UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 3, 2001 (September 29,
2001)
AMERICAN AMMUNITION, INC.
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 333-46160 91-2021594
---------------------------- ---------------- ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
3545 NW 71st Street
Miami, FL 33147
----------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 835-7400
FBI Fresh Burgers International
827 State Street, Suite 14
Santa Barbara, CA 93101
(805) 560-1308
------------------------------------------------
(Former name or former address, if changes since last report)
Copy of Communications to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Phone: (561) 832-5696
Fax: (561) 659-5371
ITEM 1. CHANGE OF CONTROL OF REGISTRANT.
On September 29, 2001, FBI Fresh Burgers International n/k/a American
Ammunition, Inc. (the "Company"), a California corporation, F&F Equipment, Inc.
d/b/a American Ammunition, a Florida corporation ("F&F") and the individual
holders of the outstanding capital stock of F&F Equipment, Inc. (the "Holders")
consummated a reverse acquisition (the "Reorganization") pursuant to a certain
Share Exchange Agreement ("Agreement") of such date. Pursuant to the Agreement,
the Holders tendered to the Company all issued and outstanding shares of common
stock of F&F Equipment, Inc. in exchange for 21,000,000 Shares of common stock
of the Company. The reorganization is being accounted for as a reverse
acquisition.
The then officers and directors of the Company tendered their resignation
in accordance with the terms of the Agreement. Andres Fernandez, Emilio D. Jara,
Emilia Fernandez, Stephen Durland, Maria A. Fernandez, Len Hale and Robert
Escobio were elected to serve on the Board of Directors of the Company (the
"Board"). The Board subsequently appointed Andres Fernandez as Chairman of the
Board, President and Chief Executive Officer; Emilio D. Jara as Vice-President
of Operations and Secretary; Emilia Fernandez as Vice-President; and Stephen
Durland as Chief Financial Officer.
The Company also announced approval of the amendment of its Articles of
Incorporation in order to change the name of the Company from FBI Fresh Burgers
International to American Ammunition, Inc. Total issued and outstanding stock
following the forward split and after effecting the Share Exchange Agreement is
29,827,200.
Copies of the Agreement are filed herewith as Exhibit 2.1, and are
incorporated herein by reference. The foregoing descriptions are qualified in
their entirety by reference to the full text of such agreements.
ITEM 5. OTHER EVENTS
EXECUTIVE SUMMARY
The Company, a California corporation through its subsidiary American
Ammunition, is a manufacturer of small arms ammunition predominantly for the
commercial ammunition market. Both companies are referred to collectively as AA
or Company.
The Executive Offices of AA are as follows:
3545 NW 71st Street
Miami, FL 33147
Phone: (305) 835-7400
Facsimile: (305) 694-0037
Website: www.a-merc.com
Shares Outstanding ........................29,827,200
New Company Name: American Ammunition, Inc.
Contact Person: Andres F. Fernandez, President
DESCRIPTION OF BUSINESS
The Company is a California corporation incorporated on February 1, 2000,
and is a reporting company with the Securities and Exchange Commission. It is
changed its name from FBI Fresh Burgers International to American Ammunition,
Inc. It currently trades on the OTC Bulletin Board under the trading symbol
"FBIB". The Company has applied for a symbol change reflecting its new name.
On September 29, 2001, the Company entered into a Share Exchange Agreement
with F&F Equipment, Inc., a Florida corporation d/b/a American Ammunition
("AA"). The Agreement provides for 100% of the shares of AA to be acquired by
the Company in exchange for shares of common stock of the Company; for a new
Board of Directors consisting of AA directors; and, with total issued and
outstanding shares of the Company immediately after the closing of 29,827,200.
AA is the sole operating subsidiary of the Company after effecting the
Agreement.
AA is a manufacturer of small arms ammunition ("ammo"), predominantly for
the commercial ammunition market.
AA began as an assembler and re-loader of ammunition of several calibers:
9mm, .380auto, .357Mag, .38Spl, .40S&W, .45auto. As AA grew, management realized
that the only way to break into the industry was to become a vertically
integrated manufacturer. Its founders then invested heavily in research and
development, equipment, technology and market share. Soon AA was manufacturing
the calibers listed above along with special order ammunition for the Department
of Defense. Further streamlining of the operation resulted in the current
product line, the manufacture of 9mm, .45auto, .380auto, .32auto, .40S&W,
38Spl., and 30carbine. These products have been identified as having the largest
share of the market for the next several years. It now enjoys autonomy in
approximately 90% of its raw materials.
AA is an autonomous manufacturer of ammunition, with the technology and
equipment to take advantage of the growing market. It has an excellent
reputation within the industry. The ammunition industry has experienced a 28%
average increase in revenues annually between 1991 through 1998. This trend is
expected to continue through the year 2005.
The barrier to entry into the ammunition market is extremely high, in the
case of AA it is an established small arms munitions manufacturer, with an
established distribution network. AA manufactures its ammunition by creating
most of the components itself. The Company's manufacturing equipment and
techniques are technologically advanced and the Company is poised to enter and
impact a growing market predominantly held by three (3) large manufacturers.
Additionally it has been approved as a Department of Defense contractor.
The Ammunition market is growing each year and supply is not keeping up
with demand, allowing for companies like AA to make a significant impact in
sales through distributors in commercial markets and in addition sales to
government agencies, the military and exports. AA seeks to obtain additional
cash flow to allow it to enlarge its operations to take advantage of its
technological capacities, equipment and the existing marketplace.
PRODUCT UNIQUENESS
For years the large manufacturers have supplied the component parts of the
manufacturing process to smaller companies to assemble and distribute. A company
making its own components, can produce and market a quality lower cost product.
This concept, coupled with technology and progressive and environmentally sound
manufacturing practices (i.e. cans and recycled plastic packaging), has resulted
in a quality, affordable product reaching the sports shooter on a large scale
(Appendix 2).
INDUSTRY OUTLOOK
The top three (3) manufacturers of commercial ammunition in the United
States controlled an estimated eighty-one (81%) of the U.S. market in 1994.
These three (3) would include Olin Corporation's Winchester Ammunition Division,
Remington Arms and Federal Cartridge Company (Blount).
AA is committed to increasing its production capacity by 50 to 100% over
the next 3 years thereby significantly increasing its presence in the market.
Domestic consumption of commercial ammunition has exhibited strong growth
rates between 1991 and 1996, much in the same manner as the products in which
they are used. In short, domestic consumption value of commercial ammunition has
grown by 27% on an average annual basis between 1991 and 1994. In 1998, the
United States Federal Government purchased $1,687,658,000; U.S. Exports of small
arms ammunition were $1,618,000,000 and U.S. commercial consumption totaled
$758,000,000.
MARKETING AND SALES DISTRIBUTION
American currently has agreements with sixteen (16) national distributors
throughout the United States to diversify its sales base. American will
aggressively contact the customer through promotions, advertising and trade
shows (Appendix A). AA intends to aggressively solicit:
- OEM subcontract work from the 3 major manufacturers;
- Additional means of commercial distribution;
- Department of Defense and Law Enforcement contacts;
- Export sales; and - Mass Merchandisers/Chain stores.
American has been certified by the United States Small Business
Administration as a "qualified HUBZone small business concern.". Under the
program , small businesses can qualify for special set-aside contracts, get up
to a 10 percent edge in competitive contract bidding or even be the sole-source
bidder in some cases. The programs name signifies the effort to promote
businesses in "historically underutilized business zones," generally blighted
areas and to create jobs for those who live there as well.
AA is also aggressively marketing our unique manufacturing flexibility to
numerous DOD and commercial munitions manufacturers as subcontractors allowing
prime contractors to reap the
benefits of our "HUBZone certification", thereby allowing them to comply with
FAR requirements for the use of "small and underutilized minority business" in
fulfilling government contracts.
The Small Business Reauthorization Act of 1997 increased the overall
government agencies' procurement goals for small business to 23 percent and
calls for HUBZone contracts to go from 1.5 percent of procurement to 3 percent
by 2003.
THE MANUFACTURING PROCESS
AA's equipment and production lines have been appraised at $17,000,000.00.
The metallurgical process is extensive and highly technical. The
manufacture of the projectile is just as complex. American Ammunition, Inc. owns
all the equipment necessary to take the raw material, from cup, lead, primer and
powder, to the finished product--a finished, loaded round. The process of
manufacturing diverse calibers of ammunition is extremely complex. It requires
tolerances of +/-.0005" to be held. AA has the technology and the equipment to
produce a large variety of handgun and rifle ammunition. AA has a state of the
art machine shop and maintains its own testing and quality assurance equipment
and program. Ammunition is a performance - based product. Therefore, after the
manufacturing process is complete, the ammunition must comply with specific
protocols such as velocity, accuracy, and pressure to name a few. The purchase
of raw materials in bulk and taking advantage of prepayment discount produces
significant savings.
AA is evaluating the addition of several products to its existing
production lines. We are considering the addition of high speed projectile
forming machines to supplement our existing casting machines which would
effectively double or triple projectile production capacity, while improving
projectile quality and performance. AA is also making provisions to increase
other aspects of production capacity which would complement long term goals of
both production volume and product diversity
PRICING AND VALUE
AA strives to price its products competitively at a price lower than any of
the big three manufacturers (Remington, Federal, and Winchester). AA capitalizes
on the fact that the big three have very large corporate infrastructures and
have to pay much higher labor costs to their plant personnel. This pricing
schedule permits the distributor to purchase the product, add a significant
profit and sell at retail a price lower than that at which they can purchase the
competitors' product.
ADVERTISING & PROMOTION
AA's advertising and promotional budget will be geared towards magazine and
print media,(i.e. GUNS AND AMMO, HANDGUNS, SHOOTING INDUSTRY) results would
include name recognition among individual consumers. Currently, AA's products
sell on their own with very little advertising.
TRADEMARKS
AA has obtained a federal or state trademark for its headstamp "A-MERC " .
The trademark was assigned and registered on May 10,1994.
FACILITY/PLANT IN THE UNITED STATES,
AA currently manufactures its products at its Miami-based facility. This
facility has all of the infrastructure required for the manufacture of
ammunition, meeting and exceeding all environmental requirements. AA intends to
continue full operations through the next 12-24 months in this facility. After
12 months AA may consider moving portions of its manufacturing operations to its
facility in the Dominican Republic (see future growth and expansion section).
The company leases 24,000 square feet of warehouse space, owned by the Fernandez
family, at a rate of $2.71 per square foot per year. Management believes
comparable rentals in the area average about $4.50 per square foot. The company
is operating under a five year lease agreement expiring on July 31, 2004.
FUTURE GROWTH AND EXPANSION
The following information is included solely to provide a forward looking
view of what the future may hold for AA. While AA will continue its
manufacturing operations at its Miami, FL location for the foreseeable future,
it does intend to take advantage of an outstanding opportunity which has
presented itself.
In November 2000, AA received a Presidential Decree for the use, possession
and dominion over the installation located in the city of San Cristobal, known
as La Antigua Armeria Nacional for a period of (50) fifty years. This facility
has approximately 150,000 sq. ft. on approximately ten (10) acres which include
over 15 existing buildings. The Decree also declares this facility a Free- Zone.
These facilities could allow AA to increase output 200-400% over its US
production capacity. Lower operational costs in the Dominican Republic would
allow for an increase in profit margins, and allow for product development into
other aspects of the market.
American Ammunition, Inc. finds itself in a unique situation due to the
advent of the Presidential Decree in that all of its key personnel are
bilingual. The minimum wage in a Free-Zone in the Dominican Republic is $120.00
U.S. per month, or .75cents U.S./hour. This low labor cost will give AA an
extremely aggressive advantage over its competitors, who normally pay high
wages. There also exists a surplus of skilled labor. The proximity to the United
States and South and Central America allows us to aggressively expand our
markets, coupled with our Free-Zone status, which provides it with a very
favorable tax position.
MANAGEMENT
Andres F. Fernandez, J.A. Fernandez Jr. and Emilio D. Jara have been
involved in the business since AA began the manufacturing aspect of its
operations. Their management and technical skills in the area of ammunition
manufacturing have been reviewed and are discussed in the Pre-Award Survey
issued by the Department of Defense.
AA 's management team consists of:
Andres F. Fernandez Chairman, President and Chief Executive Officer
Emilio D. Jara Vice-President of Operations, Secretary and Director
Amelia Fernandez Vice President and Director
Steve Durland Chief Financial Officer and Director
Maria A. Fernandez Director
Len Hale Director
Robert Escobio Director
The Officers and Directors of the Company are as follows:
Andres Fernandez, age 35, currently serves as Chairman, President and Chief
Executive Officer. He has been employed by AA for over a decade. Mr. Fernandez
is responsible for day to day operations and has been a driving force behind the
company and its success in becoming a vertically integrated manufacturer. He
studied physics and calculus at St. Thomas University, FL and at the University
of Miami, FL. He is a licensed pilot, having graduated from the American
Institute of Aeronautics, FL, and received his certificate as a private pilot
(fixed wing) as well as private helicopter (rotary)in 1989. In 1989, Mr.
Fernandez graduated from the Institute of Public Service (Pan Am), GA as a
tactical rappel instructor. In 1990, he graduated from Omni Explosives, TN with
a specialty in tactical explosives. Mr. Fernandez was certified by the Florida
Department of Law Enforcement Academy in special operations/entry techniques in
1990. He has served as a tactical advisor to U.S. Treasury Department, Bureau of
Alcohol, Tobacco, and Firearms, U.S. Customs Service, and the Florida Department
of Law Enforcement. He has received numerous commendations and letters of
appreciation. He also served on the Board of Veterans Affairs (Hialeah , FL)
from 1990 to 1991. He is fluent in Spanish.
Emilio Jara, age 35, currently serves as Vice President of Operations,
Secretary and a Director. He has been employed with the company since 1988. He
has been an integral part of the company's technological growth. His abilities
have contributed to AA's research and development and subsequent increase in the
number of production lines. Mr. Jara is extremely well versed in metallurgical
and ballistic issues. He studied business administration at Miami-Dade Community
College (1984/1985). In 1989, he graduated from the Institute of Public Service
(Pan Am), GA as a Tactical Rappel Instructor. In 1990, Mr. Jara graduated from
Omni Explosives, TN with a specialty in Tactical Explosives. He is fluent in
Spanish.
Amelia Fernandez ,age 65, currently serves as Vice President and Director.
She graduated from Conservatorio Falcon (1950), and the National Conservatory of
Music in Havana, Cuba in 1952. Mrs. Fernandez holds the degrees of Professor of
Piano and Professor of Solmization Theory. She is an accomplished classical
pianist, opera singer and artist. As a diamond importer and wholesaler, she
completed and graduated from numerous Gemological Institute of America courses,
including the diamond and colored stone courses. She achieved success as a
jewelry designer for a select group of buyers, both corporate and individual.
She has managed, owned and operated several business enterprises in the
competitive world of wholesale and retail diamonds and precious stones. She has
been employed by the company since 1986 as its Office Manager and Human
Resources Coordinator, including the research and development of training
manuals and procedures for the selection of personnel. She is fluent in Spanish.
Stephen H. Durland, age 47 , currently serves as Chief Financial Officer
and Director. He is a CPA in 14 states. Mr. Durland received his Bachelor of
Administrative Science from Guilford College in Greensboro, NC in 1982.He is a
member of FICPA and served as a member of the FICPA Accounting Principles and
Auditing Standards Committee for the seven years. He is a member of the Board of
Directors and Audit/Finance Committee of The Children's Place at Home Safe,
Inc., a non-profit organization. Mr. Durland is the CFO and a member of the
Board of Directors of JAB International, Inc., (NQB Pink Sheets), and American
Hydroculture, Inc. currently a private company. He is also the CFO of Ong Corp.,
currently a private company. His professional experience over the last 21 years
includes 13 years of audit experience, 7 years of corporate accounting and
institutional investment management experience, and a total of 17 years in the
securities field. For 3 years he and one other individual managed a $ 900
million institutional investment portfolio. Mr. Durland is a Certified Cash
Manager (National). He has been a Florida licensed mortgage broker, a Registered
Investment Advisor and held NASD securities sales licenses.
Maria A. Fernandez, age 42, currently serves as Director. She is the
managing partner at Fernandez Friedman Grossman & Kohn PLLC. since May 1998.
Prior to that date, she was a partner at Taustine Post Sotsky Berman Fineman &
Kohn. She concentrates her legal practice in the areas of estate planning,
probate and administration. She also practices in the areas of Medicaid and
disability planning, corporate and individual taxation and Corporate law, with
an emphasis in closely held corporations. She is a graduate of the University of
Miami, FL (Bachelor of Business Administration and Master of Professional
Accounting) and the Brandeis School of Law at the University of Louisville, KY.
Ms. Fernandez is licensed to practice in Kentucky and Florida. She has lectured
in the areas of estate planning and probate, Medicaid planning and elder law.
She is a member of the Louisville, Florida, Kentucky and American Bar
Associations and is fluent in Spanish. Ms. Fernandez is the past President of
the Women Lawyers Association of Jefferson County, Kentucky and current Board
Member of the Louisville Bar Association. A Graduate of the Kentucky Women's
Leadership Network, she is active in various civic organizations and is on the
board of several non-profit corporations.
Len Hale, age 57, currently serves as a Director. He is the President of
Hale Consulting, LLC in Montgomery, AL, a management consulting firm focusing on
sales, marketing and management systems. Mr. Hale has more than twenty (20)
years experience as a proven leader in the firearms industry. From 1995-1998, he
served as group president of Blount International, Inc. (AL). As president of
this public manufacturing company consisting of ten (10) sporting goods brands,
he oversaw a $300 million plus operation with three (3) division Presidents and
increased sales from $84M to in excess of $300M through internal growth and
acquisitions, improved operating income and return on capital employ. From
1990-1995, Mr. Hale served as Executive Vice-President and Chief Operating
Officer of Ellett Brothers, Inc.(SC) Under his leadership, sales improved from
$69M to $160 M and profits grew from a negative profit to in excess of $6M. He
also installed a marine division, archery division and manufacturing divisions.
He has served on numerous boards and industry organizations, including the Board
of Governors of SAAMI (Sporting Arms and Ammunition Manufacturers Association)
and the Board of Governors of the National Shooting Sports Foundation.
Robert Escobio, age 46, currently serves as Director. He serves as member
of the Board of Directors of Thinkpath Inc. Mr. Escobio is currently President
and CEO of Capital Investment Services, Inc., an investment brokerage firm
located in Miami, FL. In this role, Mr. Escobio is responsible for all aspects
of a "broker/dealer" including finance, compliance, sales and operational
procedures. Mr. Escobio also serves as a Portfolio Manager for many prominent
individuals and works with various international institutions, brokers, and
dealers. Prior to Capital Investment Services, Mr. Escobio was the Executive
Vice President and International Director for Brill Securities Inc. where he
managed portfolios for high net worth customers and performed institutional
trading. Mr. Escobio also had numerous managerial roles in companies such as
Cardinal Capital Management, Smith Barney, Prudential Securities, and Dean
Witter. Mr. Escobio holds an MBA and a BSBA in Finance and Management.
KEY SUPPORT
Joe Fernandez, Jr., age 37, currently serves as Production Manager. He has
been employed by American Ammunition, Inc. since 1988. Mr. Fernandez has been an
integral part of the design and implementation of all of the production lines.
His involvement in high speed product flow has allowed the company to grow to
seven production lines. He has created our in-house machine shop, which has
given us the autonomy to manufacture all of our tooling requirements. He studied
mechanical engineering at Miami-Dade Community College (1983/1984). In 1985 he
graduated from Stewart International School of Jewelers of Jupiter, Fl, with
specialty in Wax Molding and Casting, Diamond Setting, and Jewelry Repair. In
1988 he graduated from American Institute of Aeronautics in Opa Locka, FL where
he received his Private Pilots Certificate (fixed wing and rotary helicopter).
In 1989 he graduated from the Institute of Public Service (PanAm), GA as a
Tactical Rappel Instructor. In 1990 Mr. Fernandez graduated from Omni
Explosives, TN with a specialty in Tactical Explosives. He studied Tool and Die
Making at Miami-Dade Adult Education Center in 1990-1991. He is fluent in
Spanish.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
(1) Financial statements of F&F Equipment, Inc., a Florida corporation are
included.
(b) Pro forma financial information.
(1) Pro forma financial information regarding the Reorganization are
included.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Certified Public Accountant.......................F-2
Balance Sheets..........................................................F-3
Statements of Operations................................................F-4
Statements of Stockholders' Equity......................................F-5
Statements of Cash Flows................................................F-6
Notes to Financial Statements...........................................F-7
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
F&F Equipment, Inc.
We have audited the accompanying balance sheets of F&F Equipment, Inc. (a
Florida corporation) as of December 31, 2000 and 1999, and the related
statements of operations and comprehensive income, changes in stockholders'
equity and cash flows for each of the two years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of F&F Equipment, Inc. as of
December 31, 2000 and 1999 and the related statements of operations, changes in
stockholders' equity and cash flows for each of the two years then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note B to the
financial statements, the Company has suffered recurring losses from operations
and has continuing liquidity problems in meeting daily operating requirements.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note B. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ S W Hatfield
S. W. HATFIELD, CPA
Dallas, Texas
September 19, 2001
F-2
F&F EQUIPMENT, INC.
d/b/a American Ammunition
Balance Sheets
June 30, December 31,
2001 2000
------------------- -------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash on hand and in banks $ 320,941 $ 858
Accounts receivable - trade, net of factored accounts of
approximately $-0- and $10,070 and allowance for doubtful
accounts of $-0- and $-0-, respectively 150,291 60,415
Inventory 185,554 333,410
------------------- -------------------
Total current assets 656,786 394,683
------------------- -------------------
PROPERTY AND EQUIPMENT
Manufacturing equipment 6,435,336 6,354,117
Furniture and office equipment 49,699 49,699
Leasehold improvements 181,814 181,814
Less accumulated depreciation (2,101,661) (1,792,978)
------------------- -------------------
Net property and equipment 4,565,188 4,792,652
------------------- -------------------
OTHER ASSETS
Loan costs, net of accumulated amortization of approximately $23,778 0 45,556
Deposits and other 59,712 59,712
------------------- -------------------
Net other assets 59,712 105,268
------------------- -------------------
Total Assets $ 5,281,686 $ 5,292,603
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY ( DEFICIENCY)
CURRENT LIABILITIES
Cash overdraft $ 0 $ 73,234
Accounts payable 516,826 684,674
Customer deposits 105,382 0
Excise taxes payable 9,751 27,380
Bank loan 0 1,143,381
Loan from third party 200,000 0
Equipment loans - current portion 36,525 28,409
Accrued interest payable 3,466,680 3,308,038
------------------- -------------------
Total current liabilities 4,335,164 5,265,116
------------------- -------------------
LONG-TERM DEBT
Equipment loans 48,407 79,875
Bank loan 950,000 0
Long-term debt - related party 4,007,327 4,007,327
------------------- -------------------
Total long-term debt 5,005,734 4,087,202
------------------- -------------------
Total Liabilities 9,340,898 9,352,318
------------------- -------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, no par value, authorized 25,000,000;
0 issued and outstanding 0 0
Common stock, $0.0001 and no par value, authorized 100,000,000 shares;
1,000,000 and 1,000 issued and outstanding 1,000 1,000
Contributed capital 5,000,000 5,000,000
Accumulated deficit (9,060,212) (9,060,715)
------------------- -------------------
Total stockholders' equity (deficiency) (4,059,212) (4,059,715)
------------------- -------------------
Total Liabilities and Stockholders' Equity (Deficiency) $ 5,281,686 $ 5,292,603
=================== ===================
The accompanying notes are an integral part of the financial statements
F-3
F&F EQUIPMENT, INC.
d/b/a American Ammunition
Statements of Operations
Six Months Ended Year Ended December 31,
------------------------------- -------------------------------
June 30, 2001 June 30, 2000 2000 1999
---------------- -------------- --------------- --------------
(unaudited) (unaudited)
REVENUES
Sales $ 336,531 $ 1,075,932 $ 1,715,885 $ 2,914,113
---------------- -------------- --------------- --------------
Net sales 336,531 1,075,932 1,715,885 2,914,113
COST OF SALES
Materials 179,518 564,305 1,158,662 1,779,613
Direct labor 41,130 134,032 210,707 385,516
Other direct costs and expenses 23,275 17,698 39,633 51,136
Depreciation 303,271 290,161 593,432 563,835
---------------- -------------- --------------- --------------
Total cost of sales 547,194 1,006,196 2,002,434 2,780,100
Gross margin (210,663) 69,736 (286,549) 134,013
OPERATING EXPENSES
Salaries 153,242 181,934 363,265 334,845
Advertising 5,516 1,346 4,609 3,168
Depreciation and amortization 5,412 9,709 10,874 20,099
General and administrative 254,408 194,275 86,901 236,592
---------------- -------------- --------------- --------------
Total operating expenses 418,578 387,264 465,649 594,704
---------------- -------------- --------------- --------------
Operating income (loss) (629,241) (317,528) (752,198) (460,691)
---------------- -------------- --------------- --------------
OTHER INCOME (EXPENSE):
Settlement of litigation 802,038 0 0 0
Other income 0 0 0 0
Interest expense (172,294) (220,023) (438,226) (430,979)
---------------- -------------- --------------- --------------
Total other income (expense) 629,744 (220,023) (438,226) (430,979)
---------------- -------------- --------------- --------------
Net income (loss) $ 503 $ (537,551) $ (1,190,424) $ (891,670)
================ ============== =============== ==============
The accompanying notes are an integral part of the financial statements
F-4
F&F EQUIPMENT, INC.
d/b/a American Ammunition
Statements of Stockholders' Equity
Number Additional Total
of Common Paid-In Retained Stockholders'
Shares Stock Capital Earnings Equity
----------- ------------- -------------- -------------- ------------------
BEGINNING BALANCE,
December 31, 1998 1,000 $ 1,000 $ 5,000,000 $ (6,978,621) $ (1,977,622)
Net loss 0 0 0 (891,670) (891,669)
----------- ------------- -------------- -------------- ------------------
BALANCE, December 31, 1999 1,000 1,000 5,000,000 (7,870,291) (2,869,291)
Net loss 0 0 0 (1,190,424) (1,190,424)
----------- ------------- -------------- -------------- ------------------
BALANCE, December 31, 2000 1,000 1,000 5,000,000 (9,060,715) (4,059,715)
Forward split and par change 999,000 0 0 0 0
Net income 0 0 0 503 503
----------- ------------- -------------- -------------- ------------------
ENDING BALANCE, June 30, 2001
(unaudited) 1,000,000 $ 1,000 $ 5,000,000 $ (9,060,212) $ (4,059,212)
=========== ============= ============== ============== ==================
The accompanying notes are an integral part of the financial statements
F-5
F&F EQUIPMENT, INC.
d/b/a American Ammunition
Statements of Cash Flows
Six Months Ended Year Ended December 31,
----------------------------- -----------------------------
June 30, 2001 June 30, 2000 2000 1999
-------------- -------------- ------------- --------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 503 $ (537,550) $ (1,190,424) $ (891,669)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 308,683 299,870 612,953 583,934
Lawsuit settlement (644,477) 0 0 0
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (89,876) (19,435) 86,488 (20,982)
(Increase) decrease in inventory 147,856 (26,008) (49,725) 153,896
(Increase) decrease in deposits and other 0 0 (50,457) (7,105)
Increase ( decrease) in accounts payable (167,848) 108,722 335,427 226,355
Increase (decrease) in customer deposits 105,382 0 0 0
Excise taxes payable (17,628) (18,850) (47,240) 39,974
Increase (decrease) in accrued interest payable 160,293 160,293 320,586 320,586
-------------- -------------- ------------- --------------
Net cash provided (used) by operating activities (197,112) (32,958) 17,608 404,989
-------------- -------------- ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash payments for the purchase of fixed assets (81,219) (132,635) (265,268) (192,943)
-------------- -------------- ------------- --------------
Net cash provided (used) by investing activities (81,219) (132,635) (265,268) (192,943)
-------------- -------------- ------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) bank overdraft 21,766 0 73,234 (34,364)
Cash received (paid) on short-term loans 200,000 (14,583) (14,583) 250,000
Long-term loans principal payments (550,000) (42,841) (42,841) (130,145)
Cash received on long-term loans 950,000 0 0 0
Cash paid for loan origination 0 0 0 (19,712)
Principal payments on capital leases (23,352) (12,375) (24,749) (20,367)
-------------- -------------- ------------- --------------
Net cash provided (used) by financing activities 598,414 (69,799) (8,939) 45,412
-------------- -------------- ------------- --------------
Net increase (decrease) in cash and equivalents 320,083 (235,392) (256,599) 257,458
CASH and equivalents, beginning of period 858 257,457 257,457 0
-------------- -------------- ------------- --------------
CASH and equivalents, end of period $ 320,941 $ 22,065 $ 858 $ 257,458
============== ============== ============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Payment of interest in cash $ 0 $ 54,497 $ 108,993 $ 110,392
============== ============== ============= ==============
Income taxes paid in cash $ 0 $ 0 $ 0 $ 0
============== ============== ============= ==============
Non-Cash Financing Activities:
Acquisition of fixed assets on long-term capital leases $ 0 $ 0 $ 0 $ 153,400
============== ============== ============= ==============
The accompanying notes are an integral part of the financial statements
F-6
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Description of Business
F&F Equipment, Inc. (Company) was incorporated on October 4, 1983 under the laws
of the State of Florida. The Company was formed to engage principally in the
"import, export, retail & wholesale of firearms equipment, ammunition & other
devices and for the purpose of transacting any and/or all lawful business". The
Company conducts its business operations under the assumed name of "American
Ammunition".
The Company has elected a year-end of December 31 and uses the accrual method of
accounting.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note B - Going Concern Uncertainty
Since inception, the company has incurred cumulative net operating losses of
approximately $9,000,000. The Company's survival in the current and prior years
has been substantially dependent upon short and/or intermediate-term debt
financing.
The Company is currently pursuing the issuance of a Private Placement
Memorandum, utilizing an exemption from registration under Regulation D, Rule
506 of the U. S. Securities and Exchange Commission, to sell common stock and is
contemplating a sale-leaseback transaction of substantially all of its
manufacturing equipment.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.
Management believes that the proceeds from the Private Placement Memorandum, if
any, or the execution of the sale- leaseback transaction will provide sufficient
liquidity to meet the Company's cash flow needs through December 31, 2000 and in
future periods, if necessary.
However, there can be no assurance that the Company will be able to obtain
additional funding or, that such funding, if available, will be obtained on
terms favorable to or affordable by the Company or that the Company will be able
to sustain sufficient cash flows to service and retire the proposed
sale-leaseback transaction.
F-7
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note C - Summary of Significant Accounting Policies
1. Cash and cash equivalents
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Accounts receivable
In the normal course of business, the Company extends unsecured credit to
virtually all of its customers which are located throughout the United
States. Because of the credit risk involved, management has provided an
allowance for doubtful accounts which reflects its opinion of amounts which
will eventually become uncollectible. In the event of complete
non-performance, the maximum exposure to the Company is the recorded amount
of trade accounts receivable shown on the balance sheet at the date of
non-performance.
3. Inventory
Inventory consists of raw materials, work-in-process and finished goods
related to the production and sale of small arms ammunition. Inventory is
valued at the lower of cost or market using the first-in, first-out method.
As of December 31, 2000 and 1999, inventory consisted of the following
components:
2000 1999
--------------- ---------------
Raw materials $ 109,467 $ 117,696
Work in process 196,935 146,720
Finished goods 27,008 19,269
--------------- ---------------
$ 333,410 $ 283,685
=============== ===============
4. Property, plant and equipment
Property and equipment are recorded at historical cost. These costs are
depreciated over the estimated useful lives of the individual assets using
the straight-line method, generally three to ten years.
Gains and losses from disposition of property and equipment are recognized
as incurred and are included in operations.
5. Loan costs
Amounts paid for origination fees related to loans payable are amortized
over the scheduled maturity of the corresponding debt.
F-8
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note C - Summary of Significant Accounting Policies - Continued
6. Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. At December 31, 2000 and 1999, the deferred tax asset and deferred
tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization, allowance for doubtful accounts and vacation
accruals.
As of December 31, 2000 and 1999, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. If these
carryforwards are not utilized, they will begin to expire in 2005.
7. Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of December 31, 2000 and 1999, the Company
had no warrants and/or options outstanding.
8. Advertising
The Company does not conduct any direct response advertising activities.
For non-direct response advertising, the Company charges the costs of these
efforts to operations at the first time the related advertising is
published.
Note D - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Note E - Property and Equipment
Property and equipment consist of the following components:
Estimated
2000 1999 useful life
---------------- ---------------- ---------------
Manufacturing equipment $ 6,354,117 $ 6,091,927 10 years
Office furniture and fixtures 49,699 49,699 7 years
Leasehold improvements 181,814 178,735 20 years
---------------- ----------------
6,585,630 6,320,361
Accumulated depreciation (1,792,978) (1,188,671)
---------------- ----------------
Net property and equipment $ 4,792,652 $ 5,131,690
================ ================
F-9
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note E - Property and Equipment - Continued
Total depreciation expense charged to operations for the years ended December
31, 2000 and 1999 was approximately $604,307 and $574,606, respectively.
Included in the amounts reflected in the accompanying balance sheet are the
following fixed assets on long-term capital leases:
2000 1999
--------------- ---------------
Manufacturing and processing equipment $ 153,400 $ 153,400
Less accumulated depreciation (23,839) (8,499)
--------------- ---------------
$ 129,561 $ 144,901
=============== ===============
Note F - Notes payable to a Bank
Notes payable to a Bank consist of the following at December 31, 2000 and 1999,
respectively:
2000 1999
--------------- ----------------
$200,000 line of credit payable to a bank. Interest at the Bank's
prime rate plus 1.50% or 2.00%, respectively. (11.00% at December
31, 2000). Interest payable monthly. Advances and accrued, but
unpaid, interest mature on the 60th day following funding.
Agreement is renegotiable annually on the anniversary date in
November of each calendar year. Collateralized by all accounts
receivable, inventory and fixed assets of the Company and the
personal guaranty of the Company's President. $ 200,000 $ 200,000
$250,000 installment note payable to a bank. Interest at the Wall
Street Journal published prime rate plus 2.0%. (11.00% at
December 31, 2000). Payable in monthly installments of
approximately $2,083, plus accrued interest. Final payment due in
December 2009. Collateralized by all accounts receivable,
inventory and fixed assets of the Company, the personal guaranty
of the Company's President and a mortgage on the Company's
corporate offices and manufacturing facility owned by the
Company's stockholder. 235,417 250,000
F-10
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note F - Notes payable to a Bank - Continued
2000 1999
--------------- ----------------
$738,090 (originally $1,000,000) installment note payable to a bank.
Interest at the Wall Street Journal published prime rate plus
2.50% (11.0% at December 31, 2000). Payable in monthly
installments of approximately $7,530, plus accrued interest.
Final payment due in March 2008. Collateralized by all accounts
receivable, inventory and fixed assets of the Company and the
personal guaranty of the Company's President. 707,964 750,805
--------------- -----------------
Total notes payable to a bank. $ 1,143,381 $ 1,200,805
=============== =================
As of December 31, 2000, the Company was operating under a bank approved
moratorium on the payment of principal and interest on all of the above listed
notes payable. During 2001, the Company and its President commenced litigation
against the lending institution and, on June 29, 2001, the Company and the Bank
executed a Settlement and Compromise Agreement whereby all loans and debts of
the Company to the Bank were settled and canceled for a one- time cash payment
of $550,000. Accordingly, due to the circumstances surrounding the final
settlement and retirement of these loans, they are classified as "current" in
the accompanying balance sheets.
One June 28, 2001, in anticipation of the above discussed Settlement, the
Company executed a new $950,000 note payable to another financial institution.
This new note bears interest at the Wall Street Journal published prime rate
plus 2.0%. The new note has payment terms as follows: For the first year
(through June 28, 2002), interest only, payable monthly. Thereafter, starting on
July 28, 2002, equal monthly payments of principal and interest shall be due
until June 28, 2007 which payments shall represent the amount necessary to fully
amortize the remaining principal balance of the note. The monthly payments shall
be recalculated at the time of any change in the applicable interest rate. The
note is secured by virtually all of the Company's real and personal property. A
portion of the proceeds from the financing were used to pay the $550,000
required in the Settlement and Compromise Agreement.
Note G - Capital Leases Payable
Capital leases payable consist of the following as of December 31, 2000 and
1999, respectively:
2000 1999
--------------- ---------------
Six capital leases payable to various equipment financing companies.
Interest ranging between 12.45% and 16.00%. Payable in aggregate
monthly installments of approximately $3,467, including accrued
interest. Final maturities occur between September 2002 and
February 2005. Collateralized the underlying leased manufacturing
equipment. $ 108,284 $ 133,033
Less current maturities (28,409) (24,749)
--------------- ----------------
Long-term portion $ 79,875 $ 108,284
=============== ================
F-11
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note G - Capital Leases Payable - continued
Future maturities of capital leases payable are as follows:
Year ending
December 31 Amount
----------------- -----------------
2001 $ 28,409
2002 31,370
2003 29,259
2004 18,711
2005 535
-----------------
Totals $ 108,284
=================
Note H - Loan payable to Stockholder
2000 1999
--------------- ---------------
$4,007,327 note payable to the Company's stockholder. Interest at
8.0%. Principal and accrued interest payable at maturity.
Maturity at December 31 annually and automatically renews for an
equivalent annual period unless called by the Stockholder at
least 90 days prior to maturity. Unsecured. $ 4,007,327 $ 4,007,327
=============== ===============
Note I - Related Party Transactions
The Company leases its corporate office and manufacturing facility from its
controlling stockholder under a long-term operating lease agreement. The lease
requires a monthly payment of approximately $3,931, plus applicable sales taxes.
Further, the Company is responsible for all utilities and maintenance expenses.
The lease expires on October 31, 2003 and contains a clause that the lease may
be renewed for an additional ten year period upon written notification to the
lessor no later than 120 days prior to the scheduled expiration date at a rental
rate based upon the fair value for similar space in a similar location.
On January 1, 1998, the Company's controlling stockholder contributed various
manufacturing equipment to the Company. This transaction was valued at an
agreed-upon value of approximately $5,000,000, which was substantially less than
original founders cost. As of October 25, 2000, in conjunction with a proposed
sale-leaseback transaction, the Company received an independent appraisal on its
manufacturing equipment with an appraised value of approximately $17,000,000 at
a utilization rate of 90,000,000 rounds of small-arms ammunition produced per
annual period.
F-12
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note J - Income Taxes
The components of income tax (benefit) expense for the years ended December 31,
2000 and 1999, respectively are as follows:
2000 1999
------------ -------------
Federal:
Current $ - $ -
Deferred - -
------- -------
State:
Current - -
Deferred - -
------- -------
Total $ - $ -
======= =======
As of December 31, 2000, the Company has a net operating loss carryforward of
approximately $3,600,000 to offset future taxable income. Subject to current
regulations, components of this carryforward will begin to expire in 2003. The
amount and availability of the net operating loss carryforwards may be subject
to limitations set forth by the Internal Revenue Code. Factors such as the
number of shares ultimately issued within a three year look-back period; whether
there is a deemed more than 50 percent change in control; the applicable
long-term tax exempt bond rate; continuity of historical business; and
subsequent income of the Company all enter into the annual computation of
allowable annual utilization of the carryforwards.
The Company's income tax expense for the years ended December 31, 2000 and 1999,
respectively, are as follows:
2000 1999
---------------- ---------------
Statutory rate applied to loss before income taxes $ (404,744) $ (303,168)
Increase (decrease) in income taxes resulting from:
State income taxes - -
Other, including reserve for deferred tax asset 404,744 303,168
Income tax expense $ - $ -
================== ===============
Temporary differences, consisting primarily of statutory differences in the
depreciable lives for property and equipment, between the financial statement
carrying amounts and tax bases of assets and liabilities give rise to deferred
tax assets and liabilities as of December 31, 2000 and 1999, respectively:
2000 1999
---------------- ---------------
Deferred tax assets - long-term
Net operating loss carryforwards $ 1,232,924 $ 1,213,797
Deferred tax liabilities - long-term
Statutory depreciation differences (280,425) (182,311)
---------------- ---------------
952,499 1,031,486
Less valuation allowance (952,499) (1,031,486)
---------------- ---------------
Net Deferred Tax Asset $ - $ -
================ ================
During the years ended December 31, 2000 and 1999, respectively, the valuation
allowance increased (decreased) by approximately $(78,987) and $(69,588).
F-13
F&F EQUIPMENT, INC.
d/b/a American Ammunition
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note K - Contingencies
In May 1998, the Company entered into a $500,000 accounts receivable factoring
facility with its financial institution. The facility provided for the purchase
of various trade accounts receivable by the bank from the Company at 80.0% of
the face value of the underlying invoice. The Company paid a discount fee of
1.5% for invoices settled between 1 and 30 days of invoice date, 3.0% for
invoices settled between 31 and 60 days of invoice date and an additional 1.5%
for each additional 30 days thereafter. All accounts receivable invoices were
factored with full recourse to the company and the Company was at risk for
approximately $10,070 and $63,334 of factored invoices. The Company has not
experienced any losses related to the factoring agreement. This Agreement was
terminated in conjunction with the execution of the Settlement and Compromise
Agreement on June 29, 2001.
F-14
INDEX TO PROFORMA FINANCIAL STATEMENTS
Proforma Consolidated Balance Sheet.....................................F-2
Proforma Consolidated Statements of Operations..........................F-3
Notes to Proforma Consolidated Financial Statement.....................F-4
American Ammunition, Inc.
(f/k/a FBI Fresh Burgers International)
Proforma Consolidated Balance Sheet
(Unaudited)
June 30, 2001
F&F Equipment,
American Inc. (d/b/a
Ammunition, American Proforma
Inc. Ammunition) Adjustments Proforma
---------------- ---------------- --------------- ----------------
ASSETS
CURRENT ASSETS
Cash $ 0 $ 320,941 $ 320,941
Accounts receivable 0 150,291 60,415
Inventory 0 185,554 185,554
---------------- ---------------- ----------------
Total current assets 0 656,786 656,786
---------------- ---------------- ----------------
PROPERTY, PLANT AND EQUIPMENT
(Net of accumulated depreciation) 0 4,565,188 4,565,188
---------------- ---------------- ----------------
Total property, plant and equipment 0 4,565,188 4,565,188
---------------- ---------------- ----------------
OTHER ASSETS
Investment in subsidiaries 0 0 a) 4,873,650
b) (4,873,650) 0
Deposits and other 0 59,712 59,712
---------------- ---------------- ----------------
Total other assets 0 59,712 59,712
---------------- ---------------- ----------------
Total Assets $ 0 5,281,686 5,281,686
================ ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 0 $ 516,826 $ 516,826
Customer deposits 0 105,382 105,382
Excise taxes payable 0 9,751 9,751
Loan from third party 0 200,000 200,000
Equipment loans - current portion 0 36,525 36,525
Accrued interest payable 0 3,466,680 3,466,680
---------------- ---------------- ----------------
Total current liabilities 0 4,335,164 4,335,164
---------------- ---------------- ----------------
LONG-TERM DEBT
Equipment loans 0 48,407 48,407
Bank loan 0 950,000 950,000
Long-term debt - related party 0 4,007,327 4,007,327
---------------- ---------------- ----------------
Total long-term debt 0 5,005,734 5,005,734
---------------- ---------------- ----------------
Total Liabilities 0 9,340,898 9,340,898
---------------- ---------------- ----------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, respectively;
10,000,000 and 25,000,000 shares authorized;
0 shares outstanding 0 0 0
Common stock, $0.001 par value, 100,000,000
shares authorized; 2,075,400 and 1,000,000
shares outstanding, respectively 2,075 1,000 a) 21,000
b) (1,000) 23,075
Additional paid-in capital 125,275 5,000,000 a) 4,852,650
b) (5,000,000) 4,977,925
Accumulated deficit (127,350) (9,060,212)b) 127,350 (9,060,212)
---------------- ---------------- ----------------
Total stockholders' equity 0 (4,059,212) (4,059,212)
---------------- ---------------- ----------------
Total Liabilities and Stockholders' Equity $ 0 $ 5,281,686 $ 5,281,686
================ ================ ================
The accompanying notes are an integral part of the proforma financial statements
F-2
American Ammunition, Inc.
(f/k/a FBI Fresh Burgers International)
Proforma Consolidated Statements of Operations
(Unaudited)
Six Months Ended June 30, 2001
F&F Equipment,
American Inc. (d/b/a
Ammunition, American Proforma
Inc. Ammunition) Adjustments Proforma
--------------- ----------------- -------------- -----------------
REVENUES
Sales $ 0 $ 336,531 $ 336,531
--------------- ----------------- -----------------
Total revenues 0 336,531 336,531
COST OF SALES
Cost of sales 0 547,194 547,194
--------------- ----------------- -----------------
Gross margin 0 (210,663) (210,663)
--------------- ----------------- -----------------
OPERATING EXPENSES
General and administrative 125,400 418,578 c) (125,400) 418,578
--------------- ----------------- -----------------
Total operating expenses 125,400 418,578 418,578
--------------- ----------------- -----------------
Operating loss (125,400) (629,241) (629,241)
--------------- ----------------- -----------------
OTHER INCOME (EXPENSE)
Settlement of litigation 0 802,038 802,038
Interest expense 0 (172,294) (172,294)
--------------- ----------------- -----------------
Total other income (expense) 0 629,744 629,744
--------------- ----------------- -----------------
Net income (loss) $ (125,400)$ 503 $ 503
=============== ================= =================
The accompanying notes are an integral part of the proforma financial statements
F-3
American Ammunition, Inc.
(f/k/a FBI Fresh Burgers International)
Notes to Proforma Consolidated Financial Statements
(Unaudited)
(1) Proforma Changes On September 29, 2001, the Company entered into a Share
Exchange Agreement with F&F Equipment, Inc., a Florida corporation, (d/b/a
American Ammunition). The business combination closed on September 29, 2001
and is a reverse merger, accounted for as a recapitalization of F&F
Equipment, Inc., (d/b/a American Ammunition). The Proforma statement of
operations includes the twelve months ended December 31, 2000 for the
Company and F&F Equipment, Inc., (d/b/a American Ammunition). The Company
issued 21,000,000 of common stock of the Company to complete this
acquisition.
(2) Proforma Adjustments
a) 21,000,000 shares of common stock valued at ($4,873,650) issued to
effect the reverse merger.
Consolidation:
2. Eliminate investment in subsidiary, the Company's retained deficit and
common stock of subsidiary.
3. Eliminate pre-merger expenses.
F-4
INDEX TO PROFORMA FINANCIAL STATEMENTS
Proforma Consolidated Statements of Operations............................F-2
Notes to Proforma Consolidated Financial Statement.......................F-3
American Ammunition, Inc.
(f/k/a FBI Fresh Burgers International)
Proforma Consolidated Statements of Operations
(Unaudited)
For the Year Ended December 31, 2000
F&F
American Equipment,
Ammunition, Inc. (d/b/a Proforma
Inc. American Adjustments Proforma
Ammunition)
-------------- ---------------- --------------- --------------
REVENUES
Sales $ 0 $ 1,715,885 $1,715,885
-------------- ---------------- --------------
Total revenues 0 1,715,885 1,715,885
COST OF SALES
Cost of sales 0 2,002,434 2,002,434
-------------- ---------------- --------------
Gross margin 0 (286,549) (286,549)
-------------- ---------------- --------------
OPERATING EXPENSES
General and administrative 1,950 465,649 a) (1,950) 465,649
-------------- ---------------- --------------
Total operating expenses 1,950 465,649 465,649
-------------- ---------------- --------------
Operating loss (1,950) (752,198) (752,198)
-------------- ---------------- --------------
OTHER INCOME (EXPENSE)
Interest expense 0 (438,226) (438,226)
-------------- ---------------- --------------
Total other income (expense) 0 (438,226) (438,226)
-------------- ---------------- --------------
Net loss $ (1,950)$ (1,190,424) $ (1,190,424)
============== ================ ==============
The accompanying notes are an integral part of the proforma financial statements
F-2
American Ammunition, Inc.
(f/k/a FBI Fresh Burgers, International)
Notes to Proforma Consolidated Financial Statements
(Unaudited)
(1) Proforma Changes On September 29, 2001, the Company entered into a Share
Exchange Agreement with F&F Equipment, Inc., a Florida corporation, (d/b/a
American Ammunition). The business combination closed on September 29, 2001
and is a reverse merger, accounted for as a recapitalization of F&F
Equipment, Inc., (d/b/a American Ammunition). The Proforma statement of
operations includes the twelve months ended December 31, 2000 for the
Company and F&F Equipment, Inc., (d/b/a American Ammunition). The Company
issued 21,000,000 of common stock of the Company to complete this
acquisition.
(2) Proforma Adjustments
(4) Eliminate pre-reverse merger expenses.
F-3
(c) Exhibits
Exhibit
Number Description
-------- -----------
2.1 * Share Exchange Agreement between FBI Fresh Burgers International and F&F
Equipment, Inc. dated September 29, 2001.
3(i).1 [1] Articles of Incorporation (formerly Exhibit 3.1).
3(i).2 [1] Amendment to Articles of Incorporation (formerly Exhibit 3.2).
3(i).3 * Amendment to Articles of Incorporation.
3(ii).1 [1] Bylaws (formerly Exhibit 3.4).
4.1 [1] Form of Common Stock Certificate.
5.1 [1] Opinion of Kenneth G. Eade (including consent).
6.1 [1] Form of Stock Certificate.
23.2 [1] Consent of Kenneth G. Eade (filed as part of Exhibit 5.1).
----------------
[1] Incorporated herein by reference to the Company's Registration Statement on
Form SB-2 filed September 20, 2000.
* Filed herein.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
FBI Fresh Burgers International
(Registrant)
Date: October 3, 2001 By:/s/ Andres Fernandez
--------------------------
Andres Fernandez, President