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 March 31, 2001

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

                        Commission File Number 000-32193

                           E. J. NAK MATTRESS COMPANY
                  ---------------------------------------------
                 (Name of small business issuer in its charter)

                      Utah                                    87-0369125
          ------------------------------                   ------------------
         (State or other jurisdiction of                  (I.R.S. Employer
         incorporation or organization)                   Identification No.)

                     1782 South Main, Bountiful, Utah 84010
                     --------------------------------------
               (Address of principal executive offices) (Zip Code)

Issuer's telephone no.:  (801) 292-9777

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 by
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 No o

         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  Registrant's  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 issuer's revenues for its most recent fiscal year.  $240,044

         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. $-0- (No active trading market)

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

          Class                            Outstanding as of September 30, 2001
 -----------------------                   ------------------------------------
 Common Stock, Par Value                                 491,992
 $.001 per share

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

Transitional Small Business Disclosure Format.   Yes [ ] No [X]


<PAGE>


<TABLE>
<CAPTION>

                        E. J. NAK MATTRESS COMPANY, INC.

                                TABLE OF CONTENTS

                                      Page

                                                      PART I

<S>               <C>                                                                                        <C>
Item 1.           Description of Business .......................................................            3

Item 2.           Description of Property........................................................            7

Item 3.           Legal Proceedings..............................................................            7

Item 4.           Submission of Matter to a Vote of
                  Security Holders...............................................................            8

                                                      PART II

Item 5.           Market for Common Equity and Related
                  Stockholder Matters............................................................            8

Item 6.           Management's Discussion and Analysis or
                  Plan of Operation..............................................................           10

Item 7.           Financial Statements...........................................................           12

Item 8.           Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure.........................................           12

                                                     PART III

Item 9.           Directors, Executive Officers, Promoters and
                  Control persons; Compliance with Section 16(a)
                  of the Exchange Act............................................................           12

Item 10.          Executive Compensation.........................................................           13

Item 11.          Security Ownership of Certain Beneficial
                  Owners and Management..........................................................           14

Item 12.          Certain Relationships and Related Transactions.................................           15

                                                      PART IV

Item 13.          Exhibits and Reports on Form 8-K...............................................           16

SIGNATURES        ...............................................................................          S-1
</TABLE>

                                       -2-

<PAGE>



                                     PART I

Item 1.           Description of Business


Business Development

         E. J. Nak  Mattress  Company,  a Utah  corporation  ("E. J. Nak" or the
"Company"),  operates a retail  outlet for the sale of  mattresses  and  related
bedding  products.  The Company has entered  into an  arrangement  with  Simmons
Mattress  Company to develop retail mattress  outlets  selling Simmons  products
exclusively throughout the State of Utah and surrounding areas.

         History

         The  Company  was  organized  on January 29, 1981 under the laws of the
State of Utah as Union  Investments,  with the initial purpose to invest in real
and personal property, which management expanded to include acquiring, exploring
and developing  mineral ore prospects.  On April 16, 1981, the Company commenced
an intrastate  public  offering of its common stock  pursuant to a  registration
statement  filed  with the Utah  Securities  Commission  (now  known as the Utah
Division of  Securities).  The offering was closed on October 6, 1981  following
the sale of 20,000,000  shares  (pre-split)  of common stock at Two Cents ($.02)
per share, with gross proceeds of $400,000. The offering was not registered with
the Securities and Exchange  Commission  (the "SEC") in reliance upon exemptions
provided by Section  3(a)(11)  and Rule 147 of the  Securities  Act of 1933,  as
amended (the 1933 Act), in effect at that time.

         Following  completion of its public  offering,  the Company  engaged in
sporadic mining  operations until  approximately  1983. At that time the Company
became inactive. From 1983 to 1999, the Company had no operations,  engaged only
in nominal activities intended to maintain its corporate  viability,  and had no
formal business plan. In March 1999, the shareholders approved certain proposals
to reorganize the business of the Company and to change its corporate name to E.
J. Nak Mattress Company.  Also, the shareholders ratified the proposal to effect
a reverse stock split of the Company's  issued and outstanding  shares of common
stock on a one (1)  share for one  hundred  (100)  shares  basis,  effective  in
October  2000.  The  reorganization  did not  involve a change in control of the
Company.

         Initially,   the   Company's   planned   reorganization   included  the
acquisition  of the Furniture  Gallery,  a retail  furniture  outlet  located in
Bountiful,  Utah.  The Company had planned to liquidate  the store and then open
new retail outlets  specializing in mattresses and related bedding  supplies and
products.  However,  it was  subsequently  decided to not acquire the  Furniture
Gallery and, in the alternative, open a new mattress store in connection with an
arrangement with Simmons.  In August 1999, the Company opened its first mattress
store in Bountiful Utah.

Exclusive Agreement with Simmons

         In September 1999, the Company entered into an exclusive agreement with
Simmons  whereby Simmons will be the sole provider of all mattresses and related
bedding products for the Company's current and each future retail location.  The
exclusive  nature of the  agreement  means that the  Company  may only sell such
products that are acquired from Simmons.  Under the agreement,  the Company must
display a minimum of 30 sets of Simmons  bedding at each Company  location.  The
Company is permitted to open new retail outlets in any community anywhere,  with
the  provision the location must be agreed upon by both Simmons and the Company.
Simmons will also provide co-op  advertising  funds whereby  Simmons will accrue
ten percent  (10%) of the  Company's net sales in a co-op account to be used for
advertising.  Upon  the  Company's  verification  to  Simmons  of the  Company's
expenditures on  advertising,  Simmons will pay fifty percent (50%) of the cost,
provided sufficient funds have been accrued in the co-op account.

                                       -3-

<PAGE>



         Under its agreement with Simmons, the Company has access to all Simmons
products  and can receive  weekly  deliveries  of needed  products.  Simmons has
provided  the Company with a wholesale  price list of all of its  products  from
which  the  Company  can make its  purchases.  Prices  include  delivery  to the
Company's  store  location and offer a 2% discount if paid within ten days,  and
payment is otherwise due in 30 days.

         Also pursuant to the  agreement,  Simmons will provide the Company with
(i) point of purchase  advertising displays for each of the Company's locations,
(ii)   comprehensive  and  ongoing  sales  training  for  management  and  sales
associates,  and  (iii)  assistance  in  developing  consistent  and  forecasted
advertising campaigns.  The agreement is subject to review and may be terminated
at any time by either party. Violation of any term of the agreement would result
in its termination. Management believes that as long as the agreement remains in
effect, the Company should be able to obtain sufficient products from Simmons as
needed.

Retail Outlet

         The Company's retail outlet consists of approximately 5,080 square feet
and is located in the Five Points Mall in  Bountiful,  Utah,  ten miles north of
Salt Lake City.  Approximately  1,000  square  feet are used for storage and the
balance  is used for the  sales  area and  displays.  The  store is  capable  of
displaying  more than 40 mattresses and related bedding  products.  The space is
subject to a five-year lease agreement entered into in September 1999. The lease
expires in  September  2004 and  provides an option to extend for an  additional
three year period.  Basic annual rent will escalate  yearly from $17,500 for the
first year to $31,800 for the fifth year.

         Under its agreement with Simmons, the Company offers Simmons mattresses
exclusively  together  with  other  related  bedding  products.  The  Company is
permitted to sell related accessories  marketed by other companies which are not
offered by Simmons.  The Simmons line of products is headed by the "BeautyrestTM
Pocketed Coil" spring mattresses, which is available in all customary sizes.

         Because of the  retail  outlet's  enclosed  mall  location,  it depends
primarily on mall traffic and local  advertising.  The Company also maintains an
Internet web-site  (http://www.EJNAK.com)  providing visitors  information about
the store and its location and information about products  offered.  As provided
by the Company's agreement with Simmons,  Simmons will accrue 10% of all Simmons
related  net sales for co-op  advertising.  The Company is liable for payment of
all its advertising and must submit proof of the advertising expense to Simmons.
Simmons will then reimburse the Company 50% of the advertising  invoice based on
sufficient  funds accrued in the Company's co-op account.  Simmons also provides
point-of-  purchase  advertising  and sales  displays for the  Company's  store.
Simmons also provides the Company with ongoing support in developing advertising
campaigns.

         Bountiful  is  located  in  South  Davis  County  which is north of and
adjacent to Salt Lake County.  The Company's retail outlet serves  approximately
forty  square  miles  of South  Davis  County  which  has  approximately  50,000
households.  The  cities  of North  Salt  Lake,  Woods  Cross,  West  Bountiful,
Centerville  and  Farmington  are situated in South Davis County and are part of
the Company's marketing area. Management believes that its retail outlet has the
largest display of mattresses in the local South Davis County market.

Possible Future Expansion

         Although  the  Company   presently  has  no  definitive   agreement  or
arrangements  to expand its retail outlet or open new stores,  management  fully
intends to open new locations as sufficient  funds are available to the Company.
Although no exact locations have been determined for future stores, it is likely
that any future  expansion  will be in the South Davis County - Salt Lake County
area or in adjacent  counties.  Management  believes  that its  Bountiful  store
serves as a model for  developing  new  retail  outlets.  Future  stores  may be
located as either free standing or in a mall environment.  Prospective locations
must be in high  traffic  areas and be cost  effective  in  relation to rent and
other expenses related to the stores'  operations.  Both the Company and Simmons
must agree on all future locations.

                                       -4-

<PAGE>



         Management  intends to open a new retail  outlet only if the  necessary
funds  available  without  interfering  with its current  operation.  Management
estimates  that  approximately  $100,000 will be needed to fund the opening of a
new  location,  given such a location  can be  leased.  If a location  has to be
purchased,  it would most likely require significantly more funds,  depending on
the cost and terms of  purchasing  the  property.  Ideally,  funds to open a new
retail outlet would be derived from retained profits from the Company's  current
operations.  However,  the  Company  may  consider  the  possibility  of outside
financing to provide the necessary  start-up funds and working capital for a new
retail  outlet.  Presently,  management  has no  arrangement  or  agreement  for
additional outside funding, either private or public. If the Company does decide
to seek outside funding, there is no assurance such funds will be available,  or
if  available,  the  Company  will be able to  negotiate  terms  and  conditions
favorable to the Company.

Competition

         The Company is in direct  competition with numerous retail outlets that
offer both Simmons products and other  comparable  competing  bedding  products.
Although some of these  competitors  are relatively  small locally owned stores,
many are large furniture  stores and retailers that are associated with national
chains.  Most of these competitors have established a market share in the market
in which the Company will be competing.  The ability of the Company to penetrate
these  markets  will depend on many factors  including,  but not limited to, its
ability to obtain  sufficient  capital to enhance  and  broaden  its  ability to
market its products and advertise its location,  to obtain and retain  necessary
management and advisory  personnel,  and the  establishment  of a  comprehensive
marketing plan.

         The Company's agreement with Simmons provides that the Company may open
new retail  outlets in any community,  provided the location is mutually  agreed
upon by Simmons and the Company.  This provision could preclude the Company from
opening  stores in locations  considered  to be  desirable  or in certain  small
communities  unless Simmons  agrees to the location.  This could have an adverse
effect on the  Company's  future  business if it is unable to open new stores in
desirable locations.

         Because  the store will offer  Simmons  products  exclusively,  it will
compete with other furniture  stores and other specialty or mattress stores that
offer other brands.  Management believes that in addition to Simmons,  there are
four primary  manufacturers of mattresses,  Sealy, Serta and Spring Air. Because
the Company will only offer Simmons products, it will therefore compete directly
with outlets for these  primary  competitors  as well as other  stores  offering
several brands.

         Presently,  there are three other retailers  selling  mattresses in the
South Davis County area. Two of these competitors sell Serta products,  which is
a direct  competitor with Simmons,  and the third store sells a local brand. The
Company has a larger mattress  display than its three  competitors.  None of the
three  competitors  is a full service  retailer  offering  sales and service and
carry  mattresses  only as a sideline.  Because  the  Company is a full  service
mattress  retailer,  management  believes  it can  compete  favorably  with  its
competition.  Also, the Company is the only retailer  currently offering Simmons
products in Bountiful. Should Simmons eventually place its mattresses with other
Bountiful  area  retailers,  these  retailers  would  be on an  equal  basis  in
obtaining  products  from  Simmons.  Thus,  management  believes  that  it  must
emphasize its full service ability to compete with other area outlets.

Employees

         As  of  the  date  hereof,  the  Company  has  two  full-time  sales  /
administrative   persons.  The  Company  also  uses  part-time  persons,  on  an
as-needed-basis,  to deliver  products.  The Company  has not  entered  into any
employment agreements, although it will consider such agreements as its business
expands.  Management  intends to hire  additional  qualified  employees  only as
business conditions warrant and as funds are available.

                                       -5-

<PAGE>



Risk Factors Relating to the Company's Business

         Because of the nature of the Company's business,  it encounters certain
risk  factors.  Each of these  factors  could  adversely  affect  the  business,
operating results and financial condition of the Company.

         Competition Could Negatively Effect Sales

         The retail sale of mattresses  and related  bedding  products is highly
competitive.  These  products are offered not only by small  specialized  retail
stores, but also in large furniture and department type stores. The Company will
face  stern  local  competition  in  any  jurisdiction  in  which  it  operates.
Additional  competitors  may also enter the market  and future  competition  may
intensify.  Many of  these  competitors  have  substantially  greater  financial
resources  than the Company and may be able to accept more  financial  risk than
the Company prudently can manage.

         Short Operating History - No Assurance of Profitability

         The Company has a short  operating  history and opened its first retail
outlet in August 1999.  The Company is in the early phases of operation  and its
likelihood of success must be considered in light of the many unforeseen  costs,
expenses,  problems,  difficulties  and delays  frequently  associated  with new
ventures.  Also, there is no assurance that the Company's business ventures will
be successful or that it will be able to attract and retain sufficient customers
to attain its goals. The Company  anticipates  that its operating  expenses will
increase  substantially  as its business  expands and new outlets are opened and
there will be a greater need to generate  significantly more revenues to achieve
profitability.  There is also the  probability  that the  Company  will  have to
secure  future  funding,  either  debt  or  equity,  in  order  to  finance  its
activities. There can be no assurance that any such funding will be available to
the Company or, that if it is, it will be  available  on terms  favorable to the
Company.

         Concentration of Share Ownership Gives Insiders Control

         The  Company's  directors,   executive  officers  and  other  principal
shareholders own approximately 57% of the Company's  outstanding common stock as
of October 23, 2000. As a result,  these persons possess  significant  influence
over  the  Company  on  matters  including  the  election  of  directors.   This
concentration  of share  ownership may: (i) delay or prevent a change in control
of the Company; (ii) impede a merger, consolidation, takeover, or other business
involving the Company;  or (iii)  discourage a potential  acquirer from making a
tender offer or otherwise attempting to obtain control of the Company.

         Possible Difficulties in Securing Future Funding

         Since the Company commenced it current business  operations in 1999, it
has financed much of its operations from borrowing,  primarily from its officers
and directors.  It is unlikely that these funding  sources will be sufficient to
satisfy the Company's future,  increasing  financing demands.  Accordingly,  the
Company may have to seek additional  funding from other outside  sources.  There
can be no assurance that outside funding will be available to the Company at the
time and in the amount to satisfy the  Company's  needs,  or, that if such funds
are available,  they will be available on terms favorable to the Company. If the
Company  issues  additional  shares of common stock,  current  shareholders  may
experience  immediate  and  substantial  dilution in their  ownership of Company
shares.  In the event the Company issues  securities or  instruments  other than
common stock, it may be required to issue such  instruments  with greater rights
than that currently possessed by holders of the Company's common stock.

         Possibility  That the  Company  May Not Be Able to  Continue as a Going
Concern

         The  Company  has  realized  only  nominal  operating  income  since it
commenced  its  current  operations  in  August  1999  and,  to  date,  has  not
established a source of revenues  sufficient to cover its operating  costs.  The
Company  was able to  recognize  an  operating  profit  in fiscal  2000  because
management  has  absorbed  certain  costs  that  would  normally  be paid by the
Company.  For the year ended March 31, 2000 and nine months  ended  December 31,
2000, the Company had a net operating profit of $5,461 and a net operating  loss

                                       -6-

<PAGE>



of $10,540,  respectively.  The Company's  management has included a footnote in
the Company's  consolidated  financial statements for the periods ended March 31
and December 31, 2000 stating that because of the Company's accumulated deficit,
lack of cash and a working  capital  deficit,  there is substantial  doubt as to
whether  the  Company  can  continue  as a  going  concern.  See  Note  1 to the
consolidated financial statements.

         Possibilities  of No Public Market or Only a Limited Public Market will
be Established for the Common Stock

         Presently,  the  Company's  common  stock  is  not  being  traded  in a
recognized  public market nor has it traded in several years.  Contemporaneously
with the filing of its registration statement,  the Company intends to submit to
the NASD an application to have its shares traded in the over-the-counter market
and included on the OTC Bulletin Board and/or "pink sheets." However, unless the
Company's  registration statement becomes comment-free in a timely manner, there
is a risk that the Company's common stock may not be eligible for trading on the
OTC  Bulletin  Board.  In this event,  the company will have to apply for and be
accepted to the "pink sheet" in order to have its  securities  quoted and traded
by broker-dealers. This could severely limit the liquidity of the trading market
in the Company's  shares and have an adverse  effect on the price of the shares.
Accordingly,  there can be no  assurance  that an active  trading  market in the
Company's shares will be established or, if established, sustained.

Risk Factors and Cautionary Statements

         This Report contains certain forward-looking  statements and cautionary
words such as "may," "will,"  "expect,"  "anticipate,"  "estimate" and "intend."
The  Company   wishes  to  advise   readers  that  actual   results  may  differ
substantially from such forward-looking  statements.  Forward-looking statements
involve  risks and  uncertainties  that  could  cause  actual  results to differ
materially from those expressed in or implied by the statements,  including, but
not limited to, the  following:  the possible  success of the  Company's  retail
outlet,  the ability of the Company to fund its current and future  projects and
its ability to meet its cash and working capital needs, and other risks detailed
in the  Company's  periodic  report  filings  with the  Securities  and Exchange
Commission.

Item 2.           Description of Property

         The Company does not  presently  own any real  property.  Its principal
offices are located in its sole retail outlet  located in Bountiful,  Utah.  The
Company believes that its current  facilities are adequate for its current needs
and  anticipates  securing  additional  facilities only as it is able to proceed
with plans to open additional  retail outlets.  The decision to open new outlets
will be governed by business  conditions  and the  Company's  ability to finance
expansion.

         The Company's  retail outlet and principle  business offices consist of
approximately  5,080  square  feet and is  located  in the Five  Points  Mall in
Bountiful,  Utah.  Approximately  1,000 square feet are used for storage and the
balance  is used for the sales  area and  displays.  The space is  subject  to a
five-year lease  agreement  entered into in September 1999. The lease expires in
September  2004 and  provides an option to extend for an  additional  three year
period.  Basic annual rent will escalate  yearly from $17,500 for the first year
to $31,800 for the fifth year.  Management  believes that its  facilities are in
good  condition  and it does  not  anticipate  the need  for  renovation  in the
immediate future. Management further believes that its facilities are adequately
covered by insurance.

Item 3.           Legal Proceedings

         There are no material pending legal proceedings to which the Company or
any of its  subsidiaries  is a party or to which any of its  property is subject
and,  to the best of its  knowledge,  no such  actions  against  the Company are
contemplated or threatened.

                                       -7-

<PAGE>



Item 4.           Submission of Matters to a Vote of Security Holders

         No matters were submitted to a vote of the Company's Securities Holders
during the fourth quarter of the Company's fiscal year ended March 31, 2001.

                                     PART II

Item 5.           Market for Common Equity and Related Stockholder Matters

         No shares of the Company's common stock have previously been registered
with the  Commission.  In 1981, the Company did make a public offering of common
stock  pursuant to a  registration  statement  filed with the State of Utah. The
Company  intends to make an application to the NASD for the Company's  shares to
be quoted on the OTC Bulletin Board. The Company's  application to the NASD will
consist  of  current  corporate  information,  financial  statements  and  other
documents as required by Rule 15c2-11 of the Securities Exchange Act of 1934, as
amended.  Inclusion on the OTC Bulletin  Board permits price  quotations for the
Company's  shares to be published by such  service.  The Company is not aware of
any  established  trading market for its common stock nor is there any record of
any  reported  trades in the  public  market in recent  years.  Also,  secondary
trading  of the  Company's  shares  may be  subject  to  certain  state  imposed
restrictions regarding shares of shell companies.  Except for the application to
the  OTC  Bulletin  Board,  there  are  no  plans,  proposals,  arrangements  or
understandings with any person concerning the development of a trading market in
any of the Company's  securities.  There has not been an active  public  trading
market in the Company's common stock for several years.

         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 issuer's  securities  be registered in their
state or  appropriately  exempted from  registration  before the  securities are
permitted  to  trade  in that  state.  Presently,  the  Company  has no plans to
register  its  securities  in any  particular  state.  Further,  most likely the
Company's  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.

         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
exceptions.  Rule 3a51-1 provides that any equity security is considered to be a
penny  stock  unless  that  security  is:  registered  and  traded on a national
securities exchange meeting specified criteria set by the Commission; authorized
for  quotation on The NASDAQ  Stock  Market;  issued by a registered  investment
company;  excluded from the definition on the basis of price (at least $5.00 per
share) or the issuer's net tangible  assets;  or exempted from the definition by
the Commission.  If the Company's 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 securities and must
have received the purchaser's  written  consent to the transaction  prior to the
purchase.  Additionally,  for any  transaction  involving a penny stock,  unless
exempt,  the rules require the delivery,  prior to the first  transaction,  of a
risk  disclosure  document  relating to the penny stock market.  A broker-dealer
also must disclose the  commissions  payable to both the  broker-dealer  and the
registered representative,  and current quotations for the securities.  Finally,
monthly  statements  must be sent  disclosing  recent price  information for the
penny stocks held in the account and  information on the limited market in penny
stocks. Consequently,  these rules may restrict the ability of broker-dealers to
trade and/or maintain a market in the Company's  common stock and may affect the
ability of shareholders to sell their shares.


                                       -8-

<PAGE>



         As of October 29, 2001, there was  approximately  366 holders of record
of the  Company's  common  stock,  which figure does not take into account those
shareholders  whose certificates are held in the name of broker-dealers or other
nominees.

         As of October 29, 2001, the Company has issued and outstanding  491,992
shares of common stock.  Of this total,  269,500  shares are deemed  "restricted
securities" as defined by the Act and certificates representing such shares bear
an appropriate restrictive legend.

         Of the Company's total outstanding shares, approximately 222,492 shares
may be sold,  transferred  or  otherwise  traded in the  public  market  without
restriction, should a trading market be established, unless held by an affiliate
or  controlling  shareholder  of the  Company.  None of these  shares  have been
identified as being held by affiliates.

Rule 144

         All 269,500 shares of restricted  common stock set forth above are held
by John A. Nak, Ernest B. Nak and their respective spouses, and have been issued
and outstanding for more than two years. Thus, the 269,500 restricted shares are
presently  eligible  for  sale  pursuant  to  Rule  144  promulgated  under  the
Securities Act of 1933, as amended.

         In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares of the
Company for at least one year,  including  any person who may be deemed to be an
"affiliate"  of the Company (as the term  "affiliate" is defined under the Act),
is entitled to sell,  within any  three-month  period,  an amount of shares that
does not exceed the  greater of; (i) the average  weekly  trading  volume in the
Company's 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.  Further,  the  selling
shareholder  may not act in concert with other  shareholders  in making any such
sales,  any such sales must be made in "broker  transactions" or in "transaction
directly with a market maker" in the Company's shares, and concurrently with any
such sale,  the selling  shareholder  is required to complete,  execute and file
with the Commission three copies of Form 144.

         A person who is not deemed to be an  "affiliate" of the Company and has
not been an  affiliate  for the most recent three  months,  and who has held the
restricted  shares for at least two years  would be entitled to sell such shares
without regard to the resale limitations of Rule 144.

Dividend Policy

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


         During the past  three  years,  the  Company  has issued the  following
securities.

         In March 1999,  the Company  issued  212,000  shares to its two current
directors  in  connection  with the  Company's  reorganization.  The shares were
issued upon  conversion  of debt in the amount of $21,200.  Also,  the directors
arranged for the Company to enter into the arrangement with Simmons.

         In March 2001, the Company  issued 25,000 shares of preferred  stock to
its Chairman, John A. Nak, in exchange for debt owed to Mr. Nak in the amount of
$29,564 plus accrued  interest of $2,778.  The 25,000 shares of preferred  stock
are convertible  into 25,000 shares of common stock and have full voting rights,
preferences for liquidation purposes, and no dividend rights.

                                       -9-

<PAGE>



         The  above  issuances  of  securities  were not  registered  under  the
Securities  Act of 1933, as amended (the "Act").  The Company  believes that the
issuances were made in private,  isolated  transactions  with  affiliates of the
Company and, therefore,  exempt from registration  pursuant to the provisions of
Section 4(2) of the Act.

Item 6.           Management's 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.

Overview

         The Company  opened its first  retail  outlet in August  1999  offering
mattresses and related bedding  products.  The Company  realized a net operating
profit for the fiscal year ended March 31, 2000 and a net operating loss for the
nine-month  period ended  December 31, 2000. It should be noted that the Company
was able to  recognize  an  operating  profit in fiscal  2000  primarily  due to
management  absorbing  certain costs that would normally be paid by the Company.
Through an  arrangement  with  Simmons  Mattress,  the  Company  intends to open
additional  retail  outlets  offering  Simmons  products as business  conditions
warrant and necessary funds are available.

         Management  believes that the mattress  business has long been a stable
product  segment of the  durable  goods  industry.  Mattresses  and other  sleep
related products are more of a necessity rather than a luxury. Thus,  management
believes  that the bedding  products  business is less  susceptible  to the more
severe  fluctuations  business  cycles of other durable goods.  In the immediate
future,  the  Company  does  not  foresee  any  discernable  trends,  events  or
uncertainties in the bedding  products  business.  Further,  management does not
believe seasonal  fluctuations in the business will have any long-term impact on
the Company's liquidity or income.

Results of Operations

         For the fiscal year ended March 31, 2001 ("fiscal  2001"),  the Company
had revenues of $240,044.  Cost of sales was $130,575,  or 54% of revenues,  and
total operating expenses were $142,591, consisting of general and administrative
expenses of $90,819,  selling  expenses of $35,975 and  depreciation of $15,797.
The  Company's  net  operating  loss for  fiscal  2001 was  $33,122  and,  after
deducting interest expense of $7,056, the net loss was $40,178.

         For the fiscal year ended March 31, 2000 ("fiscal  2000"),  the Company
had  revenues of $98,309.  Cost of sales was $29,207,  or 30% of  revenues,  and
total operating expenses were $63,641,  consisting of general and administrative
expenses of $36,080,  selling  expenses of $17,325 and  depreciation of $10,236.
The  Company's  net  operating  income for fiscal  2000 was  $5,461  and,  after
deducting interest expense of $4,155, the net income was $1,306.

         The 144%  increase in  revenues in fiscal 2001 is due to the  Company's
retail outlet being open and in full operation for the full year. Actual cost of
sales  increased in 2001 due to the increased  sales.  The percentage of cost of
sales compared to revenues  increased from 30% fiscal 2000 to 54% in fiscal 2001
due to a lack of factory  seconds and overruns  available  from  Simmons  during
2001. In fiscal 2000, the Company was able to purchase from Simmons at a reduced
cost a considerable  number of factory  seconds and overruns,  which the Company
was then able to sell at nearly full retail price.  The 152% increase in general
and administrative expenses and 108% increase in selling expenses in fiscal 2001
is directly  related to the Company's  increased  revenues.  The net loss during
fiscal 2001 is due primarily to the increase in cost of sales.

                                      -10-

<PAGE>



Net Operating Losses

         The Company has accumulated approximately $51,439 of net operating loss
carryforwards  as of March 31, 2001,  that may be offset  against future taxable
income through 2021 when the  carryforwards  expire.  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 an annual
limitation on the amount of net operating loss carryforwards  which can be used.
No tax  benefit  has been  reported  in the  financial  statements,  because the
Company believes there is a 50% or greater chance the carryforwards  will expire
unused.  Accordingly,  the  potential tax benefit of the loss  carryforwards  is
offset by valuation allowance of the same amount.

Liquidity and Capital Resource

         The Company has relied upon funding  advanced by its  directors to open
its  first  retail  outlet.  It is  anticipated  that  additional  funds  may be
necessary to meet working capital  requirements for the store. If such funds are
required,  it is anticipated that the directors will provide additional funds or
the Company  will seek out a short term  borrowing  arrangement.  As of the date
hereof,  no  agreement  or  arrangement  has been  entered  into for any  future
funding.  The  Company  also  intends  to  explore,  at some  future  date,  the
possibility  of raising  capital  from the sale of its  securities,  either in a
private of public  transaction.  Such  future  funding  will be done only as the
Company's  initial  retail  outlet has  developed  its business to an acceptable
level and, more likely, as the Company decides to open additional stores.  There
are no agreements or other arrangements  presently in effect for any future sale
of the Company  securities  and there can be no assurance  that the Company will
indeed make an  offering,  or that if such an offering is made,  that it will be
successful.

         At March 31, 2001, the Company had a working capital deficit of $40,555
compared to a working capital deficit at March 31, 200 of $2,300.  This increase
in the deficit is primarily  attributed to the 303%  increase in trade  accounts
payable and 68% increase in note payable (current portion).  Working capital was
benefitted  by the 21%  increase in  inventory  during the period.  At March 31,
2001, the Company had total assets of $98,719 and total stockholders' deficit of
$4,762 compared with total assets of $104,789 and total stockholders'  equity of
$554 at March 31, 2000.

         During fiscal 2000, Ernest B. Nak,  President of the Company,  advanced
$3,120 to the  Company,  of which $600 was repaid  during the fiscal  year ended
March 31, 2000. In March 2001,  the Company issued to John A. Nak, the Company's
Chairman,  25,000  shares of  convertible  preferred  stock in exchange  for the
forgiveness  of  $29,564  of  related  party  debt as well as $2,778 of  accrued
interest of the debt. The 25,000 shares of preferred stock are convertible  into
25,000  shares of common stock of the Company.  The  preferred  shares have full
voting rights, preference for liquidation purposes, and no dividend rights.

Effect of Inflation

         In the opinion of management,  inflation has not had a material  effect
on the operations of the Company.

Plan of Operation

         Upon  entering into its  exclusive  agreement  with Simmons the Company
began to  develop  its plan for  opening  retail  outlets  offering  exclusively
Simmons  products.  As revenues from the Company's  initial outlet in Bountiful,
Utah reach a level which will  provide the  Company  sufficient  capital to open
additional stores, it plans to explore potential sites through the State of Utah
and in  surrounding  states.  It is the Company's goal to open up to five stores
during the next two years, given that it can generate sufficient capital to fund
the  creation  and  operation  of the  stores,  and that it can secure  suitable
locations.  The Company intends to open only one additional  store at a time and
curtail  additional  openings until it has sufficient  capital.  There can be no
assurance  that the  Company's  initial  retail  outlet will provide  sufficient
capital  to open any new  stores,  or that the  Company  will be able to  secure
additional financing to fund the creation and operation of new stores.


                                      -11-

<PAGE>



         As business  warrants  and funds  become  available,  the Company  will
explore  potential new sites for additional  stores. It is anticipated that each
new  store  will  be  located  in a high  traffic  area  and in a  community  of
sufficient size to support such a store. Any potential  location will have to be
mutually  agreed  upon  by  Simmons.  Additional  stores  will  be of  the  same
approximate size as the Company's initial store.  After a new site is determined
and funding has been secured for the site,  the Company will seek out  qualified
persons to operate the store.  Based on the Company's  first store in Bountiful,
it is  anticipated  that each  additional  store  will have to be  staffed  by a
minimum of two persons,  either full or  part-time.  Additional  staff,  such as
accounting and delivery persons,  will most likely be contracted on an as-needed
basis. The Company will own its stores and has no current plans for creating any
franchise operations.

         During the next twelve months, management expects that the Company will
be able to satisfy its monthly working capital needs from revenues.  Because the
Company does not currently have readily available cash reserves, it will have to
depend on revenues and/or  additional  financing to fund its operations.  In the
event the Company does not have sufficient  revenues to fund its operations,  it
will seek other  sources  of  financing,  either  debt or  equity.  The  Company
presently does not have any agreement or arrangement for any potential  funding.
Further,  there  can be no  assurance  that the  Company  will be able to obtain
additional funding, if and when needed, or that such funding, if available,  can
be obtained on terms acceptable to the Company.

         The Company  does not have any  immediate  plans for  material  capital
expenditures  during the next twelve  months.  If  management  believes that the
Company  is in a  financial  position  to  open  one or more  additional  retail
outlets,  it is estimated that $100,000 of capital will be required to open each
new store.  This  initial  capital  will be used to secure a  location,  acquire
fixtures  and  improvements  to the  facility  as needed,  and  acquire  initial
inventory.  The Company has not made any initial plans to obtain future  funding
in the event it does not have sufficient cash reserves to open the store.

Item 7.           Financial Statements

         The Company's financial statements as of and for the fiscal years ended
March 31, 2001 and 2000 have all been examined to the extent  indicated in their
report by Hansen,  Barnett & Maxwell,  independent certified public accountants,
and  have  been  prepared  in  accordance  with  generally  accepted  accounting
principles  and pursuant to Regulation  S-B as promulgated by the Securities and
Exchange Commission. The aforementioned financial statements are included herein
starting with page F-1.

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

         This Item is not Applicable.

                                    PART III

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

Executive Officers and Directors

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

         Name                  Age                Position
     ------------              ---      ---------------------------------------
     John A. Nak               75       Chairman, Secretary /
                                        Treasurer and Director
     Ernest B. Nak             49       President, Chief Financial  Officer and
                                        Director


                                      -12-

<PAGE>



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

         None of the  officers  and/or  directors  of the Company are  currently
officers or  directors of any other  publicly  traded  corporation.  None of the
directors,  officers,  affiliates  or  promoters  of the Company  have filed any
bankruptcy  petition,  been  convicted  in or been the  subject  of any  pending
criminal proceedings, or the subject of any order, judgment, or decree involving
the  violation  of any state or  federal  securities  laws  within the past five
years.

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

         John A. Nak became a director and  President of the Company in 1982 and
was designated  Chairman in 1999. In 1999 he was  instrumental  in the Company's
reorganization  and opened the  Company's  retail outlet under the name of E. J.
Nak Mattress Company.  He served as President of the Furniture Gallery from 1989
to 1999 and was in  charge  of  directing  the daily  operations  of the  retail
furniture  outlet.  From  1971 to 1989,  he was the  President  of  Beauty  Mold
Furniture  in Salt  Lake  City.  Mr.  Nak has  several  years of  experience  in
operating  and managing  retail  furniture  businesses  and is a graduate of the
University of  Leeawarden  with a BA degree in interior  design.  Mr. Nak is the
father of the Company's President, Ernest B. Nak.

         Ernest B. Nak became a director  and Vice  President  of the Company in
1982 and was  designated  President  in  1999.  From  1993 to 1999,  he was Vice
President of the Furniture Gallery and involved in the day-to-day  operations of
the business.  Previously from 1978 to 1992, he was the Vice President and sales
manager of Beauty Mold Furniture in Salt Lake City. Mr. Nak is a graduate of the
University of Utah with a BS degree in economics and human resources.  He is the
son of the Company's Chairman, John A. Nak.

Item 10.          Executive Compensation

         The  Company  does  not  have a  bonus,  profit  sharing,  or  deferred
compensation plan for the benefit of its employees, officers or directors. As of
March 31, 2000,  no employee of the Company has earned in excess of $100,000 per
annum.

         Presently,  the Company is paying a salary to the Company's  President,
Ernest B. Nak, in the amount of $20,000  per year.  John A. Nak,  the  Company's
Chairman,  intends to work on an as-needed basis and is not presently  drawing a
regular  salary,  although it is expected that he will begin receiving a regular
salary as business conditions warrant. He does receive  compensation in the form
of a life insurance premium paid by the Company in his behalf of $2,292, and the
use of a Company car, an estimated  benefit of $6,000 per year,  which  includes
automobile  insurance paid by the Company. To date, both Ernest Nak and John Nak
have been devoting full time, at least 40 hours per week, to the business.

         The  following  table  sets  forth  all cash  compensation  paid by the
Company for  services  rendered to the Company for the fiscal  years ended March
31, 2001, 2000 and 1999 to the Company's Chief Executive  Officer.  No executive
officer of the Company has earned a salary  greater than  $100,000  annually for
the period depicted.

                                      -13-

<PAGE>


<TABLE>
<CAPTION>

                                            Summary Compensation Table
                                                                                          Other              All
                                                                                          Annual            Other
Name and                                                                                  Compen-           Compen-
Principal Position                  Year              Salary              Bonus           sation            sation
------------------                  -----            --------            -------          ------            ------
<S>                                  <C>               <C>              <C>             <C>             <C>
Ernest B. Nak,                       2001              $20,000          $   -0-          $  -0-          $   -0-
President, C.E.O.                    2000               20,000              -0-             -0-              -0-
                                     1999                3,000              -0-             -0-              -0-
-----------------------------
</TABLE>

         The   preceding   table  does  not  include  any  amounts  for  noncash
compensation,  including  personal  benefits,  paid to the Company's  C.E.O. The
Company believes that the value of such noncash  benefits and compensation  paid
during the periods  presented did not exceed the lesser of $50,000 or 10% 0f the
cash compensation reported for them.

Employment Agreements

         As of the date thereof, the Company has not entered into any employment
contracts with any of its employees,  officers or directors, nor has the Company
had a bonus,  profit sharing,  or deferred  compensation plan for the benefit of
its employees, officers or directors.

Item 11.          Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth  information,  to  the  best  of the
Company's knowledge, as of October 29, 2001 with respect to each person known by
the Company to own  beneficially  more than 5% of the outstanding  common stock,
each director and all directors and officers as a group.

 Name and Address                       Amount and Nature of        Percent
of Beneficial Owner                     Beneficial Ownership      of Class(1)
--------------------                    --------------------      -----------
John A. Nak *                                     187,000(2)          36.2%
  1782 South Main
  Bountiful, UT 84010
Ernest B. Nak *                                   107,500(3)          21.9%
  1782 South Main
  Bountiful, UT 84010
All directors and executive
  officers as a group                             294,500(4)          57.0%
------------------
          *       Director and/or executive officer
Note:    Unless otherwise indicated in the footnotes below, the Company has been
         advised  that each person  above has sole voting  power over the shares
         indicated above.

         (1)      As of  October  29,  2001 there was  491,992  shares of common
                  stock   outstanding.   This   figure   does  not   take   into
                  consideration  25,000 shares of preferred stock,  which may be
                  converted into 25,000 shares of common stock, and are owned by
                  a director.  Therefore,  for purposes of the table above only,
                  as of the date  hereof,  516,992  shares of  common  stock are
                  deemed to be issued and  outstanding  in accordance  with Rule
                  13d-3 adopted by the Commission under the Securities  Exchange
                  Act of 1934,  as amended.  Percentage  ownership is calculated
                  separately  for each person on the basis of the actual  number
                  of  outstanding  shares as of October 29, 2001 and assumes the
                  conversion of preferred shares held by such person (but not by
                  anyone else).
         (2)      Includes  112,000 shares in the name of Martha J. Nak, wife of
                  John A. Nak,  and 25,000  shares  that may be issued  upon the
                  conversion of 25,000 shares of preferred stock presently owned
                  by Mr. Nak and which shares have full voting power.
         (3)      Includes  40,000 shares in the name of Marci J. Nak, Ernest B.
                  Nak's former wife.
         (4)      Includes those shares depicted in notes (2) and (3) above.


                                      -14-

<PAGE>



Item 12.          Certain Relationships and Related Transactions

         There have been no  transactions  during the last two years between the
Company and any officer,  director,  nominee for  election as  director,  or any
shareholder  owning greater than five percent (5%) of the Company's  outstanding
shares,  nor any member of the above referenced  individuals'  immediate family,
except as set forth below.

         During fiscal year ended March 31, 1999,  the Company issued to its two
current directors, John A. Nak and Ernest B. Nak, an aggregate of 212,000 shares
of authorized,  but previously  unissued common stock. The shares were issued in
connection with the Company's  reorganization and upon conversion of debt in the
amount of $21,200.

         During  fiscal year ended March 31,  2000,  the Company  received  cash
advances  from John A. Nak in the amount of $3,120,  of which $600 in  principal
was repaid by March 31, 2000.  During the quarter ended  December 31, 2000,  the
remaining  amount of $2,520 was forgiven by the director and was reclassified as
additional paid-in capital.

         At March 31, 2001, the Company had an obligation to its Chairman,  John
A. Nak,  in the  amount of  $30,866.  Of this  amount,  $15,000  is owed for the
purchase of certain office  equipment from the Chairman.  The balance of $15,866
is owed for Company expenses paid by the Chairman during fiscal year ended March
31, 2000.  Pursuant to a verbal agreement,  interest is to accrue on the debt at
the rate of 6% per annum.  Principal  and interest are to be repaid at such time
as the Company is generating sufficient revenues to repay the debt. During March
31, 2001, the Company made a principal  payment of $1,302 to the Chairman and he
Mr. Nak then  converted  the  remaining  amount of  $29,564,  as well as accrued
interest of $2,778,  into 25,000  shares of  convertible  preferred  stock.  The
25,000 shares of preferred  stock are  convertible  into 25,000 shares of common
stock. The preferred shares have full voting rights, preferences for liquidation
purposes, and no dividend rights.

         During  fiscal  year  2000,  the  Company's   Chairman   assigned  four
automobiles to the Company in exchange for the Company's assumption of the notes
payable related to the vehicles.  The  automobiles  were recorded at cost to the
Company  based on the amount of the  liability  assumed by the Company.  Mr. Nak
received  no benefit  from the  assignment,  except for the relief from the debt
assigned to the Company.

                                      -15-

<PAGE>



                                     PART V

Item 13.                   Exhibits and Reports on Form 8-K

         (a)      Exhibits

Exhibit No.                     Exhibit Name

      3.1*            Restated Articles of Incorporation
      3.2*            By-Laws
      4. *            Instrument  defining  rights of holders  (See  Exhibit No.
                      3.1, Restated Articles of Incorporation - Article IV)
     10.1*            Agreement with Simmons
     10.2*            Town Center, LLC - The Lease - Modified Gross Lease
     27.*             Financial Data Schedule
----------------
     * Previously  filed as an exhibit to the Company's Form 10-SB  Registration
Statement.

                                      -16-

<PAGE>



                           E. J. NAK MATTRESS COMPANY

                              FINANCIAL STATEMENTS

                                 March 31, 2001


                            HANSEN, BARNETT & MAXWELL
                           A Professional Corporation
                          CERTIFIED PUBLIC ACCOUNTANTS

                                       F-1

<PAGE>

<TABLE>
<CAPTION>

                                            E. J. NAK MATTRESS COMPANY



                                                 TABLE OF CONTENTS



                                                                                                        Page
                                                                                                        ----

<S>                                                                                                     <C>
         Report of Independent Certified Public Accountants                                              F-3

         Financial Statements:

              Balance Sheets - March 31, 2001 and 2000                                                   F-2

              Statements of Operations for the Years Ended
                 March 31, 2001 and 2000                                                                 F-4

              Statements of Stockholders' (Deficit) Equity for the Years
                 Ended March 31, 2000 and 2001                                                           F-5

              Statements of Cash Flows for the Years Ended
                 March 31, 2001 and 2000                                                                 F-6

         Notes to Financial Statements                                                                   F-7

                                            ---------------------------
</TABLE>



                                       F-2

<PAGE>



      HANSEN, BARNETT & MAXWELL
     A Professional Corporation
    CERTIFIED PUBLIC ACCOUNTANTS

                                                        (801) 532-2200
    Member of AICPA Division of Firms                Fax (801) 532-7944
           Member of SECPS                       345 East 300 South, Suite 200
Member of Summit International Associates       Salt Lake City, Utah 84111-2693



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Stockholders
E. J. Nak Mattress Company

We have audited the accompanying  balance sheets of E. J. Nak Mattress  Company,
formerly Union Investments, Inc., as of March 31, 2001 and 2000, and the related
statements of operations, stockholders' equity and cash flows for the years then
ended.  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 audit.

We conducted our audits in accordance with auditing standards generally accepted
in the United  States.  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.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of E. J. Nak Mattress Company as
of March 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 in the
financial  statements,  the  Company  has an  accumulated  deficit and a working
capital  deficit.  These  factors  raise  substantial  doubt about the Company's
ability to continue  as a going  concern.  Management's  plan in regard to these
matters is also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                                   /s/ HANEN, BARNETT & MAXWELL
                                                   ----------------------------
                                                       HANEN, BARNETT & MAXWELL

Salt Lake City, Utah
September 7, 2001

                                       F-3

<PAGE>


<TABLE>
<CAPTION>

                           E. J. NAK MATTRESS COMPANY
                                 BALANCE SHEETS



                                     ASSETS
                                     ------


                                                                     March 31,
                                                               2001             2000
                                                          -------------    -------------
<S>                                                       <C>              <C>
Current Assets
      Cash                                                $         691    $         --
      Inventory                                                  37,520           31,083
      Prepaid expenses                                            5,958            3,581
                                                          -------------    -------------

           Total Current Assets                                  44,169           34,664
                                                          -------------    -------------

Equipment
      Office equipment                                           15,000           15,000
      Transportation equipment                                   63,983           63,983
                                                          -------------    -------------
                                                                 78,983           78,983
      Less:   Accumulated depreciation                          (26,033)         (10,236)
                                                          -------------    -------------

           Net Equipment                                         52,950           68,747
                                                          -------------    -------------

Other Assets
      Cash surrender value of life insurance                        --               878
      Deposits                                                    1,600              500
                                                          -------------    -------------

           Total Other Assets                                     1,600            1,378
                                                          -------------    -------------

Total Assets                                              $      98,719    $     104,789
                                                          =============    =============
</TABLE>



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



                                       F-4

<PAGE>


<TABLE>
<CAPTION>

                           E. J. NAK MATTRESS COMPANY
                           BALANCE SHEETS (CONTINUED)


                 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
                 ----------------------------------------------


                                                                                             March 31,
                                                                                       2001             2000
                                                                                  -------------    -------------
<S>                                                                               <C>              <C>
Current Liabilities
      Bank overdraft                                                              $         --     $       5,276
      Accounts payable - trade                                                           53,679           13,305
      Sales tax payable                                                                  10,692            2,515
      Interest payable                                                                      201            1,600
      Debt to related party                                                                 --             2,250
      Notes payable - current portion                                                    20,152           12,018
                                                                                  -------------    -------------

           Total Current Liabilities                                                     84,724           36,964
                                                                                  -------------    -------------

Long-Term Liabilities
      Notes payable                                                                      18,757           36,135
      Debt to related parties                                                               --            31,136
                                                                                  -------------    -------------

           Total Long-Term Liabilities                                                   18,757           67,271
                                                                                  -------------    -------------

Total Liabilities                                                                       103,481          104,235
                                                                                  -------------    -------------

Stockholders' (Deficit) Equity
      Preferred stock - $0.001 par value; 10,000,000 shares
         authorized; 25,000 and 0 shares issued or outstanding                           32,342              --
      Common stock - $0.001 par value; 50,000,000 shares
         authorized; 491,992 shares issued and outstanding                                  492              492
      Additional paid-in capital                                                        465,310          462,790
      Accumulated deficit                                                              (502,906)        (462,728)
                                                                                  -------------    -------------

           Total Stockholders' (Deficit)  Equity                                         (4,762)             554
                                                                                  -------------    -------------

Total Liabilities and Stockholders' (Deficit) Equity                              $      98,719    $     104,789
                                                                                  =============    =============
</TABLE>


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


                                       F-5

<PAGE>


<TABLE>
<CAPTION>

                           E. J. NAK MATTRESS COMPANY
                            STATEMENTS OF OPERATIONS


                                                                  For the Years Ended
                                                                       March 31,
                                                               2001             2000
                                                          -------------    -------------

<S>                                                       <C>              <C>
Revenues                                                  $     240,044    $      98,309

Cost of Sales                                                   130,575           29,207
                                                          -------------    -------------

           Gross Profit                                         109,469           69,102

Operating Expenses
      Selling expenses                                           35,975           17,325
      Depreciation expense                                       15,797           10,236
      General and administrative expenses                        90,819           36,080
                                                          -------------    -------------

           Total Operating Expenses                             142,591           63,641
                                                          -------------    -------------

Income (Loss) From Operations                                   (33,122)           5,461

Interest Expense                                                 (7,056)          (4,155)
                                                          -------------    -------------

Net Income (Loss)                                         $     (40,178)   $       1,306
                                                          =============    =============

Basic and Diluted Income (Loss) Per Common Share          $       (0.08)   $        0.00
                                                          =============    =============

Weighted Average Number of Common Shares
   Used in Per Share Calculation                                491,992          491,992
                                                          =============    =============
</TABLE>



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


                                       F-6

<PAGE>

<TABLE>
<CAPTION>

                           E. J. NAK MATTRESS COMPANY
                  STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 2001


                                       Preferred Stock          Common Stock        Additional
                               ------------------------   ------------------------   Paid-In    Accumulated
                                 Shares        Amount       Shares        Amount     Capital      Deficit       Total
                               -----------  -----------   -----------  -----------  -----------  -----------  -----------

<S>                           <C>           <C>            <C>         <C>          <C>          <C>          <C>
Balance at March 31, 1999              --   $       --        491,992  $       492  $   462,790  $  (464,034) $      (752)

Net income for the year                --           --            --           --           --         1,306        1,306
                               -----------  -----------   -----------  -----------  -----------  -----------  -----------

Balance at March 31, 2000              --           --        491,992          492      462,790     (462,728)         554

Contribution to capital
 of related party debt                 --           --            --           --         2,520          --         2,520

Conversion to convertible
   preferred stock of related
   party debt and accrued
   interest                        25,000        32,342           --           --           --           --        32,342

Net loss for the year                  --           --            --           --           --       (40,178)     (40,178)
                               -----------  -----------   -----------  -----------  -----------  -----------  ------------

Balance at March 31, 2001           25,000  $    32,342       491,992  $       492  $   465,310  $  (502,906) $    (4,762)
                               ===========  ===========   ===========  ===========  ===========  ===========  ===========
</TABLE>

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


                                       F-7

<PAGE>

<TABLE>
<CAPTION>

                           E. J. NAK MATTRESS COMPANY
                            STATEMENTS OF CASH FLOWS


                                                                                          For the Years Ended
                                                                                              March 31,
                                                                                      2001             2000
                                                                                  -------------    -------------

<S>                                                                               <C>              <C>
Cash Flows From Operating Activities
      Net income (loss)                                                           $     (40,178)   $       1,306
      Adjustments to reconcile net income
         to net cash provided by operating activities:
           Depreciation                                                                  15,797           10,236
           Expenses paid by Officer/Director                                                --             9,866
      Changes in current assets and liabilities:
           Inventories                                                                   (6,437)         (31,083)
           Prepaid expenses and other assets                                             (2,599)          (4,959)
           Accounts payable                                                              39,374           12,553
           Other liabilities                                                             10,556            4,115
                                                                                  -------------    -------------

           Net Cash Provided By Operating Activities                                     16,513            2,034
                                                                                  -------------    -------------

Cash Flows From Investing Activities
      Purchase of equipment                                                                 --            (1,100)
                                                                                  -------------    -------------

           Net Cash Used In Investing Activities                                            --            (1,100)
                                                                                  -------------    -------------

Cash Flows From Financing Activities
      Proceeds from bank overdraft                                                          --             5,276
      Payment of bank overdraft                                                          (5,276)             --
      Borrowings under related party debt                                                   --             3,120
      Principal payments on related party debt                                           (1,302)            (600)
      Principal payments on notes payable                                                (9,244)          (8,730)
                                                                                  -------------    -------------

           Net Cash Used In Financing Activities                                        (15,822)            (934)
                                                                                  -------------    -------------

Net Increase In Cash                                                                        691              --

Cash at Beginning of Year                                                                   --               --
                                                                                  -------------    -------------

Cash at End of Year                                                               $         691    $         --
                                                                                  =============    =============

Supplemental Disclosures of Cash Flow Information - Note 7
</TABLE>

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


                                       F-8

<PAGE>


                           E. J. NAK MATTRESS COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business -- E. J. Nak  Mattress  Company  (the  Company) is a mattress
retail store. The Company was originally  incorporated on January 29, 1981 under
the laws of the  state  of Utah as Union  Investments,  Inc.  with the  business
purpose to invest in real and personal  property.  The Company  discontinued its
operations in investing in 1983 and began seeking other business  opportunities.
On March 31, 1999, the  shareholders of the Company approved an amendment to its
Articles of  Incorporation  to change the Company's name from Union  Investments
Inc. to E. J. Nak Mattress  Company and to adopt a general  business  purpose in
order to pursue the retail sales of mattresses and other various home decoration
items. Prior to the year ended March 31, 2000, the Company had no operations and
was considered to be a development stage enterprise.

Business  Condition -- The financial  statements have been prepared on the basis
of the Company  continuing  as a going  concern.  The Company has  accumulated a
deficit at March 31,  2001 in the amount of $502,906  and has a working  capital
deficit of $40,555.  These  conditions  raise  substantial  doubt  regarding the
Company's ability to continue as a going concern.  Management's plan to mitigate
the impact of these conditions is to obtain  additional equity financing through
the issuance of the Company's  common stock.  These financial  statements do not
include any adjustments  relating to the  recoverability  and  classification of
recorded  assets or amounts and  classifications  of  liabilities  that might be
necessary should the Company be unable to continue as a going concern.

Concentrations of Risk -- The Company relies on Simmons Mattress Company for its
supply of  mattresses.  The  Company's  ability to  continue  operations  may be
significantly impacted in the near- term if Simmons ceases to provide mattresses
to the Company.

Use of Estimates -- The  preparation of financial  statements in conformity with
accounting   principles   generally  accepted  in  the  United  States  requires
management to make estimates and assumptions that affect the reported amounts of
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.

Cash -- Cash and cash  equivalents  include  investments  in highly  liquid debt
instruments with an original maturity of three months or less.

Inventories -- Inventories are stated at the lower of cost or market, cost being
determined by the first-in, first-out (FIFO) method.

Equipment  and  Depreciation  --  Equipment  is recorded  at cost.  Maintenance,
repairs,  and minor  replacements  are  charged  to expense  as  incurred.  When
depreciable  assets are retired,  sold,  or otherwise  disposed of, the cost and
related accumulated depreciation are removed from the accounts and the resulting
gain or loss is reflected in earnings.

Depreciation is calculated by using the straight-line  method over a useful life
of five years.

Depreciation  expense on property  and  equipment  for the years ended March 31,
2001 and 2000 was $15,797 and $10,236, respectively.

                                       F-9

<PAGE>


                           E. J. NAK MATTRESS COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001


Revenue  Recognition  -- Revenue is recognized  when  merchandise  is shipped or
otherwise accepted by the customer.

Advertising Costs -- Advertising  costs are expensed when incurred.  Advertising
expense  was $3,221 and  $10,521  for the years  ended  March 31, 2001 and 2000,
respectively.

Financial Instruments -- The amounts reported as inventory,  bank overdrafts and
accounts payable  approximate fair values because of the immediate or short-term
maturities of these financial instruments. The carrying amounts of notes payable
approximate fair value based on current interest rates available to the Company.

Income Taxes -- The Company  recognizes  the amount of income  taxes  payable or
refundable  for  the  current  year  and  recognizes  deferred  tax  assets  and
liabilities for the future tax consequences  attributable to differences between
the financial  statement  amounts of certain  assets and  liabilities  and their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income  in the  years  those
temporary  differences  are expected to be  recovered  or settled.  Deferred tax
assets are  reduced by a  valuation  allowance  to the extent  that  uncertainty
exists as to whether the deferred tax assets will ultimately be realized.

Earnings  Per Share -- Earnings  per common  share is  computed by dividing  net
income available to common stockholders by the weighted-average number of common
shares  outstanding  during the period.  Diluted earnings per share reflects the
potential dilution which could occur if all contracts to issue common stock were
exercised or  converted  into common stock or resulted in the issuance of common
stock. At March 31, 2000, there were no potentially  issuable common shares.  At
March 31, 2001,  the Company  issued 25,000 shares of preferred  stock that were
convertible  into an equal number of common shares,  but these potential  common
shares  were not  included  in the  computation  of diluted  earnings  per share
because the per-share effect would have been anti-dilutive.

NOTE 2-RELATED PARTY TRANSACTIONS

During  the year  ended  March 31,  2000,  an  Officer/Director  of the  Company
assigned  four  automobiles  to  the  Company  in  exchange  for  the  Company's
assumption of the notes payable  related to those  automobiles.  The automobiles
were recorded at cost to the Company based on the amount of liability assumed by
the Company.

During the year ended March 31, 2000, the Company received cash advances from an
Officer/Director  in the amount of $3,120 of which $600 in principal  was repaid
by March 31, 2000.  During the quarter  ended  December 31, 2000,  the remaining
amount of $2,520 was  contributed  to the  Company for no  additional  shares of
common stock.

At March 31, 2000, the Company had an obligation to an  Officer/Director  in the
amount of $30,866. Of this amount,  $15,866 was owed to the Officer/Director for
expenses  paid during the year ended March 31, 2000 by the  Officer/Director  on
behalf of the Company and $15,000 was owed from the  purchase of various  office
equipment   from  the   Officer/Director   which  had  been   acquired   by  the
Officer/Director  from an affiliated company upon liquidation.  During March 31,
2001, a principal payment of $1,302 was made and the Officer/Director  converted
the  remaining  amount of  $29,564 as well as accrued  interest  of $2,778  into
25,000  shares  of  convertible  preferred  stock  (see  Note 5 -  Stockholders'
Equity).


                                      F-10
<PAGE>


                           E. J. NAK MATTRESS COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001


NOTE 3-NOTES PAYABLE
<TABLE>
<CAPTION>

Notes  payable to third  parties  at March 31,  2001 and 2000  consisted  of the
following:

                                                                                             2001           2000
                                                                                      -----------    -----------
<S>                                                                                   <C>            <C>
      Note payable to a bank; interest payable at 11.99%
      with monthly installments of $286, secured by equipment.                        $    10,070    $    12,330

      Note payable to a bank; interest payable at 9.75% with
      monthly installments of $232, secured by equipment.                                   1,884          3,654

      Note payable to a bank; interest payable at 9.41% with
      monthly installments of $418, secured by equipment.                                  14,830         17,499

      Note  payable  to  a  bank;   interest   payable  at  9.50%  with  monthly
      installments of $426, secured by equipment.
      In July 2001, the note was repaid in full.                                           12,125         14,670
                                                                                      -----------    -----------

      Total Notes Payable                                                                  38,909         48,153

      Less: Current Portion                                                                20,152         12,018
                                                                                      -----------    -----------

      Total Notes Payable - Long-Term                                                 $    18,757    $    36,135
                                                                                      ===========    ===========
</TABLE>

Annual  maturities  of long-term  debt as of March 31, 2001 for each of the next
five years are as follows:

                          Year Ending March 31:
                          ---------------------
                                  2002                   $      20,152
                                  2003                           6,811
                                  2004                           7,556
                                  2005                           4,390
                                                         -------------
                                 Total:                  $      38,909
                                                         =============

NOTE 4-INCOME TAXES

No benefit for income taxes has been  recorded  during the years ended March 31,
2001 and  2000.  Certain  risks  exist  with  respect  to the  Company's  future
profitability,  and management has concluded  that, due to these  uncertainties,
the related net deferred tax asset may not be realized. Accordingly, a valuation
allowance has been recorded to offset the deferred tax asset in its entirety.


                                      F-11

<PAGE>


                           E. J. NAK MATTRESS COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001


The  components of the net deferred tax assets at March 31, 2001 and 2000 are as
follows:

<TABLE>
<CAPTION>
                                                                                       For the Years Ended
                                                                                            March 31,
                                                                                     2001             2000
                                                                                -------------    -------------
<S>                                                                             <C>              <C>
      Deferred Income Tax Assets
           Tax net operating loss carry forward                                 $      19,185    $       1,952
           Reserves and accrued liabilities                                                --              597
                                                                                -------------    -------------
                Total Deferred Income Tax Assets                                       19,185            2,549
           Valuation allowance                                                        (15,462)            (476)
                                                                                -------------    -------------
                Net Deferred Income Tax Assets                                          3,723            2,073
                                                                                -------------    -------------

      Deferred Income Tax Liability - Depreciation                                     (3,723)          (2,073)
                                                                                -------------    -------------

      Net Deferred Income Tax                                                   $          --    $         --
                                                                                -------------    -------------
</TABLE>

During the year ended March 31, 2001 and 2000, the valuation allowance increased
by $14,986 and decreased by $486, respectively.

As of March 31, 2001,  the Company has a net  operating  loss  carryforward  for
federal  income tax  reporting  purposes of  approximately  $51,439  that may be
offset against future taxable income through the fiscal year 2021.

The  following is a  reconciliation  of the income tax at the federal  statutory
rate of 34% with the  provision  for income  taxes for the years ended March 31,
2001 and 2000:

<TABLE>
<CAPTION>

                                                                For the Years Ended
                                                                       March 31,
                                                               2001             2000
                                                          -------------    -------------
<S>                                                       <C>              <C>
      Income tax expense at statutory rate                $     (13,661)   $         444
      Change in deferred tax valuation account                   14,986             (486)
      State taxes, net of federal benefit                        (1,325)              42
                                                          -------------    -------------

      Provision for Income Taxes                          $         --     $         --
                                                          =============    =============
</TABLE>

NOTE 5-STOCKHOLDERS' EQUITY

The  Company's  Articles  of  Incorporation  authorize  the board of  directors,
without  shareholder  approval,  to issue up to  10,000,000  shares of preferred
stock with such rights and  preferences  as the board of directors may determine
at its  discretion.  The board of directors has the authority to issue shares of
preferred  stock  having  rights  prior to the  common  stock  with  respect  to
dividends, voting and liquidation.

During the year ended March 31,  2000,  the Company  approved a 100-for-1  stock
split. The accompanying  financial statements have been restated for all periods
presented for the effects of the stock split.

                                      F-12

<PAGE>


                           E. J. NAK MATTRESS COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001


During the year ended March 31, 2001,  an  Officer/Director  contributed  a note
payable  to the  Company  in the  amount  of  $2,520,  which  was  reclassed  as
additional paid-in capital. No interest was accrued on this debt.

During March 2001,  the Company  issued 25,000 shares of  convertible  preferred
stock in exchange for the  forgiveness  of $29,564 of related party debt as well
as $2,778 of accrued  interest on the debt. The 25,000 shares of preferred stock
are convertible into 25,000 shares of common stock of the Company. The preferred
shares have full voting rights,  preference  for  liquidation  purposes,  and no
dividend rights.

NOTE 6-LEASE COMMITMENTS

During  September 1999, the Company entered into a five year lease agreement for
its store. This lease agreement expires September 2004 and provides an option to
extend for an  additional 3 year period.  Under the terms of the lease,  monthly
payments for the period March 2000 through November 2000 are $2,000. This amount
increases by $150 for each  subsequent  year of the lease.  Rent expense for the
years ended March 31, 2001 and 2000 was $21,900 and $12,250, respectively.


The following is a schedule by years of future minimum rental payments  required
under the operating leases described above as of March 31, 2001:

                          Year Ending March 31:
                          ---------------------
                                  2002                      $      26,700
                                  2003                             28,500
                                  2004                             30,600
                                  2005                             14,575



NOTE 7-SUPPLEMENTAL CASH FLOW INFORMATION

Interest  paid  during the years  ended  March 31,  2001 and 2000 was $5,678 and
$2,182,  respectively.  No income tax was paid  during the year ended  March 31,
2001 or 2000.

Non-Cash Investing and Financing  Activities -- As described in Note 2 - Related
Party Transactions and Note 5 - Stockholders' Equity,  related party debt in the
amount of $2,520 was forgiven by an  Officer/Director  and was  reclassified  as
additional  paid-in capital.  Also at March 31, 2001,  related party debt in the
amount of $29,564  and  accrued  interest  of $2,778 was  converted  into 25,000
shares of the Company's preferred stock.

NOTE 8-SUBSEQUENT EVENTS

On July 10,  2001,  the Company sold a vehicle and repaid a related note payable
to a bank with the proceeds of the sale (see Note 3 - Notes Payable).

                                      F-13

<PAGE>



                                   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.

                                           E. J. NAK MATTRESS COMPANY



                                            By:     /S/ JOHN A. NAK
                                               ------------------------
                                                        John A. Nak
                                                        Chairman

Dated:  November 12, 2001


             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 A. NAK              Chairman and Director        November 13, 2001
-------------------------
      JOHN A. Nak



/S/   ERNEST B. NAK            President and Director        November 13, 2001
-------------------------      Chief Accounting Officer
      Ernest B. Nak            Chief Financial Officer


                                       S-1