TEMECULA -- If you ask Jason O'Neill what an entrepreneur is, he struggles a bit to explain what it means. But take a look at what this 10-year-old Temecula boy has already accomplished -- and still has planned -- and there is no problem seeing him as just that.

A common dictionary definition of entrepreneur is a person who organizes and manages any enterprise, especially a business, usually with considerable initiative. That's young Jason.

What started as a simple craft-fair product last fall is now a full-fledged business for the boy, complete with a city of Temecula business license, a state tax identification number, a Web site for sales and -- perhaps the ultimate compliment for any entrepreneur -- others trying to buy his idea from him.

His innovative product? The Pencil Bug.

Jason isn't ashamed to admit that he likes doing homework and decided that having a Pencil Bug would make it a bit more fun for him and other children. He started with a red one -- that's his favorite color. And that very first red Pencil Bug has hatched a family of bugs now available in eight colors.

There are also Pencil Bug bookmarks and T-shirts available, and plans to develop a larger, plush, baby-safe Pencil Bug.

Jason is already working on a children's book series and someday would like to sell his idea for a TV cartoon about Pencil Bugs, something in the vein of SpongeBob SquarePants.

As his product Web site, www.pencilbugs.com, says, Pencil Bugs aren't just for kids.

So now, children and adults alike can spice up that boring ol' No. 2 pencil with a unique, handmade bug atop the eraser.

Pencil Bugs have little Styrofoam heads with antennae and eyes, complete with pipe-cleaner bodies wrapped around the pencil.

Each one comes with its own certificate of authenticity, which includes its name, the day it was "born" and instructions on the proper care and training of a Pencil Bug. Apparently, they come already trained how to sit, stand and stay.

Jason gave his first red creation to his pal, Chris Padgett, who started showing it to people at their school, Ysabel Barnett Elementary School.

"At first, I was nervous going around showing it to people," Jason says. "Chris helped a lot."

With some promoting from his buddy, Jason's Pencil Bugs started catching on quickly, and soon, more and more of his classmates wanted their own.

That led to the need for an assembly line -- well, an assembly line of Jason and his mom and dad, Nancy and Don O'Neill -- to start making more of the popular product.

It starts with the painting of the heads, and then its little bug eyes have to be hot-glued on. "My mom has to do that. I'm not allowed to do that part," Jason said, adding that he's "very lucky" to have so much help from his mom and dad.

Once the antennae and the body are added to each pencil, they are ready to be sold at $1.50 each.

Amazingly, in January, Jason was approached by a boy at his school who somehow brought two crisp $50 bills with him that day.

"He said, 'I want to buy your business for $100,' " Jason recalls with a bit of a sneer on his face.

"I thought about it and just said, 'Why would I do that? I'll make a lot more than $100,' " he said.

The team of Jason and his parents can make about 50 Pencil Bugs an hour, Nancy O'Neill says.

"We try to keep about 100 of them ready," she said, as orders continue to come in through word-of-mouth, the Web site and, as of about a week ago, sales through a Southern California school supply company.

On Aug. 21, the O'Neills delivered five cases of Pencil Bugs to CM School Supply -- one for each of its five stores, including one on Old Town Front Street in Temecula. Each case holds 24 Pencil Bugs.

The company bought the five cases, as well as a case of 48 Pencil Bug bookmarks.

The relationship with CM School Supply was sealed at an Aug. 17 sales meeting with the company's owners.

During the meeting, one of the owners asked Jason if he knew what the business term "win-win" meant, Nancy O'Neill said.

Jason responded in a manner far beyond his 10 years.

"I told him: 'Yes, I do. But this is a win-win-win. I make money, you make money, and the customer gets a great product,' " Jason recalled, as a smile beamed across his young face.

Jason's mom says that close to 1,000 Pencil Bugs have been sold thus far, along with about 150 bookmarks and a handful of Pencil Bug T-shirts.

Jason's entrepreneurial spirit is also helping children he doesn't know.

"Once the business started, I wanted to help other kids," Jason said. Through his mom, he heard about a place called HUGS Foster Family Agency in Temecula.

After meeting with those who run the nonprofit agency, Jason decided that he would donate 5 percent of all his sales to them.

The other 95 percent goes right back into the product itself, so more bugs can be made, his mother says.

"Even though I'm not making money from this right now, I'm getting experience from it," Jason says.

Jason's mom beams with pride when talking about what her only child has done with his young life.

"We also still want him to be a kid. This is much more than a lemonade stand, that's for sure," Nancy O'Neill said with a smile.

Contact staff writer John Hall at (951) 676-4315, Ext. 2628, or jhall@californian.com.