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, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to ________________
Commission file no. 33-41809-D
Jewelnique Designs, Inc.
--------------------------------------------
(Name of small business issuer in its charter)
Colorado 84-1385900
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2449 Lyric Avenue
Los Angeles, California 90027
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (213) 660-8665
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange on
Title of each class which registered
None
- ----------------------------- -------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-----------------------------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $-0-
Of the 408,000 shares of voting stock of the registrant issued and
outstanding as of March 19, 1998, 144,000 shares are held by non-affiliates.
Because of the absence of an established trading market for the voting stock,
the registrant is unable to calculate the aggregate market value of the voting
stock held by non-affiliates as of a specified date within the past 60 days.
2
<PAGE>
PART I
Item 1. Description of Business.
(a) Business Development.
Jewelnique Designs, Inc., formerly Blue Mountain Capital, Inc. (hereinafter
referred to as the "Company" or "JDI"), was organized under the laws of the
State of Colorado on March 6, 1997. The name of the Company was changed to
"Jewelnique Designs, Inc.," on June 20, 1997. The Company's executive offices
are presently located at 2449 Lyric Avenue, Los Angeles, California 90027, and
its telephone number is (213) 660-8665.
The Company has generally been inactive, having conducted no business
operations except organizational and fund raising activities since its
inception. JDI received gross proceeds in the amount of $20,000 from the sale of
a total of 80,000 shares of common stock, $.001 par value per share (the "Common
Stock"), in an offering conducted pursuant to Section 3(b) of the Securities Act
of 1933, as amended, and Rule 504 of Regulation D promulgated thereunder.
See (b) "Business of Issuer" immediately below for a description of the
Company's proposed business of designing, manufacturing, marketing and
distributing a specialized line of jewelry products through, primarily,
boutiques, hair salons, beauty supply stores, department stores and children's
stores. As of the date hereof, the Company has no jewelry products available for
distribution.
(b) Business of Issuer.
General
Since its inception, the Company has conducted no business operations
except for organizational activities and an offering of Common Stock pursuant to
which it has received gross offering proceeds in the amount of $20,000. Further,
the Company has had no employees since its organization. It is anticipated that
the Company's executive officers and directors who, except for one lump-sum
consulting fee received by two such persons, have served in those positions
without compensation through the date hereof, will receive reasonable salaries
for services as executive officers at such time as the Company commences
business operations. (See Part I, Item 6., "Executive Compensation - Executive
Compensation.") The Company's executive officers and/or directors will devote
such time and effort as may be necessary to participate in the day-to-day
management of the Company. (See Part I, Item 5. "Directors, Executive Officers,
Promoters and Control Persons - Executive Officers and Directors.") The Company
has no plans to employ any individuals except its three executive officers on a
part-time basis for the foreseeable future. The Company proposes to engage in
business as a designer, manufacturer and distributor of a specialized line of
jewelry products which, except for the design of the "Face Jewel," JDI's initial
proposed product, which has not yet been developed and which is intended to be
marketed, primarily, through boutiques, hair salons, beauty supply stores,
department stores and children's stores to a target market comprised of young
adults and children, especially, whose tastes in jewelry are expected to be
characterized by a desire for unique, different or unusual designs and products
at moderate prices. As of the date hereof, JDI has no jewelry products available
for distribution, although the Face Jewel is in the design stage.
The following discussion of the jewelry business, as it relates to the
Company's business objectives, is of course pertinent only if the Company is
successful in obtaining sufficient debt and/or equity financing to commence
operations in the jewelry business and, in addition thereto, is able to generate
significant profits from operations (which are not expected in the foreseeable
3
<PAGE>
future) and/or additional financing to continue in business and/or fund the
anticipated growth, assuming JDI's proposed product line is successful. There
can be no assurance such financing can be obtained or that the Company's
proposed product line will be successful. While each of Messrs. Roland W. Fink
and Kendall L. Dorsett, executive officers, directors and owners together of
approximately 62.7% of the outstanding common stock of JDI, has over twenty
years of business experience, having co-founded, managed, been employed by and
retained as consultants to a variety of companies, neither individual has any
specific experience or expertise in the jewelry business. (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Risk Factors.")
Mr. Kendall L. Dorsett, JDI's Secretary/Treasurer, and Ms. Suzanne
Sorensen, Executive Vice President of the Company, have been personal friends
for the past approximately seven years. Messrs. Fink and Dorsett decided to
pursue the jewelry business via the Company because of the belief that their
collective prior business experience and expertise, when combined with Ms.
Sorensen's creativity, design capabilities and expertise, experience and
contacts in the jewelry business, will enable them to develop a successful
jewelry company which will have the advantages of, among other things, greater
availability of capital and potential for growth through the vehicle of a public
company as compared to a privately-held company. The time required to be devoted
by each executive officer, including Messrs. Fink and Dorsett and Ms. Suzanne
Sorensen, to manage the day-to-day affairs of the Company is presently estimated
to be approximate five to ten hours per week. This time commitment on the part
of the Company's executive officers is expected to increase at such time, if
ever, as JDI obtains sufficient funding with which to commence jewelry
production and employ additional personnel in the areas of jewelry design,
product development and/or marketing and customer support.
The Company will be dependent upon its Executive Vice President, Ms.
Suzanne Sorensen, to develop the jewelry designs and products which will be
featured in JDI's proposed, specialized jewelry line. Ms. Sorensen has
approximately twenty-three years of experience in the jewelry business and has
managed Suzanne Designs, a family-owned jewelry business, since approximately
1976. The principal product of Suzanne Designs in recent years, the "Hair
Jewel," a unique, elegant, easy-to-use hair accessory made from fine Austrian
crystals, fourteen carat gold spirals and other fine materials, has been sold in
Nordstrom, Macy's, Dillard's, Bullock's, Accessory Place, Etcetera, Judy's and
Casual Corner; in most of the fifty states of the United States and in Japan,
Panama, Canada and Mexico; and continues to be re-ordered by customers after
nine years since its first availability. Ms. Sorensen's jewelry, clothing and
other product designs have been featured in advertisements in major U.S.
magazines, newspapers and other publications such as Women's Wear Daily; on
television productions, including the Donnie and Marie Show and CBS' The Young
and the Restless; and in several Hollywood feature films, including Steve
Martin's L.A. Stories and The Addams Family (Part II). The Company intends to
use to its advantage Ms. Sorensen's reputation in the jewelry business as a
creator of jewelry and other product designs so unique, different and unusual as
to readily attract media, even Hollywood's, attention and her creative talents
which have, in the past, resulted in continuous developments of new jewelry
designs and products available to consumers at moderate prices in an industry
dominated by mass merchandisers of inexpensive, unimaginative jewelry products
and fine jewelers whose high-end products are so costly as to be unavailable to
consumers of moderate means. Nevertheless, while Ms. Sorensen's jewelry designs
have been successful in the past, their can be no assurance that her designs for
JDI's proposed product line, including the Face Jewel, will be successful since
the popularity of any design is largely a measure of subjective public reaction.
Further, the Company has very limited financial, personnel and other resources
and lacks a customer base and market recognition. (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Risk Factors.")
Ms. Sorensen may be subject to direct conflicts of interest, because of her
position as an executive officer of JDI and her management position with Suzanne
Designs, with regard to opportunities in the jewelry and accessories businesses
which come to her attention and concerning any possible business dealings
between JDI and Suzanne Designs. In any instance where such a conflict may
4
<PAGE>
arise, the Company intends to employ certain safeguards, such as ensuring that
any agreement between the Company and Suzanne Designs conforms with standard
industry practice, if any, in the western United States and is fair and
reasonable to the Company. For example, if JDI produced a jewelry product using
designs developed by Suzanne Designs and the Company entered into an agreement
with Suzanne Designs providing for Suzanne Designs to receive a royalty on each
such product manufactured and sold by the Company, the Board of Directors of the
Company would take action to ensure that any royalty paid to Suzanne Designs
would not exceed the royalty, if any, customarily paid to product designers in
the western United States. Further, Ms. Sorensen has agreed, should she be
elected to the Board of Directors of JDI at any time in the future, that she
will abstain from voting as a member of the Board of Directors on any such
agreement in which Suzanne Designs is a party or has an interest or with regard
to any business opportunity which may be attractive to both companies. The
Company's Amended Articles of Incorporation provide that any such related party
contract or transaction must be authorized, approved or ratified at a meeting of
the Board of Directors by sufficient vote thereon by directors not interested
therein or the contract or transaction must be fair and reasonable to the
Company. Accordingly, it is possible for the Company's Board of Directors, by
vote of a sufficient number of disinterested members thereof, to authorize,
approve or ratify a related party contract or transaction or business
opportunity involving Suzanne Designs which is unfair and/or unreasonable to the
Company, even though Ms. Sorensen abstains from voting thereon. (See Part I,
Item 1. "Description of Business," (b) "Business of Issuer - Risk Factors" - 10.
"Conflicts of Interest.")
Business Strategy
The Company's business strategy, which is dependent upon its obtaining
sufficient financing with which to implement its business plan, is to provide a
specialized line of jewelry products and other fashion accessories to retailers
who target consumers, especially young adults and children, seeking unique,
different or unusual jewelry at moderate prices, as opposed to fine jewelry, and
who are willing to purchase jewelry and accessories at frequent intervals as
fashions and styles change. Management has made a conscious decision at this
time not to develop a line of traditional jewelry products which would force JDI
into direct competition, immediately, with the numerous large and small
manufacturers already established in the industry, many of which have
substantial resources and numerous other significant competitive advantages as
compared to the Company. However, depending upon the commercial success, no
assurance of which can be made, of the "Face Jewel," JDI's initial proposed
product, and specialized designs for other items of jewelry proposed to complete
a line of similar such unique, different or unusual products, the Company may in
the future develop a line of traditional jewelry if business conditions appear
to provide a niche or other opportunity in the traditional jewelry market which
management believes JDI could successfully exploit.
To accomplish this strategy and to stay abreast of changing styles and
tastes, design and marketing personnel anticipated to be employed by the
Company, assuming that sufficient operating capital becomes available, are
expected to work closely with suppliers, distributors and customers and
continually participate in jewelry fairs, trade shows and other industry forums.
JDI expects to introduce numerous designs and variations of those designs in
order to extend the length of time each design is marketable. In addition, the
Company plans to develop a sophisticated computerized system to track, and to
continuously engage in market research in order to monitor, new market trends,
seasonality factors and other critical information deemed relevant to JDI's
business.
Management hopes, in the event that JDI achieves commercial success
initially, to increase the Company's domestic market penetration and product
lines through selected acquisitions. Such acquisitions could include both
jewelry and non-jewelry businesses which could complement and be integrated into
the Company's product lines and/or operations. Management believes that, in the
5
<PAGE>
current international trade environment, expansion into markets such as the
Canadian, Latin American and Asian markets, could be especially attractive.
However, foreign markets present certain unique challenges and risks, and there
could be no assurance that JDI, even if it were to be successful in establishing
foreign markets, could be expected to be successful in profitably penetrating
these potential markets.
Proposed Product Line
Ms. Suzanne Sorensen, the Executive Vice President of the Company, has
managed Suzanne Designs, a family jewelry business, since 1976. In recent years,
the principal product of Suzanne Designs has been the "Hair Jewel," a unique,
elegant, easy-to-use hair accessory that works equally well in long, short,
normal or very fine hair. The Hair Jewel is suitable for evening wear, and can
be used to hold the hair up; hold the hair back; decorate braids or sweeps; or
help spike the hair for the "punkier" look. The Hair Jewel is made from the
finest Austrian Crystals, fourteen carat gold spirals and other fine materials.
The product has sold in Nordstrom, Macy's Dillard's, Bullock's, Asccessory
Place, Etcetera, Judy's and Casual Corner, and continues to be re-ordered by
customers since it first became available approximately nine years ago. The
product has been sold in most of the fifty states of the United States and in
Japan, Panama, Canada and Mexico. Ms. Sorensen has designed elegant, black
tassel, Austrian Crystal earrings featured in Women's Wear Daily and the
eagle-feather jackets and long-feather earrings worn on the Donnie and Marie
Show. Her designs have also been featured on CBS' The Young and the Restless and
in several Hollywood feature films, including Steve Martin's L.A. Stories and
the Addams Family (Part II).
JDI intends to develop a line of specialized jewelry products and other
accessories similar, from the standpoint of novelty, moderate price and appeal
to youthful consumers, to that marketed and distributed by Suzanne Designs.
Along these lines, Ms. Sorensen has developed a design for the "Face Jewel," a
novel, elegantly sculpted earring that extends daringly out onto the face,
accentuating the graceful line of a woman's cheek. Management anticipates that
the Company's first product will be the Face Jewel currently under development,
while its ultimate product line, proposed to be developed from this initial
product, would include earrings, necklaces, bracelets, rings, pendants, pins,
brooches, ankle jewelry and decorations for other areas of the body or for
clothing, each of a unique or unusual design, hoped to be attractive to
consumers, particularly young adults and children, seeking to adorn themselves
other than with traditional jewelry. JDI's proposed products, including the Face
Jewel, are expected to be sold, primarily, through boutiques, hair salons,
beauty supply stores, department stores and children's stores.
Management is unable at this time to forecast with any degree of certainty
the average price or wholesale or retail price range of the Company's products;
however, JDI intends to design its products so that the retail prices will be
considered "moderate" by the Company's target markets.
Marketing and Distribution
The Company presently anticipates that the Face Jewel, together with the
other proposed products in its product line presently under development, will be
sold through the same distribution channels that Suzanne Designs' "Hair Jewel"
is currently being distributed, including, principally, boutiques, hair salons,
beauty supply stores, department stores and children's stores. Company
management hopes, but cannot assure, that JDI's proposed products will
eventually attract the attention of retail jewelry stores, mass merchandisers,
catalog showrooms, high-volume retailers, major discounters and specialty
marketers such as home shopping networks, direct marketers and mail order
companies as well. The Company intends to compete, assuming that it is
successful in obtaining sufficient financing with which to commence jewelry
production, primarily on the basis of its unique designs and by offering quality
products at modest prices in combination with marketing and customer support
services, and not solely on the basis of price.
6
<PAGE>
Management anticipates that its primary marketing efforts will be in the
areas of product design and customer support services, calculated to assure
JDI's timely response to fashion trends, quality products, favorable pricing and
accurate inventory control for the Company's customers. The Company's proposed
products are intended to be marketed, for the most part, through independent
third party sales representatives. However, the Company expects that it will
maintain a small sales force as well, which would be expected to work closely
with third party representatives and customers, as well as JDI's design, product
development and marketing support personnel proposed to be employed if adequate
financing becomes available. The Company believes that by utilizing independent
third party representatives, primarily, it will be able to penetrate additional
markets at a minimal cost and without the overhead associated with a large sales
force.
The Company's ability to develop and market its Executive Vice President's
designs is, of course, dependent upon management's ability to obtain the
necessary financing, of which there can be no assurance. Assuming the
availability of adequate funding, JDI intends to stay abreast of changing styles
and market tastes by ensuring that its design and product development personnel
work closely with suppliers, independent sales representatives and customers;
participating in jewelry fairs, trade shows and other industry forums; and
generating new designs and variations on earlier designs to remain competitive.
JDI does not anticipate obtaining long-term contracts with any distributors or
customers, but management believes that the loyalty of its distributors and
customers, if once obtained, could be maintained through product designs and
development which timely reflect fashion trends and changes and providing them
with proper marketing and customer support.
Competition
The jewelry industry in the United States is highly fragmented, with little
significant brand name recognition or customer loyalty. Selection is generally a
function of design appeal, preceived high value and quality in relation to
price. Jewelry stores alone account for an estimated $15 billion in annual sales
in the United States. Retail jewelry sales have historically increased at a rate
surpassing the inflation rate. This increase is primarily attributable to the
increasing disposable income of women in the United States as more and more
women, the largest group of jewelry purchasers, enter the workforce and achieve
higher salaries and more responsible positions. Working women are often
responsible for the purchase of jewelry by teenagers and children as well. The
rise in the number of women in the workforce has also increased the overall
demand for women's clothing and accessories of all types, including jewelry.
While JDI expects to compete on the basis of the uniqueness of its designs,
its reputation among customers as a quality provider of products in tandem with
marketing and customer support services, and, to a lesser extent, on the basis
of price, its opportunity to obtain customers may be limited by its financial
and other resources. In this regard, many of the companies and other
organizations with which the Company will be in competition are established and
have far greater resources, substantially greater experience and larger staffs
than the Company expects to have for the foreseeable future. Additionally, many
of these companies and organizations have proven operating histories, which the
Company lacks.
While the competition may, among other things, "knock off" the Company's
designs, offer a wider selection of products, undercut JDI's prices and employ
any number of other strategies and tactics against the Company, management hopes
that the Company's unique designs, which are expected in many cases to be
proprietary and/or copyrighted, together with its anticipated close relationship
with its customers, vendors and distributors, will enable it to maintain a
competitive position in the specialized jewelry and accessory market segment.
The Company further believes, but cannot assure, that its net profit margins
will be equal to, or in excess of, many of its competitors and that its capital
costs will be lower. Therefore, although competition is expected to be intense,
management hopes to position the Company strategically in the jewelry industry.
7
<PAGE>
Seasonality
The jewelry business is highly seasonal in general, with the fourth
calendar quarter (which includes the Christmas shopping season) historically
contributing the highest sales of any quarter during the year. Nevertheless,
seasonality cannot be predicted because of customer promotions and special
events which may occur throughout the year. Management intends that the Company
participate in promotions and other events conducted by retailers at times of
the year other than Christmas, and conduct similar such special events and
promotions and take other measures to minimize the impact of seasonality on its
business to the extent possible.
Purchasing, Manufacturing and Assembly
At least initially, the Company intends to purchase most of its jewelry and
accessories in an assembled state from suppliers located inside the United
States. At most, management expects that the Company will be required to perform
a minimal amount of light assembly of the items received into jewelry and
accessory products. Management expects to purchase jewelry from a number of
suppliers based on quality, pricing and available quantities. While purchases of
materials are expected to be made from a relatively small number of suppliers,
the Company believes, but cannot assure, that there will be numerous alternative
sources for all materials, and that the failure of any principal supplier(s)
would not have a material adverse effect on operations or JDI's financial
condition. The Company does not expect to experience any difficulty in securing
product.
Management expects manufacturing and assembly operations conducted by the
Company to be limited primarily to designing jewelry and other accessories, and
some light assembly of products. Upon completing a design, depending upon the
nature of the product, the Company will either purchase the materials and
subcontract the manufacture or assembly of the product, or provide such design
to its suppliers which will purchase the raw materials and manufacture the
product or subcontract for its manufacture. Management believes that the use of
third party manufacturers will enable the Company to substantially shift the
risk and capital cost of manufacturing to the third party. Depending upon the
availability of funding, the Company has preliminary plans to maintain a light
manufacturing and assembly operation in the United States for the purpose of
producing prototype designs and to fulfill custom orders for specialized
products and short-run orders required to be shipped within several days of the
order date. While JDI may in the future establish its own manufacturing
operations and facilities if substantial savings in the cost of inventory
appears likely and the necessary capital becomes available, the Company's
financial position does not permit management to consider such a course of
action at this time.
Employees and Consultants
The Company has had no employees since its organization. Except for a lump
sum consulting fee received by each of Messrs. Roland W. Fink and Kendall L.
Dorsett, JDI's executive officers and directors, including Messrs. Fink and
Dorsett and Ms. Suzanne Sorensen, have served in those positions without
compensation through the date hereof. Messrs. Fink and Dorsett were compensated
for certain specialized services, including the preparation of a business plan
and the performance of certain financial consulting services, commonly performed
by outside consultants, despite their positions as executive officers and
directors of JDI, because the Company does not presently have the financial
capability to pay management salaries or retain outside consultants on an
ongoing basis. It is anticipated that at such time, if ever, as the Company's
financial position permits, assuming that JDI is successful in raising adequate
8
<PAGE>
funding through equity and/or debt financing and/or generating a sufficient
level of revenue from operations, Messrs. Fink and Dorsett and Ms. Sorensen and
any other executive officers the Company may employ, will receive appropriate
compensation, in addition to salaries, which may include bonuses, coverage under
medical and/or life insurance benefits plans and participation in stock option
and/or other profit sharing or pension plans, for services as executive officers
of the Company. Additionally, directors may receive fees for their attendance at
meetings of the Board of Directors of the Company. While JDI may retain
consultants to perform services for the Company in the future, it does not
intend to retain members of management or other affiliated person(s) in this
capacity or pay consulting fees to any such person(s).
Facilities
The Company maintains its offices rent free at the home of its Executive
Vice President located at 2449 Lyric Avenue, Los Angeles, California 90027. Its
telephone number is (213) 660-8665. The Company anticipates that it will have
continued use of the Executive Vice President's home on a rent-free basis for
the foreseeable future and that this arrangement will be adequate for the
Company's needs while it is in the development stage. Assuming that JDI obtains
the necessary additional financing and is successful in implementing its
business plan, no assurance of which can be made, the Company will require its
own commercial facilities, including sufficient space to establish the intended
light assembly operation. In such event, management believes that JDI would be
able to locate adequate facilities at reasonable rental rates in the Los Angeles
area suitable for its future needs.
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
Risk Factors
1. Development Stage Company. JDI was only very recently organized on March
6, 1997, and, accordingly, is in the early form of development stage and must be
considered promotional. Management's efforts, since inception, have been
allocated primarily to organizational and fund raising activities and the
ability of the Company to establish itself as a going concern is dependent upon
the receipt of additional funds from operations or other sources to continue
those activities. Potential investors should be aware of the difficulties
normally encountered by a new enterprise in its development stage, including
undercapitalization, cash shortages, limitations with respect to personnel,
technological, financial and other resources and lack of a customer base and
market recognition, most of which are beyond the Company's control. The
likelihood that the Company will succeed must be considered in light of the
problems, expenses and delays frequently encountered in connection with the
competitive environment in which the Company will operate. The Company's success
depends to a large extent on gauging public tastes in jewelry and accessories
and its ability to design products which will capture the public eye and hold
the public's attention. There is no guarantee that the Company's proposed
products, initially the Face Jewel, will attain the level of popularity
necessary for the Company to find a niche in the jewelry industry or achieve
profitable operations. There are numerous manufacturers of jewelry and
accessories already positioned in the business which are better financed than
the Company. There can be no assurance that the Company, with its very limited
capitalization, will be able to compete with these companies and achieve
profitability. (See Part I, Item 1. "Description of Business.")
2. No Operating History, Revenues or Earnings. As of the date hereof, the
Company has not yet commenced operations and, accordingly, has received no
operating revenues or earnings. Since inception, most of the time and resources
of JDI's management have been spent in organizing the Company, obtaining interim
financing and developing a business plan. The Company's success is dependent
upon its obtaining additional financing from intended operations or otherwise.
9
<PAGE>
The Company's success in the business of designing, manufacturing, merchandising
and distributing unique jewelry and accessory products on a wholesale basis is
dependent upon the receipt of profits from operations, which are not expected
for the foreseeable future, and/or additional financing to enable the Company to
continue in operation. There is no assurance that JDI will be able to obtain
additional debt or equity financing from any source. The Company, during the
development stage of its operations, can be expected to sustain substantial
operating expenses without generating any operating revenues or the operating
revenues generated can be expected to be insufficient to cover expenses. Thus,
for the foreseeable future, unless the Company attains profitable operations,
which is not anticipated, the Company's financial statements will show an
increasing net operating loss. (See Part I, Item 1. "Description of Business.")
3. Minimal Assets, Working Capital and Net Worth. As of December 31, 1997,
the Company's total assets in the amount of $499 consisted of the sum of $80 in
cash and $419 in organization costs. As a result of its having minimal assets
and a net loss from operations in the amount of $17,796 as of December 31, 1997,
the Company has very minimal net worth presently. Further, JDI's working capital
is presently minimal and there can be no assurance that the Company's financial
condition will improve. The Company is expected to continue to have minimal
working capital or a working capital deficit as a result of current liabilities.
Messrs. Roland W. Fink and Kendall L. Dorsett, executive officers and/or
directors of JDI, each contributed services valued by them at $128 (a total of
$256) in consideration for 128,000 shares of the Company's Common Stock received
by each. Additionally, Patricia Cudd, Esq., received an aggregate of 64,000
shares of Common Stock in consideration for her performance of legal services
for JDI valued at $64. Even though management believes, without assurance, that
it will obtain sufficient capital with which to implement its business plan on a
limited scale, the Company is not expected to continue in operation, without an
infusion of capital, after the expiration of a period of six months to one year
from the date hereof. In order to obtain additional equity financing, management
may be required to dilute the interest of existing shareholders or forego a
substantial interest in its revenues, if any. (See Part I, Item 1. "Description
of Business.")
4. Need for Additional Capital; Going Concern Qualification Expressed by
Auditor. Without an infusion of capital or profits from operations, the Company
is not expected to continue in operation after the expiration of the period of
six months to one year from the date hereof. Accordingly, the Company is not
expected to become a viable business entity unless additional equity and/or debt
financing is obtained. JDI's independent certified public accountant has
expressed this as a "going concern" qualification to the opinion of Janet Loss,
C.P.A., P.C., on the Company's financial statements. The Company does not
anticipate the receipt of operating revenues until management successfully
implements its business plan, which is not assured. Further, JDI may incur
significant unanticipated expenditures which deplete its capital at a more rapid
rate because of, among other things, the development stage of its business, its
limited personnel and other resources and its lack of a customer base and market
recognition. Because of these and other factors, management is presently unable
to predict what additional costs might be incurred by the Company beyond those
currently contemplated to obtain additional financing and achieve market
penetration on a commercial scale in its proposed line of business, i.e., the
design, manufacturing, merchandising and wholesale distribution of specialized
jewelry and accessory products. JDI has no identified sources for funds, and
there can be no assurance that resources will be available to the Company when
needed. (See Part I, Item 1. "Description of Business," - (b) "Business of
Issuer - Risk Factors" - 10. "Conflicts of Interest.")
5. Dependence on Management; Directors' Lack of Experience in Jewelry
Business. The possible success of the Company is expected to be largely
dependent on the continued service of its Executive Vice President, Ms. Suzanne
Sorensen, because Messrs. Roland W. Fink and Kendall L. Dorsett, the directors
and the other executive officers of JDI, have no experience or expertise in the
jewelry business. Virtually all decisions concerning the design and proposed
manufacture, marketing and distribution of jewelry and accessories by the
10
<PAGE>
Company will be made or significantly influenced by Ms. Sorensen. She is
presently serving as the manager of Suzanne Designs, a closely-held jewelry
business owned by her family since 1976, and is required to devote a significant
amount of her time to the conduct of that company's business. Ms. Sorensen, Mr.
Fink and Mr. Dorsett are expected to devote only such time and effort to the
business and affairs of the Company as may be necessary to perform their
responsibilities as executive officers and/or directors of JDI. The loss of the
services of Ms. Sorensen would adversely affect the conduct of the Company's
business and its prospects for the future. The Company presently holds no
key-man life insurance on the lives of, and has no employment contract or other
agreement with, Ms. Sorensen or Messrs. Fink or Dorsett. (See Part I, Item 1.
"Description of Business," - (b) "Business of Issuer - Risk Factors" - 10.
"Conflicts of Interest.")
6. No Jewelry or Accessory Products or Customer Base. The Company was only
very recently organized. While JDI intends to engage in the design, manufacture,
merchandising and wholesale distribution of a specialized line of jewelry and
accessory products, the Company's initial proposed product, the "Face Jewel" is
only in the design stage and no other jewelry or accessory products are
presently being designed or manufactured. Further, the very limited funding
currently available to the Company will not permit it to commence business
operations in the jewelry industry except on a very limited scale. There can be
no assurance that the debt and/or equity financing, which is expected to be
required by the Company in order for JDI to continue in business after the
expiration of the next six months to one year, will be available. The Company
has no customers presently and there can be no assurance that it will be
successful in obtaining any customers in the major prospective market segments,
including boutiques, hair salons, beauty supply stores, department stores and
children's stores, which JDI intends to target for wholesale distribution of its
proposed products. JDI does not expect to have long-term contracts with any
customers; thus, management believes that the Company must, in order to survive,
ultimately obtain the loyalty of large volume purchasers through design and
product development which timely reflects fashion trends and changes and proper
customer and marketing support. The Company expects to be limited in the number
of designers and customer and marketing support personnel it is capable of
employing as a result of its limited operating capital. Thus, the Company could
be expected to experience substantial difficulty in attracting the high volume
customers in the prospective target markets which would enable JDI to achieve
commercial viability. The Company will be dependent upon its Executive Vice
President, Ms. Suzanne Sorensen, who has approximately twenty-one years of
experience in managing her family's jewelry business, to design the Company's
proposed jewelry and accessory products; nevertheless, there can be no assurance
that designs for such products, including the Face Jewel, will have a chance of
achieving popular and commercial success. (See Part I, Item 1. "Description of
Business," (b) "Business of Issuer - Business Strategy; - Proposed Product Line;
- - Marketing and Distribution; and - Purchasing, Manufacturing and Assembly.")
7. No Marketing Organization; Limited Marketing Capability. The Company's
success depends in large part upon its ability to identify and adequately
penetrate the markets for its potential jewelry and accessory products. As
compared to JDI, which lacks the financial, personnel and other resources
required to compete with its larger, better-financed competitors, virtually all
of the Company's competitors have much larger budgets for marketing, advertising
and promotion. Except for its Executive Vice President, JDI presently has no
design, product development, marketing or customer support personnel whatsoever
and, accordingly, management expects that the Company's products will be
marketed, for the most part, through third party independent sales
representatives. Depending upon the level of funding obtained by the Company,
management believes, without assurance, that it will be possible for JDI to
attract qualified personnel in the areas of jewelry design, product development
and marketing and customer support to work closely with both the third party
sales force and with the suppliers and customers and to participate in jewelry
11
<PAGE>
fairs. However, in the event that only limited funds are obtained, the Company
anticipates that its limited finances and other resources may be a determinative
factor in the decision of any prospective employee as to whether to become
employed by JDI. Until such time, if ever, as the Company is successful in
attracting and employing capable design, product development, marketing and
customer support personnel, it intends to rely upon the judgment and conclusions
of its Executive Vice President based upon her knowledge and experience gained
in managing a family-owned jewelry business, relative to the Company's needs for
marketing and related expertise in these areas. However, the fact that neither
Mr. Fink nor Mr. Dorsett, executive officers and directors of JDI, has any
specific experience in the jewelry industry may adversely impact the Company's
chances for success. (See Part I, Item 1. "Description of Business," (b)
"Business of Issuer - Marketing and Distribution.")
8. High Risks and Unforeseen Costs Associated with JDI's Entry into the
Jewelry Business. There can be no assurance that the design, manufacturing,
merchandising, distribution and other costs incurred by JDI will not be
significantly greater than those estimated by Company management. Therefore, the
Company may expend significant unanticipated funds or significant funds may be
expended by JDI without the development of commercially viable jewelry or
accessory products or customer or marketing support services. There can be no
assurance that cost overruns will not occur or that such cost overruns will not
adversely affect the Company. Further, unfavorable general economic conditions
and/or a downturn in consumer confidence has in the past had, and could be
expected in the future to have, an adverse effect on consumer spending
preferences which could, in turn, adversely affect the Company's business.
Additionally, competitive pressures and changes in customer mix, among other
things, which management expects the Company to experience in the uncertain
event that it achieves commercial viability, could reduce the Company's gross
profit margin from time to time. Accordingly, there can be no assurance that JDI
will be capable of establishing itself in a commercially viable position in the
worldwide jewelry distribution market despite the uniqueness of its designs or
the modesty of its pricing. (See Part I, Item 1. "Description of Business," (b)
"Business of Issuer.")
9. Dependency on Suppliers and Customers. The Company's ability to
manufacture and distribute jewelry on a profitable and timely basis depends, at
least initially, upon the availability of jewelry products assembled to
management's specifications. There can be no assurance that assembled products
will be readily available from numerous sources and/or at prices acceptable to
JDI in accordance with management's belief. Further, even if the Company
receives sufficient proceeds from equity and/or debt financing or otherwise,
thus enabling it to employ the design, manufacturing, marketing and other
personnel needed to implement its business plan, it will nevertheless be
dependent upon the availability of raw materials, primarily precious metals and
gemstones, which management believes, without assurance, to be readily available
from numerous suppliers. Increases in the prices of raw materials and/or
limitations on the availability of such raw materials may adversely affect JDI's
ability to manufacture and distribute jewelry to customers on a timely basis or
at prices acceptable to the Company and its customers, if any. Additionally,
because a substantial portion of the jewelry products proposed to be distributed
by the Company is expected to be purchased from third party suppliers, failure
by such suppliers to deliver jewelry on a timely basis and increases in the
costs charged by such suppliers could adversely affect the Company's
relationship with its customers. While management hopes to sell products to a
large number of customers in a broad range of markets, to the extent that a few
large volume customers account for the bulk of its product sales, the loss of
any of these customers, or a significant reduction in their orders, could have a
material adverse effect on JDI's business. The Company does not anticipate that
it will have long-term contracts with its prospective customers. (See Part I,
Item 1. "Description of Business," (b) "Business of Issuer Marketing and
Distribution; - Purchasing, Manufacturing and Assembly.")
12
<PAGE>
10. Conflicts of Interest. There are existing and potential conflicts of
interest, including time, effort and corporate opportunity, involved in the
participation by the Company's executive officers and directors in other
business entities and transactions. Ms. Suzanne Sorensen, the Company's
Executive Vice President and the manager of Suzanne Designs, an affiliate of the
Company, will divide her time and effort between and among the Company, Suzanne
Designs and her other business obligations. Accordingly, Ms. Sorensen and/or
other members of management of the Company may be subject to direct conflicts of
interest and the corporate opportunities doctrine with respect to business
opportunities in the jewelry and accessory business which come to their
attention. The Company's Amended Articles of Incorporation provide that any
related party contract or transaction must be authorized, approved or ratified
at a meeting of the Board of Directors by sufficient vote thereon by directors
not interested therein or the transaction must be fair and reasonable to the
Company. Accordingly, while Ms. Sorensen will abstain from voting on any related
party contract or transaction involving Suzanne Designs, it is nevertheless
possible for the Company's Board of Directors, by vote of a sufficient number of
disinterested members thereof, to authorize, approve or ratify such a contract
or transaction even if it is not fair or reasonable to the Company. Ms.
Sorensen, who is not presently a director of JDI, has agreed, in the event that
she is elected to serve as a director of the Company in the future, that she
would abstain from voting on any related party contract or transaction involving
Suzanne Designs. Nevertheless, assuming Ms. Sorensen's future election to JDI's
Board of Directors and her abstention from voting on any related party contract
or transaction in accordance with her agreement, it would still be possible for
the Board of Directors of the Company, by a vote of a sufficient number of
disinterested directors, to authorize, approve or ratify such a contract or
transaction with Suzanne Designs or any other affiliate even if the terms were
unfair to the Company or unreasonable.
Because of existing and/or potential future associations of the Company's
executive officers and directors in various capacities with other firms involved
in a range of business activities and because of the limited or minimal amount
of time and effort which is expected to be devoted to the Company by such
persons, there are existing and potential continuing conflicts of interest in
their acting as executive officers and/or directors of the Company. None of the
executive officers or directors of the Company will be able to devote a
significant amount of time or effort to the business and affairs of the Company
because of their simultaneous participation in, employment by and/or commitments
to other firms involved in a range of business activities. In addition, all of
such persons are or may become, in their individual capacities, officers,
directors, controlling shareholders and/or partners of other entities (in
addition to Suzanne Designs) engaged in a variety of businesses which are
engaged, or may in the future engage, in various transactions, or compete
directly, with the Company. Conflicts of interest and transactions which are not
at arm's-length may arise in the future because the Company's executive officers
and/or directors are involved in the management of any company which transacts
business, or competes directly, with the Company. (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - General.")
11. Competition. Competition is intense within the jewelry industry in
general and in the specialized jewelry and accessory market segment in which JDI
proposes to operate. It is anticipated that the jewelry industry may be subject
to changes in the general state of the economy, shifts in the demographic
structure, changes in the buying habits of the public, the availability of
alternative products and the increased cost of doing business. Further, there
may be significant technological advances in the future and the Company may not
have adequate creative management and resources to enable it to take advantage
of such advances. The Company anticipates that virtually all of its many
competitors, both domestic and international, will have substantially greater
technical, financial and marketing resources than the Company. While JDI expects
to compete on the basis of the uniqueness of its designs, its reputation among
customers as a quality provider of products and marketing and customer support
services together with its anticipated close relationship with its customers,
vendors and distributors and, to a lesser extent, on the basis of price, its
opportunity to obtain customers may be limited by its financial resources and
13
<PAGE>
other assets. In this regard, many of the companies and other organizations with
which JDI will be in competition are established and have far greater financial
resources, substantially greater experience and larger staffs than the Company
and are expected to offer a wider selection of products than the Company.
Additionally, many of such organizations have proven operating histories, which
the Company lacks. JDI expects to face strong competition from both such
well-established companies and small independent companies like itself. In
addition, the Company's proposed business may be subject to decline because of
the general state of the economy and generally increasing costs and expenses of
doing business, thus further increasing anticipated competition. While
management hopes that the Company's proposed products will be well-positioned
and competitive under current market conditions, there can be no assurance that
any such products will continue to be competitive in the face of changes in
product design, changes in fashion and the entry of new competitors into the
market. (See Part I, Item 1. "Description of Business," (b) "Business of Issuer
Competition.")
12. Absence of Public Market for Shares. The Company's shares of Common
Stock are not registered with the U.S. Securities and Exchange Commission under
the Securities Act of 1933, as amended (hereinafter referred to as the "Act").
There is no public market for the shares of Common Stock and no assurance that
one will develop. Of such shares, 80,000 thereof are "free-trading" because of
their issuance to persons unaffiliated with JDI pursuant to the exemption from
registration provided by Rule 504 of Regulation D promulgated under Section 3(b)
of the Act, and the balance of 328,000 of such shares are "restricted
securities." Rule 144 of the Act provides, in essence, that holders of
restricted securities for a period of one year after the acquisition thereof
from the Company or an affiliate of the Company, may, every three months, sell
to a market maker or in ordinary brokerage transactions an amount equal to one
per cent of the Company's then outstanding securities. Nonaffiliates of the
Company who hold restricted securities for a period of two years may sell their
securities without regard to volume limitations or other restriction. Resales of
the free-trading shares of Common Stock by "affiliates, control persons and/or
underwriters" of JDI, as those terms are defined in the Act, will be subject to
the volume limitations described in paragraph (e) of Rule 144. Any transfer or
resale of the shares of JDI's Common Stock will be subject, in addition to the
Federal securities laws, to the "blue sky" laws of each state in which such
transfer or resale occurs. A total of 320,000 shares of the Company's Common
Stock were available for resale under Rule 144 commencing on March 6, 1998, and
8,000 shares of the Company's Common Stock will be available for resale under
Rule 144 commencing on April 1, 1998. Sales of shares of Common Stock under Rule
144 may have a depressive effect on the market price of the Company's Common
Stock, should a public market develop for such stock. Such sales might also
impede future financing by the Company.
13. No Dividends. While payment of dividends on the Common Stock rests with
the discretion of the Board of Directors, there can be no assurance that
dividends can or will ever be paid. Payment of dividends is contingent upon,
among other things, future earnings, if any, and the financial condition of the
Company, capital requirements, general business conditions and other factors
which cannot now be predicted. It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future. (See Part I,
Item 8. "Description of Securities Description of Common Stock - Dividend
Policy.")
14. No Cumulative Voting. The election of directors and other questions
will be decided by majority vote. Since cumulative voting is not permitted and
one-third of the Company's outstanding shares constitutes a quorum, investors
who purchase shares of the Company's Common Stock may not have the power to
elect even a single director and, as a practical matter, the current management
will continue to effectively control the Company. (See Part I, Item 4. "Security
Ownership of Certain Beneficial Owners and Management" and Part I, Item 8.
"Description of Securities - Description of Common Stock.")
15. Control by Present Shareholders. The present shareholders of the
Company's outstanding Common Stock will, by virtue of their percentage share
ownership and the lack of cumulative voting, be able to elect the entire Board
of Directors, establish the Company's policies and generally direct its affairs.
Accordingly, persons investing in the Company's Common Stock will have no
significant voice in Company management, and cannot be assured of ever having
representation on the Board of Directors. (See Part I, Item 4. "Security
Ownership of Certain Beneficial Owners and Management.")
14
<PAGE>
16. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common Shareholders. The Company is authorized to
issue up to 10,000,000 shares of preferred stock, $.01 par value per share
(hereinafter referred to as the "Preferred Stock"); none of which shares has
been issued. The issuance of Preferred Stock does not require approval by the
shareholders of the Company's Common Stock. The Board of Directors, in its sole
discretion, has the power to issue shares of Preferred Stock in one or more
series and establish the dividend rates and preferences, liquidation
preferences, voting rights, redemption and conversion terms and conditions and
any other relative rights and preferences with respect to any series of
Preferred Stock. Holders of Preferred Stock may have the right to receive
dividends, certain preferences in liquidation and conversion and other rights;
any of which rights and preferences may operate to the detriment of the
shareholders of the Company's Common Stock. Further, the issuance of any shares
of Preferred Stock having rights superior to those of the Company's Common Stock
may result in a decrease in the value or market price of the Common Stock,
provided a market exists, and, additionally, could be used by the Board of
Directors as an anti-takeover measure or device to prevent a change in control
of the Company. (See Part I, Item 8. "Description of Securities - Description of
Preferred Stock.")
17. No Secondary Trading Exemption. Secondary trading in the Common Stock
will not be possible in each state until the shares of Common Stock are
qualified for sale under the applicable securities laws of that state or the
Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in that state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular state, the shares of Common Stock could
not be offered or sold to, or purchased by, a resident of that state. In the
event that a significant number of states refuse to permit secondary trading in
the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
18. Possible Adverse Effect of Penny Stock Regulations on Liquidity of
Common Stock in Secondary Market. If a secondary trading market develops in the
shares of Common Stock of the Company, of which there can be no assurance, the
Common Stock is expected to come within the meaning of the term "penny stock"
under 17 CFR 240.3a51-1 because such shares are issued by a small company; are
low priced (under five dollars); and are not traded on NASDAQ or on a national
stock exchange. The Securities and Exchange Commission has established risk
disclosure requirements for broker-dealers participating in penny stock
transactions as a part of a system of disclosure and regulatory oversight for
the operation of the penny stock market. Rule 15g-9 under the Securities
Exchange Act of 1934, as amended, obligates a broker-dealer to satisfy special
sales practice requirements, including a requirement that it make an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction. Further, the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990 require a
broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure instrument that provides information about penny
stocks and the risks in the penny stock market. Additionally, the customer must
be provided by the broker-dealer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and the salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. For so long as the Company's Common
Stock is considered penny stock, the penny stock regulations can be expected to
have an adverse effect on the liquidity of the Common Stock in the secondary
market, if any, which develops.
15
<PAGE>
Item 2. Description of Property.
The Company's executive offices are located at 2449 Lyric Avenue, Los
Angeles, California 90027, and its telephone number is (213) 660-8665. The
Company owns no real or personal property.
Item 3. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year ended
December 31, 1997, covered by this report to a vote of the Company's
shareholders, through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information.
There has been no established public trading market for the Common Stock
since the Company's inception on March 6, 1997.
(b) Holders.
As of March 19, 1998, the Company had twenty-four shareholders of record of
its 408,000 outstanding shares of Common Stock.
(c) Dividends.
The Company has never paid or declared any dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
Since its inception, the Company, which is now known as "Jewelnique
Designs, Inc.," has conducted no business operations except for organizational
and capital raising activities. For the period from inception (March 6, 1997)
through December 31, 1997, the Company had no income from operations and
operating expenses aggregating $17,796. The Company proposes to engage in
16
<PAGE>
business in the design, manufacture, marketing and wholesale distribution of a
specialized line of jewelry products. Management expects that the Company's
proposed product line will initially be distributed through the identical
distribution channels, including boutiques, hair salons, beauty supply stores,
department stores and children's stores, presently being utilized to distribute
the jewelry products manufactured, marketed and distributed by Suzanne Designs,
a closely-held jewelry business owned and operated by the Sorensen family since
approximately 1976. However, should JDI achieve commercial success in designing,
manufacturing, marketing and distributing a specialized line of jewelry products
based upon Ms. Sorensen's unique, different or unusual product designs, the
Company expects, but cannot assure, that it would obtain many of its own product
distribution channels separate from those of Suzanne Designs. Ms. Suzanne
Sorensen, Executive Vice President of JDI, agreed to develop jewelry designs and
products for the Company for the following, among other, reasons: (i) because of
her belief that a public company could exploit her creative talents, services
and business reputation to commercial advantage and (ii) to observe directly
whether the perceived advantages of a public company, including, among others,
greater ease in raising capital, liquidity of securities holdings and
availability of current public information, would translate into greater
profitability for a public, as compared to a family-owned, jewelry business.
Although the Company has extremely limited cash and other assets, its
recurring obligations are minimal because its offices are maintained rent-free
at the home of the Company's Executive Vice President and the executive officers
and directors of the Company satisfy Company obligations from their own
resources from time-to-time. If the Company is unable to generate sufficient
revenue from operations, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. Management expects that it will be
necessary for JDI to raise additional funds in the next twelve months in the
event that the Company is unable to generate any revenue, or only a minimal
level of revenue, from operations. Ms. Sorensen, at least initially, will be
solely responsible for developing JDI's jewelry products and designs and,
accordingly, the Company does not expect to expend any funds on product research
and development. However, at such time, if ever, as sufficient operating capital
becomes available, management expects to employ additional design and marketing
personnel who are expected to participate continually in jewelry fairs, trade
shows and other industry forums. In addition, the Company expects to
continuously engage in market research in order to monitor new market trends,
seasonality factors and other critical information deemed relevant to JDI's
business through the development of a sophisticated computerized system.
At least initially, the Company intends to purchase most of its jewelry and
accessories in an assembled state from suppliers located inside the United
States and, at most, management expects that the Company will be required to
perform a minimal amount of light assembly of the items received into jewelry
and accessory products. Thus, it is not anticipated that JDI will purchase a
plant or any significant equipment in the foreseeable future. Depending upon the
availability of funding, however, the Company has preliminary plans to maintain
a light manufacturing and assembly operation in the United States for the
purpose of producing prototype designs and to fulfill custom orders for
specialized products and short-run orders required to be shipped within several
days of the order date. While JDI may in the future establish its own
manufacturing operations and facilities if substantial savings in the cost of
inventory appears likely and the necessary capital becomes available, the
Company's financial condition does not permit management to consider the
acquisition of plant or equipment at this time.
Financial Condition, Capital Resources and Liquidity
At December 31, 1997, the Company had assets totaling $499 and no
liabilities. Since the Company's inception, it has received $20,000 in cash
contributed as consideration for the issuance of shares of Common Stock. In
March 1997, the Company paid a lump sum consulting fee in the amount of $5,000
to each of Messrs. Roland W. Fink and Kendall L. Dorsett, executive officers and
17
<PAGE>
directors of JDI, in consideration for certain specialized services performed
for the Company by each individual. These services included the preparation of a
business plan for the Company, in the case of Mr. Fink, and, in Mr. Dorsett's
case, the performance of certain financial consulting services. The Company paid
Cudd & Associates, a law firm of which Patricia Cudd, Esq., is the sole
proprietor, the sum of $5,000 in consideration for the performance of certain
legal services, including but not limited to passing upon the legality of the
Common Stock and certain other matters in connection with this Registration
Statement on Form 10-SB. The Company pays a fee in the amount of $250 per month
to Fink & Dorsett, a consulting firm owned by Messrs. Fink and Dorsett, in
consideration for certain administrative services performed and costs incurred
by said firm on behalf of JDI. Messrs. Fink and Dorsett and Ms. Cudd own of
record and beneficially 128,000, 128,000 and 64,000 shares, respectively,
representing approximately 31.4%, 31.4% and 15.7%, respectively, of the
outstanding shares, of the Company's Common Stock. (See Part I, Item 4.
"Security Ownership of Certain Beneficial Owners and Management' and Item 7.
"Certain Relationships and Related Transactions.")
The Company has no potential capital resources.
Item 7. Financial Statements.
The Financial Statements of Jewelnique Designs, Inc., and Notes to
Financial Statements together with the Independent Auditor's Report of Janet
Loss, C.P.A., P.C., required by this Item 7 commence on page F-1 hereof and are
incorporated herein by this reference. The Financial Statements filed as part of
this Annual Report on Form 10-KSB are listed in the Index to Financial
Statements below:
Page
----
Independent Auditor's Report F-2
Balance Sheet, as of December 31, 1997 F-3
Statement of Operations for the Period
March 6, 1997 (Inception), to December 31, 1997 F-4
Statement of Stockholders' Equity for the Period
March 6, 1997 (Inception), to December 31, 1997 F-5
Statement of Cash Flows for the Period March 6, 1997
(Inception), to December 31, 1997 F-6
Notes to Financial Statements F-7
tem 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
Because the Company has been generally inactive since its inception, it has
had no independent accountant until the retention of Janet Loss, C.P.A., P.C.,
9101 East Kenyon Avenue, Suite #2000, Denver, Colorado 80237, in May 1997. There
has been no change in the Company's independent accountant during the period
commencing with the Company's retention of Janet Loss, C.P.A., P.C., in May,
1997, through the date hereof.
18
<PAGE>
JEWELNIQUE DESIGNS, INC.
(Formerly Blue Mountain Capital, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1997
Page No.
--------
Independent Auditor's Report F-2
Balance Sheet as of December 31, 1997 F-3
Statement of Operations for the Period
March 6, 1997 (Inception) to December 31, 1997 F-4
Statement of Stockholders' Equity for the Period
March 6, 1997 (Inception) to December 31, 1997 F-5
Statement of Cash Flows for the Period
March 6, 1997 (Inception) to December 31, 1997 F-6
Notes to Financial Statements F-7
F-1
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 S. Tamarac Drive, Suite 120
Denver, Colorado 80237
303-220-0227
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Jewelnique Designs, Inc.
I have audited the accompanying balance sheet of Jewelnique Designs, Inc. (a
development stage company) as of December 31, 1997, and the related statements
of operations, stockholders' equity and cash flows for the period March 6, 1997
(inception) to December 31, 1997. 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.
These 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 Jewelnique Designs, Inc. (a
development stage company) as of December 31, 1997, and the results of its
operations and its cash flows for the period March 6, 1997 (inception) to
December 31, 1997 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The company is a development stage enterprise,
and its ability to continue in business is dependent upon obtaining future
financing and the success of future operations, the outcome of which cannot be
determined at this time, which raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in this regard are
described in Note 3. The financial statements do not include any adjustments
which might result from the outcome of this uncertainty.
Janet Loss, C.P.A., P.C.
March 16, 1998
F-2
<PAGE>
JEWELNIQUE DESIGNS, INC.
(Formerly Blue Mountain Capital, Inc.)
(A Development Stage Company)
Balance Sheet
As of December 31, 1997
Assets
------
Current Assets:
Cash $ 80
Other Assets:
Organization Costs, less accumulated
amortization of $81 419
--------
Total Assets $ 499
========
Liabilities and Stockholders' Equity
------------------------------------
Stockholders' Equity:
Preferred stock, par value $0.01,
10,000,000 shares authorized, none
issued and outstanding $ --
Common stock, par value $0.001,
100,000,000 shares authorized,
408,000 shares issued and outstanding 408
Additional paid-in capital 17,887
Deficit accumulated during
development stage (17,796)
--------
Total Stockholders' Equity 499
--------
Total Liabilities and Stockholders' Equity $ 499
========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
JEWELNIQUE DESIGNS, INC.
(Formerly Blue Mountain Capital, Inc.)
(A Development Stage Company)
Statement of Operations
For the Period March 6, 1997 (Inception) to December 31, 1997
Revenues $ --
Operating Expenses:
Amortization 81
Consulting fees 10,242
Accounting Fees 450
Legal fees 2,553
Printing 1,025
Transfer agent fees 920
Management fees 2,460
Miscellaneous 164
---------
Total Operating Expenses 17,895
---------
Loss from Operations (17,895)
Interest Income 99
---------
Loss before Income Taxes (17,796)
Income Tax Benefit --
----------
Net Loss $ (17,796)
=========
Loss per Share:
Net loss $ (0.04)
=========
Weighted Average Number of Common
and Common Equivalent
Shares Outstanding 408,000
=========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
JEWELNIQUE DESIGNS, INC.
(Formerly Blue Mountain Capital, Inc.)
(A Development Stage Company)
Statement of Stockholders' Equity
For the period March 6, 1997 (Inception) to December 31, 1997
Deficit
Additional Accumulated
Common Stock Paid-In During Develop-
Shares Amount Capital ment Stage Total
------ ------ ------- ---------- -----
<S> <C> <C> <C> <C> <C>
Issuance
of Stock
for Cash 80,000 $ 80 $ 15,895 $ -- $ 15,975
Issuance of
Stock for Services 320,000 328 1,992 -- 2,320
Net Loss for Period -- -- -- (17,796) (17,796)
-------- -------- -------- -------- --------
Balance,
December 31, 1997 400,000 $ 408 $ 17,887 $(17,796) $ 499
======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
F-5
</TABLE>
<PAGE>
JEWELNIQUE DESIGNS, INC.
(Formerly Blue Mountain Capital, Inc.)
(A Development Stage Company)
Statement of Cash Flows
For the Period March 6, 1997 (Inception) to December 31, 1997
Operating Activities:
Net Loss $(17,796)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 81
Stock issued for services 2,320
--------
Net Cash used in Operating Activities: (15,395)
--------
Investing Activities:
Organization costs (500)
--------
Net Cash used in Investing Activities (500)
--------
Financing Activities:
Proceeds from issuance of common stock,
net of $4,025 in offering expenses 15,975
--------
Net Cash provided by Financing Activities 15,975
--------
Net Increase in Cash 80
Cash, Beginning of Period --
--------
Cash, End of Period $ 80
========
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
JEWELNIQUE DESIGNS, INC.
(Formerly Blue Mountain Capital, Inc.)
(A Development Stage Company)
Notes to Financial Statements
December 31, 1997
NOTE 1 - HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Jewelnique Designs, Inc. (the "Company"), a Colorado Corporation, was
incorporated March 6, 1997. The Company's purpose is to design, manufacture,
market, and distribute a specialized line of jewelry products to be sold
primarily through stores.
Development Stage - The Company is a Development Stage Enterprise and has had no
operations to date.
Fiscal Year - The Company has elected the calendar year.
Accounting Method - The Company prepares its financial statements under the
accrual method of accounting.
Organizational Costs - Costs incurred in organizing the Company are being
amortized over a sixty month period.
Public Offering - The Company completed a public offering wherein it sold 80,000
shares of Common Stock for $20,000 under Rule 504 of Regulation D on March
8, 1997. The price per share was fixed arbitrarily by the Board of
Directors. Costs associated with the offering of $4,025 have been charged
against the proceeds of the offering.
Earnings Per Share - Earnings per share is calculated by dividing the net income
or loss for the period by the weighted average number of common and common
equivalent shares outstanding during the period. At December 31, 1997 the
Company had no options, warrants or any other common equivalents
outstanding.
Cash Flow Statement - For purposes of reporting cash flows, the Company
considers all funds with original maturities of three months or less to be
cash equivalents.
There was no cash paid for interest or income taxes during the period ended
December 31, 1997.
F-7
<PAGE>
Total cash inflows for the period ended December 31, 1997 were $20,099, and
total cash outflows for the period were $20,019.
In non-cash transactions, the Company issued 264,000 shares of common stock
to executive officers in exchange for services rendered, and 64,000 shares
to an attorney in exchange for services rendered.
Fair Value of Financial Instruments - The carrying amounts of cash, and any
accounts receivable, prepaid expenses, accounts payable or accrued expenses
approximate their fair value because of the short maturity of these items.
Income Taxes - Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", requires the use of the asset and liability method of
accounting for income taxes. Under this method, deferred income taxes are
recorded to reflect the tax consequences in future years of temporary
differences between the tax bases of those assets and liabilities and their
financial statement amounts at the end of each reporting period. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized. Income tax expense is the tax payable
for the current period plus or minus the change during the period in
deferred tax assets and liabilities. Deferred tax assets and liabilities
are netted to reflect the tax impact of temporary differences.
For the partial year ended December 31, 1997 the Company had a net
operating loss of approximately $17,000, for which no deferred tax asset
was recorded.
Use of Estimates in the Preparation of Financial Statements - The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reporting period. Actual results could
differ from these estimates.
NOTE 2 - RELATED PARTY TRANSACTIONS
On March 6,1997 the Company issued 256,000 shares of common stock to
executive officers and directors in exchange for services rendered in connection
with the formation of the Company, valued by the Board of Directors at $256. On
April 1, 1997 the Company issued 8,000 shares of Common Stock to an executive
officer in exchange for consulting services, valued by the Board of Directors at
$2,000.
During the period ended March 31, 1997, the Company paid a total of $10,000
in consulting fees to executive officers and directors, which management
believes was fair and reasonable.
F-8
<PAGE>
The company is paying $250 per month in management fees (plus certain
out-of-pocket expenses) to a company owned by its executive officers and
directors, and maintains its offices rent free at space provided by an executive
officer.
NOTE 3 - UNCERTAINTIES
The Company is in the development stage. Management believes that in order
to execute its business plan and continue in business it will be required to
raise additional capital. No potential capital resources exist at this time.
Management intends to pursue every available avenue of raising additional debt
and/or equity financing, including the public or private sale of securities.
F-9
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
Executive Officers and Directors
Set forth below are the names, ages, positions with the Company and
business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
- ---- --- ------------------------
Roland W. Fink 42 President and Director
Kendall L. Dorsett 55 Secretary, Treasurer and Director
Suzanne Sorensen 50 Executive Vice President
- -------------------
*Except for Ms. Sorensen, who had no role in founding or organizing the
Company, the above-named persons may be deemed to be "promoters" and "parents"
of the Company, as those terms are defined under the Rules and Regulations
promulgated under the Securities Act of 1933, as amended.
All directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board of Directors. Messrs. Fink and Dorsett and
Ms. Sorensen will devote such time and effort to the business and affairs of the
Company as may be necessary to perform their responsibilities as executive
officers and/or directors of the Company. Except as otherwise indicated below,
all organizations with which each executive officer and director is or has been
previously employed or associated are unaffiliated with the Company.
Family Relationships
There are no family relationships between or among the executive officers
and directors of the Company.
Business Experience
Roland W. Fink has served as the President and a director of the Company
since its inception on March 6, 1997. Since March 1997, Mr. Fink, together with
Mr. Dorsett, have been general partners of Fink & Dorsett, Glendale, California,
a consulting firm specializing in corporate finance. During the period from
October 1995 through March 1997, Mr. Fink was a self-employed consultant
performing services of a financial and accounting nature for private and public
companies. He was the managing partner of Greenberg & Jackson, a Los
Angeles-based certified public accounting firm, from May 1992 through October
1995. Mr. Fink, from 1983 through 1992, served as the Vice President and
Controller of WellTech Inc. ("WellTech"), a major Houston-based oil field
services commpany. Prior to his tenure with WellTech, Mr. Fink was employed by a
"Big Six" accounting firm and a large local accounting firm. He received a B.S.
degree in accounting from Manchester College, North Manchester, Indiana, in
1977. He is a certified public accountant.
19
<PAGE>
Suzanne Sorensen has served as the Executive Vice President of the Company
since April 1, 1997. Ms. Sorensen has managed Suzanne Designs, Los Angeles,
California, a family-owned jewelry business, where she has been responsible for
the design, manufacture, marketing and distribution of a variety of jewelry and
other fashion accessory items, since 1976.
Kendall L. Dorsett has served as the Secretary, Treasurer and a director of
the Company since the organization of JDI on March 6, 1997. He has been a
general partner, together with Mr. Fink, of Fink & Dorsett, a consulting firm
specializing in corporate finance, since March 1997. During the period from
January 1995 through March 1997, Mr. Dorsett was semi-retired, engaged in
managing his own investments and in part-time commission sales of internet
access subscriptions for EarthLink Network, Inc., an internet service provider
located in Pasadena, California. From 1990 to January 1995, Mr. Dorsett served
as the Vice President of Shareholder Relations for American Technologies Group,
Inc., a publicly-held corporation whose securities trade on the Over-the-Counter
Bulletin Board under the symbol "ATEG." Prior to 1990, he was a registered
representative with a number of New York Stock Exchange-listed brokerage firms,
including Shearson Lehman Brothers, Prudential Securities and others. Mr.
Dorsett received his B.A. degree in economics from the University of California
at Santa Barbara in 1966.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission (hereinafter referred to as the "Commission")
initial statements of beneficial ownership, reports of changes in ownership and
annual reports concerning their ownership, of Common Stock and other equity
securities of the Company on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by Commission
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, Messrs. Roland W. Fink and Kendall L. Dorsett,
Ms. Suzanne Sorensen and Patricia Cudd, Esq., comprising all of the Company's
executive officers, directors and greater than 10% beneficial owners of its
Common Stock, have complied with Section 16(a) filing requirements applicable to
them during the Company's fiscal year ended December 31, 1997.
Item 10. Executive Compensation.
Except for certain shares of the Company's Common Stock issued and sold to
each of the three executive officers and/or directors of the Company in
consideration for various services performed for the Company by each of them and
a lump-sum consulting fee in the amount of $5,000 paid to each of Messrs. Roland
W. Fink and Kendall L. Dorsett and the fee in the amount of $250 per month paid
by the Company to Fink & Dorsett, a consulting firm owned by Messrs. Fink and
Dorsett, for administrative services performed and costs incurred by said firm
on behalf of JDI, no cash or non-cash compensation was awarded to, earned by or
paid to any executive officer or director of the Company for all services
rendered in all capacities to the Company during the approximate twelve and
one-half month period since its inception on March 6, 1997. On March 6, 1997,
the Company issued and sold 128,000 shares of Common Stock, representing
approximately 31.4% of the total number of shares of Common Stock of the Company
outstanding on the date hereof, to each of Messrs. Fink and Dorsett for services
rendered in connection with the organization of the Corporation (an aggregate of
256,000 shares of Common Stock). Ms. Suzanne Sorensen, on April 1, 1997,
received a total of 8,000 shares of Common Stock, representing approximately
2.0% of the total number of outstanding shares of the Company's Common Stock as
of the date hereof, in consideration for certain business consulting services
performed by her for the Company. Except for the above-described compensation,
20
<PAGE>
it is not anticipated that any executive officer of the Company will receive any
cash or non-cash compensation for his or her services in all capacities to the
Company until such time as the Company commences business operations. At such
time as JDI commences operations, it is expected that the Board of Directors
will approve the payment of salaries in a reasonable amount to each of Mr. Fink,
Ms. Sorensen and Mr. Dorsett for their services in the positions of President,
Executive Vice President and Secretary/Treasurer, respectively, of the Company.
At such time, the Board of Directors may, in its discretion, approve the payment
of additional cash or non-cash compensation to the foregoing for their services
to the Company.
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans and has no intention of implementing
any such plans for the foreseeable future.
Compensation of Directors
The Company has no standard arrangements for compensating the directors of
the Company for their attendance at meetings of the Board of Directors.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information as of March 19, 1998, regarding
the ownership of the Company's Common Stock by each shareholder known by the
Company to be the beneficial owner of more than five per cent of its outstanding
shares of Common Stock, each director and all executive officers and directors
as a group. Except as otherwise indicated, each of the shareholders has sole
voting and investment power with respect to the shares of Common Stock
beneficially owned.
Amount
Name and Address of Beneficially Percent of
Beneficial Owner Owned Class (1)
---------------- ----- ---------
Roland W. Fink (2)(3)(4) 128,000 31.4%
1201 North Pacific Avenue, Suite #104
Glendale, California 91202
Kendall L. Dorsett (2)(3)(4) 128,000 31.4%
1201 North Pacific Avenue, Suite #104
Glendale, California 91202
Patricia Cudd 64,000 15.7%
1120 Lincoln Street, Suite #703
Denver, Colorado 80203
Suzanne Sorensen (2)(3) 8,000 2.0%
2449 Lyric Avenue
Los Angeles, California 90027
All Executive Officers and Directors 264,000 64.7%
as a Group (three persons)
- ------------------
(1) Based upon 408,000 shares of the Company's Common Stock issued and
outstanding as of March 17, 1998.
21
<PAGE>
(2) The shareholder is subject to the community property laws of the State
of California with regard to his or her ownership of the shares of Common Stock.
(3) Executive officer of the Company.
(4) Member of the Board of Directors of the Company.
Item 12. Certain Relationships and Related Transactions.
On March 6, 1997, the Company issued and sold 128,000 shares of Common
Stock to each of Messrs. Roland W. Fink and Kendall L. Dorsett (a total of
256,000 shares of Common Stock), the President and Secretary/Treasurer,
respectively, of the Company and record and beneficial owners each of
approximately 31.4% of the Company's outstanding Common Stock, in consideration
and exchange therefor of services in connection with the organization of JDI
valued at $128 (an aggregate of $256) performed for the Company by each such
person.
The Company issued and sold, on March 6, 1997, an aggregate of 64,000
shares of its Common Stock to Patricia Cudd, Esq., the owner of record and
beneficially of approximately 15.7% of the Company's outstanding shares of
Common Stock and the sole proprietor of Patricia Cudd & Associates, Denver,
Colorado, which firm has passed upon the legality of the Common Stock and
certain other matters in connection with this Form 10-SB Registration Statement.
The shares were issued to Ms. Cudd in consideration for her performance of
certain legal services related to the organization of the Company, including the
preparation and filing with the Colorado Secretary of State of the Articles of
Incorporation of the Company, the preparation of the Company's Bylaws and the
preparation of the Minutes of the Organizational Meeting of the Board of
Directors of JDI; which services were valued at $64.
On April 1, 1997, the Company issued and sold a total of 8,000 shares of
Common Stock to Ms. Suzanne Sorensen, the Executive Vice President of the
Company and the record and beneficial owner of approximately 2.0% of the
Company's outstanding Common Stock, as consideration for certain business
consulting services performed for the Company relating to, among other things,
jewelry design, fabrication and marketing, valued at $2,000.
Since the Company's inception on March 6, 1997, it has paid a monthly fee
in the amount of $250 (plus certain out-of-pocket expenses) to Fink & Dorsett, a
consulting firm owned by Messrs. Fink and Dorsett, in consideration for
administrative services performed and costs incurred by said firm on behalf of
JDI. As of December 31, 1997, management fees paid totaled $2,460. Management
believes that the management fees paid by the Company to Fink & Dorsett are
lower than fees which would be payable by the Company to unaffiliated third
parties for comparable services in the Los Angeles, California, area.
Item 13. Exhibits and Reports on Form 8-K.
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
22
<PAGE>
Exhibit Number As
Listed in Document Incor-
Exhibit No. Description porated by Reference
- --------------------------------------------------------------------------------
3.1* Articles of Incorporation of Blue Mountain 2.1
Capital, Inc., filed March 6, 1997.
3.2* Articles of Amendment to the Articles of 2.2
Incorporation of Blue Mountain Capital, Inc.,
filed June 20, 1997.
3.3* Bylaws of Blue Mountain Capital, Inc. 2.3
- ------------------
*Incorporated herein by reference to the Registration Statement on Form
10-SB of Jewelnique Designs, Inc. (File No. 0-22783), filed with the U.S.
Securities and Exchange Commission.
(b) No Reports on Form 8-K were filed during the last quarter of the fiscal
year ended December 31, 1997, covered by this Annual Report on Form 10-KSB.
23
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JEWELNIQUE DESIGNS, INC.
(Registrant)
Date: March 19, 1998 By: /s/ Roland W. Fink
-----------------------------------
Roland W. Fink, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- -----
March 19, 1998 By: /s/ Roland W. Fink President and Director
-----------------------
Roland W. Fink
March 19, 1998 By: /s/ Kendall L. Dorsett Secretary, Treasurer and
-----------------------
Kendall L. Dorsett Director
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet as of December 31, 1997 and Statements of Operations, Stockholders' Equity
and Cash Flows for the period March 6, 1997 (inception) to December 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 80
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 80
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 499
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 408
<OTHER-SE> 17,887
<TOTAL-LIABILITY-AND-EQUITY> 499
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,895
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99
<INCOME-PRETAX> (17,796)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,796)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
