U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
(Name of Small Business Issuer in its charter)
FLORIDA 65-0794113
(State of incorporation) (I.R.S. Employer Identification No.)
3391 SOUTHEAST 14TH AVENUE, PORT EVERGLADES, FLORIDA 33316
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number (954) 523-8985
Securities to be registered pursuant to 12(b) of the Act: NONE
Securities to be registered pursuant to 12(g) of the Act:
COMMON STOCK $.001 PAR VALUE
(Title of Class)
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
JUPITER MARINE INTERNATIONAL
HOLDINGS, INC.
Date: July 7, 2000 By: /S/ Carl Herndon
----------------------------------
Carl Herndon, Director,
CEO and President
Date: July 7, 2000 By: /S/ Lawrence Tierney
----------------------------------
Lawrence Tierney, Director
Date: July 7, 2000 By: /S/ Carl Herndon, Jr.
----------------------------------
Carl Herndon, Jr.,
Vice President of Sales
and Marketing
<PAGE>
JUPITER MARINE
INTERNATIONAL HOLDINGS,
INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL
STATEMENTS
July 31, 1999 and 1998
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGES
-----
<S> <C>
Independent Auditor's Report F-1
Consolidated Balance Sheets July 31, 1999 and 1998 F-2-3
Consolidated Statements of Operations July 31, 1999 and 1998 F-4
Consolidated Statements of Changes in Stockholders' Equity (Deficit) July 31, 1999 and 1998 F-5-6
Consolidated Statements of Cash Flows July 31, 1999 and 1998 F-7
Notes to Consolidated Financial Statements F-8-14
Consolidated Balance Sheets April 30, 2000 and 1999 F-15-16
Consolidated Statement of Operations April 30, 2000 and 1999 F-17
Consolidated Statements of Cash Flows April 30, 2000 and 1999 F-18
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Jupiter Marine International Holdings, Inc. and subsidiary
Fort Lauderdale, Florida
We have audited the accompanying consolidated balance sheets of Jupiter
Marine International Holdings, Inc. and subsidiary as of July 31, 1999 and 1998,
and the related consolidated statements of operations, changes in stockholders'
equity (deficit) and cash flows for the period from November 18, 1997,
(inception) through July 31, 1998 and for the year ended July 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Jupiter
Marine International Holdings, Inc. and subsidiary as of July 31, 1999 and 1998,
and the results of its operations and its cash flows for the period from
November 18, 1997, (inception) through July 31, 1998 and for the year ended July
31, 1999, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
12 to the consolidated financial statements, the Company has sustained net
operating losses, has deficit cash flows from operations, and working capital
deficiencies at July 31, 1999 and 1998, all of which raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
these matters are described in Note 12. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
September 10, 1999
F-1
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
July 31, 1999 and 1998
A S S E T S
<TABLE>
<CAPTION>
1999 1998
----------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 59,351 $ 2,539
Accounts receivable 1,736 411
Inventories 421,191 330,810
Prepaid expenses 11,749 15,385
-------------- --------------
Total current assets 494,027 349,145
-------------- --------------
PROPERTY AND EQUIPMENT, at cost or allocated cost:
Boat molds 822,181 822,181
Leasehold improvements 114,659 --
Machinery and equipment 97,804 39,700
Office equipment 8,406 7,000
-------------- --------------
1,043,050 868,881
Less accumulated depreciation 272,821 86,888
-------------- --------------
Total property and equipment 770,229 781,993
-------------- --------------
OTHER ASSETS:
Deposits 24,000 --
-------------- --------------
Total other assets 24,000 --
-------------- --------------
Total assets $ 1,288,256 $ 1,131,138
============== ==============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-2
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
July 31, 1999 and 1998
L I A B I L I T I E S A N D S T O C K H O L D E R S '
E Q U I T Y (D E F I C I T)
<TABLE>
<CAPTION>
1999 1998
----------------- --------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 146,481 $ 19,570
Payroll taxes payable 33,125 47,099
Accrued expenses 82,877 32,049
Customer deposits 248,386 156,189
Current portion of debt 50,000 --
Warranty reserve 50,553 49,084
Other current liabilities -- 604,406
-------------- --------------
Total current liabilities 611,422 908,397
-------------- --------------
DEBT, less current portion 350,000 295,000
-------------- --------------
Total liabilities 961,422 1,203,397
-------------- --------------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8) -- --
STOCKHOLDERS' EQUITY:
Capital stock, 5,000,000 shares of $ .001 par value preferred stock
authorized, 500,000 shares designated as 10% cumulative Series A preferred
stock, $ .001 par value ($ 328,000 aggregate liquidation preference),
328,000 shares issued and outstanding 328 --
Capital stock, 205,000 shares designated as 10% cumulative Series B preferred
stock, $ .001 par value ($ 205,000 aggregate liquidation preference), 205,000
shares issued and outstanding 205 --
Capital stock, 50,000,000 shares of $ .001 par value common stock authorized,
4,033,500 and 2,130,000 shares issued and outstanding as of July 31, 1999 and
1998, respectively 4,034 2,130
Additional paid-in capital 1,357,068 204,795
Accumulated deficit (1,034,801) (279,184)
-------------- --------------
Total stockholders' equity 326,834 (72,259)
-------------- --------------
Total liabilities and stockholders' equity $ 1,288,256 $ 1,131,138
============== ==============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-3
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Period From November 18, 1997 (inception)
through July 31, 1998 and for the Year Ended July 31, 1999
<TABLE>
<CAPTION>
Period from
November 18,
1997
(inception)
Year ended through
July 31, 1999 July 31, 1998
------------- -------------
<S> <C> <C>
SALES $1,201,375 $ 76,955
COST OF SALES 850,494 115,948
--------- ---------
Gross profit (loss) 350,881 (38,993)
GENERAL AND ADMINISTRATIVE EXPENSES, including
provision for depreciation of $ 185,933 and $ 86,888 992,077 234,632
--------- ---------
Loss from operations (641,196) (273,625)
OTHER INCOME (EXPENSE):
Other income 13,642 86
Interest expense (128,063) (5,645)
--------- ---------
Total other income (expense) (114,421) (5,559)
--------- ---------
Loss before provision (credit) for income taxes (755,617) (279,184)
PROVISION (CREDIT) FOR INCOME TAXES (Note 5) -- --
--------- ---------
Net loss $(755,617) $(279,184)
========= =========
Earnings (loss) per common share - basic $ (.08) $ (.13)
========= =========
Earnings (loss) per common share - diluted $ (.08) $ (.13)
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-4
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For the Period From November 18, 1997 (inception)
through July 31, 1998 and for the Year Ended July 31, 1999
<TABLE>
<CAPTION>
Preferred Preferred Additional
Stock Stock Common Paid-In Accumulated
Series A Series B Stock Capital Deficit
------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCES,
November 18,
1997 (inception) $ -- $ -- $ -- $ -- $ --
Issuance of 125,000 shares
of common stock to
founders -- -- 125 -- --
Issuance of 850,000 shares
of common stock to Carl
Herdon, Sr. -- -- 850 -- --
Issuance of 490,000 shares to
Atlantis Capital Partners, Inc.
(these share were subsequently
canceled) -- -- 490 -- --
Issuance of 460,000 shares
of common stock in exchange
for old JMI shares -- -- 460 -- --
Issuance of 205,000 shares
of common stock (subsequently
exchanged for 205,000 Series
B Preferred shares -- -- 205 204,795 --
Net loss for the period
ended July 31, 1998 -- -- -- -- (279,184)
------------- ------------- ------------- ------------- -------------
BALANCES,
August 1, 1998 -- -- 2,130 204,795 (279,184)
Cancellation of shares
issued to Atlantis
Capital Partners, Inc. -- -- (490) -- --
Issuance of 150,000
shares of common stock
to Carl Herdon, Jr. for
services rendered to the
Company -- -- 150 29,850 --
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-5
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(continued)
For the Period From November 18, 1997 (inception)
through July 31, 1998 and for the Year Ended July 31, 1999
<TABLE>
<CAPTION>
Preferred Preferred Additional
Stock Stock Common Paid-In Accumulated
Series A Series B Stock Capital Deficit
------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of 295,000
shares of Series A
preferred stock in
exchange for canceling
$ 295,000 in promissory
notes 295 -- -- 294,705 --
Issuance of 33,000 shares
of Series A preferred
stock for services
rendered to the Company 33 -- -- 32,967 --
Issuance of 500,000
shares of common stock
to Triton Holdings
International Corp. in
connection with a loan
to the Company -- -- 500 99,500 --
Issuance of 205,000 shares
of Series B preferred
stock in exchange for
205,000 shares of common
stock -- 205 (205) -- --
Issuance of 1,948,500 shares
of common stock -- -- 1,949 695,251 --
Net loss for the year
ended July 31, 1999 -- -- -- -- (755,617)
-------- ------- --------- ------------ -------------
BALANCES,
July 31, 1999 $ 328 $ 205 $ 4,034 $ 1,357,068 $ (1,034,801)
======== ======= ========= ============ =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-6
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period From November 18, 1997 (inception)
through July 31, 1998 and for the Year Ended July 31, 1999
<TABLE>
<CAPTION>
Period from
November 18,
1997
(inception)
Year ended through
July 31, 1999 July 31, 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (755,617) $ (279,184)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Provision for depreciation 185,933 86,888
Loss on disposition of property and equipment 1,554 --
Changes in assets and liabilities:
Increase in accounts receivable (1,325) (411)
Increase in inventories (90,381) (330,810)
Decrease (increase) in prepaid expenses 3,636 (15,385)
Increase in deposits (24,000) --
Increase in accounts payable 126,911 19,570
Decrease (increase) in payroll taxes payable (13,974) 47,099
Increase in accrued expenses 50,827 32,049
Increase in customer deposits 92,197 156,189
Increase in warranty reserve 1,469 49,084
Decrease (increase) in other current liabilities (604,406) 604,406
-------------- --------------
Net cash (used in) provided by
operating activities (1,027,186) 369,495
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the disposition of property and equipment 5,600 --
Payments for purchase of property and equipment (174,169) (868,881)
-------------- --------------
Net cash used in investing activities (168,569) (868,881)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 852,567 206,925
Proceeds from debt 400,000 295,000
-------------- --------------
Net cash provided by financing activities 1,252,567 501,925
-------------- --------------
Net increase in cash 56,812 2,539
CASH, Beginning of year (period) 2,539 --
-------------- -------------
CASH, End of year (period) $ 59,351 $ 2,539
============== ==============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-7
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND OPERATIONS
Jupiter Marine International, Inc. ("JMI") was incorporated under
the laws of the State of Florida in November, 1997. Shortly thereafter, JMI
acquired the assets of Jupiter 31, Inc., some of which they now use to
manufacture their boats. Jupiter Marine International Holdings, Inc.
("JMIH") was incorporated under the laws of the State of Florida on May 19,
1998. Shortly thereafter, JMI transferred it's assets and liabilities to
JMIH the newly formed entity. This transaction was accounted for as a
recapitalization. (JMIH and JMI are sometimes collectively referred to as
the "Company"). The Company is located in Fort Lauderdale, Florida and is
engaged in the manufacture and sale of offshore fishing and pleasure boats.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation:
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Jupiter Marine International, Inc.
All significant intercompany transactions and balances have been eliminated
in consolidation.
Provision for depreciation:
--------------------------
The Company provides for depreciation of its property and
equipment using the straight-line method over estimated useful lives of 5
and 7 years.
Additions and major renewals to property and equipment are
capitalized. Maintenance and repairs are charged to expense when incurred.
The cost and accumulated depreciation of assets sold or retired are removed
from the respective accounts and any gain or loss is reflected in income.
The Company continually evaluates the propriety of the carrying
value of property and equipment based on the estimated future undiscounted
cash flows of the related investment, as well as the amortization period to
determine whether current events and circumstances warrant adjustments to
carrying value and/or revised estimates of useful lives. At this time, the
Company believes that no significant impairment of the long-lived assets
has occurred and that no reduction of the estimated useful lives is
warranted.
Revenue recognition:
-------------------
Revenue from the sale of boats is recognized when they are
delivered. No right of return currently exist between the Company and its
dealers.
Use of estimates:
----------------
The presentation of a financial statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual amounts could differ from
those estimates.
F-8
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventories:
-----------
At July 31, 1999 and 1998, inventories consisted of the following:
<TABLE>
<CAPTION>
1999 1998
----------------- --------------
<S> <C> <C>
Finished boats $ 99,646 $ --
Boats in process, including
overhead applied 219,518 295,420
Materials and parts 102,027 35,390
-------------- --------------
$ 421,191 $ 330,810
============== ==============
</TABLE>
Inventories are stated at the lower of cost or market. The cost of
boats in process and finished boats includes labor, materials and allocated
production overhead. The first-in, first-out method is used to cost parts
and supplies for production. Boats in process and finished boats are valued
using the average cost method. Provision is made to reduce excess on
obsolete inventories to their estimated net realizable value.
Warranty reserves:
-----------------
The Company furnishes limited warranties from twelve to eighteen
months on its manufactured boats, and a lifetime hull warranty to the
original purchaser. The Company provides for warranty related expenses and
accruals as a percentage of net sales based on historical experience.
Stock based compensation:
------------------------
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," encourages, but does not require companies
to record compensation cost for stock-based employee compensation plans at
fair value. The Company has elected to account for stock-based compensation
plans using the intrinsic value method prescribed in Accounting Principles
Board ("APB") Opinion No.25, "Accounting for Stock Issued to Employees,"
and related interpretations. Accordingly, compensation costs for stock
options is measured as the excess, if any, of the quoted market price of
the Company's stock at the date of the grant over the amount an employee
must pay to acquire the stock. The Company did however issue common stock
totalling $ 30,000 to an employee for services rendered in the year ending
July 31, 1999.
Advertising:
-----------
The Company expenses marketing and advertising costs as they are
incurred. For the periods ended July 31, 1999 and 1998, these costs were
approximately $ 116,000 and $ 28,000 respectively.
Cash equivalents:
----------------
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents. The
Company occasionally maintains cash balances at financial institutions in
excess of Federally insured amounts.
Earnings (loss) per share:
-------------------------
Basic earnings (loss) per share ("basic EPS") is computed as net
loss divided by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could
occur from common shares issuable through stock options, warrants and other
convertible securities. Common equivalent shares are excluded from the
computation of earnings (loss) per share if their effect is anti-dilutive.
The following is reconciliation of the numerator (net loss)
and the denominator (number of shares) used in the basic and dilutive
earnings (loss) per share ("diluted EPS") calculation:
F-9
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1999 1998
----------- -----------
Basis and diluted EPS:
Net loss $ (755,617) $ (279,184)
Average common shares
outstanding 9,228,750 2,130,000
----------- -----------
Basic and diluted EPS $ (0.08) $ (0.13)
=========== ===========
Excluded from the shares used to calculate diluted EPS as
their effect is anti- dilutive were 1,559,000 convertible preferred shares
in 1999.
Recent accounting pronouncements:
--------------------------------
In June, 1997, the Financial Accounting Standards Board (the
"FASB") issued SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income generally represents all changes
in shareholders' equity during the period except those resulting from
investment by, or distributions to, shareholders. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997, and requires
restatement of earlier periods presented. We adopted SFAS 130 as of July
31, 1998, and have presented comprehensive income, if applicable, for all
periods presented in the statement of shareholders' equity.
In June, 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of and Enterprise and related information." SFAS No. 131
establishes standards for the way that a public enterprise reports
information about operating segments in annual financial statements, and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. SFAS No. 131
is effective for fiscal years beginning after December 15, 1997, and
requires restatement of earlier periods presented. The Company has
determined that it does not have any separately reporting business
segments.
In March, 1998, the AICPA issued SOP 98-1, "Accounting for the
Costs of Corporate Software Developed or Obtained for Internal Use", which
establishes guidelines for the accounting for the costs of all computer
software developed or obtained for internal use. The Company adopted SOP
98-1 effective for the year ended July 31, 1998. The adoption of SOP 98-1
is not expected to have a material impact on the Company's financial
statements.
In June, 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivated instruments, including
derivated instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. This statement does not apply to the
Company because it does not have any derivative instruments or hedging
activities.
Reclassification:
----------------
Certain prior period amounts have been reclassified in order to
conform with the current year financial statement presentation.
NOTE 3 - LEASE COMMITMENT
The Company leases office and manufacturing space from its
principal stockholder. The lease provides for monthly payments adjusted
annually for cost of living adjustments and space utilization until it
expires in May, 2002. The monthly rental was $ 13,184 at July 31, 1999 and
$ 12,525 at July 31, 1998, including sales and real estate taxes.
The Company previously received a four month rental abatement in
consideration for making various leasehold improvements and modifications.
Rental expense for the period ended July 31, 1999 and 1998, totaled
approximately $ 119,000 and $ 45,000 respectively.
F-10
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 3 - LEASE COMMITMENT (continued)
The following is a schedule of approximate future lease payments
required by this lease:
Year ending
July 31
2000 $ 141,800
2001 $ 148,800
2002 $ 65,100
Thereafter $ NONE
In connection with the lease above, the Company has been granted
an option to purchase the building as discussed in Note 6.
NOTE 4 - DEBT
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
--------- -------
Note payable to Triton Holdings International Corp., a stockholder
and related party, interest only at 10% through January, 2003, at
which time the principal balance is due. The note is
collateralized by substantially all of the assets of the Company.
The note is convertible into shares of common stock of the
Company, at the option of Triton at $ .50 per share before January
14, 2000, at $ .375 per share from January 14, 2000 to January 14,
2002, and at $ .25 thereafter until January 14, 2003. $ 350,000 $ --
Note payable to Triton Holdings International Corp. a stockholder
and related party, interest only at 12% through January, 2000, at
which time the principal balance is due. The note is
collateralized by certain assets of the Company. 50,000 --
10% note of the subsidiary payable in full upon the earlier of 18
months from February, 1998, or upon the completion of a private
offering of the Company's common stock of not less than 500,000
shares. During the year ended July 31, 1999 this note was
converted to Series A preferred stock. -- 295,000
----------- ---------
400,000 295,000
Less current portion 50,000 --
----------- ---------
$ 350,000 $ 295,000
=========== =========
</TABLE>
F-11
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 4 - DEBT (continued)
Future debt principal payments in the aggregate are approximately
as follows:
Year ending
July 31 1999 1998
------- --------- ------
1999 $ -- $ 295,000
2000 $ 50,000 $ --
2001 $ -- $ --
2002 $ -- $ --
2003 $ 350,000 $ --
Thereafter $ NONE $ NONE
NOTE 5 - PROVISION (CREDIT) FOR INCOME TAXES
Deferred taxes, if applicable, are provided at the combined
effective Federal and state statutory rates on timing differences which
occur when certain income and expense items are recognized at different
times for financial reporting and tax purposes.
The Company accounts for income taxes in accordance with the
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which requires the recognition of deferred tax liabilities and
assets at currently enacted tax rates for the expected future tax
consequences of events that have been included in the financial statements
or tax returns. A valuation allowance is recognized to reduce the net
deferred tax asset to an amount that is more likely than not to be
realized. The tax provision (credit) shown on the accompanying statements
of operations is zero, because the deferred tax asset that is generated
from net operating losses through July 31, 1999 is offset in its entirety
by a valuation allowance. Net operating loss carryforwards for financial
reporting and tax purposes total approximately $ 880,000. The tax losses
expire $ 210,000 in 2018 and $ 670,000 in 2019.
NOTE 6 - RELATED PARTY TRANSACTIONS
In connection with the lease agreement with its principal
stockholder (Note 3), the Company has been granted a purchase option on the
leased property for a three year period ending November 1, 2001. The option
price is as follows:
a. If option is exercised prior to November 1, 1999; purchase
price is $ 900,000
b. If option is exercised after November 1, 1999 but prior to
November 1, 2000; purchase price is $ 950,000
c. If option is exercised after November 1, 2000 but prior to
November 1, 2001; purchase price is $ 1,000,000
As more fully discussed in Note 4, the Company is obligated on
notes payable in the amounts of $ 350,000 and $ 50,000 to Triton Holdings
International Corp. (Triton) a stockholder of the Company. Interest expense
applicable to these notes was $ 28,563 and $ 5,645 for the year ended and
period ended July 31, 1999, and July 31, 1998, respectively. In addition,
several of the directors of Triton are also stockholders of the Company.
In addition, the Company has entered into a management agreement
with Triton which is more fully discussed in Note 7.
F-12
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 7 - COMMITMENTS
The Company entered into an employment agreement with its
President for his services until October, 2003 at $ 72,000 per year. The
agreement provides for an additional $ 2,500 per month when the Company has
achieved a positive cash flow from operations for three consecutive months
and $ 2,000 per month when the Company has net income from operations for
three consecutive months. The agreement may be automatically renewed for up
to two successive one year periods by mutual agreement between the parties.
In addition, the employment agreement provides for the President
to receive options to purchase 150,000 shares of common stock at $ .50 per
share, 150,000 shares of common stock at $ .625 per share, 150,000 shares
of common stock at $ .75 per share and 150,000 shares of common stock at $
1.00 per share. The options vest equally and may be exercised over a period
of five years. The employment agreement includes certain non-compete and
confidentiality provisions.
Further, the Company also entered into a five year management
agreement with Triton Holdings International Corp., a stockholder and
related party, Notes 4 and 6, until December, 2003. The agreement calls for
a payment of $ 5,000 per month for general business consulting services
during the term of the agreement.
The Company has made commitments to sell boats at cost or at a
dealer discount to certain stockholders and other related parties. Cost is
the actual material and labor plus allocated overhead. The dealer discount
is the manufacturers suggested list price less a dealer discount of 25%.
All dealers receive the same discount. No boats have been sold to and none
have been ordered by stockholders as of July 31, 1999.
NOTE 8 - CONTINGENCIES
From time to time the Company is subject to legal proceedings and
claims arising in the ordinary course of business. The Company is not aware
of any legal proceedings or claims that will have, individually or in the
aggregate, a material adverse effect on the Company.
NOTE 9 - CAPITAL STOCK
The capital stock structure of the Company is as follows:
Preferred stock, voting:
Series A, $ .001 par value, 10% cumulative, callable at $ 1.20 per
share, convertible into three shares of common stock until the
fifth anniversary of the date of issue at which time automatic
conversion will occur, 5,000,000 shares authorized, including
500,000 designated as 10% cumulative, 328,000 shares issued and
outstanding.
Preferred stock, nonvoting:
Series B, $ .001 par value, 10% cumulative, callable at $ 1.20 per
share, convertible into three shares of common stock until the
fifth anniversary of the date of issue at which time automatic
conversion will occur, 205,000 shares authorized, issued and
outstanding.
Common stock, voting, $ .001 par value, 50,000,000 shares
authorized and 4,033,500 shares issued and outstanding.
F-13
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1999 and 1998
NOTE 10 - EQUITY TRANSACTIONS
In December, 1998, the Company issued 295,000 shares of Series A
Preferred Stock along with warrants to purchase 295,000 shares of the
Series B Preferred Stock at $ 1.00 per share, exercisable for a period of
five years from the date of issuance. The stock was issued in consideration
for the cancellation of a $ 295,000 promissory note. As of July 31, 1999,
all of the warrants were still outstanding. Warrants are considered to be
of no value, consequently they are not recorded on the books of the
Company.
NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental Disclosure of Cash Flow Information:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash paid during the year for -
Interest $ 31,584 $ 2,250
Other Noncash Financing Activities:
Issuance of stock $ 1,277,567 $ --
Stock issued in lieu of
employee compensation (30,000) --
Debt reduction in connection
with issuance of Series A
preferred stock (295,000) --
Stock issued relating to
note payable (100,000) --
----------- -----------
Proceeds from issuance of stock $ 852,567 $ --
=========== ===========
</TABLE>
NOTE 12 - GOING CONCERN MATTERS
As shown in the accompanying financial statements, the Company
sustained net operating losses totalling $ 931,826 through July 31, 1999,
and as of that date, had current liabilities exceeding current assets by $
117,395. These deficiencies, as well as a significant deficit cash flow
from current operations, create an uncertainty about the Company's ability
to continue as a going concern.
From the inception of the Company through April, 1999, the Company
was primarily involved in satisfying certain obligations and commitments
relative to the purchase of assets from Jupiter 31, Inc. (Note 1), and in
relocating and modifying its manufacturing facility. During the last
quarter of the fiscal year the Company commenced normal operations and
generated approximately $ 1,000,000 of the total sales for the year ended
July 31, 1999. Management believes that it has assembled a management team
capable of recognizing and capitalizing on opportunities in the marine
industry, and they are committed to identifying business and financing
opportunities and strategic partners to infuse additional capital into the
Company until future profitable operations can be achieved. In addition,
the Company has completed the improvements to its facility and the
modifications to its production methods which should improve efficiency and
favorably impact future operations.
F-14
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2000 AND APRIL 30, 1999
<TABLE>
<CAPTION>
ASSETS
April 30, 2000 April 30, 1999
-------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 279,521 $ 167,011
Accounts receivable 36,997 --
Inventories 416,735 399,997
Prepaid expenses 6,115 8,272
---------- ----------
Total current assets 739,368 575,280
PROPERTY AND EQUIPMENT, at cost or allocated cost
Boat molds 1,029,124 822,181
Leasehold improvements 138,566 97,837
Machinery and equipment 126,449 34,847
Office equipment 10,112 7,000
---------- ----------
1,304,251 961,865
Less accumulated depreciation 416,467 236,171
---------- ----------
Total property and equipment 887,784 725,694
---------- ----------
OTHER ASSETS:
Deposits 30,510 20,000
---------- ----------
Total other assets 30,510 20,000
---------- ----------
Total assets $1,657,662 $1,320,974
========== ==========
F-15
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 363,510 $ 41,522
Payroll taxes payable -- 63,125
Accrued expenses 123,729 74,022
Customer deposits 28,124 199,194
Current portion of debt 50,000
Warranty reserve 56,005 49,084
----------- -----------
571,368 476,947
LONG TERM DEBT, less current portion 350,000 350,000
----------- -----------
Total liabilities 921,368 826,947
STOCKHOLDER'S EQUITY:
Capital stock, 5,000,000 shares of $.001
par value preferred stock authorized,
500,000 shares designated as 10% cumulative
Series A preferred stock, $.001 par value
($328,000 aggregate liquidation preference),
328,000 shares issued and outstanding 328 328
Capital stock, 205,000 shares designated as
as 10% cumulative Series B preferred stock,
$.001 par value ($205,000 aggregate
liquidation preference), 205,000 shares
issued and outstanding 205 205
Capital stock, 228,000 shares designated as
as 10% cumulative Series C preferred stock,
$.001 par value ($228,000 aggregate
liquidation preference), 228,000 shares
issued and outstanding 620 --
Capital stock, 50,000,000 shares of $.001
par value common stock authorized,
4,033,500 shares issued and outstanding 4,034 4,034
Additional paid-in capital 1,902,113 1,357,068
Accumulated deficit (1,171,006) (867,608)
----------- -----------
Total stockholder's equity 736,294 494,027
Total liabilities and stockholder's equity $ 1,657,662 $ 1,320,974
=========== ===========
</TABLE>
F-16
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS (LOSS)
<TABLE>
<CAPTION>
Three months Three months Nine months Nine months
ended ended ended ended
April 30, 2000 April 30, 1999 April 30, 2000 April 30, 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
NET SALES $ 1,857,607 $ 182,864 $ 4,143,548 $ 182,864
COST OF SALES 1,540,220 125,683.00 3,484,979 125,683
----------- ----------- ----------- -----------
Gross income 317,387 57,181 658,569 57,181
SELLING, GENERAL AND 295,173 363,135 768,112 625,668
ADMINISTRATIVE EXPENSES ----------- ----------- ----------- -----------
Profit (Loss) from operations 22,214 (305,954) (109,543) (568,487)
OTHER EXPENSE:
Interest expense 8,750 9,167 26,663 19,937
----------- ----------- ----------- -----------
Total other expense 8,750 9,167 26,663 19,937
Profit (Loss) before income taxes 13,464 (315,121) (136,206) (588,424)
PROVISION FOR INCOME TAXES -- -- -- --
Net Profit (Loss) $ 13,464 $ (315,121) $ (136,206) $ (588,424)
=========== =========== =========== ===========
Earnings (loss) per common share
Basic $ 0.001 $ (0.148) $ (0.015) $ (0.276)
=========== =========== =========== ===========
Earnings (loss) per common share
Diluted $ 0.001 $ (0.148) $ (0.013) $ (0.276)
=========== =========== =========== ===========
</TABLE>
F-17
<PAGE>
JUPITER MARINE INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED APRIL 30, 2000 AND APRIL 30, 1999
<TABLE>
<CAPTION>
Nine months Nine months
ended ended
April 30, 2000 April 30, 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (136,206) $ (588,424)
adjustments to reconcile net loss to
net cash (used) provided by operating activities:
Provision for depreciation 143,646 149,283
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (35,261) 411
(Increase) Decrease in inventories 4,456 (69,187)
(Increase) decrease in prepaid expenses 5,635 7,113
(Increase) decrease in other assets (6,510) (20,000)
Increase (decrease) in accounts payable 217,029 21,952
Decrease (increase) in payroll tax payable (33,125) 16,026
Increase in accrued expenses 40,852 41,973
(Decrease) increase in customer deposits (220,262) 43,005
Increase in warranty reserve 5,452 --
Decrease in other liabilities -- (604,406)
----------- -----------
Net cash (used in) provided by
operating activities (14,294) (1,002,254)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchase of property and equipment (261,201) (92,984)
----------- -----------
Net cash used in investing activities (261,201) (92,984)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payment) proceeds in debt (50,000) 105,000
Proceeds from stock transactions 545,665 1,154,710
----------- -----------
Net cash provided from financing activities 495,665 1,259,710
----------- -----------
Net increase (decrease) in cash 220,170 164,472
CASH, Beginning of period 59,351 2,539
----------- -----------
CASH, End of period $ 279,521 $ 167,011
=========== ===========
</TABLE>
F-18
