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 October 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 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 December
2, 2001, there were 4,143,300 outstanding shares of $.001 par value common
stock.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
Part I. Financial Information
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Item 1. Consolidated Financial Statements
Balance Sheets as of July 28, 2001 and October 27, 2001
Statements of Operations for the three months ended October 28, 2000
and October 27, 2001
Statements of Cash Flows for the three months ended October 28, 2000
and October 27, 2001
Statements of Stockholders' Equity as of July 28, 2001 and October 27,
2001
Notes to consolidated financial statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Part II. Other Information
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Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
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PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
Jupiter Marine International Holdings, Inc.
Consolidated Balance Sheets
July 28, 2001 and October 27, 2001
July 28, October 27,
2001 2001
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Assets (Audited) (Unaudited)
Current assets:
Cash and cash equivalents $ 73,068 $ 202,883
Accounts receivable 9,617 12,262
Inventory 898,668 914,201
Prepaid expenses 48,521 48,817
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Total current assets 1,029,874 1,178,163
Property and equipment:
Boat molds 1,215,926 1,304,627
Leasehold improvements 247,670 251,070
Machinery and equipment 157,431 161,620
Office furniture and equipment 39,583 41,605
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1,660,610 1,758,922
Less accumulated depreciation and amortization 735,417 805,489
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Property and equipment, net 925,193 953,433
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Deposits and other 36,905 42,578
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Total assets $ $1,991,972 $ 2,174,174
=============== ==============
See accompanying notes to consolidated financial statements
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July 28, October 27,
Liabilities and Stockholders' Equity 2001 2001
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(Audited) (Unaudited)
Current liabilities:
Accounts payable 377,621 526,749
Accrued expenses 84,044 84,588
Customer deposits 537,128 434,587
Warranty reserve 54,694 55,141
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Total current liabilities 1,053,487 1,101,065
Long-term liabilities:
Accrued interest payable 53,957 62,708
Debt less current portion 350,000 350,000
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Total liabilities 1,457,444 1,513,773
Stockholders' equity
Convertible preferred stock, $.001 par value, 5,000,000
shares authorized $1,277,860 and $1,498,019
aggregate liquidation preference):
Series A, 315,000 shares issued and outstanding 315 315
Series B, 328,750 shares issued and outstanding 329 329
Series C, 854,269 shares issued and outstanding 854 854
Common stock, $.001 par value, 50,000,000 shares authorized
4,143,300 issued and outstanding 4,144 4,144
Additional paid-in capital 2,302,133 2,335,312
Accumulated deficit (1,773,247) (1,680,553)
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Total stockholders' equity 534,528 660,401
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Total liabilities and stockholders' equity $ $1,991,972 $ 2,174,174
=============== ==============
See accompanying notes to consolidated financial statements
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Jupiter Marine International Holdings, Inc
Consolidated Statements of Operations
For the Three Months Ended October 28, 2000 and October 27, 2001
(Unaudited)
Three Months Three Months
Ended Ended
October 28, 2000 October 27, 2001
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Net sales $ 1,789,950 $ 1,925,381
Cost of sales 1,429,584 1,456,030
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Gross profit 360,366 469,351
Operating expenses:
Selling, general and administrative 254,655 264,754
Depreciation and amortization 56,100 70,073
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Total operating expenses 310,755 334,827
Income from operations 49,611 134,524
Other income (expense):
Interest expense (36,050) (8,791)
Other 5,979 140
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Net Income 19,540 125,873
Dividends on preferred stock 27,772 33,179
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Net income (loss) applicable to common stockholders $ (8,232) $ 92,694
================ ===============
Net income (loss) per common share - basic (Note 2) $ - $ 0.02
================ ===============
See accompanying notes to consolidated financial statements
5
Jupiter Marine International Holdings, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended October 28, 2000 and October 27, 2001
(Unaudited)
Three Months Three Months
Ended Ended
October 28, 2000 October 27, 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,540 $ 125,873
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 56,100 70,073
Amortization of deemed discount on notes payable 19,800 -
Decrease (increase) in:
Accounts receivable 3,355 (2,645)
Inventories (395,410) (15,533)
Prepaid expenses (5,493) (296)
Other assets 851 (5,673)
Increase (decrease) in:
Accounts payable (40,298) 149,128
Accrued expenses 34,177 544
Customer deposits 377,312 (102,541)
Warranty reserve 1,516 447
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Net cash provided by
operating activities 71,450 219,377
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (46,940) (98,313)
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Net cash used in investing activities (46,940) (98,313)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long term interest payable - 8,751
Net proceeds from sale of preferred stock 47,850 -
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Net cash provided by financing activities 47,850 8,751
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Net increase in cash 72,360 129,815
CASH, beginning of period 372,552 73,068
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CASH, end of period $ 444,912 $ 202,883
============== ===============
See accompanying notes to consolidated financial statements
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Jupiter Marine International Holdings, Inc.
Consolidated Statements of Stockholders' Equity
Perferred Stock Common Stock
Number Number Additional Total
of of Paid-in Accumulated Stockholders'
Shares Amount Shares Amount Capital Deficit equity
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Balance, July 31. 1999 533,000 $ 533 4,078,500 $ 4,079 $ 1,357,023 $ (1,034,801) $ 326,834
Preferred stock dividend declared
and issuable 114,108 (114,108)
Net proceeds from sale of Series C
preferred stock 744,860 745 633,925 634,670
Deemed discount for fair value of
warrants issued in connection with
notes payable 36,300 36,300
Net loss (201,557) (201,557)
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Balance, July 29, 2000 1,277,860 1,278 4,078,500 4,079 2,141,356 (1,350,466) 796,247
Issued stock dividend 53,300 53 (53) -
Conversion of Sereis A preferred (15,600) (15) 46,800 47 (32) -
stock to Common stock
Conversion of Sereis B preferred
stock to Common stock (6,000) (6) 18,000 18 (12) -
Preferred Stock dividend 133,459 133 113,079 (113,212) -
declared and issuable
Net proceeds from sale of Series C 55,000 55 47,795 47,850
preferred stock
Net loss (309,569) (309,569)
Balance July 28, 2001 1,498,019 $ 1,498 4,143,300 $ 4,144 $ 2,302,133 $ (1,773,247) $ 534,528
Net Income 1st qtr 10/27/01 92,694 92,694
Preferred stock dividend 33,179 33,179
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Balance October 27, 2001 1,498,019 1,498 4,143,300 4,144 2,302,133 (1,647,374) 660,401
===========================================================================================
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-month period ended October 27, 2001 are not
necessarily indicative of the results that may be expected for the year ending
July 27, 2002. 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 28, 2001.
In order to maintain consistency and comparability between periods presented
certain amounts have reclassified from the previous 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.
Note 2. Earnings Per Share
The following table sets forth the computation of the basic and fully diluted
earnings per share for the three-month periods ended October 28, 2000 and
October 27, 2001.
2000 2001
Numerator:
Net income $19,540 $125,873
Preferred stock dividends (27,772) (33,179)
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Numerator for basic earnings per share:
Income available to common stockholders (8,232) 92,694
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JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Effect of dilutive securities:
Convertible debt 8,750 8,791
Numerator for diluted earnings per share:
Income available to common stockholders
After assumed conversion $ 518 $ 101,485
============ =============
Denominator:
Denominator for basic earnings per share:
Weighty average shares 4,078,500 4,143,300
Effect of dilutive securities:
Convertible preferred stock 3,411,270 3,639,788
Convertible debt 933,333 1,400,000
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Dilutive potential common shares 4,344,603 5,039,788
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Denominator for diluted earnings per share 8,423,103 9,183,088
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Basic earnings per share $ (0.00) $ 0.02
============ =============
Diluted earnings per share $ (0.00) $ 0.01
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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, was incorporated on May 19, 1998. On May 26, 1998, JMIH acquired
all of the outstanding shares of common stock of Jupiter Marine International,
Inc.(JMI), a boat manufacturing company, which was incorporated under the laws
of the State of Florida on November 7, 1997. On February 17, 2000 JMIH purchased
certain of the assets of Phoenix Marine International, Inc. JMIH formed a new
wholly owned subsidiary, Phoenix Yacht Corporation (Phoenix) to hold these
assets. JMIH, JMI and Phoenix will sometimes be collectively referred to as the
"Company". The Company's principal offices and manufacturing facilities are
located in Port Everglades, Florida. The Company's Web site address is
www.jupitermarine.com.
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 four outboard powered center console models:
the Classic 31' Open, a 31' Cuddy Cabin, a 27' Open 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.
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 were $1,925,381 for the quarter ended October
27, 2001 an increase $135,431 (or 7.6%) as compared to $1,789,950 for the
quarter ended October 28, 2000. Management believes the Company's reputation for
building high quality and very seaworthy boats contributed to this sales
increase even though the economy continues to be sluggish. Management cautions
that there can be no assurances that retail demand for its product will continue
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to go against the economic trend. 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 may have also contributed to increased sales. The average sales price per
boat for the quarter ended October 27, 2001 was $128,359 as compared to $105,291
for the same quarter last year. This change is due to the sale of larger, more
expensive boats. Our order backlog has been reduced to less than six weeks due
to seasonality and the uncertain economy.
Cost of Sales
Cost of sales for the quarter ended October 27, 2001 was $1,456,030
resulting in $469,351 of gross margin or 24.4% of net sales. For the quarter
ended October 28, 2000 cost of sales was $1,429,584 and gross margin was
$360,366 or 20.1% 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 better capacity utilization.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $264,754 an increase
of $10,099 (3.9%) for the quarter ended October 27, 2001, or 13.8% of net sales,
as compared to $254,655, or 14.2% of net sales for the quarter ended October 28,
2000. This dollar increase is primarily due to the cost associated with the
addition of a full time chief financial officer on July 1, 2001. The increase,
however, was partially offset by reduced spending in other general and
administrative accounts.
Depreciation and amortization expense increased $13,973 to $70,073 for
the quarter ended October 27, 2001 as compared to $56,100 for the same quarter
last year, Leasehold improvement additions and new boat molds account for this
increase.
Interest expense decreased by $27,259 to $8,791 for the quarter ended
October 27, 2001, compared to $36,050 for the same quarter of the prior year,
because of the repayment of short term borrowings and the deemed discount for
warrants issued in connection with repaid notes payable issued in fiscal year
2000.
Liquidity and Capital Resources
The Company, from its inception, has experienced poor cash flows and
has met its cash requirements by issuing, through private placements, its common
and preferred stock and through third party loans. On December 7, 2001 the
Company finalized a revolving line of credit with a financial institution in the
amount of $250,000. In addition to the additional funds from this loan,
management has the ability to reduce certain marketing and administrative costs,
if necessary, in order to maintain adequate liquidity. The Company believes the
loan proceeds will be adequate to fund its on-going operations. The Company's
continued existence is dependent upon its ability to resolve its liquidity
problems, principally by obtaining additional debt financing.
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Inventories increased by $15,533 to $914,201 at October 27, 2001
compared to $898,668 at July 28, 2001 as a result of higher production.
Expenditures made for molds and tooling were $88,701 for the three months ended
October 27, 2001 as compared to $20,320 for the three months ended October 28,
2000. This increase is due to a major tooling change to our product line for
model year 2002. Accounts payable increased by $149,128 during this same period
due to increased inventory and additional terms from vendors. Customer deposits
decreased during the three months ended October 27, 2001 as boats relating to
these deposits were delivered.
The Company does not anticipate any significant purchase of equipment
in the near future. The number and level of employees at October 27, 2001 should
be adequate to fulfill the production schedule.
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PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-B
None
(b) Reports on Form 8-K
None
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: December 11, 2001 By: /s/ Carl Herndon
-----------------------------------------
Carl Herndon, Director, CEO and President
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