UNITED STATES
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
Marine Jet Technology Corp.
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(Name of Small Business Issuer in its charter)
Nevada 88-0450923
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 N Rainbow Blvd, Ste 300,
Las Vegas, NV 89107
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(Address of principal executive (zip code)
offices)
Issuer's telephone number: (425) 869-2723
Securities to be registered under section 12(b) of the Act:
Title of Each Class to be so Name on each exchange on which
registered each class is to be registered
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Securities to be registered under section 12(g) of the Act:
Common Stock, $0.001 par value
PAGE-1-
TABLE OF CONTENTS
Part I----------------------------------------------------- 3
Item 1.Description of Business---------------------------- 3
Item 2.Management's Analysis of Financial Condition and
Plan of Operation---------------------------------- 9
Item 3.Description of Property---------------------------- 12
Item 4.Security Ownership of Certain Beneficial Owners
and Management------------------------------------- 12
Item 5.Directors and Executive Officers, Promoters and
Control Persons------------------------------------ 13
Item 6.Executive Compensation----------------------------- 14
Item 7.Certain Relationships and Related Transactions----- 15
Item 8.Description of Securities-------------------------- 16
Part II---------------------------------------------------- 17
Item 1.Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters------ 17
Item 2.Legal Proceedings---------------------------------- 17
Item 3.Changes in and Disagreements with Accountants------ 17
Item 4.Recent Sale of Unregistered Securities------------- 18
Item 5.Indemnification of Directors and Officers---------- 19
Part F/S--------------------------------------------------- 22
Part III--------------------------------------------------- 39
Item 1.Index to Exhibits---------------------------------- 39
Item 2.Description of Exhibits---------------------------- 39
SIGNATURES------------------------------------------------- 40
PAGE-2-
INTRODUCTORY STATEMENT
Marine Jet Technology Corp ("Marine Jet" or the "Company") has
elected to file this Form 10-SB registration statement on a
voluntary basis in order to become a reporting company under the
Securities Exchange Act of 1934.
This registration statement, including the information that may be
incorporated herein by reference, contains forward-looking
statements including statements regarding, among other items, the
Company's business and growth strategies, and anticipated trends in
the Company's business and demographics. These forward-looking
statements are subject to a number of risks and uncertainties, some
of which are beyond the Company's control. Actual results could
differ materially from these forward-looking statements. For this
purpose, any statements contained in the registration statement that
are not statements of historical fact may be deemed to be forward-
looking statements. Without limiting the generality of the
foregoing, words such as "may," "except," "believe," "anticipate,"
"intend," "could," "estimate," or "continue," or the negative or
other variations thereof are intended to identify forward-looking
statements.
Part I
Item 1. Description of Business
A. Business Development and Summary
Marine Jet Technology Corp. (hereinafter referred to as the
"Company" or "Marine Jet") was incorporated in Nevada on February 9,
2000, to develop and market boat propulsion technology developed by
the President of the Company, Jeff P. Jordan.
Prior to the inception of the Company, Mr. Jordan was granted
several patents in the United States, the European Union, Australia
and New Zealand. In addition, one patent is pending in Canada. For
more information, please refer to the United States Patent and
Trademark Office web site at www.uspto.gov. These patents protect
various elements of a marine propulsion system that Mr. Jordan had
developed with his partner Mr. Robert J. Tomlinson, a current
shareholder of the Company.
Also prior to the formation of Marine Jet Technology
Corporation, Mr. Jordan asked Mr. David L. Lyman, a current
shareholder, who owns and operates a contract-manufacturing firm, to
assist in the design of a prototype engine. Mr. Lyman would assist
in making the propulsion system suitable for mass production using
automated equipment. Mr. Lyman owns and operates IDA, Inc. and has
gone to Japan to accept awards as the top quality contract
manufacturer for Mitsubishi Heavy Industries. Through IDA, Inc.,
Mr. Lyman supplies automotive parts machining services to Honeywell
and others in the US. His current production is mostly in turbo
charger components and intake manifolds, which end up in production
vehicles from Volvo, Chrysler and several Japanese manufacturers.
Prior to founding IDA, Mr. Lyman was a component part supplier for
Genie Garage Door Openers and various other companies. He was
associated with Mr. Jordan in the design, manufacture and
installation of commercial hydroelectric systems on municipal water
systems in Montana for cogeneration. He also has a long history as
tool and die maker, pattern maker and model maker.
PAGE-3-
On May 19, 2000, the Company entered into a Proprietary Rights
Agreement with Mr. Lyman, whereby the Company received any and all
proprietary rights and future benefits derived from Mr. Lyman's
design, development and work on the prototype propulsion system.
Pursuant to this agreement, the Company issued 1,000,000 shares of
common stock to Mr. Lyman. The value of Mr. Lyman's proprietary
rights was negotiated between and among Messrs. Lyman, Jordan and
Tomlinson.
On May 19, 2000, the Company entered into a Technology License
Agreement with Messrs. Jordan and Tomlinson. In accordance with
this agreement, Messrs. Jordan and Tomlinson assigned the rights to
three United States patents they owned as individuals, as well as
any improvements, reissues or extensions of those patents in the
United States or abroad. In exchange for this patent, the Company
issued an aggregate of 15,875,000 shares of common stock - of which
Mr. Jordan received 14,287,500 common shares and Mr. Tomlinson
received 1,587,500 shares of common stock.
In August of 2001, the Company purchased assets from Mr. Jordan
for cash. The assets included a test boat, patterns for component
castings and related equipment.
B. Business of the Issuer
Status of Any Publicly Announced New Product or Service
The Company has developed a fully-operation prototype
propulsion system. This system has been undergoing test, research
and further development by management of the Company. Management
has been working on the controls for the system to improve the
maneuverability and convenience of the QuickJet. Although the
prototype has generally met management's expectation, the Company
has been unable to retain either an independent firm or the
instrumentation for management to accurately measure the performance
specifications of the prototype.
Principal Product and Markets
The Company intends to develop marine jet propulsion systems
for sale and to license the rights to manufacture such systems
and/or boats incorporating such technology under the name "Quick
Jet." Marine Jet Technology seeks to develop and market the Quick
Jet technology to produce a proprietary marine jet propulsion system
that offers the low-speed thrust and acceleration of a propeller
drive, while retaining the safety, convenience and maneuverability
of a traditional jet design.
Existing jet boats have the identical problem as the first
generation of jet airplanes: although they have high top speeds and
are exceptionally maneuverable compared to boats powered by other
engine types, initial acceleration is poor. Historically, jet
propulsion systems were sized for speed and lacked the low speed
thrust required for docking and acceleration. They could either go
fast with poor acceleration or could provide acceleration at the
trade-off of low top speed.
If it were not for these operating range restrictions,
management believes that the majority of boats would be water-jet
powered. Propellers and jets both move a column of water in the
opposite direction to propel a boat. The propeller's discharge
column is submerged, but can be seen and felt. A Marine Jet
propulsion system is essentially a propeller in a tube, which has an
inlet to supply water to the propeller and a nozzle to direct the
propeller's discharge. MJTC technology allows the use of smaller
motors which reduces noise and lowers boat weight and fuel
consumption, while providing higher acceleration, higher thrust at
low boat speeds and heavy load carrying capacity. Management
believes that jets are safer than out-drives because there is no
exposed propeller in the water. In addition, management believes
that jet propulsion systems are more maneuverable than out-drives
because the jet outlet is directionally controlled.
PAGE-4-
MJTC's intelligent inlet duct adjusts to recover the velocity
head of the incoming water at all planing speeds and at all throttle
positions. This higher inlet efficiency is most important in
designs based on larger jets. Larger jets, in turn, are desirable
because they produce more thrust at low boat speeds. This parallels
engine development in commercial aircraft where high-bypass
turbofans move more air through a larger jet for shorter takeoffs.
A combination of larger jet size, efficient inlet duct, and
variable nozzle allows greater low speed thrust while increasing top
speed and maintaining higher propulsion efficiency at all boat
speeds and accelerations over traditional out-board motors. These
three innovations work together to move a high volume of water with
an efficient inlet duct and an efficient pump operation under all
operating conditions:
1. Larger jet size is desirable because they create greater thrust
than smaller ones. However, the bigger the jet, the more power that
is lost in the ordinary inlet duct. This power loss has to be made
up by the motor and the pump.
2. An intelligent inlet duct automatically adjusts to recover the
power of the incoming water at all planing speeds and at all
throttle positions. As the inlet duct becomes more efficient, it
increases pressure on the nozzle, which results in higher flow
through the system. Unfortunately, higher water flow through the
system results in reduced pump efficiency. Hence the need for the
variable nozzle to regulate the system flow for pump efficiency.
3. Thus, a variable rectangular steering nozzle is needed to
regulate the system flow for pump efficiency, thereby allowing
simultaneous control of nozzle area and steering direction to
maintain peak efficiency over wide ranges of boat speed, pump shaft
speed and steering vectors.
The Company originally developed the idea of the Marine Jet
propulsion system for use in the recreation boating arena. The
Company intends to market its water-jet system for commercial use
under the name "WorkJET." With more thrust at low boat speeds and
larger load carrying capacity than previous marine engine types,
management believes that the WorkJET will operate efficiently both
inshore and in heavy seas. It has the shallow draft of a jet, yet
the stability, sea-keeping and dynamic breaking of a propeller in
big swells.
The Company believes that this market is ideal for its product
because jet propulsion systems are preferred in the fishing industry
for their shallow draft and ability to operate over nets. Until
WorkJET, however, management believes that fishing jets have been
inefficient under load and at the slower boat speeds required by
heavy seas. It is management's belief that the WorkJET's thrust at
high and low speeds gives it the advantage over traditional jets.
The engines used with the prototype Quick Jet are the same as
are used with existing jets, inboards and stern drives. All use the
same engines, which are automobile/truck engines with marine
manifolds. The Company does not contemplate developing an entirely
new engine or drive system, rather management seeks to improve the
use of such engines. The mechanical components that differentiate a
Quick Jet boat from an inboard boat or stern drive boat are the gear
reduction and the hydraulic appliances in the inlet duct, the pump,
the nozzle and the control system. By design of Messrs. Jordan and
Lyman, the drive components are expected to be easily manufactured
using common processes and methods. The Company has a production
prototype under test and development, which was the first unit to
test these manufacturing concepts. This design is intended for 18'
to 26' boats, the largest boat segment in dollar terms. The Company
intends to have its finalized design manufactured under a common
contract based on ISO 9000 quality specifications. To date, the
Company is continuing testing and development, and has not finalized
the design of the Quick Jet system.
PAGE-5-
Distribution Methods of the Products
The Company's goal is to sell the Quick Jet system in
combination with available marine motors to boat manufacturers, who
will produce boats incorporating the licensed technology. The
Company may also license one or more manufacturers to sell systems
based on the technology. In return, manufacturers will pay the
Company a royalty on each boat or engine sold that utilizes the
Company's technology. At this time, the Company does not intend to
produce the Quick Jet engines in-house.
Marine Jet anticipates that the use of existing production and
sales capacity offers the most rapid market penetration. For this
reason, the Company's strategy centers on developing joint venture
and licensing relationships with boat and motor manufacturers. The
Company has yet to identify such companies or enter into any
manufacturing relationships or joint ventures.
The Company's Internet site, "www.marinejettech.com," is
available for industry participants and consumers to learn about the
Company's technology. The Company believes that its web site is
ideal for answering technical questions, building credibility and
creating market interest.
Additionally, the Company has produced a video exhibiting the
performance of its test boat. These will be used as 5-minute video
commercials that will initially be distributed on VHS cassettes.
The Company is planning to distribute this and future video on CD-
ROM, DVD and over the Internet to potential clients or licensees.
Competitive Business Condition and Competitive Position
Management estimates that the marine propulsion system market
is dominated by a few large manufacturers. Management believes that
this market has stagnated due to a lack of innovative new products
and that the dominant companies rely almost exclusively on economies
of scale to maintain their positions. However, the Company sees no
unusual barrier to entry, because:
1. There are many small manufacturers operating in niches with
regional distribution;
2. The cost of expanding boat production is relatively small; and
3. There are several retail channels for trailerable boats,
including boat shows, boat dealers, personal water vehicle dealers
and automobile dealers.
The Company believes the market advantages of a Quick Jet as
compared to a propeller are:
1. Better maneuverability, due to redirection of the jet;
2. Safety, since the propeller is enclosed, it cannot harm people
or marine animals; and
3. Dependability and reduced maintenance costs, because the
propeller cannot entangle or strike submerged objects.
Conversely, the Company considers that disadvantages of the
Quick Jet are:
1. Size - the Quick Jet is larger to handle more water, although
the Company has identified methods to make the system unobtrusive;
2. Placement in the boat - the motor must be placed in an area of
the boat to allow for more efficient water flow, which can affect
the floor plan of the boat; and
3. Increased cost - the Quick Jet manufacturing process will
initially not enjoy economies of scale that mass-produced propeller
drives possess.
PAGE-6-
Raw Materials
Mr. Dave Lyman, owner of IDA, Inc., based in Heron, Montana,
and a shareholder of the Company, has consulted in the design of the
Quick Jet system to make it suitable for contract manufacturing of
system components. The Company believes that there are sufficient
sources of supply for each component of the propulsion system. The
Company is not aware of any element of the system that requires
unusual or specialized manufacturing techniques.
Patents and Licenses
Prior to the inception of the Company, Mr. Jordan was granted
US Patent 5,658,176 in August of 1997, US Patent 5,679,035 in
October of 1997 and US Patent 5,683,276 in November of 1997.
Patents corresponding to US Patent 5,658,176 have also been granted
in the EU, Australia and New Zealand and one is pending in Canada.
These patents cover methods of the following:
1. More efficiently recovering hydraulic power in the inlet duct
of the propulsion system,
2. Regulating the system flow for water pump efficiency and
3. Moving a higher mass flow rate of the water for greater thrust.
Due to the length and detail of the information contained in
the patent documentation, the Company refers readers of this
registration statement to view these documents at the United States
Patent and Trademark Office's Internet site, which can be found at
www.uspto.gov.
The Company exclusively licenses the rights to patents covering
the operation and design of a marine propulsion system. Steps taken
by the Company to protect these proprietary rights may not be
adequate to prevent misappropriation of such rights or third parties
from independently developing a functionally equivalent or superior
technology.
The Company's US Patents expire as follows:
1. Patent 5,658,176 expires in December 2015,
2. Patent 5,679,035 expires in February 2016 and
3. Patent 5,683,276 expires in February 2016.
Governmental Approval
The Company knows of no government approval required for the
Quick Jet. The Company seeks to engage prospective contract
manufacturers that are already in compliance with government
regulations relating to workplace safety, payroll taxes and fair
hiring practices, although there is no guarantee of the Company's
ability to enter into relationships with such companies.
PAGE-7-
Effects of Existing or Probable Governmental Regulations
The Company believes that the effect of existing or probable
regulations in this business segment will have a positive effect on
the Company's operations. With respect to public safety
regulations, the Company intends to compete against an exposed
propeller system with a completely enclosed water jet system, which
it believes will eliminate a significant number of accidents
resulting from exposed propellers. With respect to current and
probable environmental regulations, the Company believes it will
have a similar advantage from eliminating environmental damage done
by propellers to manatees, fish, sea grass and other aquatic life.
With respect to pollution regulations the Company believes its
propulsion technology will encourage the use of four-cycle engines
rather than two-cycle engines that produce much more air and water
pollution. With respect to noise regulations, the Company believes
its designs will isolate gear whine and other propulsion system
noise within an acoustically insulated engine enclosure.
Research and Development
Since its inception, the Company has been working on the
controls for the boat to better demonstrate the maneuverability and
convenience that this system offers. The Company has purchased
approximately $1,200 in control components for this purpose.
Generally, the prototype has been under test for nearly two
years. Despite performance meeting management's general
expectations, the Company has been operating on limited funds and
has been unable to secure instrumentation, which is relatively
capital-intensive, to measure performance properly. The Company has
replaced several system components with improved designs, and is
currently working on the ergonomics of the operator interface. The
performance of any boat and propulsion system combination is greatly
affected by the hull design, so any performance specifications
obtained from the test boat will not be directly applicable to other
hull designs.
Additionally, the stock and cash paid for the rights to
proprietary technology indirectly cover time and money personally
spent by the developers of such technology.
Environmental Laws
The Company believes that the Quick Jet is designed to consume
less fuel and produce less pollution, less noise and less damage to
aquatic life than the current exposed-propeller technology, which
will allow contract manufacturers to produce a product that is
compliant with environmental legislation.
Employees
Excluding officers, the Company presently has two part-time
employees, Jeff P. Jordan, President, and Martha Jordan, Secretary.
Mr. Jordan dedicates approximately 75% of his time to the Company's
operations, while Mrs. Jordan commits approximately 20% of her time
to Marine Jet. The Company's employees are not represented by a
collective bargaining agreement, and management believes that the
Company's relations with its employees are good.
C. Reports to Security Holders
(1) Annual Reports
Marine Jet has been subject to the reporting requirements under
Section 12(g) of the Securities Act of 1934 as of December 29, 2001.
The Company has not yet filed an annual report on Form 10-KSB for
the year ended December 31, 2001. Management of the Company intends
to file such report, and all subsequent reports, with the SEC. Such
annual reports will include audited financial statements.
PAGE-8-
(2) Periodic Reports with the SEC
As of the date of this Registration Statement, Marine Jet has
not been filing periodic reports with the SEC. The Company is
delinquent in its filings, and fully intends to bring its reports
current by filing its quarterly report for the period ended March
31, 2002 on Form 10-QSB. Marine Jet further intends to file
periodic reports with the SEC as required by laws and regulations
applicable to fully reporting companies.
(3) Availability of Filings
The public may read and copy any materials Marine Jet files
with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-
800-SEC-0330. Additionally, the SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding issuers that file
electronically with the SEC.
Item 2. Management's Analysis of Financial Condition and Plan of
Operation
A. Plan of Operation
Since the Company's inception on February 9, 2000 through March
31, 2002, the Company incurred a net loss of $ 78,969. Marine Jet's
efforts have focused primarily on the development of the Company's
plan of operations, entering into agreements to utilize proprietary
technology, obtaining assets to further develop a prototype Quick
Jet motor and raising working capital through equity financing.
The Company anticipates the need to recruit a management team
experienced in the marketing of new technology in similar markets,
to generate interest in the Company's technology. However, due to
the limited availability of funds with which to pay salaries, the
Company intends to make stock options a substantial portion of the
compensation package for such a management team.
The Company developed controls for the test boat and used it to
produce a promotional video, which the Company is disseminating to
industry participants. Management notes that the cash on hand
necessarily limits progress on these tasks and that failure to
obtain additional financing will delay or prevent the completion of
such promotional material.
To fund fiscal 2002 operations, management believes that the
Company's current financial resources will not be adequate to
provide for its working capital needs through December 2002. There
are no preliminary loan agreements or understandings between the
Company, its officers, directors or affiliates or lending
institutions. The Company has no arrangements or commitments for
accounts and accounts receivable financing.
Management expects the need to raise additional capital via a
public or private offering of equity or debt securities to provide
funding for ongoing operations. There are no formal or informal
agreements to attain such financing. Any capital attained from the
sale of equity or debt securities will be utilized to manufacture an
initial production run of Quick Jet systems to provide to potential
customers for testing in their boats. In order to be able to begin
producing marketable Quick Jet systems, the Company intends to use
any proceeds from sales of the Company's equity or debt securities
to purchase patterns for castings, tooling for machining those
castings and labor to assemble and test the production Quick Jet
systems that result.
However, there can be no assurance that any financing can be
obtained or, if obtained, that it will be on reasonable terms.
Without realization of additional capital, it would be unlikely for
the Company to continue as a going concern.
PAGE-9-
To generate revenues, the Company plans to:
1. Sell Quick Jet systems to boat builders;
2. Enter into joint venture marketing agreements with one or more
engine builders to sell a propulsion package to boat builders; or
3. Enter into a joint venture licensing agreement with one or more
manufacturers to build and sell systems and boats based upon the
Quick Jet technology.
B. Risk Factors
We Cannot Assure You that the Prototype will be Commercially
Successful
There is no assurance that Marine Jet's product development
program will lead to any commercially profitable products. The
Company's initial licenses of products will require further
development and testing prior to commercialization. There is no
assurance that any such potential products will be successfully
developed and be capable of being produced in commercial quantities
at acceptable costs or be successfully marketed. There also is no
assurance that Marine Jet will be able to reach its objectives in
manufacturing, marketing and sales. The Company has no history of
sales or volume manufacturing. There can be no assurance that the
Company will successfully manufacture or market any product, either
independently or pursuant to manufacturing or marketing agreements
with third parties. There is no assurance that such third party
arrangements can be successfully negotiated or that such
arrangements will be on commercially reasonable terms. To the
extent that Marine Jet Technology Corp. arranges with third parties
to manufacture or market its products, the success of such products
may depend on the efforts of such third parties.
No Assurance of Revenue or Operating Profits
Marine Jet expects to incur substantial operating losses for at
least the first two years. The Company currently has no significant
sources of revenue, whether from product sales, licensing fees or
research funding, and there can be no assurance that it will be able
to develop such revenue sources or that its operations will become
profitable, even if it is able to commercialize its products. The
Company's operating results are and will be volatile and difficult
to predict. There can be no assurance that it will be able to
operate, expand and develop its operations and products and
efficiently maintain adequate control of its expenses. The
Company's failure to meet its objectives may have a material adverse
effect on its business, operating results and financial condition.
Technological Changes and Uncertainty
Marine Jet business activity focuses on the manufacturing and
licensing of innovative products. There can be no assurance that
research and discoveries by others will not render some or all of
the Company's programs or products noncompetitive or obsolete. No
assurance can be given that unforeseen problems will not develop
with the patents, technology or products or that the Company will
ultimately develop commercially viable products.
Diversification
Marine Jet may be required to diversify its current product
development and marketing plans to address the currently
unanticipated demands of various markets. No assurance can be given
that the Company will be able to complete the development of its
first products prior to addressing other products that may represent
more significant business opportunities for the Company.
PAGE-10-
Substantial Competition
The boat manufacturing and boat propulsion businesses are
highly competitive. Many companies are marketing products in this
business sector based on a variety of existing technologies that are
prevalent in the marketplace. Many of these companies have
substantially greater financial and other resources, and have
substantially more experience in new product development and
marketing.
Dependence on Qualified Personnel and Conflict of Interest
Because of the specialized nature of Marine Jet's business, the
Company is highly dependent upon its ability to retain Mr. Jeff
Jordan as the key, qualified technical innovator and production
advisor. There can be no assurance that the Company will be able to
retain Mr. Jordan as an employee of the Company, apart from his
interest in the success of the Company because of his relatively
large common stock holding. Loss of the services of Mr. Jordan
would be detrimental to the Company. As the Company develops its
business and operations, there is no assurance that it will be able
to attract and retain other qualified personnel. The loss of the
services of Mr. Jordan or certain other key personnel could have a
material adverse effect on the Company's business and prospects.
The success of the Company will also be largely dependent upon the
ability of the Company to continue to attract quality management and
employees to help operate the Company as its operations grow as well
as upon the ability of the Company to retain quality management and
employees in the companies it plans to invest and/or acquire.
Uncertain Ability to Protect Technology and Products
Although the Company holds domestic and foreign patents, there
can be no assurance as to the breadth or the degree of protection
that any such patents will afford the Company. Also, there can be
no assurance that others will not independently develop
substantially equivalent proprietary information or otherwise obtain
access to the Company's know-how, or that others may not be issued
patents that may require licensing and payment of significant fees
or royalties by the Company to pursue its business. Moreover, the
Company could incur substantial costs in defending itself in any
suits brought against it claiming infringement of the patent rights
of others or in asserting the Company's patent rights in a suit
against another company.
Unproven Products
The Company's products will require further development and
testing before they can be commercially marketed or licensed. Other
risks include the competitive environment in which the Company
operates, as well as risks related to the development,
manufacturing, distribution, marketing and technical problems that
may be beyond the Company's ability to resolve. There can be no
assurance that the company's products will be capable of being
produced in commercial quantities, obtain acceptance in the market
or be successfully marketed and sold. There is also no assurance
that Marine Jet will be able to establish any market for its
products. The Company is aware of no directly similar products in
any markets. The Company will incur substantial expenses in
establishing markets for its products, and in establishing
distribution channels within such markets, if and when they are ever
established.
PAGE-11-
Item 3. Description of Property
A. Description of Property
The Company's principal offices are located at 500 North
Rainbow Blvd, Suite 300, Las Vegas, NV 89107, telephone: (425) 869-
2723. The Company is leasing the office space pursuant to an
agreement that expires in July 2002. The agreement is subject to
automatic annual renewal unless explicitly terminated by the
parties. The monthly lease payment is approximately $135. The
Company believes that this arrangement is suitable given the limited
nature of the Company's current operations. There are currently no
proposed programs for the renovation, improvement or development of
the facilities the Company currently utilizes.
The Company also utilizes office space in the State of
Washington, which space is provided by an officer and director at no
cost to the Company. This space totals approximately 200 square
feet. The space is furnished with computers, printers, and various
other office furniture and equipment.
B. Investment Policies
Management of the Company does not currently have policies
regarding the acquisition or sale of real estate assets primarily
for possible capital gain or primarily for income. The Company does
not presently hold any investments or interests in real estate,
investments in real estate mortgages or securities of or interests
in persons primarily engaged in real estate activities.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
A. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of March 31, 2002 certain
information regarding the beneficial ownership of the common stock
of the Company by:
1. Each person who is known to be the beneficial owner of more
than 5% of the common stock,
2. Each of the directors and executive officers of the Company and
3. All of the Company's directors and executive officers as a
group.
Except as otherwise indicated, the persons or entities listed
below have sole voting and investment power with respect to all
shares of common stock beneficially owned by them, except to the
extent such power may be shared with a spouse. No change in control
is currently being contemplated.
PAGE-12-
Title of Name and Address Amount % of
Class Of Beneficial Owner and Class
Nature of
Beneficial
Owner
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Common Jeff P. Jordan, President and 80.96%
Stock Director(1) 16,762,500
Common Wilbur Sebree 50,000 0.25%
Stock
--------------------------------------------------------------------
Common Officers and Directors as a Group 16,812,500 83.21%
Stock
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Common Robert J. Tomlinson(2) 2,062,500 10.21%
Stock
Common Benjamin B. Jordan 100,000 0.49%
Stock
Common Julie P. Jordan 100,000 0.49%
Stock
Footnotes:
(1) The address of Mr. Jeff P. Jordan, Benjamin B. Jordan and Julie
P. Jordan is c/o Marine Jet Technology Corp., 500 North Rainbow
Blvd, Suite 300, Las Vegas, NV 89107.
(2) Mr. Tomlinson may be contacted at 1074 Hawley Way NE,
Bainbridge Island, WA 98110.
B. Change in Control
No arrangements exist that may result in a change of control of
Marine Jet.
Item 5. Directors and Executive Officers, Promoters and Control
Persons
A. Directors, Executive Officers and Significant Employees
The names, ages and positions of the Company's directors,
executive officers and significant employees are as follows:
NAME AGE POSITION DIRECTOR SINCE TERM
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Jeff P. 56 President and February 2000 1
Jordan Director year(1)
Martha A. 55 Secretary and August 2001 1
Jordan Director year(1)
Wilbur Sebree 48 Director August 2001 1
year(1)
Marilyn J. 46 Director April 2001 1
Holt year(1)
Footnotes:
(1) Directors hold office for one year or until a successor or
successors are elected and appointed.
(2) None of the officers and directors of the Company have held any
position in a reporting company other than Marine Jet Technology
Corporation.
Jeff P. Jordan, President and Director - Mr. Jordan has been
the Vice President of Operations for three technology development
and manufacturing firms in the marine, hydroelectric and
biotechnology industries. Since 1994, Mr. Jordan has worked in the
boating industry. During this period, Mr. Jordan completed
theoretical development and filed patent applications on jet water
propulsion systems. Mr. Jordan's experience also includes service
as Vice President of Operations for Unisyn Biowaste Technology in
Hawaii, where he developed organic waste processing systems. He
attempted to develop economically feasible solutions for garbage
disposal and industrial waste treatment. During his tenure at
Unisyn, Mr. Jordan re-engineered or replaced most components of the
company's existing systems. He developed a water treatment and
clarification system, as well as designed and implemented a system
for source separation of wet wastes. His other achievements with
Unisyn included designing and prototyping a waste transport system,
reduced and replaced ineffective staff and directed development of
an entrepreneurial business plan for Unisyn to seek venture capital.
PAGE-13-
Prior to his work at Unisyn, Mr. Jordan was a venture partner and
investor on hydroelectric developments, and was President of the
Northwest Venture Group based in Seattle, Washington. He produced
and executed a business plan for the identification, detailed study
and development of small commercial hydroelectric sites in Idaho and
Montana. Mr. Jordan also directed the design, development and
manufacturing of hydroelectric turbine-generator systems for
installation in these commercial hydroelectric developments.
Martha A. Jordan, Secretary and Director - Martha Jordan has
been employed part time as a technical writer, graphics designer and
office assistant, in addition to spending about half of her time in
support of MJTC.
Wilbur Sebree, Director - Wilbur Sebree has been an attorney in
the Seattle, Washington area, specializing in small business
contracts and litigation for more than 5 years.
Marilyn J. Holt, Director - Marilyn J. Holt owns Holt Capital,
which is the successor of her consulting business in Seattle,
Washington, which she has owned and worked with over the last 25
years. She is a Certified Management Consultant, Real Estate Broker
in the sale of businesses, and an Investment Advisor registered in
the State of Washington.
B. Family Relationships
Martha A. Jordan, Secretary and Director of the Company, is the
wife of Jeff P. Jordan, President and Director of the Company.
Benjamin B. Jordan, a shareholder of the Company, is the son of
Jeff P. Jordan and Martha A. Jordan.
Julie P. Jordan, a shareholder of the Company, is the daughter
of Jeff P. Jordan and Martha A. Jordan.
Item 6. Executive Compensation
A. Remuneration of Directors, Executive Officers and Significant
Employees
The Company does not have employment agreements with its
executive officers. The Company has yet to determine the
appropriate terms needed for the creation of employment agreements
for its officers. There has been no discussion with any of the
Company's officers regarding any potential terms of these
agreements, nor have such terms been determined with any
specificity. The Company plans to have these agreements completed
by the beginning of the next year. There are no proposals,
understandings or arrangements concerning accrued earnings to be
paid in the future. In the meanwhile, none of the Company's
executive officers have been drawing salaries since they were
appointed to their positions.
PAGE-14-
Summary Compensation Table
Annual Long-Term Compensation
Compensation
---------------- -----------------------------
Name and Year Salary Bonus Other Restric- Securities LTIP All
Principal ($) ($) Annual ted Underlying Pay- Other
Position Compen- Stock Options outs Compen-
sation Awards (#) ($) sation
($) ($) ($)
Jeff P. 2002 0 0 0 0 0 0 0
Jordan
President
and
Director
Martha A. 2002 0 0 0 0 0 0 0
Jordan
Secretary
and
Director
Wilbur 2002 0 0 0 0 0 0 0
Sebree
Director
Marilyn J. 2002 0 0 0 0 0 0 0
Holt
Director
Compensation of Directors
There were no arrangements pursuant to which any director was
compensated for the period from February 9, 2000 to March 31, 2002,
for services provided as a director.
Item 7. Certain Relationships and Related Transactions
On May 19, 2000, the Company entered into a Proprietary Rights
Agreement with David Lyman, a shareholder of the Company and a co-
developer of the Quick Jet technology, whereby the Company received
any and all proprietary rights and future benefits derived from Mr.
Lyman's design, development and work on the prototype propulsion
system. In consideration for this Agreement, the Company issued
1,000,000 shares of common stock to Mr. Lyman. The value of Mr.
Lyman's proprietary rights was negotiated between and among Messrs.
Lyman, Jordan and Tomlinson as $1,000. Please refer to Note 4 to
the Financial Statements in Part F/S of this registration statement.
On May 19, 2000, the Company entered into a Technology License
Agreement with Jeff P. Jordan and Robert J. Tomlinson, both of whom
are officers and directors of the Company, to issue rights to all of
the marketing, proprietary, licensing, patent and intellectual
rights to certain US Patents, in exchange for 15,875,000 shares of
the Company's $0.001 par value common stock. The patents secure the
rights to development of marine jet propulsion technology used to
provide more efficient inlet ducts, power transfer, and jet pump
operation. The Patents have a valuation of $7,568,000, as
determined by Brueggeman and Johnson, P.C., a certified business
valuation firm located in Seattle, Washington, in their valuation
report dated April 24, 2000. The Company has recorded the purchase
at the historical cost of $55,238. However, because the patents
have not demonstrated their technological or commercial feasibility
as of March 31, 2002 and December 31, 2001, and since significant
risks exist because of uncertainties the Company may face in the
form of time and costs necessary to produce technological and
commercial feasibility, there is uncertainty that the Company will
be able to realize any value from the intangible asset should the
technology fail to become viable.
The Company also entered into Non-Competition Agreements with
the Messrs. Jordan and Tomlinson, whereby such individuals will not
engage in or carry on, directly or indirectly, any business in
competition with the business of the Company relating to the Patents
that are the subject of the Patent License Agreement. The Non-
Competition Agreements are in effect for a period of five years from
the date of execution.
In August of 2001, the Company purchased a boat, tooling and
construction services from Jeff P. Jordan, an officer and director
of the Company for cash in the amount of $30,000. The property
consists of a test boat, trailer and production-related patterns and
tooling used in the development of a prototype marine propulsion
system.
PAGE-15-
Item 8. Description of Securities
The Company's authorized capital stock consists of 45,000,000
shares of common stock, par value $0.001 per share, and 5,000,000
shares of preferred stock, par value. As of March 31, 2002, the
Company had 20,205,570 shares of common stock outstanding. To date,
the Company has not issued preferred stock and has no plans,
commitments or understandings to do so. The following summary about
certain provisions of the Company's common stock and preferred stock
is not complete and is subject to the provisions of the Company's
"Articles of Incorporation" and bylaws.
Common Stock
Holders of the Company's common stock:
1. Have equal rights to dividends from funds legally available,
ratably, when as and if declared by the Company's Board of
Directors;
2. Are entitled to share, ratably, in all of the Company's assets
available for distribution upon liquidation, dissolution or winding
up of the Company's business affairs;
3. Do not have preemptive, subscription or conversion rights and
there are no redemption or sinking fund provisions applicable;
4. Are entitled to 1 vote per share of common stock owned, on all
matters that stockholders may vote and at all meetings of
shareholders; and
5. Are fully paid and non-assessable. Additionally, there is no
cumulative voting for the election of directors.
Preferred Stock
Although the Company has not issued any preferred stock to
date, nor has the Company developed the descriptive attributes of
these preferred shares, the Company can issue shares of preferred
stock in series with such preferences and designations as its board
of directors may determine. The Company's board can, without
shareholder approval, issue preferred stock with voting, dividend,
liquidation and conversion rights. This could dilute the voting
strength of the holders of common stock and may help the Company's
management impede a takeover or attempted change in control.
Nevada Anti-Takeover Provisions
The anti-takeover provisions of Sections 78.411 through 78.445
of the Nevada Corporation Law apply to Marine Jet Technology
Corporation. Section 78.438 of the Nevada law prohibits the Company
from merging with or selling MJTC or more than 5% of the Company's
assets or stock to any shareholder who owns or owned more than 10%
of any stock or any entity related to a 10% shareholder for three
years after the date on which the shareholder acquired the MJTC
shares, unless the transaction is approved by the Company's Board of
Directors. The provisions also prohibit the Company from completing
any of the transactions described in the preceding sentence with a
10% shareholder who has held the shares more than three years and
its related entities unless the transaction is approved by the
Company's Board of Directors or a majority of its shares, other than
shares owned by that 10% shareholder or any related entity. These
provisions could delay, defer or prevent a change in control of
Marine Jet.
PAGE-16-
Part II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Related Stockholder Matters
A. Market for the Registrant's Equity
The Company's common stock is not traded on any public market
and there has been no trading market to date.
There are no outstanding options or warrants to purchase, or
securities convertible into, common stock of the Company.
As of March 31, 2002, there were 20,205,570 shares of par value
common stock issued and outstanding.
The Company's management has considered a potential offering of
its common equity, which could have a material effect on the future
market price of the Company's common equity. However, there are no
agreements or commitments to enact such an offering of securities at
this time.
B. Security Holders
As of March 31, 2002, the Company had approximately 106
shareholders of record.
C. Dividends
To the date of this Registration Statement, the Company has not
declared nor paid any dividends on its Common Stock.
As of the date of this Registration Statement, the Company does
not have a formal dividend policy.
Item 2. Legal Proceedings
The Company is not and has not been a party to any pending
legal proceeding involving any private party or federal, state or
local authority.
Item 3. Changes in and Disagreements with Accountants
On January 15, 2002, the Company engaged Chavez & Koch, CPA's
as its principal accountants to replace its former principal
accountants, G. Brad Beckstead, CPA. The decision to change
accountants was approved by the Board of Directors of the
registrant.
During the Company's most recent two fiscal years and during
any subsequent interim periods preceding the date of termination,
the Company has had no disagreements with G. Brad Beckstead, CPA on
any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.
PAGE-17-
No accountant's report on the financial statements for the past
two years contained an adverse opinion or a disclaimer of opinion or
was qualified or modified as to uncertainty, audit scope or
accounting principles, except the audited statements prepared by G.
Brad Beckstead, CPA did contain a going concern qualification; such
financial statements did not contain any adjustments for
uncertainties stated therein. In addition, G. Brad Beckstead, CPA
did not advise the Company with regard to any of the following:
1. That internal controls necessary to develop reliable financial
statements did not exist; or
2. That information has come to the attention of Semple & Cooper,
which made them unwilling to rely on management's representations,
or unwilling to be associated with the financial statements prepared
by management; or
3. That the scope of the audit should be expanded significantly,
or information has come to the accountant's attention that the
accountant has concluded will, or if further investigated might,
materially impact the fairness or reliability of a previously issued
audit report or the underlying financial statements, or the
financial statements issued or to be issued covering the fiscal
periods subsequent to the date of the most recent audited financial
statements, and the issue was not resolved to the accountant's
satisfaction prior to its resignation or dismissal; and
During the most recent two fiscal years and during any
subsequent interim periods preceding the date of engagement, the
registrant has not consulted Chavez & Koch, CPA's regarding any
matter requiring disclosure under Regulation S-K, Item 304(a)(2).
Item 4. Recent Sale of Unregistered Securities
On February 11, 2000, the Company issued 105,000 shares of its
$0.001 par value common stock to Jeff Jordan, the Company's
President and founding shareholder, for $105 in cash. The shares
were issued in accordance with Section 4(2) of the Securities Act of
1933, as amended.
On February 12, 2000, the Company issued 3,125,000 shares of
its par value common stock to the two company founders as follows:
1. Jeff P. Jordan - 1,083,500 shares of common stock for cash in
the amount of $1,083.50
2. Robert J. Tomlinson - 541,750 shares of common stock for cash
of $542.
The above shares were issued in accordance with Section 4(2) of the
Securities Act.
On May 18, 2000, the Company issued 100,000 shares of its par
value common stock to Jeff Jordan for $100 in cash. The shares were
issued in accordance with Section 4(2) of the Securities Act.
On May 19, 2000, Marine Jet issued 1,000,000 shares of common
stock to David L. Lyman pursuant to a Proprietary Rights Agreement.
In accordance with the agreement, Mr. Lyman conveyed proprietary
rights to the Company in exchange for common stock of the Company
valued at $1,000. The shares were issued in accordance with Section
4(2) of the Securities Act.
On May 19, 2000, Marine Jet issued 14,287,500 shares of common
stock to Jeff P. Jordan and 1,587,500 shares to Robert J. Tomlinson
pursuant to a Technology Licensing Agreement. The shares were
issued in accordance with Section 4(2) of the Securities Act. The
valuation of the Agreement was determined by an independent
valuation analysis.
PAGE-18-
In July of 2000, the Company was issued a permit to sell
securities by the State of Nevada, pursuant to an application for
registration by qualification of the Company's offering of Common
Stock in that state. The application for registration by
qualification was filed pursuant to the provisions of NRS 90.490,
which requires the public filing and delivery to investors of a
substantive disclosure document before sale. By July 31, 2001, the
Company completed the offering of shares of common stock made
pursuant to Regulation D, Rule 504 of the Securities Act, and the
registration by qualification of said offering in the State of
Nevada, whereby the Company sold 527,570 shares of Common Stock at a
price of $0.20 per share to approximately 98 unaffiliated
shareholders of record. The entire offering was conducted
exclusively in the State of Nevada, pursuant to the permit issued by
the State of Nevada. In addition, this offering was made on a best
efforts basis. The aggregate offering price for the offering closed
on July 31, 2001 was $105,514.
At the time of the offering closed July 31, 2001, the Company
was not subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act or 1934, as amended.
Further, the Company is not now, nor was it at the time of the
offering, considered to be an investment company. Finally, since
inception, the Company has pursued a specific business plan to
provide interactive and media services, and continues to do so.
There have been no other issuances of common stock or preferred
stock.
On December 21, 2001, Jeff P. Jordan transferred restricted
control common stock in private transactions not involving the
issuer pursuant to an exemption from registration under Section 4(1)
of the Securities Act as a gift to the following individuals:
Name Shares
---------------------------------------
Benjamin B. Jordan 100,000
Julie P. Jordan 100,000
Wilbur Sebree 50,000
Ronald A. Davis 50,000
Also on December 21, 2001, Jeff P. Jordan sold 80,000 shares of
his personal holdings of common stock to George Christensen for
$8,000 in cash. These shares were sold in a private transaction,
not involving the issuer, and made in reliance upon an exemption
from registration pursuant to Section 4(1) of the Securities Act.
The shares were valued at the price at which the common stock of the
issuer were sold in the offering made pursuant to Regulation D, Rule
504.
Item 5. Indemnification of Directors and Officers
The Bylaws of the Company provide for indemnification of its
directors, officers and employees as follows:
PAGE-19-
Every director, officer, or employee of the Corporation shall
be indemnified by the Corporation against all expenses and
liabilities, including counsel fees, reasonably incurred by or
imposed upon him/her in connection with any proceeding to which
he/she may be made a party, or in which he/she may become involved,
by reason of being or having been a director, officer, employee or
agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of the
Corporation, partnership, joint venture, trust or enterprise, or any
settlement thereof, whether or not he/she is a director, officer,
employee or agent at the time such expenses are incurred, except in
such cases wherein the director, officer, employee or agent is
adjudged guilty of willful misfeasance or malfeasance in the
performance of his/her duties; provided that in the event of a
settlement the indemnification herein shall apply only when the
Board of Directors approves such settlement and reimbursement as
being for the best interests of the Corporation.
The Bylaws of the Company further state that the Company shall
provide to any person who is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of the
corporation, partnership, joint venture, trust or enterprise, the
indemnity against expenses of a suit, litigation or other
proceedings which is specifically permissible under applicable
Nevada law. The Board of Directors may, in its discretion, direct
the purchase of liability insurance by way of implementing the
provisions of this Article. However, the Company has yet to
purchase any such insurance and has no plans to do so.
The Articles of Incorporation of the Company state that a
director or officer of the corporation shall not be personally
liable to this corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but this Article
shall not eliminate or limit the liability of a director or officer
for (i) acts or omissions which involve intentional misconduct,
fraud or a knowing violation of the law or (ii) the unlawful payment
of dividends. Any repeal or modification of this Article by
stockholders of the corporation shall be prospective only, and shall
not adversely affect any limitation on the personal liability of a
director or officer of the corporation for acts or omissions prior
to such repeal or modification.
The Articles of Incorporation of the Company further state that
every person who was or is a party to, or is threatened to be made a
party to, or is involved in any such action, suit or proceeding,
whether civil, criminal, administrative or investigative, by the
reason of the fact that he or she, or a person with whom he or she
is a legal representative, is or was a director of the corporation,
or who is serving at the request of the corporation as a director or
officer of another corporation, or is a representative in a
partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless to the fullest extent legally
permissible under the laws of the State of Nevada from time to time
against all expenses, liability and loss (including attorneys' fees,
judgments, fines, and amounts paid or to be paid in a settlement)
reasonably incurred or suffered by him or her in connection
therewith. Such right of indemnification shall be a contract right,
which may be enforced in any manner desired by such person. The
expenses of officers and directors incurred in defending a civil
suit or proceeding must be paid by the corporation as incurred and
in advance of the final disposition of the action, suit, or
proceeding, under receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is
not entitled to be indemnified by the corporation. Such right of
indemnification shall not be exclusive of any other right of such
directors, officers or representatives may have or hereafter
acquire, and, without limiting the generality of such statement,
they shall be entitled to their respective rights of indemnification
under any bylaw, agreement, vote of stockholders, provision of law,
or otherwise, as well as their rights under this article.
PAGE-20-
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
PAGE-21-
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
Independent Auditors' Report
Balance Sheet F-1
Statement of Operations F-2
Statement of Stockholder's Equity F-3
Statement of Cash Flows F-4
Notes to Financial Statements F-5-12
PAGE-22-
MARINE JET TECHNOLOGY, CORP.
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED AND DECEMBER 31, 2001 AND
DECEMBER 31, 2000
PAGE-23-
CONTENTS
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS:
Balance Sheets 1
Statement of Operations 2
Statement of Changes in Stockholders' Equity 3
Statement of Cash Flows 4
NOTES TO FINANCIAL STATEMENTS 5-12
PAGE-24-
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Members of
Marine Jet Technology, Corp:
We have audited the accompanying balance sheets of Marine Jet
Technology, Corp. (a Development Stage Company) (a Nevada
corporation) as of December 31, 2001 and the statements of
operations, accumulated deficit, cash flows and the statement
of changes in stockholders' equity for the year ended December
31, 2001 and from February 9, 2000 (Date of inception) to
December 31, 2001. These financial statements are the
responsibility of the Marine Jet Technology, Corp. management.
Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of
Marine Jet Technology, Corp. for the year ended December 31,
2000, were audited by other auditors whose report, dated October
4, 2001, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Marine
Jet Technology, Corp. as of December 31, 2001 and the result of its
operations, accumulated deficit, other comprehensive income, its
cash flows and changes in stockholders' equity for the year ended
December 31, 2001 and from February 9, 2000 (Date of inception )
to December 31, 2001, in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
disclosed in Note 9 to these financial statements, the Company
has had limited operations and has not established a long-term
source of revenue. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in
regards to this issue is also described in Note 11. The
financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Chavez & Koch, CPA's, Ltd.
April 17, 2002
Henderson, Nevada
PAGE-25-
MARINE JET TECHNOLOGY CORPORATION
(a Development Stage Company)
BALANCE SHEETS
AS OF DECEMBER 31, 2001 & 2000
2001 2000
ASSETS -------------------------
CURRENT ASSETS:
Cash $31,367 $215
Prepaid expenses 810 -
-------------------------
Total current assets 32,177 215
-------------------------
FIXED ASSETS:
Office equipment 689 -
Equipment and machinery 30,000 -
Accumulated depreciation (2,035) -
-------------------------
Total fixed assets 28,654 -
-------------------------
OTHER ASSETS:
Amortized Intangible Assets:
Proprietary rights agreement, net of 884 955
amortization
Patents, net of amortization 49,086 47,333
-------------------------
Total other assets 49,970 48,288
-------------------------
TOTAL ASSETS $110,801 $ 48,503
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - $945
Note payable - shareholder - 7,375
-------------------------
Total current liabilities - 8,320
-------------------------
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, 45,000,000 20,733 20,205
shares authorized, 20,732,570 and 20,205,000
shares issued and outstanding as of 12/31/01
and 12/31/00, respectively
Preferred stock, $0.001 par value, 5,000,000 - -
shares authorized, not shares issued and
outstanding as of 12/31/01 and 12/31/00,
respectively
Additional paid-in capital 158,436 38,696
Deficit accumulated during
development stage (68,368) (18,718)
-------------------------
Total stockholders' equity 110,801 40,183
-------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $110,801 $ 48,503
=========================
The accompanying independent auditors' report and notes to financial
statements should be read in conjunction with these Balance Sheets.
PAGE-26-F1
MARINE JET TECHNOLOGY CORPORATION
(a Development Stage Company)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FROM JANUARY 1, 2001 TO DECEMBER 31, 2001, FEBRYARY 9, 2000 (DATE OF
INCEPTION) TO DECEMBER 31, 2000 AND FEBRUARY 9, 2000 (DATE OF
INCEPTION)
TO DECEMBER 31, 2001
01/01/2001 2/9/2000 2/9/2000
- - -
12/31/2001 12/31/2000 12/31/2001
------------------------------------------
REVENUES: $- $- $-
EXPENSES:
General and administrative (43,250) (22,075) (65,325)
expenses
Depreciation expense (2,035) - (2,035)
Amortization expense (3,775) (2,493) (6,268)
------------------------------------------
TOTAL EXPENSES (49,060) (24,568) (73,628)
OTHER INCOME (EXPENSE):
Interest expense (590) - (590)
Gain on the forgiveness of debt - 5,850 5,850
------------------------------------------
TOTAL OTHER INCOME (EXPENSE) (590) 5,850 5,260
------------------------------------------
NET INCOME (LOSS) (49,650) (18,718) (68,368)
------------------------------------------
Deficit accumulated during
development stage,
Beginning of period (18,718) - -
Deficit accumulated during
development stage,
end of period $(68,368) $(18,718) $(68,368)
------------------------------------------
Weighted average number 20,426,753 15,061,250 18,189,401
of shares outstanding ------------------------------------------
Net income (loss) per basic shares $(0.00) $(0.00) $(0.00)
==========================================
Net income (loss) per diluted $(0.00) $(0.00) $(0.00)
shares ==========================================
The accompanying independent auditors' report and notes to financial
statements should be read in conjunction with these Statements of
Operations and Accumulated Deficit.
PAGE-28-F2
MARINE JET TECHNOLOGY CORPORATION
(a Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FROM FEBRUARY 9, 2000 (DATE OF INCEPTION) TO DECEMBER 31, 2001
Accumulated Total
Additional Deficit Stock-
Paid-in During holders'
Shares Amount Capital Dev. Stage Equity
--------------------------------------------------------
Issued for cash
February 11, 2000 105,000 $105 $- $- $105
Issued for cash
February 12, 2000 3,125,000 3,125 - - 3,125
Issued for cash
May 18, 2000 100,000 100 - - 100
Issued for
proprietary
rights agreement
May 19, 2000 1,000,000 1,000 - - 1,000
Issued for
patents
May 19, 2000 15,875,000 15,875 33,906 - 49,781
Expenses paid for
by an officer &
director
December 31, 2000 - - 4,790 - 4,790
Net income (loss)
December 31, 2000 - - - (18,718) (18,718)
--------------------------------------------------------
Balance at
December 31, 20,205,000 $20,205 38,696 (18,718) 40,183
2000
504 Offering
July 31, 2001 527,570 528 104,986 - 105,514
Expenses paid for
by an officer &
director
September 30, - - 11,575 - 11,575
2001
Expenses paid for
by an officer &
director
December 31, 2001 - - 3,179 - 3,179
Net income (loss)
December 31, 2001 (49,650) (49,650)
--------------------------------------------------------
Balance
December 31, 20,732,570 20,733 158,436 (68,368) 110,801
2001 ========================================================
The accompanying independent auditors' report and notes to financial
statements should be read in conjunction with this Statement of
Changes in Stockholders' Equity.
PAGE-28-F3
MARINE JET TECHNOLOGY CORPORATION
(a Development Stage Company)
STATEMENTS OF CASH FLOWS
FROM JANUARY 1, 2001 TO DECEMBER 31, 2001, FEBRYARY 9, 2000 (DATE OF
INCEPTION) TO DECEMBER 31, 2000 AND FEBRUARY 9, 2000 (DATE OF
INCEPTION)TO DECEMBER 31,
2001
01/01/2001 2/9/2000 2/9/2000
- - -
12/31/2001 12/31/2000 12/31/2001
------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $(49,650) $(18,718) $(360,225)
Adjustments to reconcile net
(loss) net cash (used in)
provided by operating
activities:
Depreciation and amortization 5,810 2,493 8,302
(Increase) decrease in prepaid (810) - (810)
expenses
(Increase) Decrease in accounts (945) 945 -
payable ------------------------------------------
NET CASH USED IN OPERATING (45,595) (15,280) (60,875)
ACTIVITIES ------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets (30,688) - (30,688)
Purchase of licensing agreement, (5,458) (49,781) (55,239)
patents ------------------------------------------
NET CASH USED IN INVESTING (36,146) (49,781) (85,927)
ACTIVITIES ------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Decrease in note payable - (7,375) 7,375 -
shareholder
Issuance of common stock 528 19,205 19,733
Additional paid-in capital 119,740 38,696 158,436
------------------------------------------
NET CASH PROVIDED BY FINANCING 112,893 65,276 178,169
ACTIVITIES ------------------------------------------
NET INCREASE IN CASH 31,152 215 31,367
CASH - beginning of period 215 - -
------------------------------------------
CASH - end of period $31,367 $215 $31,367
------------------------------------------
Supplemental disclosures:
Interest paid $590 $- $590
==========================================
Taxes paid $- $- $-
==========================================
The accompanying independent auditors' report and notes to financial
statements should be read in conjunction with these Statements of
Cash Flows.
PAGE-29-F4
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001 & 2000
NOTE 1 - ORGANIZATION AND BACKGROUND
Marine Jet Technology, Corp. (a U.S. Operating Company and Nevada
corporation) incorporated on February 9, 2000. The company was
formed to develop and market a boat propulsion technology developed
by the President of the Company. The Company currently has minimal
operations and in accordance with SFAS #7, the Company is considered
a development stage company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The financial statements of Marine Jet Technology, Corp. have been
prepared on the accrual basis. Revenues are recognized when earned
and expenses are recognized in the period incurred. The fiscal year
end is December 31.
Cash and cash equivalents
The Company considers short-term investments with an original
maturity of three months or less to be cash equivalents.
Prepaid expenses
The Company amortizes prepaid expenses over a period equivalent to
the term of commitment. Prepaid expenses for the periods ended
December 31, 2001, December 31, 2000 were $810 and $0, respectively.
Fixed assets
Fixed assets are recorded at cost. Ordinary maintenance and repairs
are charged to expense as incurred and costs that materially
increase the life of the assets are capitalized. Depreciation is
recorded using the straight-line method over the estimated useful
life of the assets, which are as follows:
Computer equipment 5 years
Software 5 years
Office equipment 7 years
Office furniture 7 years
Equipment and machinery 5 years
Depreciation for the periods ended December 31, 2001, and December
31, 2000 was $2,035 and $0, respectively.
PAGE-30-F5
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings Per Share Calculations
Basic earnings per common share ("EPS") is computed by dividing
income available to common stockholders by the weighed-average
number of common shares outstanding for the period. The
weighed-average number of common shares outstanding for computing
basic EPS was 20,426,753 and 4,786,502 for the years ended
December 31, 2001 and 2000, respectively. Diluted EPS reflects
the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock. As of June 30, 2002, the Company had no outstanding
securities that could have a dilutive effect on the outstanding
common stock, respectively.
Amortized Intangible assets
Intangible Assets are recorded at their historical cost.
Amortization is recorded using the straight-line method over the
estimated useful life of the assets, which are as follows:
Proprietary rights 14 years
agreement
Patents 13-14 years
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions 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 reported period. Actual results could differ from those
estimates.
Income taxes
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 (SFAS #109) "Accounting for Income
Taxes" ("SFAS No. 109"), which require the use of the liability
method. SFAS No. 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary differences.
Deferred tax assets and liabilities at the end of each period are
determined using the currently enacted tax rates applied to taxable
income in periods in which the deferred tax assets and liabilities
are expected to be settled or realized.
PAGE-31-F6
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 3 - COMMITMENTS
The Company entered into a two-year lease agreement for office space
and mail forwarding services for $135 per month that ends on May 31,
2002. On July 18, 2001, the Company paid the lease in full. The
resulting prepaid balance as of March 31, 2002 is $810.
NOTE 4 - PROPRIETARY RIGHTS AGREEMENT
Proprietary Rights Agreement (non-cash transaction)
The Company has recorded the purchase of a proprietary rights
agreement on May 18, 2000 from David Lyman, co-developer of the boat
propulsion technology. The Company recorded the agreement for a
consideration of 1,000,000 shares of $0.001 par value stock of the
Company, valued at $1,000.
The Company has adopted SFAS 142. Under guidance from SFAS 142,
Management has determined that the value of the proprietary rights
agreement, purchased in May of 2000, has not significantly decreased
and there has been no reduction in the usefulness of the asset for
the periods ended December 31, 2001 and December 31, 2000.
Patent Licensing Agreement
The Company has recorded the purchase of a patent licensing
agreement using the seller's historical cost of $55,238. The
licensing agreement provides the company with proprietary,
licensing, patent, marketing and other intellectual property rights
related to the patents. The patents secure the rights to the
development of marine jet propulsion technology used to provide more
efficient inlet ducts, power transfer, and jet pump operation.
The Company has adopted SFAS 142. Under guidance from SFAS 142,
Management has determined that as the major intangible asset, the
value of the patent licensing agreement, purchased in April of 2000,
has not significantly decreased and there has been no reduction in
the usefulness of the asset for the periods ended December 31, 2001
and December 31, 2000. However, these intangibles are being amortized
in accordance with SFAS 142 as reflected on the schedule below.
Because the patents have not demonstrated their technological or
commercial feasibility as December 31, 2001 and December 31, 2000,
and since significant risks exist because of uncertainties the
Company may face in the form of time and costs necessary to produce
technological and commercial feasibility, there is uncertainty that
the Company will be able to realize any value from the intangible
asset should the technology fail to become viable.
PAGE-32-F7
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 4 - AMORTIZED INTANGIBLE ASSETS (CONTINUED)
Amortized Intangible Assets
Amortization expense for the periods ended December 31, 2001, and
December 31, 2000 was $3,775 and $2,493, respectively.
For the periods ended
December 31:
2001 2000
------------ -----------
Proprietary rights agreement $ 1,000 $ 1,000
Patents 55,238 49,781
------------ -----------
Gross Carrying Amounts 56,238 50,781
Less: Accumulated 6,268 2,493
Amortization ------------ -----------
Net Amortized Intangible $ 49,970 $ 48,288
Assets ============ ===========
Scheduled amortization expense for each of the next five fiscal
years are as follows:
Period ended December 31,
2002 $ 3,992
2003 3,992
2004 3,992
2005 3,992
2006 3,992
Thereafter 30,010
----------
$ 49,970
==========
NOTE 5 - STOCKHOLDER'S EQUITY
On February 11, 2000, the Company issued 105,000 of its $0.001 par
value common stock to an officer and director of the Company for
cash in the amount of $105. Of the total amount received, $105 is
considered common stock and $0 is considered additional paid-in
capital.
On February 12, 2000, the Company issued 3,125,000 shares of its
$0.001 par value common stock as founder's shares to the Company's
officers and directors for cash of
$3,125. Of the total amount received, $3,125 is considered common
stock and $0 is considered additional paid-in capital.
PAGE-33-F8
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 5 - STOCKHOLDER'S EQUITY (CONTINUED)
On May 18, 2000, the Company issued 100,000 shares of its $0.001 par
value common stock to an officer and director of the Company for
cash in the amount of $100. Of the total amount received, $100 is
considered common stock and $0 is considered additional paid-in
capital.
On May 19, 2000, the Company issued 1,000,000 shares of its $0.001
par value common stock as consideration for a "Proprietary Rights
Agreement" valued at $1,000 (See Note 4). Of the total amount
received, $1,000 is considered common stock and $0 is considered
additional paid-in capital.
On May 19, 2000, the Company issued 15,875,000 shares of its $0.001
par value common stock as consideration for a "Patent Licensing
Agreement" valued at $55,238 (See Note 8). Of the total amount
received, $15,875 is considered common stock and $33,906 is
considered additional paid-in capital.
During the period ended December 31, 2000, an officer, director and
shareholder of the Company paid for expenses on behalf of the
Company totaling $4,790. Of the total amount received, $0 is
considered common stock and $4,790 is considered additional paid-in
capital.
On July 31, 2000, the Company closed its Rule 504 offering and
issued 527,570 shares of its $0.001 par value common stock for cash
in the amount of $105,514. Of the total amount paid, $528 is
considered common stock and $104,986 is considered additional paid-
in capital.
During the period ended September 30, 2001, an officer, director and
shareholder of the Company paid for expenses on behalf of the
Company totaling $11,575. Of the total amount received, $0 is
considered common stock and $11,575 is considered additional paid-in
capital.
During the period ended December 31, 2001, an officer, director and
shareholder of the Company paid for expenses on behalf of the
Company totaling $3,179. Of the total amount received, $0 is
considered common stock and $3,179 is considered additional paid-in
capital.
For the periods ended December 31, 2001 and December 31, 2000, the
Company had 20,732,570 and 20,205,000 shares of common stock issued
and outstanding, held by 113 shareholders of record for both
periods.
PAGE-34-F9
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 6 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any
additional shares of common stock that are not disclosed on the
balance sheets.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company entered into a Patent License Agreement ("Agreement")
with Jeff P. Jordan and Robert J. Tomlinson ("Licensors"), officers
and directors of the Company, to issue rights to all of the
marketing, proprietary, licensing, patent and intellectual rights to
US Patent #5,658,176, "Marine Jet propulsion System, US Patent
#5,679,035, "Marine
Jet Propulsion Nozzle and Method", and US Patent #5,683,276, "Marine
Jet Propulsion Inlet Duct and Method", in exchange for 15,875,000
shares of the company's $0.001 par value common stock (See Note 6).
The Agreement grants to the Company exclusive rights to the use of
the Patents for all applications under 400hp.
The Company also entered into NonCompetition Agreements with the
Licensors whereby for a period of 5 years from the date of the
agreement, Licensors will not engage in or carry on, directly or
indirectly, any business in competition with the business of the
Company relating to the Patents that are the subject of the Patent
License Agreement. No valuable consideration was given for the
NonCompetition Agreements.
The Company purchased equipment from an officer and director of the
Company on August 31, 2001 with cash in the amount of $30,000.
NOTE 8 - PRIOR PERIOD ADJUSTMENT (CORRECTION OF AN ERROR)
As of December 31, 2001, the Company has a net operating loss carry
forward of approximately $68,368 for tax purposes, which will be
available to offset future taxable income. If not used, this
carryforward will expire in 2021. The deferred tax asset relating
to the net operating loss carry forward of approximately $12,092
has been fully reserved at December 31, 2001.
NOTE 9 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern,
which assumes the realization of assets and liquidation of liabilities
in the normal course of business. Since the Company has not
commenced its planned principal operations, the Company intends to
raise sufficient capital needed to continue operating until its
planned principal operations commence.
PAGE-35-F10
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 9 - GOING CONCERN (CONTINUED)
The Company anticipates the ability to raise additional
money through Private Placement Memorandums. Additionally,
the Company anticipates being listed as an Over-the-Counter
Bulletin Board stock, which will provide an additional source
of working capital for the Company. Finally, the Company
plans to curtail expenses so that the current cash balance
will allow the company to continue to operate.
Without realization of additional capital, it would be
unlikely for the Company to continue as a going concern.
The officers and directors are involved in other business
activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in
selecting between the Company and their other business
interests. The Company has not formulated a policy for
the resolution of such conflicts.
NOTE 10 - CHANGE OF AUDITORS
On January 15, 2002, the Company, with the approval of its
board of directors, dismissed the services of its prior
auditor, Brad Beckstead, and retained Chavez and Koch, CPA's,
Ltd, as its new auditors. This termination of services was
the result of a lack of customer service and not due to a
disagreement of any type.
PAGE-36-F11
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 11 - CHANGE OF AUDITORS
On January 15, 2002, the Company, with the approval of its board of
directors, dismissed the services of its prior auditor, Brad
Beckstead, and retained Chavez and Koch, CPA's, Ltd, as its new
auditors. This termination of services was the result of a lack of
customer service and not due to a disagreement of any type.
PAGE-37-F12
Part III
Item 1. Index to Exhibits
Exhibit Name and/or Identification of Exhibit
Number
2. Plan of acquisition, reorganization, arrangement,
liquidation, or succession
(a) Marine Jet Technology License Agreement
(b) Amendment to Marine Jet Technology License Agreement of
May 22, 2000
(c) Second Amendment to Marine Jet Technology License
Agreement of May 22, 2000
(d) Proprietary Rights Agreement
3. Articles of Incorporation & By-laws
(a) Articles of Incorporation of the Company filed February
9, 2000
(b) Amendment to the Articles of Incorporation filed
December 5, 2000
(c) Amendment to the Articles of Incorporation filed January
5, 2001
(d) By-laws of the Company adopted February 12, 2000
10. Material Contracts
Office lease agreement.
16. Letter on Change in Certifying Accountant
(a) Letter from G. Brad Beckstead, CPA
(b) Independent Auditor's Report dated October 4, 2001
PAGE-38-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned hereunto duly authorized.
Marine Jet Technology Corporation
---------------------------------
(Registrant)
By: /s/ Jeff P. Jordan
--------------------
Jeff P. Jordan
President
In accordance with the requirements of the Securities Act of
1933, this Registration Statement was signed by the following
persons in the capacities and on the dates stated:
Signature Title Date
----------- ------- ----------
/s/ Jeff P. Jordan
---------------------
Jeff P. Jordan President September 13, 2002
/s/ Martha A. Jordan
--------------------
Martha A. Jordan Secretary September 13, 2002
PAGE-39-