FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 {FEE REQUIRED}
For the fiscal year ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 {NO FEE REQUIRED}
For the transition period from to
Commission File No. 33-18461
JET SET LIFE USA, INC.
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(Exact name of registrant as specified in its charter)
Delaware 75-2195575
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State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
21935 Van Buren, Suite 4, Grand Terrace, California 92313
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 783-1800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock - $.0001 par value per share
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
twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ ] Yes [X] No
State Issuer's revenues for the June 30, 1999 fiscal year: $177,897
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-KSB or any amendment. [X]
The aggregate market value of the common voting stock held by
non-affiliates as of June 30, 1999: Not Determinable.
Shares outstanding of the Registrant's common stock as of June 30, 1999
66,256,792 shares.
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TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. Description of Business . . . . . . . . . . . . . . . 1
History of Business . . . . . . . . . . . . . . 1
Narrative Description of JSLT . . . . . . . . . 3
Product Description . . . . . . . . . . . . . . 4
Growth Strategy . . . . . . . . . . . . . . . . 10
Dealer Referral Plan . . . . . . . . . . . . . 10
Racing Results . . . . . . . . . . . . . . . . 11
Advertising . . . . . . . . . . . . . . . . . . 13
Trade Shows . . . . . . . . . . . . . . . . . . 13
Overseas Markets . . . . . . . . . . . . . . . 14
Competition . . . . . . . . . . . . . . . . . . 15
Risk Factors. . . . . . . . . . . . . . . . . . 15
Subsequent Events . . . . . . . . . . . . . 15
Exclusive Territory Dealership Program . . . . . . . 17
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . 19
ITEM 4. Submission of Matters to a Vote of Security Holders . 20
PART II
ITEM 5. Market for Registrant's Common Equity and Related . . 20
Stockholder Matters . . . . . . . . . . . . . . . . 20
ITEM 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . 21
ITEM 7. Financial Statements . . . . . . . . . . . . . . . . 25
ITEM 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure. . . . . . . 25
PART III
ITEM 9. Director and Executive Officers . . . . . . . . . . . 26
ITEM 10. Executive Compensation. . . . . . . . . . . . . . . . 28
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . 29
ITEM 12. Certain Relationships and Related Transactions. . . . 29
PART IV
ITEM 13. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . 30
Signatures. . . . . . . . . . . . . . . . . . . . . . 31
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FORWARD LOOKING STATEMENTS
THIS ANNUAL REPORT ON FORM 10-K, IN PARTICULAR "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" AND "ITEM 1. BUSINESS," INCLUDE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE STATEMENTS
REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS CONCERNING, AMONG
OTHER THINGS, FUTURE REVENUE, EARNINGS, AND OTHER FINANCIAL
RESULTS, PROPOSED ACQUISITIONS AND NEW PRODUCTS, ENTRY INTO NEW
MARKETS, FUTURE OPERATIONS AND OPERATING RESULTS, FUTURE BUSINESS
AND MARKET OPPORTUNITIES. THE COMPANY WISHES TO CAUTION AND
ADVISE READERS THAT SUCH STATEMENTS, WHICH MAY BE IDENTIFIED BY
WORDS INCLUDING "ANTICIPATES," "BELIEVES," "INTENDS," "ESTIMATES,"
"EXPECTS," AND SIMILAR EXPRESSIONS, ARE ONLY PREDICTIONS OR
ESTIMATIONS AND ARE SUBJECT TO KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE EXPECTATIONS AND BELIEFS CONTAINED HEREIN.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Jet Set Life USA, Inc. (the "Company") manufactures and sells
automotive related products direct to the consumer through the
Internet and retail dealers. Purchasers of the Company's products
vary from ordinary car owners to those specializing in building race
cars and racing engines, as well as automotive parts supply dealers,
motorcycle dealers, boat dealers, garages, service stations, and car
and truck Dealers.
The Company specializes in manufacturing and distributing products
which, will improve horsepower and performance of any internal
combustion engine. The Company believes, and automotive dynamometers
and test equipment shows, that all the Company's products also
lower emissions and harmful air pollutants, while still providing
increased fuel economy and reduced internal engine wear.
(See description of each individual product)
HISTORY OF BUSINESS
Jet Set Life USA, Inc. (the "Company") was organized as
a Delaware corporation on February 17, 1987, under the name
"Caravel Corporation" to be a publicly-held shell corporation
available to be combined with a privately-held Company that desired
to become publicly-held without offering its own securities to the
public. The Company had no business operations and had no planned
business activities except for the identification of and merger
with a privately-held Company.
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The Company was a wholly-owned subsidiary of ANova
Ventures Corporation ("ANova") until April 11, 1987, the
declaration date of a dividend of the Company's securities,
consisting of common stock and warrants to purchase common stock,
to the stockholders of ANova. On December 31, 1987, Liberty
Military Sales, Inc. merged into ANova and ANova's name was changed
to Liberty Military Sales, Inc. On March 10, 1989, the Company
acquired Jet Set Life, Inc., a privately-held Nevada Corporation
in a business combination accounted for as a reverse recapitalization.
Jet Set Life, Inc. became a wholly owned subsidiary of the Company
through the exchange of shares of the Company's common stock for
all the outstanding stock of Jet Set Life, Inc.
After the transaction, the shareholders of Jet Set Life, Inc. owned
the majority of stock in the Company and management of Jet Set
Life, Inc. became management of the Company.
As part of the stockholders' meeting approving the acquisition of
Jet Set Life, Inc., the stockholders' approved a 6 for 1 forward
stock split and the name changed from Caravel Corporation to Jet
Set Life USA, Inc. (The Company)
Thereafter the Jet Set Life USA Subsidiary, Jet Set Life, Inc.,
engaged in network marketing with two (2) programs: a nutrition
and weight loss products line and a video-audio subliminal
reprogrammer (VSR). Jet Set Life, Inc. was unable to obtain a
consistent source of VSRs for sale due largely in part to flaws in
the electronic components for the VSR.
The Subsidiary, Jet Set Life, Inc. was not able to succeed
financially and on November 15, 1990, it filed a Voluntary Petition
for relief under Chapter 7 of the United States Bankruptcy Code
with the U.S. Bankruptcy Court for the District of Central
California (the "Bankruptcy Court"). As a result of the
bankruptcy proceeding, the Subsidiary ceased to exist on March 1,
1991.
The Company did not engage in any business from June 1990 until
1996.
On June 30, 1996, the Company acquired Jet Set Life
Technologies, Inc., a privately held Delaware corporation ("JSLT")
in a business combination accounted for as a pooling of interests.
JSLT became a wholly-owned subsidiary of the Company through the
exchange of shares of the Company's common stock for all the
outstanding stock of JSLT. After the transaction the shareholder of
JSLT owned the majority of stock in the Company. JSLT was founded
and wholly-owned by George W. French, who is president, a director
and controlling shareholder of the Company and was prior to the
acquisition of JSLT.
The Company has several wholly-owned foreign subsidiary
corporations who engage in the distribution of all the Company's
products. The Company operates subsidiary corporations in the
U.S., Canada, UK, New Zealand, and Australia, as well as having
independent distribution channels in Germany, Austria, Netherlands,
Singapore, Taiwan, Estonia, Mexico, Puerto Rico, and the Bahamas.
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NARRATIVE DESCRIPTION OF JSLT
JSLT was started by George W. French in the summer of 1993 with two
products, a magnetic gasoline and diesel fuel treatment device and
an oil additive, both of which were purchased from outside sources.
JSLT subsequently acquired the rights to a catalytic cartridge
fuel saving device from a third party and a magnetic fuel saving
device from its President. JSLT combined these new technologies
into their product, the Triple Charger, which management believes
has the ability to treat gasoline or diesel fuel as it passes
through the device on its way to the engine combustion chamber in
such a way that mileage is increased, and emissions are decreased.
The driving public, both individual and commercial, composed the
principal market for the products and services of JSLT. JSLT chose
direct sales through a multi-level marketing network of independent
distributors as the means to sell its products. During 1999, JSLT
shifted from multi-level marketing to retail sales. JSLT has since
acquired distribution rights to a new and improved motor oil
additive, it has named Oil Extreme.
None of JSLT's products are covered by patents, but are produced
under conditions of trade secrecy.
The Company was originally started as a direct sales/network
marketing Company utilizing a group of independent
distributors whose purpose was to retail the Company's Triple
Charger fuel saving device to friends, relatives, and commercial
accounts such as trucking companies, automobile fleets, and
manufacturers who used oil and grease in their equipment.
The Company grew to over a million dollars in sales during
the first three years of operation using this marketing
method. The opportunity to acquire the rights to market a new
calcium carbonate Extreme pressure oil additive that was far
superior to the chlorinated paraffin based additive the Company had
been selling was studied over a several month period. Even though
the oil technology was clearly a superior product it was felt that
a change in product technology could slow sales while the Company's
distributors learned about the new benefits.
Finally, management decided that the future of the new technology
far outweighed the chlorinated additive it was using. Even though
the old product worked well, it used the same chlorinated
ingredients most of the other oil additive manufacturers used, and
are still using. One of the drawbacks of this old technology was
the harmful corrosive effects the chlorine produced.
In recent months the decision to change to the new calcium
carbonate technology proved correct.
Various after-market oil additive companies who have been using
chlorinated ingredients have come under fire from the Federal Trade
Commission for making unsubstantiated claims for their products.
Since most of the companies are using the same highly corrosive
ingredients it is very hard for them to defend against the
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Government's lawsuits. For two years some companies advertised
heavily on television almost every night. Now you rarely see their
30 minute infomercials.
One competitor who was using a questionable ingredient,
PTFE in their additive was fined $10,000,000 by the Federal Trade
Commission.
Even though management now had an oil technology it could
explain, and defend itself against any claim of being just
another snake oil, the independent distributors did not like the
change because they now had to go back to all their customers and
resell them on the new technology.
This change not only slowed sales for the Company's oil products
but for the Triple Charger as well. The Triple Charger,
EX-3s, suggested retail price of $229.00, and the model for large
diesel trucks the DX-3s suggested retail price of $799.00, are both
sold as a package with Oil Extreme. Even though the oil additive
was given free of charge with each Triple Charger. it was felt the
sales drop came because the two products were too closely tied
together.
The best training tools, presentation materials, and oil
training schools the Company devised did not bring the sales
back to where they were before the change to the new calcium
carbonate oil technology. Since the Company was working on an
improved model of the Triple Charger it was felt that the prudent
route to take was to build the confidence in the new oil technology
first, rather than continue heavy promotion of the Triple Charger
until such time as the improved model was finished.
Since the sales for all the Company's products hinged so much
on the Independent sales person's attitude toward them, it
was felt that the Company must gain their confidence in the new Oil
Extreme, but also create a demand for the product from the motoring
public as well as the racing fraternity.
PRODUCT DESCRIPTION
EX-3 TRIPLE CHARGER:
The EX-3 Triple Charger for gasoline or diesel powered cars and
pickup trucks employs two state-of-the-art technologies that work
synergistically to modify the long hydrocarbon chains found in all
gasoline and diesel fuels. This cracking process allows the
molecules to combine more thoroughly with oxygen when the fuel
reaches the air coming through the intake manifold of a vehicle's
engine.
Because of many fuel saving devices sold over the years that didn't
work as claimed, the Company expects skepticism, but a simple smog
check with a four gas analyzer found in most repair shops, will
quickly prove that an engine is burning cleaner. Some vehicle
owners experience a drop in hydrocarbons as much as 70% to 90%, and
sometimes they even drop to 0. The same is true for carbon
monoxide.
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If an engine is more completely burning the fuel there will be more
horsepower, acceleration, and better fuel mileage. The customer
will not only save money, but they will have the satisfaction of
knowing they are doing their bit to help save the planet from
pollution.
The EX-3 Triple Charger is so effective that each customer
receives a written GUARANTEE they will receive a minimum of 20%
increase in mpg for cars, RV's, pickups, boats, stationary engines,
and small commercial trucks using gasoline, or petrol, and a 15%
increase for the same size vehicles using diesel fuel, if the
Triple Charger is used in conjunction with the Company's Oil
Extreme.
Technology #1
The Triple Charger is installed in the engine's incoming fuel line
the same as an auxiliary fuel filter would. The fuel first passes
through a Catalytic Cartridge containing precise amounts of an
alloy made of precious, semi precious and common metals which have
gone through a proprietary 9 step chemical process. When viewed
under a microscope it can readily be seen that crystals have grown
on all the metal surfaces. Independent laboratory tests prove
that the cetane rating of diesel fuel is raised 7.9% after passing
through the catalytic cartridge. (Cetane in diesel fuel is the
same as octane in gasoline.)
Technology #2
After passing through the catalytic cartridge the fuel next flows
through very powerful magnetic fields which act to break up the
fuel's molecular clumps before they reach the intake.
There has been very little scientific study done on fuel
ionization, however, funding is being sought by one
University in Scotland that will allow them to do an in-depth study
of the Triple Charger, as well as a two year field study.
DX-3 DIESEL TRIPLE CHARGER:
The Diesel Triple Charger is a much larger version of the EX-3
Triple Charger for passenger car and light truck engines
up to 7.9 liters. The DX-3 is designed to be fitted to diesel
engines found in large over-the-road trucks, and offroad heavy duty
equipment such as tractors, and road graders, as well as large
diesel generators.
With so much emphasis being placed on the air pollution being
generated by diesel trucks, the DX-3 Triple Charger can be an
important aid in reducing the smoke opacity and pollutants
generated by these engines. The Company guarantees a 15% increase
in fuel mileage when the DX-3 Triple charger is used in conjunction
with its Oil Extreme.
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OIL EXTREME CONCENTRATE:
The third member of the Triple Charger team is Oil Extreme, an oil
concentrate so powerful and effective that only 1 ounce is needed
per quart of regular oil.
Oil Extreme Concentrate is a totally new technology which gives
Extreme pressure qualities to oil. By manipulating the molecules
of Calcium Carbonate, an ingredient found in all motor oils, enough
Calcium Carbonate can be added to Oil Extreme so it has a TBN
(Total Base Number) of 320.
When just 1 ounce of Oil Extreme is added to a quart of regular
motor oil, the TBN of the oil is raised to 18, far above the normal
7 to 8. TBN determines how well an oil can counteract the acids
produced by normal combustion.
This extra Calcium Carbonate gives a greater alkaline reserve, but
under high heat and pressure, fills the asperities, or microscopic
valleys found in all metal surfaces. Under boundary lubrication
conditions, such as high heat, cold starts, quick acceleration,
heavy load, and high RPMs, the regular protective oil film is
broken through, and metal to metal contact is experienced.
The University of Bristol, in England says that their new measuring
techniques show that only 10 to 20% of an engine's metal surfaces
come in contact during boundary lubrication conditions.
By filling the asperities in the metal's surface with a hard
calcium carbonate tribochemical film, the forces onts have been
entered against the Company. The amount of the judgements have
been accrued in the financial statements.
(G) COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Not applicable.
ITEM 10. EXECUTIVE COMPENSATION.
(A) CASH COMPENSATION.
During the last fiscal year, William Maass, who is the Company's
Secretary and a director was paid cash compensation of approximately
$0 which included salary and expense reimbursement. Mr. Maass
will be paid a comparable amount during the current fiscal year. In
the fiscal year ending June 30, 1998, and also the fiscal year ending
June 30, 1999, the Company accrued but did not pay a salary to its
president in the amount of $36,000.00 each year. No other officer
or director received any salary during the last fiscal year and the
Company has no plans to pay any during the current fiscal year.
(B) COMPENSATION PURSUANT TO PLANS.
Except as described in Item 10(c), there are presently no retirement,
stock option or other plans or arrangements pursuant to which cash or
non-cash compensation was paid or is proposed to be paid or
distributed in the future to any of the current executive officers
of the Registrant.
(C) OTHER COMPENSATION.
None
(D) COMPENSATION OF DIRECTORS.
None other than as described under Item 10(a) and 10(c).
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
The following tabulates holdings of Common Shares of the Company as
of June 30, 1999, held of record by all Directors, Officers and
Principal Shareholders individually and as a group.
Percent of
Names and Addresses of Number of Shares Common Stock
Officers and Director of Common Stock Owned(1)
George French 39,151,225 59%
William Maass 750,000 1%
All officers and
directors as a group (2 persons) 39,901,225 60%
(B) CHANGES IN CONTROL.
None
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. See Item
10(c) also.
None
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(A) Exhibits listed in the following index are
included as part of this report. Those documents which have
previously been filed as an exhibit to a registration statement
or report under the Securities Act or the Exchange Act are
incorporated herein by reference into such reports and are
marked "previously filed."
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EXHIBIT INDEX
No. Description
3.1 Articles of Incorporation Previously Filed
3.2 Articles of Amendment Previously Filed
3.3 By-Laws Previously Filed
4.1 Specimen Stock Certificate Previously Filed
SIGNATURES
Pursuant to the requirements of Section 13, or 15(d) of the
Securities and Exchange Act of 1934, the Registrant had duly caused
this Report to be signed on its behalf by the undersigned thereunto
duly authorized in the city of Salt Lake, State of Utah on this
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JET SET LIFE USA, INC.
By: /s/ George French
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President, George French
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed by the following persons in the
capacities and on the dates indicated.
Date: June 27, 2000 /s/ George W. French
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George W. French,President
and Director
Date: June 27, 2000 /s/ William Maass
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William Maass
Secretary/Treasurer
and Director
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JET SET LIFE USA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Report of Independent Certified Public Accountants 1
Consolidated Balance Sheet - June 30,1999 2
Consolidated Statements of Operations for the Years
Ended June 30, 1999 and 1998 4
Consolidated Statements of Stockholders' Deficit for
the Years Ended June 30, 1999 and 1998 5
Consolidated Statements of Cash Flows for the Years
Ended June 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
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HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
Member of AICPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East Broadway, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and the Board of Directors
Jet Set Life USA, Inc.
We have audited the accompanying consolidated balance sheet of Jet Set Life
USA, Inc. and Subsidiaries as of June 30, 1999, and the related consolidated
statements of operations, cash flows and stockholders' deficit for each of
the two years in the period ending June 30, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material missta
