2


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 For the Fiscal Year Ended December 31, 2001

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

                        Commission File Number: 000-27715

                        NICHOLAS INVESTMENT COMPANY, INC.
                 (Name of small business issuer in its charter)

                  Nevada                         33-0788293
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)                Identification No.)

                 2220 Otay Lakes Rd., #50925, Eastlake, CA 91915
               (Address of principal executive offices) (Zip Code)

Issuers telephone no.:  (619) 421-5492

Securities registered pursuant to Section 12(b) of the Exchange Act:  None

Securities registered pursuant to Section 12(g) of the Exchange Act:  Common

     Check  whether  the issuer (1) filed all  reports  required  to be filed in
Section 13 or 15(d) of the  Exchange  Act during the past 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 [X] No [
]

     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 the  Registrants  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     State the issuers revenues for its most recent fiscal year. $ 50,840.00

     State 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 ask  prices  of such  stock  as of a  specified  date  within  60  days.
$397,230.00   (the   aggregate   market  value  of  the  voting  stock  held  by
non-affiliates is undeterminable because as is considered to be 0.).
     State the number of shares  outstanding of each of the issuers  classes of
common equity, as of the latest practicable date.

                  Class                   Outstanding as of December 31, 2001
         Common Stock, $.001 Par Value                11,345,250


                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE
Transitional Small Business Disclosure Format.       Yes [x]        No [  ]


                        NICHOLAS INVESTMENT COMPANY, INC.
                                TABLE OF CONTENTS
                                   PART I Page
Item 1.          Description of Business                               3-4
Item 2.          Description of Property                               4-5
Item 3.          Legal Proceedings                                     6
Item 4.          Submission of Matter to a Vote of Security Holders    6
                                                                PART II
Item 5.          Market for Common Equity and Related Stockholder
                     Matters                                           6-9

Item 6.          Managements Discussion and Analysis or Plan of
                     Operation                                         10-14

Item 7.          Financial Statements                                  14

Item 8.          Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosure               14

                                                               PART III

Item 9.          Directors, Executive Officers, Promoters and Control persons;
                     Compliance with Section 16(a) of the Exchange Act  15-16

Item 10.         Executive Compensation                                 16

Item 11.        Security Ownership of Certain Beneficial Owners and
                     Management                                         17-18

Item 12.        Certain Relationships and Related Transactions          18

Item 13.        Exhibits and Reports on Form 8-K                        18


SIGNATURES                                                              S-1



                                     PART I

     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 documents and in all if its
communications to shareholders and others, on managements projections, estimates
and  all  other  communications.   Statements  that  are  based  on  managements
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 Companys 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

Business Development
     Nicholas Investment Company, Inc. was incorporated under the laws of Nevada
on January 22, 1998, as a start up enterprise,  to engage in any lawful activity
as shall be appropriate under laws of the State of Nevada.  Primarily,  Nicholas
Investment  Company is in the  business of  acquiring  and leasing  real estate.
Nicholas  Investment raised $202,800.00 in 1998 and purchased four single-family
dwellings.

     Nicholas  Investment  was  formed  to  invest in Real  Estate,  own  rental
properties,  notes secured by deeds of trust(s),  discounted  notes,  or smaller
properties ready for development.  Rental income,  note and trust deed receipts,
and  occasional  rental  property  and  development  property  sales will be the
primary source of income.

     The goal of Nicholas  Investment is to own rental properties free and clear
as funds become available.  Currently, none of the properties are owned free and
clear of debt.  Rental  income is the main  source of funds,  without  mortgages
these monies  become fully  available  to Nicholas  Investment  minus the normal
costs of maintenance, repairs and management.

     The initial portfolio consists of smaller rental properties,  single family
homes.   Nicholas   Investment  has  acquired  four  single-family   residential
properties. All four properties are rented with a gross monthly rental income of
$ 4,375.00 as of December 31, 2001.  The purchase  price of all four units was $
559,132 and are subject to $ 458,769 unpaid mortgages as of December 31, 2001.

Marketing
     Marketing  is the  function  of John  N.  Kirchner,  Nicholas  Investments
President. The marketing consists of negotiating terms when purchasing, leasing,
and/or selling assets owned by Nicholas Investment.

Market Research

     Market research is the function of John N. Kirchner,  Nicholas Investments
President.  When purchasing properties to be utilized by Nicholas Investment for
rental purposes or resale,  market research is required for ascertaining  proper
rental  amounts  to  be  expected  by  Nicholas  Investment  together  with  the
possibility of an increase in property values.


Competition

     All of the properties  Nicholas  Investments owns are located in San Diego,
California.  Although  there are many rental  properties in San Diego,  there is
also a high demand.  Therefore,  there is high  competition but also a very high
demand for the rental property market in San Diego.

     Nicholas Investment is looking for additional properties.  These properties
would also be in San Diego. Any planned acquisition by Nicholas Investment would
experience the same competition as the properties Nicholas Investment  currently
owns.

Employees

     Presently,  Nicholas  Investment  has 2  part  time  employees.  Management
intends to hire additional  employees only as needed and as funds are available.
In such cases  compensation  to management and employees will be considered with
prevailing wages for services rendered.

Item 2.    Description of Property

     Nicholas  Investment  currently has its offices  located at 2220 Otay Lakes
Rd. #50295, Eastlake, CA, 91915.

     Nicholas Investment owns four (4) properties in San Diego California. These
properties  are  leased  to others  for a monthly  fee.  The  properties  are as
follows:

6216 Agee St., #126, San Diego, CA 92122 condo unit
         2 bed, 2 bath 1150 square feet
         Purchase price:            $125,000.00
         Present loan balance:      $72,226.00
         Annual income:             $10,500.00,
         Loan interest rate:        8.75%
         RE annual taxes:           $1,411.48
         RE taxes monthly:          $117.62
         RE tax rate:               1.12%
         P&I Monthly:               $600.00
         Monthly Condo Fee:         $148.00
         Insurance:                 Included in condo fee
         Total Payment per Month:   $865.62
         Lease term:                month to month; tenant has been
                                    in property for 14
                                    years.

9250 Towne Center Dr. #1, San Diego, CA 92121 condo unit
         2 bed, 2 bath 1100 square feet
         Purchase price:            $130,000.00
         Present loan balance:      $85,452.00
         Annual income:             $12,000.00
         Loan interest rate:        7.02%
         RE annual taxes:           $1,470.18
         RE taxes monthly:          $122.51
         RE tax rate:               1.13%
         P&I monthly:               $600.00
         Monthly Condo Fee:         $185.00
         Insurance:                 Included in condo fee
         Total Payment per Month:   $907.51
         Lease term:                month to month tenant; has been
                                    in property for
                                    3 years.

7520 New Salem St., San Diego, CA 92126  single family home
         3 bed, 2 bath 1450 square feet
         Purchase price:            $155,000.00
         Present loan balance:      $118,684.00
         Annual income:             $16,200.00
         Loan interest rate:        8.4% variable
         RE annual taxes:           $2,253.88
         RE taxes monthly:          $ 187.82
         RE rate:                   1.45%
         P&I monthly:               $885.00
         Insurance per Month:       $41.00
         Total Payment per Month:   $1113.82
         Lease term:                expires 1/31/2003

2952 Manos Dr., San Diego, CA 92139 single family home
         3 bed, 2.5 bath 1266 square feet
         Purchase price:            $148,000.00
         Present loan balance:      $182,407
         Annual income:             $13,800.00
         Loan interest rate:        7.75%
         RE annual taxes:           $1,533.24
         RE taxes monthly:          $127.77
         RE tax rate:               1.03%
         P&I monthly:               $1527.00
         Insurance per Month:       $36.00
         Total Payment per Month:   $1690.77.
         Lease term:                month to month; tenant has been in
                                    property for 3
                                    years

     Nicholas  Investment  occupancy  rate is 100% as of December 31, 2001.  All
properties owned by Nicholas are residential and no business is conducted within
these  properties.  Nicholas  Investment  Companys  real property  holdings are
depreciated on a straight-line  basis.  The useful lives of the real property is
39.5 years for accounting purposes.
     Towne Center  Drive and Agee Street are two bedroom two bath  condominiums.
These properties are in excellent rental  condition.  The exterior is maintained
by the  homeowners  association  and the interiors  have been updated and are in
excellent condition. New Salem Street is a three-bedroom two-bath two-car garage
house that was refurbished  prior to the present tenant.  Manos Drive is a three
bedroom one and a quarter bath two car garage that was refurbished  prior to the
present tenant.  Both houses are in excellent  condition.  There are no plans to
further renovate, improve or develop any of Nicholas real properties. Management
believes the properties are adequately covered by insurance.

     Nicholas Investment is looking for additional properties.  These properties
would also be in San Diego.  So any planned  acquisition by Nicholas  Investment
would  experience the same  competition as the  properties  Nicholas  Investment
currently owns. Currently, there are no options, contract, or agreements to sell
or purchase any real properties.

     Currently,  management  has not set any  limitations  on the  percentage of
assets,  which may be invested in a single  investment.  The only restriction on
any single  investment is that the candidate  investment be for residential use.
Management has not set any limitations on the number of mortgages,  which may be
placed on any one piece of property.

     Nicholas Investment determines residential to be single family dwellings,
town  homes,  condos,  duplexes,  triplexes,  and even raw  land  intended  for
residential development.

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

     No matters were  submitted to a vote of the  Companys  Securities  Holders
during the fourth quarter of the Companys fiscal year ending December 31, 2001.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholders Matters

     Prior to the filing of this registration  statement,  no shares of Nicholas
Investments  Common Stock have been registered with the Securities and Exchange
Commission  (the  Commission)  or any  state  securities  agency  of  authority.
Nicholas   Investments   Common   Stock  is   eligible  to  be  traded  in  the
over-the-counter  market upon the filing of this Form 10SB and the clearings and
comments thereto by the Commission.

     The  ability  of an  individual  shareholder  to trade  their  shares  in a
particular  state may be subject to various rules and regulations of that state.
A number of states  require that an issuers  securities  be  registered in their
state or  appropriately  exempted from  registration  before the  securities are
permitted to trade in that state. Presently, Nicholas Investment has no plans to
register its securities in any particular state.  Further,  most likely Nicholas
Investments  shares will be subject to the provisions of Section 15(g) and Rule
15g-9 of the Securities  Exchange Act of 1934, as amended (the Exchange  Act),
commonly referred to as the penny stock rule.  Section 15(g) sets  forth-certain
requirements for transactions in penny stocks and rule 15g-9(d)(1)  incorporates
the  definition  of penny stock as that used in Rule 3a51-1 of the Exchange Act.
In the opinion of management  Nicholas Investment Company fits the definition of
a penny stock which is described as follows.

     The Commission generally defines penny stock to be any equity security that
has a market price less than $5.00 per share, subject to certain exception. Rule
3a51-1  provides  that any equity  security  is  considered  to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting  specified  criteria set by the Commission;  authorized for quotation on
the NASDAQ stock Market;  issued by a registered investment Nicholas Investment;
excluded from the definition on the basis of price (at least $5.00 per share) or
the  issuers  net  tangible  assets;  or exempted  from the  definition  by the
Commission.  If  Nicholas  Investments  shares are deemed to be a penny  stock,
trading in the shares will be subject to additional sales practice  requirements
on  broker-dealers  who sell  penny  stocks to persons  other  than  established
customers and accredited  investors,  generally persons with assets in excess of
$1,000,000 or annual income exceeding $200,000,  or $300,000 together with their
spouse.

     For transactions covered by these rules, broker-dealers must make a special
suitability  determination  for the  purchase  of such  security  and must  have
received  the  purchasers  written  consent  to the  transaction  prior  to the
purchase.  Additionally,  for any  transaction  involving a penny stock,  unless
exempt,  the rules require the delivery,  prior to the first  transaction,  of a
risk  disclosure  document  relating to the penny stock market.  A broker-dealer
also must disclose the  commissions  payable to both the  broker-dealer  and the
registered representative,  and current quotations for the securities.  Finally,
monthly  statements  must be sent  disclosing  recent price  information for the
penny stocks held in the account and  information on the limited market in penny
stocks. Consequently,  these rules may restrict the ability of broker-dealers to
trade and/or maintain a market in Nicholas Investments
Common Stock and may affect the ability of shareholders to sell their shares.

                  There are three main exemptions to the penny stock rule.

1.       A Company whose stock is priced at $5.00 or above per share.
2.       A Company whose net worth exceeds $5,000,000.
3.       A Company over five years old with a net worth of $2,500,000.

     A broker/dealer  selling to other than established  customers or accredited
investors must do so on an unsolicited basis.

     As of December 31, 1998 and  December 31, 1999 there were 21  shareholders.
As of December  31, 2001 there were 35 and as of December 31, 2001 there were 61
shareholders  respectfully  of record of  Nicholas  Investments  Common  Stock.
Because the Nicholas  Investment does not presently trade, no trading history is
presented herein.

     As of December  31, 1999  Nicholas  Investment  had issued and  outstanding
10,795,250 shares of common stock. As of December 31, 2000 and December 31, 2001
Nicholas had 11,345,250  shares of common stock issued and  outstanding.  Of the
latter  total,  10,830,667  shares  were issued in private  transactions.  These
10,830,667  shares were deemed  restricted  securities as defined by the Act and
certified  representing such shares bear a restrictive legend. All shares issued
except the 504 offering  shares were issued  pursuant to 4(2) of the  Securities
Act.  These shares were issued for investment  purpose and not for  distribution
unless they are  registered  or an exception  from  registration  is  available.
150,000  shares were issued  pursuant to  Regulation D Rule 504 in March of 1999
and are exempt from registration and do not bear a restrictive legend. There are
shares  totaling  364,583 that while issued on a restricted  basis would qualify
under 144K should a public market be  available.  None of these shares are owned
by affiliates of the Company.
     The  10,830,667  shares  considered  restricted  securities,  are  held  by
affiliates or control shareholders.  These 10,830,667 shares were issued and are
exempt from  regulation.  499,416  shares were issued and  restricted  from sale
unless an  exemption  from  registration  is  available,  ie,  144K.  85% of the
outstanding shares are held by management.  Management  together as a group with
Jonathon  MacMillan  and  Brittany  Kirchner  represent  94% of the  outstanding
shares.  514,583  shares  of the  outstanding  common  shares  are  not  held by
affiliates.

     The 94% of the outstanding shares are considered  restricted securities are
held  presently  by  affiliates  and/or  controlling  shareholders  of  Nicholas
Investment. These shares may be sold pursuant to Rule 144 in the future, subject
to the volume and other limitations set forth under Rule 144. In general,  under
Rule 144 as  currently  in  effect,  a  person  (or  persons  whose  shares  are
aggregated) who has beneficially owned restricted shares of Nicholas  Investment
for at  least  one  year,  including  any  person  who  may be  deemed  to be an
affiliate of the Nicholas Investment (as the term affiliate is defined under
the Act),  is  entitled to sell,  within any  three-month  period,  an amount of
shares that does not exceed the greater of (i) the average weekly trading volume
in the Nicholas  Investments  Common Stock,  as reported  through the automated
quotation  system  of a  registered  securities  association,  during  the  four
calendar weeks preceding such sale or (ii) 1% of the shares then outstanding.  A
person who is not deemed to be an affiliate of Nicholas Investment and has not
been an affiliate for the most recent three months,  and who has held restricted
shares  for a least two years  would be  entitled  to sell such  shares  without
regard to the resale limitations of Rule 144.

     Generally,  the  shares of  restricted  stock may not be sold or  otherwise
transferred  unless  first  registered  under  the  Act or  unless  there  is an
appropriate exemption from registration available.

Recent Sales of Unregistered Securities

     On March 18, 1998 Nicholas  Investment  issued  10,416,667 shares of common
stock with a par value of $.001 for $.02 per share or $208,333.  On May 18, 1998
Nicholas  Investment  issued 14,000  shares to fourteen (14) people  pursuant to
Section  4(2) of the  Securities  Act of 1993 for $.20 per  share or  $2,800.00.
Nicholas  Investment  issued 364,583 shares of common stock at $.20 per share on
July 10, 1998 to RB Capital & Equities, Inc., for consulting services.

     Management  fees  accrued to John  Kirchner and  Pfishski  Corporation  was
$40,000  to each  party  for  services  in  1999.  John  Kirchner  and  Pfishski
Corporation  both  received  200,000  shares of each of common stock at $.20 per
share for payment of this debt.  Robert  Bryson,  Gary DeGano,  and RB Capital &
Equities,  Inc., each received 50,000 shares of common stock for services valued
at $.20 per share for a total of $10,000 each for payment of their debt.

     On July 10, 1998 Nicholas  Investment issued 364,583 shares of common stock
to RB Capital & Equities,  Inc.,  as $.20 a share for a total of $72,916.  These
shares were  issued via a  resolution  and  contract  dated  January 20, 1998 in
accordance with Section 4(2) of the 1933 Securities Act.

     On March 16, 2000 Nicholas Investment issued 200,000 shares of common stock
at $.20 per share to both John  Kirchner and Pfishski  Corporation  for services
that were accrued as of December 31, 1999. Cash  consideration  was not received
as consideration for the shares.  Nicholas Investment also issued 150,000 shares
of common stock on March 10, 2000  pursuant to  Regulation D 504 offering  filed
February 5, 1999.  Nicholas  Investment  issued these shares for consulting fees
that were accrued to Gary DeGano, Robert Bryson and RB Capital & Equities,  Inc.
Cash consideration was not received as consideration for these shares.

     The March 16, 2000 issuance to John Kirchner and Pfishski  Corporation  was
in payment of management  services in  accordance  with Section 4(2) of the 1933
Securities Act.

     As of December 31, 2001 Nicholas Investment has 11,345,250 shares of common
stock outstanding.

Dividend Policy

     Nicholas  Investment  has not  declared  or  paid  cash  dividends  or made
distributions in the past, and the Nicholas  Investment does not anticipate that
it will pay cash  dividends or make  distributions  in the  foreseeable  future.
Nicholas  Investment  currently  intends to retain and invest future earnings to
finance its operations


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-KSB.

Plan of Operation

     Nicholas  Investment became incorporated in January 22, 1998 under the laws
of the state of Nevada.  Nicholas Investment 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.   Nicholas
Investment  has  realized  rental  revenues  as of the date  hereof,  management
anticipates  to increase  rental  revenues  by the end of the fourth  quarter or
early in the first quarter of 2001.

     As of December 31, 2001,  management  has not yet identified any properties
to acquire. None of the Nicholas real estate properties are currently for sale.

     As of  December  31,  2001,  management  has  recognized  that  there  is a
deficiency  in liquidity.  The is deficiency  has been noted in the notes to the
financial  statements  and the audit  opinion.  Management has not yet decided a
remedy.

     Nicholas  Investments  current  capital  was  provided  by the  founders of
Nicholas  Investment and by to private  placements for the sale of common stock.
Management believes that Nicholas Investments cash requirement can be satisfied
with existing capital for ninety days, if sales are sufficient to handle current
operating  costs.   However,  if  Nicholas  Investment  does  not  satisfy  cash
requirements  beyond  ninety (90) days,  Nicholas  Investment  will  explore the
possibility of outside funding.

     In the  event,  outside  funding is  necessary,  Nicholas  Investment  will
investigate  the  possibility of interim  financing,  either debt or equity,  to
provide  capital.  Although,   management  has  not  made  any  arrangements  or
definitive agreements, Nicholas Investment would consider private funding or the
private  placements  of its  securities  and/or a public  offering.  If Nicholas
Investment  experiences a substantial  delay in rental revenues and is unable to
secure public financing from the sale of its securities then mortgage  financing
would be considered.

     Currently,  there are no  commitments  for material  expenditures.  Monthly
mortgage payments should not materially affect Nicholas Investment.  This is due
to the fact that the mortgage  payments are serviceable  from the monthly rental
revenues from each property.

         Nicholas Investment has an inventory of four rental properties as
herein described.
         ( a )  7520 New Salem St.          ( c )  6216 Agee St. # 126
                  San Diego, CA.                   San Diego, CA.

         ( b )  9250 Town Center Dr. # 1    ( e )  2950 Manos Dr.
                  San Diego, CA.                   San Diego, CA.

     Management does not anticipate hiring  additional  employees until dictated
by a  substantial  increase in  acquisitions  or sales and that is  dependent on
Nicholas Investment having sufficient capital.

     It should be noted that the  Companys  auditors J Associates,  LLC.,  have
expressed in their  financial  statements and audit opinion letter that there is
substantial doubt about the Companys ability to continue as a going concern.

Liquidity and Capital Resources

     The Companys  financial  statements  present an  impairment in the terms of
liquidity. The Company has approximately a 1:2 current ratio. As of December 31,
2001 the Company has $15,573 in current assets  compared to $47,338 for the same
period of 2000.  For the years  ended  December  31,  2000 and 2001 the  current
assets were comprised entirely of cash. For the year ended December 31, 2001 the
Company has $32,405 in current liabilities  compared to $51,357 the year before.
For the year ended  December  31, 2001  current  liabilities  were  comprised of
$1,537 in accounts payable,  $23,000 in management fees payable,  and $7,868 for
the current portion of long term debt. This compares to the current  liabilities
of $2,115 in accounts  payable,  $40,000 in management fees payable,  and $9,242
for the current portion of long term debt as of December 31, 2000.
                                                         Balance Sheet Summary
                                                              December 31
                                                          2001             2000

Total Current Assets                                     15,753           47,338
Property (net)                                          529,582          538,561

Total Assets                                            545,155          585,894

Current Liabilities                                      32,405           51,357

Long Term Liabilities                                   450,901          453,093

Total Liabilities                                       483,306          504,450

Total Stockholders Equity                                61,849           81,449

Total Liabilities and
Stockholders Equity                                     545,155          585,899

     The  Companys  auditors  consider the Company to be a going  concern.  This
contemplates  the  realization  of assets and  liquidation of liabilities in the
normal course of business. 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 its real
estate operations.
Net Operating Losses

     The Company  has  accumulated  $(323,867)  off net  operating  losses as of
December 31, 2001,  which may used to reduce taxes in future years through 2021.
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.

     In the event of certain changes in control of the Company,  there will be a
annual  limitation on the amount of the net operating loss  carryforwards  which
can be used. The potential tax benefit of the net operating  loss  carryforwards
have been offset by a valuation allowance of the same amount.

Results of Operation

     For the year ended  December 31, 2001 the Company had a net loss of $19,600
compared to a net loss of $85,747 for the same period of 2000.  The  decrease in
the net  operating  loss can be  largely  attributed  to a $68,497  decrease  in
general and administrative  expenses.  Of this decrease the biggest factor was a
decrease in management  fees of $60,000.  Revenues  remained  steady with rental
income of $50,840 for the year ended  December 31, 2001  compared to $49,228 for
the same period of the prior year.  Interest expense  increased about $3,900 due
to the Company taking out some equity into the form of cash.



                            Income Statement Summary
                                   December 31

                                            2001           2000
Rental Revenues                            50,840         49,228
Total Revenues                             50,840         49,228

Total Operating Costs                      32,129        100,513

Income (Loss) from Operations              18,711        (51,285)

Other Expense
Interest Expense                           38,311         34,462

Net Loss                                  (19,600)       (85,747)

Recent Accounting Pronouncements

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting (SFAS), No. 133, Accounting for Derivative Instruments. SFAS No. 133
provides a different method for accounting for derivative  instruments  embedded
in other  contracts and hedging  activities.  Derivative  instruments  represent
rights or  obligations  that meet the  definition of assets or  liabilities  and
should be reported in the financial statements.  Fair value is the most relevant
measure for financial  statements  and the only relevant  measure for derivative
instruments.  Derivative  instruments  should  be  measured  at fair  value  and
adjustments to the Companys  derivative of hedging items should reflect changes
in their  fair  value that are  attributable  to the risk being  hedged and that
arise while the hedge is in effect.  SFAS.  No. 133 is effective  for  financial
statements ending after June 15, 1999. SFAS No. 133  implementation did not have
a material effect on the financial statements.

     The Financial  Accounting  Standards Board has also issued 44PB Opinion No.
25).  APN No. 25 APB Opinion No. 25 APB  Opinion  No. 25,  Accounting  for Stock
Issued to Employees,  was issued in October 1972. Since its issuance,  questions
have been raised about its  application and diversity in practice has developed.
During its consideration of the accounting for stock-based  compensation,  which
lead to the issuance of SFAS No. 123,  Accounting for Stock Based  Compensation,
the Board decided not to address  practice  issues related to Opinion 25 because
the Board had planned to supersede  Opinion 25.  However,  Statement 123 permits
entities  to  continue  applying  Opinion  25 to  stock  compensation  involving
employees. Consequently, questions remain about the application of Opinion 25 in
a number of different circumstances.

     This  Interpretation  clarifies  the  application  of  Opinion  25 for only
certain issues. It does not address any issued related to the application of the
fair value method in Statement  123. The issues  addressed  herein were selected
after  receiving  input from members of both the FASB Emerging Issues Task Force
and the task force on stock  compensation  that assisted in the  development  of
Statement  123.  Among  other  issues,  this  Interpretation  clarifies  (a) the
definition of employee for purposes of applying Opinion 25, (b) the criteria for
determining  whether  a  plan  qualified  as a  noncompensatory  plan,  (c ) the
accounting  consequence  of various  modifications  to the terms of a previously
fixed stock  option or award,  and (d) the  accounting  for an exchange of stock
compensation awards in a business combination.

     FIN44 is effective for financial statements issued for periods ending after
July 1, 2000. The implementation of FIN 44 did not have a material affect on the
financial statement.

Inflation

     In the opinion of management,  inflation will not have a material effect on
the operations of Nicholas Investment.

Risk Factors and Cautionary Statements

     Forward-looking  statements  in this report are made  pursuant to the safe
harbor provisions of the Private Securities  Litigation Reform Act of 1995. The
Company  wished to advise  readers that actual  result may differ  substantially
from such forward-looking  statements,  Forward-looking statements involve risks
and  uncertainties  that could cause actual  results to differ  materially  from
those expressed in or implied by the statements,  including, but not limited to,
the following: the ability of the Company to complete development of its primary
products  and its  ability  to  successfully  market  its  product  if and  when
developed and other risks detailed in the Companys periodic report filings with
the Securities and Exchange Commission.

Going Concern
     Nicholas  Investments  financial  statements are prepared using  generally
accepted accounting  principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal source of
business.  However,  Nicholas Investment does not have significant cash or other
material assets, nor does it have an established  source of revenues  sufficient
to cover its operating costs and to allow it to continue as a going concern.  It
is the intent of  Nicholas  Investment  to  complete a limited  offering  of its
common stock if necessary.

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.



Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.

         The executive officers and directors of the Company are as follows:

Name                                     Age      Position
John N. Kirchner                         70       Chairman, President and CEO
Deborah L. Wayne(1)                      50       Vice President, Director
Lynn D. Shaeffer                         53       Secretary/Treasurers, Director

     (1) Deborah L. Wayne is the daughter of John Kirchner,  Nicholas Investment
CEO and chairman.

     All directors hold office until the next annual meeting of stockholders and
until their  successors have been duly elected and qualified.  Directors will be
elected  at the  annual  meetings  to serve  for  one-year  terms.  There are no
agreements  with respect to the election of directors.  Nicholas  Investment has
not  compensated  its  directors  for service on the Board of  Directors  or any
committee  thereof.  Any non-employee  director of Nicholas  Investment shall be
reimbursed  for  expenses  incurred for  attendance  at meetings of the Board of
Directors and any committee of the Board of Directors.  The Executive  Committee
of the Board of Directors, to the extent permitted under Nevada law, consists of
the two  directors  and exercises all of the power and authority of the Board of
Directors in the  management of the business and affairs of Nicholas  Investment
between meetings of the Board of Directors.  Each executive officer is appointed
by and serves at the discretion of the Board of Directors.

     None of the officers and/or  directors of Nicholas  Investment are officers
or  directors  of any other  publicly  traded  corporation,  nor have any of the
affiliates or promoters of Nicholas  Investment  filed any bankruptcy  petition,
been convicted in or been the subject of any pending  criminal  proceedings,  or
the subject or any order,  judgment,  or decree  involving  the violation of any
state or federal securities laws within the past five years.

     The directors  will  initially  devote their time to Nicholas  Investments
affairs on an as needed basis,  the exact amount of which is  undetermined  at
this time. John N. Kirchner  currently devotes  approximately 25 to 30 hours per
week to  Nicholas  Investments  business.  If  Nicholas  Investment  begins  to
generate   revenues,   Nicholas   Investments   Vice   President   will  devote
approximately 5 to 10 hours a week primarily as Nicholas  Investments  property
manager.  Both persons are prepared to increase the time they devote to Nicholas
Investment should such a need arise. Presently, there are no other persons whose
activities are material to Nicholas Investments  operations other than Nicholas
Investments corporate counsel.

     The business experience of each of the persons listed above during the past
five years is as follows:

     John N.  Kirchner has served as Treasurer  and  President/  CEO of Nicholas
Investment  since 1998.  From 1995 to 1997 he served as Chairman of the Board of
Union Land Title Company, President of Dynamic Investment Company, inc., as real
estate  development,  founder  and  Chairman of  American  Thrift and Loan,  and
President  of the San  Diego  Board of  Realtors.  Mr.  Kirchner  has  extensive
experience in the management and  development of real  properties.  Mr. Kirchner
has in excess of twenty-five years experience in finance and real estate. He has
held offices as Chairman of the Board of First Western Bank.

     Deborah L. Wayne has served as Vice President of Nicholas Investment and as
property  manager since 1998. From 1995 to 1997 she had her own document sign up
business. Mrs. Wayne has been a California Real Estate Broker since 1983. She is
an officer and director of Pfishski Corporation. Her main field of experience is
rental property management and development of real properties.

     Lynn D.  Shaeffer has served as Vice  President  and  secretary of Nicholas
Investment  since 1998.  Mrs.  Shaeffer  has served as Vice  President  of Wayne
Financial  Inc.  and Pfishski  Corporation.  She has been  instrumental  in real
estate finance and real estate property management for both the above companies.
She  graduated  from the  University  of Hawaii  in 1973,  and has been a dental
hygienist  in the San Diego area since 1976.  She is an officer and  director of
Pfishski Corporation.Mrs.  Shaeffer is married to John N. Kirchner the Companys
Treasurer and President.


Section 16(a) Beneficial Ownership Reporting Compliance

     Each of the Companys officers and directors are required to file a Form 3,
Annual  Statement of Changes in  Beneficial  Ownership on or before the 45th day
after the end of the fiscal year.  These reports have not been filed in a timely
basis and have recently been filed.

Item 10.  Executive Compensation

     No officer or director  received any  remuneration  for year ended December
31, 2001.

     There are no annuity,  pension or  retirement  benefits  proposed to pay to
officers,  directors or employees of the  Corporation in the event of retirement
date pursuant to any presently  existing plan provided or  contributed to by the
Corporation or any of its subsidiaries.

     No  remuneration  other than that reported in paragraph (a) of this item it
proposed to be in the future  directly or indirectly by the  corporation  to any
officer or director under any plan which is presently existing.



Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The  following  table  sets  forth  information,  to the  best of  Nicholas
Investments  knowledge,  as of December 31,  2001,  with respect to each person
known by Nicholas Investment to own beneficially more than 5% of the outstanding
Common Stock, each director and all directors and officers as a group.


         Name and                   Title of     Type of   Amount     Percentage
         Address                      Class    Ownership    Owned

         John Kirchner     (1)      Common    Beneficial    800,000        7%
         PO Box 81848
         San Diego, CA 92138


         Lynn D. Shaeffer  (2)      Common    Beneficial  3,020,836       27%
         PO Box 81848
         San Diego, CA 92138

         Wayne Kirchner (3)         Common    Beneficial  2,916,666       26%
         PO Box 81165
         San Diego, CA 92138

         Deborah L. Wayne (4)       Common    Beneficial  2,916,666       26%
         PO Box  81165
         San Diego, CA 92138

         Management as a Group                            9,654,168       85%

         Other 5% Investors

         Jonathan MacMillan (5)     Common   Beneficial    520,833        4.5%
         PO Box 81165
         San Diego, CA 92138

         Brittany Kirchner (6)      Common  Beneficial     520,833        4.5%
         PO Box 81165
         San Diego, CA 92138

     (1)John Kirchner,  Nicholas Investment  Companys president,  directly holds
400,000 shares of common stock. Pfishski Corp a management company 100% owned by
John  Kirchner also owns 400,000  shares of common  stock,  which is included in
John Kirchner total shares.  Therefore,  John Kirchner directly controls 800,000
shares of common stock (2) Wife of John  Kirchner and is an officer and director
of Pfishski Corporation.  (3) Son of John Kirchner (4) Daughter of John Kirchner
and is an officer and  director of Pfishski  Corporation.  (5)  Grandson of John
Kirchner  and son of Deborah L. Wayne (6)  Granddaughter  of John  Kirchner  and
daughter of Wayne Kirchner.

     The above percentages are based on 11,345,250  outstanding common shares as
of December 31, 2001.


Item 12.  Certain Relationships and Related Transactions

     The  Companys  officers  and  directors  are  subject  to the  doctrine  of
corporate  opportunities only insofar as it applies to business opportunities in
which the  Company has  indicated  an  interest,  either  through  its  proposed
business  plan or by way of an express  statement  of interest  contained in the
Companys minutes.  If directors are presented with business  opportunities that
may  conflict  with  business   interests   identified  by  the  Company,   such
opportunities  must be promptly  disclosed  to the Board of  Directors  and made
available to the Company.  In the event the Board shall reject an opportunity to
presented and only in that event,  any of the  Companys  officers and directors
may  avail  themselves  of such an  opportunity.  Every  effort  will be made to
resolve any  conflicts  that may arise in favor of the Company.  There can be no
assurance, however, that these efforts will be successful.

                                     PART V

Item 13. Exhibits and Reports on Form 8-K

(a)      Exhibits

                  Articles of Incorporation, filed as reference to
                  Exhibit in Form 10-SB

                  By Laws, filed as reference to Exhibit in Form 10-SB

                  Subsidiaries

                  Articles of Incorporation filed as reference to Exhibit
                  in Form 10-SB


(b)      Reports  on Form 8-K

                  None.

                                   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/ John Kirchner
                                                               John Kirchner
                                                               President


Dated:  March 26, 2002

     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/ John Kirchner          President, Director              March 26, 2002
John Kirchner


/S/ Deborah L. Wayne       Vice President                   March 26, 2002
Deborah L. Wayne

/S/ Lynn D. Schaeffer     Secretary                          March 26, 2002
Lynn D. Schaeffer













                                       S-1






                           NICHOLAS INVESTMENT COMPANY

                              FINANCIAL STATEMENTS

                                December 31, 2001








                                 C O N T E N T S


Independent Auditors Report...................................... 3

Balance Sheet.................................................... 4

Statements of Operations......................................... 5

Statements of Stockholders Equity............................... 6

Statements of Cash Flows......................................... 7

Notes to the Financial Statements............................... 8

                                                    INDEPENDENT AUDITORS REPORT


To the Board of Directors
Nicholas Investment Company, Inc.
San Diego, California


     We have  audited the  accompanying  balance  sheet of  Nicholas  Investment
Company, Inc., as of December 31, 2001 and the related statements of operations,
stockholders  equity and cash flows for the years ended  December  31, 2001 and
2000.  These  financial  statements  are  the  responsibility  of the  Companys
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

     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 audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects, the financial position of Nicholas Investment Company,
Inc. as of December  31,  2001 and the  results of its  operations  and its cash
flows  for the  years  ended  December  31,  2001  and 2000 in  conformity  with
accounting principles generally accepted in the United States of America.

     In accompanying  financial  statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 5 to the
financial  statements,  the  Company has  experienced  recurring  losses,  has a
deficit in working  capital and has failed to generate  positive  cash flow from
operations,  which  together  raises  substantial  doubt  about its  ability  to
continue as a going concern.  Managements  plans in regard to these matters are
also  described  in  Note  5.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of the uncertainty.



HJ  Associates & Consultants, LLP
Salt Lake City, Utah
March 6, 2002

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

                                        7


                           NICHOLAS INVESTMENT COMPANY
                                  Balance Sheet


                                     ASSETS

                                                          December 31,
                                                            2001

CURRENT ASSETS

Cash$                                                        15,573

Total Current Assets                                         15,573

PROPERTY - NET (Note 3)                                     529,582

TOTAL ASSETS                                              $ 545,155

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES

Accounts payable                                              1,537
Accrued expenses                                             23,000
Notes payable, current portion (Note 4)                       5,681
Notes payable, current portion (related party) (Note 4)       2,187

Total Current Liabilities                                    32,405

LONG-TERM LIABILITIES

Notes payable (related party) (Note 4)                      295,410
Notes payable (Note 4)                                      155,491

Total Long-Term Liabilities                                 450,901

Total Liabilities                                           483,306

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS EQUITY

Common stock: $0.001 par
value, authorized 100,000,000
shares; 11,345,250 shares
issued and outstanding                                       11,345
Additional paid-in capital                                  374,371
Accumulated deficit                                        (323,867)

Total Stockholders Equity                                    61,849

TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY                                       $ 545,155

                           NICHOLAS INVESTMENT COMPANY
                            Statements of Operations


                                       For the Years Ended
                                          December 31,
                                      2001            2000

REVENUES

Rental revenue                  $     50,840    $     49,228

Total Revenues                        50,840          49,228

OPERATING COSTS

Amortization and depreciation          8,979           8,866
General and administrative            23,150          91,647

Total Operating Costs                 32,129         100,513

INCOME (LOSS) FROM OPERATIONS         18,711         (51,285)

OTHER EXPENSE

Interest expense                      38,311          34,462

Total Other Expense                   38,311          34,462

LOSS BEFORE TAXES                    (19,600)        (85,747)

INCOME TAX EXPENSE                         -               -

NET LOSS                     $      (19,600) $      (85,747)

BASIC INCOME (LOSS)
PER COMMON SHARE             $        (0.01) $        (0.00)

WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING                       11,345,250      11,311,097


                        NICHOLAS INVESTMENT COMPANY, INC.
                        Statements of Stockholders Equity


                                      Common Stock
                                     Shares        Amount

Balance, December 31, 1999         10,795,250   $   10,795

March 16, 2000 common stock
issued at $0.20 per share for
conversion of related party debt      550,000          550

Net loss for the year ended
December 31, 2000                           -            -

Balance, December 31, 2000         11,345,250       11,345

Net loss for the year ended
December 31, 2001                           -            -

Balance, December 31, 2001         11,345,250   $   11,345





                                 Additional
                                  Paid-in       Accumulated
                                  Capital       Deficit

Balance, December 31, 1999         $ 264,921   $(218,520)

March 16, 2000 common stock
issued at $0.20 per share for
conversion of related party debt     109,450           -

Net loss for the year ended
December 31, 2000                          -     (85,747)

Balance, December 31, 2000           374,371    (304,267)

Net loss for the year ended
December 31, 2001                          -     (19,600)

Balance, December 31, 2001         $ 374,371   $(323,867)

                        NICHOLAS INVESTMENT COMPANY, INC.
                            Statements of Cash Flows


                                          For the Years Ended
                                              December 31,
                                           2001           2000

CASH FLOWS FROM OPERATING ACTIVITIES:

Loss from operations                   $    (19,600) $ (85,747)
Adjustments to reconcile
net income to net cash used by
operating activities:
Amortization and
depreciation expense                        8,979        8,866
Changes in operating
assets and liabilities:
Increase (decrease)
in accounts payable                          (578)       2,116
Increase (decrease)
in accrued expenses                       (17,000)      38,694

Net Cash (Used) by
Operating Activities                      (28,199)     (36,071)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property                            -       (4,424)

Net Cash (Used)
by Investing Activities                         -       (4,424)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from
long-term debt                                  -       76,306
Principal payments
on long-term debt                          (3,566)      (3,964)

Net Cash Provided (Used)
by Financing Activities                    (3,566)      72,342

INCREASE (DECREASE) IN CASH               (31,765)      31,847

CASH AT BEGINNING OF PERIOD                47,338       15,491

CASH AT END OF PERIOD                   $  15,573    $  47,338

Cash paid for:

Interest                                $  38,311    $  34,462
Income taxes                    $               -$           -

Non-Cash Financing Activities:

Common stock issued for
conversion of related party deb$                -    $ 110,000

                                       12

                        NICHOLAS INVESTMENT COMPANY, INC.
                        Notes to the Financial Statements
                           December 31, 2001 and 2000


NOTE 1 -      ORGANIZATION AND DESCRIPTION OF BUSINESS

     On January 22, 1998, the Company was incorporated  under the laws of Nevada
as Nicholas Investment  Company,  Inc. to engage in any lawful activity as shall
be appropriate under laws of the State of Nevada.  Primarily,  the Company is in
the business of acquiring and leasing real estate.

     The Company has  authorized  100,000,000  shares of $0.001 par value common
stock.
NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Accounting Method

     The Companys financial  statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.

              b.  Cash Equivalents

     The Company  considers  all highly  liquid  investments  with a maturity of
three months or less when purchased to be cash equivalents.

              c.  Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

              d. Basic Loss Per Share

     SFAS No. 128  provides  for the  calculation  of Basic and  Diluted  income
(loss) per share.  Basic loss per share  includes no dilution and is computed by
dividing income available to common  stockholders by the weighted average number
of common shares  outstanding  for the period.  Diluted  income (loss) per share
reflects the potential  dilution of securities  that could share in the earnings
of an entity  that were  outstanding  for the period.  At December  31, 2001 and
2000, the Company had no potentially dilutive instruments outstanding.
                                          For the Years Ended
                                              December 31,
                                            2001                2000

Numerator - loss                       $   (19,600) $         (85,747)
Denominator weighted average number
of shares outstanding                      11,345,250      11,311,097

Loss per share                         $   (0.01)   $           (0.00)


                        NICHOLAS INVESTMENT COMPANY, INC.
                        Notes to the Financial Statements
                           December 31, 2001 and 2000


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              e.  Provision for Taxes

     At December 31, 2001, the Company had net operating loss  carryforwards  of
approximately  $108,000 that may be offset against future taxable income through
2021.  The  potential  benefit  of the  loss  carryovers  has been  offset  by a
valuation  allowance in full against the deferred tax asset,  because it is more
likely than not that  sufficient  taxable  income will be  generated  during the
carryforward period available under tax law to utilize the deferred tax asset.

     The  income  tax  benefit  differs  from the  amount  computed  at  federal
statutory rates of  approximately  38% as follows:  For the Years Ended December
31, 2001 2000

Income tax benefit at statutory rate   $  7,448    $ 32,583
Change in valuation allowance            (7,448)    (32,583)

                             $                $           -

              Deferred tax assets (liabilities) are comprised of the following:
                                     For the Years Ended
                                         December 31,
                                         2001         2000

Income tax benefit at statutory rate   $ 41,076    $ 33,628
Change in valuation allowance           (41,076)    (33,628)

                             $                $           -

     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 the future.

              f.  Long-Lived Assets

     All long-lived assets are evaluated yearly for impairment  including rental
properties per SFAS 121. A loss is recognized when  undiscounted  cash flows are
less than the carrying value of the asset. The impairment loss is the difference
by which the carrying amount of the asset exceeds its fair value. Any impairment
in value is recognized as an expense in the period when the impairment occurs.

              g.  Revenue Recognition

     Revenue is recognized on an accrual basis when monthly  payments are earned
and due.


                        NICHOLAS INVESTMENT COMPANY, INC.
                        Notes to the Financial Statements
                           December 31, 2001 and 2000


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              h.  Stock Issuances

     Currently,  the Company  has no  established  market for its common  stock.
Accordingly,  the stock issuances are valued at the more readily determinable of
the fair value of the goods or services  received.  The 550,000 shares of common
stock issued for the  conversion  of related party debt were valued at $0.20 per
share for total  conversion of related  party debt of $110,000  because that was
the most  recent  issuance of common  stock for cash.  The  services  previously
rendered to the Company were performed by related parties and major shareholders
and took the form of management and general business consulting services.

              i.  Financial Instruments

     Statement of Financial  Accounting  Standards No. 107,  Disclosures  About
Fair Value of Financial  Instruments  requires  disclosure of the fair value of
financial  instruments held by the Company. SFAS 107 defines the fair value of a
financial instrument as the amount at which the instrument could be exchanged in
a current  transaction  between  willing  parties.  The  following  methods  and
assumptions were used to estimate fair value:
     The carrying amount of cash equivalents,  accounts  receivable and accounts
payable approximate fair value due to their short-term nature. The notes payable
are stated at fair value after giving consideration to the interest rates on the
notes payable.

              j.  Change in Accounting Principles

     During the years ended November 30, 2001, and 2000, the Company adopted the
provisions of FASB Statement No. 140  Accounting for Transfers and Servicing of
Financial  Assets and  Extinguishments  of  Liabilities  (a  replacement of FASB
Statement  No. 125.),  FASB  Statement No. 141,  "Business  Combinations,"  FASB
Statement No. 142,  "Goodwill and Other  Intangible  Assets," FASB Statement No.
143,  "Accounting  for Asset  Retirement  Obligations,"  FASB Statement No. 144,
"Accounting  for the  Impairment or Disposal of  Long-Lived  Assets, and FIN 44
Accounting  for  Certain   Transactions   Involving  Stock   Compensation   (an
interpretation of APB Opinion No. 25.). The effect of these adopted  provisions
on the Company's financial statements was not significant.

NOTE 3 -      PROPERTY

     The  Company has rental  properties  that the  Company  rents for  occupant
purposes. All properties have a 39.5 year life using the straight-line method of
depreciation, and no salvage value. The properties and depreciation for the year
ending December 31, 2001 is as follows:


                        NICHOLAS INVESTMENT COMPANY, INC.
                        Notes to the Financial Statements
                           December 31, 2001 and 2000


NOTE 3 -      PROPERTY (Continued)
                                   Cost of
   Name of Property                Property
                                  December 31,
                                      2001

Agee Street                      $  84,460
Manos Drive                        108,044
New Salem                           86,855
Town Center Drive                   75,282
Land                               208,914

Total                              563,555

Less: accumulated depreciation     (33,973)

Total Property                   $ 529,582

     Depreciation  expense  for the years ended  December  31, 2001 and 2000 was
$8,979 and $8,866, respectively.

NOTE 4 -      NOTES PAYABLE
                                                                December 31,
                                                                    2001
Notes payable consisted of the following:

Note payable to Oakmont Mortgage Company, Inc., dated
March 20, 1997, 8.4% variable rate not to be greater
than 9.5%, secured by deed of trust, monthly principal
and interest payments of $885, matures April 1, 2027.               $118,684

Note payable to Frances A. Kirchner (a related party), dated
December 5, 1995, bearing interest at 8.75%, fixed interest rate,
secured by deed of trust, monthly principal and
interest payments of $600, matures December 26, 2005.                 72,226

Note payable to Frances Kirchner (a related party), dated
March 12, 1997, bearing interest at 7.02% fixed interest rate,
secured by deed of trust, monthly principal and
interest payments of $600 until paid in full.                         85,452


                        NICHOLAS INVESTMENT COMPANY, INC.
                        Notes to the Financial Statements
                           December 31, 2001 and 2000


NOTE 4 -      NOTES PAYABLE (Continued)
Notes payable consisted of the following:

Note payable to Old Kent Mortgage Company, dated
November 23, 2000, bearing interest at 7.75% fixed interest rate,
secured by deed of trust, monthly principal and
interest payments of $1,527, matures December 1, 2030.                182,407

Total notes payable                                                   458,769

Less: current portion                                                  (7,868)

Total Long-term Debt                                                $ 450,901

Maturities of long-term debt are as follows:

Years Ending December
       2002                                                         $   7,868
       2003                                                             8,508
       2004                                                             9,202
       2005                                                             9,951
       2006                                                            10,718
2007 and thereafter                                                   412,522

Total                                                               $ 458,769

NOTE 5 -      GOING CONCERN

     The Companys  financial  statements are prepared using  generally  accepted
accounting  principles  applicable  to a going concern  which  contemplates  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.  However, the Company does not have significant cash, nor does it have
an established source of revenues sufficient to cover its operating costs and to
allow it to  continue  as a going  concern.  It is the intent of the  Company to
complete a limited offering of its common stock. In the interim, shareholders of
the Company have committed to meeting its minimal operating  expenses;  however,
there can be no assurance that the plans of management will prove successful.