SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended February 28, 2002

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from _____________ to _____________


                          Commission file No. 33-98682

                        AMERICAN COMMERCE SOLUTIONS, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                              05-0460102
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)


                     1400 Chamber Dr, Bartow, Florida 33830
               (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code: (863) 533-0326

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Check if there is no disclosure of delinquent  filings pursuant to Item 405
of Regulation S-K contained herein, and no disclosure will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X].

     State the issuer's revenues for its most recent fiscal year: $1,941,855

     The aggregate  market value of the voting and  non-voting  common equity of
the  registrant  held by  non-affiliates  of the  registrant at May 15, 2002 was
approximately  $1,422,323  based  upon the  closing  sale  price of $.24 for the
Registrant's  Common  Stock,  $.002  par  value,  as  reported  by the  National
Association of Securities Dealers OTC Bulletin Board on May 15, 2002.

     As of May 15, 2002 the registrant  had  17,266,344  shares of Common Stock,
$.002 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
                        American Commerce Solutions, Inc.
                          Annual Report on Form 10-KSB
                   For the Fiscal Year Ended February 28, 2002

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
                                     PART I

Item 1.  Description of Business                                               3
Item 2.  Description of Property                                               8
Item 3.  Legal Proceedings                                                     8
Item 4.  Submission of Matters to Vote of Securities Holders                   8

                                     PART II

Item 5.  Market for Common Equity and Related Security Stockholder Matters     9
Item 6.  Management's Discussion and Analysis or Plan of Operation            10
Item 7.  Financial Statements                                                 12
Item 8.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure                                           12

                                    PART III

Item 9.  Directors, Executive Officers, Promoters, and Control Persons;
           Compliance with Section 16(a) of the Exchange Act                  12
Item 10. Executive Compensation                                               13
Item 11. Security Ownership of Certain Beneficial Owners and Management       15
Item 12. Certain Relationships and Related Transactions                       17
Item 13. Exhibits and Reports on Form 8-K                                     18

                                       2
<PAGE>
     This  Annual  Report on Form  10-KSB  contains  forward-looking  statements
within the meaning of the Private  Securities  Litigation Reform Act of 1995 and
are subject to risks, uncertainties, and other factors, which could cause actual
results  to  differ   materially   from  those  expressed  or  implied  by  such
forward-looking  statements.  See "Item 1.  Description  of  Business  - Forward
Looking Statements."

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

     American Commerce Solutions,  Inc., was incorporated in Rhode Island in May
1991 under the name Jaque Dubois,  Inc. and was  re-incorporated  in Delaware in
1994. In July 1995, the Company's name was changed to JD American Workwear, Inc.
In  December  2000 the  shareholders  voted to change the name of the company to
American Commerce  Solutions,  Inc. to more accurately portray the activities of
the company.

     American Commerce Solutions, Inc. (the "Company" or "American Commerce") is
a multi-industry holding company for its operating subsidiaries. As of the close
of its most recently completed fiscal year end, the Company had one wholly owned
subsidiary  operating in the manufacturing  segment. The operating subsidiary is
International  Machine  and  Welding,  Inc.  located in Bartow,  FL. The Company
successfully  completed the sale of the assets and certain liabilities of its JD
American  Workwear,  Inc.  subsidiary  and the complete sale of its Rhode Island
Truck and Equipment, Inc. subsidiary during the fiscal year.

     The  Company  intends  to  expand  its  holdings  by  acquiring  additional
subsidiaries to facilitate its business plan. The current business plan has been
in development since June 2000.

     International  Machine and Welding,  Inc.  provides  specialized  machining
services for heavy  industry.  Target  customers in the region  include  mining,
agriculture  processing,  maritime,  power  generation and industrial  machinery
companies.   Additional  operations  include  heavy  equipment  service  to  the
construction,  forestry,  waste and scrap  industries.  The  operation  provides
complete  service of the equipment,  which includes  rebuilding  undercarriages,
engines, transmissions,  final drives and hydraulics. The effective service area
for the operation  located in the Southeastern  region of the United States is a
prime and  lucrative  market  for such  services.  Growth in this  region of the
United States (population,  infrastructure,  and building) has created long term
needs  for  construction  equipment.  All of  these  machines  require  periodic
maintenance,  and at certain points major  overhauls.  In addition to its 38,000
square foot  facility,  the operation also provides fully equipped field service
vehicles so machines do not have to be removed from the work site. Normally, the
Company as an "independent" is more competitive than the "factory"  centers.  In
most  cases the  operation  can turn work in a quicker  and more cost  effective
manner.

     International  Machine and Welding,  Inc.  also sells OEM and  after-market
repair parts for heavy equipment. The operation has an extensive cross-reference
listing and network of sources.  One of the major competitive  advantages of the
operation  is its  ability to  determine  exactly  what the  customer  needs and
fulfill  the  requirement.  In many cases,  the  customer  may not have  service
manuals or to be able to identify part numbers.  If a customer has more than one
type of  machine,  which is quite  common,  they may have to contact a number of
different suppliers to get parts for multiple machines. Our operation identifies
the required parts and arranges the necessary repairs. As a result, the customer
only  has to make  one  phone  call  for all of their  needs.  This  also  makes
International Machine and Welding,  Inc. an attractive  alternative for sales to
customers  outside the United States.  Orders can be accumulated  throughout the
month and sent on  consolidated  shipments.  This has created a niche market for
the direct parts sales  division.  Management  is in the process of  negotiating
with agents in various  markets,  including  South America,  the Caribbean,  and
Puerto  Rico to solicit  parts  sales.  The  operation  currently  has two major
customer  relationships in the Caribbean.  Management  believes that this market
has not been fully  targeted by its  competitors  and is a  potential  source of
significant business.

     The Board of Directors of American Commerce Solutions,  Inc. has determined
that  it  will  seek  to  acquire   additional   manufacturing   operations  and
construction operations that utilize heavy equipment.  Additional segments being
considered are manufacturing supply operations, consumer products and commercial
construction support services.

                                       3
<PAGE>
ACQUISITIONS AND DIVESTITURES

     The  Company  sold back to its  original  founder  the assets  and  certain
liabilities  of its JD American  Workwear,  Inc.  operation and all of the Rhode
Island  Truck and  Equipment,  Inc.  operations  on May 31, 2001 and October 31,
2001,  respectively.  The terms and conditions of these  transactions  have been
reported in their  respective  Form 10-QSB for the period ended May 31, 2001 and
November 30, 2001 and are incorporated by reference herein.

     On June 1, 2000,  the  Company  completed  the  purchase  of  International
Machine and Welding,  Inc. by acquiring all of the outstanding  capital stock of
its  holding  company,   Patina  Corporation  for  a  total  purchase  price  of
$4,446,159.  The  acquisition  was  accounted  for using the purchase  method of
accounting and, accordingly,  International Machine and Welding,  Inc.'s results
of operations have been included in the consolidated  financial statements since
the date of  acquisition.  The  acquisition  was funded by the issuance of 9,800
shares of Series C 6% Preferred Stock.

     On June 1, 2000,  the Company  completed the purchase of Rhode Island Truck
and  Equipment  Corp.  d/b/a  International  Paving,  Inc. by acquiring  all its
outstanding  capital  stock  for  a  total  purchase  price  of  $238,000.   The
acquisition was funded by the issuance of 200,000 shares of common stock.

     On June 1, 2001, the Company discontinued the operations of its JD American
Workwear,  Inc. subsidiary and exchanged certain assets and liabilities with the
President of the subsidiary for 725,000 shares of the Company's common stock and
notes payable of $43,115.  On October 31, 2001, the Company  returned all of the
stock of Rhode  Island  Truck and  Equipment  Corp.  to its  original  owners in
exchange for 155,000 shares of the Company's common stock.

BUSINESS STRATEGY

     The Company has adopted a business  strategy  that focuses on expansion and
diversification  through  acquisitions  of companies in other lines of business.
Under the  current  strategy,  the  Company  has  developed  divisions  in three
segments: Manufacturing, Product Marketing, and Construction Management.

     Manufacturing Division. This division was formed to house the operations of
International  Machine and Welding,  Inc. Its operations include a 38,000 square
foot machine shop and sales of heavy equipment, parts and service.

     Product  Marketing  Division.  This  division  has  no  operations  but  is
currently  seeking an  acquisition.  Negotiations  are  ongoing  for an expected
closing in the second quarter ending August 31, 2002.

     Construction  Management  Division.  This division has no operations but is
currently  negotiating  with  several  companies  that  may  become  part of the
division prior to the end of the second quarter ending August 31, 2002.

PRODUCTS, SERVICES AND FEATURES

MANUFACTURING SEGMENT

     The Manufacturing  Division through International Machine and Welding, Inc.
offers a broad range of products  and  services  to heavy  industry  through its
three subdivisions.  The operations of Division 1 provide specialized  machining
of very large  components and machinery  repair to industries such as aerospace,
agricultural   processing,   chemical,   defense,  mining,  maritime  and  power
generation. Our 38,000 square foot facility located in Bartow, Florida is one of
the only  operations in the Southeast  capable of machining  components up to 55
feet in length and/or 20 feet in diameter.  Division 2 provides heavy  equipment
service (parts and labor), which includes repair and bonded rebuilds of engines,
tracks,  undercarriages,  transmissions,  final drives and hydraulic  systems on
heavy equipment. The equipment we repair is from the heavy construction industry
including bulldozers,  scrapers, loaders,  excavators,  large tractors, rollers,
etc. The division  provides field service via a fleet of fully equipped  service
trucks to provide repairs at the customer's site.  Division 3 sells  replacement
parts to the heavy equipment  market,  directly to the end user with most of the
parts exported outside the United States.

                                       4
<PAGE>
MANUFACTURING AND SOURCES OF SUPPLY

     Manufacturing Segment

     Supplies  and parts used by  International  Machine and  Welding,  Inc. are
purchased from several major suppliers including  Caterpillar,  John Deere, Case
and other major  manufacturers  and after market parts suppliers.  The machining
operations  purchase  from many  suppliers  based on the need of specific  jobs.
Although the  operations  do not have any  long-term  contracts  with any of its
suppliers, management believes that it has excellent business relationships with
its current suppliers and it is not exposed to any significant risk in the event
any one source of supply is discontinued, because there are many suppliers.

MARKETING AND SALES

     Manufacturing Segment

     International  Machine and Welding, Inc. operates three subdivisions at one
location.  Division 1 sales have  traditionally  come from  industries  within a
100-mile radius of its facilities requiring specialized machining  applications.
Direct salesmen have established  relationships  with specific customers and the
Company has expanded the business  relationship through quality,  rapid turn and
value.  While this  business is quite  lucrative,  visibility  is  limited.  The
operation  intends  to  expand  its  operations  in the OEM  market,  where  the
subsidiary provides  components to manufacturers of large machines.  These types
of  accounts  generally  involve  annual  contracts  with  three-month   rolling
schedules.  The  expansion  of the  market  also is  expected  to  increase  the
serviceable territory from the Southeast to include the entire United States.

     Direct sales personnel who primarily target mid-tier  accounts handle sales
for  Division  2 and 3. We  believe  that this  broad  niche  market is  largely
untapped by the larger factory-sponsored  operations which cater specifically to
very large  accounts.  Margins are typically  very slim in these  accounts and a
large  percentage of customer base is represented by very few accounts.  Because
we are an independent repair facility,  we can provide service to a much broader
base  of  customers  with  greater  margins  than  the  large  factory-sponsored
competitors.  Division 2 has  recently  expanded  its sales force to address the
total available market.  Anticipating growth of sales, the Company has installed
additional  specialized  equipment to service  undercarriages,  which represents
approximately 35% of the Company's repair revenue. The recent installation of an
additional track press will allow this division to double its capacity.

COMPETITION

     Manufacturing Segment

     The  principal  competitors  of  the  Manufacturing  Division  consists  of
regional  companies  such as Southern  Machinery,  Florida  Plating and Machine,
Arroyo  and  Florida  Metallizing  in  the  machining  operations  and  national
corporations  such  as  Ringhaver  Equipment,   Caterpillar,   and  Case  repair
facilities  in the  heavy  equipment  parts  and  service  category.  Management
believes  that the ability to rapidly turn goods or to provide parts on a timely
basis gives it a competitive  advantage.  We are able to ship parts  directly to
the consumer, usually on the same day as the order or to return all service work
within the time specified either by completing the work at the customers site or
because of immediate turnaround capabilities.

     Customer Dependence

     International  Machine and  Welding,  Inc.  has a broad and diverse base of
customers.  The division does not rely on any single customer, the loss of which
would have a material adverse effect on the segment. This division does generate
a  significant  amount of  revenues  from sales and  services  provided to three
different  industries.  The construction  industry  accounted for  approximately
28.9% of the  division's  revenues  in fiscal  2002  compared to 26.6% in fiscal
2001,  while the industrial and mining  industries  accounted for  approximately
18.4% and  20.0% in  fiscal  2002  compared  to 17.2% and 16.6% in fiscal  2001,
respectively, of the division's total revenues. Due to these concentrations, the
results  of  operations  of the  division  could be  affected  by changes in the
economic, regulatory, or other related conditions impacting on these industries.

                                       5
<PAGE>
CUSTOMER DEPENDENCE

     International  Machine and  Welding,  Inc.  has a broad and diverse base of
customers.  The division does not rely on any single customer, the loss of which
would have a material  adverse  effect on the  segment.  During  fiscal 2002 two
customers  provided  more  than 5% of  sales  each.  These  customers  were  IMC
Phosphates Company 10.1% and Vehicare 7.8%.

EMPLOYEES

     At May 15, 2002, the Company and its subsidiaries had 22 employees devoting
full-time hours, 2 part time employees and 4 contractors.  Of these workers, two
are performing executive, management and marketing functions, two are performing
accounting,  financial and office  functions,  three provide sales functions and
the  remainder   provide   support,   maintenance   or  fulfill  shop  operation
requirements.   The  parent  operation  has  three  full  time  employees.   The
Manufacturing Division employs 19 full time and 2 part time employees.

FORWARD LOOKING STATEMENTS

     This  Annual  Report on Form 10-KSB  (including  the  Exhibits  hereto) may
contain  "forward-looking  statements"  within the  meaning  of the safe  harbor
provisions of the Private Securities  Litigation Reform Act of 1995,  including,
but not limited to,  statements  regarding,  among other  things,  the financial
condition  and  prospects  of the  Company  and  its  subsidiaries,  results  of
operations,  projections,  plans for future business development  activities and
the  opportunities  available  within its market areas,  capital spending plans,
financing  sources,  projections of financial  results or economic  performance,
capital   structure,   the  effects  of   competition,   statements   of  plans,
expectations,  or objectives of the Company, and the business of the Company and
its subsidiaries.  These forward-looking  statements are typically identified by
words or phrases such as "believe," "expect,"  "anticipate," "plan," "estimate,"
"intend,"  and other  similar words and  expressions,  or future or  conditional
verbs such as "will," "should," "would," and "could" and other characterizations
of future  events or  circumstances.  In addition,  the Company may from time to
time make such written or oral  "forward-looking  statements"  in future filings
with the Securities and Exchange Commission (including exhibits thereto), in its
reports  to  stockholders,  and in  other  communications  made by or  with  the
approval of the Company.

     These  forward-looking  statements reflect the current views of the Company
at the time they are made and are based on  information  currently  available to
the  management  of the Company and upon current  expectations,  estimates,  and
projections  regarding the Company and its industry,  management's  beliefs with
respect   thereto,   and  certain   assumptions   made  by   management.   These
forward-looking  statements  are not  guarantees of future  performance  and are
subject to risks,  uncertainties,  and other  factors (many of which are outside
the  control  of the  Company),  which  could  cause  actual  results  to differ
materially from those expressed or implied by such  forward-looking  statements.
Such forward-looking  statements speak only to the date that such statements are
made,  and the Company  undertakes no  obligation to update any  forward-looking
statements,  whether  as the  result  of new  information,  future  events,  the
occurrence of unanticipated events, or otherwise. The following sets forth some,
but not  necessarily  all, of the factors  that may cause the  Company's  actual
results  to  vary   materially   from  those   which  are  the  subject  of  any
forward-looking statements.

RISK FACTORS

     Accumulated   Deficit  and  Operating  Losses  and  Anticipated   Earnings;
Explanatory Language in Auditor's Report. The Company had an accumulated deficit
at  February  28, 2002 of  $11,571,008  and net loss to common  shareholders  of
$1,542,919  for the year ended  February  28, 2002.  At February  28, 2001,  the
Company  had an  accumulated  deficit of  $10,028,089,  and net income to common
shareholders,  of $20,349 for the year ended February 28, 2001, as restated. The
Company had negative  cash flow for the year ended  February 28, 2002 of $20,677
and  positive  cash flow of $23,362 for the restated  period ended  February 28,
2001.  The Company's  financial  statements  are presented on the basis that the
Company is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the ordinary course of business.  While there can
be no assurance of this outcome,  management believes its plan of operation will
allow  the  Company  to  achieve   this  goal.   The  sale  of  the  assets  and
discontinuance of JD American  Workwear,  Inc. will improve the cash flow of the

                                       6
<PAGE>
overall Company and allow management to focus on its growth through  acquisition
strategy  without the  requirement  of  committing  financial  resources  to the
inventory  requirements and marketing needs that management  believes would have
used a minimum of $500,000 to achieve a minimal return over a lengthy period.

     Growth  Plans and Risk of  Expansion.  In 2000,  the  Company  adopted  and
implemented a business  strategy,  which seeks growth and expansion  through the
acquisition   of  other   companies  with   diversified   lines  of  businesses.
Accordingly, the growth and financial performance of the Company will depend, in
large  part,  upon  the  Company's  ability  to  identify  and  locate  suitable
acquisitions,  to manage such growth and the resultant  diverse  operations,  to
manage the margins of the acquired operations,  and to attract, hire, train, and
retain qualified  supervisory  personnel and other operational employees to meet
the Company's  needs as it expands,  as well as the  availability  of sufficient
working  capital.  Difficulties  resulting  from the  failure of the  Company to
manage and control its growth could  materially  adversely  affect the Company's
operating results and financial condition.

     No  Assurance  of  Acquisitions.   The  Company  has  limited   acquisition
experience and,  although from time to time it has had  preliminary  discussions
with potential acquisition candidates, the Company has not entered into any such
transactions  since June 2000.  The Company  does have  current  understandings,
arrangements, or agreements (oral or written) relating to specific acquisitions,
but has not secured funding to close the potential acquisitions. There can be no
assurance  that  any  acquisition   candidate  will  be  interested  in  such  a
transaction,  that an acquisition transaction will be successfully negotiated or
consummated,  or that the Company will be able to finance any such  acquisition.
Furthermore, there can be no assurance that the Company will be able to identify
other suitable acquisition  candidates in the future that would be interested in
such a transaction. To the extent that acquisitions are consummated, the Company
may have difficulty in successfully  integrating the acquired  business into the
Company or may lack the  management  skills or systems  necessary to  adequately
implement the Company's strategy. Furthermore, once integrated, acquisitions may
not achieve  comparable  levels of revenues,  profitability,  or productivity as
existing Company  operations,  or otherwise  perform as expected  (including the
potential failure to achieve expected  synergies or other anticipated  financial
benefits).  The  Company  is unable to predict  whether or when any  prospective
acquisition   candidate  will  become   available  or  the  likelihood  that  an
acquisition will be completed should any negotiations commence. The Company will
face  competition for such  acquisitions  from entities that have  substantially
greater resources than the Company.

     Acquisition Risks.  Acquisitions involve a number of special risks, some or
all of which could have a material  adverse  effect on the Company's  results of
operations or financial  condition.  Such risks include, but are not limited to,
the diversion of management's  attention from core  operations,  difficulties in
the  integration of acquired  operations and retention of personnel,  customers,
and suppliers,  unanticipated problems or legal liabilities,  tax and accounting
issues,  and the  inability  to  obtain  all  necessary  governmental  and other
approvals and consents.

     Need for Additional  Financing.  Cash flow from  operations and the sale of
securities  provided  the  working  capital  needs  and  principal  payments  on
long-term  debt through most of fiscal 2002.  However,  the Company will need to
obtain  additional  financing  in order to finance  its  acquisition  and growth
strategy.  There  can be no  assurance  that debt or  equity  financing  will be
available  to the Company on  acceptable  terms,  if at all. If the Company does
require  additional  financing  and it cannot be  obtained  or the terms of such
financings  are  unfavorable,  it may  have a  material  adverse  impact  on our
operations and  profitability,  and the Company may need to curtail its business
plan and strategy

     Loss of Certain Members of Our Management  Team Could Adversely  Affect the
Company.  The Company is  dependent  to a  significant  extent on the  continued
efforts and abilities of our Chairman, Robert E. Maxwell,  President,  Norman J.
Birmingham,  and Chief Executive Officer,  Daniel L. Hefner. If the company were
to lose the  services  of any of these  individuals  or other key  employees  or
consultants before a qualified replacement could be obtained, the business could
be materially affected.

     Expected  Volatility  in Share  Price.  The  market  price of our stock has
traded in a wide range.  From March 1, 2000 through  March 31, 2002 the price of
our common  shares has ranged from $1.9375 to $0.01 per share.  The price of our

                                       7
<PAGE>
common stock may be subject to  fluctuations  in response to  quarter-to-quarter
variations   in  operating   results,   creation  or   elimination   of  funding
opportunities,   restriction  of  the  acquisition   plans,   and  favorable  or
unfavorable coverage of our officers and Company by the press.

     Control by Current  Stockholders,  Officers and  Directors.  Management and
affiliates of the Company currently beneficially own, including shares they have
the right to acquire,  approximately  66.95% of the voting Common  Stock.  These
persons are, and will continue to be, able to exercise control over the election
of the Company's directors and the appointment of officers.

ITEM 2. PROPERTIES

     International  Machine and Welding,  Inc. owns in fee simple title a 38,000
square foot facility in Bartow, Florida, which currently serves as the principal
executive  offices  of  American  Commerce.  A note  with the GE  Capital  Small
Business Group encumbers this building.  This note needs to be refinanced by May
2005.  The Company has  negotiated  a  settlement  that  requires the note to be
refinanced by the end of July 2002. In the event that funding is  unavailable to
take  advantage of the  negotiated  settlement the operation will be required to
continue  to pay its  monthly  payments in excess of $12,000 per month until the
note has been paid in full.

ITEM 3. LEGAL PROCEEDINGS

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                       8
<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

     Since the April 1996 closing of the Company's initial public offering,  the
Company's Common Stock has traded in the over-the-counter market on the National
Association of Securities  Dealers,  Inc. OTC Bulletin  Board System  ("OTCBB").
Until  January 31,  2001 the  company's  common  stock  traded  under the symbol
"JDAW." In connection with the name change,  since February 10, 2001, the common
stock has traded  under the symbol  "AACS." The  following  table sets forth the
range of high and low closing bid  quotations of the Common Stock as reported by
the OTCBB for each fiscal  quarter for the past two fiscal  years.  High and low
bid  quotations  reflect  inter-dealer  prices  without  adjustment  for  retail
mark-ups,  markdowns or commissions  and may not  necessarily  represent  actual
transactions.


                                                                  Bid Prices
                                                              ------------------
                                                                High      Low
                                                                ----      ---
FISCAL 2002

First Quarter (March 1, 2001 through May 31, 2001)             $0.625    $0.25

Second Quarter (June 1, 2001 through August 31, 2001)          $0.34     $0.17

Third Quarter (September 1, 2001 through November 30, 2001)    $0.30     $0.18

Fourth Quarter (December 1, 2001 through February 28, 2002)    $0.30     $0.18

FISCAL 2001

First Quarter  (March 1, 2000 through May 31, 2000)            $1.9375   $0.88

Second Quarter  (June 1, 2000 through August 31, 2000)         $1.4375   $0.6875

Third Quarter  (September 1, 2000 through November 30, 2000)   $1.25     $0.10

Fourth Quarter  (December 1, 2000 through February 28, 2001)   $1.50     $0.01

On May 15, 2002 the closing bid price of the Company's  Common Stock as reported
by the OTCBB was $0.24 and there were approximately 538 shareholders of record.

DIVIDENDS

     The Company has never declared or paid a dividend on its Common Stock,  and
does  not  anticipate  paying  any cash  dividends  on its  Common  Stock in the
foreseeable  future.  The Company expects to retain, if any, its future earnings
for  expansion or  development  of the Company's  business.  The decision to pay
dividends,  if any,  in the  future is  within  the  discretion  of the Board of
Directors and will depend upon the  Company's  earnings,  capital  requirements,
financial condition and other relevant factors such as contractual  obligations.
There can be no assurance that dividends can or will ever be paid.

RECENT SALES OF UNREGISTERED SECURITIES

     None

                                       9
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     This Management's  Discussion and Analysis or Plan of Operation  presents a
review of the  consolidated  operating  results and  financial  condition of the
Company for the fiscal years ended  February 28, 2002 and February 28, 2001,  as
restated.  This  discussion and analysis is intended to assist in  understanding
the  financial  condition  and  results  of  operation  of the  Company  and its
subsidiaries.  This section should be read in conjunction  with the consolidated
financial statements and the related notes.

RESULTS OF OPERATIONS

     The Company owns one subsidiary that operated in the manufacturing  segment
during the fiscal  year ended  February  28,  2002 and  February  28,  2001.  To
facilitate the readers  understanding  of the Company's  financial  performance,
this discussion and analysis is presented on a segment basis.

MANUFACTURING SEGMENT

     The  manufacturing  segment  generates its revenues  from three  divisions.
Division 1 provides specialized  machining and repair services to heavy industry
and original  equipment  manufacturers.  Division 2 provides  repair and rebuild
services on heavy equipment used in construction  and mining as well as sales of
used equipment.  Division 3 provides parts sales for heavy equipment directly to
the customer.  The primary market of this segment is the majority of central and
south Florida with parts sales expanding its market internationally. The current
operations can be significantly  expanded using the 38,000 square foot structure
owned by International  Machine and Welding,  Inc. Management has implemented an
aggressive  marketing  campaign and hired additional sales staff in an effort to
improve the  utilization of its assets.  A partial second shift was added to the
operation during fiscal 2002.

     The  segments  sales  expectations  were not met in  fiscal  2002.  We have
expanded  our sales and  marketing  programs and are poised for growth in fiscal
2003.

FISCAL YEAR 2002 COMPARED TO FISCAL YEAR 2001

     General

     The Company's consolidated net sales increased to $1,941,855 for the fiscal
year ended  February 28, 2002 an increase of $291,901  from  $1,649,954  for the
restated  fiscal year ended  February  28,  2001,  an  increase  of 17.7%.  This
increase  was  due to a full  year's  operation  of  International  Machine  and
Welding, Inc. compared to nine months in fiscal 2001.

     Gross profit for the consolidated  operations increased to $837,147 for the
fiscal  year ended  February  28, 2002 from  $661,576  for the fiscal year ended
February 28, 2001.  Gross  profit  increased as a percentage  of sales to 43.11%
from  40.09%.  Consolidated  interest  expenses  in fiscal  2002  were  $297,235
compared to $192,883 in fiscal  2001.  The company  incurred a net  consolidated
loss of  $1,542,919  for the year ended  February 28, 2002 compared to a loss of
$1,765,086 for the year ended February 28, 2001.

     Selling,  general and  administrative  expenses increased to $2,043,752 for
fiscal 2002 from  $1,573,986  for fiscal 2001, an increase of $469,766 or 29.8%.
The increase was mainly attributable to increases in accounting,  legal fees and
stock   compensation  and  the  addition  of  two  employees  at  our  operating
subsidiary.

     The Company's net loss to common  shareholders  was  $1,542,919  for fiscal
2002 compared to a net gain to common  shareholders  of $20,349 for fiscal 2001.
This loss was mainly  attributable to the lack of a one-time gain less accretion
of $1,785,435 from the previous fiscal year.

                                       10
<PAGE>
     Manufacturing Segment

     The  Manufacturing  segment provided net sales of $1,941,855 For the fiscal
year ended  February 28, 2002 compared to  $1,649,954  for the fiscal year ended
February 28, 2001. The machining  operations  provided  $849,723 or 43.8% of net
sales with parts and service providing  $1,092,132 or 56.2% of net sales for the
fiscal  year  ended  February  28,  2002 as  compared  to  machining  operations
contributing  $633,758  or 38.4% of net sales with parts and  service  providing
$1,016,196  or 61.6% of net sales for the fiscal year ended  February  28, 2001.
This was  through the efforts of a three  person  sales staff and the  exemplary
work of the rank and file who  provided  product  turnaround  that  excited  the
customers and created more opportunities.

     Gross  profit from the  Manufacturing  segment was  $837,147 for the fiscal
year ended February 28, 2002 compared to $661,576 in fiscal 2001 providing gross
profit margins of 43.1% and 40.1%, respectively.

     Selling,  general and administrative  expenses were $877,771 for the fiscal
year ended  February  28, 2002  compared  to $695,470  for the fiscal year ended
February 28, 2001 leaving losses from  operations of $40,624 and $33,894 or 2.1%
and 2.1%,  respectively.  Interest  expenses  were  $243,488 for the fiscal year
ended  February 28, 2002 compared to $130,066 for the fiscal year ended February
28, 2001.

     Non-recurring Income

     On October 23, 2000 the terms of the original agreement between the Company
and  ULLICO  were  substantially  modified  to meet  the  changing  needs of the
Company.  The holder  relinquished all mandatory  conversion rights allowing the
Company to reclassify the proceeds of the preferred stock  transaction as equity
and a non-recurring  gain of $1,994,768 from the  extinguishment of debt and the
recapture of dividend and warrant costs.

LIQUIDITY AND CAPITAL RESOURCES

     During the fiscal years ended  February 28, 2002 and February 28, 2001, the
Company  provided/(used)  net cash for  operating  activities  of $(21,319)  and
$228,834,  respectively.  Accounts receivable  decreased to $234,334 at February
28, 2002 from  $257,950 at February 28,  2001,  a decrease of $23,616,  or 9.2%.
Inventory  decreased to $268,030 at February 28, 2002 from  $717,709 at February
28,  2001,  a  decrease  of  $449,679,  or  62.7% as a  result  of  discontinued
operations.

     During   fiscal  2002  and  2001,   the  Company  used  funds  for  capital
expenditures of $15,556 and $5,452, respectively.

     Cash flows from  operations  and loans or the sale of equity  provided  for
working  capital needs and principal  payments on long-term  debt through fiscal
2002.  To the extent that the cash flows from  operations  are  insufficient  to
finance the Company's  anticipated  growth,  or its other  liquidity and capital
requirements  during the next twelve  months,  the Company will seek  additional
financing from alternative  sources including bank loans or other bank financing
arrangements,  other debt financing,  the sale of equity  securities  (including
those issuable pursuant to the exercise of outstanding warrants and options), or
other financing  arrangements.  However, there can be no assurance that any such
financing  will be  available  and, if  available,  that it will be available on
terms favorable or acceptable to the Company.

SEASONALITY

     The diversity of operations in the  Manufacturing  Segment protects it from
seasonal  trends  except  in the  sales of  agricultural  processing  where  the
majority  of the  revenue  is  generated  while  the  processors  await the next
harvest.

                                       11
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

     The response to this item is included as a separate  section of this report
commencing on page F-1.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS OF THE
        REGISTRANT

     The following table sets forth  information about each person who serves as
an executive officer or director of the Company:

     Name                  Age      Positions with the Company
     ----                  ---      --------------------------

Robert E. Maxwell          67       Chairman of the Board and Director

Norman J. Birmingham       47       President and Director

Frank D. Puissegur         43       Chief Financial Officer and Director

Daniel L. Hefner           52       Chief Executive Officer and Director

     Directors  of the Company  hold office until the earlier of the next annual
meeting of the  stockholders  and until their  successors have been duly elected
and qualified, or their death, resignation, or removal. Three board members were
elected to two-year terms at the annual  stockholders  meeting held December 15,
2000.  Robert  Maxwell is the only board member  elected to a two-year term that
remains from this election.  On March 5, 2002 in consent action by  shareholders
Norman  Birmingham  was elected to a two-year term with all other members except
Mr. Maxwell elected to one-year terms.  Our officers are elected annually by the
board of directors to hold office until the next annual meeting of our board and
their  successors  have been duly  elected  and  qualified.  There are no family
relationships  between any of our officers and  directors.  Set forth below is a
description  of the business  experience  during the past five years or more and
other biographical  information for directors and executive officers  identified
above:

     Mr.  Maxwell has been a director and the Chairman of the Board of Directors
of the  Company  since June 2000.  Mr.  Maxwell is also the  General  Manager of
International  Machine and Welding,  Inc., a recently acquired subsidiary of the
Company. He was the owner/operator of Florida Machine and Welding, Inc., located
in Bartow,  Florida,  for the past 23 years until the sale of its assets in June
2000. Mr. Maxwell has served on various bank and charitable boards of directors.

     Mr. Birmingham has been President and a director of the Company since March
2002.  He  previously  served as Chief  Financial  Officer of the  Company  from
January 1, 2000 to April 2001 and as a director  from March 2000  through  April
2001. Mr.  Birmingham has served as Chief Financial Officer of Open Door Online,
Inc.  (OTCBB:  NTER)  since  March 2000 and as a director  since June 2000.  Mr.
Birmingham has served as an officer or director of three other public companies.

     Mr.  Puissegur  joined the Company in June 2001 as Chief Financial  Officer
and Director.  He became a Certified public Accountant with his certificate from
the State of Florida and the creation of a sole practitioner office in 1982. The
practice  grew and has  evolved  into its  current  form as the  partnership  of
Puissegur,  Finch, & Slivinski,  P.A., a full service  accounting  firm. He is a
member of the American and Florida  Institutes of Certified  Public  Accountants
and the  National  and  Polk  County  Estate  Planning  Councils.  The  American
Institute of Tax Studies has awarded Mr. Puissegur the designation of "Certified
Tax  Professional." He also holds the designation from the State of Florida as a
Certified Family Mediator.

                                       12
<PAGE>
     Mr. Hefner has been Chief Executive Officer since March 2002. He previously
served as Executive  Vice  President  from June 2000 to June 2001 and as interim
President  from June 2001 through  February 2002. Mr. Hefner has been a director
of the Company  since June 2000.  Mr.  Hefner  currently  serves as President of
International Commerce and Finance, Inc. a holding company for manufacturing and
technology  companies,  and he has held this  position  since August  1999.  Mr.
Hefner has been active for the past ten years as an  independent  consultant  to
individuals or business seeking to begin operations or to create  turnarounds of
existing  business.  During the same period,  Mr.  Hefner also  operated his own
independent  real estate  brokerage  operation  where he served as President and
Chief Executive Officer. During 1999, Mr. Hefner was Chief Operating Officer for
Chronicle Communications, Inc. (OTCBB: CRNC), a Tampa based printer.

ITEM 10. EXECUTIVE COMPENSATION

     The  following  summary  compensation  table sets  forth cash and  non-cash
compensation  awarded,  paid or  accrued,  for the past three  fiscal  years the
Company's  Chief Executive  Officers,  and all other, if any, whose total annual
compensation  exceeded  $100,000  for the fiscal  year ended  February  28, 2002
(collectively, the " Named Executive Officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                           Compensation
                                                              Awards
                                           Annual          ------------
                                        Compensation        Securities
Name and                   Fiscal     ----------------      Underlying       All Other
Principal Position          Year      Salary     Bonus       Options       Compensation
------------------          ----      ------     -----       -------       ------------
<S>                        <C>        <C>        <C>       <C>             <C>
Daniel L. Hefner            2002      $67,600                100,000          $25,000
Interim President

David N. DeBaene            2001      $87,500    $    0      100,000          $25,000
Subsidiary President (1)

Steven D. Smith,            2001      $15,000    $3,750            0                0
President
</TABLE>

----------
(1)  The Company's  Board of Directors  accepted the  resignation of Mr. DeBaene
     from his position as President of J.D. American Workwear, Inc., on December
     15, 2000 and  immediately  elected Mr.  Smith to serve as  President of the
     Company.  Mr. Smith resigned as President June 1, 2001 and Daniel L. Hefner
     was named interim President.

     The Company does not have any  annuity,  retirement,  pension,  deferred or
incentive  compensation plan or arrangement  under which any executive  officers
are entitled to benefits, nor does the Company have any long-term incentive plan
pursuant to which  performance  units or other forms of  compensation  are paid.
Executive officers who qualify will be permitted to participate in the Company's
1995 Stock Option Plan,  which was adopted in February  1995.  See "Stock Option
Plan."   Executive   officers  may   participate  in  group  life,   health  and
hospitalization  plans if and when such  plans are  available  generally  to all
employees. All other compensation consisted solely of health care premiums.

EMPLOYMENT AGREEMENTS

     The Company signed an employment agreement with Daniel L. Hefner on June 1,
2000  containing  a base salary of $60,000;  a minimum cash bonus of $15,000 per
year and a 4% annual  increase of the base pay. Stock options are granted on the
signing and June 1 of each  contract  year at the rate of 100,000  common  share
equivalents.  The contract  also provides for a $750 per month car allowance and
the payment of all insurance,  fuel and  maintenance  costs and all  perquisites
related to health, dental, life or disability as may be offered to the executive
management  staff.  All other  provisions  of the previous  contract  related to
capital  raises or warrant  or  exercise  revenue  were  omitted  except for the
termination provisions stated above.

                                       13
<PAGE>
DIRECTOR COMPENSATION

     Directors  of the  Company  who are not  employees  or  consultants  do not
receive  any  compensation  for  their  services  as  members  of the  Board  of
Directors,  but are  reimbursed for expenses  incurred in connection  with their
attendance at meetings of the Board of Directors.

COMPENSATION COMMITTEE

     Robert E. Maxwell,  Daniel L. Hefner and Frank Puissegur are members of the
Compensation Committee,  which reviews and makes recommendations with respect to
compensation of officers,  employees and consultants,  including the granting of
options under the Company's 1995 Stock Option Plan.

STOCK OPTION PLAN

     The 1995 Stock  Option  Plan.  The  Company's  1995 Stock  Option Plan (the
"Plan")  adopted by the Company's Board of Directors in February 1995 and by the
stockholders  in July 1995  provides for the  issuance of options to  employees,
officers and, under certain  circumstances,  directors of and consultants to the
Company ("Eligible Participants").  Options granted under the plan may be either
"incentive  stock  options"  ("ISOs") as defined in Section 422 of the  Internal
Revenue Code of 1986, as amended (the "Code") or  "nonqualified  stock  options"
("NQSOs").  The Plan does not  provide for the  issuance  of stock  appreciation
rights but does permit the granting of restricted and  non-restricted  stock and
deferred stock awards. A total of 250,000 shares of Common Stock were originally
reserved for issuance  under the Plan;  however,  in January 1998,  the Board of
Directors  voted to amend the Plan and  reserve for  issuance  under the Plan an
additional  500,000 shares,  which amendment was ratified by the stockholders of
the Company at the Annual Meeting of Stockholders  held April 15, 1998. The plan
was further amended at an Annual Shareholders meeting December 15, 2000 at which
time an increase of 1,250,000 shares were ratified.  The Compensation  Committee
of the  Board  of  Directors  administers  the  Plan.  The  Committee  has  sole
discretion and authority,  consistent with the provisions of the Plan, to select
the Eligible  Participants  to whom Options will be granted under the Plan,  the
number of shares  which will be covered by each Option and the form and terms of
the agreement to be used.  All employees and officers of the Company  (including
members of the Committee) are eligible to participate in the Plan. Directors are
eligible  to  participate  only if  they  have  been  declared  to be  "eligible
directors"  by  resolution  of the Board of  Directors.  At February  28,  1999,
approximately 20 persons were eligible to receive ISOs under the Plan.

     Options.  The  Committee is empowered  to determine  the exercise  price of
Options  granted under the Plan, but the exercise price of ISOs must be equal to
or greater than the fair market value of a share of Common Stock on the date the
Option is granted  (110% with respect to option  holders who own at least 10% of
the  outstanding  Common  Stock).  The exercise price of NQSOs granted under the
Plan must not be less than 85% of the fair market  value of the Common  Stock on
the date the Option is granted. The Committee has the authority to determine the
time or times at which Options  granted under the Plan become  exercisable,  but
the  Options  expire no later than ten years from the date of grant  (five years
with respect to Option  holders who own at least 10% of the  outstanding  Common
Stock of the Company).  The Options are nontransferable,  other than by will and
the laws of descent,  and generally may be exercised  only by an employee  while
employed by the Company or within 90 days after  termination of employment  (one
year from  termination  resulting from death or  disability).  The  compensation
committee  has the  authority to waive  payment of the  exercise  price of stock
options issued under the plan.

     At February  28,  2002,  the Company did not have any  long-term  incentive
plans nor had it awarded any restricted  shares to any Named Executive  Officer.
The table set forth  below  contains  information  with  respect to the award of
stock  options  during the  fiscal  year ended  February  28,  2001 to the Named
Executive Officers covered by the Salary Compensation Table.

                                       14
<PAGE>
                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (individual grants)

                           Number of      % of Total
                          Securities     Options/SAR's   Exercise
                          underlying      Granted to     or Base
                         Options/SAR's   Employees in     Price     Expiration
Name                       Granted        Fiscal Year     ($/Sh)       Date
----                       -------        -----------     ------       ----
David N. DeBaene           100,000           50.0         $0.42      Forfeited

Daniel L. Hefner           100,000           50.0         $0.42     June 1, 2006

               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                      AND FISCAL YEAR-END OPTION/SAR VALUES

     The following  table sets forth,  for each Named  Executive  Officer in the
Summary  Compensation  Table  who  holds  stock  options,  the  number of shares
acquired  pursuant to the exercise of stock  options  during  fiscal  2002,  the
number of stock  options  held on February 28, 2002 and the  realizable  gain of
stock options that are "in-the-money."

<TABLE>
<CAPTION>
                                                              Number of
                                                       Securities Underlying            Value of Unexercised
                                                        Unexercised Options             In-the-Money Options
                                                         at Fiscal Year End            At Fiscal Year End (1)
                         Shares                      ---------------------------     ---------------------------
                       Acquired on        Value      Exercisable   Unexercisable     Exercisable   Unexercisable
Name                  Exercised (#)     Realized         (#)            (#)               $              $
----                  -------------     --------     -----------   -------------     -----------   -------------
<S>                   <C>               <C>          <C>           <C>               <C>           <C>
Daniel L. Hefner                                       100,000           0                0              0
</TABLE>

----------
(1)  Based upon the closing  price of the Common Stock as quoted on the Over The
     Counter Bulletin Board on February 28, 2002 of $0.18 per share.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership of the Company's  outstanding Common Stock as of May 15, 2002, by: (i)
each director and nominee for director of the Company, (ii) each Named Executive
Officer,  (iii) all directors and executive  officers of the Company as a group,
and (iv) each person  known to the Company  beneficially  owning more than 5% of
the outstanding Common Stock. Except as otherwise  indicated,  the persons named
in the table have sole voting and  investment  power with  respect to all of the
Common Stock owned by them.

                                       15
<PAGE>
Name and Address or                    Amount and Nature of          Percentage
  Number in Group                    Beneficial Ownership (1)       of Class (2)
  ---------------                    ------------------------       ------------

Directors and Executive Officers

Robert E. Maxwell (3)                          723,360                  4.17%

Norman J. Birmingham (4)                     1,470,000                  8.48%

Frank D. Puissegur                                   0                    **

Daniel L. Hefner (5)
1400 Chamber Dr.
Bartow, FL                                   9,411,110                  54.3%

All Directors and Executive
Officers as a Group (4 persons)             11,604,470 (6)             66.95%

International Commerce and
Finance, Inc.
Tampa, FL                                    7,970,000                 45.99%

----------
(**) less than 1%

(1)  In  accordance  with Rule  13d-3  promulgated  pursuant  to the  Securities
     Exchange  Act of 1934, a person is deemed to be the  beneficial  owner of a
     security for  purposes of the rule if he or she has or shares  voting power
     or  dispositive  power with  respect to such  security  or has the right to
     acquire such ownership within sixty days. As used herein, "voting power" is
     the  power to vote or to direct  the  voting of  shares,  and  "dispositive
     power" is the  power to  dispose  or  direct  the  disposition  of  shares,
     irrespective of any economic interest therein.

(2)  In calculating  the percentage  ownership for a given  individual or group,
     the number of shares of Common Stock  outstanding  includes unissued shares
     subject to options,  warrants,  rights or conversion privileges exercisable
     within  sixty  days held by such  individual  or group,  but are not deemed
     outstanding by any other person or group.

(3)  Includes 723,360 shares of Common Stock held by his spouse Barbara Maxwell.

(4)  Includes (a) 200,000 shares of Common Stock, which may be acquired pursuant
     to currently exercisable options and, (b) 1,270,000 shares of Common Stock.

(5)  Includes (a) 200,000 shares of Common Stock, which may be acquired pursuant
     to currently  exercisable options (b) 1,241,110 shares of Common Stock held
     personally and, (c) 7,970,000 shares of Common Stock  beneficially owned as
     the President of International Commerce and Finance, Inc.

(6)  Includes 400,000 shares of Common Stock subject to options.

     The Company has two classes of preferred stock outstanding comprised of 102
shares of Series A Preferred Stock and 3,471 shares of Series B Preferred Stock.
Each  outstanding  class of preferred stock has voting rights and is convertible
into  Common  Stock.  Each share of Series A Preferred  Stock  converts to 1,289
shares of  Common  Stock and votes on an as  converted  basis.  3,207  shares of
Series B Preferred Stock is convertible  into 641,400 shares of Common Stock and
264 Series B Preferred  Shares  convert into 264,000  shares of Common Stock and
votes on an as converted basis.

     Gerald Hoak,  owner of 20 shares or 19.61% of Series A Preferred Stock, and
Merit  Capital  Associates,  owner of 40 shares or 39.22% of Series A  Preferred
Stock are the only  owners of more than 5% of the class.  No director or officer
is the beneficial owner of any of the Series A or Series B Preferred Stock.

     Beneficial Voting Power Held

     The  following  table sets forth the voting power in the  Company's  equity
securities,  as of May 15, 2002 held by: (i) each director of the Company,  (ii)
each Named Executive  Officer,  (iii) all directors and executive  officers as a
group,  and (iv) each  person  known by the  Company  to own more than 5% of any
class of outstanding equity security of the Company.  The voting power set forth
in this table is the beneficial voting power held,  directly and indirectly,  by

                                       16
<PAGE>
such person as of the date  indicated  assuming no  conversion  of the preferred
stock (i.e.,  includes  shares that may be acquired  within 60 days by reason of
option or warrant  exercise but not those that could be obtained upon conversion
of preferred stock).

                                                          Percent of Outstanding
Name                                                       Voting Power Held(1)
----                                                      ----------------------

Directors and Executive Officers

Robert E. Maxwell........................................          3.92%
Norman J. Birmingham (2).................................          7.89%
Frank Puissegur .........................................           *
Daniel L. Hefner (3).....................................         49.46%
All directors and executive officers
as a group (4 persons)...................................         59.06%

Other Equity Holders (4).................................

International Commerce and Finance (5)...................         40.55%

----------
*    Less than 1%

(1)  Based upon 17,386,344  outstanding  shares of common stock, 102 outstanding
     shares of Series A Preferred Stock and 3,471 outstanding shares of Series B
     Preferred  Stock.  Each share of Common  Stock is  entitled to one vote per
     share.  Each  outstanding  share of Series A Preferred Stock is entitled to
     1,289 votes.  3,207 shares of Series B Preferred  Stock are entitled to 200
     votes per share and 264 shares of Series B  Preferred  are  entitled  1,000
     votes each.  Accordingly,  as of May 15, 2002, the Series A Preferred Stock
     and Series B Preferred  Stock are entitled to an aggregate of 131,478 votes
     and 905,400 votes,  respectively.  Voting rights are calculated in the same
     manner  described  in footnote 2 to table  above  disclosing  the  Security
     Ownership  of  Management  and  Certain   Beneficial  Owners   ("Beneficial
     Ownership  Table").  Totals  exceed  100%  due  to  such  calculations  and
     overlapping  beneficial  voting  rights held  between  holders as set forth
     herein.
(2)  Consisting of 200,000 votes upon exercise of currently  exercisable options
     to purchase Common Stock and 1,270,000 shares of Common Stock held.
(3)  Consisting of 200,000 votes upon exercise of currently  exercisable options
     to  purchase  Common  Stock,  1,241,110  shares  of Common  Stock  held and
     7,970,000  shares  of  Common  Stock  beneficially  owned as  President  of
     International Commerce and Finance, Inc.
(4)  Consisting  of (a) 400,000  votes upon  exercise of  currently  exercisable
     options to  purchase  Common  Stock,  (b) Item 1 above,  and (c)  1,032,550
     warrants held by Union Labor Life Insurance  Company  totaling in aggregate
     19,655,772 votes.
(5)  Consisting of 7,970,000 shares of Common Stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

STOCKHOLDERS AGREEMENT

A Stockholders  Agreement dated April 9, 1998 was entered into among ULLICO, the
Company,  David N. DeBaene,  Annette DeBaene,  Norman DeBaene,  Thomas Lisi, and
Steve Panneton (each, a "Holder").  The Stockholders Agreement provides that the
Company shall have a right of first  refusal  before any Holder may transfer any
shares of Common Stock. ULLICO has a right of second refusal and co-sale rights,
if the Company  does not elect to buy all of the  securities  it is offered.  If
ULLICO enters into an agreement to transfer, sell or otherwise dispose of all of
its  Preferred  Stock,  Warrants and any Common Stock issued upon  conversion or
exercise of the former (such agreement referred to as a "Tag-Along Sale"),  each
Holder has the right to participate in the Tag-Along  Sale. If ULLICO,  alone or
with another person, accepts an offer from any party who is unaffiliated with it
to  purchase  any of  ULLICO's  shares  which  results in such party  having the
ability to elect a majority of the Company's  Board of  Directors,  then, at the
request of ULLICO,  each  Holder  shall sell all shares of Common  Stock held by
such Holder (referred to as a "Drag-Along Sale").

In March 2001, the property at 46 Old Flat River Rd., Coventry, RI was sold to a
relative of the  President  of JD American  Workwear,  Inc.  for  $165,000.  The
President received $40,000 from the proceeds of the sale.

                                       17
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

List of Exhibits

(a)  The  exhibits  that are  filed  with this  report or that are  incorporated
     herein by reference  are set forth in the Exhibit  Index  appearing on page
     E-1.

(b)  Reports on Form 8-K

     None

                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        AMERICAN COMMERCE SOLUTIONS, INC.


Date: June 6, 2002                      By: /s/ Norman J. Birmingham
                                            ------------------------------------
                                            Norman J. Birmingham, President

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

     Signatures                             Title                       Date
     ----------                             -----                       ----

/s/ Robert E. Maxwell        Chairman of the Board and Director     June 6, 2002
--------------------------
Robert E. Maxwell

/s/ Daniel L. Hefner         Chief Executive Officer and Director   June 6, 2002
--------------------------
Daniel L. Hefner

/s/ Frank D. Puissegur       Chief Financial Officer (Principal
--------------------------   Financial Officer) and Director        June 6, 2002
Frank D. Puissegur

/s/ Norman J. Birmingham     President and Director                 June 6, 2002
--------------------------
Norman J. Birmingham

    SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
           SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS

(1)  No annual  report  covering the  registrant's  last fiscal year has been or
     will be sent to security holders of the registrant

(2)  No proxy statements,  proxies,  or other proxy soliciting material was sent
     to the registrant's  shareholders  during the past fiscal year. The Company
     expects to hold its next annual shareholders meeting in August 2002.

                                       18
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
             CONSOLIDATED FINANCIAL STATEMENTS AND AUDITORS' REPORT
                           FEBRUARY 28, 2002 AND 2001

                                TABLE OF CONTENTS

Independent Auditors' Report                                                 F-2

Consolidated Financial Statements:

Consolidated Balance Sheets                                                  F-3

Consolidated Statements of Operations                                        F-5

Consolidated Statements of Changes
  in Stockholders' Equity                                                    F-6

Consolidated Statements of Cash Flows                                        F-7

Notes to the Consolidated Financial Statements                              F-10
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
   of American Commerce Solutions, Inc. and Subsidiaries

We have  audited  the  accompanying  consolidated  balance  sheets  of  American
Commerce  Solutions,  Inc.  (a  Delaware  Corporation)  and  subsidiaries  as of
February  28,  2002  and  2001,  and  the  related  consolidated  statements  of
operations,  changes in  stockholders'  equity and cash flows for the years then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  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 consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of American Commerce
Solutions,  Inc.  and  subsidiaries  as of February  28, 2002 and 2001,  and the
results  of their  operations  and their  cash flows for the years then ended in
conformity with generally accepted accounting principles in the United States of
America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note  2,  the  Company's
significant  operating  losses and negative  working  capital raise  substantial
doubt  about its  ability to continue  as a going  concern.  Management's  plans
regarding these matters are also described in Note 2. These financial statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.

As discussed in Note 15 to the financial  statements,  certain errors  resulting
from a  failure  to  capitalize  leased  equipment  and  record  unearned  stock
compensation  were  discovered  during the current year.  Accordingly,  the 2001
financial statements have been restated to correct the errors.

Respectfully submitted,

BELLA, HERMIDA, GILLMAN, HANCOCK & MUELLER

Certified Public Accountants
Plant City, Florida
May 23, 2002

                                      F-2
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                    February 28,    February 28,
                                                        2002           2001 *
                                                     ----------      ----------
ASSETS

Current Assets:
   Cash                                              $   14,208      $   34,885
  Accounts receivable,
   net of allowances of $34,383 (2002)
   and $46,881 (2001)                                   234,334         257,950
  Inventories                                           268,030         717,709
  Prepaid expenses                                       11,354
                                                     ----------      ----------
Total current assets                                    527,926       1,010,544

  Property and equipment, net of                      5,053,261       5,712,120
   accumulated depreciation of $520,732
   (2002) and $447,159 (2001)
  Intangible assets, net                                                 67,324
  Long term receivables                                 179,864         202,806
  Real property for resale                              243,150         240,000
  Equipment for resale                                  476,000         476,000
                                                     ----------      ----------
TOTAL ASSETS                                         $6,480,201      $7,708,794
                                                     ==========      ==========

                                      F-3
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                                   February 28,    February 28,
                                                       2002           2001 *
                                                   ------------    ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of notes payable
   and capital leases                              $  1,976,278    $    834,143
  Bank overdraft                                            278           8,649
  Accounts payable                                      572,956         624,159
  Accrued expenses                                      725,978         664,529
                                                   ------------    ------------
      Total current liabilities                       3,275,490       2,131,480

Long-term debt, net of current portion                  621,396       1,831,593

Stockholders' equity:
  Preferred stock, total authorized
   1,000,000 shares, $.001 par value
   Series A, cumulative and convertible,
    authorized 600 shares,  $.001 par value,
    102 and 110 shares issued and
    outstanding, respectively,
    liquidation preference $369,750                          --              --
  Series B, cumulative and convertible,
   authorized 3,950 shares,$.001 par value,
   3,471 and 3,207 shares issued and
   outstanding, respectively, liquidation
   preference $3,549,895                                      3               3
  Series C, cumulative and convertible,
   authorized 20,000 shares, $.001 par value,
   0 and 4,800 shares issued and outstanding,
   respectively                                              --               5
  Common stock, authorized 30,000,000 shares
   $.002 par value, 17,351,344 and 10,717,589
   shares issued and 16,829,344 and 10,717,589
   outstanding, respectively                             34,703          21,435
  Additional paid-in-capital                         14,405,143      14,229,367
  Common stock receivables                              (20,000)       (477,000)
  Accumulated deficit                               (11,571,008)    (10,028,089)
  Treasury stock, 522,000 common shares
   at cost                                             (265,526)
                                                   ------------    ------------
  Total stockholders' equity                          2,583,315       3,745,721
                                                   ------------    ------------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY                                $  6,480,201    $  7,708,794
                                                   ============    ============

* As Restated

   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        For the Year Ended
                                                   ----------------------------
                                                   February 28,    February 28,
                                                       2002            2001 *
                                                   ------------    ------------
Net sales                                          $  1,941,855    $  1,649,954

Cost of goods sold                                    1,104,708         988,378
                                                   ------------    ------------

Gross profit                                            837,147         661,576

Selling, general and administrative expenses          2,043,752       1,573,986
                                                   ------------    ------------
                                                     (1,206,605)       (912,410)
Other income (expenses)
  Other income                                           22,564           3,444
  Gain (loss) on disposal of assets                      14,547          (3,400)
  Interest expense                                     (297,235)       (192,883)
                                                   ------------    ------------
Net loss from continuing operations                  (1,466,729)     (1,105,249)
                                                   ------------    ------------
  Discontinued operations:
  Income (loss) from discontinued operations            (59,350)       (659,837)
  Loss on disposal of subsidiary                        (16,840)
                                                   ------------    ------------
Net loss from discontinued operations                   (76,190)       (659,837)
                                                   ------------    ------------

Net loss                                             (1,542,919)     (1,765,086)

Accretion of discount and dividends on
 mandatory redeemable preferred stock                                  (209,333)

Gain on extinguishment of mandatory
 redeemable preferred stock                                           1,994,768
                                                   ------------    ------------
Net profit (loss) to common shareholders           $ (1,542,919)   $     20,349
                                                   ============    ============

Net profit (loss) per common share                 $      (0.15)   $       0.00
                                                   ============    ============
Net loss from continuing operations
 per common share                                  $      (0.14)   $      (0.25)
                                                   ============    ============

Weighted average common shares outstanding           10,300,282       4,347,297
                                                   ============    ============

----------
*    As Restated

   The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED FEBRUARY 28, 2002 AND 2001

<TABLE>
<CAPTION>
                                         Common stock           Preferred stock    Additional
                                          $.002  Par                $.001 Par        Paid-in         Stock
                                     Shares        Amount       Shares    Amount     Capital       Receivable
                                   -----------    --------      ------    ------   ------------    ----------
<S>                                <C>            <C>           <C>       <C>      <C>             <C>
Balance, February 29, 2000           2,750,427    $  5,501         154    $   0    $  7,116,100    $(489,248)
Preferred shares issued for
Acquisitions                                --          --       9,800       10       4,446,159           --
Common shares issued for
 services                              347,500         695          --       --          42,305           --
Common shares issued for
 debt repayment                         10,000          20          --       --           4,980           --
Common shares returned for
 stock receivable                     (130,000)       (260)         --       --        (146,640)     146,900
Exercise of stock options
 and warrants                          199,350         399          --       --         231,354       (7,870)
Preferred stock conversion           5,081,562      10,163      (5,044)      (5)        (10,158)          --
Common shares issued for
 debt conversion                       908,750       1,817          --       --         179,932        7,870
Common stock issued for
 acquisition                           200,000         400          --       --         237,600           --
Services received for
 stock receivable                           --          --          --       --              --      192,348
Extinguishment of Series B
 mandatory conversion                       --          --       3,207        3       1,994,768           --
Stock receivable paid in cash               --          --          --       --              --       20,000
Common shares issued for
 receivables                         1,350,000       2,700          --       --         342,300     (347,000)
Accretion of discount and
 dividends mandatory redeemable
 preferred stock                            --          --          --       --        (209,333)          --
Net loss                                    --          --          --       --              --           --
                                   -----------    --------      ------    -----    ------------    ---------
Balance, February 28, 2001
 as restated                        10,717,589    $ 21,435       8,117    $   8    $ 14,229,367    $(477,000)

Common shares issued for
 services                               25,000          50          --       --           4,450           --
Common shares issued for
 debt repayment                         96,690         194          --       --          82,007           --
Common shares surrendered
 for stock receivable                  (10,000)        (20)         --       --          (2,980)      10,000
Preferred shares converted           4,850,065       9,700      (4,808)      (5)         (9,695)          --
Common shares issued for
 accrued compensation                2,030,000       4,060          --       --         361,340           --
Common stock acquired
 in sales of subsidiaries                   --          --          --       --              --           --
Stock receivable paid in
 services                                   --          --          --       --              --      442,000
Stock receivable paid in
 cash                                       --          --          --       --              --        5,000
Common shares retired                 (358,000)       (716)         --       --        (259,346)          --
Preferred shares issued for
 Series C dividends                         --          --         264       --              --           --
Net loss
                                   -----------    --------      ------    -----    ------------    ---------
Balance, February 28, 2002          17,351,344    $ 34,703       3,573    $   3    $ 14,405,143    $ (20,000)
                                   ===========    ========      ======    =====    ============    =========

                               Accumulated       Treasury
                                 Deficit           Stock           Total
                               ------------    ------------    ------------
Balance, February 29, 2000     $ (8,263,003)                   $ (1,630,650)
Preferred shares issued for
Acquisitions                             --                       4,446,169
Common shares issued for
 services                                --                          43,000
Common shares issued for
 debt repayment                          --                           5,000
Common shares returned for
 stock receivable                        --                              --
Exercise of stock options
 and warrants                            --                         223,883
Preferred stock conversion               --                              --
Common shares issued for
 debt conversion                         --                         189,619
Common stock issued for
 acquisition                             --                         238,000
Services received for
 stock receivable                        --                         192,348
Extinguishment of Series B
 mandatory conversion                    --                       1,994,771
Stock receivable paid in cash            --                          20,000
Common shares issued for
 receivables                             --                          (2,000)
Accretion of discount and
 dividends mandatory redeemable
 preferred stock                         --                        (209,333)
Net loss                         (1,765,086)                     (1,765,086)
                               ------------    ------------    ------------
Balance, February 28, 2001
 as restated                   $(10,028,089)             --    $  3,745,721

Common shares issued for
 services                                --              --           4,500
Common shares issued for
 debt repayment                          --              --          82,201
Common shares surrendered
 for stock receivable                    --              --           7,000
Preferred shares converted               --              --              --
Common shares issued for
 accrued compensation                    --              --         365,400
Common stock acquired
 in sales of subsidiaries                --        (525,588)       (525,588)
Stock receivable paid in
 services                                --              --         442,000
Stock receivable paid in
 cash                                    --              --           5,000
Common shares retired                    --         260,062              --
Preferred shares issued for
 Series C dividends                      --              --              --
Net loss                         (1,542,919)             --      (1,542,919)
                               ------------    ------------    ------------
Balance, February 28, 2002     $(11,571,008)   $   (265,526)   $  2,583,315
                               ============    ============    ============
</TABLE>

----------
*    As Restated

   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         For the Year Ended
                                                     --------------------------
                                                     February 28,   February 28,
                                                         2002          2001 *
                                                     -----------    -----------
Cash flows from operating activities:
Net loss                                             $(1,542,919)   $(1,765,086)
 Adjustments to reconcile net loss
 to net cash provided by (used in)
 operating activities:
    Depreciation and amortization                        294,314        317,519
    Provision for doubtful accounts                          731         36,881
    Provision for losses on inventory                         --        341,630
    Securities issued for services                       475,162        465,101
    Loss on disposal of subsidiary                        16,840
    (Gain)loss on disposal of assets                     (14,457)         3,400
    Changes in operating assets and
    liabilities, net of disposals:
      Accounts receivable                                (73,134)        92,504
      Inventories                                         15,889        173,780
      Prepaid expenses and other assets                  (11,354)            --
      Accounts payable and accrued expenses              825,980        519,456
      Equipment held for resale                               --         35,000
      Bank overdraft                                      (8,371)         8,649
                                                     -----------    -----------
Net cash provided by (used in)
 operating activities                                    (21,319)       228,834
                                                     -----------    -----------
Cash flows from investing activities:
  Increase in long term receivables                      (28,440)      (238,185)
  Receipts on long term receivables                       22,787         37,179
  Cash acquired in acquisition transaction                    --          2,465
  Cash sold in disposals                                 (61,260)            --
  Proceeds from sale of assets                             9,089             --
  Capital expenditures                                   (15,556)        (5,452)
                                                     -----------    -----------
Net cash used in investing activities                    (73,380)      (203,993)
                                                     -----------    -----------
Cash flows from financing activities:
  Bank overdraft assumed in acquisition                       --        (42,875)
  Proceeds from notes payable                            152,651        118,085
  Principal payments on notes payable and
   capital leases                                        (83,629)       (96,689)
  Proceeds received on common stock receivable             5,000         20,000
                                                     -----------    -----------
Net cash provided by (used in)
  financing activities                                    74,022         (1,479)
                                                     -----------    -----------
Increase (decrease) in cash                              (20,677)        23,362
Cash, beginning of year                                   34,885         11,523
                                                     -----------    -----------
Cash, end of year                                    $    14,208    $    34,885
                                                     ===========    ===========

                                      F-7
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                                For the Year Ended
                                            ---------------------------
                                            February 28,   February 28,
Supplemental cash flow disclosures:             2002           2001
                                            ------------   ------------
  Cash paid for interest                    $    168,798   $     92,193
                                            ============   ============

Supplemental schedule of non-cash investing and financing activities:

  Securities issued for debt repayment      $     44,500   $      5,000

  Securities issued for payables            $    381,438   $    181,749

  Securities surrendered                    $      3,000   $    146,900

  Securities issued for receivables         $              $    347,000

  Common stock acquired in
   sale of subsidiary                       $    156,532

     In connection with the disposal of all of the common stock of Rhode Island
     Truck and Equipment Corp., the Company reacquired 155,000 shares of its
     common stock in exchange for net assets valued at $156,532

  Common stock acquired
   in sale of operations                    $    369,056
  Notes payable issued
   in sale of operations                    $     43,115

     In connection with the disposal of the assets of JD American Workwear,
     Inc., the Company reacquired 725,000 shares of its common stock and issued
     notes payable of $43,115 in exchange for net assets of $325,941

  Mortgage paid with proceeds from
   sale of building                         $    106,323

  Notes payable issued for equipment        $    106,212

  Capital leases payable issued
   for equipment purchases                                 $    134,308

  Notes receivable issued to President
   of JD American Workwear, Inc.            $     40,000

                                      F-8
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

   Notes receivable assigned for
    accounts payable                        $    42,291

   Notes payable and accrued interest
    refinanced                              $   185,229

   Common stock issued for acquisitions                    $   238,000

     In connection with the acquisition of the outstanding stock of Rhode Island
     Truck and Equipment Corp. for $238,000 in common stock, the Company
     acquired assets with a fair value of $324,155 and assumed liabilities of
     $103,613

    Preferred stock issued for acquisition                 $ 4,446,159

     In connection with the acquisition of all of the common stock of
     International Machine and Welding, Inc. for $4,446,159 in preferred stock,
     the Company acquired assets with a fair value of $6,752,883 and assumed
     liabilities of $2,306,724.

  Accretion of discount and dividends on
   mandatory redeemable preferred stock                    $   209,333

  Gain on extinguishment of mandatory
   redeemable preferred stock                              $ 1,994,768


----------
*    As restated

   The accompanying notes are an integral part of these financial statements.

                                      F-9
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The Organization

     American Commerce Solutions, Inc., a Delaware corporation,  operates as the
     parent company to its subsidiary  International  Machine and Welding,  Inc.
     International Machine and Welding, Inc. provides machining, heavy equipment
     repair  services  and  parts  sales.   The  company  has  discontinued  the
     operations  of two  subsidiaries,  JD American  Workwear,  Inc., a workwear
     distributor and Rhode Island Truck and Equipment Corp., a paving contractor
     (See Note 12).

     Principles of Consolidation

     The accompanying  consolidated financial statements include the activity of
     American Commerce Solutions,  Inc. and its wholly owned  subsidiaries.  All
     inter-company   transactions   and  balances   have  been   eliminated   in
     consolidation.

     Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported  amount of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenue  and  expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Cash and Cash Equivalents

     The Company  considers all highly  liquid  investments  with  maturities of
     three months or less, when acquired,  to be cash  equivalents.  The Company
     held no such instruments at February 28, 2002 and 2001.

     Inventories

     Inventories  are stated at the lower of cost or market.  Cost is determined
     on a standard cost basis that approximates the first-in,  first-out method.
     Market  is  determined   based  on  net   realizable   value.   Appropriate
     consideration is given to obsolescence, excessive levels, deterioration and
     other factors in evaluating net realizable value.

                                      F-10
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
       FEBRUARY 28, 2002 AND 2001 FEBRUARY 28, 2001 AND FEBRUARY 29, 2000

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Depreciation and Amortization

     Property  and   equipment  are  stated  at  cost.   The  Company   computes
     depreciation and amortization  expense using  straight-line and accelerated
     methods over the following estimated useful lives of the assets:

     Asset Classification            Estimated Useful Lives
     --------------------            ----------------------

     Building and Improvements           15 - 39 Years
     Machinery and Equipment              5 - 15 Years
     Office Furniture and Equipment       5 -  7 Years
     Trucks and Autos                          5 Years

     Patent  costs  include the direct  costs of  obtaining  the  patents.  Upon
     issuance of the patent,  the costs are  capitalized  and amortized over the
     estimated  useful life of the patent,  generally  five to seventeen  years,
     using the straight-line method.

     Direct costs  incurred with the issuance of notes and mandatory  redeemable
     preferred  stock are deferred and amortized  using the  effective  interest
     method, through the maturity date.

     Revenue Recognition

     Sales are recorded when products, repairs or parts are shipped or delivered
     to the  customer.  Provisions  for  discounts  and  rebates  to  customers,
     estimated  returns and allowances and other adjustments are provided for in
     the same period the related  sales are  recorded.  No products or parts are
     shipped with any contingencies except for defects.

     Stock-Based Compensation

     The  Company  accounts  for  stock  issued  to  employees  as  provided  in
     Accounting Principles Board Opinion No. 25, whereby compensation expense is
     recorded on the date the  options  are  granted  equal to the excess of the
     market price of the  underlying  stock over the exercise price and provides
     pro  forma   disclosure  of  the  application  of  Statement  of  Financial
     Accounting Standards No. 123.

                                      F-11
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Basic and Diluted Loss Per Share

     Net loss per  common  share is  computed  by  dividing  net loss to  common
     shareholders  by the  weighted-average  number of  shares  of common  stock
     outstanding  for  each  fiscal  year.  Common  stock  equivalents  are  not
     considered in loss years because they are anti-dilutive.

     Fair Value of Financial Instruments

     At  February  28,  2002  and  2001,  the  fair  values  of  cash  and  cash
     equivalents,  accounts  receivable,  and accounts payable approximate their
     carrying value due to their  short-term  nature.  The fair value of debt is
     estimated at its carrying  value based upon current rates  available to the
     Company.

     Reclassification

     Certain  reclassifications  have been made to the  prior  year's  financial
     statements to conform to the current year presentation.

NOTE 2: GOING CONCERN

     The Company has incurred substantial operating losses since inception.  The
     Company  recorded  losses from  continuing  operations  of  $1,466,729  and
     $1,105,249  for the years ended  February  28, 2002 and  February 28, 2001,
     respectively.  Current  liabilities exceed current assets by $2,747,564 and
     $1,120,936  at February 28, 2002 and February 28, 2001.  Additionally,  the
     Company has been unable to meet  obligations  to its creditors as they have
     become due.  The  ability of the Company to continue as a going  concern is
     dependent  upon its ability to reverse  negative  operating  trends,  raise
     additional capital and obtain debt financing.

     Management  has revised its  business  strategy to include  expansion  into
     other lines of business through  acquisition of other companies in exchange
     for the  Company's  stock.  Management  is currently  negotiating  new debt
     financing,  the  proceeds  from which  would be used to settle  outstanding
     debts at more  favorable  terms,  to  finance  operations  and to  complete
     additional business  acquisitions.  However, there can be no assurance that
     the Company will be able to raise

                                      F-12
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 2: GOING CONCERN (CONTINUED)

     capital, obtain debt financing or improve operating results sufficiently to
     continue as a going concern.

     The  accompanying  financial  statements  do not  include  any  adjustments
     relating to the recoverability and classification of recorded assets or the
     amounts and  classification  of liabilities  that might be necessary if the
     Company is unable to continue as a going concern.

NOTE 3: INVENTORIES

     Inventories consist of the following:

                                                2002         2001
                                              --------     --------
     Work-in-process                          $ 10,483     $ 12,217
     Finished Goods, Current Portion           257,547      428,031
     Supplies                                               277,461
                                              --------     --------
     Total Inventories                        $268,030     $717,709
                                              ========     ========

     During the fourth quarter of the year ended  February 28, 2001,  management
     evaluated its estimate of the net realizable value of JD American Workwear,
     Inc. inventory based on actual sales of product styles and liquidation sale
     pricing.  As a result,  a provision  for loss on  inventory of $341,630 was
     charged to operations  during the fourth quarter of the year ended February
     28, 2001.

NOTE 4: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS

     Property and equipment, at cost, consists of the following:

                                              2002         2001
                                           ----------   ----------
     Land                                  $  186,045   $  244,925
     Building and Improvements              2,851,837    2,938,837
     Machinery and Equipment                2,202,058    2,485,053
     Office Furniture and Equipment            28,836       64,638
     Trucks and Autos                         305,217      425,826
                                           ----------   ----------

                                            5,573,993    6,159,279
     Less: Accumulated Depreciation           520,732      447,159
                                           ----------   ----------

                                           $5,053,261   $5,712,120
                                           ==========   ==========

     Depreciation  expense  for the years ended  February  28, 2002 and 2001 was
     $292,980  and  $304,619,   respectively.   Depreciation   expense  includes
     amortization  of  equipment  held  under a capital  lease in the  amount of
     $8,954 for the

                                      F-13
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 4: PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS (CONTINUED)

     year ended  February  28, 2002 and $8,954 for the year ended  February  28,
     2001.

     Intangible assets, at cost, consists of the following:

                                              2001
                                            --------
          Patents                           $ 70,970
          Goodwill                            17,458
                                            --------
                                              88,428
          Less: Accumulated Amortization      21,104
                                            --------
                                            $ 67,324
                                            ========

     Amortization expense for the years ended February 28, 2002 and February 28,
     2001 was $1,334 and $3,619, respectively.

NOTE 5: LONG-TERM RECEIVABLES

     Long term receivables consists of the following:

                                                          2002        2001
                                                       ---------   ---------
     Receivable from employee of subsidiary,
      no stated interest or terms                      $   8,605   $   9,000
     Receivable from related party, President
      of subsidiary, no stated interest or terms          23,783
     Receivable from corporation, related party
      via common shareholders, no stated terms
      or interest                                          7,637       7,083
     Receivable from corporation, related party
      via common shareholders, no interest or
      terms                                              139,839     122,040
     Long term accounts receivable
      from customers, interest at 6%                                  64,683
                                                       ---------   ---------
     Total                                             $ 179,864   $ 202,806
                                                       =========   =========

NOTE 6: NOTES PAYABLE AND CAPITAL LEASES
                                                          2002        2001
                                                       ---------   ---------
     10.5% note payable, secured by a mortgage
      on the JD American property, payable in
      monthly installments of $2,687, principal
      and interest, paid in full 2002.                 $           $ 106,323

     10% note payable to the parents of the former
      President of JD American Workwear, Inc.,
      stockholders, payable in monthly
      installments of $5,494, principal and
      interest, due September, 2002.                                 161,959

                                      F-14
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 6: NOTES PAYABLE AND CAPITAL LEASES (CONTINUED)

     10% note due to an investor, due on
      December 31, 1997.                                  40,000      40,000

     Loans from stockholders, no written terms,
      interest imputed at 0% to 7% annually.                         172,037

     Various loans from individuals, no
      written terms, interest imputed at 0% to
      7% annually.                                                    24,724

     Note payable on equipment, monthly
      payments of $292, principal and
      interest, disposed of in sale.                                   8,641

     10% note payable to the parents of
      the former President of JD American
      Workwear, Inc., maturing May 31, 2003,
      monthly interest payments beginning
      January 15, 2003.                                  185,229

     10% note payable to the former President
      of JD American Workwear, Inc., maturing
      May 31, 2003, monthly interest payments
      commencing January 15, 2003.                        36,000

     10% note payable to the former President
      of JD American Workwear, Inc., maturing
      May 31, 2003, monthly interest payments
      commencing January 15, 2003.                         4,265

     10% note payable to the sister of the
      former President of JD American Workwear,
      Inc., maturing May 31, 2003, monthly
      interest payments commencing
      January 15, 2003.                                    7,115

     7% note payable to CEO and stockholder,
      matured October 26, 2001.                           20,000

     Note payable to individual, matured May 5,
      2001, interest payable in the amount of
      $10,000 in addition to the principal.               10,000

     Note payable to individual, matured May 5,
      2001, interest payable in the amount of
      $10,000 in addition to the principal.               10,000

                                      F-15
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 6: NOTES PAYABLE AND CAPITAL LEASES (CONTINUED)

     7% note payable to a corporation, related
      party through common stockholders,
      matured October 20, 2001.                           30,000

     Three notes payable to stockholder, 10%
      interest, past maturity.                            80,000

     9% note payable to Ford Motor Credit,
      monthly principal and interest payment
      $670, matures April 1, 2006.                        27,865

     Note payable to a corporation, related
      party through common shareholders,
      no interest, due on demand.                          8,000

     10% note payable to CEO and stockholder,
      due on demand.                                      34,400

     Note payable to employee, due on demand,
      interest payable $500 in addition
      to principal.                                       10,000

     10% note payable to the President of
      International Machine and Welding, Inc.,
      due on demand.                                      54,986

     12% note payable to the daughter of the
      President of International Machine
      and Welding, Inc., due on demand.                    3,000

     8% capitalized lease on equipment,
      monthly payments of $2,728, matures
      October 1, 2004.                                    75,644     101,830

     11% convertible subordinated notes due to
      investors, matured September 30, 1998.
      The notes are subordinate in rights of
      payment to all indebtedness of the
      Company outstanding as of August 15, 1995
      or to be incurred in the future.                    37,500      75,000

                                      F-16
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 6: NOTES PAYABLE AND CAPITAL LEASES (CONTINUED)

     15% convertible note payable to investor,
      matured June 1, 2000. The note is
      convertible  at $0.70 per share. In
      conjunction with this note, the Company
      issued 3,500 warrants for purchase of
      common stock at $2.00 per share. The
      warrants expire March 1, 2002.                       4,050       7,000

     15% convertible note payable to investor,
      matured August 10, 2000. The note is
      convertible at $0.70 per share. In
      conjunction with this note, the Company
      issued 3,500 warrants for purchase of
      common stock at $2.00 per share. The
      warrants expire May 10, 2002.                                    7,000

     Note payable to investor, matured
      September 7, 2000. Interest payable
      in 2,000 shares of stock until the
      maturity date and at 20% thereafter.                 4,000       4,000

     7% note payable to accounting firm,
      matured June 1, 2001.                               25,012      30,000

     10% note payable, pursuant to a Chapter
      11 reorganization plan attached to the
      acquired assets of International
      Machine and Welding, Inc., secured by a
      mortgage on Florida property, monthly
      payments of $10,252, principal and
      interest, maturing May 22, 2005.                 1,158,171   1,163,906

     Note  payable, pursuant to a Chapter 11
      reorganization plan, secured by a
      mortgage on Florida property, no
      interest, monthly payments of
      $2,034, maturing January 22, 2010.                 199,283     219,629

     9% loan payable to Internal Revenue
      Service, pursuant to a Chapter 11
      reorganization plan, monthly payments
      of $25, principal and interest, maturing
      May 24, 2005.                                        1,352       1,352

     Loan payable to Internal Revenue Service,
      pursuant to a Chapter 11 reorganization
      plan, no interest, monthly payments of
      $10, maturing May 24, 2005.                            448         448

                                      F-17
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 6: NOTES PAYABLE AND CAPITAL LEASES (CONTINUED)

     9% loan payable to Internal Revenue Service
      pursuant to a Chapter 11 reorganization
      plan, secured by tax lien, monthly payments
      of $7,661, principal and interest, maturing
      May 24, 2006.                                       416,043    416,043

     9% loan payable to Florida Department of
      Revenue, pursuant to a Chapter 11
      reorganization plan, monthly payments
      totaling $173, principal and interest,
      maturing May 24, 2005.                               8,328       8,328

     Loan payable to Florida Department of
      Revenue, pursuant to a Chapter 11
      reorganization  plan, no interest,
      monthly payments of $36, principal and
      interest, maturing May 24, 2004.                     1,706       1,706

     9% loan payable to Polk County, pursuant
      to a Chapter 11 reorganization plan,
      secured by tax lien, monthly payments of
      $1,455, principal and interest, maturing
      January 24, 2006.                                   76,967      76,967

     9% loan payable, pursuant to a Chapter 11
      reorganization plan, monthly payments of
      $262, principal and interest, maturing
      May 24,2005.                                        12,620      12,620

     Various loans payable, pursuant to a
      Chapter 11 reorganization plan, no
      interest, monthly payments totaling $411,
      maturing May 24, 2004.                              15,690      15,690

     11% note payable, secured by a motor
      vehicle, monthly payments of $449,
      principal and interest, maturing
      December 27,2001.                                                4,670

     12% note payable, secured by a motor
      vehicle, monthly payments of $903,
      principal and interest, maturing
      September 10, 2001.                                              5,863
                                                      ----------  ----------

      Total                                            2,597,674   2,665,736

     Less, Current Portion                             1,976,278     834,143
                                                      ----------  ----------

     NET LONG-TERM DEBT                               $  621,396  $1,831,593
                                                      ==========  ==========

                                      F-18
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 6: NOTES PAYABLE AND CAPITAL LEASES (CONTINUED)

     The aggregate principal maturing in subsequent years are:

               Year Ending February 28,                 Amount
               ------------------------                --------
                         2004                          $364,387
                         2005                           123,388
                         2006                           109,652
                         2007                            23,969
                                                       --------
                                                       $621,396
                                                       ========

     Long-term  debt includes a capital  lease for  equipment  with a lease term
     through October 2004. The obligation has been recorded in the  accompanying
     financial statements at the present value of future minimum lease payments,
     discounted at 8%. The total capitalized cost at February 28, 2002 $134,308.
     Related  amortization  included  in  accumulated  depreciation  was $17,908
     (2002) and $8,954 (2001).

     The future  minimum lease  payments and the net present value of the future
     minimum lease payments under the capital lease are as follows:

               Year Ending February 28,                 Amount
               ------------------------                --------
                         2003                          $ 33,386
                         2004                            33,386
                         2005                            16,967

               Total future minimum lease payments       83,739
               Less amount representing interest          8,095
                                                       --------
               Present value of future
               minimum lease payments                    75,644
               Less current portion                      28,359
                                                       --------
               Long term portion                       $ 47,285
                                                       ========

                                      F-19
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 7: COMMITMENTS AND CONTINGENCIES

     Employment Agreements

     The Company has employment agreements with two key employees.  The terms of
     which  expire  at  various  times  for  each  in  fiscal  year  2004.  Such
     agreements,  which have been revised from time to time, provide for minimum
     salary  levels,  adjusted  annually  for cost of living  increases,  normal
     employment  benefits,  auto allowances,  stock options, as well as bonuses,
     which may contain minimum and incentive  components.  The annual commitment
     for future salaries at February 28, 2002,  including  minimum  bonuses,  is
     approximately $208,000.

     Cash In Bank

     The Company  maintains bank accounts,  which at times may contain balances,
     which exceed the amounts insured by the FDIC.

NOTE 8: MANDATORY REDEEMABLE PREFERRED STOCK

     On April 9, 1998,  the Company  authorized  the  issuance and sale of 3,950
     shares  of Series B 12%  Cumulative  Convertible  Preferred  Stock and sold
     2,500  shares at a stated  value of $1,000  per  share.  In  addition,  the
     Company  issued  detached  ten-year  stock  purchase  warrants  to purchase
     799,000 shares of the Company's  common stock at an exercise price of $0.01
     per share to the investor for an aggregate purchase price of $2,500,000.  A
     mandatory  redemption of 1,250 shares, at $1,250,000,  was required on each
     of the first  business  days of April 2004 and 2005.  Proceeds  of $960,000
     were  allocated to the carrying  value of the Series B Preferred  Stock and
     $1,540,000 to the detached  warrants based on their relative fair values at
     date of issue.  The  difference  between the carrying value of the Series B
     and its mandatory  redemption  amount was accreted to retained earnings or,
     in the absence of retained earnings, to additional paid in capital over the
     period until redemption using the effective interest rate method.

     During the year ended  February 28, 2001, the Company was able to negotiate
     a troubled  debt  restructure  agreement  with the Series B  investor.  The
     investor  agreed to waive its rights to the mandatory  redemption  required
     under the original stock purchase agreement, in exchange for an equity only
     interest.   As  a  result,  the  Company  has  recognized  a  gain  on  the
     extinguishment  of mandatory  redeemable  preferred  stock in the amount of
     $1,994,768.

                                      F-20
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 8: MANDATORY REDEEMABLE PREFERRED STOCK (CONTINUED)

     The  Series B  Preferred  Stock  has  rights  to  receive  cumulative  cash
     dividends in  preference to the payment of dividends on all other shares of
     capital  stock of the Company.  No dividends may be declared or paid on any
     other shares of stock until the full amount of the cumulative  dividends on
     the Series B Preferred Stock has been paid.  Cumulative  dividends amounted
     to $117,926  and  $146,074 at February  28,  2002 and  February  28,  2001,
     respectively.  Dividends  paid  in  additional  shares  and  warrants  were
     $264,000  for the year ended  February  28, 2002 and  $364,000 for the year
     ended February 28, 2001.

     Holders of Series B Preferred  Stock vote on an as converted basis with the
     common  stockholders  on  all  matters  to be  brought  to a  vote  of  the
     shareholders.  The Series B  Preferred  stockholders  shall be  entitled to
     elect one director out of the seven  authorized  directors of the Company's
     board. If certain events occur or do not occur,  such as the failure to pay
     dividends to the Series B Preferred stockholders, the holders of the Series
     B  Preferred  Stock shall be  entitled,  immediately  upon  giving  written
     notice,  to elect the smallest  number of directors that will  constitute a
     majority of the authorized number of directors.

     Under the terms of the  amended  agreement,  the annual  dividend  rate was
     reduced from 12% to 6%,  effective  June 1, 2000.  Dividends may be paid in
     stock through May 31, 2004 at a conversion rate of $1.00 per share.

NOTE 9: CAPITALIZATION

     Authorized Number of Shares of Common Stock

     On April 15, 1998, the shareholders of the Company approved an amendment to
     the Company's  Certificate  of  Incorporation  that increased the number of
     authorized  shares of Common Stock of the Company from 4,500,000  shares to
     7,500,000  shares.  On December 15, 2000 the  shareholder's,  at the annual
     meeting  thereof  approved an  additional  amendment to increase the Common
     Stock to 30,000,000 shares authorized.

     Series A 10% Convertible Preferred Stock

     The Company  sold 313 shares of Series A 10%  Convertible  Preferred  Stock
     through a Private Placement dated August 26, 1997, at a price of $2,500 per
     Preferred Share. Dividends are payable in kind at the Company's option.

                                      F-21
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 9: CAPITALIZATION (CONTINUED)

     Holders of Series A Preferred  Stock vote on an as converted basis with the
     common  stockholders  on  all  matters  to be  brought  to a  vote  of  the
     shareholders.  Payments  of  annual  dividends  have been  deferred  by the
     Company's board of directors on the outstanding  Series A shares because of
     losses  sustained  by the  Company.  As of  February  28,  2002,  preferred
     dividends in arrears amounted to $114,750 or $1,125 per share.

     Stock Receivable

     Stock  receivable  represents  amounts due to the Company for shares issued
     and  outstanding  at year-end.  At February  28,  2002,  the Company had an
     outstanding  receivable  of $20,000 for  unearned  stock  compensation.  At
     February 28, 2001, the Company held a note receivable  issued in connection
     with an exercise of stock  options in the amount of  $150,000.  The 7% note
     matured on December 31, 2001.  The Company also had a stock  receivable for
     unearned  compensation  of $327,000.  All amounts due at February 28, 2001,
     were repaid in services in 2002.

     Common Stock Options

     The Company's  1995 Stock Option Plan  authorizes  up to 750,000  shares of
     common stock for grants of both incentive  stock options and  non-qualified
     stock  options  to key  employees,  officers,  directors  and  consultants.
     Options  granted  under the Plan must be exercised  within ten years of the
     date of the grant.  The exercise  price of options  granted may not be less
     than 85% of the fair market value of the stock.  Additionally,  the Company
     issues stock options to executives under their employment agreements.

     A summary of the Company's stock option activity is as follows:

                                      F-22
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 9: CAPITALIZATION (CONTINUED)

                                       Number      Weighted-Average
                                         of         Exercise Price
                                       Shares          Per Share
                                       ------          ---------
     Options Outstanding,
      February 29, 2000                132,500           $ 3.14
       Granted                         200,000              .15
       Exercised                      (189,350)             .19
       Expired                         (80,650)            3.28

     Options Outstanding,
      February 28, 2001                 62,500           $ 1.57
       Granted                         200,000              .51
       Exercised                             0
       Expired, Forfeited             (150,000)             .83
                                      --------
     Options Outstanding,
      February 28, 2002                112,500           $  .57
                                      ========

     At February 28, 2002, 112,500 options, with a weighted-average  contractual
     life of 2.8 years, were outstanding at exercise prices ranging from $.42 to
     $1.50. All outstanding options were fully vested and exercisable.

     During the year ended February 28, 2002 the Company granted 200,000 options
     to two key executives in connection with their employment agreements. Total
     compensation cost recognized for stock based employee  compensation  awards
     was  $100,000  and $0 for the  years  ended  February  28,  2002 and  2001,
     respectively.

     During the year ended February 28, 2001, the Company  granted 200,000 stock
     options  to  consultants  with  a  fair  value  of  $193,883.  The  related
     compensation was expensed over the lives of the consulting agreements.  The
     Company  also  granted  50,000  stock  options  to  two  key  employees  in
     connection  with their  employment  agreements.  The  following  summarizes
     information  about options granted during the years ended February 28, 2002
     and February 28, 2001:

                                               Weighted-Average
                                   Number    ----------------------
                                     of      Exercise    Fair Value
                                   Shares     Price      Per Share
                                   ------     -----      ---------
     Options Granted in 2001
      whose exercise price:
       Is Below Market Price       200,000    $ .15       $ 1.17

     Options Granted in 2002
      whose exercise price:
       Is Below Market Price       200,000    $ .42       $  .45

                                      F-23
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 9: CAPITALIZATION (CONTINUED)

     Stock-based compensation to non-employees is valued using the Black-Scholes
     pricing model.  The Company uses the intrinsic value method under APB 25 to
     account  for  stock  option   compensation   granted  to   employees.   Had
     compensation cost been recognized under FAS 123, the amount would have been
     $90,320 and $0 for the years ended February 28, 2002 and February 28, 2001,
     respectively.

     The pro forma disclosures required under FAS 123 are as follows:

                                              2002           2001
                                          ------------    ----------
     Gain (Loss) Attributable to
      Common Stockholders:
       As Reported                        $(1,542,919)    $   20,349
       Pro forma                          $(1,633,239)    $   20,349

     Loss per Common Share:
       As Reported                        $     (0.15)    $     0.00
       Pro forma                          $     (0.16)    $     0.00

     The  following  assumptions  were used to estimate  the fair value of stock
     options using the Black-Scholes method:

                                        2002            2001
                                       ------          ------
     Dividend Yield                        0%              0%
     Expected Volatility                 399%            230%
     Average Expected Option Life     5 Years          1 Year
     Risk-Free Interest Rate            4.25%           6.50%

     Warrants

     During the year ended  February  28,  2001,  the Company  issued  10,500 in
     connection with short-term loans. The Company also has warrants outstanding
     that were issued in prior years as  compensation  for  consulting and legal
     services.  The warrants issued by the Company generally contain  provisions
     requiring proportionate  adjustment of the exercise price in the event of a
     stock split, stock dividend,  or dilutive  financing.  At February 28, 2002
     warrants to purchase  389,316 shares of common stock at a weighted  average
     exercise  price of $1.71 were  outstanding  and  exercisable.  The weighted
     average remaining contractual life of these warrants is 7 months.

                                      F-24
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 10: INCOME TAXES

     The Company  recognizes  the amount of taxes payable or refundable  for the
     current year and  recognizes  deferred tax  liabilities  and assets for the
     expected future tax consequences of events and transactions  that have been
     recognized in the Company's financial statements or tax returns.

     The Company  currently has  substantial  net operating loss  carry-forwards
     that may be applied  against future income.  These losses create a deferred
     tax asset at  February  28, 2002 and  February  28,  2001.  The Company has
     recorded a 100% valuation  allowance against net deferred tax assets due to
     uncertainty of their ultimate realization.

                                                     2002         2001
                                                  ----------   ----------
          Deferred Tax Assets Resulting
          from Net Operating Losses               $1,548,396   $1,376,168

          Less, Valuation Allowance                1,548,396    1,376,168
                                                  ----------   ----------
          Net Deferred Tax Assets                 $        0   $        0
                                                  ==========   ==========

     The Internal  Revenue  Code  contains  provisions,  which may limit the net
     operating  loss  carry-forward  available  for use in any  given  year,  if
     significant changes in ownership interest of the Company occur.

     The loss carry-forwards expire as follows:

          Years of Expiration                           Amount
          -------------------                        -----------
                 2009                                $   241,269
                 2010                                    581,952
                 2011                                  1,144,859
                 2012                                    786,579
                 2013                                  1,131,271
                 2014                                  1,779,564
                 2015                                  2,465,497
                 2016                                  1,743,097
                 2017                                  1,542,900
                                                     -----------
                                                     $11,416,988
                                                     ===========

                                      F-25
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 11: ITEMS AFFECTING FOURTH QUARTER RESULTS OF OPERATIONS

     During the fourth quarter of the year ended February 28,  2001,the  Company
     determined that a write down of inventory of $341,630 was required to reach
     net  realizable  value as discussed in Note 3. The effect of the adjustment
     was to increase net loss by $.08 per common share in the quarter.

NOTE 12: RELATED PARTY TRANSACTIONS

     In March 2001, the property at 46 Old Flat River Rd., Coventry, RI was sold
     to a relative of the President of JD American Workwear,  Inc. for $165,000.
     The President received $40,000 from the proceeds of the sale.

NOTE 13: ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS

     On June 1, 2000,  the  Company  completed  the  purchase  of  International
     Machine and Welding, Inc. by acquiring all of the outstanding capital stock
     of its holding  company,  Patina  Corporation for a total purchase price of
     $4,446,159.  The acquisition was accounted for using the purchase method of
     accounting  and,  accordingly,  International  Machine and Welding,  Inc.'s
     results of  operations  have been  included in the  consolidated  financial
     statements since the date of acquisition. The acquisition was funded by the
     issuance of 9,800 shares of Series C 6% Preferred Stock.

     The following table presents the allocation of the acquisition  cost to the
     assets acquired and liabilities assumed:

     Cash and Cash Equivalents                         $    2,465
     Accounts Receivable                                  324,394
     Inventories                                          279,027
     Property, Plant and Equipment                      5,395,997
     Other Non-current Assets                             751,000
                                                       ----------

       Total Assets                                     6,752,883
                                                       ----------

     Accounts Payable                                    (323,682)
     Other Current Liabilities                            (40,784)
     Long Term Liabilities                             (1,942,258)
                                                       ----------

       Total Liabilities                               (2,306,724)
                                                       ----------

       Total Acquisition Cost                          $4,446,159
                                                       ==========

                                      F-26
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 13: ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS (CONTINUED)

     On June 1, 2000,  the Company  completed the purchase of Rhode Island Truck
     and Equipment Corp. d/b/a  International  Paving, Inc. by acquiring all its
     outstanding  capital  stock for a total  purchase  price of  $238,000.  The
     acquisition  was accounted for using the purchase method of accounting and,
     accordingly,  the  acquired  company's  results  of  operations  have  been
     included  in the  consolidated  financial  statements  since  the  date  of
     acquisition. The excess of the purchase price over the estimated fair value
     of assets  acquired of $17,458 has been recorded` as goodwill and was being
     amortized using the straight-line method over 40 years. The acquisition was
     funded by the issuance of 200,000 shares of common stock.

     The following table presents the allocation of the acquisition  cost to the
     assets acquired and the liabilities assumed:

     Accounts Receivable                               $  10,855
     Inventory                                            28,250
     Goodwill                                             17,458
     Property, Plant and Equipment                       285,050
                                                       ---------

       Total Assets                                      341,613
                                                       ---------

     Accounts Payable                                    (40,657)
     Other Current Liabilities                           (62,956)
                                                       ---------

       Total Liabilities                                (103,613)
                                                       ---------

       Total Acquisition Cost                          $ 238,000
                                                       =========

     On October 31, 2001, the Company  returned all of the stock of Rhode Island
     Truck and Equipment  Corp.  to its original  owners in exchange for 155,000
     shares of the Company's  common stock.  Assets and liabilities  disposed of
     consisted of the following:

                                      F-27
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 13: ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS (CONTINUED)

                                    October 31,  February 28,
                                        2002         2001
                                     ---------    ---------
     Cash                            $  53,721    $
     Accounts Receivable                77,434        2,717
     Inventory                          19,516       19,516
     Property, Plant and Equipment     297,087      255,465
                                     ---------    ---------

       Total Assets                    447,758      277,698
                                     ---------    ---------

     Accounts Payable                 (195,223)     (62,516)
     Other Current Liabilities         (96,003)     (48,856)
                                     ---------    ---------

       Total Liabilities              (291,226)    (111,372)
                                     ---------    ---------

       Net Asset Disposal            $ 156,532    $ 166,326
                                     =========    =========

     The results of Rhode Island Truck and Equipment, Corp. have been classified
     as  discontinued  operations  in the statement of  operations.  The Company
     recognized a loss on the disposal of $16,840  resulting  from the write off
     of goodwill.

     On June 1, 2001, the Company discontinued the operations of its JD American
     Workwear, Inc. subsidiary and exchanged certain assets and liabilities with
     the President of the subsidiary for 725,000 shares of the Company's  common
     stock and notes  payable of  $43,115.  Assets and  liabilities  disposed of
     consisted of the following:

                                      June 1,    February 28,
                                        2001         2001
                                     ---------    ---------
     Cash                            $   7,539    $   5,544
     Accounts Receivable                 2,001       62,418
     Receivable from Stockholder        42,888
     Inventories                       414,274      428,031
     Property, Plant and Equipment      37,886      183,987
     Patents                            49,150       67,324
                                     ---------    ---------

       Total Assets                    553,738      747,304
                                     ---------    ---------

     Accounts Payable                  (21,783)     (21,783)
     Other Liabilities                (206,014)    (224,571)
                                     ---------    ---------

       Total Liabilities              (227,797)    (246,354)
                                     ---------    ---------

       Net Asset Disposal            $ 325,941    $ 500,950
                                     =========    =========

                                      F-28
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 13: ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS (CONTINUED)

     The  results  of  operations  for JD  American  Workwear,  Inc.  have  been
     classified as discontinued operations in the statement of operations.

     Operating results from discontinued operations for the years ended February
     28, 2002 and February 28, 2001 are summarized as follows:

                                            2001         2001
                                         ---------    ---------
     Net Sales                           $ 496,245    $ 455,241
     Cost of Sales                         343,215      316,604
     Selling, General & Administrative     206,500      456,235
     Other Income (Expense)                 (5,880)    (342,239)
     Loss from Discontinued Operations     (59,350)    (659,837)
     Loss from Disposal of Segments        (16,840)
     Loss from Discontinued Operations
      per Share                          $   (.006)   $    (.15)

NOTE 14: OPERATING SEGMENTS

     The Company's  reportable  business  segments are strategic  business units
     that offer  distinctive  products  and services  that are marketed  through
     different  channels.  They are managed  separately  because of their unique
     technology, marketing and distribution requirements.

     The Company had three reportable segments: Manufacturing, Product Marketing
     and Construction  Management.  Manufacturing provides production and repair
     of machine  parts  used in heavy  industry  and sales and  service of heavy
     equipment used primarily in mining and construction.  During the year ended
     February  28,  2002,  the  Company  discontinued  operations  of  both  the
     Construction Management and Product Marketing segments.  Prior year segment
     information has been restated in accordance with the revised organization.

     The  Company's  accounting  policies  for  segments  are the  same as those
     described in the summary of  significant  accounting  policies.  Management
     evaluates segment performance based on segment profit or loss before income
     taxes and nonrecurring gains and losses.

                                      F-29
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 14: OPERATING SEGMENTS (CONTINUED)

     A  summary  of the  Company's  segmented  information  for the  year  ended
     February 28, 2002 and 2001 is as follows:

                                                 MANUFACTURING
                                          --------------------------
                                             2002           2001
                                          -----------    -----------
     Net sales to unaffiliated
      customers                           $ 1,941,855    $ 1,649,954
     Interest expense                         243,448        130,066
     Depreciation and amortization            258,706        263,084
     Segment profit (loss)                    (40,624)       (33,894)
     Segment assets                         6,463,671      6,683,792
     Expenditures for assets                   47,840        139,760

     Reconciliation of Segment Information to Consolidated Amounts

     Information  for  the  Company's   reportable   segments   relates  to  the
     enterprise's consolidated totals as follows:

                                             2002           2001
                                          -----------    -----------
     Revenues
     Total revenues for reportable
      segments                            $ 1,941,855    $ 1,649,954
                                          -----------    -----------

         Total consolidated revenue       $ 1,941,855    $ 1,649,954
                                          ===========    ===========

     Profit or Loss
     Total profit (loss) for reportable
      segments                            $   (40,624)   $   (33,894)
     Other income (expense)                  (276,964)      (192,839)
     Accretion of discount and
      dividends on mandatory
      redeemable preferred stock                            (209,333)
     Gain on extinguishments of
      mandatory redeemable
      preferred stock                                      1,994,768
     Loss from discontinued segments          (59,350)      (659,837)
     General corporate expenses            (1,165,981)      (878,516)
                                          -----------    -----------

      Total consolidated profit(loss)     $(1,542,919)   $    20,349
                                          ===========    ===========

                                      F-30
<PAGE>
               AMERICAN COMMERCE SOLUTIONS, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 28, 2002 AND 2001

NOTE 14: OPERATING SEGMENTS (CONTINUED)

                                                   2002         2001
                                                ----------   ----------
     Assets
     Total assets of reportable
      segments                                  $6,463,671   $6,683,792
     Net assets of discontinued
      segments                                                1,025,002
     General corporate assets
      non-segment                                   16,530           --
                                                ----------   ----------

         Total consolidated assets              $6,480,201   $7,708,794
                                                ==========   ==========

NOTE 15: RESTATEMENT OF PRIOR PERIOD

     The accompanying  financial statements for the year ended February 28, 2001
     have been restated to record a lease not  capitalized  in  accordance  with
     generally  accepted  accounting  principles and to record stock granted for
     unearned  compensation  in  the  period  then  ended.  The  effect  of  the
     restatement  was to  decrease  the net  profit  to common  stockholders  by
     $18,026,  $.004 per common  share,  and to increase  the number of weighted
     average shares outstanding.

NOTE 16: MAJOR CUSTOMERS

     For the year ended February 28, 2002,  IMC Phosphates  Company and Vehicare
     provided 10.1% and 7.8% of the Manufacturing segments revenue.

                                      F-31
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                                             Sequentially
Incorporated Documents                                 SEC Exhibit Reference                   Numbered
----------------------                                 ---------------------                   --------
<S>        <C>                                         <C>                                     <C>
 3.1       Certificate of Incorporation of the         As filed with the Registrant's             N/A
           Registrant, as amended                      Form SB-2, on October 27, 1995,
                                                       File No. 33-98486

 3.2       By-Laws of the Registrant, as amended       As filed with the Registrant's             N/A
                                                       Form SB-2 on October 27, 1995, File
                                                       No. 33-98486

 4.1       Form of Warrant Agreement                   As filed with the Registrant's             N/A
                                                       Form SB-2, on October 27, 1995,
                                                       File No. 33-98486

 4.2       Form of Warrant of the Registrant           As filed with the Registrant's Form        N/A
           issued in the Registrant's January          SB-2 on October 27, 1995, File No.
           1995 Private Placement                      33-98486

 4.3       Form of Unit Purchase Option issued         As filed with the Registrant's Form        N/A
           to Merit Capital Associates, Inc.           SB-2 on October 27, 1995, File No.
                                                       33-98486

 4.4       Form of 11% Convertible Subordinated        As filed with the Registrant's Form        N/A
           Note of the Registrant issued in the        SB-2 on October 27, 1995, File No.
           Registrant's August, 1995 Private           33-98486
           Placement

 4.5       Form of Warrant of the Registrant           As filed with the Registrant's Form        N/A
           issued in the Registrant's August,          SB-2 on October 27, 1995, File No.
           1995 Private Placement                      33-98486

 4.6       Securities Purchase Agreement dated         As filed with the Registrant's Form        N/A
           April 9, 1998                               10KSB on June 13, 1999

 4.7       Certificate of Designation of Series        As filed with the Registrant's Form        N/A
           B Preferred Stock.                          10 KSB on June 13, 1999

 4.8       Stockholders' Agreement dated April         As filed with the Registrant's Form        N/A
           9, 1998.                                    10 KSB on June 13, 1999

 4.9       Registration Rights Agreement dated         As filed with the Registrant's Form        N/A
           April 9, 1998                               10 KSB on June 13, 1999

 4.10      Warrant Certificate issued to ULLICO        As filed with the Registrant's Form        N/A
                                                       10 KSB on June 13, 1999

 4.11      Escrow Agreement                            As filed with the Registrant's Form        N/A
                                                       10 KSB on June 13, 1999

 4.12      Certificate of Designations of Series       As filed with the Registrant's             N/A
           A Preferred Stock                           Form 10-KSB on June 11, 1998

 4.13      Certificate of Designation of Series        As filed with the Registrant's Form        N/A
           C Preferred Stock                           10-KSB on June 12, 2000
</TABLE>
<PAGE>
<TABLE>
<S>        <C>                                         <C>                                     <C>
 4.14      Amendment to the Articles of                As filed with the Registrant's             N/A
           Incorporation of JD American                Form10-KSB on June 14, 2001
           Workwear, Inc. for name change to
           American Commerce Solutions, Inc. and
           the increase in authorized shares

 10.2      Employment Agreement with Steven D.         As filed with Registrant's Form            N/A
           Smith                                       10-KSB on July 19, 2001

 10.3      Registrant's 1995 Stock Option Plan         As filed with the Registrant's             N/A
                                                       Form SB-2 on October 27, 1995,
                                                       File No. 33-98486

 10.4      Form of Option Agreement under the          As filed with the Registrant's Form        N/A
           Registrant's 1995 Stock Option Plan         SB-2 on October 27, 1995, File No.
                                                       33-98486

 10.5      Employment Agreement with Norman            As filed with Registrant's Form            N/A
           Birmingham                                  10-KSB on June 12, 2000

 10.6      Consulting Agreement with Richard           As filed with Registrant's Form            N/A
           Sullivan                                    10-KSB on June 12, 2000

 10.7      Option to Purchase Businesses between       As filed with Registrant's Form            N/A
           Registrant and International Commerce       10-KSB on June 12, 2000
           and Finance, Inc.

 10.8      Stock Purchase Agreement between            As filed with Registrant's Form            N/A
           Registrant and Patina Corporation           10-KSB on June 12, 2000

 10.9      Employment Agreement with David             As filed with Registrant's Form            N/A
           DeBaene January 1, 2001                     10-KSB on June 12, 2000

10.10      Asset Sale Agreement Between                As filed with Registrant's Form            N/A
           Registrant and David N. DeBaene June        10-QSB on July 26, 2001
           1, 2001

10.11      Stock Purchase Agreement between            As filed with Registrant's Form            N/A
           Registrant and Rhode Island truck and       10-QSB on December 14, 2001
           Equipment, Corp. October 31, 2001

10.12      Employment Agreement with Daniel L.
           Hefner dated June 1, 2000
</TABLE>