|U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-KSB


(Mark One)
|-----------------------------------------------------------------------------------------

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

|For the Fiscal Year
Ended December 31, 2000


OR
|------------------------------------------------

|[_] |  | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- |  | ----------------------------------------------------------------------------------------

|Nicole Industries, Inc.(Name
of Small Business Issuer as specified in its charter)
|----------------------------------------------------------------------------------

|NEVADA | 000-27079 | 68-0422343
|------ | --------- | ----------

|(State or other jurisdiction oforganization) | SEC FileNumber | (I.R.S. incorporation orEmployer I.D. No.)
|-------------------------------------------- | -------------- | ------------------------------------------

|83-888 Ave. 51Coachella,
CA 92236(Address of Principal Executive Office)



Issuer's Telephone
Number, including Area Code: (760) 398-9700


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


None


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


$0.01 par value common
stockTitle of Class




Indicate by check mark
whether the registrant (1) has filed all Reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding
twelve months(or for such shorter period that the registrant was required to
file such Reports) and (2) has been subject to such filing requirements for the
past 90 days.


Yes [_]     No
[X]



State
issuer's revenues as of December 31, 2000 was $12,513,010



The
aggregate market value of the voting stock held by non-affiliates of the
registrant was not determinable because the common stock does not trade on any
market.


The
number of shares outstanding of the issuers class of common stock as of
December 31, 2000 was 10,000,000.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART I


Item 1.  Description
of Business.


Business Development.


Nicole Industries, Inc.
(the Company) was organized under the laws of the State of Nevada on
January 3, 1996. The Company was incorporated to engage in any lawful activity.
The Company had been seeking and investigating potential assets, property or a
business to acquire since its organization. In 2000, through its reorganization
activities the Company merged with Aluko USA, Inc., a Delaware Corporation (ALUKO,
which has an operating, majority owned subsidiary, Aluko Co. Ltd, in Korea.
Aluko has been a leading manufacturer of specially treated etched and formed
aluminum foils, which are widely used in many electronic
components.


Our executive office is
currently located at 83-888 Avenue 51, Coachella, California 92236. The telephone
number is (760) 398-9700. This office is actually shareholder Dempsey
Morks office. This address will serve as our temporary executive office
until a more suitable office can be located. As a result of the reorganization,
Dempsey Mork, an officer and director of Magellan Capital Corporation and Asian
Financial Inc, resigned and the Board of Directors elected Mr. Ju Young Park as
the President and Chairman of the Board of Directors. Mr. Park has been
President of Aluko since its inception in 1986.


Nicole Industries, through
its operating subsidiary in Korea, has launched in the business of etched and
formed aluminum foils for electronic components. Our goal is to become a
premiere business portal of electronic raw materials and components in the
growing world market.


The Business Activities
in Overseas.


Aluko is a leading
manufacturer of etched and formed aluminum foils and it is ISO9002 certified to
meet the world standard. Aluminum foil is a main raw material for electrolytic
capacitors that are commonly used for both industrial and household electronic
devices. Aluko is a growing company in a rapidly expanding market because of the
extensive usage of capacitors in broad range of electronic devices. Alukos
main products include etched aluminum foils (cathode, anode) and formed aluminum
foils. Aluko supplies its products to the worlds major electronic
manufacturers such as Sanyo, Matsushita, Hitachi in Japan, Siemens, Philips,
Aerovox in Europe, and Samsung, Daewoo in Korea. Alukos other customers
are smaller electronic components manufacturers in Taiwan, China, Hong Kong,
Singapore, India, etc.


Product Description.


Etched and formed aluminum
foil is a key material to electrolytic capacitors. By charging and discharging
electricity, the capacitor is a primary passive component in electrical circuits
including resistors and inductors. In order to obtain a higher electric charge,
the capacitor must have a higher capacitance, which can be established by
enlarging the surface area of the electrode material. An etching process is the
solution technique used to enlarge the surface area of aluminum foil. After
etching has been completed, the aluminum foil surface is then laminated with a
hydro-oxide layer through the forming process.

2
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Market Forecasting.


Electrolytic capacitors
account for approximately 25% of the global capacitor market. According to Yano
Economic Research, the market is expected to grow approximately 8.3% annually
over the next 5 years with the explosive demand of digital equipment. The
aluminum foil market should show the similar growth rate as capacitor market
since there are strong co-relations between two products. Total world sales of
electrolytic aluminum capacitors recorded around $3.2 billion in 1999. Total
world sales of cathode foils was $104 million in 1999 and that of anode foils
was $1.1 billion.


Profitability & Market
Environments.


Regardless of high
profitability, entrance barriers to the business remain high due to the
technological difficulties in the manufacturing processes. Aluko currently
enjoys approximately 22.4% average gross margin rate with approximately 10% net
profit while competitors reach approximately 15.8% of gross margin. Through its
continuous cost-reducing measures and superior technological innovation and
improvement in quality, Aluko is planning to expand its production capacity to
reach 15% market share in the world within the next 3 years. In Asia, Aluko is
able to maintain its competitiveness against Japanese and European counterparts
through superior quality and price advantages. Chinese and Taiwanese aluminum
foil makers are not expected to pose a serious threat to Aluko in terms of
product quality during the next twelve months. Aluko expects to continue to gain
market share from Japanese competitors.


Currently, Aluko is a major
supplier of cathode foils to Japanese capacitor manufacturers. Since 1994, Sanyo
has been purchasing 90% of its essential cathode foils from Aluko and Hitachi
began to fill 50% of its needs from Aluko in 1996. Matsushita designated Aluko
as its priority-order supplier in 1999. Elna is also increasing its volume of
business with Aluko.


Philips, a Dutch
multinational, has been Alukos customer for 10 years. Siemens in Germany
and Aerovox in England use Alukos products after Aluko successfully passed
their quality test. The U.S. market is getting more attention because high
quality capacitors are in great demand for HDTV and electric hybrid vehicles.
Japanese capacitor makers, such as Matsushita and Chemi-Con, have begun local
production in the U.S. Aluko is planning to make further inroads into the U.S.
by supplying products to Matsushita-USA.


New Demand.


Accumulated production of
HDTV by 2010 is expected to be approximately 207,754,000 units according to
forecasting by the American Electronics Association. Since HDTV requires 3 times
more capacitors than conventional TV, the business potential for aluminum foils
manufacturers is enormous. The introduction of electric and/or hybrid vehicle
will further increase the demand for electrolytic capacitors. Because an
electric vehicle consumes 30 times more capacitors than conventional TV sets, it
is expected that the demand of aluminum foils will increase accordingly.


3
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Investment Plan.


Aluko plans to add 23 anode
foil production lines to the currently existing 4 lines in Korea by 2003. It is
estimated that total investment for this expansion of production facilities will
be $36 million.


Recent events.


To accomplish a more rapid
and strategic growth, Aluko participated in the investment opportunity to
acquire the major stake of Daewoo Electronic Components Co. Ltd. in May 2000. On
November, 2000, Aluko completed final due diligence and entered definitive
contracts to acquire approximately 32% interest of Daewoo Electronic Components
during 2001. Aluko anticipates that the acquisition of its interest in Daewoo
Electronic Components should be completed by August 31, 2001.


Overview of Daewoo
Electronic Components Co.


Daewoo is a major
electronic component manufacturer in Korea. Established in 1973, as an aluminum
electronic capacitor manufacturer, Daewoo has successfully expanded its business
into a wide range of electronic components. In 1985 Daewoo became the first
domestic Korean Company to manufacture tantalum solid electrolytic capacitors.
Currently, Daewoo operates 3 production sites in Korea and several overseas
affiliates including subsidiaries in the UK, China, Mexico and Vietnam.


Daewoos sales revenue
before consolidation amounted to KRW 257 billion and total assets equaled KRW
275 billion as of 31 December 2000 (USD 1.00 = KRW 1,304.60 as of June 15,
2001). Daewoo was listed on the Korean Stock Exchange in 1989.


Daewoo produces a wide
range of electronic components for the industries in entertainment, information
and telecommunication. Daewoo has successfully developed DY, FBT and E/T in
several versions for HDTVs, wide-screen, flat-surface and LCD TVs.
Especially, TA, CE and HIC are core components used in high-tech communications
hardware, personal computers, and automobile parts, which is predicted to grow
substantially in the future.


Item 2.  Description
of Property.


Our executive office is
currently located at 83888 Avenue 51, Coachella, California 92236. The telephone
number is (760) 398-9700. This office is actually shareholder Dempsey
Morks office. This address will serve as a temporary executive office
until a more suitable office can be located. This office is furnished by Mr.
Mork for our use at no cost.


Nicole owns no property in
the United States. But Aluko, its operating subsidiary in Korea, owns 27,000
square meters of land, plant structures, and machines at Eumsungkun Daesomyun,
Daepoongri 4031 North Chungchoeng province 369-821 Korea.
4
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3.  Legal
Proceedings.



None


Item 4.  Submission
of matters to a vote of security holders.



None

5
|--------------------------------------------------------------------------------------------------------------

|Part II


ITEM 5:  Market
for Common Equity and related Stockholder Matters.


Our Common Stock is traded
on The Nasdaq Electronic Bulletin Board. As our stock is traded only on the
Electronic Bulletin Board, there is only a limited trading market for our stock
and the high and low sales prices reported on the Electronic Bulletin Board may
not accurately reflect the trading market for our stock. As a result, we have
omitted from this Report any table showing the reported high and low sales
prices for our stock for any period.


As of July 15, 2001, there
were approximately 75 stockholders of record of the Common Stock. We have never
paid dividends, cash or otherwise, on our capital stock and do not anticipate
paying any dividends in the foreseeable future. We currently intend to retain
future earnings, if any, to finance the growth and development of our business.
Any future determination to pay dividends will be at the discretion of the Board
of Directors and will be dependent upon our financial condition, results of
operations, capital requirements and such other factors as the Board of
Directors deems relevant.


Item 6.  Management
Discussion and Analysis or Plan of Operation.


The following discussion
should be read in conjunction with the consolidated financial statements of the
Company and notes thereto contained elsewhere in this Report.


This Report contains
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, and Section 27A of the Securities Act of 1933. The words
expects, anticipates, believes,
intends, plans and similar expressions identify
forward-looking statements. In addition, any statements, which refer to
expectations, projections or other characterizations of future events or
circumstances, are forward-looking statements. We undertake no obligation to
publicly disclose any revisions to these forward-looking statements to reflect
events or circumstances occurring subsequent to filing this Report with the
Securities and Exchange Commission. These forward-looking statements are subject
to risks and uncertainties, including, without limitation, those discussed in
this section. Accordingly, our future results could differ materially from
historical results or from those discussed or implied by these forward-looking
statements.


General.


The Company had been
seeking and investigating potential assets, property or a business to acquire
since its organization in 1996. During July, 2000, we consolidated with Aluko
USA, Inc., a Delaware corporation, which has an operating subsidiary, Aluko Co.
Ltd, in Korea (Aluko Korea). Aluko Korea is and has been a leading
manufacturer of main electronic raw materials, etched and formed aluminum foils.


Aluko Korea is expanding
its business activities to engage in electronic components manufacturing by
acquiring a 32% stock interest in Daewoo Electronic Components, a Korean
corporation. Our goal is to become a premiere manufacturer and supplier of
electronic raw materials and components through our operating subsidiaries.
Through our operating subsidiaries, we will continue to seek to increase product
performance and widen our distribution by developing and maintaining our
marketing partners.

6
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Aluko Korea has been
investing more than 10% of its annual revenue in research and development to
enhance quality improvements and to develop new products. Currently 16% of Aluko
Koreas total employees are assigned exclusively to R&D field.


We do not have any present
plans to establish or expand our manufacturing or marketing activities other
than through our current operating subsidiaries.


Results of Operations.


The financial statements
included with this Report reflect the consolidated operations of Nicole
Industries, Inc. and Aluko Korea, our indirectly owned operating subsidiary. As
we had no operations during any of the fiscal years which ended on or before
December 31, 1999, no year-to-year comparison is provided or would be
meaningful. We do not have any present plans to establish or expand our revenue
generating activities other than through our current operating subsidiaries.


Net Revenues.


From inception through July
31, 200, we had no net revenues from operations. As a result of our
consolidation with Aluko Korea, for the fiscal year ended December 31, 2000, we
had consolidated gross revenues from operations of $12,513,010 and consolidated
net income (loss) after taxes and minority interest of ($544,347). For the
fiscal year ended December 31, 1999, which year ended prior to our consolidation
with Aluko Korea, our gross revenues were $0.00 and our net income (loss) was
($16).


Cost of Revenues.


For the fiscal year ended
December 31, 2000, our cost of goods sold was $9,338,147 and our selling,
general and administrative expenses were $1,439,723.


Non-Operating Income.


Our Non-Operating Income
(Expense) consists primarily of interest income of $248,272, interest expense of
$668,026, gain/loss on marketable securities of ($669,189) and unrealized
foreign currency translation gains (losses) of ($571,258).


Liquidity and Capital
Resources.


At December 31, 2000 we had
cash and cash equivalents balances totaling $633,315, total bank and other debts
amounting to $24,517,397 available for borrowing under our credit facilities.


Cash used in operating
activities was $10,777,870 in fiscal 2000. In fiscal 2000, operating activities
provided cash amounting to $6,898,503. Operating activities used cash in fiscal
2000 primarily as a result of significant increases in accounts receivable and
inventory.


Accounts receivable, net of
allowance for doubtful accounts, were $5,507,293 at December 31, 2000.
Inventories were $2,583,672 at December 31, 2000.
7
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Basis of Presentation.


The amounts set forth in
the foregoing discussions of the results of operations and liquidity reflects
the activities of Aluko Korea without adjustment for minority interests in Aluko
Korea. We indirectly own 50.01% of the outstanding capital stock of Aluko Korea.


ITEM 7:  Financial
Statements.


Audited consolidated
financial statements and related documents required by this item are included in
this Annual Report on Form 10-K on the pages indicated:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | 
|------------------------------------------- | 
|Report of Independent Public Accountants    | 
|Consolidated Balance Sheets                 | 
|as of December 31, 2000 and 1999            | 
|Consolidated Statements of Income for       | 
|the years ended December 31, 2000 and 1999  | 
|Consolidated Statements of Cash Flows for   | 
|the years ended December 31, 2000, and 1999 | 
|Notes to Consolidated Financial Statements  | 

|8
|-

|ITEM 8:  Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure



None




Part III

Item
9.  Directors,  Executive  Officers,  Promoters  and Control  Persons.


The following table sets
forth, as of December 31, 2000, the names, ages and positions of our executive
officers and directors. Their respective backgrounds are described below.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NAME           | AGE | CAPACITIES
|-------------- | --- | ----------
|Ju Young Park  |     | 54        
|              
|Yong Nam Kim   |     | 43        
|              
|Min Kyung Park |     | 26        
|              
|Dong Joo Chang |     | 49        

|NAME OF OFFICER/DIRECTOR | EMPLOYMENT HISTORY
|------------------------ | ------------------

|Ju Young Park | Mr. Park was
appointed as President and Chief Executive Officer in August 2000. Mr. Park is a founder
of Aluko Co., Ltd., our Korean operating subsidiary. He graduated from Hanyang University
in Seoul with degree in electronic engineering. He had worked for Daewoo Electronic
Components Co., Ltd. for 12 years as a general manager in charge of research and
technology development. Later, he founded Aluko Co., Ltd., the first and the only Company
in Korea manufacturing etched and formed aluminum foil, in 1986. He has the Chief
Executive Officer of Aluko since its foundation.
|------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Yong Nam Kim | Yong
Nam Kim, joined the Company as Chief Financial Officer and Director in August 2000. He
began his career in Daewoo Co. Ltd in 1977 after graduating from Seoul National
University, with degree in business administration. He was reassigned to Daewoo
Electronics Components Co. Ltd in 1987. From January 1997 to March 2000, he served as
Chief Financial Officer and Internal Auditor of Daewoo Electronic Components Co. Ltd. He
is also a director of Aluko Co. Ltd.
|------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9
|-

|
|

|Min Kyung Park | Min
Kyung Park has been a director of the Company since August 2000, and also serves as an
assistant planning manager of Daewoo Electronics Components. She graduated from Ewha
Woman's University in Korea and studied at Oregon State University. She completed
Investor Relations Specialist Training Program at Sungkyunkwan graduate school.
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dong Joo Chang | Dong Joo Chang joined the Company as a
Director in August 2000. He also currently serves as Executive Managing Director of Korea
Technology Investment Corporation (KTIC). KTIC is a venture capital Company with the
highest brand equity value in Korea. Since its establishment in 1986, KTIC has developed
into a prominent force in the private equities market in Korea, with total funds of Korean
Won 600 billion under management. Mr. Chang, as a key member of KTIC, incorporated it,
took it public and supported 450 start-up ventures and contributed to the improvements of
the Korean venture capital industry. From April 1981 to December 1986, he served as chief
analyst and manager of Korea Technology Banking Corporation, which was a government-run
venture capital Company of Korea. Mr. Chang earned his MBA from Seoul National University.
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Section 16 (a)
Beneficial Ownership Reporting Compliance


Section
16 (a) of the Securities Exchange Act of 1934, as amended (the Exchange
Act), requires the Companys directors and executive officers and
persons who own more than 10% of the Companys common stock to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership in our common stock. Officers, directors and beneficial
owners of more than 10% of the Companys common stock are required by the
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16 (a) forms that they file.


Based
solely on a review of the copies of such reports furnished to the Company, or
written representation that no such reports were required, the Company believes
that for the fiscal year ended December 31, 2000, all of the Companys
officers, directors and greater than 10% beneficial owners, complied with all
Section 16 (a) filing requirements applicable to them.


ITEM 10:  EXECUTIVE
COMPENSATION.



Summary
Compensation Table


The
Company currently is not paying any cash compensation to any of Executive
Officers and did not pay any cash compensation to any of its Executive Officers
during or with respect to the fiscal year ended December 31, 2000.

10
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Employment
Agreements


The
Company has entered into written Employment Agreements with Mr. Park, its
President and Chief Executive Officer. The principal terms of such Employment
Agreement are as follows.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The
term of the Employment Agreement is one and 5/12 years beginning August 1, 2000, and
ending December 31, 2001.
| | - |  | ------------------------------------------------------------------------------------------------------------------

| |  |  | During the period through
June 30, 2001, the Company will not pay or accrue any cash compensation to Mr. Park for
his performance of services under the Agreement. Prior to December 31, 2001, the Company
and Mr. Park will agree on the amount of the cash compensation payable to him for his
performance of services during the remaining term of the Agreement.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The Company will annually
review Mr. Park's performance and determine whether or not he is entitled to receive an
increase in salary for the following year as well as a cash bonus for performance during
the previous year;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Mr. Park is entitled to
participate in the Company's fringe benefit and employee benefit programs as the Company
may establish from time to time. As June 15, 2001, the Company had not established any
fringe benefit or employee benefit plans.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The
Company may terminate the Employment Agreement only for cause upon 30 days written
notice.
| | - |  | ----------------------------------------------------------------------------------------------

|Stock
Incentive Plans


The
Company has not adopted any stock option or stock incentive plans.



Employee
Pension, Profit Sharing or Other Retirement Plans


The
Company has not adopted any employee pension, profit sharing or other retirement plans



Compensation
of Directors


At
present the Company does not pay its directors for attending meetings of the
Board of Directors, although the Company expects to adopt a director
compensation policy in the future. The Company has no standard arrangement
pursuant to which directors of the Company are compensated for any services
provided as a director or for committee participation or special assignments.


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


The following table
indicates the share ownership of the Companys common stock, as of June 15,
2001, of persons owning five percent or more, directors and executive officers
based on information provided by these individuals and all directors and
executive officers as a group.

11
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|Name of Beneficial Owner                | Amount and Nature ofBeneficial Ownership | Percent of Class (1)
|--------------------------------------- | ---------------------------------------- | --------------------
|                                        |                                         
|Aluko Capital Fund LLC(2)               |                                          | 8,446,667           
|c/o Reicker Pfau Pyle McRoy & Herman    |                                         
|1421 State St, Suite B                  |                                         
|Santa Barbara, CA 93101                 |                                         
|                                        |                                         
|SPA International LLC(3)                |                                          | 353,333             
|c/o Reicker Pfau Pyle McRoy & Herman    |                                         
|1421 State St, Suite B                  |                                         
|Santa Barbara, CA 93101                 |                                         
|                                        |                                         
|T. S. Lee                               |                                          | 500,000             
|2850 Riverside Drive                    |                                         
|Suite 409                               |                                         
|Los Angeles, CA 90039                   |                                         
|                                        |                                         
|All executive officers and directors as |                                          | 8,446,667           
|a group(4)(4)                           |                                         
|                                        |                                         

| |  | (1) |  | Ownership percentage is calculated on 10,000,000 shares of common stock. The
foregoing numbers reflect the one-for-ten (1:10) reverse stock split, which was
effective as of November 27, 2000.
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (2) |  | Ju
Young Park and Aluko Co., Ltd are the beneficial owners of Aluko Capital Fund LLC.
| |  | --- |  | -------------------------------------------------------------------------------------

| |  | (3) |  | All equity interests in SPA International LLC are owned by Mr. Ju Young
Parks wife and Mr. Park therefore may be considered the beneficial owner
of SPA International and the shares of common stock of the Company owned by SPA
International. Mr. Park disclaims all beneficial interest in SPA International
and any of the shares of common stock of the Company owned by SPA International.
No other officer and director of the Company have any beneficial interest in SPA
International.
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (4) |  | None of the Officers, Directors or existing shareholders have the right to
acquire any amount of the shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations.
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|All shareholders have sole
voting and investment power.


ITEM 12:  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.


Merger
with Aluko USA Inc. Pursuant to the Agreement and Plan of Reorganization
between the Company and Aluko USA, Inc. dated July 21, 2000, the Company issued
to Aluko USA a total of 9,300,000 shares of its common stock in exchange for
Alukos issuance to the Company of 5.25 shares of Aluko USAs common
stock. Subsequent to the closing under the Reorganization Agreement and as part
of the transactions contemplated in such Agreement, Aluko USA was merged into
the Company on September 14, 2000. In connection with the merger, the shares of
common stock of Aluko USA owned by the Company were cancelled and the shares of
common stock of Aluko USA owned by persons other than the Company were converted
into a total of 9,300,000 shares of common stock of the Company. Aluko Capital
Fund LLC and SPA International LLC owned all of the shares of common stock of
Aluko USA immediately prior to the merger and, by reason of the merger, acquired
their stock interests in the Company. Mr. Park is the beneficial owner of the
equity interests in Aluko Capital Fund LLC and Ms. Shin is the beneficial owner
of the equity interests in SPA International LLC. (All of the foregoing numbers
of shares of common stock of the Company reflect the 1:10 reverse stock split
effective November 27, 2000.)
12
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Late
Filing of Annual Report. The Companys fiscal year ended on December
31, 2000. The Company was required to file its Annual Report on Form 10-KSB on
or before March 31, 2001. The Company timely filed a Notification of Late Filing
on Form 12b-25 and stated that it would not be able to file its Annual Report on
Form 10-KSB on or before March 31 and that it would undertake to file the Annual
Report within fifteen days after the due date. Because of difficulties in
preparing the consolidated financial statements for the Company and its majority
owned operating subsidiary, Aluko Co. Ltd, a Korean corporation, the Company was
not able to complete and file its Annual Report on Form 10-KSB within such
15-day period. The difficulties that the Company encountered in connection with
the preparation of such consolidated financial statements could not be
eliminated without unreasonable effort or expense. The difficulties arose
primarily because the Company s fiscal year ended on December 31, 2000
while Alukos fiscal year ended on June 30, 2000. Because of the difference
in the fiscal year ends, the consolidation was unduly complicated. In addition,
the Company encountered unanticipated difficulties relating to the coordination
of U.S. generally accepted accounting principles (applicable to the Company) and
Korean generally accepted accounting principles (applicable to Aluko).


Late
Filing of Quarterly Report. The Company was required to file its Quarterly
Reports on Form 10-QSB for the fiscal quarters ended March 31, 2001 on or before
May 15, 2001 and for the fiscal quarter ended June 30, 2001, on or before August 14, 2001.
The Company timely filed a Notification of Late Filing on Form
12b-25 and stated that it would not be able to file the Quarterly Report on or
before May 15 and that it would undertake to file the Report within five days
after the due date. Because of the difficulties encountered in preparing the
consolidated financial statements for the Company and its majority owned
operating subsidiary, Aluko Co. Ltd, a Korean corporation, for the Annual Report
on Form 10-KSB, the Company was not able to complete and file its Quarterly
Report within such 5-day period. The Company undertakes to file the Quarterly
Reports and the consolidated financial statements as quickly as possible.


Because the Company has not
timely filed its Quarterly Reports on Form 10-QSB, the Companys
shareholders may not publicly resell shares of the Companys capital stock
pursuant to Rule 144.


ITEM 13:  EXHIBITS
AND REPORTS ON FORM 8-K.


EXHIBITS


The following Exhibits are
filed as part of this Report pursuant to Item 601 of Regulation S-B:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Exhibit No. |  | Description
|----------- |  | -----------
|            | 

|2 |  | Plan
of Acquisition and Reorganization
|- |  | --------------------------------------
| 

| |  | 2.1 |  | Agreement
and Plan of Reorganization dated July 21, 2000, between Nicole Industries, Inc. and Aluko
USA, Inc. *
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------
| | 

| |  | 2.2 |  | Articles
of Merger between Nicole Industries, Inc. and Aluko USA, Inc. as filed September 14, 2000
*
| |  | --- |  | ----------------------------------------------------------------------------------------------------
| | 

|3 |  | Charter Documents
|- |  | -----------------
| 

| |  | 3.1 |  | Articles
of Incorporation as filed January 3, 1996 (1)
| |  | --- |  | ------------------------------------------------------
| | 

| |  | 3.2 |  | Articles
of Amendment of Articles of Incorporation as filed October 22, 1998 (1)
| |  | --- |  | --------------------------------------------------------------------------------
| | 

| |  | 3.3 |  | Certificate
of Amendment of Articles of Incorporation as filed November 27, 2000 *
| |  | --- |  | ----------------------------------------------------------------------------------
| | 

| |  | 3.4 |  | Bylaws
(1)
| |  | --- |  | ----------
| | 

|4 |  | Instruments
defining rights of holders
|- |  | --------------------------------------
|  | 

| |  | 4.1 |  | Form
of Common Stock Certificate *
| |  | --- |  | ----------------------------------
| | 

|10 |  | Material
Contracts
|-- |  | ------------------
|   | 

| |  | 10.1 |  | Employment
Agreement with Mr. Ju Young Park dated August 1, 2000 *
| |  | ---- |  | ------------------------------------------------------------------
| | 

| |  | 10.2 |  | Employee
Creation Assignment, License and Non-Disclosure Agreement with Mr. Ju Young Park*
| |  | ---- |  | ------------------------------------------------------------------------------------------
| | 

|23 |  | Consents
of Experts and Counsel
|-- |  | -------------------------------
|   | 

| |  | 23.1 |  | Consent
of David Winings *
| |  | ---- |  | --------------------------
| | 

|27 |  | Financial Data Schedule
|-- |  | -----------------------
|   | 

| |  | * |  | Filed
herewith
| |  | - |  | --------------

| |  | (1) |  | Incorporated
by reference to Form 10SB-12G filed by the Company on August 18, 1999.
| |  | --- |  | -----------------------------------------------------------------------------------

| | REPORTS
ON FORM 8-K
| | -------------------

| |  |  |  | The Company
filed a Periodic Report on Form 8-K on October 4, 2000, to file the Company's audited
financial statements for the period ended July 31, 2000, which reflect the effect of the
merger between the Company and Aluko USA, Inc., which was effective July 21, 2000.
| |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | The Company
filed a Periodic Report on Form 8-K on January 3, 2001, regarding the one-for-ten (1:10)
reverse stock split which was effective as of November 27, 2000.
| |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | The Company
filed a Periodic Report on Form 8-K on April 12, 2001, regarding the Company's late
filing of its Annual Report on Form 10-KSB.
| |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

|13
|--

|SIGNATURES:


Pursuant
to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, on this 3rd day of September 2001.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | NICOLE INDUSTRIES, INC.By: /s/ Ju Young Park
Ju Young ParkPresident, Chief Executive Officer and Director
| |  | -----------------------------------------------------------------------------------------------------------------------

|Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | NAME | TITLE | DATE
| | ---- | ----- | ----

| | /s/ Ju Young ParkJu Young Park | President, Chief Executive Officer and Director | September 3, 2001
| | ------------------------------ | ----------------------------------------------- | -----------------

| | /s/ Yong Nam KimYong Nam Kim | Chief Financial Officer and Director 
(Principal Financial Officer and Principal Accounting Officer) | September 3, 2001
| | ---------------------------- | ---------------------------------------------------------------------------------------------------- | -----------------

| | /s/ Min Kyung ParkMin Kyung Park | Director | September 3, 2001
| | -------------------------------- | -------- | -----------------

| | /s/ Dong Joo ChangDong Joo Chang | Director | September 3, 2001
| | -------------------------------- | -------- | -----------------

|14
|--

|EXHIBIT INDEX
|-------------

|Exhibit No. |  | Description
|----------- |  | -----------
|            | 

|2 |  | Plan
of Acquisition and Reorganization
|- |  | --------------------------------------
| 

| |  | 2.1 |  | Agreement
and Plan of Reorganization dated July 21, 2000, between Nicole Industries, Inc. and Aluko
USA, Inc. *
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------
| | 

| |  | 2.2 |  | Articles
of Merger between Nicole Industries, Inc. and Aluko USA, Inc. as filed September 14, 2000
*
| |  | --- |  | ----------------------------------------------------------------------------------------------------
| | 

|3 |  | Charter Documents
|- |  | -----------------
| 

| |  | 3.1 |  | Articles
of Incorporation as filed January 3, 1996 (1)
| |  | --- |  | ------------------------------------------------------
| | 

| |  | 3.2 |  | Articles
of Amendment of Articles of Incorporation as filed October 22, 1998 (1)
| |  | --- |  | --------------------------------------------------------------------------------
| | 

| |  | 3.3 |  | Certificate
of Amendment of Articles of Incorporation as filed November 27, 2000 *
| |  | --- |  | ----------------------------------------------------------------------------------
| | 

| |  | 3.4 |  | Bylaws
(1)
| |  | --- |  | ----------
| | 

|4 |  | Instruments
defining rights of holders
|- |  | --------------------------------------
|  | 

| |  | 4.1 |  | Form
of Common Stock Certificate *
| |  | --- |  | ----------------------------------
| | 

|10 |  | Material
Contracts
|-- |  | ------------------
|   | 

| |  | 10.1 |  | Employment
Agreement with Mr. Ju Young Park dated August 1, 2000 *
| |  | ---- |  | ------------------------------------------------------------------
| | 

| |  | 10.2 |  | Employee
Creation Assignment, License and Non-Disclosure Agreement with Mr. Ju Young Park*
| |  | ---- |  | ------------------------------------------------------------------------------------------
| | 

|23 |  | Consents
of Experts and Counsel
|-- |  | -------------------------------
|   | 

| |  | 23.1 |  | Consent
of David Winings *
| |  | ---- |  | --------------------------
| | 

|27 |  | Financial Data Schedule
|-- |  | -----------------------
|   | 

| |  | * |  | Filed
herewith
| |  | - |  | --------------

| |  | (1) |  | Incorporated
by reference to Form 10SB-12G filed by the Company on August 18, 1999.
| |  | --- |  | -----------------------------------------------------------------------------------

|15
|--

|To the Board of Directors 
Nicole Industries, Inc.




I have audited the accompanying
balance sheets of Nicole Industries, Inc. (a Nevada Corporation) as of December 31, 2000
and December 31, 1999 and the related statements of income and retained earnings, and cash
flows for the years then ended. These financial statements are the responsibility of the
Companys management. My responsibility is to express an opinion on these financial
statements based on my audit.


I conducted my audit in
accordance with generally accepted auditing standards. Those standards require that
I plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.


In my opinion, the
financial statements referred to above present fairly, in all material respects,
the financial position of Nicole Industries, Inc as of December 31, 2000 and
1999, and the results of its operations and its cash flows for the periods ended
in conformity with generally accepted accounting principles.



David M.
WiningsPalm Desert, CaliforniaSeptember 2, 2001

F-1
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NICOLE INDUSTRIES, INC.
Consolidated Balance SheetsDecember 31, 2000 and 1999
|-----------------------------------------------------------------------------

|                                              | 2000 | 1999          
|--------------------------------------------- | ---- | --------------
|ASSETS                                        |      |               
|Current Assets                                |     
|Cash and cash equivalents                     |      | $      633,315
|Short-term financial instruments              |      | 1,868,657     
|Marketable Securities (Note 2)                |      | 3,059,605     
|Accounts and Notes Receivable - Net           |     
|Trade                                         |      | 5,068,871     
|Other                                         |      | 438,422       
|Inventories (Note 3)                          |      | 2,583,672     
|Short-term loans                              |      | 166,143       
|Prepayments                                   |      | 5,975,648     
|Prepaid expenses and other current assets     |      | 364,001       
|                                              |      |               
|Total Current Assets                          |      | 20,158,334    
|                                              |      |               
|Property and Equipment                        |     
|Land                                          |      | 1,659,920     
|Building                                      |      | 3,651,529     
|Machinery and Equipment                       |      | 10,547,381    
|Transportation Equipment, tools and furniture |      | 676,189       
|Construction in progress                      |      | 4,315,060     
|                                              |      |               
|                                              |      | 20,850,079    
|Less Accumulated Depreciation                 |      | (8,179,563    
|                                              |      |               
|Total Property and Equipment                  |      | 12,670,516    
|                                              |      |               
|Other Assets                                  |     
|Investments in Securities (Note 4)            |      | 5,038,996     
|Long-term Financial Instruments               |      | 146,200       
|Intangible Assets - Net                       |      | 67,105        
|Guarantee Deposits                            |      | 147,528       
|                                              |      |               
|Total Other Assets                            |      | 5,399,829     
|                                              |      |               
|Total Assets                                  |      | $ 38,228,679  
|                                              |      |               

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


F-2
|--------------------------------------------------------------------------------

|NICOLE INDUSTRIES, INC.
Consolidated Balance SheetsDecember 31, 2000 and 1999
|-----------------------------------------------------------------------------

|                                                          | 2000 | 1999        
|--------------------------------------------------------- | ---- | ------------
|LIABILITIES AND OWNERS EQUITY                             |     
|Current Liabilities                                       |     
|Short-term borrowings                                     |      | $ 19,133,369
|Accounts and notes payable                                |     
|Trade                                                     |      | 2,419,809   
|Other                                                     |      | 1,499,249   
|Accrued liabilities                                       |      | 493,297     
|Current portion of long-term debt                         |      | 971,673     
|                                                          |      |             
|Total Current Liabilities                                 |      | 24,517,397  
|Long term liabilities                                     |     
|Long-term debt, less current portion                      |      | 987,598     
|Convertible bonds                                         |     
|Severance and retirement benefits                         |      | 414,825     
|Deferred income tax liabilities                           |      | 2,123,559   
|Other liabilities                                         |      | 7,938       
|                                                          |      |             
|Total Long term liabilities                               |      | 3,533,920   
|                                                          |      |             
|Total Liabilities                                         |      | 28,051,317  
|Minority Interest                                         |      | 5,221,069   
|Stockholders' Equity                                      |     
|Common stock, par value W500 (W100 par value in 1999);    |     
|Authorized 20,000,000 shares (100,000,000 shares in 1999) |     
|Issued and outstanding - 12,648,300 shares                |      | 100,000     
|Paid in capital in excess of par                          |      | 5,468,241   
|Retained Earnings                                         |     
|Appropriated                                              |     
|Unappropriated                                            |      | 38,538      
|Capital Adjustment Accounts                               |     
|Treasury stock                                            |      | (791        
|Valuation gain in investment securities                   |      | (21,671     
|Valuation loss in investment securities                   |      |            
|                                                          |      |             
|Total Capital Adjustment Accounts                         |      | (22,462     
|Total Stockholders' Equity                                |      | 5,584,317   
|Accumulated Other Comprehensive Income                    |      | (628,024    
|Total Liabilities and Stockholders' Equity                |      | $ 38,228,679
|                                                          |      |             

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


F-3
|--------------------------------------------------------------------------------

|NICOLE INDUSTRIES, INC.
Statements of IncomeFor the Years Ended December 31, 2000 and 1999
|------------------------------------------------------------------------------------------

|                                                   | 2000 | 1999         
|-------------------------------------------------- | ---- | -------------
|Sales                                              |      | $ 12,513,010 
|Costs of Goods Sold                                |      | 9,338,147    
|                                                   |      |              
|Gross Profit                                       |      | 3,174,863    
|Selling, general and administrative expenses       |      | 1,439,723    
|                                                   |      |              
|Income from operations                             |      | 1,735,140    
|Non-Operating Income (Expense)                     |     
|Interest income                                    |      | 248,272      
|Interest expense                                   |      | (668,026     
|Realized foreign exchange losses, net              |      | 6,898        
|Unrealized foreign currency translation gains, net |      | (571,258     
|Valuation gain in marketable securities            |      | 44,727       
|Gain/(Loss) on disposal of marketable securities   |      | (669,189     
|Valuation loss in inventories                      |      | (71,961      
|Other income, net                                  |      | 34,759       
|                                                   |      |              
|Total Non-Operating Income (Expense)               |      | (1,645,778   
|Ordinary Income                                    |      | 89,362       
|Extraordinary income (expenses)                    |      |             
|Income before Income Taxes                         |      | 89,362       
|Income taxes (Note 2 and 13)                       |      | 272,479      
|                                                   |      |              
|Income before Minority Interests                   |      | (183,117     
|Minority Income                                    |      | 361,230      
|                                                   |      |              
|Net Income                                         |      | $    (544,347
|                                                   |      |              

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

|NICOLE INDUSTRIES, INC.
Consolidated Statement of Cash Flows December 31, 2000 and 1999
|---------------------------------------------------------------------------------------

|                                                 | 2000 | 1999           
|------------------------------------------------ | ---- | ---------------
|CASH FLOWS FROM OPERATING ACTIVITIES             |      |                
|Net Income/(Loss)                                |      | $        78,574
|Adjustments to reconcile net income to net cash  |     
|cash provided(used) by operations                |     
|Depreciation                                     |      | 662,304        
|(Increase)/Decrease in:                          |     
|Accounts Receivable - Trade                      |      | (5,068,871     
|Accounts Receivable - Other                      |      | (438,422       
|Inventories                                      |      | (2,583,672     
|Prepayments                                      |      | (5,975,648     
|Prepaid expenses and other                       |     
|current assets                                   |      | (364,001       
|Guarantee Deposits                               |      | (147,528       
|Increase/(Decrease) in:                          |     
|Accounts Payable - Trade                         |      | 2,419,809      
|Accounts Payable - Other                         |      | 1,499,249      
|Accrued Liabilities                              |      | 493,297        
|Severance and retirement benefits - net          |      | 414,825        
|Deferred income tax liabilities                  |      | 2,123,559      
|Other Liabilities                                |      | 7,938          
|                                                 |      |                
|Net Cash Provided/(Used) by Operating Activities |      | (6,878,587     
|Cash Flows from Investing Activities             |     
|Investments in Short-term financial instruments  |      | 1,868,657      
|Investments in Marketable Securities             |      | 3,059,605      
|Investements in Short-term Loans                 |      | 166,143        
|Investment in Land                               |      | 1,659,920      
|Investments in Buildings                         |      | 3,651,529      
|Investments in Machinery and Equipment           |      | 10,547,381     
|Investments in Equipment, tools and furniture    |      | 676,189        
|Investment in Construction in progress           |      | 4,315,060      
|Investment in Accum Depreciation                 |      | (7,517,259     
|Investments in Securities                        |      | 5,038,996      
|Investments in Long-term Financial Instruments   |      | 146,200        
|Treasury stock                                   |      | 791            
|Valuation loss                                   |      | 21,671         
|Investments in Intangible Assets - Net           |      | 67,105         
|                                                 |      |                

|The accompanying notes are an
integral part of these financial statements.
F-5
|------------------------------------------------------------------------------

|NICOLE INDUSTRIES, INC.
Consolidated Statement of Cash Flows December 31, 2000 and 1999
|---------------------------------------------------------------------------------------

|                                                 | 2000 | 1999          
|------------------------------------------------ | ---- | --------------
|Net Cash (Provided)/Used by Financing Activites  |      | 23,701,988    
|Cash Flows from Financing Activities             |     
|Short-term borrowings                            |      | 19,133,369    
|New Borrowings - Short term debt                 |      | 971,673       
|New Borrowings - Long term debt                  |      | 947,598       
|Common Stock Issued                              |      | 98,615        
|Accumulated Other Comprehensive Income           |      | (628,024      
|Minority Interest                                |      | 5,221,069     
|Paid in Capital                                  |      | 5,468,241     
|                                                 |      |               
|Net Cash Provided/(Used) by Financing Activities |      | 31,212,541    
|                                                 |      |               
|Net Increase/(Decrease) in Cash                  |      | 631,966       
|Cash, Beginning of Year                          |      | 1,349         
|                                                 |      |               
|Cash, End of Year                                |      | $      633,315
|                                                 |      |               

|The accompanying notes are an
integral part of these financial statements.
F-6
|------------------------------------------------------------------------------

|NICOLE INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS



NOTE 1 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|------------------------------------------------------------------------------------------------------------

| | Nature
of Business
| | ------------------

| | Nicole
Industries, Inc.
| | -----------------------

| | Nicole
Industries, Inc. was organized under the laws of the State of Nevada on January 3, 1996.
The Company was incorporated primarily to engage in any lawful activity.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 11, 2000, Nicole Industries, Inc, entered into an agreement and plan of
reorganization. Under the agreement, it issued 93,000,000 shares of common stock to the
owners of Aluko USA, Inc., a Delaware Corporation, in return for all outstanding shares
of Aluko, USA, Inc. Aluko, USA, Inc. through its wholly owned subsidiary, IAT Korea, Inc.
owns 50.01% of Aluko Co., Ltd. Aluko Co., Ltd.'s primary business is to manufacture
aluminum etching foil. In September 2000, Aluko USA, Inc. was merged with and into Nicole
Industries, Inc. with Nicole Industries, Inc. being the surviving corporation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Subsidiaries
| | ------------

| | I.A.T.,
Co., Ltd.
| | -----------------

| | I.A.T.,
Co., Ltd. was incorporated on July 27, 2000 in accordance with the laws of the Republic
of Korea. I.A.T.'s primary business is to invest in securities. Nicole Industries, Inc.
owns 100% of the outstanding shares of the Company.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Aluko
Co., Ltd.
| | ---------------

| | Aluko
Co., Ltd was originally formed as Aluminum Korea Technique Co., Ltd. ("Aluko Korea") and
was incorporated in 1989 in accordance with the laws of the Republic of Korea. Aluko
Korea's shares are listed on the KOSDAQ market (over-the-counter market). Aluko Korea's
primary business is to manufacture aluminum etching foil.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | I.A.T.,
Co., Ltd owns 50.01% shares of Aluko Korea as of December 31, 2000.
| | ---------------------------------------------------------------------------

## NOTE 2  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting
policies followed by the Company and its subsidiaries in the preparation of
financial statements are summarized below:

| | Principles
of Consolidation
| | ---------------------------

| | The
consolidated financial statements include the accounts of Nicole Industries, Inc and its
controlled subsidiary companies. Investments in business entities in which the Company
holds more than a 20% investment are accounted for by the equity method.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Basis
of Translation Financial Statements
| | -----------------------------------------

| | The
financial data of the Company's Korean subsidiaries are maintained in Korean won, the
currency of Korea, are translated to U.S. dollars at the year-end exchange rate. The
exchange rate at December 31, 2000 was 1259.7 won to U.S. $1.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## Marketable Securities

| | Marketable
securities are stated at cost as determined by the moving average method. If market value
differs from acquisition cost, marketable securities are recorded at market value.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Allowance
for Doubtful Accounts
| | -------------------------------

| | The
Company and its subsidiaries provide an allowance for doubtful accounts to cover
estimated losses that may arise from non-collection of its receivables. The estimate of
losses is based on a review of the aging and current status of the outstanding
receivables.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Inventories
| | -----------

| | Inventories
are stated at the lower of cost or net realizable value; with cost being determined on
the first-in first-out method, except for in-transit items, which are stated at actual
cost and net realizable value being determined based on the estimated selling price, less
estimated completion and selling costs.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Investments
| | -----------

| | Investments
in equity securities are valued at total average cost. If the market value of listed
equity securities differs from book value, the investment is adjusted to market, and the
valuation gains (losses) are credited (charged) to the capital adjustment account within
stockholders' equity. Investments in unlisted companies are carried at cost without
providing for valuation loss reserves even when the Company's share in the underlying net
worth of the investee has declined below the Company's average cost per share, except
that if the decline is significant and is not expected to recover, the investment is
adjusted to net book value and the related loss is charged to current operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Property,
Plant and Equipment
| | -----------------------------

| | Property,
plant and equipment are valued at cost.
| | -------------------------------------------------

|F-7
|---

|
|

| | Improvements
that significantly extend the life of an asset or add to its productive capacity are
capitalized. Expenditures for maintenance and repairs are charged to current operations
as incurred. Depreciation is computed on the straight-line method over the estimated
useful lives of the related depreciable assets.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Intangible
Assets
| | -----------------

| | Research
and development expenditures and organization costs are deferred and are amortized over
five years.
| | ------------------------------------------------------------------------------------------------------------

| | Accrued
Severance Liability
| | ---------------------------

| | All
employees of the Company's Korean subsidiaries with one or more years of service are
entitled to lump sum severance payments upon termination, based on the Company and its
Subsidiaries' policies. The accrual for severance indemnities approximates the amount
required if all employees were to terminate at the balance sheet date.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Aluko
Korea has transferred a portion of its accrued severance indemnities in cash to the
national pension fund in accordance with the previous National Pension Law of Korea and
the national pension is recorded as deduction from accrued severance indemnities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income
Taxes
| | ------------

| | Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for
deductible temporary differences and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred assets and
liabilities are adjusted for the effects changes in tax laws are rates on the date of
enactment.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Restricted
Deposits
| | -------------------

| | Aluko
Korea has placed restricted deposits as of December 31, 2000.
| | -------------------------------------------------------------------

|NOTE 2 
MARKETABLE SECURITIES


Marketable securities were
recorded at a market value of $3,059,605 and the cost was $3,996,190.
F-8
|-------------------------------------------------------------------------------------------------------------------------------------

|NOTE 3 
INVENTORIES


Inventories at December 31,
2000 consisted of the following:
|-----------------------------------------------------------------------------------

|                     | 
|-------------------- | 
|Finished goods       | 
|Work in-process      | 
|Raw materials        | 
|Inventory in-transit | 
|                     | 
|                     | 
|                     | 

|NOTE 4 
INVESTMENTS


At December 31, 2000, investments
consisted of the following
|-----------------------------------------------------------------------------------

|                                
|--------------------------------
|
|                                
|Hankang Restructuring Fund      
|Korea Technology Investment Corp
|Onse Telecom Corp               
|Hangaram consulting             
|Korpa Co., Ltd.                 
|IAT USA                         
|Convertible bonds               
|                                
|Subtotal                        
|                                

|The market value of the
Hankang Restructuring Fund differed from book value and the investment was
adjusted to market, and the valuation losses of $115,232 were charged to the
capital adjustment account within the stockholders equity.



NOTE 5 
CONVERTIBLE BOND


On July 9, 1999, Aluko
Korea issued the 7th series convertible bonds to the Hankang
Restructuring Fund as follows
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                           | 
|------------------------------------------ | 
|Original amount issued                     | 
|Effective interest if not converted        | 
|Period of conversion                       | 
|Maturity date                              | 
|Conversion price per share of common stock | 

|The above convertible bonds
were included in the current portion of long-term debt account at December 31,
2000.
F-9
|--------------------------------------------------------------------------------------------------------------------

|NOTE 6 
LONG TERM DEBT


At December 31, 2000, Aluko
Koreas long-term debt consists of the following:
|-------------------------------------------------------------------------------------------------------

|                       | U.S dollars(Note1) | Annual Interestrates (%)
|---------------------- | ------------------ | ------------------------
|Foreign currency debt: |                    |                         
|Korean banks           |                    | $    617,577            
|Local currency debt:   |                   
|Korean banks           |                    | 938,483                 
|Aluko USA              |                    | 5,468,241               
|                       |                    |                         
|                       |                    | 5,789,147               
|Less current portion   |                    | (616,692                
|                       |                    | $ 6,405,839             
|                       |                    |                         

|The repayments of
short-term borrowings and long-term debt as of December 31, 2000, were
guaranteed in the amounts of $4,346,273 thousand and $354,000 by Korea Exchange
Bank and two other local banks. As security for the long-term debt and
short-term borrowings, Aluko Korea mortgaged/pledged the following assets as of
December 31, 2000:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       | 
|---------------------- | 
|Account                | 
|Short-term instruments | 
|Marketable securities  | 
|Land                   | 
|Building               | 
|Machinery              | 
|                       | 
|                       | 
|                       | 

|NOTE 7 
CONTINGENCIES


At December 31, 2000, Aluko
Korea provided 3 blank checks and 6 promissory notes as additional security for
its indebtedness.



NOTE 8 
INCOME TAXES


Aluko Korea and I.A.T., Inc. are
subject to corporate income tax, including resident surtax, at the aggregate rates of
17.6% on taxable income up to $79,383 and 30.8% on taxable income over $79,383.


Net deferred income taxes of Aluko
Korea and I.A.T., Inc. as of December 31, 2000 is zero because those are estimated to be
unrealized.


A reconciliation between
income before income taxes for financial reporting purposes and taxable income
for tax reporting purposes of the Subsidiaries for the six-month ended December
31, 2000, is summarized as follows:



F-10
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|                                          | 
|----------------------------------------- | 
|Income before income taxes for financial  | 
|reporting purposes of Subsidiary          | 
|Permanent differences:                    | 
|Deemed interest on investments            | 
|Entertainment expenses                    | 
|Unrealized loss on investments            | 
|Others                                    | 
|Temporary differences:                    | 
|Accrued income receivable                 | 
|Severance and retirement benefits         | 
|Unrealized loss on investments            | 
|Reserve for small and medium sized        | 
|business investment                       | 
|Valuation loss on inventory               | 
|Unrealized gain on marketable securities  | 
|                                          | 
|Taxable income for tax reporting purposes | 
|                                          | 

Income tax expense and the
effective tax rate for the six-month ended December 31, 2000 are as follows:

|                                         | 
|---------------------------------------- | 
|Income taxes for tax reporting purposes  | 
|Increase in deferred tax liabilities     | 
|                                         | 
|Income tax expense for the six-month     | 
|Ended December 31, 2000                  | 
|                                         | 
|Income before income taxes for financial | 
|reporting purposes of Subsidiary         | 
|                                         | 

|F-11
|----

|NOTE 9 
LOSSES PER SHARE


The Companys losses
per share for the six-month ended December 31, 2000 were computed as follows:
|------------------------------------------------------------------------------------------------------------------------------

|                                       | 
|-------------------------------------- | 
|Net loss                               | 
|Average number of shares of common     | 
|stock outstanding during the six-month | 
|Losses per share                       | 

|NOTE 10 -- ACQUISITION
OF COMMON STOCK OF DAEWOO ELECTRONIC COMPONENT CO., LTD.


On November 1, 2000, Aluko
Korea entered into the agreement for the acquisition of 2,265,882 shares
(ownership: 90%, acquisition cost : $12,217,195) of outstanding common stock of
Daewoo Electronic Component Co., Ltd, a corporation organized under the laws of
the Republic of Korea, associating with Korea Technology Investment (ownership :
10%). 40% of aggregate payments were paid during the period and future payments
payable under the agreement are W 9,234 million at December 31, 2000. The
assets, liabilities and revenues of Daewoo Electronic Component Co., Ltd. are
not included in these financial statements as Aluko Korea had not acquired a
stock interest in Daewoo Electronic on or before December 31, 2000.



NOTE 11 
CONSOLIDATED STATEMENT OF CASH FLOWS


The significant items of non-cash
transaction are as follows;
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | 
|--------------------------------------------- | 
|Valuation loss of investment securities       | 
|(Capital adjustment accounts)                 | 
|Reclassify long-term debts to current portion | 

|NOTE 12 -- THE METHOD
APPLIED IN ELIMINATING A CONTROLLING COMPANY'S INVESTMENT AGAINST A SUBSIDIARY COMPANY'S
STOCKHOLDERS' EQUITY


The Company eliminated
investment against stockholders equity of the Subsidiary at the date of
consolidation, July 1, 2000, which was regarded as the acquisition date of the
capital stock. And there were no difference between investments and
corresponding stockholders equity.
F-12
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|As described Note 2, the
Subsidiary recorded the effect of deferred income tax credits in the financial
statements. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax reporting purposes.
Significant changes in cumulative temporary differences for the six-month ended
31, 2000 are as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                   | Korean won In thousands |            
|---------------------------------- | ----------------------- | -----------
|
|                                  
|Accrued income receivable          |                         | $  (104,278
|Severance and retirement benefits  |                         | 312,339    
|Investments in securities          |                         | 43,333     
|Valuation loss on marketable       |                        
|securities                         |                         | 260,389    
|Deferred unrealized foreign        |                        
|currency                           |                        
|Translation losses                 |                         | (13,084    
|Reserve for small and medium sized |                        
|business investment                |                         | (1,190,760 
|Gain on valuation of treasury      |                        
|stock                              |                         | (5,870,912 
|Valuation loss on inventory        |                         | 24,613     
|Reserve for overseas market        |                        
|development                        |                         | (47,630    
|                                   |                        
|                                   |                         | (6,653,936 
|Tax rate                           |                         | 30.8       
|                                   |                        
|Deferred income tax liabilities    |                         | $ 2,049,412
|                                   |                        

|F-13
|----