U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2004.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______ to ________
COMMISSION FILE NUMBER: 333-70932
THE JACKSON RIVERS COMPANY
(Name of small business issuer in its charter)
FLORIDA 65-1102865
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
27 RADIO CIRCLE, MOUNT KISCO, NEW YORK 10549
(Address of principal executive offices) (Zip Code)
(619) 615-4242
(Issuer's telephone number)
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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of September 30, 2004, the
issuer had 335,982,750 shares of its common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 2
Item 1. Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . 2
Item 2. Management's Discussion and Analysis or Plan of Operation. . . . . . 2
Item 3. Controls and Procedures . . . . . . . . . . . . . . . . . . . 4
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 5
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . 5
Item 4. Submission of Matters to a Vote of Security Holders . . 5
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . 5
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 5
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 . . . 7
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 . . . 8
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 . . . 9
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 . . . 10
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE JACKSON RIVERS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS September 30, 2004 December 31, 2003
----------------------- -------------------
Current assets:
Cash and cash equivalents $ 70,353 $ 14,820
Accounts receivable, net of allowance for doubtful account of $0 at
September 30, 2004 and December 30, 2003 42,000 -
Prepaid expenses and other 6,733 3,455
----------------------- -------------------
Total current assets 119,086 18,275
Property, plant and equipment, net of accumulated depreciation of $1,797
and $341 at Septemver 30, 2004 and December 31, 2003, respectively 8,693 3,756
----------------------- -------------------
Total Assets $ 127,779 $ 22,031
======================= ===================
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 343,348 $ 15,529
Advances from related parties 100 100
----------------------- -------------------
Total current liabilities 343,448 15,629
Commitments and contingencies - -
(Deficiency in) stockholders' equity (Note B):
Preferred stock, par value; $.001, authorized 200,000,000 shares; none
issued and outstanding at September 30, 2004 and December 31, 2003 - -
Common stock, par value; $.001, authorized 1,980,000,000 shares;
335,982,750 and 39,432,750 shares issued and outstanding at September 30,
2004 and December 31, 2003, respectively 335,983 39,433
Additional paid-in capital 2,636,388 843,747
Stock subscription receivable (62,400) (59,500)
Accumulated deficit (3,125,640) (817,278)
----------------------- -------------------
Total (deficiency in) stockholders' equity (215,669) 6,402
Total liabilities and (deficiency in) stockholders' equity $ 127,779 $ 22,031
======================= ===================
See accompanying notes to the unaudited condensed consolidated financial information
4
CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
THE JACKSON RIVERS COMPANY
(UNAUDITED)
For the three months ended September 30, For the nine months ended September 30,
2004 2003 2004 2003
---------------------- --------------------- --------------------- ---------------------
Revenues:
Sales, net $ 67,000 $ - $ 67,000 $ -
Operating expenses:
Selling, general, and
administrative 646,809 197,585 2,373,918 230,438
Depreciation 525 137 1,456 137
---------------------- --------------------- --------------------- ---------------------
Total operating expenses 647,334 197,722 2,375,374 230,575
Loss from operations (580,334) (197,722) (2,308,374) (230,575)
Other income:
Other income - - - 12,856
Interest income 9 1 12 1
---------------------- --------------------- --------------------- ---------------------
Total other income 9 1 12 12,857
Net loss before provision for
income taxes (580,325) (197,721) (2,308,362) (217,718)
Provision for income taxes - - - -
---------------------- --------------------- --------------------- ---------------------
Net loss $ (580,325) $ (197,721) $ (2,308,362) $ (217,718)
====================== ===================== ===================== =====================
Earnings (losses) per share, basic
and fully diluted $ (0.01) $ (0.01) $ (0.01) $ (0.01)
====================== ===================== ===================== =====================
Basic and diluted weighted
average number of shares
outstanding 103,488,329 17,457,750 154,099,548 18,247,769
====================== ===================== ===================== =====================
See accompanying notes to the unaudited condensed consolidated financial information
5
THE JACKSON RIVERS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months ended September 30,
2004 2003
--------------------- ---------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss from operation $ (2,308,362) $ (217,718)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 1,456 137
Common stock issued in exchange for consulting services rendered (Note B) 503,740 138,000
Common stock issued in exchange for employee services rendered and related
transaction costs (Note B and C) 361,043 14,908
Employee compensation and transaction costs in connection with common
stock subscribed (Note B) 6,373 -
Loss from disposal of equipment - 1,272
(Increase) decrease in accounts receivable (42,000) -
(Increase) decrease in prepaid expenses and other (3,278) 1,946
Increase (decrease) in accounts payable and accrued liabilities 327,818 (4,999)
--------------------- ---------------------
Net cash (used in) operating activities (1,153,210) (66,454)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,392) (4,098)
--------------------- ---------------------
Net cash (used in) investing activities (6,392) (4,098)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party advances - 100
Proceeds from the sale of common stock, net of costs and fees (Note B) 1,215,135 63,093
--------------------- ---------------------
Net cash provided by financing activities 1,215,135 63,193
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 55,533 (7,359)
Cash and cash equivalents at beginning of period 14,820 29,411
--------------------- ---------------------
Cash and cash equivalents at end of period $ 70,353 $ 22,052
===================== =====================
Supplemental Disclosure of Cash Flows Information:
Cash paid during the period for interest $ - $ -
Cash paid during the period for income taxes - -
Common stock issued in exchange for consulting services rendered (Note B) 503,740 138,000
Common stock issued in exchange for employee services rendered and related
transaction costs (Note B and C) 361,043 14,908
Employee compensation and transaction costs in connection with common
stock subscribed (Note B) 6,373 -
Employee stock purchase plan:
Common stock issued under employee stock purchase plan 1,585,451 110,899
Less: stock subscription receivable (62,400) (32,000)
Add: proceeds received from common stock subscribed 53,127 -
Less: common stock retained by employees and related transaction costs (361,043) (15,806)
--------------------- ---------------------
Net proceeds from the sale of common stock $ 1,215,135 $ 63,093
===================== =====================
See accompanying notes to the unaudited condensed consolidated financial information
1
THE JACKSON RIVERS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
SEPTEMBER 30, 2004
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
-------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Accordingly, the results from operations for the nine-month period ended
September 30, 2004, are not necessarily indicative of the results that may be
expected for the year ended December 31, 2004. The unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated December 31, 2003 financial statements and footnotes thereto
included in the Company's SEC Form 10-KSB.
Business and Basis of Presentation
----------------------------------
The Jackson Rivers Company (the "Company") was incorporated on May 8, 2001 under
the laws of the State of Florida. The Company was a "development stage
enterprise" (as defined in statement of Financial Accounting Standards No. 7)
until September 30, 2004. The Company is currently engaged in the business of
developing and providing customized information management systems.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Jackson Rivers Technologies, Inc. and JRC Global
Products, Inc. Significant intercompany transactions and accounts have been
eliminated in consolidation.
(a) Stock Based Compensation
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
statement amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company has chosen to continue to account
for stock-based compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related interpretations. Accordingly, compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the Company's stock at the date of the grant over the exercise price of the
related option. The Company has adopted the annual disclosure provisions of SFAS
No. 148 in its financial reports for the year ended December 31, 2003 and has
adopted the interim disclosure provisions for its financial reports for the
subsequent periods. The Company has no awards of stock-based employee
compensation outstanding at September 30, 2004.
2
THE JACKSON RIVERS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
SEPTEMBER 30, 2004
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassification
----------------
Certain reclassifications have been made to conform to prior periods' data to
the current presentation. These reclassifications had no effect on reported
losses.
NOTE B - CAPITAL STOCK
The Company has authorized 200,000,000 shares of preferred stock, with a par
value of $.001 per share. As of September 30, 2004 and December 31, 2003, the
Company has no preferred shares issued and outstanding. The Company is
authorized to issue 1,980,000,000 shares of common stock, with a par value of
$.001 per share. As of September 30, 2004 and December 31, 2003, the Company has
335,982,750 and 39,432,750 shares of common stock issued and outstanding.
In January 2004, the Company received $53,127 of proceeds for the $59,500 of
common stock subscribed in December 2003, the remaining balance of $6,373 was
charged to operations as compensation and transaction costs in January 2004.
During the nine months ended September 30, 2004, the Company issued an aggregate
of 42,050,000 shares of common stock to consultants in exchange for $503,740 of
services rendered, which approximated the fair value of the shares issued during
the period the services were rendered.
During the nine months ended September 30, 2004, the Company issued an aggregate
of 254,500,000 shares of common stock to officers and employees for stock
options exercised at a price ranging from $0.001 to $0.03 per share for a total
of $1,585,451 (Note C). The Company received $1,162,008 of proceeds, net of
costs and fees. Stock subscription of $62,400 is due to the Company and
compensation expenses of $361,043 were charged to operations during the period
ended September 30, 2004.
NOTE C - EMPLOYEE STOCK INCENTIVE PLAN
3
In August 2003, the Company established the 2003 Employee Stock Incentive Plan
(the "Plan"). The purpose of the Plan is to provide officers and employees, who
make significant contributions to the long-term growth and performance of the
Company, with equity-based compensation incentives, and to attract and retain
quality employees. The maximum number of shares of common stock that may be
awarded or issued under the Plan is 17,000,000. The Plan will be administered by
a Compensation Committee (the "Committee") appointed by the board of directors
of the Company. In January 2004, Company established the 2004 Employee Stock
Incentive Plan and the maximum number of shares of common stock that may be
awarded or issued under the 2004 Plan is 50,000,000. In September 2004, the
Company increased the maximum number of shares of common stock that may be
awarded or issued to 400,000,000 shares.
The stock option plan provides for the issuance of incentive stock options at an
exercise price approximating 85% of the fair market value of the Company's
common stock on the date of exercise (or 110% of the fair market value of the
common stock on the date of the grant of the option, in the case of significant
stockholders). The maximum life of the options is ten years. During the period
ended September 30, 2004, an aggregate of 254,500,000 options were granted and
all options were exercised on the grant date. There are no stock options
outstanding as of September 30, 2004.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD-LOOKING INFORMATION
Much of the discussion in this Item is "forward looking" as that term is
used in Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934. Actual operations and results may materially differ from
present plans and projections due to changes in economic conditions, new
business opportunities, changed business conditions, and other developments.
Other factors that could cause results to differ materially are described in our
filings with the Securities and Exchange Commission.
The following are factors that could cause actual results or events to
differ materially from those anticipated, and include, but are not limited to
general economic, financial and business conditions, changes in and compliance
with governmental laws and regulations, including various state and federal
environmental regulations, our ability to obtain additional financing from
outside investors and/or bank and mezzanine lenders; and our ability to generate
sufficient revenues to cover operating losses and position us to achieve
positive cash flow.
Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof. We believe
the information contained in this Form 10-QSB to be accurate as of the date
hereof. Changes may occur after that date. We will not update that information
except as required by law in the normal course of our public disclosure
practices.
Additionally, the following discussion regarding our financial condition
and results of operations should be read in conjunction with the financial
statements and related notes contained in Item 1 of Part I of this Form 10-QSB,
as well as the financial statements in Item 7 of Part II of our Form 10-KSB for
the fiscal year ended December 31, 2003.
MANAGEMENT'S PLAN OF OPERATION
We were originally organized to provide short-term loans to consumers
wishing to finance funeral arrangements for their deceased loved ones, while
payment of benefits from insurance companies on the lives of the deceased were
pending. Due to a change in control of our company and because of the
difficulty in securing a line of credit or other sources of funding to establish
a loan portfolio large enough to support our operations and return a profit, we
abandoned our plans to pursue short-term financing of funeral arrangements.
We have now entered the business of providing customized information management
systems. We expect to provide innovative solutions for integrating financial
and customer information, managing manufacturing processes, reducing inventory
and standardizing human resource
4
information. We plan to market our business management software development
platform throughout the United States, Mexico and Canada by utilizing various
business software developers, solutions providers and system integrators. Our
clients, the solutions providers, are expected to develop customized business
applications, using the STEPS(TM) platform, for their clients in less time and
with fewer programming, database management, and development resources. We hope
to expand our client base and win market share by offering established experts
in the various business functions such as supply-chain management and customer
relations management to bundle their expertise with our development platform to
deliver highly effective business management applications.
We now have the exclusive worldwide sublicense to commercialize products
using the STEPS platform. STEPS (Straight Through Enterprise Processing Systems)
is a proprietary Java-based platform, built on patented technology, used to
create customized business management applications and information management
systems. We recently announced new developments related to the plans of Jackson
Rivers Technologies, Inc., our wholly-owned subsidiary ("JRT") to market its
open-architecture STEPS ERP solution to small-and medium-sized enterprises
(SMEs) in the logistics, distribution and supply-chain management sector in the
United States and Canada. JRT is now moving to finalize the functional
specification for this application and recruit additional domain expertise. As
reported in previous public announcements, a STEPS solution has successfully
penetrated the distribution/logistics sector in the Latin American market. We
have generated a considerable amount of interest throughout the region of Latin
America, including the recently announced channel partnership with global
enterprise mobility solutions provider, Symbol Technologies, which we see as a
strategic boost to STEPS deployments in Latin America.
We have engaged McQuerter, a San Diego-based international marketing firm
that specializes in introducing innovative technology platforms to
business-to-business and business-to-consumer enterprises, to plan and execute
an international public relations program to introduce STEPS(TM), the
open-architecture, Enterprise Management Solution (EMS) software, throughout
North America.
We completed our first domestic software deployment, implementing an
accelerated installation of STEPS software for the San Diego Regional Technology
Alliance (RTA). According to RTA management, STEPS will allow the RTA to scale
down from five working databases to one for their internal CRM activities. As a
result, the RTA can more efficiently track services and target communications
for each of their specific audiences.
On August 3, 2004 we filed articles of amendment to our articles of
incorporation, which increased the number of our authorized shares of common
stock to 1,980,000,000; authorized 200,000,000 shares of preferred stock; gave
our board of directors authority to determine, in whole or part, the
preferences, limitations, and relative rights, of classes or series of shares,
as provided in Section 607.0602 of the Florida Statutes and reduced our quorum
requirements for shareholder meetings from the majority to one-third of the
total shares entitled to be cast at such meetings. In October 2004, we filed
articles of amendment to our articles of incorporation with the Secretary of
State Florida. The articles of amendment to our articles of incorporation
established the rights and preferences of our newly created Series A and B
preferred stock.
Because we lack capital, an investment in us involves a very high degree of
risk. We generated sales revenues in the third quarter, have incurred expenses
and have sustained losses. We expect to generate significantly more revenues
during the last three months of our current fiscal year as we fully transition
from a development stage company to that of an active growth and acquisition
stage company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE CORRESPONDING PERIOD IN
2003.
Revenues. During the three months ended September 30, 2004, we had net
revenues of $67,000 compared to $0 during the same period in 2003, an increase
of $67,000. These are our first revenues to date. The substantial increase in
revenues reflects strong performance in our operations generally, and especially
in the sector of our business related to our subsidiary, Jackson Rivers
Technologies, Inc. Our significant increase in revenues was due to the
5
initial deployments of STEPS. Operating Expenses. During the three-month period
ended September 30, 2004, operating expenses were $647,334, as compared to
$197,722 for the same period in 2003. The increase in operating expenses is the
result of needed growth and development during initial deployments of the STEPS
software.
We anticipate that overhead as a percentage of operating expenses and total
revenue will decrease in future periods as we achieve certain economies from our
operations. If we expand our operations, we anticipate that the overall level
of general overhead expenses in dollars will increase.
Loss from Operations. For the quarter ended September 30, 2004 we realized
a loss from operations of $580,325, or $0.0056 loss per share, as compared to
$197,721, or $0.011 loss per share in the quarter ended September 30, 2003. We
intend to continue to find ways to expand our business, including through
acquisitions and organic growth. We believe that revenues and earnings will
increase as we grow. We anticipate that we will incur losses in the future if
we are able to expand our business and the marketing of our Internet technology
through acquisitions. The losses will be created to the extent of the excess of
technology development and marketing expenses over the income from operations.
NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE CORRESPONDING PERIOD IN
2003.
Revenues. During the nine months ended September 30, 2004, we had net
revenues of $67,000 compared to $0 during the same period in 2003, an increase
of $67,000. The substantial increase in revenues reflects strong performance in
our operations generally, and especially in the sector of our business related
to Jackson Rivers Technologies. Our significant increase in revenues was due
primarily to our initial internal development and deployments of STEPS. We
believe that Jackson Rivers Technologies' business is directly related to the
general economy and that a strong economy will have a positive effect on the
revenues we earn. The increase in the costs of sales as a percentage of revenue
is attributed to the emergence into the sales and marketing phase.
Operating Expenses. During the nine-month period ended September 30, 2004,
operating expenses were $2,375,374, as compared to $230,575 for the same period
in 2003. The increase is primarily due to licensing fees, development and
initial deployments of STEPS, as well as increase in stock-based compensation to
consultants and employees. We anticipate that overhead as a percentage of
operating expenses and total revenue will decrease in future periods as we
achieve certain economies from our operations. If we expand our operations, we
anticipate that the overall level of general overhead expenses in dollars will
increase.
Loss from Operations. For the nine months ended September 30, 2004 we
realized a lossfrom continuing operations of $2,308,362, or $0.014 loss per
share, as compared to $217,718, or $0.012 loss per share in the nine months
ended September 30, 2003. We intend to continue to find ways to expand our
business, including through acquisitions and organic growth. We believe that
revenues and earnings will increase as we grow. We anticipate that we will incur
losses in the future if we are able to expand our business and the marketing of
our Internet technology through acquisitions. The losses will be created to the
extent of the excess of technology development and marketing expenses over the
income from operations.
LIQUIDITY AND CAPITAL RESOURCES.
As of September 30, 2004, the Company had a deficiency in working capital
of $224,362. During the nine months ended September 30, 2004, the Company
generated cash flow deficit of $1,153,210. This was as a result of our net loss
of $2,308,362, adjusted principally for stock based compensation of $864,783 and
increase in accounts payable and accrued liabilities of $327,818. We used $6,392
of cash to acquire new property and equipment during the period. We met our cash
requirements during the period through receipts of $1,215,135 from sale of
common stock and stock subscription, net of costs and fees.
6
While we have raised capital to meet our working capital and financing needs in
the past, additional financing remains to be required in order to meet our
current and projected cash flow deficits from operations and development. While
we continue to seek financing in the form of equity in order to provide the
necessary working capital; we currently have no commitments for such financing.
Therefore, there is no guarantee that we will be successful in raising the funds
required.
By adjusting our operations and development to the level of capitalization,
we believe we have sufficent capital resources to meet projected cash flow
deficits through the next twelve months. However, if thereafter, we are not
successful in generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations, liquidity and
financial condition.
The effect of inflation on our revenues and operating results was not
significant. Our operations are located in California and Nevada and there are
no seasonal aspects that would have a material effect on our financial condition
or results of operations.
OUR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS HAVE STATED IN THEIR REPORT
INCLUDED IN OUR DECEMBER 31, 2003 FORM 10-KSB, THAT WE HAVE INCURRED OPERATING
LOSSES IN THE LAST TWO YEARS, AND THAT WE ARE DEPENDENT UPON MANAGEMENT'S
ABILITY TO DEVELOP PROFITABLE OPERATIONS. THESE FACTORS AMONG OTHERS MAY RAISE
SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We believe that we do not have any material exposure to interest or
commodity risks. We are exposed to certain economic and political changes in
international markets where we compete, such as inflation rates, recession,
foreign ownership restrictions, and trade policies and other external factors
over which we have no control.
We currently have no material long-term debt obligations. We do not use
financial instruments for trading purposes and we are not a party to any
leverage derivatives.
As discussed by our accountants in the audited financial statements
included in Item 7 of our Annual Report on Form 10-KSB, our revenue is currently
insufficient to cover our costs and expenses. We anticipate raising any
necessary capital from outside investors coupled with bank or mezzanine lenders.
As of the date of this report, we have not entered into any negotiations with
any third parties to provide such capital.
RECENT DEVELOPMENTS
We executed a promissory note, payable to Multitrade Technologies LLC and
Joe Khan, one of our directors, in the principal amount of $200,000.00 as
settlement of license fees due We have included the $200,000 in accrued
liabilities as of September 30, 2004, as in the terms of the notes have not be
finalized.
On October 13, 2004, we filed articles of amendment to our articles of
incorporation with the Secretary of State of the State of Florida, establishing
Series A of our preferred stock. 10,000,000 shares have been designated as
Series A preferred stock. Each share of the Series A preferred stock is
convertible into 1,000 shares of our common stock. On all matters submitted to
a vote of the holders of our common stock, the holders of the Series A preferred
stock are entitled to the number of voted equal to the number of shares of the
Series A preferred stock held by such holder multiplied by 2,000.
7
On October 18, 2004, we filed articles of amendment to our articles of
incorporation with the Secretary of State of the State of Florida, establishing
Series B preferred stock. Each share of the Series B preferred stock is
convertible into shares of our common stock in accordance with the Per Share
Conversion Price. The "Per Share Conversion Price" means 80 percent of the
OTCBB, (or such other exchange or market on which our common stock is then
listed, if our common stock is not listed on the OTCBB) five-day average closing
bid price for each share of our common stock for the five days prior to the date
of the conversion. The number of underlying shares of our common stock issuable
upon any conversion hereunder shall be calculated by multiplying the number of
shares of the Series B preferred stock to be converted times the par value of
the Series B preferred stock ($0.001 per share) and dividing the product thus
obtained by the Per Share Conversion Price. The holder of the Series B
preferred stock may not hold more than 4.99 percent of the issued and
outstanding shares of our common stock, in the aggregate, following any such
conversion. The holders of the Series B preferred stock have no voting rights
on any matter submitted to our shareholders for their vote, waiver, release or
other action, or be considered in connection with the establishment of a quorum,
except as may otherwise be expressly required by law or by the applicable stock
exchange rules.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
ITEM 3. CONTROLS AND PROCEDURES.
Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.
Evaluation of disclosure and controls and procedures. As of the end of the
period covered by this Quarterly Report, we conducted an evaluation, under the
supervision and with the participation of our chief executive officer and chief
financial officer, of our disclosure controls and procedures (as defined in
Rules 13a-15(e) of the Exchange Act). Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.
Changes in internal controls over financial reporting. There was no change
in our internal controls, which are included within disclosure controls and
procedures, during our most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
controls.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As of the date of this report, we are not involved in any legal
proceedings.
ITEM 2. CHANGES IN SECURITIES.
See "Recent Developments," supra, for information related to our Series A and B
preferred stock. In October 2004, 1,000,000 shares of the series A preferred
stock have been issued to Dennis N. Lauzon for services performed by him.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
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None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of our shareholders held on August 2, 2004, a
majority of our shareholders voted for approval of the following corporate
actions:
- Dennis N. Lauzon, Joseph M. Khan, and Nicholas A. Cortese, Jr. were elected
directors for the following year;
- The number of our authorized shares of common stock was increased to
1,980,000,000 by amending our articles of incorporation;
- 200,000,000 shares of preferred stock were authorized by amending our
articles of incorporation;
- Our board of directors was authorized to determine, in whole or part, the
preferences, limitations, and relative rights, of classes or series of
shares, as provided in Section 607.0602 of the Florida Statutes by amending
our articles of incorporation;
- Our quorum requirements for shareholder meetings were reduced from the
majority to one-third of the total shares entitled to be cast at such
meeting by amending our articles of incorporation; and
- Our selection of Russell Bedford Stefanou Mirchandani LLP as our
independent public accountants for the fiscal years ending December 31,
2003 and 2004 was approved and ratified.
The total number of votes cast in favor of each of the above proposals was
over 50,811,190 shares of our common stock, which number was sufficient to
approve pass the proposed amendments.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
IDENTIFICATION OF EXHIBIT
-------------------------
EXHIBIT NO.
------------
3.1** Articles of Incorporation filed with Secretary of State of Florida on May 8, 2001.
3.2* Articles of Amendment to Articles of Incorporation filed with Secretary of State of Florida on
August 3, 2004.
3.3* Articles of Amendment to our Articles of Incorporation, establishing Series A preferred
stock filed with Secretary of State of Florida on October 13, 2004.
3.4* Articles of Amendment to our Articles of Incorporation, establishing Series B preferred stock
filed with Secretary of State of Florida on October 18, 2004.
3.5** Bylaws dated June 23, 2004.
10.1** Technology License Agreement.
10.2* Promissory Note executed by The Jackson Rivers Company in favor of Joe Khan.
31.1* Certification of Dennis N. Lauzon, Chief Executive Officer of The Jackson Rivers Company,
pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of
2002.
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IDENTIFICATION OF EXHIBIT
-------------------------
EXHIBIT NO.
------------
31.2* Certification of Dennis N. Lauzon, Chief Financial Officer of The Jackson Rivers Company,
pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.302 of the Sarbanes-Oxley Act of
2002.
32.1* Certification of Dennis N. Lauzon, Chief Executive Officer of The Jackson Rivers Company,
pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of
2002.
32.2* Certification of Dennis N. Lauzon, Chief Financial Officer of The Jackson Rivers Company,
pursuant to 18 U.S.C. Sec.1350, as adopted pursuant to Sec.906 of the Sarbanes-Oxley Act of
2002
__________
* Filed herewith.
** Previously filed.
(b) Reports on Form 8-K.
None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
THE JACKSON RIVERS COMPANY
Dated November 17, 2004.
By /s/ Dennis N. Lauzon
--------------------------------------
Dennis N. Lauzon,
President and Chief Executive Officer
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