March 2, 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.
Draft Amendment No. 1 to Form SB-2 submitted February
15,
2005
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 revise your registration statement to include audited
financial statements for the year ended December 31, 2004. See
Regulation S-B, Item 310(g).
2. We note your proposed response to comment 1 in our letter of
February 11, 2005. Please revise your supplemental response to
tell
us why you believe 42,861,322 represented a good faith estimate of
the number of shares issuable upon the application of the floating
conversion rate on the date of your initial filing. Your
supplemental response relates to market prices on February 14,
2005,
whereas at the time of your initial filing, your estimate was
exactly
twice the number of shares that would be issued under the
conversion
formula based on the market price at that date.
3. We note your proposed response to comment 2 in our prior
letter.
Please revise the formula on page 2 to reflect the complete
formula.
4. We note your proposed response to prior comment 3, including
the
deletion of the statement that the debentures are convertible at a
24% discount to the trading price of the common stock. Please
tell
us supplementally, with a view toward disclosure that will provide
context for understanding the conversion formula, what the formula
is
intended to achieve. The relationship between the value of the
shares of common stock into which the debentures are convertible
and
the face amount of the debentures is not clear from the formula.
For
example, it appears that if the market value of the common stock
is
at least $1.32 per share, then the debenture should convert into
one
share for each dollar`s worth of the debenture that is being
converted (although the value of the shares received would by
higher
than the face amount of the debenture being converted). However,
if
the market value of the common stock is less than $1.32, the
number
of shares and the total dollar value of the common stock per
dollar
of debenture being converted increases dramatically. For example,
if
the common stock market value is $1.00, then $50 face amount of
debentures would convert into 223 shares, or $223.00 worth of
common
stock. If the market value of the common stock is $0.50, then $50
face amount of debentures would convert into 947 shares, or
$473.50
worth of common stock. Please consider including a tabular
presentation that illustrates this in your filing as well as an
explanation of what the formula is designed to achieve.
5. Please consider renaming the "conversion price" component of
the
formula for purposes of the disclosure in this filing, since the
debenture does not actually "convert" at this "price" and
investors
may become confused as to how the formula operates.
6. The risk factor entitled "The continuously adjustable
conversion
price feature of our convertible debentures . . ." provides a
chart
that illustrates the number of shares issuable upon conversion of
the
debenture. Please revise this risk factor to clarify that the
table
assumes that the entire amount of the $266,350 debenture is being
converted. Please also rename the column headed "with discount at
24%", since the debenture actually converts at a much higher
discount
to the market value of the common stock.
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 and the declaration of
effectiveness 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
??
??
??
??
Andres F. Fernandez
American Ammunition, Inc.
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE