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 31, 2004

                                       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. [ ]

State issuer's revenues for its most recent fiscal year. $10,260,684

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. ($0.32 on September 30, 2004) $1,791,858.88.

                   (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 30, 2004: 12,295,563 Shares
of Common Stock and 998,722 Shares of Series C Preferred 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..................................................................           7

Item 4        Submission of Matters to a Vote of Security Holders................................           7

PART II
-------
Item 5.       Market for Common Equity, Related Stockholder Matters and Small Business Issuer
              Purchases of Equity Securities.....................................................           8

Item 6.       Management's Discussion and Analysis or Plan of Operation..........................           10

Item 7.       Financial Statements...............................................................           14

Item 8.       Changes in and Disagreements With Accountants on Accounting and Financial
              Disclosure.........................................................................           14

Item 8A.      Controls and Procedures............................................................           14

Item 8B.      Other Information..................................................................           14

PART III
--------
Item 9.       Directors and Executive Officers...................................................           15

Item 10.      Executive Compensation.............................................................           17

Item 11.      Security Ownership of Certain Beneficial Owners and Management and Related
              Stockholder Matters................................................................           21

Item 12.      Certain Relationships and Related Transactions.....................................           22

Item 13.      Exhibits, List and Reports on Form 8-K.............................................           23

Item 14.      Principal Accountant Fees and Services.............................................           23
</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 sportfishing 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 sportfishing boats under the Jupiter name. The product line currently
consists of five models:

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

Products

         The list prices for the Jupiter 31 models range from $143,560 to
$147,340 and from $102,460 to $108,590 for the Jupiter 27. 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.

         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 and introduced 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



                                       3
<PAGE>
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 the perfect choice 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
         -----------------------

         The 27' Open is the same concept as the 31' Open except in a smaller,
less expensive model. It's designed as an entry-level boat at attractive
pricing. This model features an integrated engine mounting platform, above deck
livewell and transom door The 27' Open was added to the line in order to enable
the entry level buyer to acquire a Jupiter boat at an affordable price.

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

         This model was introduced during fourth quarter of fiscal year 2003.
The 27' Forward Seating is the same as the 27" Open except that it offers a
U-shaped, cushioned forward area provides seating for four adults and is roomy
enough for lounging and sunbathing.

         27' Center Console-berth
         ------------------------

         Due to limited production capacity, the 27' Center Console-berth model
was temporally discontinued during fiscal year 2004.

         35' Flybridge Convertible, Inboard
         ----------------------------------

         Due to limited production capacity the 35' Flybridge Convertible was
temporally discontinued at the end fiscal year 2004.

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.



                                       4
<PAGE>
         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.

         The Company built 93 boats during fiscal year 2004, which was
approximately 90% of capacity. In order to reach capacity the Company would need
to add new tooling and hire additional employees, both skilled and unskilled.
Should the production capacity be reached, the Company believes it could then
further expand its manufacturing capacity by adding additional plant space,
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. The resin used to bind
the composite structure together is a vinylester type, which is stronger, better
bonding and more flexible than the polyester resins used by most other
fiberglass boat manufacturers.

         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,



                                       5
<PAGE>
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.

         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 25 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.



                                       6
<PAGE>
         The Company sells all of its boats through retail dealers primarily on
a cash-on-delivery basis. However, approximately 41% 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.

         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 31, 2004, the Company has not been required to repurchase any
boats. However, the Company is contingently liable for approximately $209,000
under terms of these agreements as of July 31, 2004. Except as noted above, the
Company has no other obligation to repurchase boats from its dealers.

         The outboard 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 70
full-time personnel at its manufacturing facility, including 1 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. The leases expire on July 31, 2005, July 31, 2005 and September 30,
2005.

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.


                                       7
<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 and transactions are sporadic. On
October 8, 2004 the closing bid price of the Company's common stock was $.32.
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, 2002              $.10             $.01
Quarter ended December 31, 2002               $.40             $.01
Quarter ended March 31, 2003                  $.40             $.05
Quarter ended June 30, 2003                   $.30             $.20
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

         As of the date of this report there are approximately 101 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.









                                       8
<PAGE>
Securities Authorized for Issuance Under Equity Compensation Plans

         The table below provides information 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          1,000,000                    $.147                      2,300,000

Equity compensation plans not
   approved by security holders          1,850,000                    $ .47                           None

         Total                           2,850,000
</TABLE>
Related Stockholder Matters

         On February 4, 2004 the Board of Directors and a Majority of the
Shareholders approved the adoption of the 2004 Management and Director Equity
Incentive and Compensation Plan (the "Plan") of the Corporation and 3,300,000
shares of Common Stock, $.0001 par value, were reserved for issuance upon
exercise of options granted under the plan.

         On May 5, 2004 the Board of Directors approved the granting of
incentive stock options under the Plan to a total of 9 individuals serving as
either Key Employees, Officers or Directors of the Company to purchase an
aggregate of 1,000,000 shares of the Company's Common Stock at $.14 per share
(or $.15 per share for the President) exercisable for a period of 5 years.

         During the year ended July 31, 2004, the Company declared dividends on
its outstanding shares of Series C preferred stock of approximately $73,719,
payable in shares of Series C preferred stock. The Company issued an aggregate
of 73,719 shares of its Series C preferred stock to its Series C preferred
stockholders.

         Effective the year ended July 31, 2004, the Board of Directors approved
the issuance of 758,334 shares of the Company's common stock to the President of
the Company in consideration for providing personal guarantees on the Company's:
(1) $500,000 line of credit which was renewed effective November 2003 through
December 2004 and (2) $200,000 credit line with a financial institution for the
purchase of inventory which was renewed through February 1, 2005.

         Effective the year ended July 31, 2004, the Board of Directors approved
the issuance of 455,011 shares of the Company's common stock to the President
and Chief Financial Officer of the Company for their extension of the due date




                                       9
<PAGE>
of a note payable held by the President and Chief Financial Officer from
February 14, 2004 to February 14, 2006.

         The above transactions were 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 security
holders received information regarding the Company or had knowledge of the
Company's operations and business. Furthermore, 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.

         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 and the introduction of new models. 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 31, 2004 were
$10,260,684 an increase of $956,492 (or 10.3%) as compared to $9,304,192 for the
fiscal year ended July 26, 2003. The sales growth for fiscal year 2004 compared
to fiscal year 2003 for our outboard line was $1,978,386 (or 23.9%). Customer
acceptance of the Company's products continues to remain very strong and the
Company continues to build a large following of its outboard models. Management





                                       10
<PAGE>
decided to temporally discontinue the 35' Flybridge to take advantage of the
increased demand for our outboard product, particularly the new models
introduced at the end of fiscal year 2003.

         The average selling price per boat for fiscal year 2004 was
approximately $110,300 compared to $116,000 during fiscal year 2003. 93 boats
were sold during fiscal year 2004 as compared to 80 boats in fiscal year 2003.
At July 31, 2004 dealer inventory was extremely low at only 6 boats available
for sale at dealer locations. At July 26, 2003 dealer inventory was 17 boats.
Order backlog has increased to approximately six months at July 31, 2004 from
approximately four months at July 26, 2003.

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

         Cost of sales for the year ended July 31, 2004 was $7,733,922 resulting
in $2,526,762 of gross profit or 24.6% of net sales. For last fiscal year ended
July 26, 2003 cost of sales was $7,374,259 and gross profit was $1,929,933 or
20.7% of net sales. The increase in gross profit is the result of: (1) a sales
shift to more profitable product, (2) better utilization of overhead and (3)
controlling material costs and usage.

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

         Selling, general and administrative expenses were $1,655,517 or 16.1%
of net sales, for the fiscal year ended July 31, 2004 compared to $1,160,143 or
12.5% of net sales, for the fiscal year ended July 26, 2003, an increase of
$495,374. The increase was principally due to an increase in professional fees,
advertising and marketing fees, salary expenses and insurance.

         An accrual of $150,000 for management bonuses was recorded for fiscal
year 2004, while no bonuses were recorded for fiscal year 2003.

         Professional fees were approximately $118,000 higher in fiscal year
2004 than in fiscal year 2003. The Company engaged the services of outside
consultants to assist with environmental compliance, licensing and information
technologies. Additionally, legal fees were higher as a result of our
application and re-listing on the OTCBB.

         Advertising and marketing expenses increased by approximately $74,000
due to increased print advertising, new and more expensive sales brochures and
normal salary increases.

         Liability insurance increased by about $25,000 during fiscal year 2004
compared to fiscal year 2003 because of higher premiums and increased coverage.

         The Company changed payroll service companies at the beginning of the
year which resulted in higher service fees of approximately $67,000 which were
recorded as a general expense. However, these fees were more than offset by
reduced workers compensation charges and other fees that are a part of cost of
goods sold.




                                       11
<PAGE>
         Utility expenses increased by approximately $15,000 because of the
addition of new data lines.

         Company personnel traveled more in fiscal year 2004 to boat shows,
dealer and prospective dealer locations and trade shows than in fiscal year 2003
resulting in a $18,000 increase in travel related expenses.

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

         Interest expense decreased by $25,558, from $102,631 in fiscal year
2003 to $77,073 in fiscal 2004 primarily due to lower average balances on the
revolving credit line.

         Effective the year ended July 31, 2004, the Board of Directors approved
the issuance of 758,334 shares of the Company's common stock to the President of
the Company in consideration for providing personal guarantees on (1) the
Company's current $500,000 line of credit which was renewed effective November
2003 through December 2004 and (2) a $200,000 credit line with a financial
institution for the purchase of inventory. These shares, with a fair value of
$92,000, were recorded as Other Expense.

         Effective the year ended July 31, 2004, the Board of Directors approved
the issuance of 455,011 shares of the Company's common stock to the President
and Chief Financial Officer of the Company for their extension of the due date
of the note payable to February 14, 2006. These shares, with a fair value of
$54,601, were recorded as Other Expense.

Liquidity and Capital Resources

         At July 31, 2004, the Company had cash and cash equivalents of
$602,936. The Company anticipates that cash generated from operations should be
sufficient to satisfy the Company's contemplated cash requirements for at least
the next twelve months.

         The Company extended its $500,000 revolving line of credit with a
financial institution through December 31, 2004. The note on the line of credit
bears interest at the financial institution's index rate plus 2% (6.25% at July
31, 2004). 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 $724,556 for fiscal 2004
and $351,336 for fiscal year 2003.

         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 31, 2004 accounts receivable was $16,622, a
decrease of $137,637 compared to July 26, 2003 as all sales were fully funded.
Inventories increased by $245,896 in order to support the sales growth.




                                       12
<PAGE>
         Accounts payable decreased by $193,880 as vendor's accounts were
brought with-in terms and cash discount were taken when economically feasible.
The increase in accrued expenses is due primarily to accruing at July 31, 2004 a
$150,000 bonus for management employees.

         The $350,000 note payable and accrued interest due to the Company's
President and Chief Financial Officer was extended from February 14, 2004 to
February 14, 2006. The Board of Directors approved the issuance of 455,011
shares of the Company's common stock to the President and Chief Financial
Officer of the Company in consideration of extending the Note Payable to
February 14, 2006.

         During the year ended July 31, 2004 the Company decreased the amount
outstanding under the line of credit by $100,000.

         The first quarterly payment in the amount of $31,250 plus accrued
interest was made to the holders of three bridge notes. The final three payments
of $31,500 each are scheduled for October 2004, December 2004 and March 2005.

         The Board of Directors approved the issuance of 758,334 shares of the
Company's common stock to the President of the Company in consideration for
providing personal guarantees on the Company's current lines of credit.

         During the year ended July 26, 2003 the Company had sales to five
dealers representing 23%, 16%, 16%, 13% and 11% of fiscal year 2004 net sales.
During the year ended July 26, 2003 the Company had sales to four dealers
representing 20%, 14% and 12% of fiscal year 2003 net sales.

         The Company does not anticipate any significant purchases of equipment
during fiscal year 2004. Additionally, the number and level of employees at July
31, 2004 should be adequate to fulfill the anticipated production schedule.

Recent Accounting Pronouncements

         On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation--Transition and Disclosure." This standard amends SFAS
No. 123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. This standard also requires
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. See Note 7 for the Company's disclosures under
this standard.

         In May, 2003, SFAS 150, "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity", was issued. This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments




                                       13
<PAGE>
were previously classified as equity. Generally, a financial instrument, whether
in the form of shares or otherwise, that is mandatorily redeemable, i.e. that
embodies an unconditional obligation requiring the issuer to redeem it by
transferring its shares or assets at a specified or determinable date (or dates)
or upon an event that is certain to occur, must be classified as a liability (or
asset in some circumstances). In some cases, a financial instrument that is
conditionally redeemable may also be subject to the same treatment. This
Statement does not apply to features that are embedded in a financial instrument
that is not a derivative (as defined) in its entirety. For public entities, this
Statement is effective for financial instruments entered into or modified after
May 31, 2003. The adoption of SFAS 150 did not effect the Company's financial
position or results of operations.

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.










                                       14
<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 will be 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.        65      Director, President and Chief Executive Officer

Lawrence S. Tierney      58      Director, Vice President and Chief Financial
                                 Officer and Secretary

Kerry Clemmons           59      Director, Audit Committee

Carl Herndon, Jr.        38      Vice President Sales and Operations

Key Employees
-------------
Jill Shave               59      Sales Manager

Anthony Clements         45      Production Manager


         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
sportfishing 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



                                       15
<PAGE>
(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
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. Mr. Herndon was granted a leave of absence from July
2003 through May 2004 to attend to family medical issues.

         Anthony Clements - Mr. Clements joined the Company during May 2001 as a
Tooling supervisor. In June of 2003 Mr. Clements was promoted to the position of
Production Manager. He has over 25 years of experience in the marine industry
including working in the tooling and design department of both Chapparal Boats
and Wellcraft Marine. Mr. Clements also served as lamination supervisor and
lamination production engineer at Donzi Marine. While at Donzi Marine he
participated in the APBA National Circuit as a throttle man as well as serving
on the design team. Mr. Clements also has extensive knowledge of the marine
service industry from the retail as well as the manufacture's perspective.

         Jill B. Shave - Ms. Shave joined JMI in April 2003 as sales manager.
Ms. Shave has over 30 years of sale and marketing experience within the boating
industry. Most recently she was with Bertram Yachts as inside sales manager.
From 1995 to 1998 she was the marketing manager for Mako Marine International,
Inc. She held the position of sales coordinator at Lazzara Yacht Sales, the
retail arm of the Lazzara Yacht factory, from 1990 to 1994. Ms Shave was at
Bertram Yacht from 1979 to 1989 holding such positions as sales coordinator,
marketing services manager and advertising and promotions manager. From 1968 to
1979 she held various management position at Seacraft Inc. Ms Shave has served
on various National Marine Manufactures Association committees, including boat
show and statistics committees.







                                       16
<PAGE>
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."

         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: (i) honest and
ethical conduct, including the ethical handling of actual or parent conflicts of
interests between personal and professional relationships; (ii) 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; (iii) compliance with applicable governmental laws, rules
and regulations; (iv) the prompt internal reporting of violations of the Code to
an appropriate person or persons identified in the Code; and (v) 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.






                                       17
<PAGE>
<TABLE>
<CAPTION>

                                             SUMMARY COMPENSATION TABLE

-------------------------------------------------------------------------------------------------------------------------------
                                            Annual Compensation                          Long-Term Compensation
-------------------------------------------------------------------------------------------------------------------------------
                                                                                    Awards                    Payouts
-------------------------------------------------------------------------------------------------------------------------------
                                                                                         Securities
                                                                 Other                     Under-
                                                                Annual      Restricted      Lying
  Name and Principal                                            Compen-       Stock       Options/       LTIP      All Other
        Position           Year        Salary         Bonus     sation       Award(s)       SARs       Payouts    Compensation
                                         ($)           ($)        ($)          ($)           (#)         ($)          ($)
-------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>     <C>             <C>         <C>          <C>           <C>         <C>         <C>
Carl Herndon, Sr. CEO
and President              2004    $181,576           ---         ---          ---         250,000       ---          (6)
-------------------------------------------------------------------------------------------------------------------------------
                           2003    $175,000           ---         ---          ---            ---        ---          ---
-------------------------------------------------------------------------------------------------------------------------------
                           2002    $175,000(1)        (2)         ---          ---         150,000       ---          ---
-------------------------------------------------------------------------------------------------------------------------------
Lawrence Tierney
CFO                        2004    $104,223           ---         ---          ---         200,000       ---          (6)
-------------------------------------------------------------------------------------------------------------------------------
                           2003    $113,712           (4)         ---          ---         100,000       ---          ---
-------------------------------------------------------------------------------------------------------------------------------
                           2002    $100,000(3)        ---         ---          ---            ---        ---          ---
-------------------------------------------------------------------------------------------------------------------------------
Carl Herndon, Jr.,
Vice President             2004    $0(5)              ---         ---          ---         100,000       ---          ---
-------------------------------------------------------------------------------------------------------------------------------
                           2003    $105,000           ---         ---          ---            ---        ---          ---
-------------------------------------------------------------------------------------------------------------------------------

                           2002    $100,000           ---         ---          ---            ---        ---          ---
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  $8,750 of Mr. Herndon's salary has been converted into 51,471 shares of
     common stock valued at $.17 per share.
(2)  Value of 150,000 shares of common stock underlying options exercisable at
     $.10 per share issued July 25, 2002. Options have been exercised.
(3)  $28,750 of Mr. Tierney's salary has been converted into 169,117 shares of
     common stock valued at $.17 per share.
(4)  Value of 100,000 shares of common stock underlying options exercisable at
     $.10 per share issued July 25, 2002. Options have been exercised.
(5)  Mr. Herndon was granted a leave of absence from July 2003 through May 2004.
(6)  Mr. Herndon and Mr. Tierney each purchased a boat from the Company at
     cost.

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.





                                       18
<PAGE>
<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, Sr.                       250,000             25%                $.15                  5/6/09
--------------------------------------------------------------------------------------------------------------------
Lawrence Tierney                        200,000             20%                $.14                  5/6/09
--------------------------------------------------------------------------------------------------------------------
Carl Herndon, Jr.                       100,000             10%                $.14                  5/6/09
--------------------------------------------------------------------------------------------------------------------
</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 31, 2004, as
reported by the OTCBB was $.14 per share. The value of unexercised in the money
options is calculated by multiplying the difference between $.14 and the option
exercise price by the number of shares of Common Stock underlying the options.
<TABLE>
<CAPTION>
                          AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
                                               OPTION/SAR VALUES
--------------------------------------------------------------------------------------------------------------------
                                                                             Number of
                                                                            Securities               Value Of
                                                                            Underlying             Unexercised
                                                                            Unexercised            In-The-Money
                                                                          Options/SARs at         Options/SARs at
                                                                          Fiscal Year-End         Fiscal Year-End
                                         Shares            Value                (#)                     ($)
                                      Acquired On        Realized          Exercisable/            Exercisable/
    Name                              Exercise (#)          ($)            Unexercisable           Unexercisable
--------------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>             <C>                      <C>
Carl Herndon                              ----             ----            850,000/0 (1)            -0-/-0-
--------------------------------------------------------------------------------------------------------------------
Lawrence Tierney                          ----             ----            450,000/0 (2)            -0-/-0-
--------------------------------------------------------------------------------------------------------------------
Carl Herndon, Jr.                         ----             ----            350,000/0 (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.

Compensation of Directors

         Members of the Company's Board of Directors have historically not
received compensation for their service on the Board. However, independent
                                       19
<PAGE>
members of the Company's Board of Directors will receive $500 per Board meeting
and be 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
a period of five years commencing on July 27, 2001. The employment agreement
includes non-compete and confidentiality provisions.




                                       20
<PAGE>
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, 2004 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, Port Everglades, Florida 33316. On September 30, 2004
there were approximately 12,435,561 shares of common stock outstanding. This
excludes: an aggregate of 2,356,200 shares of Common Stock issuable upon the
exercise of options; 1,997,444 shares of Common Stock issuable upon conversion
of 998,722 shares of Series C Preferred Stock; and 150,000 shares of Common
Stock issuable upon the exercise of warrants granted to the holders of three
short term notes.
<TABLE>
<CAPTION>
                                       Number of Beneficially          Percentage of Outstanding
Name and Address                            Owned Shares               Shares Beneficially Owned
----------------                            ------------               -------------------------
<S>                                           <C>                               <C>
Carl Herndon                                  6,346,036(1)                      47.8%

Lawrence Tierney                              1,266,218(2)                       9.8%

Carl Herndon, Jr.                               583,750(3)                       4.6%

Kerry Clemmons                                  300,000(4)                       2.4%

Officers and Directors as a Group             8,496,004                         59.7%
(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 and (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.

(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.




                                       21
<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 December 2004 and increased to $500,000. The note
on the line of credit bears interest at the financial institution index rate
plus 2% (6.25% at July 31, 2004). 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 541,667 shares of common stock during fiscal year
2004. 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, 2005
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 216,667 shares of common stock during
fiscal year 2004.

         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.




                                       22
<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 has cancelled the Management Agreement and
forgiven all outstanding fees and obligations due under the Management
Agreement.

         During fiscal year ended July 31, 2004 Mr. Herndon and Mr. Tierney each
purchased a boat from the Company at cost.

Item 13. Exhibits, List and Reports on Form 8-K

         (a) 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
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.

         (b) Reports on Form 8-K.

             None.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees to Auditors Fiscal Year ended July 26, 2003.

         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 26, 2003
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 26, 2003 or





                                       23
<PAGE>
services that are normally provided in connection with statutory and regulatory
filings or engagements during the fiscal year ending July 26, 2003 was $18,000.

         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 $-0-.

         Tax Fees: The aggregate fees, including expenses, billed by Spicer,
Jeffries LLP for tax compliance, tax advice and tax planning during year 2003
was $-0-.

         All Other Fees: The aggregate fees, including expenses, billed for all
other services rendered to the Company by Spicer, Jeffries LLP during year 2003
was $775

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 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 during the year ended July 31, 2004 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-.

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













                                       24

<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 October 26, 2004.

                                         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:  October 26, 2004                By: /s/ Carl Herndon, Sr.
                                           ----------------------
                                            Carl Herndon, Sr., Director,
                                            Chief Executive Officer and
                                            President



Dated:  October 26, 2004                By: /s/ Lawrence Tierney
                                            --------------------
                                            Lawrence Tierney,  Director,
                                            Chief Financial Officer and
                                            Secretary






















                                       25
<PAGE>





















                          JUPITER MARINE INTERNATIONAL
                         HOLDINGS, INC. AND SUBSIDIARIES

                              FINANCIAL STATEMENTS

                            YEARS ENDED JULY 31, 2004
                                AND JULY 26, 2003






























                                      F-1


<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 - 20





























                                      F-2

<PAGE>
             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 31, 2004 and July 26,
2003, and the related consolidated statements of operations, 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 31, 2004 and July 26,
2003, 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


Greenwood Village, Colorado
September 24, 2004













                                      F-3

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

                           CONSOLIDATED BALANCE SHEETS
                         JULY 31, 2004 AND JULY 26, 2003


                                                                     2004           2003
                                                                     ----           ----
<S>                                                              <C>            <C>
                                     ASSETS
                                     ------
CURRENT ASSETS:
  Cash and cash equivalents                                      $   602,936    $   384,636
  Accounts receivable                                                 16,622        154,259
  Inventory (Notes 2 and 4)                                        1,133,681        887,785
  Prepaid expenses                                                    42,916         13,138
                                                                 -----------    -----------
         Total current assets                                      1,796,155      1,439,818

PROPERTY AND EQUIPMENT, net (Note 5)                                 903,671        784,040

OTHER ASSETS                                                          18,660         42,660
                                                                 -----------    -----------
                TOTAL ASSETS                                     $ 2,718,486    $ 2,266,518
                                                                 ===========    ===========

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

CURRENT LIABILITIES:
  Accounts payable                                               $   229,156    $   423,036
  Accrued expenses                                                   333,912        107,506
  Accrued interest (Note 10)                                           5,096        100,963
  Customer deposits                                                   28,002         31,729
  Warranty reserve                                                    89,586         96,140
  Capital lease obligation (Note 9)                                    3,687          4,369
  Notes payable (Note 6)                                             363,750        845,000
                                                                 -----------    -----------
         Total current liabilities                                 1,053,189      1,608,743
                                                                 -----------    -----------

LONG-TERM LIABILITIES:
  Capital lease obligation (Note 9)                                       --          3,687
  Accrued interest due to shareholders (Notes 6 and 10)              106,059             --
  Note payable to shareholders (Notes 6 and 10)                      350,000             --
                                                                 -----------    -----------
                                                                     456,059          3,687
                                                                 -----------    -----------
                TOTAL LIABILITIES                                  1,509,248      1,612,430
                                                                 -----------    -----------

COMMITMENTS AND CONTINGENCIES (Note 9)                                    --             --

SHAREHOLDERS' EQUITY (Note 7):
  Cumulative convertible preferred stock, $.001 par value,
    5,000,000 shares authorized, ($1,692,706 and $1,568,277
    liquidation preference):
  Series A: -0- and 315,000 shares issued and outstanding                 --            315
  Series B: -0- and 452,500 shares issued and outstanding                 --            453
  Series C: 998,722 and 925,003 shares issued and outstanding            999            925
  Common stock, $.001 par value, 50,000,000 shares authorized,
    11,825,563 and 8,309,718 shares issued and outstanding            11,826          8,310
  Additional paid-in capital                                       3,153,400      2,935,902
  Deficit                                                         (1,956,987)    (2,291,817)
                                                                 -----------    -----------
                TOTAL SHAREHOLDERS' EQUITY                         1,209,238        654,088
                                                                 -----------    -----------
                TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 2,718,486    $ 2,266,518
                                                                 ===========    ===========
</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 31, 2004 AND JULY 26, 2003

                                                2004           2003
                                                ----           ----
<S>                                         <C>            <C>
NET SALES                                   $10,260,684    $ 9,304,192

COST OF SALES (exclusive of depreciation)     7,733,922      7,374,259
                                            -----------    -----------

        GROSS PROFIT                          2,526,762      1,929,933
                                            -----------    -----------

OPERATING EXPENSES:
  Selling and marketing                         352,035        277,560
  General and administrative                  1,303,483        882,583
  Depreciation and amortization                 255,506        317,630
                                            -----------    -----------
        Total operating expenses              1,911,024      1,477,773
                                            -----------    -----------

OTHER INCOME (EXPENSE)
  Interest expense                              (77,073)      (102,631)
  Other expense - loan guarantee               (146,601)       (65,000)
  Other income                                   16,485          2,311
                                            -----------    -----------
        Total other expense                    (207,189)      (165,320)
                                            -----------    -----------

NET INCOME BEFORE INCOME TAXES                  408,549        286,840

INCOME TAX EXPENSE (Note 8)                          --             --
                                            -----------    -----------

NET INCOME                                      408,549        286,840
  Dividends on preferred stock                  (73,719)      (127,746)
                                            -----------    -----------

NET INCOME APPLICABLE TO COMMON
SHAREHOLDERS                                $   334,830    $   159,094
                                            ===========    ===========
BASIC AND DILUTED NET INCOME (LOSS)
PER COMMON SHARE (Note 2):
  Basic                                     $      0.04    $      0.03
                                            ===========    ===========
  Diluted                                   $      0.03    $      0.03
                                            ===========    ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING
  Basic                                       9,020,364      5,893,835
                                            ===========    ===========
  Diluted                                    11,853,424      9,735,834
                                            ===========    ===========

</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 31, 2004 AND JULY 26, 2003


                                                                                                     Additional
                                               Preferred Stock               Common Stock              Paid In
                                           Shares       $.001 Par        Shares      $.001 Par         Capital         Deficit
                                           ------       ---------        ------      ---------         -------         -------
<S>                                      <C>            <C>             <C>          <C>           <C>             <C>
BALANCES, July 27, 2002                  1,568,277      $    1,568      4,340,170    $     4,341   $  2,418,366    $ (2,450,911)

Issuance of stock for services                  --              --         26,100             26            496              --

Conversion of Series C pfd stock            (3,520)             (3)         7,040              7             (4)             --

Issuance of common stock related
  to note payable (Note 10)                     --              --      1,808,098          1,808         34,354              --

Forgiveness of accrued management
  fee by shareholders (Note 10)                 --              --             --             --         78,333              --

Issuance of common stock in payment
  of accrued expenses (Note 10)                 --              --        978,310            978        162,889              --

Issuance of common stock related to
  stockholder's loan gurantee (Note 10)         --              --        650,000            650         64,350              --

Preferred stock dividend declared
  and issuable                             127,746             128             --             --        127,618        (127,746)

Exercise of stock options                       --              --        500,000            500         49,500              --

Net income                                      --              --             --             --             --         286,840
                                         ---------      ----------   ------------    -----------   ------------    ------------
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 D
  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)
                                         =========      ==========   ============    ===========   ============    ============
</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 31, 2004 AND JULY 26, 2003

                                                                        2004         2003
                                                                        ----         ----
<S>                                                                  <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                        $ 408,549    $ 286,840
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                   255,506      317,630
       Gain on asset disposition                                        (4,500)
       Issuance of common shares to pay expenses                       146,601      101,684
       Amortization of debt issue costs                                     --        5,534
       Decrease (increase) in accounts receivable                      137,637     (118,499)
       (Increase) decrease in inventory                               (245,896)     128,705
       Increase in prepaid expenses                                    (29,778)     (10,929)
       Decrease in other assets                                         24,000           --
       Decrease in accounts payable                                   (193,880)    (114,670)
       Increase (decrease) in accrued expenses                         236,598      (68,476)
       Decrease in customer deposits                                    (3,727)    (174,626)
       Decrease in warranty reserve                                     (6,554)      (1,857)
                                                                     ---------    ---------
         Net cash provided by operating activities                     724,556      351,336
                                                                     ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from sale of equipment                                  34,500           --
       Purchases of property and equipment                            (405,137)    (271,659)
                                                                     ---------    ---------
         Net cash used in investing activities                        (370,637)    (271,659)
                                                                     ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Borrowings from notes payable and long term debt                770,000      320,000
       Payments on notes payable and long term debt                   (905,619)    (204,113)
       Net proceeds from stock options exercised                            --       50,000
                                                                     ---------    ---------
         Net cash (used in) provided by financing activities          (135,619)     165,887
                                                                     ---------    ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS                              218,300      245,564

CASH AND CASH EQUIVALENTS, beginning of year                           384,636      139,072
                                                                     ---------    ---------

CASH AND CASH EQUIVALENTS, end of year                               $ 602,936    $ 384,636
                                                                     =========    =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Cash paid for interest                                        $  83,707    $  41,961
                                                                     =========    =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES:
       Purchase of equipment under capital lease                     $      --    $  14,200
                                                                     =========    =========
       Preferred stock dividends declared and payable in shares
         of Series B and C preferred stock                           $  73,719    $ 127,746
                                                                     =========    =========
       Common stock issued in payment of liabilities
         due to shareholders                                         $ 146,601    $ 163,867
                                                                     =========    =========
       Forgiveness of accounts payable due to shareholders
         as contribution to paid in capital                          $      --    $  78,333
                                                                     =========    =========
</TABLE>


The accompanying notes are an integral part of these statements.

                                      F-7
<PAGE>
                   JUPITER MARINE INTERANTIONAL HOLDINGS INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

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.

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.

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

                                      F-8
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

by providing an allowance for uncollectible accounts receivable and charging
actual write offs to the allowance. As of July 31, 2004 and July 26, 2003, 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.

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
warranty on the fiberglass hull and related structures 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 $67,000 and $65,955 for the year
ended July 31, 2004 and July 26, 2003, respectively. For these same periods,
warranty expenses charged to the reserve were $58,939 and $74,256, respectively.

                                      F-9
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

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 $95,000 and $53,000 for 2004 and 2003, 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.

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.
                                      F-10
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

The following table reflects the pro forma information regarding the Company's
employee stock option grants for the year ended July 31, 2004. The Company did
not make any stock option grants during the year ended July 26, 2003.

                                                                   July 31, 2004
                                                                   -------------

           Net income applicable to common shareholders               $ 334,830
           Less: Stock based employee compensation
                    expense determined under fair value method          (73,228)
                                                                      ---------

           Pro forma net income                                       $ 261,602
                                                                      =========
           Net loss per share - basic:
                     As reported                                      $    0.04
                                                                      =========

                     Pro forma                                        $    0.03
                                                                      =========
           Net loss per share - diluted:
                     As reported                                      $    0.04
                                                                      =========

                     Pro forma                                        $    0.03
                                                                      =========

Net Income (Loss) Per Share of Common Stock
-------------------------------------------

Net income (loss) 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 31, 2004 and July 26,
2003 are shown in the following table.

                                                         July 31,      July 26,
                                                           2004          2003
                                                           ----          ----

        Basic weighted average shares outstanding        9,020,364    5,893,835
          Effect of preferred stock conversion           1,997,444    3,841,999
          Effect of dilutive employee stock options        835,616           --
                                                        ----------  -----------
        Diluted weighted average shares outstanding     11,853,424    9,735,834
                                                        ==========  ===========

                                      F-11
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

Reclassifications
-----------------

Certain reclassifications have been made to prior year balances in order to
conform to the current year's presentation.

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
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 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
                                      F-12
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51, which it revised in
December 2003 (collectively, "FIN 46"). FIN 46 requires the consolidation of
certain variable interest entities, as defined. FIN 46 is effective for the
Company as of December 31, 2003, as it relates to special-purpose entities, as
defined, and in the first quarter 2004 for all other types of variable interest
entities. The Company did not have investments in any variable interest
entities, and therefore, the adoption of FIN 46 did not have an impact on the
Company's 2003 financial statements and is not expected to have an impact on the
2004 financial position, results of operations, or cash flows.

In December 2002, Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation -Transition and Disclosure," ("SFAS
148") was issued. SFAS 148 amends Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") to provide
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based employee compensation. In addition, SFAS
148 amends the disclosure requirements of SFAS 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on the reported results. The provisions of SFAS 148 are effective for
financial statements for fiscal years ending after December 15, 2002 and interim
periods beginning after December 15, 2002. The adoption of the disclosure
requirements of this statement did not impact the Company's financial position,
results of operations or cash flows.

In December 2002, the Emerging Issues Task Force issued a consensus on Issue No.
00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21). EITF
00-21 mandates how to identify whether goods or services or both that are to be
delivered separately in a bundled sales arrangement should be accounted for as
separate units of accounting. The Company is currently evaluating the effects of
adoption of EITF 00-21 on its service arrangements.

In November 2002, the Financial Accounting Standards Board issued Interpretation
No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Guarantees of Indebtedness of Others," ("FIN 45"). FIN 45 requires the
Company to recognize, at the inception of a guarantee, a liability for the fair
value of the obligation undertaken in the issuance of the guarantee. FIN 45 is
effective for guarantees issued or modified after December 31, 2002. The
disclosure requirements effective for the year ending March 31, 2003 expand the
disclosures required by a guarantor about its obligations under a guarantee. The
adoption of the disclosure requirements of this statement did not impact the
Company's financial position, results of operations or cash flows.

NOTE 3 - SIGNIFICANT CUSTOMER CONCENTRATIONS

During the years ended July 31, 2004 and July 26, 2003, the Company's sales to
major customers were approximately 78% (five customers ) and 59% (four
                                      F-13
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)
NOTE 3 - SIGNIFICANT CUSTOMER CONCENTRATIONS (continued)

customers) of its net sales, respectively. The Company's accounts receivable at
each year end are substantially due from these customers.

NOTE 4 - INVENTORY

The Company's inventory consists of the following as of each year end indicated:

                                                   July 31, 2004  July 26, 2003
                                                   -------------  -------------
         Raw materials                               $  302,391     $ 298,418
         Work in process                                574,718       302,837
         Finished goods                                 256,572       286,530
                                                     ----------     ---------
                                                     $1,133,681     $ 887,785
                                                     ==========     =========
NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following for each year end indicated:

                                                July 31, 2004    July 26, 2003
                                                -------------    -------------
         Boat molds                              $  1,933,375     $ 1,678,134
         Leasehold improvements                       259,419         254,142
         Machinery and equipment                      225,813         178,409
         Office furniture and equipment                89,614          55,231
                                                 ------------     -----------
                                                    2,508,221       2,165,916
         Accumulated depreciation                  (1,604,550)     (1,381,876)
                                                 ------------     -----------
                                                 $    903,671     $   784,040
                                                 ============     ===========
NOTE 6-  NOTES PAYABLE AND LONG TERM DEBT

At each year end, the Company has the following notes payable and long term debt
outstanding:
                                                    July 31, 2004  July 26, 2003
                                                    -------------  -------------
  Long term 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
    $230,000 at July 31, 2004), interest payable
    monthly at bank's index rate plus 2%
    (6.25% at July 31, 2004), due December 31, 2004,
    collateralized by all of the Company's assets
    and personally guaranteed by its President.          270,000      370,000
  Notes payable to individuals, interest at 8%,
    due through June, 2005, in quarterly installments     93,750      125,000
                                                      ----------    ---------
        Current notes payable                         $  363,750    $ 845,000
                                                      ==========    =========
                                      F-14
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 6-  NOTES PAYABLE AND LONG TERM DEBT (Continued)

         (a)  During the year ended July 31, 2004, the due date of this note was
              extended until February 14, 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.

NOTE 7 -  SHAREHOLDERS' EQUITY

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

The Company has authorized 5,000,000 shares of convertible preferred stock and
has 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 has previously issued
998,722 and 925,003 shares of Series C preferred at July 31, 2004 and July 26,
2003, respectively. The features, rights and obligations of each series is
described as follows.

         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 prefrred 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 year ended July 26,
2003, there were 3,520 shares of Series C preferred converted to 7,040 shares of
common stock.

                                      F-15
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 7 -  SHAREHOLDERS' EQUITY (Continued)

During the years ended July 31, 2004 and July 26, 2003, the Board of Directors
declared total annual dividends of $73,719 and $127,746, respectively, on the
preferred stock series payable as described in the preceding paragraphs.

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

During the years ended July 31, 2004 and July 26, 2003, the Company issued
2,302,500 and 7,040 common shares in connection with the conversions of
preferred stock discussed above. It also issued 500,000 common shares during the
year ended July 26, 2003 pursuant to the exercise of certain employee stock
options discussed below. 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 1,213,345
and 3,436,408 common shares during the year ended July 31, 2004 and July 26,
2003, respectively.

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

The Company's Board of Directors grants options for the purchase of its common
shares on a discretionary basis. The following table summarizes such grants and
its outstanding options as of each year end indicated.
<TABLE>
<CAPTION>
                                                           Exercise            Weighted          Weighted
                                          Non Qualified     Price              Average        Average Years
                                             Options        Range           Exercise Price    Remaining Life
                                             -------        -----           --------------    --------------
<S>                                        <C>             <C>                 <C>                <C>
         Balances at July 27, 2002         2,081,200       $.10 to $1.00       $ 0.46             3.55
           Granted                                --                  --           --               --
           Exercised / Expired              (500,000)      $        0.10       $ 0.10             4.50
         Balances at July 26, 2003         1,581,200       $.48 to $1.00       $ 0.67             2.36
           Granted                         1,000,000       $        0.14       $ 0.14             4.78
           Exercised / Expired              (225,000)      $        0.48       $ 0.10               --
                                           ---------       -------------       ------             ----
         Balances at July 31, 2004         2,356,200       $.14 to $1.00       $ 0.46             2.98
                                           =========       =============       ======             ====
</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 May
2004, the Company awarded options 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 July, 2002, it awarded options for the purchase
of 500,000 shares at a price of $.10 per share to various officers and key
employees in recognition of their service to the Company. The options granted
July 2002 were exercised during fiscal 2003. In connection with a private
placement of the Company's 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.

                                      F-16
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 7 -  SHAREHOLDERS' EQUITY (Continued)

Stock Options and Warrants (Continued)
-------------------------------------

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.

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 2004: expected volatility 61%, risk-free interest rate of 1.25%,
expected dividends of 0%, and expected life of 5 years. This option pricing
model results in a weighted average fair value of approximately $.07 per share
in 2004.

Under the accounting provisions of SFAS 123, the Company's net income and income
per share would have been decreased for its year ended July 31, 2004 to the pro
forma amounts indicated below. The Company did not grant any options or issue
any warrants for the purchase of its common shares in the year ended July 26,
2003.

                                                                   July 31, 2004
                                                                   -------------
         Net income applicable to common shareholders                 $ 334,830
         Less: Stock based employee compensation
                  expense determined under fair value method            (73,228)
                                                                      ---------
         Pro forma net income                                         $ 261,602
                                                                      =========
         Net loss per share - basic:
                   As reported                                        $    0.04
                                                                      =========
                   Pro forma                                          $    0.03
                                                                      =========
         Net loss per share - diluted:
                   As reported                                        $    0.04
                                                                      =========
                   Pro forma                                          $    0.03
                                                                      =========

                                      F-17
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

NOTE 8 - INCOME TAXES

At July 31, 2004, the Company had an unused net operating loss carryforward of
approximately $700,000 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 $263,000; 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 $351,000 for
2004 as a portion of the net operating loss carryforward was utilized to offset
current taxable income. During 2003, the valuation allowance decreased
approximately $30,000. 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 significant components of the Company's deferred tax assets and liabilities
as of July 31, 2004 and July 26, 2003 are presented in the following table:

                                                           2004       2003
                                                           ----       ----
        Deferred tax liabilities:
          Depreciation                                 $ (43,000)   $ (28,000)
        Deferred tax assets:
          Net operating loss carryforwards               226,000      604,000
          Reserves for future costs and expenses          80,000       38,000
                                                       ---------     --------
        Net deferred tax asset                           263,000      614,000
        Valuation allowance for deferred tax assets     (263,000)    (614,000)
                                                       ---------     --------
                                                       $      --           --
                                                       =========     ========

The Company's actual effective tax rate for these years is reconciled to the
expected statutory tax rate as follows:

                                                                2004      2003
                                                                ----      ----
        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 %
                                                              ======    ======
                                      F-18
<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 as of July 31, 2004 are approximately as follows:
<TABLE>
<CAPTION>
                                                                                            Principal Due On
                                                 Year Ended July,   Operating     Capital    Capital Leases
                                                 ----------------   ---------     -------    --------------
<S>                                                    <C>          <C>           <C>            <C>
                                                       2005         $ 272,677     $ 3,900        $ 3,687
                                                       2006           216,340          --             --
                                                                    ---------     -------        -------
                                                                    $ 489,017       3,900        $ 3,687
                                                                    =========                    =======
                          Less amount representing interest                          (213)
                                                                                  -------
                    Present value of minimum lease payments                       $ 3,687
                                                                                  =======
</TABLE>
Total rental expense for the years ended July 31, 2004 and July 26, 2003 was
$299,261 and $299,772, respectively.

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 totalling $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 31, 2004, the Company has
not been required to repurchase any boats; however, the Company is contingently
liable for approximately $209,000 under terms of these agreements as of July 31,
2004.

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.

                                      F-19
<PAGE>
                   JUPITER MARINE INTERNATIONAL HOLDINGS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (continued)

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 31, 2004 and July 26, 2003, the Company's
President was paid rents of approximately $299,261 and $299,772, respectively.

During 2004, in accordance with the terms of their employment agreements, two
officers purchased boats from the Company for approximately $202,000
representing its manufacturing costs.

On November 21, 2002, the Company's President and its Chief Financial Officer
("buyers") entered into agreements with Triton International Holdings Corp. 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.

In November, 2002, the Company was unable to renew its existing line of credit
without a personal guarantee from its President. As payment for this personal
guarantee, the Company issued the President 650,000 of its common shares with a
fair value of $65,000.

On July 26, 2003, the Company's President and Chief Financial Officer agreed to
accept shares of its common stock in satisfaction of $163,867 of accrued
expenses (not including any accrued interest related to the Triton note
discussed above) owed to them by the Company. Accordingly, they received 978,310
shares of its common stock in full payment.

                                      F-20