U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                  Form 10-KSB

(Mark One)

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

     For the fiscal year ended December 31, 1997

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

     For the transition period from _______________ to ________________

     Commission file no. 33-41809-D

                            Jewelnique Designs, Inc.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

          Colorado                                                84-1385900
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

         2449  Lyric  Avenue 
      Los  Angeles,  California                                      90027 
---------------------------------------                           ----------
(Address of principal executive offices)                          (Zip Code)

Issuer's telephone number (213) 660-8665

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

                                                        Name of each exchange on
      Title of each class                                  which registered

None
-----------------------------                          -------------------------

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

                          Common Stock, $.001 par value
                       -----------------------------------
                                (Title of class)

     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
                                                                    -----  -----


<PAGE>


     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  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year. $-0-

     Of the  408,000  shares  of  voting  stock  of the  registrant  issued  and
outstanding  as of March 19, 1998,  144,000  shares are held by  non-affiliates.
Because of the absence of an  established  trading  market for the voting stock,
the  registrant is unable to calculate the aggregate  market value of the voting
stock held by non-affiliates as of a specified date within the past 60 days.



                                       2
<PAGE>



                                     PART I

Item 1. Description of Business.

     (a) Business Development.

     Jewelnique Designs, Inc., formerly Blue Mountain Capital, Inc. (hereinafter
referred to as the  "Company"  or "JDI"),  was  organized  under the laws of the
State of  Colorado  on March 6, 1997.  The name of the  Company  was  changed to
"Jewelnique  Designs,  Inc.," on June 20, 1997. The Company's  executive offices
are presently located at 2449 Lyric Avenue,  Los Angeles,  California 90027, and
its telephone number is (213) 660-8665.

     The Company has  generally  been  inactive,  having  conducted  no business
operations  except   organizational   and  fund  raising  activities  since  its
inception. JDI received gross proceeds in the amount of $20,000 from the sale of
a total of 80,000 shares of common stock, $.001 par value per share (the "Common
Stock"), in an offering conducted pursuant to Section 3(b) of the Securities Act
of 1933, as amended, and Rule 504 of Regulation D promulgated thereunder.

     See (b) "Business of Issuer"  immediately  below for a  description  of the
Company's   proposed  business  of  designing,   manufacturing,   marketing  and
distributing  a  specialized  line  of  jewelry  products  through,   primarily,
boutiques,  hair salons, beauty supply stores,  department stores and children's
stores. As of the date hereof, the Company has no jewelry products available for
distribution.

     (b) Business of Issuer.

General

     Since its  inception,  the Company  has  conducted  no business  operations
except for organizational activities and an offering of Common Stock pursuant to
which it has received gross offering proceeds in the amount of $20,000. Further,
the Company has had no employees since its organization.  It is anticipated that
the  Company's  executive  officers and directors  who,  except for one lump-sum
consulting  fee  received by two such  persons,  have served in those  positions
without  compensation  through the date hereof, will receive reasonable salaries
for  services  as  executive  officers  at such  time as the  Company  commences
business operations.  (See Part I, Item 6., "Executive  Compensation - Executive
Compensation.")  The Company's  executive  officers and/or directors will devote
such time and  effort  as may be  necessary  to  participate  in the  day-to-day
management of the Company. (See Part I, Item 5. "Directors,  Executive Officers,
Promoters and Control Persons - Executive  Officers and Directors.") The Company
has no plans to employ any individuals  except its three executive officers on a
part-time basis for the foreseeable  future.  The Company  proposes to engage in
business as a designer,  manufacturer  and distributor of a specialized  line of
jewelry products which, except for the design of the "Face Jewel," JDI's initial
proposed  product,  which has not yet been developed and which is intended to be
marketed,  primarily,  through  boutiques,  hair salons,  beauty supply  stores,
department  stores and children's  stores to a target market  comprised of young
adults and  children,  especially,  whose  tastes in jewelry are  expected to be
characterized by a desire for unique,  different or unusual designs and products
at moderate prices. As of the date hereof, JDI has no jewelry products available
for distribution, although the Face Jewel is in the design stage.

     The  following  discussion  of the jewelry  business,  as it relates to the
Company's  business  objectives,  is of course  pertinent only if the Company is
successful  in obtaining  sufficient  debt and/or  equity  financing to commence
operations in the jewelry business and, in addition thereto, is able to generate
significant  profits from operations  (which are not expected in the foreseeable



                                       3

<PAGE>



future)  and/or  additional  financing  to continue in business  and/or fund the
anticipated  growth,  assuming JDI's proposed product line is successful.  There
can be no  assurance  such  financing  can be  obtained  or that  the  Company's
proposed product line will be successful.  While each of Messrs.  Roland W. Fink
and Kendall L. Dorsett,  executive  officers,  directors and owners  together of
approximately  62.7% of the  outstanding  common  stock of JDI,  has over twenty
years of business experience,  having co-founded,  managed, been employed by and
retained as  consultants to a variety of companies,  neither  individual has any
specific  experience or expertise in the jewelry business.  (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Risk Factors.")

     Mr.  Kendall  L.  Dorsett,  JDI's  Secretary/Treasurer,   and  Ms.  Suzanne
Sorensen,  Executive Vice President of the Company,  have been personal  friends
for the past  approximately  seven years.  Messrs.  Fink and Dorsett  decided to
pursue the jewelry  business  via the  Company  because of the belief that their
collective  prior  business  experience  and  expertise,  when combined with Ms.
Sorensen's  creativity,  design  capabilities  and  expertise,   experience  and
contacts in the  jewelry  business,  will  enable  them to develop a  successful
jewelry  company which will have the advantages of, among other things,  greater
availability of capital and potential for growth through the vehicle of a public
company as compared to a privately-held company. The time required to be devoted
by each executive  officer,  including Messrs.  Fink and Dorsett and Ms. Suzanne
Sorensen, to manage the day-to-day affairs of the Company is presently estimated
to be approximate  five to ten hours per week.  This time commitment on the part
of the  Company's  executive  officers is expected to increase at such time,  if
ever,  as  JDI  obtains  sufficient  funding  with  which  to  commence  jewelry
production  and employ  additional  personnel  in the areas of  jewelry  design,
product development and/or marketing and customer support.

     The Company  will be  dependent  upon its  Executive  Vice  President,  Ms.
Suzanne  Sorensen,  to develop the jewelry  designs and  products  which will be
featured  in  JDI's  proposed,   specialized  jewelry  line.  Ms.  Sorensen  has
approximately  twenty-three  years of experience in the jewelry business and has
managed Suzanne Designs, a family-owned  jewelry business,  since  approximately
1976.  The  principal  product of Suzanne  Designs  in recent  years,  the "Hair
Jewel," a unique,  elegant,  easy-to-use  hair accessory made from fine Austrian
crystals, fourteen carat gold spirals and other fine materials, has been sold in
Nordstrom, Macy's, Dillard's,  Bullock's,  Accessory Place, Etcetera, Judy's and
Casual  Corner;  in most of the fifty states of the United  States and in Japan,
Panama,  Canada and Mexico;  and continues to be  re-ordered by customers  after
nine years since its first availability.  Ms. Sorensen's  jewelry,  clothing and
other  product  designs  have been  featured  in  advertisements  in major  U.S.
magazines,  newspapers  and other  publications  such as Women's Wear Daily;  on
television  productions,  including the Donnie and Marie Show and CBS' The Young
and the  Restless;  and in several  Hollywood  feature  films,  including  Steve
Martin's L.A.  Stories and The Addams  Family (Part II). The Company  intends to
use to its advantage  Ms.  Sorensen's  reputation  in the jewelry  business as a
creator of jewelry and other product designs so unique, different and unusual as
to readily attract media, even  Hollywood's,  attention and her creative talents
which have,  in the past,  resulted in  continuous  developments  of new jewelry
designs and products  available  to consumers at moderate  prices in an industry
dominated by mass merchandisers of inexpensive,  unimaginative  jewelry products
and fine jewelers whose high-end  products are so costly as to be unavailable to
consumers of moderate means. Nevertheless,  while Ms. Sorensen's jewelry designs
have been successful in the past, their can be no assurance that her designs for
JDI's proposed product line,  including the Face Jewel, will be successful since
the popularity of any design is largely a measure of subjective public reaction.
Further,  the Company has very limited financial,  personnel and other resources
and  lacks a  customer  base  and  market  recognition.  (See  Part  I,  Item 1.
"Description of Business," (b) "Business of Issuer - Risk Factors.")

     Ms. Sorensen may be subject to direct conflicts of interest, because of her
position as an executive officer of JDI and her management position with Suzanne
Designs, with regard to opportunities in the jewelry and accessories  businesses
which come to her  attention  and  concerning  any  possible  business  dealings
between JDI and  Suzanne  Designs.  In any  instance  where such a conflict  may



                                       4


<PAGE>



arise, the Company intends to employ certain  safeguards,  such as ensuring that
any  agreement  between the Company and Suzanne  Designs  conforms with standard
industry  practice,  if any,  in the  western  United  States  and is  fair  and
reasonable to the Company.  For example, if JDI produced a jewelry product using
designs  developed by Suzanne  Designs and the Company entered into an agreement
with Suzanne Designs  providing for Suzanne Designs to receive a royalty on each
such product manufactured and sold by the Company, the Board of Directors of the
Company  would take action to ensure that any  royalty  paid to Suzanne  Designs
would not exceed the royalty,  if any,  customarily paid to product designers in
the western  United  States.  Further,  Ms.  Sorensen has agreed,  should she be
elected to the Board of  Directors  of JDI at any time in the  future,  that she
will  abstain  from  voting as a member of the  Board of  Directors  on any such
agreement in which Suzanne  Designs is a party or has an interest or with regard
to any business  opportunity  which may be  attractive  to both  companies.  The
Company's Amended Articles of Incorporation  provide that any such related party
contract or transaction must be authorized, approved or ratified at a meeting of
the Board of Directors by sufficient  vote thereon by directors  not  interested
therein  or the  contract  or  transaction  must be fair and  reasonable  to the
Company.  Accordingly,  it is possible for the Company's Board of Directors,  by
vote of a sufficient  number of  disinterested  members  thereof,  to authorize,
approve  or  ratify  a  related  party   contract  or  transaction  or  business
opportunity involving Suzanne Designs which is unfair and/or unreasonable to the
Company,  even though Ms. Sorensen  abstains from voting  thereon.  (See Part I,
Item 1. "Description of Business," (b) "Business of Issuer - Risk Factors" - 10.
"Conflicts of Interest.")

Business Strategy

     The  Company's  business  strategy,  which is dependent  upon its obtaining
sufficient  financing with which to implement its business plan, is to provide a
specialized line of jewelry products and other fashion  accessories to retailers
who target  consumers,  especially  young adults and children,  seeking  unique,
different or unusual jewelry at moderate prices, as opposed to fine jewelry, and
who are willing to purchase  jewelry and  accessories  at frequent  intervals as
fashions and styles  change.  Management  has made a conscious  decision at this
time not to develop a line of traditional jewelry products which would force JDI
into  direct  competition,  immediately,  with  the  numerous  large  and  small
manufacturers   already  established  in  the  industry,   many  of  which  have
substantial resources and numerous other significant  competitive  advantages as
compared to the Company.  However,  depending  upon the commercial  success,  no
assurance of which can be made,  of the "Face  Jewel,"  JDI's  initial  proposed
product, and specialized designs for other items of jewelry proposed to complete
a line of similar such unique, different or unusual products, the Company may in
the future develop a line of traditional  jewelry if business  conditions appear
to provide a niche or other opportunity in the traditional  jewelry market which
management believes JDI could successfully exploit.

     To  accomplish  this  strategy and to stay  abreast of changing  styles and
tastes,  design  and  marketing  personnel  anticipated  to be  employed  by the
Company,  assuming that  sufficient  operating  capital becomes  available,  are
expected  to  work  closely  with  suppliers,  distributors  and  customers  and
continually participate in jewelry fairs, trade shows and other industry forums.
JDI expects to introduce  numerous  designs and  variations  of those designs in
order to extend the length of time each design is marketable.  In addition,  the
Company plans to develop a sophisticated  computerized  system to track,  and to
continuously  engage in market research in order to monitor,  new market trends,
seasonality  factors and other  critical  information  deemed  relevant to JDI's
business.

     Management  hopes,  in the  event  that  JDI  achieves  commercial  success
initially,  to increase the Company's  domestic  market  penetration and product
lines  through  selected  acquisitions.  Such  acquisitions  could  include both
jewelry and non-jewelry businesses which could complement and be integrated into
the Company's product lines and/or operations.  Management believes that, in the



                                       5



<PAGE>



current  international  trade  environment,  expansion  into markets such as the
Canadian,  Latin  American and Asian  markets,  could be especially  attractive.
However,  foreign markets present certain unique challenges and risks, and there
could be no assurance that JDI, even if it were to be successful in establishing
foreign  markets,  could be expected to be successful in profitably  penetrating
these potential markets.

Proposed Product Line

     Ms. Suzanne  Sorensen,  the Executive  Vice  President of the Company,  has
managed Suzanne Designs, a family jewelry business, since 1976. In recent years,
the  principal  product of Suzanne  Designs has been the "Hair Jewel," a unique,
elegant,  easy-to-use  hair  accessory  that works equally well in long,  short,
normal or very fine hair.  The Hair Jewel is suitable for evening wear,  and can
be used to hold the hair up; hold the hair back;  decorate braids or sweeps;  or
help  spike the hair for the  "punkier"  look.  The Hair  Jewel is made from the
finest Austrian Crystals,  fourteen carat gold spirals and other fine materials.
The product  has sold in  Nordstrom,  Macy's  Dillard's,  Bullock's,  Asccessory
Place,  Etcetera,  Judy's and Casual  Corner,  and continues to be re-ordered by
customers  since it first  became  available  approximately  nine years ago. The
product  has been sold in most of the fifty  states of the United  States and in
Japan,  Panama,  Canada and Mexico.  Ms.  Sorensen has designed  elegant,  black
tassel,  Austrian  Crystal  earrings  featured  in  Women's  Wear  Daily and the
eagle-feather  jackets and  long-feather  earrings  worn on the Donnie and Marie
Show. Her designs have also been featured on CBS' The Young and the Restless and
in several  Hollywood  feature films,  including Steve Martin's L.A. Stories and
the Addams Family (Part II).

     JDI intends to develop a line of  specialized  jewelry  products  and other
accessories similar,  from the standpoint of novelty,  moderate price and appeal
to youthful  consumers,  to that marketed and  distributed  by Suzanne  Designs.
Along these lines,  Ms.  Sorensen has developed a design for the "Face Jewel," a
novel,  elegantly  sculpted  earring  that  extends  daringly out onto the face,
accentuating the graceful line of a woman's cheek.  Management  anticipates that
the Company's first product will be the Face Jewel currently under  development,
while its ultimate  product  line,  proposed to be  developed  from this initial
product, would include earrings,  necklaces,  bracelets,  rings, pendants, pins,
brooches,  ankle  jewelry  and  decorations  for other  areas of the body or for
clothing,  each of a  unique  or  unusual  design,  hoped  to be  attractive  to
consumers,  particularly young adults and children,  seeking to adorn themselves
other than with traditional jewelry. JDI's proposed products, including the Face
Jewel,  are  expected to be sold,  primarily,  through  boutiques,  hair salons,
beauty supply stores, department stores and children's stores.

     Management  is unable at this time to forecast with any degree of certainty
the average price or wholesale or retail price range of the Company's  products;
however,  JDI intends to design its  products so that the retail  prices will be
considered "moderate" by the Company's target markets.

Marketing and Distribution

     The Company  presently  anticipates that the Face Jewel,  together with the
other proposed products in its product line presently under development, will be
sold through the same  distribution  channels that Suzanne Designs' "Hair Jewel"
is currently being distributed,  including, principally, boutiques, hair salons,
beauty  supply  stores,   department  stores  and  children's  stores.   Company
management  hopes,  but  cannot  assure,   that  JDI's  proposed  products  will
eventually attract the attention of retail jewelry stores,  mass  merchandisers,
catalog  showrooms,  high-volume  retailers,  major  discounters  and  specialty
marketers  such as home  shopping  networks,  direct  marketers  and mail  order
companies  as  well.  The  Company  intends  to  compete,  assuming  that  it is
successful  in obtaining  sufficient  financing  with which to commence  jewelry
production, primarily on the basis of its unique designs and by offering quality
products at modest prices in  combination  with  marketing and customer  support
services, and not solely on the basis of price.


                                       6

<PAGE>



     Management  anticipates that its primary  marketing  efforts will be in the
areas of product  design and customer  support  services,  calculated  to assure
JDI's timely response to fashion trends, quality products, favorable pricing and
accurate inventory control for the Company's  customers.  The Company's proposed
products  are intended to be marketed,  for the most part,  through  independent
third party sales  representatives.  However,  the Company  expects that it will
maintain a small sales force as well,  which would be  expected to work  closely
with third party representatives and customers, as well as JDI's design, product
development and marketing support personnel  proposed to be employed if adequate
financing becomes available.  The Company believes that by utilizing independent
third party representatives,  primarily, it will be able to penetrate additional
markets at a minimal cost and without the overhead associated with a large sales
force.

     The Company's  ability to develop and market its Executive Vice President's
designs  is, of  course,  dependent  upon  management's  ability  to obtain  the
necessary  financing,  of  which  there  can  be  no  assurance.   Assuming  the
availability of adequate funding, JDI intends to stay abreast of changing styles
and market tastes by ensuring that its design and product development  personnel
work closely with suppliers,  independent sales  representatives  and customers;
participating  in jewelry  fairs,  trade shows and other  industry  forums;  and
generating new designs and variations on earlier designs to remain  competitive.
JDI does not anticipate  obtaining  long-term contracts with any distributors or
customers,  but  management  believes that the loyalty of its  distributors  and
customers,  if once obtained,  could be maintained  through  product designs and
development  which timely reflect  fashion trends and changes and providing them
with proper marketing and customer support.

Competition

     The jewelry industry in the United States is highly fragmented, with little
significant brand name recognition or customer loyalty. Selection is generally a
function  of design  appeal,  preceived  high value and  quality in  relation to
price. Jewelry stores alone account for an estimated $15 billion in annual sales
in the United States. Retail jewelry sales have historically increased at a rate
surpassing the inflation  rate.  This increase is primarily  attributable to the
increasing  disposable  income  of women in the  United  States as more and more
women, the largest group of jewelry purchasers,  enter the workforce and achieve
higher  salaries  and  more  responsible  positions.  Working  women  are  often
responsible  for the purchase of jewelry by teenagers and children as well.  The
rise in the number of women in the  workforce  has also  increased  the  overall
demand for women's clothing and accessories of all types, including jewelry.

     While JDI expects to compete on the basis of the uniqueness of its designs,
its reputation  among customers as a quality provider of products in tandem with
marketing and customer support  services,  and, to a lesser extent, on the basis
of price,  its  opportunity to obtain  customers may be limited by its financial
and  other  resources.   In  this  regard,  many  of  the  companies  and  other
organizations  with which the Company will be in competition are established and
have far greater resources,  substantially  greater experience and larger staffs
than the Company expects to have for the foreseeable future. Additionally,  many
of these companies and organizations have proven operating histories,  which the
Company lacks.

     While the  competition  may, among other things,  "knock off" the Company's
designs,  offer a wider selection of products,  undercut JDI's prices and employ
any number of other strategies and tactics against the Company, management hopes
that the  Company's  unique  designs,  which are  expected  in many  cases to be
proprietary and/or copyrighted, together with its anticipated close relationship
with its  customers,  vendors  and  distributors,  will  enable it to maintain a
competitive  position in the specialized  jewelry and accessory  market segment.
The Company  further  believes,  but cannot assure,  that its net profit margins
will be equal to, or in excess of, many of its  competitors and that its capital
costs will be lower. Therefore,  although competition is expected to be intense,
management hopes to position the Company strategically in the jewelry industry.


                                       7

<PAGE>



Seasonality

     The  jewelry  business  is highly  seasonal  in  general,  with the  fourth
calendar  quarter (which includes the Christmas  shopping  season)  historically
contributing  the highest  sales of any quarter  during the year.  Nevertheless,
seasonality  cannot be  predicted  because of  customer  promotions  and special
events which may occur throughout the year.  Management intends that the Company
participate  in promotions  and other events  conducted by retailers at times of
the year other than  Christmas,  and conduct  similar  such  special  events and
promotions  and take other measures to minimize the impact of seasonality on its
business to the extent possible.

Purchasing, Manufacturing and Assembly

     At least initially, the Company intends to purchase most of its jewelry and
accessories  in an  assembled  state from  suppliers  located  inside the United
States. At most, management expects that the Company will be required to perform
a minimal  amount of light  assembly  of the items  received  into  jewelry  and
accessory  products.  Management  expects to purchase  jewelry  from a number of
suppliers based on quality, pricing and available quantities. While purchases of
materials  are expected to be made from a relatively  small number of suppliers,
the Company believes, but cannot assure, that there will be numerous alternative
sources for all  materials,  and that the failure of any  principal  supplier(s)
would not have a  material  adverse  effect  on  operations  or JDI's  financial
condition.  The Company does not expect to experience any difficulty in securing
product.

     Management expects  manufacturing and assembly operations  conducted by the
Company to be limited primarily to designing jewelry and other accessories,  and
some light assembly of products.  Upon  completing a design,  depending upon the
nature of the  product,  the Company  will either  purchase  the  materials  and
subcontract the  manufacture or assembly of the product,  or provide such design
to its  suppliers  which will purchase the raw  materials  and  manufacture  the
product or subcontract for its manufacture.  Management believes that the use of
third party  manufacturers  will enable the Company to  substantially  shift the
risk and capital cost of  manufacturing  to the third party.  Depending upon the
availability of funding,  the Company has preliminary  plans to maintain a light
manufacturing  and assembly  operation  in the United  States for the purpose of
producing  prototype  designs  and to  fulfill  custom  orders  for  specialized
products and short-run  orders required to be shipped within several days of the
order  date.  While  JDI  may in the  future  establish  its  own  manufacturing
operations  and  facilities  if  substantial  savings  in the cost of  inventory
appears  likely and the  necessary  capital  becomes  available,  the  Company's
financial  position  does not permit  management  to  consider  such a course of
action at this time.

Employees and Consultants

     The Company has had no employees since its organization.  Except for a lump
sum  consulting  fee  received by each of Messrs.  Roland W. Fink and Kendall L.
Dorsett,  JDI's executive  officers and directors,  including  Messrs.  Fink and
Dorsett  and Ms.  Suzanne  Sorensen,  have  served  in those  positions  without
compensation through the date hereof.  Messrs. Fink and Dorsett were compensated
for certain specialized  services,  including the preparation of a business plan
and the performance of certain financial consulting services, commonly performed
by outside  consultants,  despite  their  positions  as  executive  officers and
directors of JDI,  because the Company  does not  presently  have the  financial
capability  to pay  management  salaries  or retain  outside  consultants  on an
ongoing basis.  It is  anticipated  that at such time, if ever, as the Company's
financial position permits,  assuming that JDI is successful in raising adequate


                                       8

<PAGE>


funding  through  equity and/or debt  financing  and/or  generating a sufficient
level of revenue from operations,  Messrs. Fink and Dorsett and Ms. Sorensen and
any other executive  officers the Company may employ,  will receive  appropriate
compensation, in addition to salaries, which may include bonuses, coverage under
medical and/or life insurance  benefits plans and  participation in stock option
and/or other profit sharing or pension plans, for services as executive officers
of the Company. Additionally, directors may receive fees for their attendance at
meetings  of the  Board  of  Directors  of the  Company.  While  JDI may  retain
consultants  to perform  services  for the  Company in the  future,  it does not
intend to retain  members of  management or other  affiliated  person(s) in this
capacity or pay consulting fees to any such person(s).

Facilities

     The Company  maintains  its offices rent free at the home of its  Executive
Vice President located at 2449 Lyric Avenue, Los Angeles,  California 90027. Its
telephone  number is (213) 660-8665.  The Company  anticipates that it will have
continued use of the Executive Vice  President's  home on a rent-free  basis for
the  foreseeable  future  and that this  arrangement  will be  adequate  for the
Company's needs while it is in the development stage.  Assuming that JDI obtains
the  necessary  additional  financing  and is  successful  in  implementing  its
business  plan, no assurance of which can be made,  the Company will require its
own commercial facilities,  including sufficient space to establish the intended
light assembly operation.  In such event,  management believes that JDI would be
able to locate adequate facilities at reasonable rental rates in the Los Angeles
area suitable for its future needs.

     Before  making  an  investment  decision,   prospective  investors  in  the
Company's  Common  Stock should  carefully  consider,  along with other  matters
referred to herein,  the  following  risk factors  inherent in and affecting the
business of the Company.

Risk Factors

     1. Development Stage Company. JDI was only very recently organized on March
6, 1997, and, accordingly, is in the early form of development stage and must be
considered  promotional.   Management's  efforts,  since  inception,  have  been
allocated  primarily  to  organizational  and fund  raising  activities  and the
ability of the Company to establish  itself as a going concern is dependent upon
the receipt of  additional  funds from  operations  or other sources to continue
those  activities.  Potential  investors  should  be aware  of the  difficulties
normally  encountered by a new enterprise in its  development  stage,  including
undercapitalization,  cash  shortages,  limitations  with respect to  personnel,
technological,  financial  and other  resources  and lack of a customer base and
market  recognition,  most of  which  are  beyond  the  Company's  control.  The
likelihood  that the Company  will succeed  must be  considered  in light of the
problems,  expenses and delays  frequently  encountered  in connection  with the
competitive environment in which the Company will operate. The Company's success
depends to a large extent on gauging  public  tastes in jewelry and  accessories
and its ability to design  products  which will  capture the public eye and hold
the  public's  attention.  There is no  guarantee  that the  Company's  proposed
products,  initially  the Face  Jewel,  will  attain  the  level  of  popularity
necessary  for the  Company to find a niche in the  jewelry  industry or achieve
profitable   operations.   There  are  numerous  manufacturers  of  jewelry  and
accessories  already  positioned in the business which are better  financed than
the Company.  There can be no assurance that the Company,  with its very limited
capitalization,  will  be able to  compete  with  these  companies  and  achieve
profitability. (See Part I, Item 1. "Description of Business.")

     2. No Operating History,  Revenues or Earnings.  As of the date hereof, the
Company has not yet  commenced  operations  and,  accordingly,  has  received no
operating revenues or earnings. Since inception,  most of the time and resources
of JDI's management have been spent in organizing the Company, obtaining interim
financing and  developing a business  plan.  The Company's  success is dependent
upon its obtaining  additional  financing from intended operations or otherwise.



                                       9

<PAGE>



The Company's success in the business of designing, manufacturing, merchandising
and distributing  unique jewelry and accessory  products on a wholesale basis is
dependent  upon the receipt of profits from  operations,  which are not expected
for the foreseeable future, and/or additional financing to enable the Company to
continue in  operation.  There is no  assurance  that JDI will be able to obtain
additional  debt or equity  financing from any source.  The Company,  during the
development  stage of its  operations,  can be expected  to sustain  substantial
operating  expenses without  generating any operating  revenues or the operating
revenues  generated can be expected to be insufficient to cover expenses.  Thus,
for the foreseeable  future,  unless the Company attains profitable  operations,
which is not  anticipated,  the  Company's  financial  statements  will  show an
increasing net operating loss. (See Part I, Item 1. "Description of Business.")

     3. Minimal Assets,  Working Capital and Net Worth. As of December 31, 1997,
the Company's  total assets in the amount of $499 consisted of the sum of $80 in
cash and $419 in  organization  costs.  As a result of its having minimal assets
and a net loss from operations in the amount of $17,796 as of December 31, 1997,
the Company has very minimal net worth presently. Further, JDI's working capital
is presently minimal and there can be no assurance that the Company's  financial
condition  will  improve.  The Company is  expected to continue to have  minimal
working capital or a working capital deficit as a result of current liabilities.
Messrs.  Roland  W. Fink and  Kendall  L.  Dorsett,  executive  officers  and/or
directors of JDI, each  contributed  services valued by them at $128 (a total of
$256) in consideration for 128,000 shares of the Company's Common Stock received
by each.  Additionally,  Patricia  Cudd,  Esq.,  received an aggregate of 64,000
shares of Common Stock in  consideration  for her  performance of legal services
for JDI valued at $64. Even though management believes,  without assurance, that
it will obtain sufficient capital with which to implement its business plan on a
limited scale, the Company is not expected to continue in operation,  without an
infusion of capital,  after the expiration of a period of six months to one year
from the date hereof. In order to obtain additional equity financing, management
may be required to dilute the  interest  of  existing  shareholders  or forego a
substantial interest in its revenues,  if any. (See Part I, Item 1. "Description
of Business.")

     4. Need for Additional Capital;  Going Concern  Qualification  Expressed by
Auditor. Without an infusion of capital or profits from operations,  the Company
is not expected to continue in operation  after the  expiration of the period of
six months to one year from the date  hereof.  Accordingly,  the  Company is not
expected to become a viable business entity unless additional equity and/or debt
financing  is  obtained.  JDI's  independent  certified  public  accountant  has
expressed this as a "going concern"  qualification to the opinion of Janet Loss,
C.P.A.,  P.C.,  on the  Company's  financial  statements.  The Company  does not
anticipate  the receipt of  operating  revenues  until  management  successfully
implements  its  business  plan,  which is not assured.  Further,  JDI may incur
significant unanticipated expenditures which deplete its capital at a more rapid
rate because of, among other things, the development stage of its business,  its
limited personnel and other resources and its lack of a customer base and market
recognition.  Because of these and other factors, management is presently unable
to predict what  additional  costs might be incurred by the Company beyond those
currently  contemplated  to  obtain  additional  financing  and  achieve  market
penetration  on a commercial  scale in its proposed line of business,  i.e., the
design,  manufacturing,  merchandising and wholesale distribution of specialized
jewelry and accessory  products.  JDI has no identified  sources for funds,  and
there can be no assurance  that  resources will be available to the Company when
needed.  (See Part I, Item 1.  "Description  of  Business,"  - (b)  "Business of
Issuer - Risk Factors" - 10. "Conflicts of Interest.")

     5.  Dependence  on  Management;  Directors'  Lack of  Experience in Jewelry
Business.  The  possible  success  of the  Company  is  expected  to be  largely
dependent on the continued service of its Executive Vice President,  Ms. Suzanne
Sorensen,  because Messrs.  Roland W. Fink and Kendall L. Dorsett, the directors
and the other executive  officers of JDI, have no experience or expertise in the
jewelry  business.  Virtually all decisions  concerning  the design and proposed
manufacture,  marketing  and  distribution  of jewelry  and  accessories  by the



                                       10

<PAGE>



Company  will  be made  or  significantly  influenced  by Ms.  Sorensen.  She is
presently  serving as the manager of Suzanne  Designs,  a  closely-held  jewelry
business owned by her family since 1976, and is required to devote a significant
amount of her time to the conduct of that company's business.  Ms. Sorensen, Mr.
Fink and Mr.  Dorsett  are  expected  to devote only such time and effort to the
business  and  affairs of the  Company  as may be  necessary  to  perform  their
responsibilities  as executive officers and/or directors of JDI. The loss of the
services of Ms.  Sorensen  would  adversely  affect the conduct of the Company's
business  and its  prospects  for the  future.  The Company  presently  holds no
key-man life insurance on the lives of, and has no employment  contract or other
agreement  with, Ms. Sorensen or Messrs.  Fink or Dorsett.  (See Part I, Item 1.
"Description  of  Business,"  - (b)  "Business  of Issuer - Risk  Factors" - 10.
"Conflicts of Interest.")

     6. No Jewelry or Accessory  Products or Customer Base. The Company was only
very recently organized. While JDI intends to engage in the design, manufacture,
merchandising  and wholesale  distribution of a specialized  line of jewelry and
accessory products,  the Company's initial proposed product, the "Face Jewel" is
only in the  design  stage  and no  other  jewelry  or  accessory  products  are
presently  being designed or  manufactured.  Further,  the very limited  funding
currently  available  to the  Company  will not permit it to  commence  business
operations in the jewelry industry except on a very limited scale.  There can be
no  assurance  that the debt and/or  equity  financing,  which is expected to be
required  by the  Company in order for JDI to  continue  in  business  after the
expiration of the next six months to one year,  will be  available.  The Company
has no  customers  presently  and  there  can be no  assurance  that  it will be
successful in obtaining any customers in the major prospective  market segments,
including boutiques,  hair salons,  beauty supply stores,  department stores and
children's stores, which JDI intends to target for wholesale distribution of its
proposed  products.  JDI does not expect to have  long-term  contracts  with any
customers; thus, management believes that the Company must, in order to survive,
ultimately  obtain the loyalty of large  volume  purchasers  through  design and
product  development which timely reflects fashion trends and changes and proper
customer and marketing support.  The Company expects to be limited in the number
of  designers  and  customer and  marketing  support  personnel it is capable of
employing as a result of its limited operating capital.  Thus, the Company could
be expected to experience  substantial  difficulty in attracting the high volume
customers in the  prospective  target  markets which would enable JDI to achieve
commercial  viability.  The Company will be dependent  upon its  Executive  Vice
President,  Ms. Suzanne  Sorensen,  who has  approximately  twenty-one  years of
experience in managing her family's  jewelry  business,  to design the Company's
proposed jewelry and accessory products; nevertheless, there can be no assurance
that designs for such products,  including the Face Jewel, will have a chance of
achieving popular and commercial  success.  (See Part I, Item 1. "Description of
Business," (b) "Business of Issuer - Business Strategy; - Proposed Product Line;
- Marketing and Distribution; and - Purchasing, Manufacturing and Assembly.")

     7. No Marketing Organization;  Limited Marketing Capability.  The Company's
success  depends  in large  part upon its  ability to  identify  and  adequately
penetrate  the markets for its  potential  jewelry and  accessory  products.  As
compared  to JDI,  which  lacks the  financial,  personnel  and other  resources
required to compete with its larger, better-financed competitors,  virtually all
of the Company's competitors have much larger budgets for marketing, advertising
and  promotion.  Except for its Executive Vice  President,  JDI presently has no
design, product development,  marketing or customer support personnel whatsoever
and,  accordingly,  management  expects  that  the  Company's  products  will be
marketed,   for  the  most  part,   through   third  party   independent   sales
representatives.  Depending  upon the level of funding  obtained by the Company,
management  believes,  without  assurance,  that it will be possible  for JDI to
attract qualified personnel in the areas of jewelry design,  product development
and  marketing  and  customer  support to work closely with both the third party
sales force and with the suppliers and customers and to  participate  in jewelry


                                       11

<PAGE>


fairs.  However, in the event that only limited funds are obtained,  the Company
anticipates that its limited finances and other resources may be a determinative
factor in the  decision  of any  prospective  employee  as to  whether to become
employed  by JDI.  Until such time,  if ever,  as the Company is  successful  in
attracting and employing  capable  design,  product  development,  marketing and
customer support personnel, it intends to rely upon the judgment and conclusions
of its Executive Vice President  based upon her knowledge and experience  gained
in managing a family-owned jewelry business, relative to the Company's needs for
marketing and related expertise in these areas.  However,  the fact that neither
Mr. Fink nor Mr.  Dorsett,  executive  officers  and  directors  of JDI, has any
specific  experience in the jewelry  industry may adversely impact the Company's
chances  for  success.  (See  Part I, Item 1.  "Description  of  Business,"  (b)
"Business of Issuer - Marketing and Distribution.")

     8. High Risks and  Unforeseen  Costs  Associated  with JDI's Entry into the
Jewelry  Business.  There can be no  assurance  that the design,  manufacturing,
merchandising,  distribution  and  other  costs  incurred  by  JDI  will  not be
significantly greater than those estimated by Company management. Therefore, the
Company may expend significant  unanticipated  funds or significant funds may be
expended  by JDI without  the  development  of  commercially  viable  jewelry or
accessory  products or customer or marketing support  services.  There can be no
assurance  that cost overruns will not occur or that such cost overruns will not
adversely affect the Company.  Further,  unfavorable general economic conditions
and/or a  downturn  in  consumer  confidence  has in the past had,  and could be
expected  in the  future  to  have,  an  adverse  effect  on  consumer  spending
preferences  which could,  in turn,  adversely  affect the  Company's  business.
Additionally,  competitive  pressures and changes in customer  mix,  among other
things,  which  management  expects the Company to  experience  in the uncertain
event that it achieves  commercial  viability,  could reduce the Company's gross
profit margin from time to time. Accordingly, there can be no assurance that JDI
will be capable of establishing  itself in a commercially viable position in the
worldwide jewelry  distribution  market despite the uniqueness of its designs or
the modesty of its pricing.  (See Part I, Item 1. "Description of Business," (b)
"Business of Issuer.")

     9.  Dependency  on  Suppliers  and  Customers.  The  Company's  ability  to
manufacture and distribute jewelry on a profitable and timely basis depends,  at
least  initially,  upon  the  availability  of  jewelry  products  assembled  to
management's  specifications.  There can be no assurance that assembled products
will be readily  available from numerous sources and/or at prices  acceptable to
JDI in  accordance  with  management's  belief.  Further,  even  if the  Company
receives  sufficient  proceeds from equity  and/or debt  financing or otherwise,
thus  enabling  it to employ  the  design,  manufacturing,  marketing  and other
personnel  needed to  implement  its  business  plan,  it will  nevertheless  be
dependent upon the availability of raw materials,  primarily precious metals and
gemstones, which management believes, without assurance, to be readily available
from  numerous  suppliers.  Increases  in the  prices  of raw  materials  and/or
limitations on the availability of such raw materials may adversely affect JDI's
ability to manufacture and distribute  jewelry to customers on a timely basis or
at prices  acceptable to the Company and its  customers,  if any.  Additionally,
because a substantial portion of the jewelry products proposed to be distributed
by the Company is expected to be purchased from third party  suppliers,  failure
by such  suppliers  to deliver  jewelry on a timely  basis and  increases in the
costs  charged  by  such  suppliers   could   adversely   affect  the  Company's
relationship  with its customers.  While  management hopes to sell products to a
large number of customers in a broad range of markets,  to the extent that a few
large volume  customers  account for the bulk of its product sales,  the loss of
any of these customers, or a significant reduction in their orders, could have a
material adverse effect on JDI's business.  The Company does not anticipate that
it will have long-term  contracts with its prospective  customers.  (See Part I,
Item 1.  "Description  of  Business,"  (b)  "Business  of Issuer  Marketing  and
Distribution; - Purchasing, Manufacturing and Assembly.")



                                       12

<PAGE>


     10.  Conflicts of Interest.  There are existing and potential  conflicts of
interest,  including  time,  effort and corporate  opportunity,  involved in the
participation  by the  Company's  executive  officers  and  directors  in  other
business  entities  and  transactions.   Ms.  Suzanne  Sorensen,  the  Company's
Executive Vice President and the manager of Suzanne Designs, an affiliate of the
Company, will divide her time and effort between and among the Company,  Suzanne
Designs and her other business  obligations.  Accordingly,  Ms.  Sorensen and/or
other members of management of the Company may be subject to direct conflicts of
interest  and the  corporate  opportunities  doctrine  with  respect to business
opportunities  in the  jewelry  and  accessory  business  which  come  to  their
attention.  The Company's  Amended  Articles of  Incorporation  provide that any
related party contract or transaction  must be authorized,  approved or ratified
at a meeting of the Board of Directors by  sufficient  vote thereon by directors
not  interested  therein or the  transaction  must be fair and reasonable to the
Company. Accordingly, while Ms. Sorensen will abstain from voting on any related
party contract or transaction  involving  Suzanne  Designs,  it is  nevertheless
possible for the Company's Board of Directors, by vote of a sufficient number of
disinterested  members thereof, to authorize,  approve or ratify such a contract
or  transaction  even  if it is not  fair  or  reasonable  to the  Company.  Ms.
Sorensen,  who is not presently a director of JDI, has agreed, in the event that
she is elected to serve as a director  of the  Company in the  future,  that she
would abstain from voting on any related party contract or transaction involving
Suzanne Designs. Nevertheless,  assuming Ms. Sorensen's future election to JDI's
Board of Directors and her abstention  from voting on any related party contract
or transaction in accordance with her agreement,  it would still be possible for
the Board of  Directors  of the  Company,  by a vote of a  sufficient  number of
disinterested  directors,  to  authorize,  approve or ratify  such a contract or
transaction  with Suzanne  Designs or any other affiliate even if the terms were
unfair to the Company or unreasonable.

     Because of existing and/or potential  future  associations of the Company's
executive officers and directors in various capacities with other firms involved
in a range of business  activities  and because of the limited or minimal amount
of time and  effort  which is  expected  to be  devoted  to the  Company by such
persons,  there are existing and potential  continuing  conflicts of interest in
their acting as executive officers and/or directors of the Company.  None of the
executive  officers  or  directors  of the  Company  will be able  to  devote  a
significant  amount of time or effort to the business and affairs of the Company
because of their simultaneous participation in, employment by and/or commitments
to other firms involved in a range of business activities.  In addition,  all of
such  persons  are or may  become,  in their  individual  capacities,  officers,
directors,  controlling  shareholders  and/or  partners  of other  entities  (in
addition  to  Suzanne  Designs)  engaged in a variety  of  businesses  which are
engaged,  or may in the  future  engage,  in  various  transactions,  or compete
directly, with the Company. Conflicts of interest and transactions which are not
at arm's-length may arise in the future because the Company's executive officers
and/or  directors are involved in the management of any company which  transacts
business,  or  competes  directly,  with  the  Company.  (See  Part  I,  Item 1.
"Description of Business," (b) "Business of Issuer - General.")

     11.  Competition.  Competition  is intense  within the jewelry  industry in
general and in the specialized jewelry and accessory market segment in which JDI
proposes to operate.  It is anticipated that the jewelry industry may be subject
to  changes  in the  general  state of the  economy,  shifts in the  demographic
structure,  changes in the buying  habits of the  public,  the  availability  of
alternative  products and the increased cost of doing business.  Further,  there
may be significant  technological advances in the future and the Company may not
have adequate  creative  management and resources to enable it to take advantage
of such  advances.  The  Company  anticipates  that  virtually  all of its  many
competitors,  both domestic and international,  will have substantially  greater
technical, financial and marketing resources than the Company. While JDI expects
to compete on the basis of the uniqueness of its designs,  its reputation  among
customers as a quality  provider of products and marketing and customer  support
services  together with its anticipated  close  relationship with its customers,
vendors and  distributors  and, to a lesser extent,  on the basis of price,  its
opportunity  to obtain  customers may be limited by its financial  resources and



                                       13

<PAGE>



other assets. In this regard, many of the companies and other organizations with
which JDI will be in competition are established and have far greater  financial
resources,  substantially  greater experience and larger staffs than the Company
and are  expected  to offer a wider  selection  of  products  than the  Company.
Additionally,  many of such organizations have proven operating histories, which
the  Company  lacks.  JDI  expects  to face  strong  competition  from both such
well-established  companies  and small  independent  companies  like itself.  In
addition,  the Company's  proposed business may be subject to decline because of
the general state of the economy and generally  increasing costs and expenses of
doing  business,   thus  further  increasing  anticipated   competition.   While
management hopes that the Company's  proposed  products will be  well-positioned
and competitive under current market conditions,  there can be no assurance that
any such  products  will  continue to be  competitive  in the face of changes in
product  design,  changes in fashion and the entry of new  competitors  into the
market.  (See Part I, Item 1. "Description of Business," (b) "Business of Issuer
Competition.")

     12.  Absence of Public Market for Shares.  The  Company's  shares of Common
Stock are not registered with the U.S.  Securities and Exchange Commission under
the Securities Act of 1933, as amended  (hereinafter  referred to as the "Act").
There is no public  market for the shares of Common Stock and no assurance  that
one will develop. Of such shares,  80,000 thereof are "free-trading"  because of
their issuance to persons  unaffiliated  with JDI pursuant to the exemption from
registration provided by Rule 504 of Regulation D promulgated under Section 3(b)
of the  Act,  and  the  balance  of  328,000  of  such  shares  are  "restricted
securities."  Rule  144 of  the  Act  provides,  in  essence,  that  holders  of
restricted  securities  for a period of one year after the  acquisition  thereof
from the Company or an affiliate of the Company,  may, every three months,  sell
to a market maker or in ordinary  brokerage  transactions an amount equal to one
per cent of the Company's  then  outstanding  securities.  Nonaffiliates  of the
Company who hold restricted  securities for a period of two years may sell their
securities without regard to volume limitations or other restriction. Resales of
the free-trading  shares of Common Stock by "affiliates,  control persons and/or
underwriters"  of JDI, as those terms are defined in the Act, will be subject to
the volume  limitations  described in paragraph (e) of Rule 144. Any transfer or
resale of the shares of JDI's Common  Stock will be subject,  in addition to the
Federal  securities  laws,  to the "blue  sky" laws of each  state in which such
transfer or resale  occurs.  A total of 320,000  shares of the Company's  Common
Stock were  available for resale under Rule 144 commencing on March 6, 1998, and
8,000 shares of the  Company's  Common Stock will be available  for resale under
Rule 144 commencing on April 1, 1998. Sales of shares of Common Stock under Rule
144 may have a  depressive  effect on the market price of the  Company's  Common
Stock,  should a public  market  develop for such  stock.  Such sales might also
impede future financing by the Company.

     13. No Dividends. While payment of dividends on the Common Stock rests with
the  discretion  of the  Board of  Directors,  there  can be no  assurance  that
dividends  can or will ever be paid.  Payment of dividends is  contingent  upon,
among other things,  future earnings, if any, and the financial condition of the
Company,  capital  requirements,  general business  conditions and other factors
which cannot now be predicted.  It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future. (See Part I,
Item 8.  "Description  of  Securities  Description  of Common  Stock -  Dividend
Policy.")

     14. No Cumulative  Voting.  The election of directors  and other  questions
will be decided by majority vote. Since  cumulative  voting is not permitted and
one-third of the Company's  outstanding shares  constitutes a quorum,  investors
who  purchase  shares of the  Company's  Common  Stock may not have the power to
elect even a single director and, as a practical matter,  the current management
will continue to effectively control the Company. (See Part I, Item 4. "Security
Ownership  of  Certain  Beneficial  Owners and  Management"  and Part I, Item 8.
"Description of Securities - Description of Common Stock.")

     15.  Control by  Present  Shareholders.  The  present  shareholders  of the
Company's  outstanding  Common Stock will, by virtue of their  percentage  share
ownership and the lack of cumulative  voting,  be able to elect the entire Board
of Directors, establish the Company's policies and generally direct its affairs.
Accordingly,  persons  investing  in the  Company's  Common  Stock  will have no
significant  voice in Company  management,  and cannot be assured of ever having
representation  on the  Board  of  Directors.  (See  Part I,  Item 4.  "Security
Ownership of Certain Beneficial Owners and Management.")



                                       14
<PAGE>



     16.  Potential  Anti-Takeover  and Other  Effects of Issuance of  Preferred
Stock May Be  Detrimental to Common  Shareholders.  The Company is authorized to
issue up to  10,000,000  shares  of  preferred  stock,  $.01 par value per share
(hereinafter  referred to as the  "Preferred  Stock");  none of which shares has
been issued.  The issuance of Preferred  Stock does not require  approval by the
shareholders of the Company's Common Stock. The Board of Directors,  in its sole
discretion,  has the  power to issue  shares of  Preferred  Stock in one or more
series  and  establish   the  dividend   rates  and   preferences,   liquidation
preferences,  voting rights,  redemption and conversion terms and conditions and
any  other  relative  rights  and  preferences  with  respect  to any  series of
Preferred  Stock.  Holders  of  Preferred  Stock may have the  right to  receive
dividends,  certain  preferences in liquidation and conversion and other rights;
any of  which  rights  and  preferences  may  operate  to the  detriment  of the
shareholders of the Company's Common Stock.  Further, the issuance of any shares
of Preferred Stock having rights superior to those of the Company's Common Stock
may  result in a  decrease  in the value or market  price of the  Common  Stock,
provided  a market  exists,  and,  additionally,  could be used by the  Board of
Directors as an  anti-takeover  measure or device to prevent a change in control
of the Company. (See Part I, Item 8. "Description of Securities - Description of
Preferred Stock.")

     17. No Secondary Trading  Exemption.  Secondary trading in the Common Stock
will not be  possible  in each  state  until  the  shares  of  Common  Stock are
qualified  for sale under the  applicable  securities  laws of that state or the
Company  verifies  that an  exemption,  such as listing  in  certain  recognized
securities  manuals, is available for secondary trading in that state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary  trading,  or availing itself of an exemption for
secondary  trading in the Common  Stock,  in any state.  If the Company fails to
register or qualify,  or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular  state,  the shares of Common Stock could
not be offered or sold to, or  purchased  by, a resident of that  state.  In the
event that a significant  number of states refuse to permit secondary trading in
the Company's  Common  Stock,  a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.

     18.  Possible  Adverse  Effect of Penny Stock  Regulations  on Liquidity of
Common Stock in Secondary  Market. If a secondary trading market develops in the
shares of Common Stock of the Company,  of which there can be no assurance,  the
Common  Stock is expected  to come within the meaning of the term "penny  stock"
under 17 CFR 240.3a51-1  because such shares are issued by a small company;  are
low priced (under five  dollars);  and are not traded on NASDAQ or on a national
stock  exchange.  The Securities and Exchange  Commission has  established  risk
disclosure   requirements  for  broker-dealers   participating  in  penny  stock
transactions  as a part of a system of disclosure and  regulatory  oversight for
the  operation  of the penny  stock  market.  Rule  15g-9  under the  Securities
Exchange Act of 1934, as amended,  obligates a broker-dealer  to satisfy special
sales  practice   requirements,   including  a  requirement   that  it  make  an
individualized  written suitability  determination for the purchaser and receive
the  purchaser's  written  consent  prior  to  the  transaction.   Further,  the
Securities  Enforcement  Remedies  and Penny Stock  Reform Act of 1990 require a
broker-dealer,   prior  to  a  transaction  in  a  penny  stock,  to  deliver  a
standardized  risk disclosure  instrument that provides  information about penny
stocks and the risks in the penny stock market. Additionally,  the customer must
be provided by the  broker-dealer  with current bid and offer quotations for the
penny stock,  the compensation of the  broker-dealer  and the salesperson in the
transaction  and monthly  account  statements  showing the market  value of each
penny stock held in the customer's account.  For so long as the Company's Common
Stock is considered penny stock, the penny stock  regulations can be expected to
have an adverse  effect on the  liquidity of the Common  Stock in the  secondary
market, if any, which develops.



                                       15
<PAGE>



Item 2. Description of Property.


     The  Company's  executive  offices  are located at 2449 Lyric  Avenue,  Los
Angeles,  California  90027,  and its telephone  number is (213)  660-8665.  The
Company owns no real or personal property.


Item 3. Legal Proceedings.

     The  Company  knows  of no legal  proceedings  to which it is a party or to
which any of its  property  is the  subject  which are  pending,  threatened  or
contemplated or any unsatisfied judgments against the Company.


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

     No matter was submitted  during the fourth quarter of the fiscal year ended
December  31,  1997,  covered  by  this  report  to  a  vote  of  the  Company's
shareholders, through the solicitation of proxies or otherwise.


                                    PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

     (a) Market Information.

     There has been no  established  public  trading market for the Common Stock
since the Company's inception on March 6, 1997.

     (b) Holders.

     As of March 19, 1998, the Company had twenty-four shareholders of record of
its 408,000 outstanding shares of Common Stock.

     (c) Dividends.

     The Company has never paid or declared  any  dividends  on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future.


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

Plan of Operations

     Since  its  inception,  the  Company,  which is now  known  as  "Jewelnique
Designs,  Inc.," has conducted no business  operations except for organizational
and capital raising  activities.  For the period from inception  (March 6, 1997)
through  December  31,  1997,  the  Company had no income  from  operations  and
operating  expenses  aggregating  $17,796.  The  Company  proposes  to engage in


                                       16

<PAGE>



business in the design,  manufacture,  marketing and wholesale distribution of a
specialized  line of jewelry  products.  Management  expects that the  Company's
proposed  product  line will  initially  be  distributed  through the  identical
distribution channels,  including boutiques,  hair salons, beauty supply stores,
department stores and children's stores,  presently being utilized to distribute
the jewelry products manufactured,  marketed and distributed by Suzanne Designs,
a closely-held  jewelry business owned and operated by the Sorensen family since
approximately 1976. However, should JDI achieve commercial success in designing,
manufacturing, marketing and distributing a specialized line of jewelry products
based upon Ms.  Sorensen's  unique,  different or unusual product  designs,  the
Company expects, but cannot assure, that it would obtain many of its own product
distribution  channels  separate  from those of  Suzanne  Designs.  Ms.  Suzanne
Sorensen, Executive Vice President of JDI, agreed to develop jewelry designs and
products for the Company for the following, among other, reasons: (i) because of
her belief that a public  company could exploit her creative  talents,  services
and business  reputation  to commercial  advantage and (ii) to observe  directly
whether the perceived advantages of a public company,  including,  among others,
greater  ease  in  raising  capital,   liquidity  of  securities   holdings  and
availability  of  current  public  information,  would  translate  into  greater
profitability for a public, as compared to a family-owned, jewelry business.

     Although  the Company has  extremely  limited  cash and other  assets,  its
recurring  obligations are minimal because its offices are maintained  rent-free
at the home of the Company's Executive Vice President and the executive officers
and  directors  of the  Company  satisfy  Company  obligations  from  their  own
resources  from  time-to-time.  If the Company is unable to generate  sufficient
revenue  from   operations,   management   intends  to  explore  all   available
alternatives  for debt and/or  equity  financing,  including  but not limited to
private and public  securities  offerings.  Management  expects  that it will be
necessary  for JDI to raise  additional  funds in the next twelve  months in the
event that the  Company is unable to  generate  any  revenue,  or only a minimal
level of revenue,  from operations.  Ms. Sorensen,  at least initially,  will be
solely  responsible  for  developing  JDI's  jewelry  products  and designs and,
accordingly, the Company does not expect to expend any funds on product research
and development. However, at such time, if ever, as sufficient operating capital
becomes available,  management expects to employ additional design and marketing
personnel who are expected to participate  continually  in jewelry fairs,  trade
shows  and  other  industry  forums.   In  addition,   the  Company  expects  to
continuously  engage in market  research in order to monitor new market  trends,
seasonality  factors and other  critical  information  deemed  relevant to JDI's
business through the development of a sophisticated computerized system.

     At least initially, the Company intends to purchase most of its jewelry and
accessories  in an  assembled  state from  suppliers  located  inside the United
States and, at most,  management  expects  that the Company  will be required to
perform a minimal  amount of light  assembly of the items  received into jewelry
and accessory  products.  Thus, it is not  anticipated  that JDI will purchase a
plant or any significant equipment in the foreseeable future. Depending upon the
availability of funding,  however, the Company has preliminary plans to maintain
a light  manufacturing  and  assembly  operation  in the  United  States for the
purpose  of  producing  prototype  designs  and to  fulfill  custom  orders  for
specialized  products and short-run orders required to be shipped within several
days  of the  order  date.  While  JDI  may  in the  future  establish  its  own
manufacturing  operations and  facilities if substantial  savings in the cost of
inventory  appears  likely and the  necessary  capital  becomes  available,  the
Company's  financial  condition  does not  permit  management  to  consider  the
acquisition of plant or equipment at this time.

Financial Condition, Capital Resources and Liquidity

     At  December  31,  1997,  the  Company  had  assets  totaling  $499  and no
liabilities.  Since the  Company's  inception,  it has received  $20,000 in cash
contributed  as  consideration  for the issuance of shares of Common  Stock.  In
March 1997,  the Company paid a lump sum  consulting fee in the amount of $5,000
to each of Messrs. Roland W. Fink and Kendall L. Dorsett, executive officers and


                                       17

<PAGE>



directors of JDI, in consideration for certain  specialized  services  performed
for the Company by each individual. These services included the preparation of a
business plan for the Company,  in the case of Mr. Fink,  and, in Mr.  Dorsett's
case, the performance of certain financial consulting services. The Company paid
Cudd &  Associates,  a law  firm of  which  Patricia  Cudd,  Esq.,  is the  sole
proprietor,  the sum of $5,000 in  consideration  for the performance of certain
legal  services,  including  but not limited to passing upon the legality of the
Common Stock and certain  other  matters in  connection  with this  Registration
Statement on Form 10-SB.  The Company pays a fee in the amount of $250 per month
to Fink & Dorsett,  a  consulting  firm owned by Messrs.  Fink and  Dorsett,  in
consideration for certain  administrative  services performed and costs incurred
by said firm on behalf of JDI.  Messrs.  Fink and  Dorsett  and Ms.  Cudd own of
record  and  beneficially  128,000,  128,000  and 64,000  shares,  respectively,
representing  approximately  31.4%,  31.4%  and  15.7%,  respectively,   of  the
outstanding  shares,  of the  Company's  Common  Stock.  (See  Part  I,  Item 4.
"Security  Ownership of Certain  Beneficial  Owners and  Management' and Item 7.
"Certain Relationships and Related Transactions.")

     The Company has no potential capital resources.


Item 7. Financial Statements.

     The  Financial  Statements  of  Jewelnique  Designs,  Inc.,  and  Notes  to
Financial  Statements  together with the Independent  Auditor's  Report of Janet
Loss, C.P.A.,  P.C., required by this Item 7 commence on page F-1 hereof and are
incorporated herein by this reference. The Financial Statements filed as part of
this  Annual  Report  on Form  10-KSB  are  listed  in the  Index  to  Financial
Statements below:


                                                                        Page
                                                                        ----

Independent Auditor's Report                                            F-2

Balance Sheet, as of December 31, 1997                                  F-3

Statement of Operations for the Period 
   March 6, 1997 (Inception), to December 31, 1997                      F-4

Statement of Stockholders' Equity for the Period
   March 6, 1997 (Inception), to December 31, 1997                      F-5

Statement of Cash Flows for the Period March 6, 1997
   (Inception), to December 31, 1997                                    F-6

Notes to Financial Statements                                           F-7


tem  8.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.

     Because the Company has been generally inactive since its inception, it has
had no independent  accountant until the retention of Janet Loss, C.P.A.,  P.C.,
9101 East Kenyon Avenue, Suite #2000, Denver, Colorado 80237, in May 1997. There
has been no change in the  Company's  independent  accountant  during the period
commencing  with the Company's  retention of Janet Loss,  C.P.A.,  P.C., in May,
1997, through the date hereof.



                                       18

<PAGE>
                                    
                            JEWELNIQUE DESIGNS, INC.
                     (Formerly Blue Mountain Capital, Inc.)
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                                December 31, 1997


                                                                        Page No.
                                                                        --------

Independent Auditor's Report                                              F-2

Balance Sheet as of December 31, 1997                                     F-3

Statement of Operations for the Period
         March 6, 1997 (Inception) to December 31, 1997                   F-4

Statement of Stockholders' Equity for the Period
         March 6, 1997 (Inception) to December 31, 1997                   F-5

Statement of Cash Flows for the Period
         March 6, 1997 (Inception) to December 31, 1997                   F-6

Notes to Financial Statements                                             F-7



                                      F-1

<PAGE>



                            Janet Loss, C.P.A., P.C.
                           Certified Public Accountant
                        3525 S. Tamarac Drive, Suite 120
                             Denver, Colorado 80237
                                  303-220-0227

                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Jewelnique Designs, Inc.

I have audited the  accompanying  balance sheet of Jewelnique  Designs,  Inc. (a
development  stage company) as of December 31, 1997, and the related  statements
of operations,  stockholders' equity and cash flows for the period March 6, 1997
(inception)  to  December  31,  1997.   These   financial   statements  are  the
responsibility of the company's  management.  My responsibility is to express an
opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally  accepted auditing  standards.
These standards  require that I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position  of  Jewelnique  Designs,  Inc. (a
development  stage  company) as of  December  31,  1997,  and the results of its
operations  and its cash  flows  for the  period  March 6, 1997  (inception)  to
December 31, 1997 in conformity with generally accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will continue as a going concern. The company is a development stage enterprise,
and its  ability to continue in business  is  dependent  upon  obtaining  future
financing and the success of future  operations,  the outcome of which cannot be
determined  at this time,  which raises  substantial  doubt about the  Company's
ability to continue as a going  concern.  Management's  plans in this regard are
described in Note 3. The  financial  statements  do not include any  adjustments
which might result from the outcome of this uncertainty.

Janet Loss, C.P.A., P.C.
March 16, 1998


                                      F-2

<PAGE>


                            JEWELNIQUE DESIGNS, INC.
                     (Formerly Blue Mountain Capital, Inc.)
                          (A Development Stage Company)

                                  Balance Sheet

                             As of December 31, 1997

                                     Assets
                                     ------

Current Assets:
         Cash                                                          $     80

Other Assets:
         Organization Costs, less accumulated
           amortization of $81                                              419
                                                                       --------

                  Total Assets                                         $    499
                                                                       ========

                      Liabilities and Stockholders' Equity
                      ------------------------------------


Stockholders' Equity:

         Preferred stock, par value $0.01,
          10,000,000 shares authorized, none
          issued  and outstanding                                      $   --

         Common stock, par value $0.001,
          100,000,000 shares authorized,
          408,000 shares issued and outstanding                             408

         Additional paid-in capital                                      17,887

         Deficit accumulated during
           development stage                                            (17,796)
                                                                       --------

                Total Stockholders' Equity                                  499
                                                                       --------

                  Total Liabilities and Stockholders' Equity           $    499
                                                                       ========



    The accompanying notes are an integral part of the financial statements.


                                      F-3

<PAGE>


                            JEWELNIQUE DESIGNS, INC.
                     (Formerly Blue Mountain Capital, Inc.)
                          (A Development Stage Company)

                             Statement of Operations

          For the Period March 6, 1997 (Inception) to December 31, 1997


Revenues                                                              $    --

Operating Expenses:
         Amortization                                                        81
         Consulting fees                                                 10,242
         Accounting Fees                                                    450
         Legal fees                                                       2,553
         Printing                                                         1,025
         Transfer agent fees                                                920
         Management fees                                                  2,460
         Miscellaneous                                                      164
                                                                      ---------
           Total Operating Expenses                                      17,895
                                                                      ---------

                  Loss from Operations                                  (17,895)

Interest  Income                                                             99
                                                                      ---------

                  Loss before Income Taxes                              (17,796)

Income Tax Benefit                                                         --
                                                                      ----------

                  Net Loss                                            $ (17,796)
                                                                      =========

Loss per Share:
  Net loss                                                            $   (0.04)
                                                                      =========

    Weighted Average Number of Common
    and Common Equivalent
    Shares Outstanding                                                  408,000
                                                                      =========




    The accompanying notes are an integral part of the financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>


                                          JEWELNIQUE DESIGNS, INC.
                                   (Formerly Blue Mountain Capital, Inc.)
                                        (A Development Stage Company)

                                      Statement of Stockholders' Equity

                        For the period March 6, 1997 (Inception) to December 31, 1997


                                                                                    Deficit
                                                                  Additional       Accumulated
                                        Common Stock                Paid-In      During Develop-
                                   Shares           Amount          Capital         ment Stage          Total
                                   ------           ------          -------         ----------          -----

<S>                                <C>             <C>              <C>             <C>                <C>   
Issuance
of Stock
for Cash                            80,000         $     80         $ 15,895         $   --            $ 15,975

Issuance of
Stock for Services                 320,000              328            1,992             --               2,320

Net Loss for Period                   --               --               --            (17,796)          (17,796)
                                  --------         --------         --------         --------          --------

Balance,
December 31, 1997                  400,000         $    408         $ 17,887         $(17,796)         $    499
                                  ========         ========         ========         ========          ========









                   The accompanying notes are an integral part of these financial statements.

                                                     F-5
</TABLE>

<PAGE>



                            JEWELNIQUE DESIGNS, INC.
                     (Formerly Blue Mountain Capital, Inc.)
                          (A Development Stage Company)

                             Statement of Cash Flows

          For the Period March 6, 1997 (Inception) to December 31, 1997


Operating Activities:
   Net Loss                                                            $(17,796)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
         Amortization                                                        81
         Stock issued for services                                        2,320
                                                                       --------

                  Net Cash used in Operating Activities:                (15,395)
                                                                       --------

Investing Activities:
         Organization costs                                                (500)
                                                                       --------

         Net Cash used in Investing Activities                             (500)
                                                                       --------


Financing Activities:
         Proceeds from issuance of common stock,
           net of $4,025 in offering expenses                            15,975
                                                                       --------

                  Net Cash provided by Financing Activities              15,975
                                                                       --------

         Net Increase in Cash                                                80

         Cash, Beginning of Period                                         --
                                                                       --------

         Cash, End of Period                                           $     80
                                                                       ========







    The accompanying notes are an integral part of the financial statements.

                                      F-6
<PAGE>


                            JEWELNIQUE DESIGNS, INC.
                     (Formerly Blue Mountain Capital, Inc.)
                          (A Development Stage Company)

                          Notes to Financial Statements

                                December 31, 1997


NOTE 1 - HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Jewelnique  Designs,  Inc. (the  "Company"),  a Colorado  Corporation,  was
incorporated  March 6, 1997.  The Company's  purpose is to design,  manufacture,
market,  and  distribute  a  specialized  line of  jewelry  products  to be sold
primarily through stores.

Development Stage - The Company is a Development Stage Enterprise and has had no
     operations to date.

Fiscal Year - The Company has elected the calendar year.

Accounting Method - The Company  prepares  its  financial  statements  under the
     accrual method of accounting.

Organizational  Costs - Costs  incurred  in  organizing  the  Company  are being
     amortized over a sixty month period.

Public Offering - The Company completed a public offering wherein it sold 80,000
     shares of Common Stock for $20,000  under Rule 504 of Regulation D on March
     8,  1997.  The  price  per  share  was  fixed  arbitrarily  by the Board of
     Directors.  Costs  associated with the offering of $4,025 have been charged
     against the proceeds of the offering.

Earnings Per Share - Earnings per share is calculated by dividing the net income
     or loss for the period by the weighted  average number of common and common
     equivalent shares  outstanding  during the period. At December 31, 1997 the
     Company  had  no  options,   warrants  or  any  other  common   equivalents
     outstanding.

Cash Flow  Statement  - For  purposes  of  reporting  cash  flows,  the  Company
     considers all funds with original  maturities of three months or less to be
     cash equivalents.

     There was no cash paid for interest or income taxes during the period ended
     December 31, 1997.


                                      F-7
<PAGE>



     Total cash inflows for the period ended December 31, 1997 were $20,099, and
     total cash outflows for the period were $20,019.

     In non-cash transactions, the Company issued 264,000 shares of common stock
     to executive officers in exchange for services rendered,  and 64,000 shares
     to an attorney in exchange for services rendered.

Fair Value of  Financial  Instruments  - The carrying  amounts of cash,  and any
     accounts receivable, prepaid expenses, accounts payable or accrued expenses
     approximate their fair value because of the short maturity of these items.

Income Taxes - Statement of Financial  Accounting Standards No. 109, "Accounting
     for Income  Taxes",  requires the use of the asset and liability  method of
     accounting for income taxes.  Under this method,  deferred income taxes are
     recorded  to reflect  the tax  consequences  in future  years of  temporary
     differences between the tax bases of those assets and liabilities and their
     financial statement amounts at the end of each reporting period.  Valuation
     allowances are established  when necessary to reduce deferred tax assets to
     the amount  expected to be realized.  Income tax expense is the tax payable
     for the  current  period  plus or minus the  change  during  the  period in
     deferred tax assets and  liabilities.  Deferred tax assets and  liabilities
     are netted to reflect the tax impact of temporary differences.

     For the  partial  year  ended  December  31,  1997  the  Company  had a net
     operating loss of  approximately  $17,000,  for which no deferred tax asset
     was recorded.

Use  of Estimates in the  Preparation of Financial  Statements - The preparation
     of financial  statements in conformity with generally  accepted  accounting
     principles  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
     and revenues and expenses during the reporting period. Actual results could
     differ from these estimates.

NOTE 2 - RELATED PARTY TRANSACTIONS

     On March  6,1997  the  Company  issued  256,000  shares of common  stock to
executive officers and directors in exchange for services rendered in connection
with the formation of the Company,  valued by the Board of Directors at $256. On
April 1, 1997 the Company  issued  8,000  shares of Common Stock to an executive
officer in exchange for consulting services, valued by the Board of Directors at
$2,000.

     During the period ended March 31, 1997, the Company paid a total of $10,000
in  consulting  fees to  executive  officers  and  directors,  which  management
believes was fair and reasonable.


                                      F-8
<PAGE>



     The  company is paying  $250 per month in  management  fees  (plus  certain
out-of-pocket  expenses)  to a  company  owned  by its  executive  officers  and
directors, and maintains its offices rent free at space provided by an executive
officer.


NOTE 3 - UNCERTAINTIES

     The Company is in the development stage.  Management believes that in order
to execute  its  business  plan and  continue in business it will be required to
raise additional  capital.  No potential  capital  resources exist at this time.
Management  intends to pursue every available avenue of raising  additional debt
and/or equity financing, including the public or private sale of securities.













                                      F-9





<PAGE>



                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        With Section 16(a) of the Exchange Act.

Executive Officers and Directors

     Set  forth  below are the  names,  ages,  positions  with the  Company  and
business experiences of the executive officers and directors of the Company.

Name                       Age              Position(s) with Company
----                       ---              ------------------------

Roland W. Fink              42              President and Director

Kendall L. Dorsett          55              Secretary, Treasurer and Director

Suzanne Sorensen            50              Executive Vice President

-------------------

     *Except for Ms.  Sorensen,  who had no role in founding or  organizing  the
Company,  the above-named  persons may be deemed to be "promoters" and "parents"
of the  Company,  as those  terms are  defined  under the Rules and  Regulations
promulgated under the Securities Act of 1933, as amended.

     All  directors  hold office until the next annual  meeting of the Company's
shareholders and until their successors have been elected and qualify.  Officers
serve at the pleasure of the Board of  Directors.  Messrs.  Fink and Dorsett and
Ms. Sorensen will devote such time and effort to the business and affairs of the
Company as may be  necessary  to perform  their  responsibilities  as  executive
officers and/or directors of the Company.  Except as otherwise  indicated below,
all organizations  with which each executive officer and director is or has been
previously employed or associated are unaffiliated with the Company.

Family Relationships

     There are no family  relationships  between or among the executive officers
and directors of the Company.


Business Experience

     Roland W. Fink has served as the  President  and a director  of the Company
since its inception on March 6, 1997. Since March 1997, Mr. Fink,  together with
Mr. Dorsett, have been general partners of Fink & Dorsett, Glendale, California,
a consulting  firm  specializing  in corporate  finance.  During the period from
October  1995  through  March  1997,  Mr.  Fink was a  self-employed  consultant
performing  services of a financial and accounting nature for private and public
companies.   He  was  the  managing  partner  of  Greenberg  &  Jackson,  a  Los
Angeles-based  certified  public  accounting firm, from May 1992 through October
1995.  Mr.  Fink,  from 1983  through  1992,  served as the Vice  President  and
Controller  of  WellTech  Inc.  ("WellTech"),  a major  Houston-based  oil field
services commpany. Prior to his tenure with WellTech, Mr. Fink was employed by a
"Big Six" accounting firm and a large local  accounting firm. He received a B.S.
degree in accounting from Manchester  College,  North  Manchester,  Indiana,  in
1977. He is a certified public accountant.



                                       19
<PAGE>



     Suzanne  Sorensen has served as the Executive Vice President of the Company
since April 1, 1997.  Ms.  Sorensen has managed  Suzanne  Designs,  Los Angeles,
California,  a family-owned jewelry business, where she has been responsible for
the design, manufacture,  marketing and distribution of a variety of jewelry and
other fashion accessory items, since 1976.

     Kendall L. Dorsett has served as the Secretary, Treasurer and a director of
the  Company  since  the  organization  of JDI on March 6,  1997.  He has been a
general  partner,  together with Mr. Fink, of Fink & Dorsett,  a consulting firm
specializing  in  corporate  finance,  since March 1997.  During the period from
January  1995  through  March 1997,  Mr.  Dorsett was  semi-retired,  engaged in
managing  his own  investments  and in  part-time  commission  sales of internet
access  subscriptions for EarthLink Network,  Inc., an internet service provider
located in Pasadena,  California.  From 1990 to January 1995, Mr. Dorsett served
as the Vice President of Shareholder  Relations for American Technologies Group,
Inc., a publicly-held corporation whose securities trade on the Over-the-Counter
Bulletin  Board  under the symbol  "ATEG."  Prior to 1990,  he was a  registered
representative with a number of New York Stock Exchange-listed  brokerage firms,
including  Shearson  Lehman  Brothers,  Prudential  Securities  and others.  Mr.
Dorsett  received his B.A. degree in economics from the University of California
at Santa Barbara in 1966.

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

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's executive officers and directors and persons who own more than 10%
of a  registered  class of the  Company's  equity  securities,  to file with the
Securities and Exchange Commission (hereinafter referred to as the "Commission")
initial statements of beneficial ownership,  reports of changes in ownership and
annual  reports  concerning  their  ownership,  of Common Stock and other equity
securities of the Company on Forms 3, 4 and 5, respectively. Executive officers,
directors  and  greater  than  10%   shareholders  are  required  by  Commission
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, Messrs. Roland W. Fink and Kendall L. Dorsett,
Ms. Suzanne  Sorensen and Patricia Cudd,  Esq.,  comprising all of the Company's
executive  officers,  directors  and greater than 10%  beneficial  owners of its
Common Stock, have complied with Section 16(a) filing requirements applicable to
them during the Company's fiscal year ended December 31, 1997.


Item 10. Executive Compensation.

     Except for certain shares of the Company's  Common Stock issued and sold to
each  of the  three  executive  officers  and/or  directors  of the  Company  in
consideration for various services performed for the Company by each of them and
a lump-sum consulting fee in the amount of $5,000 paid to each of Messrs. Roland
W. Fink and Kendall L.  Dorsett and the fee in the amount of $250 per month paid
by the Company to Fink & Dorsett,  a consulting  firm owned by Messrs.  Fink and
Dorsett,  for administrative  services performed and costs incurred by said firm
on behalf of JDI, no cash or non-cash  compensation was awarded to, earned by or
paid to any  executive  officer or  director  of the  Company  for all  services
rendered in all  capacities  to the Company  during the  approximate  twelve and
one-half  month period since its  inception on March 6, 1997.  On March 6, 1997,
the  Company  issued  and sold  128,000  shares  of Common  Stock,  representing
approximately 31.4% of the total number of shares of Common Stock of the Company
outstanding on the date hereof, to each of Messrs. Fink and Dorsett for services
rendered in connection with the organization of the Corporation (an aggregate of
256,000  shares  of Common  Stock).  Ms.  Suzanne  Sorensen,  on April 1,  1997,
received a total of 8,000  shares of Common  Stock,  representing  approximately
2.0% of the total number of outstanding  shares of the Company's Common Stock as
of the date hereof,  in consideration for certain business  consulting  services
performed by her for the Company.  Except for the above-described  compensation,



                                       20
<PAGE>



it is not anticipated that any executive officer of the Company will receive any
cash or non-cash  compensation  for his or her services in all capacities to the
Company until such time as the Company commences  business  operations.  At such
time as JDI  commences  operations,  it is expected  that the Board of Directors
will approve the payment of salaries in a reasonable amount to each of Mr. Fink,
Ms.  Sorensen and Mr.  Dorsett for their services in the positions of President,
Executive Vice President and Secretary/Treasurer,  respectively, of the Company.
At such time, the Board of Directors may, in its discretion, approve the payment
of additional cash or non-cash  compensation to the foregoing for their services
to the Company.

     The Company does not provide  officers  with  pension,  stock  appreciation
rights,  long-term incentive or other plans and has no intention of implementing
any such plans for the foreseeable future.

Compensation of Directors

     The Company has no standard  arrangements for compensating the directors of
the Company for their attendance at meetings of the Board of Directors.


Item 11. Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth information as of March 19, 1998,  regarding
the ownership of the  Company's  Common Stock by each  shareholder  known by the
Company to be the beneficial owner of more than five per cent of its outstanding
shares of Common Stock,  each director and all executive  officers and directors
as a group.  Except as otherwise  indicated,  each of the  shareholders has sole
voting  and  investment  power  with  respect  to the  shares  of  Common  Stock
beneficially owned.

                                         Amount
   Name and Address of                Beneficially                   Percent of
    Beneficial Owner                     Owned                        Class (1)
    ----------------                     -----                        ---------

Roland W. Fink (2)(3)(4)                128,000                         31.4%
1201 North Pacific Avenue, Suite #104
Glendale, California  91202

Kendall L. Dorsett (2)(3)(4)            128,000                         31.4%
1201 North Pacific Avenue, Suite #104
Glendale, California  91202

Patricia Cudd                            64,000                         15.7%
1120 Lincoln Street, Suite #703
Denver, Colorado  80203

Suzanne Sorensen (2)(3)                   8,000                          2.0%
2449 Lyric Avenue
Los Angeles, California  90027

All Executive Officers and Directors    264,000                         64.7%
as a Group (three persons)

------------------

     (1) Based upon  408,000  shares of the  Company's  Common  Stock issued and
outstanding as of March 17, 1998.



                                       21
<PAGE>



     (2) The shareholder is subject to the community  property laws of the State
of California with regard to his or her ownership of the shares of Common Stock.

     (3) Executive officer of the Company.

     (4) Member of the Board of Directors of the Company.


Item 12. Certain Relationships and Related Transactions.

     On March 6, 1997,  the  Company  issued and sold  128,000  shares of Common
Stock to each of  Messrs.  Roland W. Fink and  Kendall  L.  Dorsett  (a total of
256,000  shares  of  Common  Stock),  the  President  and   Secretary/Treasurer,
respectively,   of  the  Company  and  record  and  beneficial  owners  each  of
approximately 31.4% of the Company's  outstanding Common Stock, in consideration
and exchange  therefor of services in connection  with the  organization  of JDI
valued at $128 (an  aggregate  of $256)  performed  for the Company by each such
person.

     The  Company  issued and sold,  on March 6, 1997,  an  aggregate  of 64,000
shares of its  Common  Stock to  Patricia  Cudd,  Esq.,  the owner of record and
beneficially  of  approximately  15.7% of the  Company's  outstanding  shares of
Common Stock and the sole  proprietor  of Patricia  Cudd &  Associates,  Denver,
Colorado,  which  firm has passed  upon the  legality  of the  Common  Stock and
certain other matters in connection with this Form 10-SB Registration Statement.
The shares were  issued to Ms.  Cudd in  consideration  for her  performance  of
certain legal services related to the organization of the Company, including the
preparation  and filing with the Colorado  Secretary of State of the Articles of
Incorporation  of the Company,  the preparation of the Company's  Bylaws and the
preparation  of the  Minutes  of the  Organizational  Meeting  of the  Board  of
Directors of JDI; which services were valued at $64.

     On April 1, 1997,  the Company  issued and sold a total of 8,000  shares of
Common  Stock to Ms.  Suzanne  Sorensen,  the  Executive  Vice  President of the
Company  and the  record  and  beneficial  owner  of  approximately  2.0% of the
Company's  outstanding  Common  Stock,  as  consideration  for certain  business
consulting  services  performed for the Company relating to, among other things,
jewelry design, fabrication and marketing, valued at $2,000.

     Since the  Company's  inception on March 6, 1997, it has paid a monthly fee
in the amount of $250 (plus certain out-of-pocket expenses) to Fink & Dorsett, a
consulting  firm  owned  by  Messrs.  Fink and  Dorsett,  in  consideration  for
administrative  services  performed and costs incurred by said firm on behalf of
JDI. As of December 31, 1997,  management fees paid totaled  $2,460.  Management
believes  that the  management  fees paid by the  Company to Fink & Dorsett  are
lower than fees which  would be payable  by the  Company to  unaffiliated  third
parties for comparable services in the Los Angeles, California, area.


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

     (a) The exhibits  required to be filed  herewith by Item 601 of  Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:



                                       22
<PAGE>


                                                           Exhibit Number As
                                                       Listed in Document Incor-
Exhibit No.             Description                       porated by Reference
--------------------------------------------------------------------------------

   3.1*     Articles of Incorporation of Blue Mountain            2.1
            Capital, Inc., filed March 6, 1997.

   3.2*     Articles of Amendment to the Articles of              2.2 
            Incorporation of Blue Mountain Capital, Inc., 
            filed June 20, 1997.

   3.3*     Bylaws of Blue Mountain Capital, Inc.                 2.3

------------------

     *Incorporated  herein by  reference to the  Registration  Statement on Form
10-SB of  Jewelnique  Designs,  Inc.  (File No.  0-22783),  filed  with the U.S.
Securities and Exchange Commission.

     (b) No Reports on Form 8-K were filed during the last quarter of the fiscal
year ended December 31, 1997, covered by this Annual Report on Form 10-KSB.




                                       23
<PAGE>



                                   SIGNATURES
                                   ----------

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

                                          JEWELNIQUE DESIGNS, INC.
                                          (Registrant)


Date:  March 19, 1998                     By: /s/ Roland W. Fink
                                             -----------------------------------
                                             Roland W. Fink, 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.


     Date                        Signature                     Title
     ----                        ---------                     -----

March 19, 1998            By: /s/ Roland W. Fink       President and Director
                             -----------------------
                             Roland W. Fink


March 19, 1998            By: /s/ Kendall L. Dorsett   Secretary, Treasurer and
                             -----------------------
                             Kendall L. Dorsett           Director




                                       24