February 11, 2005
Mail Stop 0510
By U.S. Mail and facsimile to (888) 282-6372
Andres F. Fernandez
Chief Executive Officer
American Ammunition, Inc.
3545 NW 71st Street
Miami, Florida 33147
Re: American Ammunition, Inc.
Form SB-2
File No. 333-122056
Dear Mr. Fernandez:
We have reviewed your filing and have the following comments.
Note that our review has been limited to matters relating to the
conversion of debentures into shares of common stock. No further
review of the registration statement has been nor will be made.
Where indicated, we think you should revise your document in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. Please tell us supplementally why you believe 42,861,322
represents a good faith estimate of the number of shares issuable
upon application of the floating conversion rate. Note that
because
you are issuing shares under a conversion formula based on
fluctuating market prices, you may not rely on Rule 416 but must
instead register for resale the maximum number of shares needed in
your good faith estimate. Please see Securities Act Sections,
paragraph 3S and Securities Act Rules, paragraph 2S in the March
1999
supplement to our Manual of Publicly Available Telephone
Interpretations. We may have additional comments upon review of
your
response.
2. We note that your conversion formula on pages 35 and 36 and
your
explanation of the formula on page 17 include a final calculation
of
dividing by the conversion price to obtain the number of shares
issued, whereas your other statements of the conversion formula do
not include this final step. Please revise your statements of the
conversion formula throughout the document to include this final
step. In addition, please consider providing the equation by
which
the conversion formula operates in the "Convertible Debenture"
section.
3. Tell us supplementally what amount of shares you intend the
conversion formula to produce. For example, we note disclosure on
page 7 of your prospectus that the debentures convert into shares
at
a 24% discount to market; however, your conversion formula seems
much
more complex than is necessary to achieve this result.
4. We also note that the conversion formula on page 17 uses the
variable "Dollar Amount" twice, whereas other statements of the
formula use "Principal Amount" and "Dollar Amount." We also note
that you use the same figure, $266,500, in the sample conversion
on
pages 35 and 36. Please provide a single operational definition
for
these terms, including whether they are interchangeable, and
revise
throughout your document accordingly.
5. Similarly, please ensure that you describe the conversion
consistently throughout the document. For example, the conversion
formula as described on the cover page refers to "the dollar
amount"
and "the five lowest volume weighted prices," but does not specify
the security (i.e., the debenture or the common stock) whose
dollar
amount and weighted average price are being measured. Although
this
disclosure appears elsewhere in the document, you should make each
reference to the formula consistent and complete.
6. The disclosure under "Convertible Debenture" on page 17 does
not
appear to take in to account the December 2004 amendments to the
convertible debenture that you describe on page 4. For example,
on
page 17, you say that the conversion price is obtained by
multiplying
the market value of an unnamed security by 80%, however, we
understand that the December 2004 amendments changed this to 76%
(as
disclosed on the cover page). Further, the disclosure on page 17
suggests that the debenture is convertible at LaJolla`s election,
whereas disclosure on page 4 suggests that the debenture is
mandatorily convertible according to an agreed schedule. In
addition, on page 4 you state that LaJolla will "prepay" the
warrant.
Please clarify whether this means LaJolla will exercise the
warrant.
Please also reconcile this with disclosure on page 18, where you
say
that the warrant will be exercised simultaneously with the
conversion
of the debenture. Please reconcile these and any other
disclosures
regarding the terms of conversion of the debentures and exercise
of
the warrants throughout your document. We may have additional
comments on this disclosure after the terms have been clarified.
7. You appear to have registered the resale of the shares
underlying
these debentures and warrants as originally issued. We assume
that
you are filing this registration statement to register the resale
of
those shares as they will be issued under the revised terms of the
debenture and warrants. Please note that to the extent that
shares
underlying the debenture and warrants have not been sold, you
should
deregister them by filing a post-effective amendment to your
effective registration statement for this purpose.
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter that is filed on EDGAR with your amendment that keys
your responses to our comments and provides any requested
supplemental information. Detailed cover letters greatly
facilitate
our review. Please understand that we may have additional
comments
after reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date
Please contact Matt Franker, Staff Attorney, at (202) 824-
5495
or me at (202) 942-1950 with questions.
Sincerely,
Pamela A. Long
Assistant Director
cc: Steve Fleming, Esq. (via facsimile 212/930-9725)
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas, 21st Floor
New York, New York 10018
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Andres F. Fernandez
American Ammunition, Inc.
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE