UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2001
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period from __________ to
Commission File Number 000-33297
MARINE JET TECHNOLOGY CORPORATION
(Name of small business issuer in its charter)
Nevada 88-0450923
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
500 N. Rainbow Blvd., Suite 300 89107
Las Vegas, NV
(Address of principal executive (Zip code)
offices)
Issuer's telephone number: (425) 869-2723
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Title of each class Name of each exchange on which registered
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON
(Title of class)
(Title of class)
PAGE-1-
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
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $0
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was sold, or the average bid and
asked price of such common equity, as of a specified date within
the past 60 days. (See definition of affiliate in Rule 12b-2 of
the Exchange Act.) N/A
Note: If determining whether a person is an affiliate will
involve an unreasonable effort and expense, the issuer may
calculate the aggregate market value of the common equity held by
non-affiliates on the basis of reasonable assumptions, if the
assumptions are stated.
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
20,732,570
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g.,
Part I, Part II, etc.) into which the document is incorporated:
(1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act"). The listed documents should be clearly described for
identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1990).
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
FORWARD LOOKING STATEMENTS
This Annual Report contains forward-looking statements about
our business, financial condition and prospects that reflect our
management's assumptions and beliefs based on information
currently available. We can give no assurance that the
expectations indicated by such forward-looking statements will be
realized. If any of our assumptions should prove incorrect, or
if any of the risks and uncertainties underlying such
expectations should materialize, Marine Jet Technology
Corporation's actual results may differ materially from those
indicated by the forward-looking statements.
The key factors that are not within our control and that may
have a direct bearing on operating results include, but are not
limited to, acceptance of our services, our ability to expand its
customer base, managements' ability to raise capital in the
future, the retention of key employees and changes in the
regulation of our industry.
There may be other risks and circumstances that management
may be unable to predict. When used in this Report, words such
as, "believes," "expects," "intends," "plans," "anticipates,"
"estimates" and similar expressions are intended to identify and
qualify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions.
However, the forward-looking statements contained herein are not
covered by the safe harbors created by Section 21E of the
Securities Exchange Act of 1934.
PAGE-2-
PART I
ITEM 1. BUSINESS.
A. Business Development and Summary
Marine Jet Technology Corp. was incorporated in Nevada on
February 9, 2000, to develop and market boat propulsion
technology developed by our President, Jeff P. Jordan.
Prior to our inception, 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
holder of our common stock.
Also, prior to our formation, 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.
On May 19, 2000, we entered into a Proprietary Rights
Agreement with Mr. Lyman, whereby we received any and all
proprietary rights and future benefits derived from Mr. Lyman's
design, development and work on the prototype propulsion system.
In accordance with this agreement, we 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, we 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, we
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, we purchased assets from Mr. Jordan for
cash. The assets included a test boat, patterns for component
castings and related equipment.
B. Business of Issuer
1) Principal products or services and their markets
We intend 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, our
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. Our 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. Our
management believes that jets are safer than out-drives because
there is no exposed propeller in the water. In addition, our
management believes that jet propulsion systems are more
maneuverable than out-drives because the jet outlet is
directionally controlled.
PAGE-3-
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.
We originally developed the idea of the Marine Jet
propulsion system for use in the recreation boating arena. We
now also intend to market our 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, our 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.
We believe that this market is ideal for our product because
jet propulsion systems are preferred in the fishing industry for
their shallow draft and ability to operate over nets. Until
WorkJET, however, our management believes that fishing jets have
been inefficient under load and at the slower boat speeds
required by heavy seas. It is our 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. We do not contemplate developing an entirely
new engine or drive system; instead, our 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. We have 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. We intend to have our
finalized design manufactured under a common contract based on
ISO 9000 quality specifications. To date, we are continuing
testing and development, and has not finalized the design of the
Quick Jet system.
2) Distribution methods of the products or services
Our 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. We may also license
one or more manufacturers to sell systems based on the
technology. In return, manufacturers will pay us a royalty on
each boat or engine sold that utilizes our technology. At this
time, we do not intend to produce the Quick Jet engines in-house.
PAGE-4-
Marine Jet anticipates that the use of existing production
and sales capacity offers the most rapid market penetration. For
this reason, our strategy centers on developing joint venture and
licensing relationships with boat and motor manufacturers. We
have yet to identify such companies or enter into any
manufacturing relationships or joint ventures.
Our Internet site, "www.marinejettech.com," is available for
industry participants and consumers to learn about our Quick Jet
technology. We believe that our web site is ideal for answering
technical questions, building credibility and creating market
interest.
Additionally, we have 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. We are planning to distribute this and future video
on CD-ROM, DVD and over the Internet to potential clients or
licensees.
3) Status of Any Publicly Announced New Product or Service
We have developed a fully-operation prototype propulsion
system. This system has been undergoing test, research and
further development by our management. Our 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 our management's expectation, we have
been unable to retain either an independent firm or the
instrumentation for management to accurately measure the
performance specifications of the prototype.
4) Competition
Our management estimates that the marine propulsion system
market is dominated by a few large manufacturers. Our management
also 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, we see 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.
We believe 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, we 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-5-
5) Raw Materials
Mr. Dave Lyman, owner of IDA, Inc., based in Heron, Montana,
and a holder of our stock, has consulted in the design of the
Quick Jet system to make it suitable for contract manufacturing
of system components. We believe that there are sufficient
sources of supply for each component of the propulsion system.
We are not aware of any element of the system that requires
unusual or specialized manufacturing techniques.
7) Patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts, including duration
Prior to our inception, 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, we refer you to view these documents at
the United States Patent and Trademark Office's Internet site,
which can be found at www.uspto.gov.
We exclusively license the rights to patents covering the
operation and design of a marine propulsion system. Steps taken
by us 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.
Our 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.
8) Governmental Approval
We know of no government approval required for the Quick
Jet. We seek 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 our ability to enter into
relationships with such companies.
9) Effect of existing or probable governmental regulations on the
business
We believe that the effect of existing or probable
regulations in this business segment will have a positive effect
on our operations. With respect to public safety regulations, we
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, we believe we 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, we believe our 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, we believes our
designs will isolate gear whine and other propulsion system noise
within an acoustically insulated engine enclosure.
10) Research and development activities
Since our inception, we have been working on the controls
for the boat to better demonstrate the maneuverability and
convenience that this system offers. We have purchased
approximately $1,200 in control components for this purpose.
Generally, the prototype has been under test for nearly two
years. Despite performance meeting our management's general
expectations, we have been operating on limited funds and has
been unable to secure instrumentation, which is relatively
capital-intensive, to measure performance properly. We have
replaced several system components with improved designs, and are
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.
PAGE-6-
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.
11) Environmental Laws
We believe 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.
12) Number of total employees and number of full time employees
We presently have two part-time employees, Jeff P. Jordan,
President, and Martha Jordan, Secretary. Mr. Jordan dedicates
approximately 75% of his time to our operations, while Mrs.
Jordan commits approximately 20% of her time to Marine Jet. Our
employees are not represented by a collective bargaining
agreement, and our management believes that out relations with
our employees are good.
C. Reports to Security Holdings
(1) Annual reports
We have been subject to the reporting requirements under
Section 12(g) of the Securities Act of 1934 as of December 29,
2001. This annual report on Form 10-KSB for the year ended
December 31, 2001 is being filed delinquent. Our management
intends to file future reports with the SEC in a timely manner.
Such annual reports will include audited financial statements.
(2) Periodic reports with the SEC
As of the date of this Registration Statement, we have not
been filing periodic reports with the SEC. we are delinquent in
our filings, and fully intends to bring our reports current by
filing the necessary forms and reports. We further intend 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 we file 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. PROPERTIES
Our principal offices are located at 500 North Rainbow Blvd,
Suite 300, Las Vegas, NV 89107, telephone: (425) 869-2723. We
are 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. We believe that
this arrangement is suitable given the limited nature of our
current operations. There are currently no proposed programs for
the renovation, improvement or development of the facilities we
currently utilize.
We also utilizes office space in the State of Washington,
which space is provided by an officer and director at no cost to
us. This space totals approximately 200 square feet. The space
is furnished with computers, printers, and various other office
furniture and equipment.
PAGE-7-
ITEM 3. LEGAL PROCEEDINGS
We are not subject to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PAGE-8-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
A. Market information
There is no established public trading market for our
securities and a regular trading market may not develop, or if
developed, may not be sustained. A shareholder in all
likelihood, therefore, will not be able to resell his or her
securities should he or she desire to do so when eligible for
public resales. Furthermore, it is unlikely that a lending
institution will accept our securities as pledged collateral for
loans unless a regular trading market develops. We have no
plans, proposals, arrangements, or understandings with any person
with regard to the development of a trading market in any of our
securities.
B. Holders
As of the date of this registration statement, we had 106
holders of record of our common stock.
C. Dividends
We have not declared any cash dividends on our common stock
since our inception and do not anticipate paying such dividends
in the foreseeable future. We plan to retain any future earnings
for use in our business. Any decisions as to future payments of
dividends will depend on our earnings and financial position and
such other facts as the board of directors deems relevant. We
are not limited in our ability to pay dividends on our
securities.
D. Securities authorized for issuance under equity
compensation plans
Not applicable.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
FORWARD LOOKING STATEMENTS
Some of the statements contained in this Form 10-KSB that
are not historical facts are "forward-looking statements" which
can be identified by the use of terminology such as "estimates,"
"projects," "plans," "believes," "expects," "anticipates,"
"intends," or the negative or other variations, or by discussions
of strategy that involve risks and uncertainties. We urge you to
be cautious of the forward-looking statements, that such
statements, which are contained in this Form 10-KSB, reflect our
current beliefs with respect to future events and involve known
and unknown risks, uncertainties and other factors affecting our
operations, market growth, services, products and licenses. No
assurances can be given regarding the achievement of future
results, as actual results may differ materially as a result of
the risks we face, and actual events may differ from the
assumptions underlying the statements that have been made
regarding anticipated events. Factors that may cause actual
results, our performance or achievements, or industry results, to
differ materially from those contemplated by such forward-looking
statements include without limitation:
1. Our ability to maintain, attract and integrate internal
management, technical information and management information
systems;
2. Our ability to generate customer demand for our products;
3. The intensity of competition; and
4. General economic conditions.
All written and oral forward-looking statements made in
connection with this Form 10-KSB that are attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by these cautionary statements. Given the uncertainties
that surround such statements, you are cautioned not to place
undue reliance on such forward-looking statements.
PAGE-9-
Overview
Marine Jet Technology Corporation is a corporation formed in
the State of Nevada in February 9, 2000. We intend to develop
marine jet propulsion systems for sale and to license the rights
to manufacture these systems and/or boats incorporating our
technology under the name "Quick Jet." We plan 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.
We have conducted our operations since February 2000. We
have generated no revenues and we have accumulated losses $68,368
since we were formed. As of the date of this report, we have not
secured any rights to sell our planned products and there have
not been any third party companies engaged related to the
manufacturing, supplying, shipping, billing or processing of the
proposed e-commerce business operations.
Plan of Operation
Since our formation on February 9, 2000 through December 31,
2001, we accumulated a deficit of $68,368. For the year ended
December 31, 2001, we incurred a net loss of $49,650. Our
efforts have focused primarily on the development of our 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.
Our management anticipates the need to recruit a management
team experienced in the marketing of new technology in similar
markets, to generate interest in our Quick Jet technology.
However, due to the limited availability of funds with which to
pay salaries, we intend to make stock options a substantial
portion of the compensation package for such a management team.
The conversion of such securities may dilute your interest in our
company as a shareholder.
We have developed controls for the test boat and used it to
produce a promotional video, which we are disseminating to
industry participants. Our management believes that the cash on
hand will limit the progress on these tasks and that failure to
obtain additional financing will delay or prevent the completion
of such promotional material.
To fund our operations for the year 2002, our management
believes that our current financial resources will not be
adequate to provide for our working capital needs. There are no
preliminary loan agreements or understandings between us, our
officers, directors or affiliates or lending institutions. We
have no arrangements or commitments for accounts and accounts
receivable financing. There are no plans or intentions to
acquire a significant plant and/or any equipment, nor to divest
any of our current assets or equipment.
Our 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, we intend to use any proceeds from sales of our
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, we
cannot assure you that any financing can be obtained or, if
obtained, that it will be on reasonable terms. Without
realization of additional capital, our management believes that
it would be unlikely for us to continue as a going concern.
Because we are a development stage company with no
significant operating history and a poor financial condition, we
may be unsuccessful in obtaining such financing or the amount of
the financing may be minimal and therefore inadequate to
implement our plan of operations. We have no alternative plan of
operations. In the event that we do not receive financing or our
financing is inadequate or if we do not adequately implement an
alternative plan of operations that enables us to conduct
operations without having received adequate financing, we may
have to liquidate our business and undertake any or all of the
following actions:
PAGE-10-
1. Sell or dispose of our assets;
2. Pay our liabilities in order of priority, if we have
available cash to pay such liabilities;
3. If any cash remains after we satisfy amounts due to our
creditors, distribute any remaining cash to our shareholders in
an amount equal to the net market value of our net assets;
4. File a Certificate of Dissolution with the State of Nevada
to dissolve our corporation and close our business;
5. Make the appropriate filings with the Securities and
Exchange Commission so that we will no longer be required to file
periodic and other required reports with the Securities and
Exchange Commission, if, in fact, we are a reporting company at
that time; and
If we have any liabilities that we are unable to satisfy and
we qualify for protection under the U.S. Bankruptcy Code, we may
voluntarily file for reorganization under Chapter 11 or
liquidation under Chapter 7. Our creditors may also file a
Chapter 7 or Chapter 11 bankruptcy action against us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our
creditors will take priority over our shareholders. If we fail
to file for bankruptcy under Chapter 7 or Chapter 11 and we have
creditors, such creditors may institute proceedings against us
seeking forfeiture of our assets, if any. We do not know and
cannot determine which, if any, of these actions we will be
forced to take.
ITEM 7. FINANCIAL STATEMENTS
PAGE-11-
MARINE JET TECHNOLOGY, CORP.
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED AND DECEMBER 31, 2001 AND
DECEMBER 31, 2000
PAGE-12-
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-13-
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 2000 and the statements
of operations and accumulated deficit and the statements of cash
flows for the periods January 1, 2001 to December 31, 2001,
February 9, 2000 (Date of inception) to December 31, 2000 and
February 9, 2000 (Date of inception) to December 31, 2001 and the
statement of changes in stockholders' equity 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. as of 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 and its cash flows for the periods ended
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 10 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-14-
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 884 961
amortization
Patents, net of amortization 49,086 7,273,689
----------------------
Total other assets 49,970 7,274,650
----------------------
TOTAL ASSETS $110,801 $7,274,865
======================
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 7,556,915
Accumulated deficit (68,368) (310,575)
Total stockholders' equity 110,801 7,266,545
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $110,801 $7,274,865
The accompanying independent auditors' report and notes to
financial statements should be read in conjunction with these
Balance Sheets.
PAGE-15-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- 02/09/2000- 02/09/2000-
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) (294,350) (3,775)
-----------------------------------------
TOTAL EXPENSES (49,060) (316,425) (71,135)
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) (310,575) (65,875)
-----------------------------------------
Accumulated Deficit, beginning of
period
As previously reported (310,575) - -
Correction of an error 291,857 - (2,493)
(amortization) -----------------------------------------
Adjusted balance of accumulated (18,718) - (2,493)
deficit, January 1, 2001
Accumulated Deficit, end of period $(68,368) $(310,575) $(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) $(0.02) $(0.00)
=========================================
Net income (loss) per diluted $(0.00) $(0.02) $(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-16-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
Additional Accumulated Total
Paid-in Deficit During Stockholders'
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 7,552,125 - 7,568,000
Expenses paid for
by an officer &
director
December 31, 2000 - - 4,790 - 4,790
Net income (loss)
December 31, 2000 - - - (310,575) (310,575)
----------------------------------------------------------
Balance at
December 31, 20,205,000 $20,205 7,556,915 (310,575) 7,266,545
2000
Prior Period - - 291,857 291,857
Adjustment
(Amortization)
Prior Period - - (7,518,219) (7,518,219)
Adjustment
(Patents
valuation)
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
The accompanying independent auditors' report and notes to
financial statements should be read in conjunction with this
Statement of Changes in Stockholders' Equity.
PAGE-17-F2
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- 02/09/2000- 02/09/2000-
12/31/2001 12/31/2000 12/31/2001
-----------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $(49,650) $(310,575) $(360,225)
Adjustments to reconcile net
(loss) net cash (used in)
provided by operating
activities:
Depreciation and amortization 5,811 294,350 300,160
(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 (30,689) - (30,689)
Purchase of licensing agreement, (5,458) (49,781) (55,239)
patents -----------------------------------------
NET CASH USED IN INVESTING (36,147) (49,781) (85,928)
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-18-F3
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-19-F4
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 15,061,250 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 December 31, 2001 and 2000, 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-20-F5
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.
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-21-F6
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 March 31:
-------------------------------
2002 2001
-------------------------------
Proprietary rights agreement $1,000 $1,000
Patents 55,238 51,230
-------------------------------
Gross Carrying Amounts 56,238 52,230
Less: Accumulated Amortization 7,266 3,412
-------------------------------
Net Amortized Intangible Assets $48,972 $48,818
===============================
Scheduled amortization expense for each of the next five fiscal
years are as follows:
Period ended March 31,
2003 $ 3,992
2004 3,992
2005 3,992
2006 3,992
2007 3,992
Thereafter 29,012
---------
$ 48,972
=========
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-22-F7
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-23-F8
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)
For the year ended December 31, 2000, the Company had recorded
amortization expense of $294,350 related to the proprietary
rights agreement and patent licensing agreement purchased, based
on an appraised value of 7,568,000. The proper valuation of the
patent based on historical costs was $55,238. The Company has
since adopted SFAS 142. Under guidance from SFAS 142 and due to
the stage of development of the Company, management has
determined that the values of the proprietary rights agreement
and patent licensing agreement have not significantly decreased
and there have been no reductions in the usefulness of these
assets for the periods ended December 31, 2001 and December 31,
2000. Additionally, this asset will not be amortized and will be
tested for impairment at least annually by comparing the fair
value of the asset with the recorded value.
PAGE-24-F9
Marine Jet Technology Corp.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AS OF DECEMBER 31, 2001 & 2000
NOTE 8 - PRIOR PERIOD ADJUSTMENT (CORRECTION OF AN ERROR)
(CONTINUED)
Due to the adoption of SFAS 142, a prior period adjustment was
recorded to remove the net amortization expense of $291,857 for
the period ended December 31, 2001. The correction of this error
resulted in a net decrease in January 1, 2001 accumulated deficit
by $291,857.
NOTE 9 - INCOME TAXES
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 10 - 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.
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.
PAGE-25-F10
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-26-F11
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The board of directors elects our executive officers annually. A
majority vote of the directors who are in office is required to
fill vacancies. Each director shall be elected for the term of
one year, and until his successor is elected and qualified, or
until his earlier resignation or removal. Our directors and
executive officer are as follows:
NAME AGE POSITION DIRECTOR SINCE TERM
---------- ----- --------------- ---------------- ------
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 48 Director August 2001 1
Sebree 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 our officers and directors 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. 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.
PAGE-27-
Board Committees
We currently have no compensation committee or other board
committee performing equivalent functions. Currently, the member
of our board of directors participate in discussions concerning
executive officer compensation.
Employees
Excluding our directors, we have two part-time employees,
Jeff P. Jordan, President, and Martha Jordan, Secretary. Mr.
Jordan dedicates approximately 75% of his time to our operations,
while Mrs. Jordan commits approximately 20% of her time to Marine
Jet. Our employees are not represented by a collective
bargaining agreement, and our management believes that our
relations with our employees are good.
Legal Proceedings
No officer, director, or persons nominated for such
positions, promoter or significant employee has been involved in
legal proceedings that would be material to an evaluation of our
management.
Family Relationships
Martha A. Jordan, Secretary and Director of our Company, is
the wife of Jeff P. Jordan, our President and Director.
Benjamin B. Jordan, a shareholder, is the son of Jeff P.
Jordan and Martha A. Jordan.
Julie P. Jordan, a shareholder, is the daughter of Jeff P.
Jordan and Martha A. Jordan.
ITEM 10. EXECUTIVE COMPENSATION
We do not have employment agreements with our executive
officers. We continue to have discussions with our attorneys to
determine the appropriate terms needed for the creation of
employment agreements for our officers. There has been no
discussion with any of our officers regarding any potential terms
of these agreements, nor have such terms been determined with any
specificity. We plan to have these agreements completed by the
beginning of the next year. We have no proposal, understanding
or arrangement concerning accrued earnings to be paid in the
future. In the meanwhile, all of our executive officers have
been drawing salaries since they were appointed to their
positions.
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 2001 0 0 0 0 0 0 0
President
and
Director
Martha A. 2002 0 0 0 0 0 0 0
Jordan 2001 0 0 0 0 0 0 0
Secretary
and
Director
Wilbur 2002 0 0 0 0 0 0 0
Sebree 2001 0 0 0 0 0 0 0
Director
Marilyn J. 2002 0 0 0 0 0 0 0
Holt 2001 0 0 0 0 0 0 0
Director
PAGE-28-
Employment Contracts
We do not have employment agreements.
Board Compensation
Members of our board of directors do not receive cash
compensation for their services as directors, although some
directors are reimbursed for reasonable expenses incurred in
attending board or committee meetings.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tables set forth the ownership, as of the date
of this registration statement, of our common stock by each
person known by us to be the beneficial owner of more than 5% of
our outstanding common stock, our directors, and our executive
officers and directors as a group. To the best of our knowledge,
the persons named have sole voting and investment power with
respect to such shares, except as otherwise noted. There are not
any pending or anticipated arrangements that may cause a change
in control of our company.
Name and Address Amount and Nature
of
Title of Of Beneficial Owner Beneficial Owner % of
Class Class
-----------------------------------------------------------------
Common Jeff P. Jordan, 16,762,500 80.96%
Stock President and
Director(1)
Common Wilbur Sebree, 50,000 0.25%
Stock Director(1)
Common Officers and Directors 16,812,500 83.21%
Stock as a Group
Common Robert J. Tomlinson(2) 2,062,500 10.21%
Stock
Common Benjamin B. Jordan(1) 100,000 0.49%
Stock
Common Julie P. Jordan(1) 100,000 0.49%
Stock
Footnotes:
(1) The address of Mr. Jeff P. Jordan, Wilbur Sebree, 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.
This table is based upon information derived from our stock
records. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, it
believes that each of the shareholders named in this table has
sole or shared voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages
are based upon 20,732,570 shares of common stock outstanding as
of December 31, 2001.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 19, 2000, we entered into a Proprietary Rights
Agreement with David Lyman, a holder of our stock and a co-
developer of the Quick Jet technology, whereby we 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, we 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 Item 7 of this annual report.
PAGE-29-
On May 19, 2000, we entered into a Technology License
Agreement with Jeff P. Jordan and Robert J. Tomlinson, both of
whom are our officers and directors, 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 our $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. We have recorded the purchase at
the historical cost of $55,238. However, because the patents
have not demonstrated their technological or commercial
feasibility as of December 31, 2001, and since significant risks
exist because of uncertainties we may face in the form of time
and costs necessary to produce technological and commercial
feasibility, there is uncertainty that we will be able to realize
any value from the intangible asset should the technology fail to
become viable.
We 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 our business 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, we purchased a boat, tooling and
construction services from Jeff P. Jordan, an officer and
director, 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.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
A list of exhibits required to be filed as part of this
Annual Report is set forth in the Index to Exhibits, which
immediately precedes such exhibits and is incorporated herein by
reference.
(b) Reports on Form 8-K
We have not filed any reports on Form 8-K during the last
quarter of the period covered by this Report.
On January 15, 2002, we engaged Chavez & Koch, CPA's as our
principal accountants to replace our former principal
accountants, G. Brad Beckstead, CPA. The decision to change
accountants was approved by our Board of Directors.
During our most recent two fiscal years and during any
subsequent interim periods preceding the date of termination, we
have had no disagreements with G. Brad Beckstead, CPA on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
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 us 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 G. Brad
Beckstead, CPA, 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).
PAGE-30-
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 July 31, 2002
Jeff P. Jordan President
/s/ Martha A. Jordan July 31, 2002
Martha A. Jordan Secretary
PAGE-31
INDEX TO EXHIBITS
Item 1. Index to Exhibits
Exhibi Name and/or Identification of Exhibit
t
Number
2. Plan of acquisition, reorganization, arrangement,
liquidation, or succession
(a) Marine Jet Technology License Agreement (1)
(b) Amendment to Marine Jet Technology License Agreement of
May 22, 2000 (1)
(c) Second Amendment to Marine Jet Technology License
Agreement of May 22, 2000 (1)
(d) Proprietary Rights Agreement (1)
3. Articles of Incorporation & By-laws
(a) Articles of Incorporation of the Company filed February
9, 2000 (1)
(b) Amendment to the Articles of Incorporation filed
December 5, 2000 (1)
(c) Amendment to the Articles of Incorporation filed January
5, 2001 (1)
(d) By-laws of the Company adopted February 12, 2000 (1)
10. Material Contracts
Office lease agreement (1)
(1) Incorporated by reference to the exhibits to the Company's
General Form for Registration of Securities of Small Business
Issuers on Form 10-SB, and amendments thereto, previously filed
with the Commission.
PAGE-32-