U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the fiscal year ended July 30, 2005
                                   -------------

                                       OR

[ ]      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 0-26617

                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                   -------------------------------------------
                 (Name of Small Business Issuer in its Charter)

                             Florida                      65-0794113
                             -------                      ----------
                (State or Other Jurisdiction of        (I.R.S. Employer
                 Incorporation or Organization)       Identification No.)

               3391 S. E. 14th Avenue, Port Everglades, FL 33316
               -------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (954) 523-8985
                                 --------------
                           (Issuer's Telephone Number)

              Securities registered under Section 12(b) of the Act:

          Title of Each Class         Name of Each Exchange on Which Registered
          -------------------         -----------------------------------------
                                               None

         Securities registered under Section 12(g) of the Exchange Act:

          Title of Each Class        Name of Each Exchange on Which Registered
          -------------------        -----------------------------------------
             Common Stock

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 contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State issuer's revenues for its most recent fiscal year. $11,463,235

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. ($0.28 on October 5, 2005) $2,511,711.16.

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: September 9, 2005: 15,555,525 Shares
of Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

- None -

Transitional Small Business Disclosure Format (Check One).   Yes [ ]    No [X]
<PAGE>
<TABLE>
<CAPTION>
                                                Table of Contents
                                                -----------------


                                                                                                          Page
                                                                                                          ----
<S>           <C>                                                                                          <C>
PART I
------

Item 1.       Description of Business............................................................          3

Item 2.       Description of Property............................................................          7

Item 3.       Legal Proceedings..................................................................          8

Item 4        Submission of Matters to a Vote of Security Holders................................          8

PART II
-------

Item 5.       Market for Common Equity, Related Stockholder Matters and Small Business Issuer
              Purchases of Equity Securities.....................................................          9

Item 6.       Management's Discussion and Analysis or Plan of Operation..........................         12

Item 7.       Financial Statements...............................................................         17

Item 8.       Changes in and Disagreements With Accountants on Accounting and Financial
              Disclosure.........................................................................         17

Item 8A.      Controls and Procedures............................................................         17

Item 8B.      Other Information..................................................................         17

PART III
--------

Item 9.       Directors and Executive Officers...................................................         18

Item 10.      Executive Compensation.............................................................         20

Item 11.      Security Ownership of Certain Beneficial Owners and Management and Related
              Stockholder Matters................................................................         23

Item 12.      Certain Relationships and Related Transactions.....................................         24

Item 13.      Exhibits...........................................................................         26

Item 14.      Principal Accountant Fees and Services.............................................         26
</TABLE>


















                                        2
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Business

         Jupiter Marine International Holdings, Inc. (JMIH), a Florida
corporation, was incorporated on May 19, 1998. On May 26, 1998, JMIH acquired
all of the outstanding shares of common stock of Jupiter Marine International,
Inc. (JMI), a boat manufacturing company, which was incorporated under the laws
of the State of Florida on November 7, 1997. On February 17, 2000, JMIH
purchased certain of the assets of Phoenix Marine International, Inc., mostly
consisting of molds for inboard powered sport fishing boats. JMIH formed a new
wholly owned subsidiary, Phoenix Yacht Corporation (Phoenix) to hold these
assets. JMIH, JMI and Phoenix will sometimes be collectively referred to as the
"Company". The Company's principal offices and manufacturing facilities are
located in Port Everglades, Florida. The Company's web site address is
www.jupitermarine.com.

         The Company designs, manufactures and markets a diverse mix of high
quality sport fishing boats under the Jupiter name. The product line currently
consists of six models:

         31' Open Center Console
         31' Cuddy Cabin
         31' Forward Seating Center Console
         27' Open Center Console
         27' Forward Seating Center Console
         38' Forward Seating Center Console

Products

         The list prices for the Jupiter 38' model range from $212,970 to
$249,750. The Jupiter 31 models range from $146,430 to $150,970 and the Jupiter
27 ranges from $105,540 to $111,850. Optional equipment specified by the
customer is additional. The Company provides each boat purchaser with a limited
lifetime hull structure warranty and a 12 month warranty on any other part
manufactured by the Company.

         38' Forward Seating Center Console
         ----------------------------------

         The 38' Forward Seating, is based on the Jupiter 31'. The 38' has been
developed to satisfy boaters who require a larger vessel which incorporates the
performance features, and comforts of the 31'. The Eurostyle motor well is
designed to accommodate either twin or triple outboard installations. The wide
beam, centerline fuel tanks and ample freeboard aft make this an extremely
stable boat.





                                       3
<PAGE>
         31' Open Center Console
         -----------------------

         The 31' Center Console is designed for the family fisherman and
provides what management of the Company believes is a quality offshore
performance while offering amenities and features not normally found in other
open boats. This model includes a private stand up compartment with 6'2"
headroom containing a vanity with sink and shower and room for optional marine
head.

         31' Cuddy Cabin Center Console
         ------------------------------

         This model was completely redesigned during February 2003. In addition
to her sleek new look major improvements include: centerline cabin entrance,
increased cabin and deck storage, a new console seat, live-well in transom,
larger fishbox and high performance trim tabs. The forward cuddy cabin is
equipped with cruising amenities and a comfortable 4-place dinette that converts
to a queen berth for sleeping.

         31' Forward Seating Center Console
         ----------------------------------

         The 31' Forward Seating model is designed for serious anglers who also
need the additional seating for family and friends when cruising or
entertaining. The U-shaped, cushioned forward area provides comfortable seating
for six adults and is roomy enough for lounging and sunbathing. This model was
introduced during the fourth quarter of fiscal year 2003.

         27' Open Center Console
         -----------------------

         This model was discontinued effective July 2005.

         27' Forward Seating Center Console
         ----------------------------------

         Production of this model has been temporally suspended until
manufacturing capacity can be increased.

Manufacturing

         The Company's manufacturing plant is set up with three full-length
assembly lines. Each line operates at a rate that is determined by sales and
demand. It is Management's intent that each assembly line run at a consistent
line rate so that the workstations become repetitive and components can be
assembled in quantity at a most efficient rate. A line rate can generally be
increased or decreased by simply adding or subtracting workers and material on
the line.

         Current production capacity is sufficient to accommodate approximately
16 boats in various stages of construction at any one time. Construction of a
Jupiter outboard model, depending on size, takes approximately four weeks to
complete.



                                       4
<PAGE>
         The Company built 88 boats during fiscal year 2005, which was
approximately 95% of capacity. In order to expand its business the Company must
add additional manufacturing capacity as well as additional manpower, equipment
and tooling.

         The manufacturing process consists of two phases. The first phase of
manufacturing involves creating the hulls and decks of the boats. This is
accomplished by the hand "laying-up" (taking sheets of fiberglass material and
laying them in place along the bottom and up the hull of a boat) of vinylester
blended resins and high quality stitched, bi-directional and tri-directional
fiberglass material over a foam core in the molds. Bi-directional fiberglass is
a fabric type material that is made of fiberglass strands and distributed in
rolls, much the same as cotton fabrics. There are many types and styles of
fiberglass cloth, the most common being bi-directional, which means the
structural strands of material are woven in two directions normally at right
angles to each other. Tri-directional fiberglass is basically the same material
as bi-directional fiberglass with the difference being that the structural
strands of fiberglass are woven or knitted in three different directions in a
variety of combinations.

         This procedure and components create a composite structure with strong
out and inner skins with a thicker, lighter core in between. The laying-up of
fiberglass by hand, rather than using chopped fiberglass and mechanical
applicators, results in superior strength and appearance. During the second
phase of manufacturing, the fuel tanks and inner liner (or deck), which is made
of the same material as the hull, are installed in the hull. Decks are bonded to
the hulls using bonding agents, screws and fiberglass to achieve a strong,
unitized construction. The third phase involves installing the console, wiring,
electrical components, various accessories and engines. The final segment
involves installing custom accessories, upholstery, seating, electronics and
navigational aids.

Design

         The outboard powered product line's deep-v hulls are specifically
designed to perform at high speeds in offshore sea conditions, while providing
their passengers a smooth, comfortable and dry ride. There is no lean or
cavitation (vibration and inefficiencies caused by boat propeller slippage
occurring when a boat propeller does not have solid contact with the water) in a
turn.

         The outboard line's performance characteristics result from its
"posi-stern" hull design, developed by JMI, which reduces drag, planes faster,
turns sharper, and increases fuel economy. This hull design, combined with stern
lifting strakes, creates a variable dynamic lift that provides a level, stable,
and soft ride.

         The additional increase in stern lift balances the hull on its lines
and allows the boat to raise on plane very quickly without a loss of visibility
from the helm. The resulting running angle allows the bow to cut through the
water at a sharper angle, which results in deflecting spray out, not up and for
a softer and drier ride that reduces pounding or hopping commonly associated
with boats.



                                       5
<PAGE>
         Design and tooling for new boat models and improvements to existing
models is an integral part of the Company's business and will be ongoing. Time
involved will be dependent on the magnitude of the project and could range from
three to twelve months. The anticipated cost in planning and designing a new
boat is approximately $350,000. It is anticipated that the costs of these
projects will be funded with additional financing as well as from cash flows
from operations.

JMI Sales and Marketing

         JMI's marketing efforts continues to focus on Carl Herndon's name and
reputation in the boat manufacturing industry. Mr. Herndon has over 30 years of
marine experience. His background includes building high quality boats ranging
in length from 16' up to 80' in length and serving as the chief executive
officer of Blackfin Yacht Corporation and Bertram Yachts, two highly regarded
companies within the marine industry. In addition to his boat building
expertise, Herndon has served as the President of the Marine Industries
Association of South Florida, was appointed to the Boating Advisory Council by
Florida's Governor, has served on numerous committees for the National Marine
Manufacturers Association, and has lobbied in Washington, DC on behalf of the
marine industry.

         JMI markets its product lines in nationally circulated magazines and
trade publications including Boating Magazine, Sports Fishing, Florida
Sportsman, Motor Boating and Saltwater Sportsman. JMI intends to attend most
major boat shows and exhibitions, as well as possibly sponsoring boats in
fishing tournaments.

         The marketing of boats to retail customers is the direct responsibility
of authorized dealers, whose efforts are supplemented by the Company through
advertising in boating magazines and participation in boat shows. The Company`s
dealers are located in the United States along the East Coast and Gulf of
Mexico, as well as Puerto Rico. These dealers are not exclusive to the Company
and may carry the boats of other companies. The Company uses discretion in
locating new dealers in an effort to protect the interests of the existing
dealers. The Company normally does not manufacture boats for inventory. Most
boats are pre-sold to a dealer when entering the production line. The Company
currently has agreements with 13 boat dealers. The Company is in the process of
seeking additional qualified boat retailers to act as dealers.

         The Company sells all of its boats through retail dealers primarily on
a cash-on-delivery basis. However, approximately 47% of Company shipments are
made pursuant to commercial dealer floor plan financing programs in which the
Company participates on behalf of its dealers. Under these arrangements, a
dealer establishes lines of credit with one or more, Company approved,
third-party lenders for the purchase of inventory. When a dealer purchases a
boat pursuant to a floor plan arrangement, it draws against its line of credit
and the lender pays the invoice cost of the boat directly to the Company.




                                       6
<PAGE>
         The Company has agreed to repurchase boats with unencumbered titles
from an approved third-party lender which have been repossessed from a dealer
and returned to the Company in new or like new condition. Since its inception
and through July 30, 2005, the Company has not been required to repurchase any
boats. However, the Company is contingently liable for approximately $1,007,000
under terms of these agreements as of July 30, 2005. Except as noted above, the
Company has no other obligation to repurchase boats from its dealers.

Competition

         The market for sport fishing boats is extremely competitive. The
Jupiter line competes directly with the following manufacturers in its market
segment: Intrepid Powerboats, Inc., Contender Boats, Inc., Grady-White Boats,
Pursuit (a Division of S2 Yachts), and Regulator.

Employees

         Gevity HR (Gevity) has been engaged by JMIH to provide all personnel
and human resource management services. The Company employs approximately 85
full-time personnel at its manufacturing facility, including 12 administrative
and executive personnel. The agreement with Gevity may be terminated upon 30
days written notice. Management believes its relationship with its employees is
good and does not foresee any difficulties in hiring additional employees.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company leases a 32,140 square foot facility located at 3391 S.E.
14th Avenue, Port Everglades, Florida for its boat manufacturing operation and
executive offices. The Company leases the facility from Carl Herndon, the
Company's President and Chief Executive Officer. The lease was renewed on July
27, 2001 for an additional five years or through July 2006. The renewed lease
requires the Company to pay initial monthly lease payments of $14,383 per month
plus applicable real estate and sales taxes. The lease payments are subject to a
5% annual increase.

         Three additional buildings of 6,250, 3,240 and 5,000 square feet, which
are located adjacent to the main manufacturing facility, were leased from an
independent lessor. The monthly rent for these buildings is $4,194 $2,542 and
$3,276. Two of theses leases expired on July 31, 2005 and are on a month to
month basis. The other lease expires on September 30, 2005, at which time it
will go to a month to month lease.

         During December 2004 the Company entered into a Commercial Lease and
Purchase Option with a third party for the lease and potential purchase of an
additional operating facility in an effort to expand its manufacturing and
production capacity. The facility will provide the Company with approximately
50,000 square feet of additional manufacturing and production space. Under the
agreement the Company has agreed to lease certain properties and facilities in
Florida for a term of one year at $14,500 per month. The lease shall commence on




                                       7
<PAGE>
the earlier of the date the: (1) facilities are determined to meet all
applicable environmental and building code requirements ("Code Requirements") or
(2) Company takes possession of the facilities. The Company agreed to contribute
one-fourth of the funds necessary to satisfy Code Requirements. It was initially
estimated that funds necessary to satisfy Code Requirements was $300,000. During
the term of the lease the Company has a right and option to purchase the
facility. If the Company exercises such option, all funds contributed by the
Company to satisfy Code Requirements will be deducted from the purchase price.
If the Company declines to exercise the option or is unable to secure acceptable
financing Carl Herndon, the Company's president, will have a similar option to
purchase the facility. At July 30, 2005, the Company has contributed
approximately $37,500. However, since signing the Commercial Lease and Purchase
Option, the estimate of funds necessary to satisfy Code Requirements has
increased to approximately $1,000,000. As of October 10, 2005, the Company has
not been able to secure acceptable financing to satisfy the additional costs for
Code Requirements. If the Company cannot secure acceptable financing, it will
not exercise its purchase option.

         In the event the Company does not exercise its purchase option, Carl
Herndon has agreed to purchase the facility and lease it back to the Company and
Mr. Herndon will personally satisfy all Code Requirements without any cost to
the Company. If the Company occupies the facility it will require up to an
additional $1,500,000 for operational costs. Such costs are related to
inventory, new boat molds and miscellaneous equipment. It is anticipated that
funds for these activities will be provided from operations, an increase in the
Company's credit line and potential financing. To date, the Company has not
secured any financing.
ITEM 3.  LEGAL PROCEEDINGS

         There are no significant material legal proceedings filed, or to the
Company's knowledge, threatened against the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.





















                                        8

<PAGE>
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Equity

         Effective July 28, 2004, the Company's common stock is traded on the
Over the Counter Bulletin Board (OTCBB) under the symbol "JMIH". During the
prior fiscal year the Company's was quoted on the Pink Sheets. Prior to October
12, 2000, the Company's common stock was not publicly traded. The following
table sets forth the high and low bid quotations for the Company's common stock
as traded on the OTCBB or Pink Sheets for the calendar year periods indicated.
The Company's common stock is thinly traded. On September 16, 2005 the closing
bid price of the Company's common stock was $.29. Quotations, as supplied by the
OTCBB, reflect prices between dealers, do not include retail mark-ups,
markdowns, commissions and may not necessarily represent actual transactions.

Calendar Period                                         High             Low
---------------                                         ----             ---

Quarter ended September 30, 2003                        $.40             $.18
Quarter ended December 31, 2003                         $.37             $.12
Quarter ended March 31, 2004                            $.40             $.16
Quarter ended June 30, 2004                             $.40             $.11
Quarter ended September 30, 2004                        $.35             $.14
Quarter ended December 31, 2004                         $.36             $.28
Quarter ended March 31, 2005                            $.43             $.27
Quarter ended June 30, 2005                             $.33             $.25
Quarter ended September 30, 2005                        $.32             $.26

         As of the date of this report there are approximately 100 holders of
record of the Company's common stock.

         The Company has never paid cash dividends on its common stock. The
Company presently intends to retain future earnings, if any, to finance the
expansion of its business and does not anticipate that any cash dividends will
be paid in the foreseeable future. The future dividend policy will depend on the
Company's earnings, capital requirements, expansion plans, financial condition
and other relevant factors. The Company has paid stock dividends on shares of
its preferred stock, as disclosed below.











                                        9

<PAGE>
Securities Authorized for Issuance Under Equity Compensation Plans

         The table below provides information as of July 30, 2005, pertaining to
all compensation plans under which equity securities of the Company are
authorized for issuance:
<TABLE>
<CAPTION>
                                                                                         Number of securities
                                     Number of securities                               remaining available for
                                       to be issued upon         Weighted-average        future issuance under
                                          exercise of            exercise price of        equity compensation
                                     outstanding options,      outstanding options,   plans (excluding securities
                                      warrants and rights       warrants and rights    reflected in column (a))
                                      -------------------       -------------------    ------------------------
                                              (a)                        (b)                     (c)
<S>                                      <C>                           <C>                       <C>
Equity compensation plans
   approved by security holders          2,000,000                     $.22                      3,300,000

Equity compensation plans not
   approved by security holders          1,100,000                     $.72                           None

         Total                           3,100,000
</TABLE>
Related Stockholder Matters

         In August 2004 the Company issued 210,000 shares of its common stock to
the Equity Group, Inc. in consideration for financial public relations and
investor relations services. Additionally, the Equity Group receives a monthly
fee of $3,500 plus expenses. The agreement with the Equity Group commenced on
August 1, 2004 and continued to July 31, 2005. The agreement was subsequently
extended to January 31, 2006. The shares issued to the Equity Group were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act. The shares contain the appropriate legend restricting their transfer absent
registration or exemption. The Equity Group received current information
concerning the Company at the time the shares were issued and had the
opportunity to ask questions concerning the Company.

         In August 2004 the Company issued 200,000 shares of its common stock to
Roland Perry in consideration of investor relations services. The initial twelve
month term of the agreement with Mr. Perry has been extended for an additional
twelve months. The shares issued to Mr. Perry were issued pursuant to the
exemption from registration under Section 4(2) of the Securities Act. The shares
contain the appropriate legend restricting their transfer absent registration or
exemption. Mr. Perry received current information concerning the Company at the
time the shares were issued and had the opportunity to ask questions concerning
the Company.

         In August 2004 the Company issued 50,000 shares of its common stock to
Mark Alba in consideration for financial consulting services. Mr. Alba receives
a monthly fee of $500. The initial twelve month term of the agreement with Mr.
Alba has been extended for an additional six months. The shares issued to Mr.
Alba were issued pursuant to the exemption from registration under Section 4(2)
of the Securities Act. The shares contain the appropriate legend restricting
their transfer absent registration or exemption. Mr. Alba received current




                                       10
<PAGE>
information concerning the Company at the time the shares were issued and had
the opportunity to ask questions concerning the Company.

         On January 13, 2005, the Board of Directors approved the issuance of
209,351 shares of the Company's common stock, in lieu of cash, to its chief
executive officer and chief financial officer as payment of bonuses earned
pursuant to their respective employment contracts during fiscal year ended July
31, 2004 at $.20 per share, which includes a 33% discount to market reflecting
the three year restriction placed on the common stock on January 13, 2005. Such
bonuses had been accrued at July 31, 2004. The bonus payable to the company's
chief executive officer was $27,927 and the bonus payable to the company's chief
financial officer was $13,963. The transaction was exempt from registration
under Section 4(2) of the Securities Act. The shares were issued with legends
restricting their transferability absent registration or applicable exemption.

         On January 13, 2005, in conjunction with the potential opening of an
additional facility in Central Florida the Company will require certain
employees to relocate. As an incentive for relocating and remaining with the
Company certain non-executive employees were granted options to purchase, at
$.30 per share, an aggregate of 1,000,000 shares of common stock of the Company
pursuant to the Company's 2004 Management and Director Equity Incentive
Compensation Plan. The trading price of the Company's, as reported on the Over
the Counter Bulletin Board, on January 13, 2005, the date of issue, was $.30.
The transaction was exempt from registration under Section 4(2) of the
Securities Act. The securities were issued with legends restricting their
transferability absent registration or applicable exemptions. The employees
received information regarding the Company or had knowledge of the Company's
operations and business. Furthermore, the employees had the opportunity to ask
questions about the Company.

         On July 28, 2005 the Board of Directors approved the issuance of
540,000 shares of the Company's common stock to a total of six employees of the
Company in lieu of cash for their accrued fiscal year 2004 incentive
compensation at $.20 per share, which includes a 33% discount to market
reflecting the three year restriction placed on the common stock. The
transaction was exempt from registration under Section 4(2) of the Securities
Act. The securities were issued with legends restricting their transferability
absent registration or applicable exemptions. The employees received information
regarding the Company or had knowledge of the Company's operations and business.
Furthermore, the employees had the opportunity to ask questions about the
Company.

         During November 2001 the Company negotiated a $250,000 revolving line
of credit with a financial institution which expired November 2002 and was
subsequently extended through January 2006 and increased to $500,000. The note
on the line of credit bears interest at the financial institution index rate
plus 2% (7.75% at July 30, 2005). The note is collateralized by all of the
Company's assets and is personally guaranteed by Carl Herndon, president of the
Company. In consideration for providing a personal guarantee on the renewed
note, Mr. Herndon received 324,838 shares of common stock during fiscal year




                                       11
<PAGE>
2005. The Company believes the compensation paid to Mr. Herndon was on terms
equal to, or better than, terms that could have been obtained from an
independent third party. The transaction was exempt from registration under
Section 4(2) of the Securities Act. The shares were issued with legends
restricting their transferability absent registration or applicable exemption.

         During February 2002 the Company negotiated a $150,000 revolving line
of credit with a financial institution for the purchase of outboard engines. The
note on the line of credit was subsequently extended through February 1, 2006
and increased to $200,000. The note is personally guaranteed by Carl Herndon,
president of the Company. In consideration for providing a personal guarantee on
the renewed note, Mr. Herndon received 129,935 shares of common stock during
fiscal year 2005. The transaction was exempt from registration under Section
4(2) of the Securities Act. The shares were issued with legends restricting
their transferability absent registration or applicable exemption.

         During the year ended July 30, 2005, the Company declared dividends on
its outstanding shares of series C convertible preferred stock of approximately
$34,197, payable in shares of Series C convertible preferred stock. The Company
issued an aggregate of 34,197 shares of its series C preferred stock to its
series C preferred stockholders. The securities were exempt from registration
under Section 3(a)(9) of the Securities Act. The securities were issued with
legends restricting their transferability absent registration or applicable
exemptions. The security holders had the opportunity to ask questions about the
Company.

         The Company's shares of series C convertible preferred stock
automatically convert into two shares of common stock of the Company five years
from date of issue. During the year ended July 30, 2005, 1,032,919 shares of
series C convertible preferred stock were converted into 2,065,838 shares of
common stock. As a result of these conversions all preferred stock have been
converted into common stock of the Company. The securities were exempt from
registration under Section 3(a)(9) of the Securities Act. The securities were
issued with legends restricting their transferability absent registration or
applicable exemptions. The security holders had the opportunity to ask questions
about the Company.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

         Management's discussion and analysis contains various "forward-looking
statements" within the meaning of the Securities and Exchange Act of 1934. Such
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may",
"expect", "anticipate", "estimate" or "continue" or use of negative or other
variations or comparable terminology.




                                       12
<PAGE>
         Management cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those contained in the forward-looking statements, that these forward-looking
statements are necessarily speculative, and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements.

Plan of Operations

         The Company plans to grow the business by the addition of new features
on present models, the introduction of new models and the expansion of its
manufacturing capacity. The Company would consider an acquisition candidate if
their products would complement those offered by the Company and the result
would enhance the service level provided by the Company. There are no
discussions with any potential candidates at this time, nor has the Company
identified any acquisition candidates.

Results of Operations

Net Sales
---------

         The Company's net sales for the fiscal year ended July 30, 2005 were
$11,463,235 an increase of $1,202,551 (or 11.7%) as compared to $10,260,684 for
the fiscal year ended July 31, 2004.

         The average selling price per boat for fiscal year 2005 was
approximately $128,000 compared to $114,000 during fiscal year 2004. 88 boats
were sold during fiscal year 2005 as compared to 93 boats in fiscal year 2004.
The introduction of the new 38' in to the product line decreased the unit count
for the year but contributed to the overall dollar sales increase. Dealer
inventory has remained relatively constant with 9 boats in dealer inventory at
July 30, 2005 compared to 6 boats in dealer inventory at July 31, 2004. Order
backlog has remained at approximately six months at July 30, 2005.

         The Company has been able to offset increased cost of materials by,
among other things, raising selling prices without sacrificing unit sales.
However, there can be no assurances that selling prices can continue to increase
in the future without a unit sales drop off. Additionally, the effects of higher
fuel prices, lower consumer confidence and the recent hurricanes may contribute
to a slow down of the economy which may temper our sales growth trends.

Cost of Sales
-------------

         Cost of sales for the year ended July 30, 2005 was $8,594,446 resulting
in $2,868,789 of gross profit or 25.0% of net sales. For last fiscal year ended
July 31, 2004 cost of sales was $7,733,922 and gross profit was $2,526,762 or
24.6% of net sales. The increase in cost of sales is directly attributable to
the increase in net sales.

         While there has been an increase in the cost of raw materials such as
petroleum based resin, the Company has offset the increase with (1) selling



                                       13
<PAGE>
price increases, (2) seeking out less expensive alternative materials and raw
material sources without sacrificing quality, (3) improved manufacturing
efficiencies, and (4) better utilization of overhead. Although the Company has
been able to offset the increased cost of raw materials in the past, there can
be no assurance that the Company will be able to do so in the future.

Selling, General and Administrative Expenses
--------------------------------------------

         Selling and marketing expenses were $485,820 or 4.2% of net sales, for
the fiscal year ended July 30, 2005 compared to $352,035 or 3.4% of net sales
for the fiscal year ended July 31, 2004, an increase of $133,785. The company
expanded its presence at boat shows resulting in an increase of approximately
$65,000. Travel and related expenses were up approximately $20,000. Sales
salaries increased by approximately $55,000.

         General and administrative expenses were $1,423,899 or 12.4% of net
sales, for the fiscal year ended July 30, 2005 compared to $1,303,483 or 12.7%
of net sales, for the fiscal year ended July 31, 2004, an increase of $120,416.
The Company issued an aggregate of 460,000 shares of common stock to three
consultants for business consulting and investor relations services. These
shares were valued at a fair market value of $64,400 and were recorded as
consulting fees during the 2005 year ended July 30, 2005. Additionally, the
Company incurred fees from consultants of $48,000 for the year ended July 30,
2005. The remaining cost increases are attributable to normal increases, such
as, but not limited to salaries, insurance, utilities and rent.

Other Income (Expense)
----------------------

         Interest expense for fiscal year 2005 was $66,763 a decrease of $10,310
compared to fiscal year 2004 because of the repayment of bridge loans and lower
average balances on the revolving credit line.

         During the year ended July 30, 2005, Company issued its chief executive
officer an aggregate of 454,773 shares of its common stock in consideration of
its chief executive officer providing personnel guarantees for the Company. Such
guarantees were required to secure lines of credit up to $700,000. This
transaction was recorded as an Other Expense - Loan Guarantee at $91,000.

         The Company decided, during the fourth quarter of fiscal year 2005,
that it would no longer manufacture its 35' Inboard, the 27' Cuddy Cabin and the
27' Open models as it would not be financially prudent to allocate valuable
production capacity to these models. Consequently, a provision for loss on
disposition of assets in the amount of $99,490 was recorded.

Liquidity and Capital Resources

         At July 30, 2005, the Company had cash and cash equivalents of $356,361
and working capital of $846,671.




                                       14
<PAGE>
         The Company extended its $500,000 revolving line of credit with a
financial institution through January 31, 2006. The note on the line of credit
bears interest at the financial institution's index rate plus 1.5% (7.75% at
July 30, 2005). The note is collateralized by all of the Company's assets and is
personally guaranteed by Carl Herndon, president of the Company.

         Net cash provided by operating activities was $455,330 for fiscal 2005
and $724,556 for fiscal year 2004.

         During February 2002, the Company negotiated a $150,000 revolving line
of credit with a financial institution for the purchase of outboard engines. The
note on the line of credit was subsequently extended through February 1, 2006
and increased to $200,000. The note is personally guaranteed by Carl Herndon,
president of the Company.

         The Company anticipates that cash generated from operations should be
sufficient to satisfy the Company's contemplated cash requirements for its
current operations for at least the next twelve months. The Company does not
anticipate any significant purchases of equipment during fiscal year 2006 at its
current manufacturing facility. However, it is anticipated that from $1,000,000
to $1,500,000 will be needed to start up the potential new facility with
inventory, new boat molds and miscellaneous equipment. It is anticipated that
funds for these activities will be provided from operations, an increase in the
Company's credit line or potential financing. To date, the Company has not
secured any financing.

         Some of the Company's dealers use third party financing for the
purchase of their boats. These third party financing companies pay within four
business days of shipment. At July 30, 2005 accounts receivable was $172,309, an
increase of $155,687 compared to July 31, 2004 as a boat shipped at year end was
not yet paid by the financing company. Inventories increased by $308,528 due to
timing of outboard engine availability and to support the sales growth.

         Accounts payable decreased by $82,885 because cash discount were taken
when economically feasible. During the year ended July 30, 2005 the Company
decreased the amount outstanding under the line of credit by $30,000. The
balance of $93,750 plus accrued interest on three bridge notes was paid during
the fiscal year ended July 30, 2005.

         The note and accrued interest payable to shareholders has been
reclassified to short term, as such amounts are due February 14, 2006.

         During the year ended July 30, 2005 the Company had sales to three
dealers representing 28%, 17% and 13% of fiscal year 2005 net sales. During the
year ended July 30, 2004 the Company had sales to five dealers representing 23%,
16%, 16% and 13% of fiscal year 2004 net sales.

         The number and level of employees at July 30, 2005 should be adequate
to fulfill the anticipated production schedule at the Company's current




                                       15
<PAGE>
manufacturing facility. Additional employees will have to be hired if the new
facility comes on line during fiscal year 2006.

Recent Accounting Pronouncements

         In May 2005, the FASB issued FAS 154 (SFAS no. 154), Accounting Changes
and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement
No. 3. This Statement provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes, unless impracticable,
retrospective application as the required method for reporting a change in
accounting principle in the absence of explicit transition requirements specific
to the newly adopted accounting principle. This Statement also provides guidance
for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective
application is impracticable. The correction of an error in previously issued
financial statements is not an accounting change. However, the reporting of an
error correction involves adjustments to previously issued financial statements
similar to those generally applicable to reporting an accounting change
retrospectively. Therefore, the reporting of a correction of an error by
restating previously issued financial statements is also addressed by this
Statement. This statement is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. The adoption of
this accounting pronouncement is not expected to have a material effect on the
consolidated financial statements.

         In March 2005, the FASB issued Interpretation No. 47 (FIN No. 47),
Accounting for Conditional Asset Retirement Obligations, and Interpretation of
FASB Statement No. 143. This interpretation clarifies the timing for recording
certain asset retirement obligations required by FASB Statement No. 143,
Accounting for Asset Retirement Obligations. The provisions of FIN No. 47 are
effective for years ending after December 15, 2005. The adoption of this
accounting pronouncement is not expected to have a material effect on the
consolidated financial statements.

         In December 2004, the FASB issued revised FAS No. 123 (SFAS No. 123R),
Share-Based Payment. This standard eliminates the ability to account for
share-based compensation transactions using the intrinsic value-based method
under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and requires instead that such transactions be accounted for using a
fair-value-based method. SFAS No. 123R is effective for financial statements
issued for the first interim period beginning after December 15, 2005 for small
business issuers. The adoption of this accounting pronouncement will not have an
effect on the consolidated financial statements until fiscal year 2006.

         In December 2004, the FASB issued FAS 153, Exchanges of Nonmonetary
Assets. The provisions of this Statement are effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. The
provisions of this Statement should be applied prospectively, and eliminates the
exception from fair value measurement for nonmonetary exchanges of similar





                                       16
<PAGE>
productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for
Nonmonetary Transactions, and replaces it with an exception for exchanges that
do not have commercial substance. The adoption of this accounting pronouncement
is not expected to have a material effect on the consolidated financial
statements.

ITEM 7.  FINANCIAL STATEMENTS

         See the financial statements listed in the accompanying index to the
Financial Statements on Page F-1.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES

         None.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

         As of the end of the period covered by this report, the Company carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Company's Principal Executive Officer and Principal Financial Officer. Based
upon that evaluation, the Principal Executive Officer and Principal Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in gathering, analyzing and disclosing information needed to satisfy
the Company's disclosure obligations under the Exchange Act.

Changes in internal controls

         There were no significant changes in the Company's internal controls or
in other factors that could significantly affect those controls since the most
recent evaluation of such controls.

ITEM 8B. OTHER INFORMATION

         None.





















                                       17
<PAGE>
                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth the names, positions with JMIH and ages
of the executive officers and directors of JMIH. Directors are elected at JMIH'S
annual meeting of shareholders and serve for one year or until their successors
are elected and qualify. Officers are elected by the Board and their terms of
office are, except to the extent governed by employment contract, at the
discretion of the Board of Directors.

Name                             Age             Position Held
----                             ---             -------------

Carl Herndon, Sr.                66          Director, President and Chief
                                               Executive Officer
Lawrence S. Tierney              59          Director, Vice President and Chief
                                               Financial Officer and Secretary
Kerry Clemmons                   60          Director, Audit Committee

Carl Herndon, Jr.                39          Vice President Sales and Operations

         Carl Herndon, Sr. - Mr. Herndon has been president, chief executive
officer and a director of JMIH since its inception on May 19, 1998. Mr. Herndon
has also served as president, chief executive officer and a director of JMI
since May 15, 1998. Between 1973 and 1997, Mr. Herndon was president, chief
executive officer, director and sole shareholder of Blackfin Yacht Corporation,
a Fort Lauderdale, Florida based designer, manufacturer and seller of sport
fishing boats. Between 1993 and 1995, Mr. Herndon was president and chief
executive officer of Bertram Yacht Corporation in Miami, Florida. During Mr.
Herndon's tenure as officer and director of Blackfin, Blackfin filed for Chapter
11 Bankruptcy Reorganization protection. The bankruptcy proceeding was
subsequently converted to a Chapter 7 proceeding. Carl Herndon is the father of
Carl Herndon, Jr., the vice president of sales and marketing of JMI.

         Lawrence Tierney - On July 27, 2001 Mr. Tierney joined JMIH as vice
president, chief financial officer and secretary. Mr. Tierney served JMIH as a
director and consultant from January 1999 through his appointment as an
executive officer and director. From April 1997 to July 2001, Mr. Tierney was
the owner of Aamco Transmissions of Plant City, Florida. From March 1995 to
March 1997, Mr. Tierney was chief financial officer of MAKO Marine
International, Inc., a manufacturer of high quality offshore fishing boats. From
June of 1993 to March of 1995, Mr. Tierney served as chief financial officer of
Chris Craft Boats, a wholly owned subsidiary of Outboard Marine Corporation
(OMC) a full line manufacturer of power boats. From June 1991 to June 1993, Mr.
Tierney held the position of chief operating officer of Chris Craft Boats. From
August 1986 to June 1991, Mr. Tierney was senior vice president of finance for
Chris Craft. Mr. Tierney is a certified public accountant.

         Kerry Clemmons -- On February 2, 2004 Mr. Clemmons was elected to the
Board of Directors. For ten years Mr. Clemmons has served the American Red Cross



                                       18
<PAGE>
of Greater Miami and the Florida Keys in various capacities, including board
member, chairman (1999-2001) and CEO (2002-2003). From 1999 through 2001 he was
a consultant for Arthur Anderson in mergers and acquisitions. He also served as
senior vice president of John Alden Financial Corporation from 1982 through 1990
and senior vice president of MasTec from 1998 through 1999. Mr. Clemmons holds a
masters and doctorate degrees from Nova Southern University.

         Carl Herndon Jr. - Mr. Herndon joined the Company in June 1998 as Vice
President Sales. He is the son of Carl Herndon and has spent his professional
working career in the marine industry. He was employed by Blackfin Yacht
Corporation from 1984 to 1997, initially working on the shop floor. During his
tenure at Blackfin, he progressed through the ranks from laminator to plant
manager and ultimately became chief operating officer. He also served as vice
president of sales and was instrumental in doubling Blackfin's dealer base
resulting in record sales.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulation to
furnish the Company with copies of all such reports they file.

         To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
complied with for the period which this report relates.

Committees

         The audit committee consists of Kerry Clemmons. Mr. Clemmons qualifies
as an independent director and is considered a "financial expert" as defined
under Item 401(e) of Regulation S-B.

         The nominating committee consists of Carl Herndon and Lawrence Tierney.

Code of Ethics

         The Company has adopted a Code of Ethics that applies to the Company's
executive officers and directors. The Code of Ethics provides written standards
that are reasonably designed to deter wrongdoing and to promote: (1) honest and
ethical conduct, including the ethical handling of actual or parent conflicts of
interests between personal and professional relationships; (2) full, fair,
accurate, timely and understandable disclosure in reports and documents that the
Company files with, or submits to, the SEC and in other public communications
made by the Company; (3) compliance with applicable governmental laws, rules and
regulations; (4) the prompt internal reporting of violations of the Code to an



                                       19
<PAGE>
appropriate person or persons identified in the Code; and (5) accountability for
adherence to the Code.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth information relating to the compensation
paid by the Company during the last three fiscal years to: the Company's
president and chief executive officer and each of the Company's executive
officers who earned more than $100,000 during any fiscal year.
<TABLE>
<CAPTION>
                                             SUMMARY COMPENSATION TABLE
                                             --------------------------


                                    Annual Compensation                                     Long-Term Compensation
-------------------------------------------------------------------------------------------------------------------------------
                                                                                    Awards                     Payouts
-------------------------------------------------------------------------------------------------------------------------------
                                                                                        Securities
                                                                 Other                    Under-
                                                                 Annual    Restricted      Lying
                                                                Compen-       Stock      Options/       LTIP      All Other
   Name and Principal              Salary            Bonus       sation     Award(s)       SARs       Payouts    Compensation
        Position          Year      ($)               ($)         ($)          ($)          (#)         ($)          ($)
-------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>     <C>              <C>            <C>          <C>       <C>             <C>          <C>
Carl Herndon, Sr.         2005    $215,086         $41,350(1)      ---          ---          ---         ---
CEO and President         2004    $181,576         $27,927(3)      ---          ---      250,000         ---          ---
                          2003    $175,000             ---         ---          ---          ---         ---          ---
-------------------------------------------------------------------------------------------------------------------------------
Lawrence Tierney          2005    $127,858         $20,675(1)      ---          ---          ---         ---          ---
CFO                       2004    $104,223         $13,964(3)      ---          ---      200,000         ---          ---
                          2003    $113,712             ---         ---          ---      100,000         ---          ---
-------------------------------------------------------------------------------------------------------------------------------
Carl Herndon, Jr.,        2005    $113,693         $20,675(1)      ---          ---      200,000         ---          ---
Vice President            2004    $      0 (2)         ---         ---          ---      100,000         ---          ---
                          2003    $105,000                         ---          ---          ---         ---          ---
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Fiscal year 2005 bonuses have been accrued but have not been paid.
(2)  Mr. Herndon Jr. was granted a leave of absence from July 2003 through May
     2004.
(3)  Bonus was paid in shares of common stock in lieu of cash.











                                       20
<PAGE>
Stock Option and SAR Issuances

       The table below provides a summary of individual grants of stock options
and SARs made during the last fiscal year to each of the named officers included
in the Summary Compensation Table.
<TABLE>
<CAPTION>
                                      OPTIONS/SAR GRANTS IN THE LAST FISCAL YEAR
--------------------------------------------------------------------------------------------------------------------
                                       Number of
                                       Shares of
                                      Common Stock     Percentage of
                                       Underlying      Total Options
               Name                     Options           Granted         Exercise Price        Expiration Date
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>               <C>                <C>                  <C>  <C>
Carl Herndon, Jr.                        200,000           20%                $.30                 1/13/10
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Option Exercises and Holdings

       The table below provides a summary of each exercise of stock options or
SARs during the last fiscal year by each person named in the Summary
Compensation Table and the unexercised options held as of the end of the fiscal
year. The closing sale price of the Company's Common Stock on July 30, 2005, as
reported by the OTCBB was $.30 per share. The value of unexercised in the money
options is calculated by multiplying the difference between $.30 and the option
exercise price by the number of shares of Common Stock underlying the options.
<TABLE>
<CAPTION>
                  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
                                        OPTION/SAR VALUES
--------------------------------------------------------------------------------------------------------------------
                                                                             Number of
                                                                            Securities              Value Of
                                                                            Underlying            Unexercised
                                                                            Unexercised           In-The-Money
                                                                            Options/SARs          Options/SARs
                                                                        at Fiscal Year-End    at Fiscal Year-End
                                         Shares            Value                (#)                   ($)
                                      Acquired On        Realized          Exercisable/            Exercisable/
       Name                           Exercise (#)          ($)            Unexercisable          Unexercisable
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>              <C>     <C>               <C> <C>
Carl Herndon                              ----             ----            850,000/0(1)             -0-/-0-
--------------------------------------------------------------------------------------------------------------------
Lawrence Tierney                          ----             ----            450,000/0(2)             -0-/-0-
--------------------------------------------------------------------------------------------------------------------
Carl Herndon, Jr.                         ----             ----            550,000/0(3)             -0-/-0-
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)      Mr. Herndon received options to purchase 600,000 shares of common stock
         during fiscal year 1999 exercisable at prices ranging from $.50 to
         $1.00. The exercise period of these options were extended to July 27,
         2006 from November 10, 2003 during fiscal year 2001. During fiscal year
         2004 Mr. Herndon received options to purchase 250,000 shares of common
         stock exercisable at $.15 per share through May 6, 2009.
(2)      Options are exercisable at prices ranging from $.50 per share to $1.00
         per share until July 27, 2006. 100,000 options are exercisable at $.10
         per share until July 27, 2007. During fiscal year 2004 Mr. Tierney
         received options to purchase 200,000 shares of common stock exercisable
         at $.14 per share through May 6, 2009.
(3)      Options are exercisable at prices ranging from $.50 per share to $1.00
         per share until July 27, 2006. During fiscal year 2004 Mr. Herndon
         received options to purchase 100,000 shares of common stock exercisable
         at $.14 per share through May 6, 2009. During fiscal year 2005 Mr.
         Herndon received options to purchase 200,000 shares of common stock at
         $.30 per share through January 13, 2010.

                                       21
<PAGE>
Compensation of Directors

         Independent members of the Company's Board of Directors receive $500
per Board meeting and are reimbursed for their expenses in attending Board
meetings.

Employment Agreements

         Carl Herndon, Sr., CEO. On July 27, 2001, the Company entered into a
five-year employment agreement with Mr. Herndon with two one year renewal
options. The agreement obligates Mr. Herndon to devote all his time to
supervising, designing and manufacturing boats as president and chief executive
officer of the Company. Mr. Herndon will earn an initial base salary of $175,000
per year. Such base salary shall automatically increase by five percent each
year unless additional increases are authorized. Mr. Herndon's shall also
receive, as additional compensation a bonus based on the Company's pre tax
profit. The terms of the employment agreement included an extension of the term
of Mr. Herndon's options to purchase 600,000 shares of common stock of the
Company at prices between $.50 and $1.00 per share from November 10, 2003 to
July 26, 2006. In addition, the vesting of such options was accelerated from
vesting equally over the original five year term to immediate vesting. The
employment agreement includes non-compete and confidentiality provisions.

         Lawrence Tierney, CFO. On July 27, 2001, the Company entered into a
five-year employment agreement with Lawrence Tierney with two one-year renewal
options. The agreement obligates Mr. Tierney to devote all his time to
supervising the financial and administrative functions of the Company's as vice
president and chief financial officer. Mr. Tierney will earn an initial base
salary of $100,000 per year. Such base salary shall automatically increase by
five percent each year unless additional increases are authorized. Mr. Tierney
shall also receive, as additional compensation a bonus based on the Company's
pre tax profit. The employment agreement also entitles Mr. Tierney to an
aggregate of options to purchase 250,000 shares of common stock of the Company
at prices between $.50 and $1.00 per share over a period of five years from July
27, 2001. The employment agreement includes non-compete and confidentiality
provisions.

         Carl Herndon, Jr. Vice President Sales and Operations. On July 27,
2001, the Company entered into a five-year employment agreement with Carl
Herndon, Jr. with two one-year renewal options. During July 2003 and through May
2004, Mr. Herndon was granted a leave of absence due for family medical reasons.
Mr. Herndon resumed full time duties during May 2004. The agreement obligates
Mr. Herndon to devote all his time to supervising the sale and operational
functions of the Company's as vice president sale and operations. Mr. Herndon
will earn an initial base salary of $100,000 per year. Such base salary shall
automatically increase by five percent each year unless additional increases are
authorized. Mr. Herndon shall also receive, as additional compensation, a bonus
based on the Company's pre tax profit. The employment agreement also entitles
Mr. Herndon to an aggregate of options to purchase 250,000 shares of common
stock of the Company at prices between $.50 and $1.00 per share exercisable over




                                       22
<PAGE>
a period of five years commencing on July 27, 2001. The employment agreement
includes non-compete and confidentiality provisions.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
Company's common stock beneficially owned on September 30, 2005 by: (1) each
shareholder known by the Company to be the beneficial owner of five (5%) percent
or more of the Company's outstanding common stock, (2) each of the Company's
executive officers and directors, and (3) all executive officers and directors
as a group. Unless otherwise disclosed, the address for the shareholders below
is 3391 S.W. 14th Avenue, Fort Lauderdale, Florida 33316. On September 30, 2005,
there were approximately 16,305,525 shares of common stock outstanding.
<TABLE>
<CAPTION>
                                     Number of Beneficially       Percentage of Outstanding
Name and Address                          Owned Shares            Shares Beneficially Owned
----------------                          ------------            -------------------------
<S>                                       <C>                               <C>
Carl Herndon                              6,884,126(1)                      42.0%

Lawrence Tierney                          1,336,001(2)                       8.3%

Carl Herndon, Jr.                           883,750(3)                       5.5%

Kerry Clemmons                              275,000(4)                       1.8%

Officers and Directors as a Group         9,378,877(1)(2)(3)(4)             53.4%
(4 persons)
</TABLE>
----------------
(1) Includes (i) 600,000 shares of Common Stock issuable upon the exercise of
options at exercise prices between $.50 and $1.00 per share expiring July 27,
2006 and (ii) 250,000 shares of Common Stock issuable upon the exercise of
options at an exercise price of $.15 per share expiring May 6, 2009.

(2) Includes (i) 250,000 shares of Common Stock issuable upon the exercise of
options at exercise prices between $.50 and $1.00 per share expiring July 27,
2006 and (ii) 200,000 shares of Common Stock issuable upon the exercise of
options at an exercise price of $.14 per share expiring May 6, 2009.

(3) Includes (i) 250,000 shares of Common Stock issuable upon the exercise of
options at exercise prices between $.50 and $1.00 per share expiring July 27,
2006, (ii) 100,000 shares of Common Stock issuable upon the exercise of options
at an exercise price of $.14 per share expiring May 6, 2009, and 200,000 shares
of Common Stock issuable upon exercise of options at an exercise price of $.30
per share expiring January 13, 2010.

(4) Includes 150,000 shares of Common Stock issuable upon the exercise of
options at an exercise price of $.14 per share expiring May 6, 2009.




                                       23
<PAGE>
ITEM 12. INTEREST OF MANAGEMENT AND OTHER CERTAIN TRANSACTIONS

         Mr. Herndon personally owns the Company's manufacturing facility in
Port Everglades, Florida. On July 27, 2001, the Company entered into a new lease
agreement with Mr. Herndon in which the Company leases the manufacturing
facility for a period of five years at $5.37 per square foot or $14,383 per
month. The Company believes that the lease agreement between the Company and Mr.
Herndon was consummated on terms no less favorable than with an unrelated party.

         During November 2001 the Company negotiated a $250,000 revolving line
of credit with a financial institution which expired November 2002 and was
subsequently extended through January 2006 and increased to $500,000. The note
on the line of credit bears interest at the financial institution index rate
plus 2% (7.75% at July 30, 2005). The note is collateralized by all of the
Company's assets and is personally guaranteed by Carl Herndon, president of the
Company. In consideration for providing a personal guarantee on the renewed
note, Mr. Herndon received 324,838 shares of common stock during fiscal year
2005. The Company believes the compensation paid to Mr. Herndon was on terms
equal to, or better than, terms that could have been obtained from an
independent third party.

         During February 2002 the Company negotiated a $150,000 revolving line
of credit with a financial institution for the purchase of outboard engines. The
note on the line of credit was subsequently extended through February 1, 2006
and increased to $200,000. The note is personally guaranteed by Carl Herndon,
president of the Company. In consideration for providing a personal guarantee on
the renewed note, Mr. Herndon received 129,935 shares of common stock during
fiscal year 2005.

         On November 21, 2002 Triton International Holdings, Inc. sold a
$350,000 Promissory Note issued by the Company in January 1998 to Carl Herndon
and Lawrence Tierney. The Note was only sold to Messrs. Herndon and Tierney
after the Company was unable to satisfy payment of the Note, despite seeking
financing from unrelated third parties on the same or similar terms. Pursuant to
the terms of the Note, Herndon and Tierney received an aggregate of 1,808,098
shares of the Company's common stock which would otherwise have been issued to
Triton pursuant to the Note and 500,000 shares of the Company common stock held
by Triton. In connection with the purchase of the Note, Herndon and Tierney
extended the term of the Note through February 14, 2004 and subsequently agreed
to extend to February 14, 2006. Herndon and Tierney received a total of 455,011
shares of the Company's stock for extending the note to February 14, 2006.

         Herndon and Tierney paid Triton $400,000 (the "Purchase Price") payable
in the amount of $150,000 cash and a Secured Promissory Note in the principal
amount of $250,000. The Secured Promissory Note is secured by a first mortgage
on real estate owned by Mr. Herndon and leased to the Company.





                                       24
<PAGE>
         In consideration for delivery of the Purchase Price, Triton transferred
and assigned to Herndon (1) all right, title and interest under the Security
Agreement by and between the Company and Triton; (2) and all right, title and
interest under the Management Agreement by and between the Company and Triton
dated January 1999. Mr. Herndon cancelled the Management Agreement and forgiven
all outstanding fees and obligations due under the Management Agreement.

         During December 2004, the Company entered into a Commercial Lease and
Purchase Option with a third party for the lease and potential purchase of an
additional operating facility in an effort to expand its manufacturing and
production capacity. The facility will provide the Company with approximately
50,000 square feet of additional manufacturing and production space. Under the
agreement the Company has agreed to lease certain properties and facilities in
Florida for a term of one year at $14,500 per month. The lease shall commence on
the earlier of the date the: (1) facilities are determined to meet all
applicable environmental and building code requirements ("Code Requirements") or
(2) Company takes possession of the facilities. The Company has agreed to
contribute one- third of the funds necessary to satisfy Code Requirements. It
was initially estimated that funds necessary to satisfy Code Requirements was
$300,000. During the term of the lease the Company has a right and option to
purchase the facility. If the Company exercises such option, all funds
contributed by the Company to satisfy Code Requirements will be deducted from
the purchase price. If the Company declines to exercise the option or is unable
to secure acceptable financing Carl Herndon, the Company's president, will have
a similar option to purchase the facility. At July 30, 2005, the Company has
contributed approximately $37,500. However, since signing the Commercial Lease
and Purchase Option, the estimate of funds necessary to satisfy Code
Requirements has increased to approximately $1,000,000. As of October 10, 2005,
the Company has not been able to secure acceptable financing to satisfy the
additional costs for Code Requirements. If the Company cannot secure acceptable
financing, it will not exercise its purchase option.

         In the event the Company does not exercise its purchase option, Carl
Herndon has agreed to purchase the facility and lease it back to the Company and
Mr. Herndon will personally satisfy all Code Requirements without any cost to
the Company. If the Company occupies the facility it will require up to an
additional $1,500,000 for operational costs. Such costs related to inventory,
new boat molds and miscellaneous equipment. It is anticipated that funds for
these activities will be provided from operations, an increase in the Company's
credit line and potential financing. To date, the Company has not secured any
financing.

         During fiscal year ended July 30, 2005, Mr. Herndon and Mr. Tierney
each purchased a boat from the Company at cost.





                                       25
<PAGE>
ITEM 13. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No.    Description
-----------    -----------
<S>            <C>
3.1            Articles of Incorporation(2)
3.2            Articles of Amendment(2)
3.3            Designation of Series C Preferred Stock(2)
10.1           Employment Agreement with Carl Herndon, Sr. dated July 27, 2001(1)
10.2           Employment Agreement with Carl Herndon, Jr. dated July 27, 2001(1)
10.3           Management Agreement with Triton Holdings International Corp. (2)
10.4           Secured Promissory Note with Triton Holdings International Corp. (2)
10.5           Lease Agreement with Herndon(1)
10.6           Employment Agreement with Lawrence Tierney dated July 27, 2001(1)
14             Code of Ethics(3)
21             Subsidiaries (1)
31.1           Rule 13a-14(a)/15d-4(a) Certification Principal Executive Officer
31.2           Rule 13a-14(a)/15d-4(a) Certification Principal Financial Officer
32.1           Section 1350 Certification Principal Executive Officer
32.2           Section 1350 Certification Principal Financial Officer
</TABLE>
(1)  Previously filed on Form 10-KSB for the fiscal year ended July 28, 2001.
(2)  Previously filed on Form 10-SB Registration Statement.
(3)  Previously filed on Form 10-KSB for the fiscal year ended July 31, 2004.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees to Auditors Fiscal Year ended July 31, 2004.

         Audit Fees: The aggregate fees, including expenses, billed by Spicer,
Jeffries LLP for professional services rendered for the audit of the Company's
consolidated financial statements during the fiscal year ending July 31, 2004
and for the review of the Company's financial information included in its
quarterly reports on Form 10-QSB during the fiscal year ending July 31, 2004 or
services that are normally provided in connection with statutory and regulatory
filings or engagements during the fiscal year ending July 31, 2004 was $18,250.

         Audit Related Fees: The aggregate fees, including expenses, billed by
Spicer, Jeffries LLP for assurance and related services reasonably related to
the performance of the Company's audit or review of the Company's financial
statements were $1,648.

         Tax Fees: The aggregate fees, including expenses, billed by Spicer,
Jeffries LLP for tax compliance, tax advice and tax planning during year 2004
was $3,865.

         All Other Fees: The aggregate fees, including expenses, billed for all
other services rendered to the Company by Spicer, Jeffries LLP during year 2004
was $-0-.




                                       26
<PAGE>
Fees to Auditors Fiscal Year ended July 30, 2005.

         Audit Fees: The aggregate fees, including expenses, billed by Spicer,
Jeffries LLP for professional services rendered for the audit of the Company's
consolidated financial statements during fiscal year ending July 31, 2004 and
for the review of the Company's financial information included in its quarterly
reports on Form 10-QSB during the fiscal year ending July 30, 2005 or services
that are normally provided in connection with statutory and regulatory filings
or engagements during the fiscal year ending July 30, 2005 was $25,190.

         Audit Related Fees: The aggregate fees, including expenses, billed by
Spicer, Jeffries LLP for assurance and related services reasonably related to
the performance of the Company's audit or review of the Company's financial
statements during the year ended July 30, 2005 were $1,625.

         Tax Fees: The aggregate fees, including expenses, billed by Spicer,
Jeffries LLP for tax compliance, tax advice and tax planning during year 2005
was $3,537.

         All Other Fees: The aggregate fees, including expenses, billed for all
other services rendered to the Company by Spicer, Jeffries LLP during year 2005
was $-0-.

         The Audit Committee has considered whether the provisions of the
services covered above under the captions is compatible with maintaining the
auditor's independence.





























                                       27
<PAGE>
                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on November 2, 2005.

                                        JUPITER MARINE INTERNATIONAL
                                        HOLDINGS, INC.


                                        By:/s/ Carl Herndon, Sr.
                                           -------------------------------------
                                           Carl Herndon, Sr., Director, Chief
                                             Executive Officer and President

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


Dated:  November 2, 2005                By:/s/ Carl Herndon, Sr.
                                           -------------------------------------
                                           Carl Herndon, Sr., Director, Chief
                                             Executive Officer and President



Dated:  November 2, 2005                By:/s/ Lawrence Tierney
                                           -------------------------------------
                                           Lawrence Tierney, Director, Chief
                                             Financial Officer and Secretary

























                                       28
<PAGE>






















                          JUPITER MARINE INTERNATIONAL
                          ----------------------------
                         HOLDINGS, INC. AND SUBSIDIARIES
                         -------------------------------

                              FINANCIAL STATEMENTS
                              --------------------

                            YEARS ENDED JULY 30, 2005
                            -------------------------
                               AND JULY 31, 2004
                               -----------------





<PAGE>

                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES


                                TABLE OF CONTENTS
                                -----------------


                                                                          Page
                                                                          ----

Report of Independent Registered Public Accounting Firm                    F-3

Consolidated Balance Sheets                                                F-4

Consolidated Statements of Income                                          F-5

Consolidated Statements of Changes in Shareholders' Equity                 F-6

Consolidated Statements of Cash Flows                                      F-7

Notes to Consolidated Financial Statements                            F-8 - F-24




































                                       F-2


<PAGE>
                                                             SPICER JEFFRIES LLP


                                                    CERTIFIED PUBLIC ACCOUNTANTS

                                            5251 SOUTH QUEBEC STREET o SUITE 200
                                               GREENWOOD VILLAGE, COLORADO 80111
                                                       TELEPHONE: (303) 753-1959
                                                             FAX: (303) 753-0338
                                                          www.spicerjeffries.com


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Board of Directors
Jupiter Marine International Holdings, Inc.


We have audited the accompanying consolidated balance sheets of Jupiter Marine
International Holdings, Inc. and Subsidiaries as of July 30, 2005 and July 31,
2004, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Jupiter Marine
International Holdings, Inc. and Subsidiaries as of July 30, 2005 and July 31,
2004, and the results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles in the
United States of America.


                                                       /s/ SPICER JEFFRIES LLP
                                                       -----------------------
                                                           SPICER JEFFRIES LLP

Greenwood Village, Colorado
September 16, 2005




                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                         JULY 30, 2005 AND JULY 31, 2004
                         -------------------------------





                             ASSETS
                             ------                                              2005           2004
                                                                              -----------    -----------
<S>                                                                           <C>            <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                   $   356,361    $   602,936
  Accounts receivable                                                             172,309         16,622
  Inventory (Notes 2 and 4)                                                     1,443,737      1,133,681
  Prepaid expenses                                                                119,861         42,916
                                                                              -----------    -----------
                 Total current assets                                           2,092,268      1,796,155

PROPERTY AND EQUIPMENT, net (Note 5)                                            1,069,241        903,671

 OTHER ASSETS                                                                      19,160         18,660
                                                                              -----------    -----------

              TOTAL ASSETS                                                    $ 3,180,669    $ 2,718,486
                                                                              ===========    ===========

                     LIABILITIES AND SHAREHOLDERS' EQUITY
                     ------------------------------------

CURRENT LIABILITIES:
  Accounts payable                                                            $   146,271    $   229,156
  Accrued expenses                                                                269,929        333,912
  Accrued interest (Note 10)                                                           --          5,096
  Accrued interest due to shareholders (Notes 6 and 10)                           117,259             --
  Customer deposits                                                                48,201         28,002
  Warranty reserve                                                                 73,937         89,586
  Capital lease obligation (Note 9)                                                    --          3,687
  Notes payable (Note 6)                                                          590,000        363,750
                                                                              -----------    -----------
                   Total current liabilities                                    1,245,597      1,053,189
                                                                              -----------    -----------

LONG-TERM LIABILITIES:
  Accrued interest due to shareholders (Notes 6 and 10)                                --        106,059
  Note payable to shareholders (Notes 6 and 10)                                        --        350,000
                                                                              -----------    -----------
                                                                                       --        456,059
                                                                              -----------    -----------
              TOTAL LIABILITIES                                                 1,245,597      1,509,248
                                                                              -----------    -----------

COMMITMENTS AND CONTINGENCIES (Note 9)                                                 --             --

SHAREHOLDERS' EQUITY (Note 7):
  Cumulative convertible preferred stock, $.001 par value, 5,000,000
     shares authorized, ($-0- and $1,692,706 liquidation preference):
         Series A:  -0- shares issued and outstanding                                  --             --
         Series B:  -0- shares issued and outstanding                                  --             --
         Series C:  -0- and 998,722 shares issued and outstanding                      --            999
  Common stock, $.001 par value, 50,000,000 shares authorized,
     15,555,525 and 11,825,563 shares issued and outstanding                       15,556         11,826
  Additional paid-in capital                                                    3,490,157      3,153,400
  Deficit                                                                      (1,570,641)    (1,956,987)
                                                                              -----------    -----------
         TOTAL SHAREHOLDERS' EQUITY                                             1,935,072      1,209,238
                                                                              -----------    -----------

         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $ 3,180,669    $ 2,718,486
                                                                              ===========    ===========
</TABLE>
        The accompanying notes are an integral part of these statements.

                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

               FOR THE YEARS ENDED JULY 30, 2005 AND JULY 31, 2004
               ---------------------------------------------------



                                                                                  2005            2004
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
NET SALES                                                                     $ 11,463,235    $ 10,260,684

COST OF SALES (exclusive of depreciation)                                        8,594,446       7,733,922
                                                                              ------------    ------------

     GROSS PROFIT                                                                2,868,789       2,526,762
                                                                              ------------    ------------

OPERATING EXPENSES:
  Selling and marketing                                                            485,820         352,035
  General and administrative                                                     1,423,899       1,303,483
  Depreciation and amortization                                                    309,408         255,506
                                                                              ------------    ------------

     Total operating expenses                                                    2,219,127       1,911,024
                                                                              ------------    ------------

OTHER INCOME (EXPENSE):
  Interest expense                                                                 (66,763)        (77,073)
  Other expense - loan guarantee                                                   (91,000)       (146,601)
  Impairment of assets                                                             (99,490)             --
  Other income                                                                      28,134          16,485
                                                                              ------------    ------------

     Total other income (expense)                                                 (229,119)       (207,189)
                                                                              ------------    ------------

NET INCOME BEFORE INCOME TAXES                                                     420,543         408,549
INCOME TAX EXPENSE (Note 8)                                                             --              --
                                                                              ------------    ------------

NET INCOME                                                                         420,543         408,549
  Dividends on preferred stock                                                     (34,197)        (73,719)
                                                                              ------------    ------------

NET INCOME APPLICABLE TO COMMON SHAREHOLDERS                                  $    386,346    $    334,830
                                                                              ============    ============


BASIC AND DILUTED NET INCOME
      PER COMMON SHARE (Note 2):
          Basic                                                               $       0.03    $       0.04
                                                                              ============    ============
          Diluted                                                             $       0.02    $       0.03
                                                                              ============    ============
WEIGHTED AVERAGE NUMBER OF SHARES
  OF COMMON STOCK OUTSTANDING
          Basic                                                                 14,693,321       9,020,364
                                                                              ============    ============

          Diluted                                                               16,237,277      11,853,424
                                                                              ============    ============
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED JULY 30, 2005 AND JULY 30, 2004
               ---------------------------------------------------




                                            Preferred Stock                 Common Stock             Additional
                                     ----------------------------    ----------------------------     Paid In
                                        Shares         $.001 Par        Shares        $.001 Par       Capital          Deficit
                                     ------------    ------------    ------------    ------------   -------------   -------------
<S>                                     <C>          <C>             <C>             <C>            <C>             <C>
BALANCES, July 26, 2003                 1,692,503    $      1,693       8,309,718    $      8,310   $  2,935,902    $ (2,291,817)


Issuance of common stock related
  to stockholder's loan guarantee
  and extension of note
  payable (Note 10)                            --              --       1,213,345           1,213        145,388              --

Conversion of Series A and B
  preferred stock                        (767,500)
                                                             (768)      2,302,500           2,303         (1,535)             --

Preferred stock dividend declared
  and issuable                             73,719              74              --              --         73,645         (73,719)

Net income                                     --              --              --              --             --         408,549
                                     ------------    ------------    ------------    ------------   ------------    ------------

BALANCES, July 31, 2004                   998,722             999      11,825,563          11,826      3,153,400      (1,956,987)



Preferred stock dividend declared
  and issuable                             34,197              34              --              --         34,163         (34,197)

Issuance of stock for services                 --              --         460,000             460         63,940              --

Issuance of stock for officer
  bonuses (Note 10)                            --              --         209,351             209         41,682              --

Issuance of common stock  related
  related to stockholder's loan
  guarantee (Note 10)                          --              --         454,773             455         90,545              --

Issuance of common stock for
  management bonuses (Note 10)                 --              --         540,000             540        107,460              --

Conversion of Series C preferred
  Stock                                (1,032,919)         (1,033)      2,065,838           2,066         (1,033)             --

Net income                                     --              --              --              --             --         420,543
                                     ------------    ------------    ------------    ------------   ------------    ------------

BALANCES, July 30, 2005                        --    $         --      15,555,525    $     15,556   $  3,490,157    $ (1,570,641)
                                     ============    ============    ============    ============   ============    ============
</TABLE>









        The accompanying notes are an integral part of these statements.

                                       F-6
<PAGE>
<TABLE>
<CAPTION>
                   JUPITER MARINE INTERNATIONAL HOLDINGS INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

               FOR THE YEARS ENDED JULY 30, 2005 AND JULY 30, 2004
               ---------------------------------------------------

                                                                                2005         2004
                                                                              ---------    ---------
<S>                                                                           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                 $ 420,543    $ 408,549
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                            309,408      255,506
       Impairment of assets                                                      99,490           --
       Gain on asset disposition                                                     --       (4,500)
       Issuance of common shares to pay expenses                                305,291      146,601
       Decrease (increase) in:
         Accounts receivable                                                   (155,687)     137,637
         Inventory                                                             (308,528)    (245,896)
         Prepaid expenses                                                       (78,473)     (29,778)
         Other assets                                                              (500)      24,000
       Increase (decrease) in:
         Accounts payable                                                       (82,885)    (193,880)
         Accrued expenses                                                       (57,879)     236,598
         Customer deposits                                                       20,199       (3,727)
         Warranty reserve                                                       (15,649)      (6,554)
                                                                              ---------    ---------
         Net cash provided by operating activities                              455,330      724,556
                                                                              ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from sale of equipment                                               --       34,500
       Purchases of property and equipment                                     (574,468)    (405,137)
                                                                              ---------    ---------
         Net cash used in investing activities                                 (574,468)    (370,637)
                                                                              ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Borrowings on notes payable and long term debt                           690,000      770,000
       Payments on notes payable and long term debt                            (817,437)    (905,619)
                                                                              ---------    ---------
         Net cash used in financing activities                                 (127,437)    (135,619)
                                                                              ---------    ---------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                           (246,575)     218,300

CASH AND CASH EQUIVALENTS, beginning of year                                    602,936      384,636
                                                                              ---------    ---------

CASH AND CASH EQUIVALENTS, end of year                                        $ 356,361    $ 602,936
                                                                              =========    =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Cash paid for interest                                                 $  60,659    $  83,707
                                                                              =========    =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES:
       Preferred stock dividends declared and payable in shares
         of Series B and C preferred stock                                    $  34,197    $  73,719
                                                                              =========    =========
       Common stock issued in payment of liabilities
         to shareholders                                                      $ 240,891    $ 146,601
                                                                              =========    =========
</TABLE>



        The accompanying notes are an integral part of these statements.

                                       F-7
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 1 - ORGANIZATION AND BUSINESS

Jupiter Marine International Holdings, Inc. ("JMIH"), a Florida corporation, was
incorporated May 19, 1998 to enter the boat manufacturing industry and on May
26, 1998, acquired Jupiter Marine International, Inc. ("JMI"), a Florida
corporation engaged in manufacturing "Jupiter" brand outboard sport fishing
boats. On February 17, 2000, JMIH purchased certain assets from Phoenix Marine
International, Inc., through its newly formed wholly owned subsidiary, Phoenix
Yacht Corporation ("PYC"), to manufacture "Phoenix" brand inboard sport boats.
JMIH is a publicly owned company and its common shares are currently traded in
the Over The Counter Bulletin Board under the symbol JMIH.

The Company's principal offices and manufacturing facilities are located in Port
Everglades, Florida. The Company designs, manufactures and markets a diverse mix
of high quality hand constructed sport fishing boats under the Jupiter name. It
sells its line of boats through authorized dealers in the United States on the
East Coast and Gulf of Mexico, as well as Puerto Rico.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Fiscal Years and Reclassifications
----------------------------------

The Company reports its financial position and results of operations using a 52
week fiscal year ending the last Saturday of July of each calendar year. Certain
prior year amounts have been reclassified to conform to the current year
presentation. The accompanying financial statements present the consolidated
financial position and results of operations of JMIH, JMI and PYC, collectively
referred to as the "Company". All material intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as the reported amounts of revenue and expenses
during the period. Actual results could differ from those estimates and such
differences could be material to the consolidated financial statements.

Cash Equivalents
----------------

For purposes of reporting cash and cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.


        The accompanying notes are an integral part of these statements.
                                      F-8
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable
-------------------

The Company sells its boats and accessory products and services on credit terms
widely used in its industry. It uses the allowance method to recognize bad debts
by providing an allowance for uncollectible accounts receivable and charging
actual write offs to the allowance. As of July 30, 2005 and July 31, 2004, the
Company does not have an allowance for uncollectible accounts as management
believes all receivables are collectible.

Inventories
-----------

Inventories are stated at the lower of cost or market. The first-in, first-out
method is used to cost raw materials. The cost of boats in process and finished
boats includes actual raw materials, direct labor and allocated production
overhead. Provision is made to reduce excess or obsolete inventory to the
estimated net realizable value considering a reasonable sales gross margin.

Property and Equipment
----------------------

Property and equipment are recorded at cost. Depreciation and amortization are
computed using the straight-line method over an estimated useful life of five
years or, in the case of leasehold improvements, the term of the lease, if
greater.

Long-Lived Assets
-----------------

The Company reviews its long-lived assets for impairment whenever changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. For purposes of evaluating the recoverability of long-lived assets,
the recoverability test is performed using undiscounted net cash flows estimated
to be generated by the asset. If such review indicates that the asset is
impaired, the asset's carrying amount is written down to fair value. Long-lived
assets to be disposed of are reported at the lower of carrying amount or fair
value less cost to sell. During the year ended July 30, 2005, the Company
recognized impairment losses of $99,490. There were no impairment losses for the
year ended July 31, 2004.

        The accompanying notes are an integral part of these statements.
                                      F-9
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Warranty Reserves
-----------------

The Company provides a limited warranty on all boat components for a period of
twelve months from date of purchase. In addition, it provides a limited lifetime
structural warranty on the fiberglass hull of each of its boats. The Company
provides for anticipated warranty expenses through an allowance determined as a
percentage of net sales based on actual historical experience. Increases to the
reserve for allowances were $64,000 and $67,000 for the years ended July 30,
2005 and July 31, 2004, respectively. For these same periods, warranty expenses
charged to the reserve were $79,649 and $58,939, respectively.

Revenue Recognition
-------------------

Revenue from the sale of boats is recognized at the time of physical delivery
and transfer of legal title to its authorized dealers. The Company does not
provide any right of return for the boats sold to its dealers but, as discussed
in Note 9, it provides certain guarantees to some lenders who provide floor plan
financing to some of its dealers.

Advertising Costs
-----------------

The Company purchases print advertising in industry publications and
participates with its authorized dealers on a co-op basis in such advertising to
promote its brand name and line of boats. Such costs are charged to operations
as incurred without regard to any expected future benefit. Advertising costs
were approximately $99,000 and $95,000 for 2005 and 2004, respectively.

Income Taxes
------------

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.

Stock-Based Compensation
------------------------

The Company accounts for stock-based awards to employees and directors using the
intrinsic value method of accounting in accordance with APB Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25). Under the intrinsic value
method, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized in the Company's Consolidated Statements of
Income.
        The accompanying notes are an integral part of these statements.
                                      F-10
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-Based Compensation (continued)
------------------------

Pro forma information regarding option grants made to the Company's employees
and directors is based on specified valuation techniques that produce estimated
compensation charges. The value of each option grant is estimated on the date of
grant using the Black-Sholes option pricing model, which was developed for use
in estimating the value of traded options that have no vesting restrictions and
are fully transferable. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
estimate, in management's opinion, the existing valuation models do not provide
a reliable measure of the fair value of the Company's employee stock options.
Also, see Note 7 herein for additional information.

The following table reflects the pro forma information regarding the Company's
employee stock option grants for the years ended July 30, 2005 and July 31,
2004.
<TABLE>
<CAPTION>
                                                                    July 30, 2005      July 31, 2004
                                                                    -------------      -------------
<S>                                                                   <C>               <C>
              Net income applicable to common shareholders            $  386,346        $   334,830
              Less: Stock based employee compensation
                      expense determined under fair value method         (53,546)          (137,144)
                                                                      ----------        -----------
              Pro forma net income                                    $  332,800        $   197,686
                                                                      ==========        ===========
              Net income per share - basic:
                        As reported                                   $     0.03        $      0.04
                                                                      ==========        ===========
                        Pro forma                                     $     0.02        $      0.02
                                                                      ==========        ===========
              Net income per share - diluted:
                        As reported                                   $     0.02        $      0.04
                                                                      ==========        ===========
                        Pro forma                                     $     0.02        $      0.02
                                                                      ==========        ===========
</TABLE>
Net Income Per Share of Common Stock
------------------------------------

Net income per common share is calculated in accordance with SFAS No. 128,
"Earnings Per Share" requiring companies to report basic and diluted earnings
per share. Basic net income per common share is computed using the weighted
average number of common shares issued and outstanding during the period.
Diluted net income per common share is computed using the weighted average
number of common shares issued and outstanding plus any dilutive potential
common shares outstanding during the period. The effects of dilutive potential
shares outstanding during the years ended July 30, 2005 and July 30, 2004 are
shown in the following table.

        The accompanying notes are an integral part of these statements.
                                      F-11

<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Income Per Share of Common Stock - (continued)
------------------------------------
<TABLE>
<CAPTION>
                                                July 30, 2005      July 31, 2004
                                                -------------      -------------
<S>                                                <C>                 <C>
Basic weighted average shares outstanding          14,693,321          9,020,364
   Effect of preferred stock conversion
                                                           --          1,997,444
   Effect of dilutive employee stock options        1,543,956            835,616
                                                -------------     --------------
Diluted weighted average shares outstanding        16,237,277         11,853,424
                                                =============     ==============
</TABLE>
Business Segments
-----------------

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" establishes standards for public enterprises to report information
about their operating segments in annual financial statements. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers.

SFAS No. 131 defines operating segments as components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in
assessing operating performance. Management has determined that the Company
currently operates in only one business segment, sport fishing boat
manufacturing. Therefore, the Company does not have any separate operating
segment information to report other than the amounts reflected in its financial
statements.

Fair Value of Financial Instruments
-----------------------------------

SFAS No. 107 requires the disclosure of fair value of financial instruments. The
estimated fair value amounts have been determined by the Company's management
using available market information and other valuation methods. However,
considerable judgment is required to interpret market data in developing the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize in a current
market exchange. The carrying amounts reported in the consolidated balance
sheets were used in estimating fair value disclosure for cash and cash

        The accompanying notes are an integral part of these statements.
                                      F-12
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments (continued)
-----------------------------------

equivalents, accounts receivable, accounts payable, accrued expenses and notes
payable because of the short maturity of those instruments. For the long-term
portion of notes payable, the Company believes that the estimated fair value
does not vary substantially from the amounts reported in the consolidated
balance sheets due to the effect of the interest rate.

Recent Accounting Pronouncements
--------------------------------

In May 2005, the FASB issued FAS 154 (SFAS no. 154), Accounting Changes and
Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3.
This Statement provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes, unless impracticable,
retrospective application as the required method for reporting a change in
accounting principle in the absence of explicit transition requirements specific
to the newly adopted accounting principle. This Statement also provides guidance
for determining whether retrospective application of a change in accounting
principle is impracticable and for reporting a change when retrospective
application is impracticable. The correction of an error in previously issued
financial statements is not an accounting change. However, the reporting of an
error correction involves adjustments to previously issued financial statements
similar to those generally applicable to reporting an accounting change
retrospectively. Therefore, the reporting of a correction of an error by
restating previously issued financial statements is also addressed by this
Statement. This statement is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. The adoption of
this accounting pronouncement is not expected to have a material effect on the
consolidated financial statements.

In March 2005, the FASB issued Interpretation No. 47 (FIN No. 47), Accounting
for Conditional Asset Retirement Obligations, and Interpretation of FASB
Statement No. 143. This interpretation clarifies the timing for recording
certain asset retirement obligations required by FASB Statement No. 143,
Accounting for Asset Retirement Obligations. The provisions of FIN No. 47 are
effective for years ending after December 15, 2005. The adoption of this
accounting pronouncement is not expected to have a material effect on the
consolidated financial statements.

In December 2004, the FASB issued revised FAS No. 123 (SFAS No. 123R),
Share-Based Payment. This standard eliminates the ability to account for
share-based compensation transactions using the intrinsic value-based method
under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and requires instead that such transactions be accounted for using a
fair-value-based method. SFAS No. 123R is effective for financial statements
issued for the first interim period beginning after December 15, 2005 for small
business issuers. The adoption of this accounting pronouncement will not have an
effect on the consolidated financial statements until fiscal year 2006.

        The accompanying notes are an integral part of these statements.
                                      F-13
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)
--------------------------------

In December 2004, the FASB issued FAS 153, Exchanges of Nonmonetary Assets. The
provisions of this Statement are effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. The provisions of
this Statement should be applied prospectively, and eliminates the exception
from fair value measurement for nonmonetary exchanges of similar productive
assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary
Transactions, and replaces it with an exception for exchanges that do not have
commercial substance. The adoption of this accounting pronouncement is not
expected to have a material effect on the consolidated financial statements.

In November, 2004, SFAS 151, "Inventory Costs, an Amendment of ARB No. 43,
Chapter 4" was issued by the Financial Accounting Standards Board. This
statement amends prior accounting pronouncements to conform certain inventory
accounting with international principles by clarifying the accounting for
abnormal amounts of idle facility expense, freight, handling costs and wasted
material. The statement requires that such costs be treated as current period
charges regardless of their classification as abnormal in nature. In addition,
the statement requires that fixed production overhead amounts be allocated to
the costs of conversion based on the normal capacity of production facilities.
The statement is effective for years beginning on or after June 15, 2005,
although earlier application is allowed. The adoption of SFAS 151 did not effect
the Company's financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
requires that certain financial instruments previously classified as equity be
classified as liabilities or, in some cases, as assets. The adoption of SFAS No.
150 had no impact on the Company's financial position, results of operations, or
cash flows.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, as amended. This statement amends
and clarifies financial accounting and reporting for derivative instruments and
for hedging activities under SFAS No. 133. In general, SFAS No. 149 was
effective for the Company on a prospective basis for contracts entered into or
modified after June 30, 2003, and for hedging relationships designated after
that date. The adoption of SFAS No. 149 had no impact on the Company's financial
position, results of operations, or cash flows.

NOTE 3 - SIGNIFICANT CUSTOMER CONCENTRATIONS

During the years ended July 30, 2005 and July 31, 2004, the Company's sales to
major customers were approximately 60% (three customers ) and 78% (five
customers) of its net sales, respectively. The Company's accounts receivable at
each year end are substantially due from these customers.

        The accompanying notes are an integral part of these statements.
                                      F-14
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 4 - INVENTORY

The Company's inventory consists of the following as of each year end indicated:
<TABLE>
<CAPTION>
                                          July 30, 2005         July 31, 2004
                                         ----------------     -----------------
<S>                                      <C>                  <C>
                    Raw materials        $        569,463     $         302,391
                    Work in process               874,274               574,718
                    Finished goods                     --               256,572
                                         ----------------     -----------------
                                         $      1,443,737     $       1,133,681
                                         ================     =================
</TABLE>
NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following for each year end indicated:
<TABLE>
<CAPTION>
                                                         July 30, 2005        July 31, 2004
                                                       ------------------   -----------------
<S>                                                    <C>                  <C>
                    Boat molds                         $        1,919,763   $       1,933,375
                    Leasehold improvements                        322,254             259,419
                    Machinery and equipment                       307,160             225,813
                    Office furniture and equipment                100,393              89,614
                                                       ------------------   -----------------
                                                                2,649,570           2,508,221
                    Accumulated depreciation                   (1,580,329)         (1,604,550)
                                                       ------------------   -----------------
                                                       $        1,069,241   $         903,671
                                                       ==================   =================
</TABLE>

















        The accompanying notes are an integral part of these statements.
                                      F-15
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 6-  NOTES PAYABLE AND REVOLVING LINES OF CREDIT

At each year end, the Company has the following notes payable outstanding:
<TABLE>
<CAPTION>
                                                                      July 30, 2005            July 31, 2004
                                                                   -------------------       -----------------
<S>                                                                <C>                        <C>
  Note payable to shareholders, interest at 10%, due in
      full February 14, 2006, subordinated to bank line
      of credit, collateralized by substantially all
      of the Company's assets.                                     $          350,000 (a)     $       350,000 (a)

  Note payable to bank, revolving line of credit (unused
      portion of facility is $260,000 at July 30, 2005),
      interest payable monthly at bank's prime rate
      plus 1.5% (7.75% at July 30, 2005), due December 31, 2005,
      collateralized by all of the Company's assets and
      personally guaranteed by its President.                                 240,000                 270,000

  Notes payable to individuals, interest at 8%,
      due through June, 2005, in quarterly installments                            --                  93,750
                                                                  -------------------         ---------------
                     Total notes payable                          $           590,000         $       713,750
                     Less:  Current maturities                                590,000                 363,750
                                                                  -------------------         ---------------
                     Long term portion of notes payable           $                --         $       350,000
                                                                  ===================         ===============
</TABLE>
(a)           During the year ended July 31, 2004, the due date of this note was
              extended until February 2006. This note was purchased from it's
              the original lender during the year ended July 26, 2003, by two
              officers of the Company in a private transaction. See note 10 for
              additional disclosures regarding these transactions.

The Company has a $200,000 revolving line of credit with a financial institution
for the purchase of outboard engines, due February 1, 2006, collateralized by a
$30,000 certificate of deposit. The unused balance on this revolving line of
credit at July 30, 2005 is $200,000. This line of credit is personally
guaranteed by the Company's president.

NOTE 7 -  SHAREHOLDERS' EQUITY

Preferred Stock
---------------

The Company has authorized 5,000,000 shares of convertible preferred stock and
had previously issued 315,000 shares of Series A Preferred and 452,500 shares of
Series B Preferred. During 2004, the total outstanding Series A and Series B
preferred shares were automatically converted to 2,302,500 common shares on a 3
common shares for each preferred share basis. The Company had issued 998,722 of
shares of Series C preferred at July 31, 2004. During 2005, the Company issued
34,197 shares of Series C preferred shares for payment of dividends, then the
total 1,032,919 outstanding Series C preferred shares were automatically
converted to 2,065,838 common shares on a 2 common shares for each preferred
share basis. The features, rights and obligations of each series is described as
follows.

        The accompanying notes are an integral part of these statements.
                                      F-16
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 7 -  SHAREHOLDERS' EQUITY - (continued)

Series A. The company has authorized 500,000 shares of Series A convertible
preferred stock. When and if declared by the Board of Directors, dividends
accrue quarterly based on 10% per annum, are cumulative and are payable in
shares of Series B preferred stock valued at $1.00 per share. Each Series A
share is convertible into three shares of Common Stock of the Company at any
time at the option of the holder. In addition, each share will automatically
convert into three shares of Common Stock of the Company (a) five years from the
date of issue, or (b) at such time as a registration statement registering the
shares of the Company's common stock issuable upon such conversion of Series A
preferred convertible is declared effective by the Securities and Exchange
Commission. Each preferred share is entitled to votes equal to the number of
shares of Common Stock into which the Series A preferred stock is convertible.
The Company may redeem the Series A preferred stock at a price of $1.20 per
share upon 120 days written notice to the holders thereof. In the event of
liquidation, dissolution or winding up of the Company, Series A preferred stock
has rights to the assets of the Company superior to those of Series B and C
preferred stock and Common Stock equal to $1.00 per share.

Series B. The Company has authorized 500,000 shares of Series B convertible
preferred stock. The features, rights and obligations of this series are
identical to Series A preferred stock except that Series B preferred stock is
subordinate to Series A.

Series C. The Company has authorized 1,500,000 shares of Series C convertible
preferred stock. The features, rights and obligations of this series are
identical to Series A and Series B preferred stock, except that: (a) Series C
preferred stock is subordinate to Series A and Series B preferred stock, (b)
each share of Series C preferred stock is convertible into two shares of the
Common Stock of the Company, and (c) dividends are payable at 8% per annum in
additional shares of Series C preferred stock.

During the years ended July 30, 2005 and July 31, 2004, the Board of Directors
declared total annual dividends of $34,197 and $73,719, respectively, on the
preferred stock series payable as described in the preceding paragraphs.

Common Stock
------------

During the years ended July 30, 2005 and July 31, 2004, the Company issued
2,065,838 and 2,302,500 common shares in connection with the conversions of
preferred stock discussed above. In connection with the payment of certain
amounts due to officers and for the guarantee of a bank line of credit and
extending the due date of a note payable to officers as discussed in Note 10, it
issued 454,773 and 1,213,345 common shares during the years ended July 30, 2005
and July 31, 2004, respectively. In addition, during the year ended July 30,
2005, the Company issued 460,000 common shares as payment for services, 209,351
common shares as payment of 2004 officer bonuses, and 540,000 common shares as
payment of 2004 management bonuses.

        The accompanying notes are an integral part of these statements.
                                      F-17
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 7 -  SHAREHOLDERS' EQUITY (continued)

Stock Options and Warrants
--------------------------

The Company's Board of Directors grants options for the purchase of its common
shares on a discretionary basis. In 2004, the Company adopted the 2004
management and director equity incentive and compensation plan. The Plan
encourages and enables key employees, directors and consultants to participate
in the company's future prosperity and growth by providing them with incentives
and compensation based on the Company's performance, development and financial
success. Options granted under this plan may be in the form of incentive stock
options ("ISOs"), which are intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended, or stock options that are not
intended to qualify as ISOs ("NQSOs"). The maximum shares which may be issued
under the Plan was initially 3,300,000 shares and was increased to 5,300,000
shares in November 2004. At July 30, 2005, 2,000,000 shares have been issued
under this plan. The following table summarizes such grants and its outstanding
options as of each year end indicated.
<TABLE>
<CAPTION>
                                                     Non-Qualified Options                    Qualified Options
                                              -----------------------------------     ---------------------------------
                                                Number of        Weighted Average       Number of      Weighted Average
                                                 Options          Exercise Price         Options        Exercise Price
                                              ---------------   -----------------     -------------   -----------------
<S>                                            <C>              <C>                   <C>             <C>

BALANCE, July 26, 2003                              1,581,200   $            0.67                --   $              --
     Granted                                               --                  --         1,000,000                0.14
     Exercised                                             --                  --                --                  --
     Forfeited                                       (225,000)               0.10                --                  --
                                              ---------------   -----------------     -------------   -----------------

BALANCE, July 31, 2004                              1,356,200                0.70         1,000,000                0.14
     Granted                                               --                  --         1,000,000                0.30
     Exercised                                             --                  --                --                  --
     Forfeited                                       (256,200)               0.60                --                  --
                                              ---------------   -----------------     -------------   -----------------

BALANCE, July 30, 2005                              1,100,000                0.72         2,000,000                0.30
                                              ===============   =================     =============   =================

Number of options exercisable
     at July 31, 2004                               1,356,200                0.70         1,000,000                0.14
                                              ===============   =================     =============   =================

Number of options exercisable
     At July 30, 2005                               1,100,000                0.72         1,000,000                0.14
                                              ===============   =================     =============   =================
</TABLE>
The Company's issuances of options and warrants for the purchase of its common
shares are generally described below (as adjusted for stock splits). In January
2005, the company awarded ISOs for the purchase of 1,000,000 shares at a price
of $.30 per share to six key employees as inducement for them to relocate to
central Florida. These options vest once the relocation has taken place. In May
2004, the Company awarded ISOs for the purchase of 1,000,000 shares at a price
of $.14 per share to various officers and key employees in recognition of their
service to the Company. In connection with a private placement of the Company's

        The accompanying notes are an integral part of these statements.
                                      F-18
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 7 -  SHAREHOLDERS' EQUITY (continued)

Stock Options and Warrants (continued)
--------------------------

common stock in 1999, the Company issued 225,000 warrants to placement agents,
each redeemable for one share of common stock at a price of $.48 for a period of
five years. These placement agent warrants expired in fiscal 2004. In connection
with a private placement of the Company's Series C preferred stock in 1999, the
Company issued 256,200 warrants to placement agents, each redeemable for one
share of common stock at a price of $.60 for a period of five years. These
placement agent warrants expired in fiscal 2005.

On July 27, 2001, the Company entered into employment agreements with its
President, Vice President and Chief Financial Officer, with the officers
receiving options to purchase a total of 1,100,000 shares of the Company's
common stock exercisable in four increments of 275,000 shares at $.50 per share,
$.625 per share, $.75 per share and $1.00 per share. The options are fully
vested and are exercisable for a period of five years.

A summary of the Company's outstanding and exercisable stock options as of July
30, 2004 is as follows:
<TABLE>
<CAPTION>

                                                                                  Weighted Average
                                                                Number         Remaining Contractual
         Exercise Price             Status                    of Options            Life (years)
         --------------             ------                    ----------            ------------
<S>            <C>                  <C>                        <C>                      <C>
               $ 0.14               Outstanding                1,000,000                3.77
                 0.14               Exercisable                1,000,000                3.77
                 0.30               Outstanding                1,000,000                4.46
                 0.30               Exercisable                       --                4.46
                 0.50               Outstanding                  275,000                0.99
                 0.50               Exercisable                  275,000                0.99
                 0.625              Outstanding                  275,000                0.99
                 0.625              Exercisable                  275,000                0.99
                 0.75               Outstanding                  275,000                0.99
                 0.75               Exercisable                  275,000                0.99
                 1.00               Outstanding                  275,000                0.99
                 1.00               Exercisable                  275,000                0.99
</TABLE>
Statement of Financial Accounting Standard (SFAS) No. 123, "Accounting for Stock
Based Compensation" as amended by SFAS 148, "Accounting for Stock Based
Compensation - Transition and Disclosure", requires the Company to provide pro
forma information regarding net loss and loss per share as if compensation cost
for the Company's employee stock options had been determined in accordance with
the fair value based method prescribed in SFAS No. 123. The Company estimates
the fair value of each option at the grant date by using the Black-Scholes
option pricing model with the following weighted-average assumptions used for
grants in 2005 and 2004: expected volatility 212% and 204%, risk-free interest
rate of 3.71% and 3.85%, expected dividends of 0%, and expected life of 5 years.
This option pricing model results in a weighted average fair value of
approximately $.30 and $.14 per share in 2005 and 2004, respectively.

        The accompanying notes are an integral part of these statements.
                                      F-19
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 7 -  SHAREHOLDERS' EQUITY (continued)

Stock Options and Warrants (continued)
--------------------------

Under the accounting provisions of SFAS 123, the Company's net income and income
per share would have been decreased for the years ended July 30, 2005 and July
31, 2004 to the pro forma amounts indicated below.
<TABLE>
<CAPTION>
                                                                             July 30, 2005        July 31, 2004
                                                                             -------------        -------------
<S>                                                                                <C>                 <C>
                     Net income applicable to common shareholders            $     386,346        $     334,830
                     Less: Stock based employee compensation
                              expense determined under fair value method           (53,546)            (137,144)
                                                                             -------------        -------------
                     Pro forma net income                                    $     332,800        $     197,686
                                                                             =============        =============
                     Net income per share - basic:
                               As reported                                   $        0.03        $        0.04
                                                                             =============        =============
                               Pro forma                                     $        0.02        $        0.02
                                                                             =============        =============
                     Net income per share - diluted:
                               As reported                                   $        0.02        $        0.04
                                                                             =============        =============
                               Pro forma                                     $        0.02        $        0.02
                                                                             =============        =============
</TABLE>
NOTE 8 - INCOME TAXES

During the year ended July 30, 2005, the Company utilized approximately $410,000
of its net operating loss carryforward, and at July 30, 2005 the Company has a
remaining unused net operating loss carryforward of approximately $950,000 for
income tax purposes, of which approximately $60,000 expires in 2012 and the
remainder in the years 2018 through 2021. However, the ability to utilize such
losses to offset future taxable income is subject to various limitations imposed
by the rules and regulations of the Internal Revenue Service. The net operating
loss carryforwards may result in future income tax benefits of approximately
$378,000; however, because realization is uncertain at this time, a valuation
reserve in the same amount has been established. The valuation allowance for
deferred tax assets decreased approximately $134,000 and $102,000 for the years
ended July 30, 2005 and July 31, 2004, respectively. Deferred income taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.










        The accompanying notes are an integral part of these statements.
                                      F-20
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 8 - INCOME TAXES (continued)

The significant components of the Company's deferred tax assets and liabilities
as of July 30, 2005 and July 31, 2004 are presented in the following table:
<TABLE>
<CAPTION>
                                                 2005                   2004
                                               ---------             ---------
<S>                                            <C>                   <C>
Deferred tax liabilities:
  Depreciation                                 $ (45,000)            $ (43,000)

Deferred tax assets:
  Net operating loss carryforwards               358,000               226,000
  Reserves for future costs and expenses          65,000                80,000
                                               ---------             ---------
Net deferred tax asset, originally reported      378,000               263,000
  Adjustment to net operating loss carryover          --               249,000
                                               ---------             ---------
Net deferred tax asset, restated                 378,000               512,000
Valuation allowance for deferred tax assets     (378,000)             (512,000)
                                               ---------             ---------
                                               $      --             $      --
                                               =========             =========
</TABLE>
The Company's actual effective tax rate for these years is reconciled to the
expected statutory tax rate as follows:
<TABLE>
<CAPTION>
                                                        2005      2004
                                                      -------   -------
<S>                                                     <C>       <C>
Expected Federal statutory tax (benefit) rate           34.00 %   34.00 %
Expected  state tax (benefit) rate, net of
  Federal tax                                            3.60 %    3.60 %
                                                      -------   -------

Expected combined statutory tax rate                    37.60 %   37.60 %
Utilization of net operating loss carryforward         (37.60)%  (37.60)%
                                                      -------   -------
Effective income tax rate                                0.00 %    0.00 %
                                                      =======   =======
</TABLE>






        The accompanying notes are an integral part of these statements.
                                      F-21

<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 9 - COMMITMENTS AND CONTINGENCIES

The Company leases its facilities and certain equipment under operating and
capital leases expiring through July 2006. The manufacturing facility is owned
by the Company's president. Future minimum lease payments under the
non-cancelable leases with initial terms greater than one year, as of July 30,
2005 are approximately as follows:

      Year Ended July,             Operating
      ----------------             ---------
            2006                   $ 216,340

Total rental expense for the years ended July 30, 2005 and July 31, 2004 was
$303,533 and $299,261, respectively.

During December 2004, the Company entered into a Commercial Lease and Purchase
Option with a third party for the lease and potential purchase of an additional
operating facility in an effort to expand its manufacturing and production
capacity. The facility will provide the Company with approximately 50,000 square
feet of additional manufacturing and production space. Under the agreement the
Company has agreed to lease certain properties and facilities in Florida for a
term of one year at $14,500 per month. The lease shall commence on the earlier
of the date the: (1) facilities are determined to meet all applicable
environmental and building code requirements ("Code Requirements") or (2) the
Company takes possession of the facilities. The Company agreed to contribute
one-fourth of the funds necessary to satisfy Code Requirements. It was initially
estimated that funds necessary to satisfy Code Requirements was $300,000. During
the term of the lease the Company has a right and option to purchase the
facility. If the Company exercises such option, all funds contributed by the
Company to satisfy Code Requirements will be deducted from the purchase price.
If the Company declines to exercise the option or is unable to secure acceptable
financing, the Company's president will have a similar option to purchase the
facility. As of July 30, 2005, the Company had contributed approximately $37,500
towards satisfying Code Requirements. However, since signing the Commercial
Lease and Purchase Option, the estimate of funds necessary to satisfy Code
Requirements has increased to approximately $1,000,000. If the Company cannot
secure acceptable financing, it will not exercise its purchase option.







        The accompanying notes are an integral part of these statements.
                                      F-22

<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued)

In the event the Company does not exercise its purchase option, the President
has agreed to purchase the facility and lease it back to the Company and
personally satisfy all Code Requirements without any cost to the Company.

Beginning in 2002, the Company entered into employment agreements with three of
its principal executives for their services through July 27, 2006. Under the
terms of the agreements, the base salaries totaling $375,000 under these
agreements are automatically increased 5% annually. In addition, the executives
shall receive additional compensation of a combined 9% of the Company's net
income before income taxes annually, are reimbursed annually for their vehicle
expenses and may purchase one boat annually from the Company at its
manufacturing cost. These agreements can be terminated by the Company or the
executives without cause. They are renewable for two additional one-year
periods.

The Company sells its boats to independent dealers who, occasionally, finance
the purchase through floor plan financing arrangements with lenders. In
connection with this floor plan financing with certain dealers, the Company
guarantees directly to lenders that they will repurchase boats with unencumbered
titles that are in unused condition if the dealer defaults on its obligation to
repay the loan. Since its inception and through July 30, 2005, the Company has
not been required to repurchase any boats; however, the Company is contingently
liable for approximately $1,007,000 under terms of these agreements as of July
30, 2005.

There are cash deposits in a single bank exceeding the federally insured account
balance limit of $100,000. The excess account balance could be subject to loss
if the bank should cease to operate.

NOTE 10 - RELATED PARTY TRANSACTIONS

The Company leases its office and manufacturing facilities from its President.
Under the terms of the lease agreements, the Company pays the agreed monthly
rents, applicable sales taxes, property taxes and it insures and maintains the
buildings. For the years ended July 30, 2005 and July 31, 2004, the Company's
President was paid rents of approximately $190,000 each year.









        The accompanying notes are an integral part of these statements.
                                      F-23
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 10 - RELATED PARTY TRANSACTIONS (continued)

In accordance with the terms of their employment agreements, two officers
purchased boats from the Company in 2005 and 2004 at cost.

On November 21, 2002, the Company's President and its Chief Financial Officer
("buyers") entered into agreements with Triton International Holdings Corp.
("Triton") to acquire all rights, title and security interest in the Company's
note payable to Triton (see Note 6), including accrued interest, the management
agreement between the Company and Triton and 500,000 shares of its common stock
held by Triton. The buyers agreed to pay a total consideration of $400,000 to
acquire the note payable and management agreement and purchased the shares held
by Triton for $10,000. At the date of the agreements, the note payable had a
principal balance of $350,000 and accrued interest of $102,025. The buyers
extended these amounts plus accrued interest since the date of their purchase to
February 14, 2004. Pursuant to the terms of the note to which the buyers
succeeded, additional consideration was due to the note holder as it was unpaid
on its third anniversary. Under those terms, the Company was obligated to issue
common shares at the rate of 4 shares for each dollar of the unpaid balance of
the note (including accrued interest). Therefore, the buyers received 1,808,098
common shares in accordance with these terms. The fair value of these shares
based on the shares purchased from Triton was $36,162. In addition, the Company
owed Triton $78,333 under its management agreement. The buyers cancelled the
Company's future commitment under the management agreement and forgave the
amount due for past services as a contribution to paid in capital. On July 31,
2004, the Company issued 1,213,345 shares of common stock with a fair value of
$146,601 to its President and Chief Financial Officer as payment for extending
the due date of this note payable until February, 2006 and for personally
guaranteeing the Company's bank line of credit.

On January 13, 2005, the Company's President and Chief Financial Officer
received 209,351 shares of its common stock, in lieu of cash, as payment of
bonuses in the amount of $41,891 earned pursuant to their respective employment
contracts during the year ended July 31, 2004.

In addition, the Company was unable to renew its existing lines of credit
without personal guarantees from its President. As payment for his personal
guarantees, the Company issued the President 454,773 of its common shares with a
fair value of $91,000 on January 13, 2005.

On July 29, 2005, the Company issued 540,000 of its common shares with a fair
value of $108,000, in lieu of cash, as payment of non-executive management
bonuses earned during the year ended July 31, 2004.



        The accompanying notes are an integral part of these statements.
                                      F-24