, 2003 and
2002















---



C O N T E N T S



|Independent Auditors'
    Report......................................................................               | 3 
|-------------------------------------------------------------------------------------------------------------------- | --
|Balance Sheets
    ................................................................................................. | 4 
|Schedule of
    Investments................................................................................          | 6 
|Statements of
    Operations...............................................................................          | 7 
|Statements of
    Stockholders' Equity (Deficit)..............................................                       | 8 
|Statements of Cash
    Flows..............................................................................           | 14
|Notes to the Financial
    Statements................................................................                | 15











---







INDEPENDENT
AUDITORS' REPORT

To the Board of Directors and Stockholders
Nicholas Investment Company, Inc. 
Temecula, California
We have audited the accompanying balance sheets of Nicholas Investment Company,
Inc. as of December 31, 2003 and 2002, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
2003, 2002 and from inception April 17, 2001, through December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Virgin Lakes
Development Corporation, a former consolidated subsidiary, as of December 31,
2001, and for the period from inception on March 1, 2001, through December 31,
2001, which statements reflect total assets and revenue constituting 19.6% and
100%, respectively, of the related consolidated total for fiscal 2001. Those
statements were audited by other auditors, whose report has been furnished to
us, and our opinion for the year ended December 31, 2001, insofar as it relates
to the amounts included for Virgin Lakes Development Corporation, is based
solely on the report of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 audits provide a
reasonable basis for our opinion.
As discussed more fully in Note 1 to the financial statements, securities
amounting to $469,691 (94% of net assets) at December 31, 2003 have been valued
at fair value as determined by the Board of Directors. We have reviewed the
procedures applied by the directors in valuing such securities and have
inspected underlying documentation; while in the circumstances the procedures
appear to be reasonable and the documentation appropriate, determination of fair
values involves subjective judgment which is not susceptible to substantiation
by auditing procedures.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nicholas Investment Company,
Inc. as of December 31, 2003 and 2002 and the results of its operations and its
cash flows for the years ended December 31, 2003, 2002 and from inception on
April 17, 2001, through December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company and has generated significant losses for the
years ended December 31, 2003, 2002 and 2001. These items raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 8. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
HJ Associates & Consultants, LLP
Salt Lake City, Utah
March 10, 2004

F-3

---



NICHOLAS INVESTMENT
COMPANY, INC.Balance Sheets

ASSETS

December2003
      
      2002CURRENT
      ASSETSCash
      $
      18,193
      $
      20Total Current Assets
      
      18,193
      
      20FIXED ASSETS, NET (Note 5)
      
      7,862
      
      -OTHER ASSETSNotes Receivable-Sino UJE (Note 2)
      
      93,691
      
      -Investment in Affiliated Company
      (Note 2)
      
      376,000
      
      -Deposit
      
      6,544
      
      -Total Other Assets
      
      476,235
      
      -TOTAL ASSETS
      $
      502,290
      $
      20




The accompanying notes
are in integral part of these financial statements.
F-4

---



NICHOLAS INVESTMENT
COMPANY, INC.Balance Sheets (Continued)

LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)



|                                            
|--------------------------------------------
|                                            
|                                            
|                                            
|                                            
|CURRENT LIABILITIES                         
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|COMMITMENTS AND CONTINGIENCIES (NOTE
    11)
|                                            
|STOCKHOLDERS' EQUITY (DEFICIT)              
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            

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



F-5

---

NICHOLAS INVESTMENT COMPANY, INC.Schedule of Investments






Company
      
      Description
      of Business
      
      Percent
      Ownership
      
      Cost
      
      Fair 
      Value
      
      AffiliationJavelin
      Holdings
      
      Management Consulting
      
      100%
      
      $84,000
      
      $376,000
      (1)
      YesSino UJE
      
      Foreign
      
      Operation
      
      -0-
      
      $93,691
      
      $93,691
      
      No








(1) 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 in integral part of these financial statements.  F-6




NICHOLAS INVESTMENT COMPANY, INC.


Statements of Operations


For the Year
      Ended December 31,2003
      
      
      2002
      
      
      2001INVESTMENT REVENUE
      $
      1,900
      
      $
      -
      
      $
      -EXPENSESProfessional fees
      
      161,477
      
      
      -
      
      
      -General
      and administrative
      
      44,767
      
      
      -
      
      
      -Depreciation
      
      251
      
      
      -
      
      
      -Total Expenses
      
      206,495
      
      
      -
      
      
      -NET
      INVESTMENT LOSS
      
      (204,595)
      
      
      -
      
      
      -OTHER
      INCOME (EXPENSE)Interest
      Expense (Note 3)
      
      (184,088)
      
      
      -
      
      
      -Unrealized gain on investment
      
      280,000
      
      
      -
      
      
      -Total Other Income (Expense)
      
      95,912
      
      
      -
      
      
      -LOSS FROM CONTINUING OPERATIONS
        
        BEFORE INCOME TAXES AND DISCONTINUED
        OPERATIONS
      
      (108,683)
      
      
      -
      
      
      -Income
      taxes
      
      -
      
      
      -
      
      
      -LOSS
      FROM CONTINUING OPERATIONS
      
      (108,683)
      
      
      -
      
      
      -LOSS
      FROM DISCONTINUED
      OPERATIONS NET OF ZERO TAX EFFECT
      (Note 7)
      
      -
      
      
      (1,855,046)
      
      
      (58,828)NET LOSS
      $
      (108,683)
      
      $
      (1,855,046)
      
      $
      (58,828)BASIC
      LOSS PER SHARE:Continuing operations
      $
      (0.16)
      
      $
      (0.00)
      
      $
      (0.00)Discontinued operations
      
      (0.00)
      
      
      (12.21)
      
      
      (1.62)Basic loss per share
      $
      (0.16)
      
      $
      (12.21)
      
      $
      (1.62)WEIGHTED
      AVERAGE NUMBER OF 
      SHARES OUTSTANDING
      
      677,039
      
      
      151,929
      
      
      36,376




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



F-7

---

NICHOLAS INVESTMENT COMPANY, INC.
Statements of Stockholders' Equity (Deficit)





Preferred Stock-
        Series B
      Preferred Stock -
      Series C
      Common Stock
      
      
      
      
      Deferred 
        ConsultingShares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      
      Additional Paid-In Capital
      
      
      
      
      Accumulated
        DeficitInception, April 17,
      2001
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      $
      -
      
      $
      -
      
      $
      -Common stock issued
      for organizational and management services at $1.70 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      8,813
      
      
      9
      
      
      14,991
      
      
      -
      
      
      -Common stock issued
      for cash at $25.00
      
      -
      
      
      -
      
      -
      
      
      -
      
      800
      
      
      1
      
      
      19,999
      
      
      -
      
      
      -Capital contribution
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      4,920
      
      
      -
      
      
      -Common stock issued
      for assets and in reorganization of Town Square, LLC
      
      -
      
      
      -
      
      -
      
      
      -
      
      9,075
      
      
      9
      
      
      55,049
      
      
      -
      
      
      -Common stock issued
      for approximately 70% of the outstanding common stock of H&L Specialties
      
      -
      
      
      -
      
      -
      
      
      -
      
      5,000
      
      
      5
      
      
      33,044
      
      
      -
      
      
      -Common
      stock issued for approximately 86% of the outstanding common stock of
      Shadow Ridge Water Company
      
      -
      
      
      -
      
      -
      
      
      -
      
      6,312
      
      
      6
      
      
      31,627
      
      
      -
      
      
      -Net loss
      for the period ended December 31, 2001
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (58,828)Balance,
      December 31, 2001
      
      -
      
      
      -
      
      -
      
      
      -
      
      30,000
      
      
      30
      
      
      159,630
      
      
      -
      
      
      (58,828)April 1, 2002,
      Recapitalization
      
      -
      
      
      -
      
      -
      
      
      -
      
      56,727
      
      
      57
      
      
      8,270
      
      
      -
      
      
      -Balance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      86,727
      
      $
      87
      
      
      167,900
      
      $
      -
      
      
      (58,828) The accompanying notes are in
  integral part of these financial statements.  F-8  NICHOLAS INVESTMENT
  COMPANY, INC.Consolidated Statements of Stockholders' Equity (Deficit) (Continued)  Preferred Stock-
        Series B
      Preferred Stock -
      Series C
      Common Stock
      
      
      
      
      Deferred 
        ConsultingShares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      
      Additional Paid-In Capital
      
      
      
      
      Accumulated
        DeficitBalance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      86,727
      
      $
      87
      
      
      167,900
      
      $
      -
      
      
      (58,828)April 1, 2002,
      common stock issued for services at $50.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,500
      
      
      2
      
      
      74,998
      
      
      -
      
      
      -April 16, 2002,
      common stock
      issued for services
      at $75.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      800
      
      
      1
      
      
      55,999
      
      
      -
      
      
      -August 18, 2002,
      common stock
      issued in exchange for equivalent
      outstanding shares in majority-
      owned subsidiary at par value
      
      -
      
      
      -
      
      -
      
      
      -
      
      409
      
      
      -
      
      
      82
      
      
      -
      
      
      -August 23, 2002,
      common stock
      issued to directors for services 
      rendered at $6.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      168,500
      
      
      168
      
      
      1,010,832
      
      
      -
      
      
      -August 23, 2002,
      common stock
      issued for services at 6.00 
      per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      12,083
      
      
      12
      
      
      72,488
      
      
      -
      
      
      -October 1, 2002,
      common stock
      issued for acquisition of
      Advantage Services Group
      at $8.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,500
      
      
      2
      
      
      11,998
      
      
      -
      
      
      -October 1, 2002,
      common stock
      issued to consultants for 
      services at $8.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      2,000
      
      
      2
      
      
      7,998
      
      
      -
      
      
      -October 2, 2002, common stock
      issued to consultants for
      services at $8.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,500
      
      
      2
      
      
      11,998
      
      
      -
      
      
      -Balance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      275,019
      
      $
      276
      
      
      1,414,293
      
      $
      -
      
      
      (58,828) The accompanying notes are in
  integral part of these financial statements.  F-9   NICHOLAS INVESTMENT
  COMPANY, INC.Consolidated Statements of Stockholders' Equity (Deficit) (Continued)  Preferred Stock-
        Series B
      Preferred Stock -
      Series C
      Common Stock
      
      
      
      
      Deferred 
        ConsultingShares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      
      Additional Paid-In Capital
      
      
      
      
      Accumulated
        DeficitBalance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      275,019
      
      $
      276
      
      
      1,414,293
      
      $
      -
      
      
      (58,828)November 4, 2002, common
      stock issued to consultants
      for services at $2.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      2,000
      
      
      2
      
      
      3,998
      
      
      -
      
      
      -November
      6, 2002, common 
      stock issued to an officer of
      the Company for services at $8.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      7,500
      
      
      7
      
      
      59,993
      
      
      -
      
      
      -November
      18, 2002, common
      stock issued to an officer of
      the Company for services at $2.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      7,500
      
      
      7
      
      
      14,993
      
      
      -
      
      
      -November
      18, 2002, common
      stock issued to consultants
      for services at $2.00 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,250
      
      
      1
      
      
      2,499
      
      
      -
      
      
      -November
      21, 2002, common
      stock issued to consultants
      for services at $4.80 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,500
      
      
      2
      
      
      7,198
      
      
      -
      
      
      -December
      6, 2002, common
      stock issued to an officer of
      the Company for services at $2.27 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      7,500
      
      
      7
      
      
      16,493
      
      
      -
      
      
      -December
      6, 2002, common
      stock issued to consultants
      for services at $2.20 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      3,100
      
      
      3
      
      
      6,817
      
      
      -
      
      
      -Balance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      305,369
      
      $
      305
      
      
      1,526,284
      
      $
      -
      
      
      (58,828)  The accompanying notes are in
  integral part of these financial statements.  F-10   NICHOLAS INVESTMENT
  COMPANY, INC.Consolidated Statements of Stockholders' Equity (Deficit) (Continued) Preferred Stock-
        Series B
      Preferred Stock -
      Series C
      Common Stock
      
      
      
      
      Deferred 
        ConsultingShares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      
      Additional Paid-In Capital
      
      
      
      
      Accumulated
        DeficitBalance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      305,369
      
      $
      305
      
      
      1,526,284
      
      $
      -
      
      
      (58,828)December 6, 2002, common stock
      issued for cash at $2.10 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      20,250
      
      
      20
      
      
      42,480
      
      
      -
      
      
      -December
      16, 2002, common stock issued to consultants for services at $1.20 per
      share
      
      -
      
      
      -
      
      -
      
      
      -
      
      11,500
      
      
      12
      
      
      13,788
      
      
      -
      
      
      -December
      16, 2002, common stock issued to an officer of the Company for services at
      $1.20
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,250
      
      
      1
      
      
      1,499
      
      
      -
      
      
      -Net loss
      for the year ended, December 31, 2002
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1,855,046)Balance,
      December 31, 2002
      
      -
      
      
      -
      
      -
      
      
      -
      
      338,369
      
      
      338
      
      
      1,584,051
      
      
      -
      
      
      (1,913,874)January
      15, 2003, common stock issued for extinguishment of debt at $0.86 per
      share
      
      -
      
      
      -
      
      -
      
      
      -
      
      12,000
      
      
      12
      
      
      10,308
      
      
      -
      
      
      -February
      15, 2003, common stock issued for services rendered and previously accrued
      at $1.20 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      150,000
      
      
      150
      
      
      179,850
      
      
      -
      
      
      -February
      25, 2003, common stock issued for services rendered and previously accrued
      at $0.70 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      76,500
      
      
      77
      
      
      53,473
      
      
      -
      
      
      -Balance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      576,869
      
      $
      577
      
      
      1,827,682
      
      $
      -
      
      
      (1,913,874) The accompanying notes are in
  integral part of these financial statements.  F-11  NICHOLAS INVESTMENT
  COMPANY, INC.Consolidated Statements of Stockholders' Equity (Deficit) (Continued) Preferred Stock-
        Series B
      Preferred Stock -
      Series C
      Common Stock
      
      
      
      
      Deferred 
        ConsultingShares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      
      Additional Paid-In Capital
      
      
      
      
      Accumulated
        DeficitBalance Forward
      
      -
      
      $
      -
      
      -
      
      $
      -
      
      576,869
      
      $
      577
      
      
      1,827,682
      
      $
      -
      
      
      (1,913,874)Sale of subsidiaries
      to related parties
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      90,104
      
      
      -
      
      
      -Preferred stock, Series B issued for cash at $0.0025 per share
      
      2,000,000
      
      
      2,000
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      3,000
      
      
      -
      
      
      -Common
      stock, issued for consulting agreements at $0.20 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      250,000
      
      
      250
      
      
      49,750
      
      
      (50,000)
      
      
      -Conversion of series B shares to series C Preferred shares
      
      (2,000,000)
      
      
      (2,000)
      
      2,000,000
      
      
      2,000
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -Series C
      preferred stock issued for services
      
      -
      
      
      -
      
      10,000,000
      
      
      10,000
      
      -
      
      
      -
      
      
      14,000
      
      
      -
      
      
      -Common
      stock issued for acquisition of Javelin Holdings
      
      -
      
      
      -
      
      -
      
      
      -
      
      200,000
      
      
      200
      
      
      95,800
      
      
      -
      
      
      -Debt
      discount on convertible debentures
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      231,500
      
      
      -
      
      
      -Common
      stock issued for conversion of convertible debentures
      
      -
      
      
      -
      
      -
      
      
      -
      
      1,236,382
      
      
      1,236
      
      
      72,946
      
      
      -
      
      
      -Contribution of
      fixed assets by employee
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      5,712
      
      
      -
      
      
      -Common stock issued
      for cash at $0.06 per share
      
      -
      
      
      -
      
      -
      
      
      -
      
      83,334
      
      
      83
      
      
      4,917
      
      
      -
      
      
      -Amortization of
      deferred consulting fees
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      
      30,998
      
      
      -Balance Forward
      
      -
      
      $
      -
      
      12,000,000
      
      $
      12,000
      
      2,346,585
      
      $
      2,346
      
      
      2,395,411
      
      $
      (19,002)
      
      
      (1,913,874) The accompanying notes are in
  integral part of these financial statements. F-12            NICHOLAS INVESTMENT
  COMPANY, INC.Consolidated Statements of Stockholders' Equity (Deficit) (Continued) Preferred Stock-
        Series B
      Preferred Stock -
      Series C
      Common Stock
      
      
      
      
      Deferred 
        ConsultingShares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      Shares
      
      
      Amount
      
      
      Additional Paid-In Capital
      
      
      
      
      Accumulated
        DeficitBalance Forward
      
      -
      
      $
      -
      
      12,000,000
      
      $
      12,000
      
      2,346,585
      
      $
      2,346
      
      
      2,395,411
      
      $
      (19,002)
      
      
      (1,913,874)Net loss for the
      year ended December 31, 2003
      
      -
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (108,683)Balance 
      December 31, 2003
      
      -
      
      $
      -
      
      12,000,000
      
      $
      12,000
      
      2,346,585
      
      $
      2,346
      
      
      2,395,411
      
      $
      (19,002)
      
      
      (2,022,557)   The accompanying notes are in
  integral part of these financial statements.
  F-13   NICHOLAS INVESTMENT COMPANY, INC.
  Statements of Cash Flows For the Year
      Ended December 31,2003
      
      2002
      
      
      2001CASH
      FLOWS FROM OPERATING ACTIVITIESNet loss
      $
      (108,683)
      
      $
      (1,855,046 )
      
      $
      (58,828 )Adjustments to reconcile net
        loss to net cash used in operating activities:Depreciation and amortization
      
      251
      
      
      9,062
      
      
      5,040Loss on impairment of assets
      
      -
      
      
      125,206
      
      
      -Loss on sale of fixed assets
      
      -
      
      
      8,327
      
      
      -Common stock issued in
          recapitalization
      
      -
      
      
      2,982
      
      
      -Common stock issued for
          services
      
      -
      
      
      1,357,798
      
      
      15,000Preferred stock issued for
          services
      
      24,000
      
      
      -
      
      
      -Bad debt expense
      
      -
      
      
      8,585
      
      
      -Amortization of deferred
          consulting expense
      
      30,998
      
      
      -
      
      
      -Unrealized gain on investment
      
      (280,000)
      
      
      -
      
      
      -Amortization of debt discount
      
      179,796
      
      
      -
      
      
      -Change
      in operating asset and liability accounts:(Increase) decrease in accounts
        receivable, net
      
      -
      
      
      10,428
      
      
      (19,013)(Increase) decrease in other
        assets
      
      (6,544)
      
      
      315
      
      
      (315)Increase in accounts payable
      
      28,135
      
      
      45,487
      
      
      18,201Increase in accrued liabilities
      
      1,879
      
      
      240,877
      
      
      -Net Cash Used by Operating
          Activities
      
      (130,168)
      
      
      (45,979)
      
      
      (39,915)CASH
      FLOWS FROM INVESTING ACTIVITIESAdvances to Sino UJE
      
      (93,691)
      
      
      -
      
      
      -Purchase of fixed assets
      
      (2,401)
      
      
      (17,828)
      
      
      -Net Cash Used by Investing
          Activities
      
      (96,092)
      
      
      (17,828)
      
      
      -CASH
      FLOWS FROM FINANCING ACTIVITIESCash overdraft
      
      (1,396)
      
      
      6,094
      
      
      -Proceeds form the sale of
        common stock
      
      5,000
      
      
      42,500
      
      
      24,920Payments on notes payable
      
      (25,500)
      
      
      (2,885)
      
      
      -Payments on related party notes
        payable
      
      (6,931)
      
      
      (1,366)
      
      
      -Proceeds from notes payable
      
      25,500
      
      
      11,183
      
      
      2,018Proceeds from related party
        notes payable
      
      15,260
      
      
      11,199
      
      
      -Proceeds from convertible
        debentures
      
      231,500
      
      
      -
      
      
      -Payments on convertible
        debentures
      
      (4,000)
      
      
      -
      
      
      -Preferred stock issued for cash
      
      5,000
      
      
      -
      
      
      -Minority interest
      
      -
      
      
      (16,027)
      
      
      14,806Net Cash Provided by
          Financing Activities
      
      244,433
      
      
      50,698
      
      
      41,744NET
      INCREASE (DECREASE) IN CASH
      
      18,173
      
      
      (13,109)
      
      
      1,829CASH AT
      BEGINNING OF PERIOD
      
      20
      
      
      13,129
      
      
      11,300CASH AT
      END OF PERIOD
      $
      18,193
      
      $
      20
      
      $
      13,129CASH
      PAID FOR:Interest
      $
      -
      
      $
      9,113
      
      $
      -Income Tax
      $
      -
      
      $
      -
      
      $
      -SCHEDULE
      OF NON-CASH INVESTING AND FINANCING ACTIVITIESConversion of convertible
        debentures
      $
      74,183
      
      $
      -
      
      $
      -Preferred stock issued for
        services
      $
      24,000
      
      $
      -
      
      $
      -Issuance of common stock for
        services
      $
      -
      
      $
      1,357,798
      
      $
      15,000Issuance of common stock for
        fixed assets
      $
      -
      
      $
      -
      
      $
      24,920  The accompanying notes are in
  integral part of these financial statements.  F-14  NICHOLAS INVESTMENT COMPANY, INC.
  Notes to the Financial Statements
  December 31, 2003 and 2002 NOTE 1 - NATURE OF
  ORGANIZATION This summary of
    significant accounting policies of Nicholas Investment Company, Inc. and
    Subsidiaries is presented to assist in understanding the Company's
    consolidated financial statements. The consolidated financial statements and
    notes are representations of the Company's management who are responsible
    for their integrity and objectivity. These accounting policies conform to
    accounting principles generally accepted in the United States of America and
    have been consistently applied in the preparation of the consolidated
    financial statements.
    a. Organization and Business Activities
    The Company was incorporated on January 28, 1998 under the laws of the State
    of Nevada as Nicholas Investment Company, Inc. to engage in any lawful
    activity as shall be appropriate under laws of the State of Nevada.
    Initially, the Company was in the business of acquiring and leasing real
    estate.
    On April 1, 2002, Nicholas Investment Company, Inc. ("Nicholas"), and Virgin
    Lakes Development Corporation ("Virgin Lakes"), completed an Agreement of
    Reorganization whereby Nicholas issued 30,000 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 56,726
    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 0.014 shares of Nicholas. Virgin Lakes was treated as the acquiring
    entity for accounting purposes and Nicholas was the surviving entity for
    legal purposes. The accounting history presented in these financial
    statements prior to the reorganization is that of Virgin Lakes, and as such,
    the date of inception presented is that of Virgin Lakes. 
    Virgin Lakes Development Corporation, had three subsidiaries, The Town
    Square, LLC (100% owned), Shadow Ridge Water Company (86% owned), and H & L
    Specialties (70% owned). 
    On April 29, 2003, the Company sold each of its subsidiaries (Virgin Lakes
    Development Corporation, The Town Square, Shadow Ridge Water Company, and H
    & L Specialties- (all of which had been accounted for as discontinued
    operations as of December 31, 2003) to former officers, directors and
    shareholders of the Company in exchange for the assumption of all accounts
    payable and debts associated with the subsidiaries. As a result of this
    transaction, the Company recognized $90,104 of additional paid-in capital.
    This amount represents the combined shareholders' equity of the disposed
    subsidiaries.
    From the date of inception through December 31, 2002, the Company generally
    engaged in activities related to the construction and real estate
    development industries. As the Company was never able to fully commence
    operations and develop a sustainable source of revenues, all operations of
    the Company were discontinued on December 31, 2002. See Note 7.
    On November 24, 2003, the Company filed with the Securities and Exchange
    Commission to become a Business Development Corporation as defined under the
    Investment Act of 1940.
    F-15
    
    NICHOLAS INVESTMENT COMPANY,
    INC.Notes to the Financial Statements
    December 31, 2003 and 2002 NOTE 1 - NATURE OF
  ORGANIZATION (Continued) a. Organization and
    Business Activities (Continued)
    Additionally, on December 9, 2003, the Company registered an offering
    circular with the SEC for up to 166,666,667 shares of common stock under
    Regulation E of the Investment Act to raise capital and to make investments
    in eligible emerging or early-stage companies in various fields of business
    by arranging for and contributing capital and providing management
    assistance.
    b. Accounting Method
    The Company's financial statements are prepared using the accrual method of
    accounting. The Company has elected a December 31 year-end.
    c. Cash and Cash Equivalents
    For the purpose of the statement of cash flows, the Company considers all
    highly liquid investments purchased with a maturity of three months or less
    to be cash equivalents. 
    d. Estimates
    The preparation of financial statements in conformity with accounting
    principles generally accepted in the United States of America 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 the estimates.
    e. 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. Fully diluted loss per share is not presented as any
    common stock equivalents are antidilutive in nature. Common stock
    equivalents consisting of convertible debt and preferred stock have not been
    included in the calculation of loss per share.


> 2003
>         
>         2002
>         
>         2001Loss
>         from operations
>         $
>         (108,683)
>         $
>         -
>         $
>         -Loss
>         from discontinued
>         Operations
>         $
>         -
>         $
>         (1,855,046)
>         $
>         (58,828)Loss
>         per shareLoss
>         from operations
>         $
>         (0.16)
>         $
>         -
>         $
>         -Loss
>         from discontinued operations
>         
>         (0.00)
>         
>         (12.21)
>         
>         (1.62)Total loss per share
>         $
>         (0.16)
>         
>         (12.21)
>         
>         (1.62)Weighted Average Number of 
>         shares Outstanding
>         
>         677,039
>         
>         157,929
>         
>         36,376
>     F-16
>     NICHOLAS
>     INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002
>     NOTE 1 - NATURE OF ORGANIZATION
>     (Continued)
>     f. Income Taxes
>       Deferred taxes are provided on a liability method whereby deferred tax
>       assets are recognized for deductible temporary differences and operating
>       loss and tax credit carryforwards and deferred tax assets are recognized
>       for taxable temporary differences. Temporary differences are the
>       differences between the reported amounts of assets and liabilities and
>       their tax bases. Deferred tax assets are reduced by a valuation allowance
>       when, in the opinion of management, it is more likely than not that some
>       portion or all of the deferred tax assets will not be realized. Deferred
>       tax assets and liabilities are adjusted for the effects of changes in tax
>       laws and rates on the date of enactment.
>       Net deferred tax assets consist of the following components as of December
>       31, 2003 and 2002:
>     2003
>         
>         2002Deferred tax
>         assets:NOL Carryover
>         
>         $
>         381,265
>         $
>         246,310Deferred tax
>         liabilities:
>         
>         
>         -
>         
>         -Valuation
>         allowance
>         
>         
>         (381,265)
>         
>         (246,310)Net deferred tax
>         asset
>         
>         $
>         -
>         $
>         -

The income tax provision differs from the amount of income
  tax determined by applying the U.S. federal income tax rates of 39% to pretax
  income from continuing operations for the years ended December 31, 2003 and
  2002 due to the following:


> 2003
>         
>         2002Book income
>         $
>         (36,335)
>         $
>         (723,470)Gain/Loss on
>         disposal
>         
>         -
>         
>         (144,890)Loss on impairment
>         
>         -
>         
>         48,830Unrealized
>         gain/loss
>         
>         (109,200)
>         
>         -Stock for
>         services/options expense
>         
>         9,360
>         
>         529,541Accrued liability
>         
>         1,430
>         
>         93,942Other
>         
>         (520)
>         
>         (263)Valuation
>         allowance
>         
>         135,265
>         
>         196,310$
>         -
>         $
>         -
>   At December 31, 2003, the Company
>     had net operating loss carryforwards of approximately $977,000 that may be
>     offset against future taxable income from the year 2003 through 2023. No tax
>     benefit has been reported in the December 31, 2003 financial statements
>     since the potential tax benefit is offset by a valuation allowance of the
>     same amount.
>     F-17
>     
>     NICHOLAS INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002
>     NOTE 1 - NATURE OF ORGANIZATION
>     (Continued)
>     f. Income Taxes
>     Due to the change in ownership provisions of the Tax Reform
>       Act of 1986, net operating loss carryforwards for Federal income tax
>       reporting purposes are subject to annual limitations. Should a change in
>       ownership occur, net operating loss carryforwards may be limited as to use
>       in future years.
>       g. Recent Accounting Pronouncements
>     During the year ended December 31, 2003, the Company adopted
>       the following accounting pronouncements:SFAS No. 143-- In August 2001, the FASB issued
>       SFAS No. 143, Accounting for Asset Retirement Obligations, which
>       established a uniform methodology for accounting for estimated reclamation
>       and abandonment costs. The statement was effective for fiscal years
>       beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a
>       material effect on the financial statements of the Company. SFAS No. 145 -- On April 30, 2002, the FASB
>       issued FASB Statement No. 145 (SFAS 145), "Rescission of FASB Statements
>       No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
>       Corrections." SFAS 145 rescinds both FASB Statement No. 4 (SFAS 4),
>       "Reporting Gains and Losses from Extinguishment of Debt," and the
>       amendment to SFAS 4, FASB Statement No. 64 (SFAS 64), "Extinguishments of
>       Debt Made to Satisfy Sinking-Fund Requirements." Through this rescission,
>       SFAS 145 eliminates the requirement (in both SFAS 4 and SFAS 64) that
>       gains and losses from the extinguishment of debt be aggregated and, if
>       material, classified as an extraordinary item, net of the related income
>       tax effect. However, an entity is not prohibited from classifying such
>       gains and losses as extraordinary items, so long as it meets the criteria
>       in paragraph 20 of Accounting Principles Board Opinion No. 30, Reporting
>       the Results of Operations Reporting the Effects of Disposal of a Segment
>       of a Business, and Extraordinary, Unusual and Infrequently Occurring
>       Events and Transactions. Further, SFAS 145 amends paragraph 14(a) of FASB
>       Statement No. 13, "Accounting for Leases", to eliminate an inconsistency
>       between the accounting for sale-leaseback transactions and certain lease
>       modifications that have economic effects that are similar to
>       sale-leaseback transactions. The amendment requires that a lease
>       modification (1) results in recognition of the gain or loss in the 9
>       financial statements, (2) is subject to FASB Statement No. 66, "Accounting
>       for Sales of Real Estate," if the leased asset is real estate (including
>       integral equipment), and (3) is subject (in its entirety) to the
>       sale-leaseback rules of FASB Statement No. 98, "Accounting for Leases:
>       Sale-Leaseback Transactions Involving Real Estate, Sales-Type Leases of
>       Real Estate, Definition of the Lease Term, and Initial Direct Costs of
>       Direct Financing Leases." Generally, FAS 145 is effective for transactions
>       occurring after May 15, 2002. The adoption of SFAS 145 did not have a
>       material effect on the financial statements of the Company.SFAS No. 146 -- In June 2002, the FASB issued
>       SFAS No. 146, "Accounting for Exit or Disposal Activities" (SFAS 146).
>       SFAS 146 addresses significant issues regarding the recognition,
>       measurement, and reporting of costs that are associated with exit and
>       disposal activities, including restructuring activities that are currently
>       accounted for under EITF No. 94-3, "Liability Recognition for Certain
>       Employee Termination Benefits and Other Costs to Exit an Activity
>       (including Certain Costs Incurred in a Restructuring)." The scope of SFAS
>       146 also includes costs related to terminating a contract
>       F-18
>       NICHOLAS INVESTMENT COMPANY, INC.Notes to the Financial Statements
>       December 31, 2003 and 2002
>     NOTE 1 - NATURE OF ORGANIZATION
>     (Continued)
>     g. Recent Accounting
>       Pronouncements (Continued)
>       that is not a capital lease and termination benefits that employees who
>       are involuntarily terminated receive under the terms of a one-time benefit
>       arrangement that is not an ongoing benefit arrangement or an individual
>       deferred-compensation contract. SFAS 146 will be effective for exit or
>       disposal activities that are initiated after December 31, 2002 and early
>       application is encouraged. The provisions of EITF No. 94-3 shall continue
>       to apply for an exit activity initiated under an exit plan that met the
>       criteria of EITF No. 94-3 prior to the adoption of SFAS 146. The effect on
>       adoption of SFAS 146 will change on a prospective basis the timing of when
>       the restructuring charges are recorded from a commitment date approach to
>       when the liability is incurred. The adoption of SFAS 146 did not have a
>       material effect on the financial statements of the Company.SFAS No. 147 -- In October 2002, the Financial
>       Accounting Standards Board (FASB) issued Statement of Financial Accounting
>       Standards (SFAS) No. 147, "Acquisitions of Certain Financial Institutions"
>       which is effective for acquisitions on or after October 1, 2002. This
>       statement provides interpretive guidance on the application of the
>       purchase method to acquisitions of financial institutions. Except for
>       transactions between two or more mutual enterprises, this Statement
>       removes acquisitions of financial institutions from the scope of both SFAS
>       72 and Interpretation 9 and requires that those transactions be accounted
>       for in accordance with SFAS No. 141, "Business Combinations" and No. 142,
>       "Goodwill and Other Intangible Assets". The adoption of SFAS No. 147 did
>       not have a material effect on the financial statements of the Company. SFAS No. 148 -- In December 2002, the FASB
>       issued SFAS No. 148, "Accounting for Stock Based Compensation-Transition
>       and Disclosure-an amendment of FASB Statement No. 123" which is effective
>       for financial statements issued for fiscal years ending after December 15,
>       2002. This Statement amends SFAS 123, Accounting for Stock-Based
>       Compensation, to provide alternative methods of transition for a voluntary
>       change to the fair value based method of accounting for stock-based
>       employee compensation. In addition, this Statement amends the disclosure
>       requirements of SFAS 123 to require prominent disclosures in both annual
>       and interim financial statements about the method of accounting for
>       stock-based compensation and the effect of the method used on reported
>       results. The adoption of SFAS No. 148 did not have a material effect on
>       the financial statements of the Company.SFAS No. 149-- In April 2003, the FASB issued
>       SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and
>       Hedging Activities" which is effective for contracts entered into or
>       modified after June 30, 2003 and for hedging relationships designated
>       after June 30, 2003. This statement amends and clarifies financial
>       accounting for derivative instruments embedded in other contracts
>       (collectively referred to as derivatives) and hedging activities under
>       SFAS 133. The adoption of SFAS No. 149 did not have a material effect on
>       the financial statements of the Company.SFAS No. 150 -- In May 2003, the FASB issued
>       SFAS No. 150, "Accounting for Certain Financial Instruments with
>       Characteristics of both Liabilities and Equity" which is effective for
>       financial instruments entered into or modified after May 31, 2003, and is
>       otherwise effective at the beginning of the
>       F-19
>       NICHOLAS INVESTMENT COMPANY, INC.Notes to the Financial Statements
>       December 31, 2003 and 2002
>     NOTE 1 - NATURE OF ORGANIZATION
>     (Continued)
>     g. Recent Accounting
>       Pronouncements (Continued)
>       first interim period beginning after June 15, 2003. This Statement
>       establishes standards for how an issuer classifies and measures in its
>       statement of financial position certain financial instruments with
>       characteristics of both liabilities and equity. It requires that an issuer
>       classify a financial instrument that is within its scope as a liability
>       (or an asset in some circumstances) because that financial instrument
>       embodies an obligation of the issuer. The adoption of SFAS No. 150 did not
>       have a material effect on the financial statements of the Company.FASB Interpretation No. 45 -- "Guarantor's
>       Accounting and Disclosure Requirements for Guarantees, Including Indirect
>       Guarantees of Indebtedness of Others - an Interpretation of FASB
>       Statements No. 5, 57 and 107". The initial recognition and initial
>       measurement provisions of this Interpretation are to be applied
>       prospectively to guarantees issued or modified after December 31, 2002.
>       The disclosure requirements in the Interpretation were effective for
>       financial statements of interim or annual periods ending after December
>       15, 2002. The adoption of FASB Interpretation No. 45 did not have a
>       material effect on the financial statements of the Company.FASB Interpretation No. 46 -- In January 2003,
>       the FASB issued FASB Interpretation No. 46 "Consolidation of Variable
>       Interest Entities." FIN 46 provides guidance on the identification of
>       entities for which control is achieved through means other than through
>       voting rights, variable interest entities, and how to determine when and
>       which business enterprises should consolidate variable interest entities.
>       This interpretation applies immediately to variable interest entities
>       created after January 31, 2003. It applies in the first fiscal year or
>       interim period beginning after June 15, 2003, to variable interest
>       entities in which an enterprise holds a variable interest that it acquired
>       before February 1, 2003. The adoption of FIN 46 did not have a material
>       impact on the Company's financial statements.
>       During the year ended December 31, 2003, the Company adopted the following
>       Emerging Issues Task Force Consensuses: EITF Issue No. 00-21 "Revenue
>       Arrangements with Multiple Deliverables", EITF Issue No. 01 -8 "
>       Determining Whether an Arrangement Contains a Lease", EITF Issue No. 02-3
>       "Issues Related to Accounting for Contracts Involved in Energy Trading and
>       Risk Management Activities", EITF Issue No. 02-9 "Accounting by a Reseller
>       for Certain Consideration Received from a Vendor", EITF Issue No. 02-17,
>       "Recognition of Customer Relationship Intangible Assets Acquired in a
>       Business Combination", EITF Issue No. 02-18 "Accounting for Subsequent
>       Investments in an Investee after Suspension of Equity Method Loss
>       Recognition", EITF Issue No. 03-1, "The Meaning of Other Than Temporary
>       and its Application to Certain Instruments", EITF Issue No. 03-5,
>       "Applicability of AICPA Statement of Position 9702, "Software Revenue
>       Recognition' to Non-Software Deliverables in an Arrangement Containing
>       More Than Incidental Software", EITF Issue No. 03-7, "Accounting for the
>       Settlement of the Equity Settled Portion of a Convertible Debt Instrument
>       That Permits or Requires the Conversion Spread to be Settled in Stock",
>       EITF Issue No. 03-10, "Application of EITF Issue No. 02-16 by Resellers to
>       Sales Incentives Offered to Consumers by Manufacturers.
>       These newly issued accounting pronouncements had no effect on the
>       Company's current financial statements and did not impact the Company.
>       F-20
>       
>       NICHOLAS
>       INVESTMENT COMPANY, INC.Notes to the Financial Statements
>       December 31, 2003 and 2002
>     NOTE 1 - NATURE OF ORGANIZATION
>     (Continued)
>     h. Fixed Assets
>       Fixed assets are recorded at cost. Major additions and improvement are
>       capitalized. The cost and related accumulated depreciation of equipment
>       retired or sold are removed from the accounts and any differences between
>       the undepreciated amount and the proceeds from the sale are recorded as
>       gain or loss on sale of assets. Depreciation is computed using the
>       straight-line method over the estimated useful life of the assets as
>       follows:
>       Description
>           Estimate
>           Useful LifeFurniture and
>           fixtures
>           5 yearsComputers and
>           software
>           5 years
>   i. Revenue Recognition
>     Prior to the discontinuation of operations on December 31, 2002 (See Note
>     7), the Company's revenue was created primarily from the contracting of
>     various small-scale construction projects. The Company recognized revenues
>     based upon the contractual price of services performed. Revenue was recorded
>     as the projects were completed and as the amounts were determined to be
>     receivable.
>     See Note 2 for a discussion on the revenue recognition methods of the
>     Company for 2003.
>     j. Reverse Stock Split
>     On November 13, 2003, the Company approved a 1 for 200 reverse stock split.
>     All references to common stock have been retroactively restated.
>     k. Investment Valuation
>     The Company's loans, net of participations and any unearned discount, are
>     considered investments under the 1940 Act and are recorded at fair value.
>     Since no ready market exists for these loans, the fair value is determined
>     in good faith by the Board of Directors. In determining the fair value, the
>     Company and Board of Directors consider factors such as the financial
>     condition of the borrower, the adequacy of the collateral and individual
>     credit risks.
>     Investments in equity securities are recorded at fair value, represented as
>     cost, plus or minus unrealized appreciation or depreciation, respectively.
>     The carrying values of investments that have no readily-determinable market
>     values are determined by the Board of Directors, based upon its analysis of
>     the assets and revenues of the underlying investee companies.
>     Because of the inherent uncertainty of valuations, the Board of Directors'
>     estimates of the values on the investments may differ significantly from the
>     values that would have been used had a ready market for the investments
>     existed and the differences could be material.
>     F-21
>     NICHOLAS
>     INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002
>   NOTE 1 - NATURE OF
>   ORGANIZATION (Continued)
>   l. Preferred Stock
>     The outstanding series C preferred stock is convertible into one share of
>     common stock for each share of preferred stock. The series C preferred stock
>     is not entitled to any dividends. In the event of any liquidation of the
>     Company, the Series C preferred stock would be automatically converted into
>     common shares, and would have no liquidation preference over the common
>     stock.
>     NOTE 2 - INVESTMENTS
>     The Company currently has investments in two 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.
>     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 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.
>     F-22
>     NICHOLAS INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002
>   NOTE 2 - INVESTMENTS
>   (Continued)
>   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 $376,000. Accordingly an unrealized gain of $280,000 has been
>     recorded.
>     The investment is Sino UJE (Sino) was a loan of $93,691 at December 31,
>     2003. The acquisition of 95% of Sino occurred in January 2004 (See Note 9).
>     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 will be valued using the procedures described
>     above.
>     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.
>     F-23
>     NICHOLAS INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002

NOTE 3 - CONVERTIBLE
DEBENTURES

> During the year
>     December 31, 2003, the Company raised $231,500 of operating capital in the
>     form of convertible debentures. The debentures have varying terms of one to
>     three 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. All convertible debentures are convertible at the option of the
>     holder or the Company and automatically convert into common stock in the
>     event of bankruptcy or liquidation. Of the $231,500 in convertible notes,
>     two debentures totaling $5,000 were held by the Company's CFO which were
>     subsequently forgiven in exchange for the 2,000,000 shares of Series B
>     preferred stock previously issued to MRG California.
>     Upon issuance of the debentures, the Company recognized a debt discount
>     related to the beneficial conversion feature of the debentures totaling
>     $231,500. This amount will be amortized over the respective terms of the
>     debentures. As of December 31, 2003, $179,796 of the recorded debt discount
>     has been amortized to interest expense, and an additional $3,575 has been
>     recorded as interest related to the stated 8% interest rate associated with
>     the debentures.
>     The Company issued 1,236,382, shares of common stock in December, 2003 to
>     convert $73,500 of convertible debentures and $683 of accrued interest into
>     equity.
>     At December 31, 2003, there were convertible debentures with a face value of
>     $154,000 outstanding with an unamortized discount of $51,704 for a net value
>     of $102,296.

NOTE 4 - NOTES PAYABLE -
RELATED PARTIES

> During the year ended
>     December 31, 2002, the Company received loans from the primary minority
>     shareholder of the H&L Specialties subsidiary totaling $10,823. The loans
>     were considered to be short-term in nature and did not accrue interest. The
>     loans were subsequently forgiven by the individual during the second quarter
>     of fiscal 2003 as part of the spin-off of the subsidiaries (Note 7).
>     During the year ended December 31, 2002, the Company received loans from the
>     prior CEO of the Company totaling $376. In 2003, loans of $12,410 were
>     received by the Company and payments of $4,137 were made. The loans were
>     considered to be short-term in nature and did not accrue interest. The loan
>     was subsequently forgiven by the former CEO during the second quarter of
>     fiscal 2003 as part of the spin-off of the subsidiaries (Note 7).
>     On December 6, 2002, the Company received a $3,800 loan from a prior officer
>     of the Company. The loan accrued interest at 10% per annum and was to be
>     repaid on December 6, 2003. The Company has paid $2,000 towards the note as
>     of December31, 2002, leaving a balance of $1,800 at December 31, 2002 and
>     during 2003. Loans of $2,850 were received by the company and payments of
>     $2,800 were made. This remaining balance was subsequently forgiven by the
>     former officer during the second quarter of fiscal 2003 as part of the
>     spin-off of the subsidiaries (Note 7).
>     F-24
>     NICHOLAS
>     INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002

NOTE 5 - FIXED ASSETS

> Fixed assets of the
>     Company consisted of the following at December 31, 2003 and 2002.

|                                  |  |   |       | December |  
|--------------------------------- |  | - | ----- | -------- | -
|                                  |  |   |       | 2003     |  
|                                  |  |   |       |          |  
|Computer Equipment                |  | $ | 1,184 | $        | -
|Office Furniture                  |  |   | 6,929 |          | -
|                                  |  |   |       |          |  
|                                  |  |   | 8,113 |          | -
|Less Accumulated
    depreciation |  |   | (251) |          | -
|                                  |  |   |       |          |  
|                                  |  |   | $     | 7,862    | $
|                                  |  |   |       |          |  



> Depreciation expense
>     for the years ended December 31, 2003, 2002 and 2001 was $251, zero, and
>     zero, respectively.

NOTE 6 - EQUITY TRANSACTIONS

> On April 1, 2002, the
>     Company issued 1,500 shares of Rule 144 restricted common stock to
>     consultants for their services relating the reorganization. The shares were
>     valued at $50.00 per share, which represents the fair market value of the
>     shares as of the date of issuance. The expense associated with this issuance
>     has been included in discontinued operations. See Note 7.
>     On April 16, 2002, the Company issued 800 shares of Rule 144 restricted
>     common stock to consultants for services rendered. The shares were valued at
>     $75.00 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     During the year ended December 31, 2002, the Company entered into exchange
>     agreements with several holders of minority interests in Shadow Ridge Water
>     Company (An 86% owned subsidiary - See Note 1), whereby the Company would
>     exchange shares of its Rule 144 restricted common stock for an equivalent
>     number of Shadow Ridge common stock. The exchanges, however, were so
>     insignificant in size, that the percent ownership of Shadow Ridge Water
>     Company held by the Company did not change. The shares have been recorded at
>     par value.
>     On August 8, 2002, the Company's Board of Directors approved an amendment to
>     the Company's articles of incorporation to increase in the authorized common
>     shares from 100,000,000 to 500,000,000.
>     On August 8, 2002, the Company's Board of Directors approved an amendment to
>     the Company's articles of incorporation to establish a preferred class of
>     stock designated as Series A Preferred Stock. The amended articles of
>     incorporation authorize 50,000,000 shares at $0.001 par value. As of
>     December 31, 2002, there are no Series A Preferred Shares issued or
>     outstanding.
>     F-25
>     NICHOLAS
>     INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002

NOTE 6 - EQUITY
TRANSACTIONS (Continued)

> On August 23, 2002,
>     the Company issued 8,500 shares of free trading S-8 common stock and 160,000
>     shares of Rule 144 restricted common stock to officers and directors of the
>     Company in exchange for services rendered. The shares were valued at $6.00
>     per share, which represents the fair market value of the shares as of the
>     date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On August 23, 2002, the Company issued 12,083 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $6.00 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On October 1, 2002, the Company issued 1,500 shares of Rule 144 restricted
>     common stock in the acquisition of Advantage Services Group. Advantage
>     Service Group had no operations, assets, liabilities, or equity, and as
>     such, the value of the shares was immediately expensed. The shares were
>     valued at $8.00 per share, which represents the fair market value of the
>     shares as of the date of issuance. The expense associated with this issuance
>     has been included in discontinued operations. See Note 7.
>     On October 1, 2002, the Company issued 2,000 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $8.00 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On October 2, 2002, the Company issued 1,500 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $8.00 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On November 4, 2002, the Company issued 2,000 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $2.00 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On November 6, 2002, the Company issued 7,500 shares of free trading S-8
>     common stock to an officer of the Company for services rendered. The shares
>     were valued at $8.00 per share, which represents the fair market value of
>     the shares as of the date of issuance. The expense associated with this
>     issuance has been included in discontinued operations. See Note 7.
>     On November 18, 2002, the Company issued 7,500 shares of free trading S-8
>     common stock to an officer of the Company for services rendered. The shares
>     were valued at $2.00 per share, which represents the fair market value of
>     the shares as of the date of issuance. The expense associated with this
>     issuance has been included in discontinued operations. See Note 7.
>     On November 18, 2002, the Company issued 1,250 free trading S-8 shares of
>     common stock to consultants for services rendered. The shares were valued at
>     $2.00 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     F-26
>     NICHOLAS
>     INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002

NOTE 6 - EQUITY
TRANSACTIONS (Continued)

> On November 21, 2002,
>     the Company issued 1,500 shares of free trading S-8 common stock to
>     consultants for services rendered. The shares were valued at $4.80 per
>     share, which represents the fair market value of the shares as of the date
>     of issuance. The expense associated with this issuance has been included in
>     discontinued operations. See Note 7.
>     On December 6, 2002, the Company issued 7,500 shares of free trading S-8
>     common stock to an officer of the Company for services rendered. The shares
>     were valued at $2.27 per share, which represents the fair market value of
>     the shares as of the date of issuance. The expense associated with this
>     issuance has been included in discontinued operations. See Note 7.
>     On December 6, 2002, the Company issued 3,100 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $2.20 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On December 6, 2002, the Company issued 20,250 shares of restricted common
>     stock in exchange for cash at $2.10 per share.
>     On December 16, 2002, the Company issued 11,500 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $1.20 per share, which represents the fair market value of the shares as of
>     the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On December 16, 2002, the Company issued 1,250 shares of free trading S-8
>     common stock to the former CEO for services rendered. The shares were valued
>     at $1.20 per share, which represents the fair market value of the shares as
>     of the date of issuance. The expense associated with this issuance has been
>     included in discontinued operations. See Note 7.
>     On January 15, 2003, the Company issued 12,000 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $0.86 per share, which represents the fair market value for the shares as of
>     the date of issuance. As the Company recorded an accrual of $10,320 related
>     to the services at December 31, 2002.
>     On February 15, 2003, the Company issued 150,000 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $1.20 per share, which represents the fair market value for the shares as of
>     the date of issuance. As the consulting services were rendered during the
>     year ended December 31, 2002, the Company recorded an accrual of $180,000
>     related to the services at December 31, 2002.
>     On February 25, 2003, the Company issued 76,500 shares of free trading S-8
>     common stock to consultants for services rendered. The shares were valued at
>     $0.70 per share, which represents the fair market value for the shares as of
>     the date of issuance. As the consulting services were rendered during the
>     year ended December 31, 2002, the Company recordered an accrual of $39,550
>     related to the services at December 31, 2002.
>     F-27
>     NICHOLAS INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002

NOTE 6 - EQUITY
TRANSACTIONS (Continued)

> 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. Due to the 100 for 1 voting rights
>     associated with the Series B Preferred Stock, this issuance effectively gave
>     voting control of the Company to MRG California. 
>     On October 10, 2003, the Company issued 250,000 shares of S-8 common stock
>     to various individuals for consulting services to be rendered. The shares
>     were valued at $0.20 which was the closing price on the date of issue. The
>     consulting expense is being authorized over the life of the contracts.
>     During 2003, the Company amortized $30,998 of the deferred consulting fees
>     leaving as unamortized balance of $19,002 at December 31, 2003.
>     On November 12, 2003, the Company issued 3,550,000 shares of Series C
>     preferred stock for services rendered. The shares were valued at $0.0024
>     which was the closing price of the common stock on the date of issue.
>     In November 2003, the Company converted all series B preferred stock to
>     8,450,000 shares of Series C preferred stock.
>     On November 13, 2003, the Company reverse split is common stock on a 1 for
>     200 basis. All references to common stock have been retroactively restated.
>     On November 15, 2003, the Company issued 200,000 shares of common stock for
>     the acquisition of Javelin Holdings, Inc. The shares were valued at $0.48
>     per share which was the closing price on the date of issue for total
>     consideration of $96,000.
>     In December 2003, the Company issued 1,236,382 shares of common stock for
>     the conversion of $74,183 of convertible debentures and accrued interest.
>     In December 2003, the Company issued 83,334 shares of common stock for cash
>     valued at $0.06 per share.

NOTE 7 - DISCONTINUED
OPERATIONS

> Effective December 31,
>     2002, the Company discontinued all then existing operations. This
>     discontinuation of operations included all operations of the company and its
>     subsidiaries. The financial statements have been retroactively restated to
>     reflect this event. No tax benefit has been attributed to the discontinued
>     operations.
>     As a result of the discontinuation of operations, the Company has written
>     off all undepreciated fixed assets, and has recognized a related impairment
>     loss of $125,521 for the year ended December 31, 2002.
>     F-28
>     NICHOLAS
>     INVESTMENT COMPANY, INC.Notes to the Financial Statements
>     December 31, 2003 and 2002

NOTE 7 - DISCONTINUED
OPERATIONS (continued)

> The following is a
>     summary of liabilities related to discontinued operations:

| |                                                    |   | December 31,
      2002 | 
| | -------------------------------------------------- | - | ----------------------- | 
| |                                                    |   |                         | 
| | CURRENT
    LIABILITIES                            |   |                         | 
| | Bank
    overdraft                                 | $ | 6,094                   | 
| | Accounts
    payable                               |   | 58,931                  | 
| | Accrued
    liabilities                            |   | 244,098                 | 
| | Notes
    payable                                  |   | 7,383                   | 
| | Notes
    payable-related party                    |   | 12,999                  | 
| |                                                    |   |                         | 
| | Total Current Liabilities                          |   | 329,505                 | 
| |                                                    |   |                         | 
| | Total Liabilities                                  |   | 329,505                 | 
| |                                                    |   |                         | 
| | MINORITY INTEREST IN NET ASSETS                    |   | -                       | 
| |                                                    |   |                         | 
| | TOTAL
    LIABILITIES FROM DISCONTINUED OPERATIONS | $ | 329,505                 | 
| |                                                    |   |                         | 

The following is a summary
of the loss from discontinued operations resulting from the elimination of all
operations:



|                                            |   |             |                                           |   |                                                                   |  | 
|------------------------------------------- | - | ----------- | ----------------------------------------- | - | ----------------------------------------------------------------- |  | 
|                                            |   |             | For the Year Ended 
    December 31, 2002 |   | From Inception on March 1, 2001
    through
    December 31, 2001
|                                            |   |             |                                           |   |                                                                  
|                                            |   |             |                                           |   |                                                                   |  | 
|REVENUES, NET                               | $ | 44,784      |                                           | $ | 50,113                                                           
|                                            |   |             |                                           |   |                                                                  
|COST OF SALES                               |   | 47,482      |                                           |   | 53,486                                                           
|                                            |   |             |                                           |   |                                                                  
|GROSS MARGIN                                |   | (2,698)     |                                           |   | (3,373)                                                          
|                                            |   |             |                                           |   |                                                                  
|EXPENSES                                    |   |             |                                           |   |                                                                  
|Organizational costs                        |   | -           |                                           |   | 17,070                                                           
|Lease expense for water wells               |   | -           |                                           |   | 5,159                                                            
|Depreciation and amortization
      expense |   | 6,731       |                                           |   | 5,040                                                            
|General and administrative                  |   | 88,381      |                                           |   | 31,814                                                           
|Consulting expense                          |   | 1,629,515   |                                           |   | -                                                                
|Loss on impairment of fixed
      assets    |   | 125,521     |                                           |   | -                                                                
|Loss on sale of equipment                   |   | 8,327       |                                           |   | -                                                                
|                                            |   |             |                                           |   |                                                                  
|Total Operating Expenses                    |   | 1,858,475   |                                           |   | 59,083                                                           
|                                            |   |             |                                           |   |                                                                  
|OPERATING LOSS                              |   | (1,861,173) |                                           |   | (62,456)                                                         
|                                            |   |             |                                           |   |                                                                  
|OTHER INCOME (EXPENSE)                      |   |             |                                           |   |                                                                  
|                                            |   |             |                                           |   |                                                                  
|Interest expense                            |   | (9,900)     |                                           |   | -                                                                
|Interest income                             |   | -           |                                           |   | 807                                                              
|                                            |   |             |                                           |   |                                                                  
|Total Other Income (Expense)                |   | (9,900)     |                                           |   | 807                                                              
|                                            |   |             |                                           |   |                                                                  
|                                            |   |             |                                           |   |                                                                  
|NET LOSS BEFORE MINORITY INTEREST           |   | (1,871,073) |                                           |   | (61,649)                                                         
|MINORITY INTEREST IN NET LOSS               |   | 16,027      |                                           |   | 2,821                                                            
|                                            |   |             |                                           |   |                                                                  
|NET LOSS FROM DISCONTINUED OPERATIONS       | $ | (1,855,046) |                                           | $ | (58,828)                                                         
|                                            |   |             |                                           |   |                                                                  
|                                            |   |             |                                           |   |                                                                  





F-29

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NICHOLAS INVESTMENT
COMPANY, INC.Notes to the Financial Statements
December 31, 2003 and 2002

NOTE 8 - GOING CONCERN

> The Company's financial statements are prepared using accounting principles
>   generally accepted in the United States of America applicable to a going
>   concern which contemplates the relation of assets and liquidation of
>   liabilities in the normal course of business. The Company has generated
>   significant losses for the years ended December 31, 2003, 2002, and 2001. 
>   In November 2003, the Company elected to report as a business development
>   company under the Investment Company Act of 1940. As a Business Development
>   Company, we can sell up to $5,000,000 in common stock every twelve months
>   under an exemption from registration. Also in November 2003, the Company filed
>   a notification with the SEC that it intends to sell all $5 million of this
>   Regulation E exemption. Through December 31, 2003, the Company sold a total of
>   $73,500 (1,236,383 shares) in Regulation E stock, and raised an additional
>   $154,000 in funds under convertible debentures. These debentures can be
>   converted into free-trading shares of common stock under Regulation E. Between
>   December 31, 2003 and March 8, 2004, the Company raised an addition $35,000
>   through the issuance of Reg. E. stock and sold $40,000 in convertible
>   debentures. The balance of the Company's cash flow derived from the operations
>   of its subsidiary, Javelin Holdings, which generated positive cash flow of
>   $169,047 between January 1, 2004 and February 29, 2004. Management believes
>   that once the Company commences trading on the "Over the Counter Bulletin
>   Board (OTCBB)" there will be increased liquidity in the Company's common
>   stock, making it easier to raise capital through the sale of stock. The
>   Company will also rely on the continued growth of Javelin Holdings to fund
>   operations. The Company currently projects that it will continue to lose money
>   on its portfolio investment. Sino UJE, through August 2003, at which time the
>   Company should experience overall profitability. There is no assurance that
>   Sino UJE can become profitable, or that the revenues of Javelin Holdings and
>   the sale of stock and debentures will be adequate to cover the Company's cash
>   needs. In the event such funds are unavailable or insufficient, the Company
>   may need to alter its operation or cease to function as a going concern.
>   The ability of the Company to continue as a going concern is dependant upon
>   its ability to successfully seek out and consummate investments, or to secure
>   other sources of financing such that it may commence profitable operations.
>   The accompanying financial statements do not include any adjustments that
>   might be necessary if the Company is unable to continue as a going concern.

NOTE 9- SUBSEQUENT EVENTS

> Stock Issuances
>   Subsequent to year end, the Company issued 500,000 shares of common stock for
>   cash of $30,000. The Company also issued 150,000 shares of common stock to
>   complete the acquisition of Sino UJE.
>   F-30
>   NICHOLAS INVESTMENT
>   COMPANY, INC.Notes to the Financial Statements
>   December 31, 2003 and 2002

NOTE 9- SUBSEQUENT EVENTS (Continued)

> Convertible Debenture
>   The Company issued a convertible debenture for $40,000.Dividends for Javelin
>   The Company has received dividends of $128,023 from Javelin Holdings.

NOTE 10 - FINANCIAL
HIGHLIGHTS 
    The following schedule presents financial highlights for a
share of the Fund outstanding throughout the periods indicated.

|                                                                        |   | Common stock Year ended
      December 31, 2003
|----------------------------------------------------------------------- | - | -----------------------------------------------
|                                                                        |   |                                                
|Net asset value,
    beginning of period                                |   |                                                
|Income from
    investment operations:                                  | $ | (2.17)                                         
|                                                                        |   |                                                
|Net Investment income                                                   |   | 0.00                                           
|Net gains (losses) on
    securities
    (both realized and unrealized) |   | 0.41                                           
|                                                                        |   |                                                
|Total from investment
    operations                                    |   | 0.41                                           
|                                                                        |   |                                                
|Other Increase                                                          |   | 2.30                                           
|Less distributions
    from net investment income                       |   | -                                              
|                                                                        |   |                                                
|Net asset value, end
    of period                                      | $ | 0.54                                           
|                                                                        |   |                                                

> Calculated using post split average
>   shares outstanding.
>   The Company elected to become a Business Development Company in November 2003.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

> The Company signed an office lease
>   agreement which goes through June 30, 2006. Future minimum payments required
>   under this lease are as follows:

| | 2004 | $ | 39,262 
| | ---- | - | -------
| | 2005 |   | 40,664 
| | 2006 |   | 20,332 
| |      |  
| |      | $ | 100,258
| |      |  

F-31

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