JMIH 7.6% owner files 13D denouncing reverse merger proposal.
http://www.sec.gov/Archives/edgar/data/1063154/000116289307000003/jupiter13d.txt
ITEM 3. Source and Amount of Funds or Other Consideration
Personal funds in the aggregate amount of $155,433.81 have been used to effect
the purchases. No part of the purchase price represents borrowed funds.
ITEM 4. Purpose of Transaction
Respondent is firmly opposed to the company's proposed reverse merger with
Diamond Information Institute. Respondent believes that management's completing
the reverse merger would represent an unconscionable betrayal of minority
shareholders, a breach of fiduciary responsibility, and a blatant case of
"self-dealing." (Management's proposal would allow insiders to go from 53% to
100% control of a $16 million in revenues boat business, while the 47% minority
shareholders would suffer massive dilution, and "get stuck" owning 9% of an
unproven $2 million in revenues jewelry business.) The dramatic 45% decline in
Jupiter's common stock since the announcement of the proposed reverse merger
(significant open market purchases by the respondent notwithstanding) evidences
that the market is "voting with its feet," and believes that the transaction
will destroy value for the minority shareholders, while enriching current
management. It is soberingly clear to respondent that Jupiter's lone outside
director, for some unknown reason, has abdicated his moral duty to protect the
interests of outside shareholders of this "controlled entity."
Respondent believes Jupiter's common stock could be worth a multiple of the
current trading price, if management's publicly disclosed income projections for
the boat business in the next few years come to fruition, and that value for
minority shareholders is best created by "walking away" from the Diamond
transaction. Respondent believes that Jupiter has a successful business model,
operates in a more specialized (and therefore more stable) "upper-end" niche,
has a growing reputation for excellence in the industry, increasing brand equity
and awareness, and that this is evidenced by Jupiter's outperforming many of its
peers in revenue growth over the last several years. The company has a solid
balance sheet, with no immediate need for additional capital. The recent
consolidation into one facility in Palmetto will reduce costs and increase
operating efficiencies. OUTSIDE SHAREHOLDERS HAVE THE RIGHT TO PARTICIPATE IN
THAT UPSIDE, and not have Jupiter management force us out, and "take it all for
themselves." (Based upon management's publicly disclosed projections for
significant improvement in Jupiter's fundamentals over the next few years, and
the fact that the financial "hit" of the Palmetto consolidation is behind the
company, it seems evident that management is opportunistically attempting to
"squeeze out" minority holders during a "trough" in the boat business's
financial results.)
Respondent feels that if Jupiter management wants to show good faith with the
reverse merger proposal, they should do what other "controlled entities" have
done that respondent has held shares in, and put the proposal to a vote of the
minority shareholders, mandating that "a majority of the minority" approve the
transaction, to allow it to go forward.
Respondent has had discussions with Jupiter management, and intends to continue
to have discussions with Jupiter management, to urge them to forgo the reverse
merger. If management goes through with the proposal, respondent intends to
exercise appraisal rights on 100% of his shares, as he believes that the current
market price substantially undervalues Jupiter's boat business (and that the
terms of the proposed reverse merger substantially undervalue Jupiter's boat
business, and dramatically overvalue Diamond). Respondent is outraged by the
"fairness opinion" provided by ManageSource Research, believes that it presents
a wildly exaggerated valuation for Diamond having no foundation in reality, is a
brazen act of financial chicanery, and an insult to any thinking investor.
Respondent believes the independence of ManageSource is highly questionable,
given the nature of the opinion, the fact that Jupiter paid $40,000 for the
opinion, and the fact that Diamond separately paid ManageSource $22,500 for
other services. With all of this in mind, respondent reserves the right to hold
discussions with other shareholders and legal counsel in reference to the
company generally, and/or specifically with regard to seeking an injunction to
halt the Diamond transaction.
Respondent has acquired the shares for investment purposes. Respondent may,
from time to time and at any time, acquire additional shares in the open market
or otherwise, and reserves the right to dispose of any or all of his shares in
the open market or otherwise, at any time and from time to time.
As a seasoned investor specializing in micro-cap "deep value" situations,
respondent has been increasing his position in Jupiter stock because of its
significant price decline, because it is selling for an extreme discount to
tangible book value and sales per share, because of the solid balance sheet, and
positive long-term prospects of the boat business. Furthermore, because he felt
that crossing the 5% ownership threshold (and going on the public record as the
largest outside shareholder--and the 3rd largest shareholder overall after
Chairman & CEO Carl Herndon and CFO Lawrence Tierney) was more likely to
demonstrate to management just how wrong the proposed transaction is, and
because he is so convinced that Jupiter is undervalued at current prices, that
he is willing to "go to appraisal," and argue at that time for just how much
more Jupiter is worth, if the proposed transaction should not be voluntarily
aborted, put to a vote of the minority shareholders, or otherwise enjoined.
Respondent believes that if Messrs. Herndon and Tierney want to control 100% of
the boat business (quite obviously the actual reason for this proposed
transaction), they need to make a good faith cash offer to shareholders, and not
try to unceremoniously "dump off" the minority shareholders, leaving us with an
ownership interest in an entity (Diamond) that has a significantly more
uncertain future, a significantly higher risk profile, is in a market (jewelry)
that is much more competitive than Jupiter's "upper-end" niche boat business,
and, most importantly, represents an ownership interest that is worth
scandalously less than the minority's current position in Jupiter.
Respondent emphasizes that each shareholder, in consulting with his financial
advisor, based upon his unique set of circumstances, needs to decide for
himself the desirability of an investment in Jupiter stock, the relative merits
of the proposed reverse merger, the likelihood of the transaction going through
or not going through (and the effect of either situation on the stock price),
efforts and expenses involved in seeking appraisal of one's shares, etc..
Respondent makes no recommendation to other shareholders as to what they should
do, in any regard.
Except as set forth above in this Item 4, the respondent has no plans or
proposals which relate to, or could result in, any of the matters referred to
in subsections (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
As of September 14, 2007, respondent has sole voting and dispositive power over
1,441,486 shares of Jupiter Marine International Holdings Inc. common stock.
According to the the company's latest 10-Q filing, as of May 25, 2007, there
were 18,863,861 common shares outstanding. Respondent is therefore deemed to
own 7.6% of the company's common stock. Transactions effected by the
respondent in the past 60 days were performed in ordinary brokerage transac-
tions, on the OTC Bulletin Board, and are indicated as follows:
07/16/07 purchased 5000 shares @ $.091
07/17/07 purchased 25,000 shares @ .09
07/18/07 purchased 5000 shares @ .09
07/24/07 purchased 1200 shares @ .086
08/03/07 purchased 5000 shares @ .09
08/09/07 purchased 5000 shares @ .086
08/13/07 purchased 20,000 shares @ .09
08/15/07 purchased 40,000 shares @ .09
08/17/07 purchased 10,000 shares @ .085
08/20/07 purchased 5000 shares @ .082
08/23/07 purchased 37,000 shares @ .0803
08/30/07 purchased 30,000 shares @ .08
09/04/07 purchased 105,000 shares @ .0759
09/05/07 purchased 25,000 shares @ .075
09/06/07 purchased 105,000 shares @ .0755
09/07/07 purchased 20,000 shares @ .0703
09/10/07 sold 5000 shares @ .074
09/12/07 purchased 90,000 shares @ .0714
09/13/07 purchased 140,000 shares @ .0699
09/14/07 purchased 100,000 shares @ .0668
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