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FORM 10-QSB
(As last amended in Release No. 33-7505,
effective January 1, 1999, 63 F.R. 9632)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 27, 2001
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from __________________ to ___________________
Commission file number _____________
Jupiter Marine International Holdings, Inc.
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(Exact name of small business issuer as
specified in its charter)
Florida 65-0794113
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3391 S.E. 14th Avenue, Port Everglades, FL 33316
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(Address of principal executive offices)
954-523-8985
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of January 31, 2001,
there were 4,169,400 outstanding shares of $.001 par value common stock.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
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PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets as of July 28, 2000 and January 27, 2001 3
Statements of Operations for the three months and six months
ended January 31, 2000 and January 27, 2001 5
Statements of Cash Flows for the six months ended
January 31, 2000 and January 27, 2001 6
Notes to consolidated financial statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 5. Other Information 11
Item 6. Exhibits and reports on form 8-K 11
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Jupiter Marine International Holdings, Inc.
Consolidated Balance Sheets
July 29, 2000 and January 27, 2001
July 29, JANUARY 27,
2000 2001
(Audited) (UNAUDITED)
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Assets
Current assets:
Cash and cash equivalents $ 372,552 $ 274,573
Accounts receivable 17,134 18,127
Inventory 619,153 912,558
Prepaid expenses 34,888 36,985
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Total current assets 1,043,727 1,242,243
Property and equipment:
Boat molds 1,057,437 1,160,958
Leasehold improvements 160,071 202,620
Machinery and equipment 148,759 157,431
Office furniture and equipment 10,112 39,135
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1,376,379 1,560,144
Less accumulated depreciation and amortization 485,917 598,327
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Property and equipment, net 890,462 961,817
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Deposits and other 35,525 34,695
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Total assets $1,969,714 $2,238,755
========== ==========
See accompanying notes to consolidated financial statements
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July 29, JANUARY 27,
2000 2001
(Audited) (UNAUDITED)
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 351,538 275,384
Accrued expenses 86,605 56,243
Customer deposits 57,471 523,346
Warranty reserve 50,209 67,148
Accrued for litigation loss -- 120,000
Current portion of debt 223,200 --
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Total current liabilities 769,023 1,042,121
Long-term liabilities:
Accrued interest payable 54,444 62,909
Debt less current portion 350,000 350,000
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Total liabilities 1,173,467 1,455,030
Stockholders' equity
Convertible preferred stock, $.001 par value, 5,000,000
shares authorized $1,277,860 and $1,382,135
aggregate liquidation preference):
Series A, 328,000 and 305,000 shares issued and outstanding 328 305
Series B, 205,000 and 252,000 shares issued and outstanding 205 252
Series C, 744,860 and 825,135 shares issued and outstanding 745 825
Common stock, $.001 par value, 50,000,000 shares authorized
4,078,500 and 4,170,000 issued and outstanding 4,079 4,170
Additional paid-in capital 2,141,356 2,189,011
Accumulated deficit (1,350,466) (1,410,838)
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Total stockholders' equity 796,247 783,725
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Total liabilities and stockholders' equity $ 1,969,714 $ 2,238,755
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See accompanying notes to consolidated financial statements
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Jupiter Marine International Holdings, Inc
Consolidated Statements of Operations
(Unaudited)
Three Months THREE MONTHS Six Months SIX MONTHS
Ended ENDED Ended ENDED
January 31, 2000 JANUARY 27, 2001 January 31, 2000 JANUARY 27, 2001
---------------- ---------------- ---------------- ----------------
Net sales $ 1,073,451 $ 1,748,286 $ 2,285,941 $ 3,538,236
Cost of sales 896,689 1,390,090 1,944,759 2,819,674
----------- ----------- ----------- -----------
Gross profit 176,762 358,196 341,182 718,562
Operating expenses:
Selling 24,594 35,252 59,607 69,141
Advertising 38,283 25,100 45,131 57,232
General and administrative 146,527 181,400 287,762 370,034
Depreciation 45,846 56,310 92,337 112,410
----------- ----------- ----------- -----------
Total operating expenses 255,250 298,062 484,837 608,817
Income (loss) from operations (78,488) 60,134 (143,655) 109,745
Other income (expenses):
Interest expense (8,750) (22,232) (17,913) (58,282)
Other -- 2,186 -- 8,165
Litigation loss -- (120,000) -- (120,000)
----------- ----------- ----------- -----------
Net loss applicable to common stockholders $ (87,238) $ (79,912) $ (161,568) $ (60,372)
=========== =========== =========== ===========
Weighted average number of shares of common
stock outstanding 4,078,500 4,170,000 4,078,500 4,124,250
Net loss per common share - basic and diluted $ (0.02) $ (0.02) $ (0.04) $ (0.02)
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements
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Jupiter Marine International Holdings, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended January 31, 2000 and January 27, 2001
(Unaudited)
Six Months SIX MONTHS
Ended ENDED
January 31, 2000 JANUARY 27, 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(161,568) $ (60,372)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Depreciation and amortization 104,880 112,410
Amortization of deemed discount on notes payable -- 26,800
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (104,855) (993)
(Increase) decrease in inventories 28,162 (293,405)
(Increase) decrease in prepaid expenses (9,107) (2,097)
(Increase) decrease in other assets (4,800) 830
Increase (decrease) in accounts payable 139,802 (76,154)
Decrease (increase) in payroll tax payable (33,125) --
Increase (decrease) in accrued expenses 89,102 (30,362)
(Decrease) increase in customer deposits (121,386) 465,875
Increase in accrued litigation loss -- 120,000
Increase in accrued interest -- 8,465
Increase (decrease) in warranty reserve 2,625 16,939
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Net cash (used in) provided by
operating activities (70,270) 287,936
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (23,477) (183,765)
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Net cash used in investing activities (23,477) (183,765)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt (50,000) (250,000)
Net proceeds from sale of preferred stock 227,800 47,850
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Net cash provided by (used in)
financing activities 177,800 (202,150)
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Net increase (decrease) in cash 84,053 (97,979)
CASH, beginning of period 59,351 372,552
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CASH, end of period $ 143,404 $ 274,573
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See accompanying notes to consolidated financial statements
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Jupiter Marine International Holdings, Inc
Notes to consolidated Financial Statements
(UNAUDITED)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of normal recurring
accruals considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended January 27, 2001 are
not necessarily indicative of the results that may be expected for the year
ending July 28, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on form 10-KSB for the year ended July 29, 2000.
In order to maintain consistency and comparability between periods presented
certain amounts have been reclassified from the previously reported financial
statements in order to conform to the financial statement presentation of the
current period.
The consolidated financial statements include Jupiter Marine International
Holdings, Inc., ("the Company") and its wholly-owned subsidiaries, Jupiter
Marine International, Inc. and Phoenix Yacht Corporation. All inter-company
balances and transactions have been eliminated.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Jupiter Marine International Holdings, Inc. (JMIH), a Florida
corporation, is the holding company of Jupiter Marine International, Inc.(JMI),
the manufacturer of Jupiter boats, and Phoenix Yacht Corporation ("Phoenix"),
which holds the right to use the Phoenix trademark and the molds and tooling for
the 34' and 38' Phoenix Convertible Sportfisherman models. JMIH, JMI and Phoenix
are collectively referred to as the Company.
The Company designs, manufactures and markets a diverse mix of high
quality sportfishing boats under the Jupiter and Phoenix names. The Jupiter
product line currently consists of three outboard powered center console models:
the classic 31' Open, a 31' Cuddy Cabin and a 27' Console-berth model. The
Phoenix models include a completely redesigned inboard powered 35' Flybridge
Convertible as well as a 38' Flybridge Convertible. The Company's principal
offices and manufacturing facilities are located in Port Everglades, Florida.
The Company's Web site address is www.jupitermarine.com.
Management's discussion and analysis contains various "forward-looking
statements" within the meaning of the Securities and Exchange Act of 1934. Such
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate" or "continue" or use of negative or other
variations or comparable terminology.
The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those contained in the forward-looking statements, that these forward-looking
statements are necessarily speculative, and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements.
NET SALES
The Company's net sales increased by $674,835 (or 62.9%) to $1,748,286
for the quarter ended January 27, 2001 as compared to $1,073,451 for the quarter
ended January 31, 2000. For the six months ended January 27, 2001 sales were
$3,538,236 compared to $2,285,941 for the six months ended January 31, 2000, an
increase of $1,252,295 (or 54.8%). Management believes the Company's reputation
for building a high quality and seaworthy boat continues to spread throughout
the boating community, which has translated into increased sales. Management
also believes the Company's advertising campaign, boating magazine articles and
boat show participation has increased the awareness of the Jupiter and Phoenix
brands to the retail customer which has resulted in
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increased sales. During the quarter ended January 27, 2001 the first Phoenix 35
was delivered. The average sales price per boat for the quarter ended January
27, 2001 was $115,745 as compared to $81,873 for the same quarter last year.
This change is due to the sale of larger, more expensive boats.
Dealer inventory remains relatively low for this time of year. Order
backlog has been reduced to less than eight weeks due to seasonality, poor
economic news reports and condition of the stock market. Management was very
pleased with the results of the Miami International Boat Show in February 2001.
Dealer participation and consumer acceptance of the Jupiter and Phoenix brand at
the show was far greater than anticipated.
COST OF SALES
Cost of sales for the quarter ended January 27, 2001 were $1,390,090
resulting in gross margin of $358,196 or 20.5% of net sales. For the quarter
ended January 31, 2000 cost of sales was $896,689 and gross margin was $176,762
or 16.5% of net sales. For the six months ended January 27, 2001 gross margin
was $718,562 of 20.3% of net sales. For the same six months last year gross
margin was $341,182 which was 14.9% of net sales. The improvement in gross
margin dollars and percentage of net sales is due to improved manufacturing
efficiencies, reductions in material cost and to a lesser extent, a sales shift
to higher gross margin product.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased $42,812 (16.8%)
to $298,062 for the quarter ended January 27, 2001, or 17.0% of net sales, as
compared to $255,250, or 23.8% of net sales for the quarter ended January
31, 2000. For the six months ended January 27, 2001 operating expenses were
$608,817, or 17.2% of net sales. For same six months of last year operating
expenses were $484,837, or 21.2% of net sales. These dollar increases are due to
increased spending needed to support the increased sales volume and the
introduction of the Phoenix product line. For example, one sales assistant and
one customer service representative were added to the payroll as well as
increased boat and trade show participation. Advertising expenditures have also
increased.
Depreciation and amortization expense increased $20,072 (21.7%) from
$92,337 for the six month period ended January 31, 2000 to $112,410 for the six
month period ended January 27, 2001, due to new leaseholds and equipment
purchases needed to support the sales increase.
Interest expense increased by $13,482 for the quarter ended January 27,
2001 because of interest on the of short term borrowings, which were repaid
during December 2000, and $7,000 amortization of deemed discount for warrants
issued in connection with notes payable issued last year.
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LIQUIDITY AND CAPITAL RESOURCES
The Company, from its inception through the end of fiscal year 1999,
had experienced negative cash flow and met its cash requirements by issuing,
through private placements, its common and preferred stock. The Company
anticipates that funds received from these sources and cash generated from
operations should be sufficient to satisfy the Company's contemplated cash
requirements for at least the next 12 months. After such time, the Company
anticipates that cash generated from operations will be sufficient to fund its
operations, although there can be no assurances that this will be the case.
Inventories increased by $293,405 to $912,558 at January 27, 2001
compared to $619,153 at July 29, 2000 as a result of higher production.
Expenditures made for molds and tooling were $183,765 for the six months ended
January 27, 2001 as compared to $27,477 for the six months ended January 31,
2000. This increase is primarily due to the initial start-up costs for the
Phoenix line. Accounts payable decreased by $76,154 during this same time period
due to increased liquidity allowing for faster payment of payables in relation
to the inventory build up. Customer deposits increased during the six months
ended January 27, 2001 because of deposits made by our customers to secure
production slots for the Phoenix 35. Short term notes in the amount of $250,000
were paid off during December 2000.
During the six months ended January 27, 2001, the Company sold through
a private placement, 55,000 shares of Series C Convertible Preferred Stock for
$1 per share resulting in proceeds of $47,850, net of expenses.
The Company does not anticipate any significant purchase of equipment
in the near future. The number and level of employees at January 27, 2001 should
be adequate to fulfill the production schedule.
A provision for the final judgement of a lawsuit (see Item 5 of Other
Information) in the amount of $120,000 was recorded prior to January 27, 2001.
If the Company does not appeal the verdict, payment will be needed to be made in
the third quarter.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On July 20, 1999, Peter Fallon filed a law suit against JMI in Palm
Beach County alleging that JMI was obligated to pay a debt incurred by Mr.
Fallon by Jupiter 31, Inc. On February 27, 2001, JMI participated in a jury
trial in the fifteenth judicial circuit in and for Palm Beach County, Florida.
The jury returned a verdict in favor of plaintiff Peter Fallon for the sum of
$70,000 plus prejudgment interest from December 2, 1997, in the amount of
$22,890 for a total of $92,890. The Court reserves jurisdiction to determine the
amount of court costs and attorney's fees awarded to Mr. Fallon. The Company is
evaluating its options concerning post-trial appellate issues. JMI would have 30
days from the entry of the final judgment to file an appeal of the verdict. The
Company recorded a provision of $120,000 during the quarter ended January 27,
2001 regarding this suit.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Requlation S-B
None
(b) Reports on Form 8-K
None
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JUPITER MARINE INTERNATIONAL
HOLDINGS, INC.
Date: March 13, 2001 By: /s/ Carl Herndon
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Carl Herndon, Director, CEO and President
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