**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

| **ý**                                                                                                                                                                                                                                                                                                                   | **QUARTERLY REPORT UNDER SECTION 13  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                         |
| **For the quarterly period ended November 30,  2003**                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                         |
| **o**                                                                                                                                                                                                                                                                                                                        | **TRANSITION REPORT UNDER SECTION 13  OR 15(d) OF THE EXCHANGE ACT**                   |
|                                                                                                                                                                                                                                                                                                                         |
| **For the transition period from                           to                       ** |
|                                                                                                                                                                                                                                                                                                                         |
| **Commission file number:****33-98682**                                                                                                                                                                                                                                                                                      |

 

**American Commerce Solutions, Inc.**

(Exact name of small business issuer as specified in its charter)

 

| **Delaware**                                                                        |   | **05-0460102**                     |
|-------------------------------------------------------------------------------------|--------|------------------------------------|
| (State or other jurisdiction of incorporation or  organization)                     |   | (IRS Employer Identification  No.) |
|                                                                                |   |                               |
| **1400 Chamber Dr., Bartow, Florida 33830**                                         |
| (Address of principal executive offices)                                            |
|                                                                                |   |                               |
| **(863) 533-0326**                                                                  |
| (Issuer’s telephone number)                                                    |
|                                                                                |   |                               |
| **N/A**                                                                             |
| (Former name, former address and former fiscal year, if changed since  last report) |

 

Check whether the issuer (1)filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act during the past 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. ý   YES  o   NO

 

There were 118,073,824 sharesof the Registrant’s $.002 par value common stock outstanding as of November 30,2003.

 

Transitional Small BusinessDisclosure Format (Check one): Yes oNo ý

 

 

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**American CommerceSolutions, Inc.**

 

**Contents**

 
| Part I – Financial Information |    |
|-------------------------------------|---------|
|                                |    |
|                                | Item 1. | Consolidated Financial Statements |   |
|                                |    |   |   |
|                                | Item 2. | Management’s Discussion & Analysis |   |
|                                |    |   |   |
|                                | Item 3. | Controls and Procedures |   |
|                                |    |
| Part II – Other Information    |    |
|                                |    |
|                                | Item 1. | Legal Proceedings |   |
|                                |    |   |   |
|                                | Item 2. | Changes in Securities |   |
|                                |    |   |   |
|                                | Item 3. | Defaults Upon Senior Securities |   |
|                                |    |   |   |
|                                | Item 4. | Submission of Matters to a Vote of Security  Holders |   |
|                                |    |   |   |
|                                | Item 5. | Other Information |   |
|                                |    |   |   |
|                                | Item 6. | Exhibits and Reports on Form 8-K |   |
|                                |    |
| Signatures                          |    |

 

----

 

**PART I – FINANCIAL INFORMATION**

 

**Item 1.    ConsolidatedFinancial Statements**

 

***Consolidated Financial Statements***

 

***American Commerce Solutions, Inc. and Subsidiaries***

 

*As of November 30, 2003 and for theNine Months Ended November 30, 2003 and 2002(unaudited)*

 

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American CommerceSolutions, Inc. and Subsidiaries

 

Consolidated FinancialStatements

 

As of November 30, 2003and for theNine Months Ended November 30, 2003 and 2002*(unaudited)*

 

**Contents**

 
| Consolidated Financial Statements:         |   |   |
|--------------------------------------------|--------|--------|
|                                       |   |   |
| Consolidated Balance Sheet                 |   |   |
| Consolidated Statements of Operations      |   |   |
| Consolidated Statements of Cash Flows      |   |   |
| Notes to Consolidated Financial Statements |   |   |

 

----

 

American CommerceSolutions, Inc. and Subsidiaries

 

Consolidated Balance Sheet

 

November 30, 2003

*(unaudited)*

 
| **Assets**                                                                                                                                               |   |        |      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|
| Current assets:                                                                                                                                          |   |        |      |
| Cash                                                                                                                                                     |   | $           | 77,462    |   |
| Accounts receivable, net  of allowance of $10,157                                                                                                        |   | 89,832      |      |
| Inventory                                                                                                                                                |   | 113,648     |      |
| Other receivables                                                                                                                                        |   | 140,150     |      |
| Other current assets                                                                                                                                     |   | 102,092     |      |
| Total current assets                                                                                                                                     |   | 523,184     |      |
|                                                                                                                                                     |   |        |      |
| Property and equipment,  net of depreciation of $1,064,738                                                                                               |   | 5,187,679   |      |
|                                                                                                                                                     |   |        |      |
| Other assets:                                                                                                                                            |   |        |      |
| Prepaid loan costs                                                                                                                                       |   | 23,574      |      |
| Intangible assets, net  of accumulated amortization of $5,278                                                                                            |   | 184,722     |      |
| Long-term receivable                                                                                                                                     |   | 25,828      |      |
| Real property held for  resale                                                                                                                           |   | 243,150     |      |
| Total other assets                                                                                                                                       |   | 477,274     |      |
|                                                                                                                                                     |   | $           | 6,188,137 |   |
|                                                                                                                                                     |   |        |      |
| **Liabilities and Stockholders’ Equity**                                                                                                            |   |        |      |
| Current liabilities:                                                                                                                                     |   |        |      |
| Current portion of notes payable  and capital leases                                                                                                     |   | $           | 658,420   |   |
| Accounts payable                                                                                                                                         |   | 427,981     |      |
| Accrued expenses                                                                                                                                         |   | 43,219      |      |
| Accrued interest                                                                                                                                         |   | 173,025     |      |
| Deferred revenue                                                                                                                                         |   | 6,572       |      |
| Due to stockholders                                                                                                                                      |   | 230,773     |      |
| Total current  liabilities                                                                                                                               |   | 1,539,990   |      |
|                                                                                                                                                     |   |        |      |
| Notes payable and  capital leases, net of current portion                                                                                                |   | 1,213,175   |      |
|                                                                                                                                                     |   |        |      |
| Stockholders’ equity:                                                                                                                               |   |        |      |
| Preferred stock, total  authorized 5,000,000 shares:                                                                                                     |   |        |      |
| Series A; cumulative and  convertible; $.001 par value; 600 shares authorized; 102 shares issued and  outstanding; liquidating preference $376,125       |   |        |      |
| Series B; cumulative and  convertible; $.001 par value; 3,950 shares authorized; 3,944 shares issued  and outstanding; liquidating preference $3,944,617 |   | 3           |      |
| Common stock; $.002 par  value; 350,000,000 shares authorized; 118,595,824 shares issued; 118,073,824  shares outstanding                                |   | 237,193     |      |
| Common stock payable                                                                                                                                     |   | 120,809     |      |
| Additional paid-in  capital                                                                                                                              |   | 16,771,659  |      |
| Stock receivable                                                                                                                                         |   | (10,000     | )         |
| Treasury stock, at cost                                                                                                                                  |   | (265,526    | )         |
| Accumulated deficit                                                                                                                                      |   | (13,205,218 | )         |
| Loan costs                                                                                                                                               |   | (213,948    | )         |
| Total stockholders’  equity                                                                                                                         |   | 3,434,972   |      |
|                                                                                                                                                     |   | $           | 6,188,137 |   |

 

*Theaccompanying notes are an integral part of the consolidated financial statements.*

 

1

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American CommerceSolutions, Inc. and Subsidiaries

 

Consolidated Statements ofOperations

*(unaudited)*

 
|                                                  |   | **Three Months Ended  November 30,** |     | **Nine Months Ended  November 30,** |   |
|-------------------------------------------------------|--------|--------------------------------------|----------|-------------------------------------|--------|
|                                                  |   | **2003**                             |     | **2002**                            |   | **2003** |   | **2002** |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Net sales                                             |   | $                                    | 489,878  |                                | $      | 648,154 |   | $ | 1,385,178 |   | $ | 1,776,163 |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Cost of goods sold                                    |   | 302,700                              |     | 365,076                             |   | 846,358 |   | 1,030,440 |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Gross profit                                          |   | 187,178                              |     | 283,078                             |   | 538,820 |   | 745,723 |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Selling, general and  administrative expenses         |   | 657,662                              |     | 332,678                             |   | 1,703,048 |   | 1,221,817 |   |
|                                                  |   | (657,662                             | )        | (332,678                            | )      | (1,703,048 | ) | (1,221,817 | ) |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| (Loss) from operations                                |   | (470,484                             | )        | (49,600                             | )      | (1,164,228 | ) | (476,094 | ) |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Other income (expense):                               |   |                                 |     |                                |   |   |   |   |   |
| Other income                                          |   | 4,123                                |     | 5,146                               |   | 19,468 |   | 13,024 |   |
| Gain on forgiveness of  debt                          |   | 11,295                               |     | 812,014                             |   | 11,295 |   | 812,014 |   |
| Interest expense                                      |   | (46,048                              | )        | (82,491                             | )      | (152,835 | ) | (223,191 | ) |
| Total other income  (expense)                         |   | (30,630                              | )        | 734,669                             |   | (122,072 | ) | 601,847 |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Net (loss) income                                     |   | $                                    | (501,114 | )                                   | $      | 685,069 |   | (1,286,300 | ) | $ | 125,753 |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Net loss per common  share                            |   | $                                    | (.01     | )                                   | $      | .04 |   | $ | (.02 | ) | $ | .01 |   |
|                                                  |   |                                 |     |                                |   |   |   |   |   |
| Weighted average number  of common shares outstanding |   | 91,924,452                           |     | 17,999,344                          |   | 57,760,313 |   | 17,705,780 |   |

 

*Theaccompanying notes are an integral part of the consolidated financialstatements.*

 

2

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American CommerceSolutions, Inc. and Subsidiaries

 

Consolidated Statements of Cash Flows

*(unaudited)*

 
|                                                                                                   |   | **Nine Months Ended  November 30,** |       |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                                                                   |   | **2003**                            |       | **2002** |   |
| **Operating activities:**                                                                              |   |                                |       |   |   |
| Net (loss) income                                                                                      |   | $                                   | (1,286,300 | ) | $ | 125,753 |   |
| Adjustments to reconcile net  (loss) income to net cash (used) by operating activities:                |   |                                |       |   |   |
| Gain on forgiveness of debt                                                                            |   | (11,295                             | )          | (812,014 | ) |
| Depreciation and amortization                                                                          |   | 246,017                             |       | 237,874 |   |
| Stock issued for services                                                                              |   | 240,199                             |       | 273,903 |   |
| Common stock payable                                                                                   |   | 120,809                             |       |   |   |
| Options issued to consultants and  employees                                                           |   | 205,645                             |       |   |   |
| Loss on sale of assets                                                                                 |   |                                |       | 7,774 |   |
| Decrease (increase) in:                                                                                |   |                                |       |   |   |
| Accounts receivables                                                                                   |   | 79,208                              |       | (340 | ) |
| Inventory                                                                                              |   | (10,018                             | )          | (29,325 | ) |
| Other receivables and other assets                                                                     |   | (265,738                            | )          | (195,144 | ) |
| Increase (decrease) in:                                                                                |   |                                |       |   |   |
| Accounts payable and accrued  expenses                                                                 |   | 2,995                               |       | 166,504 |   |
| Deferred income                                                                                        |   | (29,853                             | )          |   |   |
| Total adjustments                                                                                      |   | 577,969                             |       | (350,768 | ) |
| Net cash (used) by operating  activities                                                               |   | (708,331                            | )          | (225,015 | ) |
|                                                                                                   |   |                                |       |   |   |
| **Investing activities:**                                                                              |   |                                |       |   |   |
| Increase in long-term receivables                                                                      |   | (33,153                             | )          |   |   |
| Proceeds from sale of asset                                                                            |   |                                |       | 14,000 |   |
| Acquisition of property and  equipment                                                                 |   | (12,763                             | )          | (22,229 | ) |
| Net cash used by investing  activities                                                                 |   | (45,916                             | )          | (8,229 | ) |
|                                                                                                   |   |                                |       |   |   |
| **Financing activities:**                                                                              |   |                                |       |   |   |
| (Decrease) increase in bank  overdraft                                                                 |   | (14,187                             | )          | 27,991 |   |
| Proceeds from notes payable and  long-term debt                                                        |   | 56,279                              |       | 972,639 |   |
| Principal payments on notes  payable and capital leases                                                |   | (451,109                            | )          | (761,960 | ) |
| Proceeds from advances from  stockholders                                                              |   | 52,379                              |       |   |   |
| Proceeds from stock receivable                                                                         |   |                                |       | 10,000 |   |
| Exercise of stock options and  warrants                                                                |   | 1,173,864                           |       |   |   |
| Net cash provided by financing  activities                                                             |   | 817,226                             |       | 248,670 |   |
|                                                                                                   |   |                                |       |   |   |
| **Net increase in cash**                                                                               |   | 62,979                              |       | 15,426 |   |
|                                                                                                   |   |                                |       |   |   |
| **Cash, beginning of period**                                                                          |   | 14,483                              |       | 14,208 |   |
|                                                                                                   |   |                                |       |   |   |
| **Cash, end of period**                                                                                |   | $                                   | 77,462     |   | $ | 29,634 |   |
|                                                                                                   |   |                                |       |   |   |
| **Supplemental disclosures of cash flow  information and noncash investing and financing activities:** |   |                                |       |   |   |
| Cash paid during the period for  interest                                                              |   | $                                   | 44,556     |   | $ | 77,587 |   |

 

During theperiod ended November 30, 2003, a related party forgave an outstanding payablefrom the Company which resulted in a capital contribution on the forgiveness ofdebt of $66,525.

 

During theperiod ended November 30, 2003, the Company purchased 100 percent of theoutstanding common stock of Chariot Manufacturing, Inc. for $360,000 whichconsisted of the assignmentof a note receivable valued at $150,000, $30,000 worth of common stock and anote payable for $180,000. The fair value of the assets acquired at the acquisition date are asfollows:

 
| Equipment         |   | $       | 170,000 |   |
|-------------------|--------|---------|---------|--------|
| Intangible assets |   | 190,000 |    |
| Assets acquired   |   | $       | 360,000 |   |

 

*The accompanying notesare an integral part of the consolidated financial statements.*

 

3

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American CommerceSolutions, Inc. and Subsidiaries

 

Notes to ConsolidatedFinancial Statements

 

As of November 30, 2003and for theNine Months Ended November 30, 2003 and 2002*(unaudited)*

 

**1.             Background Information**

 

American Commerce Solutions, Inc. was incorporated in Rhode Island in1991 under the name Jaque Dubois, Inc., and was re-incorporated in Delaware in1994. In July 1995, Juque Dubois, Inc. changed its name to JD AmericanWorkwear, Inc. In December 2000, the stockholders voted at the annualstockholders meeting to change the name of JD American Workwear, Inc. toAmerican Commerce Solutions, Inc. (the “Company”).

 

The Company is primarily a holding company with two wholly ownedsubsidiaries; International Machine and Welding, Inc. is engaged in themachining and fabrication of parts used in industry, and parts sales andservice for heavy construction equipment; Chariot Manufacturing Company, Inc.,which was acquired on October 1, 2003 from a related party, manufacturesmotorcycle trailers with fiberglass bodies. As of November 30, 2003, operations of Chariot Manufacturing Company,Inc. have not commenced, and therefore, segment reporting is not required.

 

**2.             Significant Accounting Policies**

 

At November 30, 2003, theCompany has two stock-based employee compensation plans, all of which have beenapproved by the shareholders.  The Company accounts for those plans underthe recognition and measurement principles of Accounting Principles BoardOpinion No. 25, “Accounting for Stock Issued to Employees” and relatedInterpretations. The Company recognized $45,000 and $129,300 for the three andnine month periods ended November 30, 2003, respectively, in stock-basedemployee compensation cost which is reflected in net loss.  The followingtable illustrates the effect on net income and

 

4

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American Commerce Solutions, Inc. andSubsidiary

 

Notes to ConsolidatedFinancial Statements

 

As of November 30, 2003and for theThree**and**NineMonths Ended November 30, 2003 and 2002*(unaudited)*

 

earnings per share if theCompany had applied the fair value recognition provisions of FASB Statement123, “Accounting for Stock-Based Compensation”, to stock-based employeecompensation.

 
|                                                                                                                                  |   | **Three  Months Ended** |     | **Nine  Months Ended**  |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|-------------------------|--------|
|                                                                                                                                  |   | **November  30,  2003** |     | **November  30,  2002** |   | **November  30,  2003** |   | **November  30,  2002** |   |
| Net (loss) income, as reported                                                                                                        |   | $                       | (501,114 | )                       | $      | 685,069 |   | $ | (1,286,300 | ) | $ | 125,753 |   |
|                                                                                                                                  |   |                    |     |                    |   |   |   |   |   |
| Deduct:  Total stock based employee compensation expense  determined under fair value based methods for all awards, net of taxes |   | (36,639                 | )        | (0                      | )      | (91,250 | ) | (0 | ) |
|                                                                                                                                  |   |                    |     |                    |   |   |   |   |   |
| Pro forma net (loss) income                                                                                                           |   | $                       | (537,753 | )                       | $      | 685,069 |   | $ | (1,377,550 | ) | $ | 125,753 |   |
|                                                                                                                                  |   |                    |     |                    |   |   |   |   |   |
| Basic net (loss) income per share:                                                                                                    |   |                    |     |                    |   |   |   |   |   |
| As reported                                                                                                                           |   | $                       | (.01     | )                       | $      | .04 |   | $ | (.02 | ) | $ | .01 |   |
| Pro forma                                                                                                                             |   | $                       | (.01     | )                       | $      | .04 |   | $ | (.02 | ) | $ | .01 |   |
|                                                                                                                                  |   |                    |     |                    |   |   |   |   |   |
| Diluted net (loss) income per share:                                                                                                  |   |                    |     |                    |   |   |   |   |   |
| As reported                                                                                                                           |   | $                       | (.01     | )                       | $      | .04 |   | $ | (.02 | ) | $ | .01 |   |
| Pro forma                                                                                                                             |   | $                       | (.01     | )                       | $      | .04 |   | $ | (.02 | ) | $ | .01 |   |

 

In determining the pro formaamounts above, the value of each grant is estimated at the grant date using theBlack-Scholes option model with the following weighted average assumptions:

 
|                         |   | **2003** |   | **2002** |   |
|------------------------------|--------|----------|--------|----------|--------|
|                         |   |     |   |     |   |
| Dividend rate of             |   | 0        | %      | 0        | %      |
| Risk-free interest rate      |   | 1.07     | %      | 4.25     | %      |
| Expected lives               |   | 1 month  |   | 5 years  |   |
| Expected price volatility of |   | 163.19   | %      | 399      | %      |

 

**3.             Going Concern**

 

The Company has incurred substantial operating losses sinceinception.  The Company recorded lossesfrom continuing operations of $1,286,300 for the nine-month period endedNovember 30, 2003.  Current liabilitiesexceed current assets by $1,016,806 at November 30, 2003.  Additionally, the Company has been unable tomeet obligations to its creditors as they have become due and is in default onseveral notes payable.

 

5

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The ability of the Company to continue as a going concern is dependentupon its ability to reverse negative operating trends, raise additionalcapital, and obtain debt financing.

 

Management’s business strategy includes expansion into other lines of businessthrough the acquisition of other companies in exchange for cash and theCompany’s common stock. Management continues to reduce debt; however, newfinancing to finance operations and to complete additional businessacquisitions is still being sought. There can be no assurance that the Company will be able to raisecapital, obtain debt financing, or improve operating results sufficiently tocontinue as a going concern.

 

The accompanying consolidated financial statements do not include anyadjustments relating to the recoverability and classification of recordedassets, or the amounts and classification of liabilities that might benecessary if the Company is unable to continue as a going concern.

 

**4.             Basis of Presentation**

 

In the opinion of management,all adjustments consisting only of normal recurring adjustments necessary for afair statement of (a) the results of operations for the three and nine monthperiods ended November 30, 2003 and 2002, (b) the financial position atNovember 30, 2003, and (c) cash flows for the nine month periods ended November30, 2003 and 2002, have been made.

 

The unaudited consolidatedfinancial statements and notes are presented as permitted by Form 10-QSB.Accordingly, certain information and note disclosures normally included incondensed financial statements prepared in accordance with accountingprinciples generally accepted in the United States of America have beenomitted.  The accompanying consolidatedfinancial statements and notes should be read in conjunction with the auditedconsolidated financial statements and notes of the Company for the fiscal yearended February 28, 2003.  The results ofoperations for the three and nine month periods ended November 30, 2003 are notnecessarily indicative of those to be expected for the entire year.

 

The Company records a commonstock payable at the time consideration is received

or the obligation is incurred.

 

Certain minor reclassificationshave been made to the 2002 consolidated financial statements to conform to theclassifications used in 2003.

 

**5.             Acquisition**

 

On October 11, 2003, the Company acquired 100 percent of the outstandingcommon stock of Chariot Manufacturing Company, Inc. from a related party for$360,000.  The acquisition was financedthrough the assignment of a note receivable valued at $150,000, $30,000 worthof common stock and a note payable for $180,000.  Also, the Company will pay the buyer a $50 premium per item solduntil the purchase price has been paid in full.  As Chariot Manufacturing Company, Inc. manufactures motorcycle trailerswith fiberglass bodies, it provides a vehicle for the Company to enter thefiberglass 

 

6

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manufacturing market.  Chariott Manufacturing Company, Inc. has hadno operations since its acquisition by the Company.  Prior to its acquisition Chariott Manufacturing Company, Inc.ceased its operations and liquidated a majority of its assets andliabilities.  The accompanying statementof operations are unaffected by the consolidation of this Company due to itsinactivity since its acquisition date.

 

The following table summarizesthe estimated fair values of the assets acquired at the date of acquisition,there were no outstanding liabilities. The Company is in the process of obtainingthird-party valuations of certain intangible assets; thus, the allocation ofthe purchase price is subject to refinement.

 

**At November 30, 2003**

 

| Equipment             |   | $       | 170,000 |   |
|-----------------------|--------|---------|---------|--------|
| Intangible assets     |   | 190,000 |    |
|                  |   |    |    |
| Total assets acquired |   | $       | 360,000 |   |

 

Of the $190,000 of acquiredintangible assets, $59,454 was assigned to brand recognition, $44,420 wasassigned to customer list and $86,125 was assigned to the web sitedevelopment.  These intangible assetswill be amortized over an average useful life of 5 years.

 

The following are pro formaamounts assuming the acquisition was made on March 1, 2003:

 
|                                                  |   | **Three Months Ended  November 30,  2003** |     | **Nine Months Ended  November 30,  2003** |   |
|-------------------------------------------------------|--------|--------------------------------------------|----------|-------------------------------------------|--------|
|                                                  |   |                                       |     |                                      |   |
| Net sales                                             |   | $                                          | 491,140  |                                      | $      | 1,557,546 |   |
|                                                  |   |                                       |     |                                      |   |
| Net loss                                              |   | $                                          | (524,135 | )                                         | $      | (899,291 | ) |
|                                                  |   |                                       |     |                                      |   |
| Net loss per common share                             |   | $                                          | (.01     | )                                         | $      | (.02 | ) |
|                                                  |   |                                       |     |                                      |   |
| Weighted average number  of common shares outstanding |   | 91,924,452                                 |     | 57,760,313                                |   |

 

The nine months ended November30, 2003, includes a nonrecurring gain on the disposal of assets of $492,600.

 

**6.             AccountsReceivable**

 

The Company follows SFAS No.140, “Accounting for Transfers and Servicing of Financial Assets andExtinguishments of Liabilities” to account for its factoring of accountsreceivable by selling and assigning all rights, title, and interest to certainof the Company’s accounts receivable. The Company receives 80% of all approved invoices sold to the FactoringCompany, which assumes the credit risk. Based on the Factoring Company’s collections of these invoices theCompany may receive additional consideration of up to 18%.  The Company records the 80% as paymentagainst the invoices sold and records 18% as an amount due from FactoringCompany.  Once the 

 

7

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invoice exceeds 120 days, theremaining 18% is recorded as expense. As of November 30, 2003, the Company had $49,426 of receivables due fromthe Factoring Company.

 

During the three and ninemonths ended November 30, 2003, the Company factored receivables ofapproximately $367,000 and $1,199,000, respectively.  In connection with the factoring agreement, the Company incurredfees of approximately $12,600 and $33,600 during the three and nine monthsended November 30, 2003, respectively. Any and all of the Company’s indebtedness and obligations to theFactoring Company is guaranteed by two stockholders and collateralized by theCompany’s inventory and fixed assets.

 

**7.             Common Stock and Stock Options**

 

During the nine month period ended November 30, 2003, the Company issued125,000 shares of common stock for $4,000 of services.

 

Stock-based compensation to non-employees is valued using theBlack-Scholes option pricing model. During the nine month period ended November30, 2003, the Company received $510,845 when 22,292,600 options to purchasecommon stock were issued to and exercised by consultants. Total compensationrecognized in conjunction with the issuance was approximately $76,345 and isincluded in consulting expense.  TheCompany also received $2,831 when an additional 117,600 options to purchasecommon stock were exercised.

 

The following table summarizesthe activity related to all Company stock options for the nine months endedNovember 30, 2003 and the year ended February 28, 2003:

 
|                             |   | **Stock  Options** |   | **Exercise  Price  per Share** |              | **Weighted  Average  Exercise Price  per Share** |   |
|----------------------------------|--------|--------------------|--------|--------------------------------|-------------------|--------------------------------------------------|--------|
|                             |   |               |   |                           |              |                                             |   |
| Outstanding at March 1, 2002     |   | 112,500            |   | $                              | 0.05  – 0.57 |                                             | $      | 0.57 |   |
| Granted                          |   | 900,000            |   | $                              | 0.05  – 0.57 |                                             | 0.11   |   |
| Exercised                        |   | (750,000           | )      | $                              | 0.24              |                                             | — |   |
|                             |   |               |   |                           |              |                                             |   |
| Canceled or expired              |   | —             |   | —                         |              | —                                           |   |
| Outstanding at February 28, 2003 |   | 262,500            |   | $                              | 0.05  - .057      |                                             | 0.36   |   |
| Granted                          |   | 66,092,600         |   | $                              | 0.00  – 0.04 |                                             | 0.02   |   |
| Exercised                        |   | (65,992,600        | )      | $                              | 0.00  – 0.04 |                                             | 0.01   |   |
|                             |   |               |   |                           |              |                                             |   |
| Canceled or expired              |   | —             |   | —                         |              | —                                           |   |
| Outstanding at November 30, 2003 |   | 362,500            |   | $                              | 0.04  - 0.57      |                                             | $      | 0.27 |   |
| Exercisable at November 30, 2003 |   | 362,500            |   | $                              | 0.04  - 0.57      |                                             | $      | 0.27 |   |

 

The options expire at variousdates ranging from October 2005 through February 2013.

 

During the period ended November 30, 2003, the Company granted43,700,000 options to employees in conjunction with the Employee StockIncentive Plan, all of which were exercised immediately.

 

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**8.             Inventory**

 

Inventory consists of the following atNovember 30, 2003:

 
| Work in process |   | $      | 20,301  |   |
|-----------------|--------|--------|---------|--------|
| Finished goods  |   | 93,347 |    |
|            |   | $      | 113,648 |   |

 

**9.             Seasonality**

 

The diversity of operations in the manufacturing segment protects itfrom seasonal trends except in the sales of agricultural processing where themajority of the revenue is generated while the processors await the nextharvest.

 

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**PARTI – FINANCIAL INFORMATION**

 

**Item 2****.    Management’sDiscussion & Analysis**

 

THIS FILING CONTAINSFORWARD-LOOKING STATEMENTS.  THE WORDS“ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,”“PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TOIDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTUREOPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW.  SUCH STATEMENTS REFLECT THE COMPANY’SCURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE ANDINVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERALECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, ANDECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTALREGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONALCUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’SCONTROL.  SHOULD ONE OR MORE OF THESERISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BEINCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSEANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED.  CONSEQUENTLY, ALL OF THE FORWARD-LOOKINGSTATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS ANDTHERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.

 

The Company cautions readersthat in addition to important factors described elsewhere, the followingimportant facts, among others, sometimes have affected, and in the future couldaffect, the Company’s actual results, and could cause the Company’s actualresults during 2003 and beyond, to differ materially from those expressed inany forward-looking statements made by, or on behalf of, the Company

.

This Management’s Discussion and Analysis orPlan of Operation presents a review of the consolidated operating results andfinancial condition of the Company for the three month periods ended November30, 2003 and 2002. This discussion and analysis is intended to assist inunderstanding the financial condition and results of operation of the Companyand its subsidiaries. This section should be read in conjunction with the consolidatedfinancial statements and the related notes.

 

MANUFACTURING SUBSIDIARIES

The manufacturing subsidiary, International Machine and Welding, Inc.generates its revenues from three divisions. Division 1 provides specialized machining and repair services to heavyindustry and original equipment manufacturers. Division 2 provides repair andrebuild services on heavy equipment used in construction and mining as well assales of used equipment. Division 3 provides parts sales for heavy equipmentdirectly to the customer. The primary market of this segment is the majority ofcentral and south 

 

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Florida with parts sales expanding its market internationally. Thecurrent operations can be significantly expanded using the 38,000 square footstructure owned by International Machine and Welding, Inc.

 

On October 11, 2003, the Company acquired Chariot Manufacturing Company,Inc. from a party related through common stockholders, for $360,000 assignmentof a note receivable valued at $150,000, $30,000 worth of common stock and anote payable for $180,000.  Also, theCompany will pay the buyer a $50 premium per item sold until the purchase pricehas been paid in full. This new subsidiary is expected to be revenue producingin the next fiscal quarter.  Sales willbe made through both direct sales and through a dealer network.

 

The Company does not have discrete financialinformation on each division, nor does the Company make decisions on thedivisions separately; therefore, they are not reported as segments.

 

**COMPARISONOF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2003 AND2002.**

 

RESULTS OF OPERATIONS

The Company owns one subsidiary that operated in the manufacturingsegment during the three months ended November 30, 2003 and 2002. To facilitatethe readers understanding of the Company’s financial performance, thisdiscussion and analysis is presented on a segment basis.

 

THREE MONTHS ENDED NOVEMBER 30, 2003 COMPARED TO NOVEMBER 30, 2002

 

General

The Company’s consolidated netsales decreased to $489,878 for the three months ended November 30, 2003 adecrease of $158,276 from $648,154 for the three months ended November 30,2002, a decrease of 24%. This decrease was due to general market conditions.

 

Gross profit for the consolidated operationsdecreased to $187,178 for the three months ended November 30, 2003 from$283,078 for the three months ended November 30, 2002. Gross profit decreasedas a percentage of sales to 38% from 44%. This change was due to a change inthe ratio between the more profitable part sales and machining revenue.Consolidated interest expense for the three months ended November 30, 2003 was$46,048 compared to $82,491 for the three months ended November 30, 2002. Thedecrease in interest expense is due to successful debt refinancing andreduction of debt.  The company incurreda net consolidated loss of $501,114 for the three months ended November 30,2003 compared to income of $685,069 for the three months ended November 30, 2002.The increase in the net consolidated loss is due to the prior year incurring aone time gain of $812,000 from negotiated discounts on refinanced debt.  Additionally, the Company had increases inprofessional fees, and costs to issue options under the Employee StockIncentive Plan for 2003 and the Non Qualifying Stock Option Plan which alsocontributed to the loss.

 

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Selling, general andadministrative expenses increased to $657,662 for the three months endedNovember 30, 2003 from $332,678 for the three months ended November 30, 2002,an increase of $324,984 or 98%.  Theincrease was mainly attributable to the increase in professional fees ofapproximately $150,000, an increase in the costs to issue options under theEmployee Stock Incentive Plan for 2003 and the Non Qualifying Stock Option ofapproximately $45,000 and an increase in loan guarantee expense ofapproximately $35,000.

 

Manufacturing Subsidiary

 

The Manufacturing operation provided net sales of $489,878 for the threemonths ended November 30, 2003 compared to $648,154 for the three months endedNovember 30, 2002. The machining operations provided $191,921 or 39% of netsales with parts and service providing $297,957 or 61% of net sales for thethree months ended November 30, 2003 as compared to machining operationscontributing $209,944 or 32% of net sales with parts and service providing$438,210 or 68% of net sales for the three months ended November 30, 2002.  This decrease in net sales is due to thegeneral market conditions.

 

Gross profit from the Manufacturing operation was $187,178 for the threemonths ended November 30, 2003 compared to $283,078 for the three months endedNovember 30, 2002 providing gross profit margins of 38% and 44%,respectively.  The decrease in the grossprofit margin is due to the change in the mix of sales of parts and service andmachining revenues.

 

Selling, general and administrative expenses were $220,115 for the threemonths ended November 30, 2003 compared to $209,812 for the three months endedNovember 30, 2002. Interest expense was $37,249 for the three months endedNovember 30, 2003 compared to $69,217 for the three months ended November 30,2002.  The decrease in interest expenseis due to the Company refinancing debt, which in turn reduced the amount ofinterest expense.

 

NINE MONTHS ENDED NOVEMBER 30, 2003 COMPARED TO NOVEMBER 30, 2002

 

General

The Company’s consolidated netsales decreased to $1,385,178 for the nine months ended November 30, 2003 a decreaseof $390,985 from $1,776,163 for the nine months ended November 30, 2002, adecrease of 22%. This decrease was due to general market conditions.

 

Gross profit for the consolidated operationsdecreased to $538,820 for the nine months ended November 30, 2003 from $745,723for the nine months ended November 30, 2002. Gross profit decreased as apercentage of sales to 39% from 42%. This change was due to a change in theratio between the more profitable part sales and machining revenue.

 

Selling, general andadministrative expenses increased to $1,703,048 for the nine months endedNovember 30, 2003 from $1,221,817 for the nine months ended November 30, 2002,an increase of $481,231 or 39%.  Theincrease was mainly attributable to the increase in professional fees ofapproximately $295,000, an increase in the costs to issue 

 

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options under the EmployeeStock Incentive Plan for 2003 and the Non Qualifying Stock Option ofapproximately $129,300.

 

Consolidated interest expense for the ninemonths ended November 30, 2003 was $152,835 compared to $223,191 for the ninemonths ended November 30, 2002. The decrease in interest expense is due tosuccessful debt refinancing and reduction of debt.

 

The company incurred a net consolidated lossof $1,286,300 for the nine months ended November 30, 2003 compared to income of$125,753 for the nine months ended November 30, 2002. The increase in the netconsolidated loss is due to the prior year incurring a one time gain of $812,000from negotiated discounts on refinanced debt. Additionally, the Company had increases in professional fees, and coststo issue options under the Employee Stock Incentive Plan for 2003 andthe Non Qualifying Stock Option Plan which also contributed to the loss.

 

Manufacturing Subsidiary

 

The Manufacturing operation provided net sales of $1,385,175 for thenine months ended November 30, 2003 compared to $1,776,163 for the nine monthsended November 30, 2002. The machining operations provided $538,394 or 39% ofnet sales with parts and service providing $846,781 or 61% of net sales for thenine months ended November 30, 2003 as compared to machining operationscontributing $655,405 or 37% of net sales with parts and service providing$1,120,758 or 63% of net sales for the nine months ended November 30,2002.  The ratio of machining to partssales and service has remained somewhat consistent.

 

Gross profit from the Manufacturing operation was $538,820 for the ninemonths ended November 30, 2003 compared to $745,723 for the nine months endedNovember 30, 2002 providing gross profit margins of 39% and 42%, respectively.

 

Selling, general and administrative expenses were $562,919 for the ninemonths ended November 30, 2003 compared to $564,731 for the nine months endedNovember 30, 2002. Interest expense was $107,639 for the nine months endedNovember 30, 2003 compared to $166,712 for the nine months ended November 30,2002. These reductions are the reflection of management controls and debtreduction for the reporting period.

 

LIQUIDITY AND CAPITAL RESOURCES

 

During the nine months endedNovember 30, 2003 and 2002, the Company used net cash for operating activitiesof ($708,331) and ($225,015), respectively. This increase in cash used byoperating activities is primarily due to the net loss of ($1,286,300) for thenine months ended November 30, 2003 as compared to net income of $125,753 forthe same period ended November 30, 2002, a reduction in accounts payable andaccrued expenses and the increase in loan costs and other current assets.

 

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During the nine months ended November 30, 2003 and 2002, the Companyused funds for capital expenditures of ($45,916) and ($8,229),respectively.  The increase in net cash usedfor investing activities is due to the increase in long term receivables.

 

During the nine months ended November 30, 2003 and 2002, the Companyprovided cash from financing activities of $817,226 and 248,670,respectively.  The increase in net cashprovided by financing activities is the increase in cash from the exercise ofstock options.

 

Cash flows from operations and the sale of equity provided for workingcapital needs and principal payments on long-term debt through November 30,2003. To the extent that the cash flows from operations are insufficient tofinance the Company’s anticipated growth, or its other liquidity and capitalrequirements during the next twelve months, the Company will seek additionalfinancing from alternative sources including bank loans or other bank financingarrangements, other debt financing, the sale of equity securities (includingthose issuable pursuant to the exercise of outstanding warrants and options),or other financing arrangements. However, there can be no assurance that anysuch financing will be available and, if available, that it will be availableon terms favorable or acceptable to the Company.

 

SEASONALITY

 

The diversity of operations in the Manufacturing Segment protects itfrom seasonal trends except in the sales of agricultural processing where themajority of the revenue is generated while the processors await the nextharvest.

 

**CriticalAccounting Policies and Estimates**

 

The accompanying unauditedconsolidated financial statements include the activity of the Company and itswholly owned subsidiary. All intercompany transactions have been eliminated inconsolidation.  The preparation of consolidated financial statements inconformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affectthe reported amount of assets and liabilities and disclosure of contingentassets and liabilities at the date of the consolidated financial statements andthe reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

 

We believe that the followingcritical policies affect our more significant judgments and estimates used inpreparation of our consolidated financial statements.

 

We maintain allowances fordoubtful accounts for estimated losses resulting from the inability of ourcustomers to make required payments.  We base our estimate on an analysisof the Company’s prior collection experience, customer credit worthiness, andcurrent economic trends.  If the financial condition of our customers wereto deteriorate, additional allowances may be required.

 

We value our inventories at thelower of cost or market.  Cost is determined on a standard cost basis thatapproximates the first-in, first-out method; market is determined based on netrealizable value.  We write down inventory balances for estimatedobsolescence or 

 

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unmarketable inventory equal tothe difference between the cost of the inventory and the estimated market valuebased upon assumptions about future demand and market conditions.  Ifactual market conditions are less favorable than those projected by management,additional inventory write-downs may be required.

 

We value our property andequipment at cost.  Amortization and depreciation are calculated using thestraight-line and accelerated methods of accounting over the estimated usefullives of the assets.  Maintenance and repairs are charged to operationswhen incurred.  Betterments and renewals are capitalized. When propertyand equipment are sold or otherwise disposed of, the asset account and relatedaccumulated depreciation account are relieved, and any gain or loss is includedin operations.

 

We record amounts billed tocustomers for shipping and handling costs as sales revenue. Costs incurred byus for shipping and handling are included in cost of sales. Sales are recordedwhen products, repairs, or parts are delivered to the customer. Provisions fordiscounts and rebates to customers, estimated returns, allowances, and otheradjustments are provided for in the same period the related sales are recorded.No products or parts are delivered with any contingencies except for defects.

 

We have adopted SFAS No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144addresses the financial accounting and reporting for the impairment oflong-lived assets, excluding goodwill and intangible assets, to be held andused or disposed of.  In accordance withSFAS No. 144, the carrying values of long-lived assets are periodicallyreviewed by the Company and impairments would be recognized if the expectedfuture operating non-discounted cash flows derived from an asset were less thanits carrying value and if the carrying value is more than the fair value of theasset.

 

We have adopted FinancialAccounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFASNo. 123), which provides that expense equal to the fair value of all stock-basedawards on the date of grant be recognized over the vesting period andAlternatively, this statement allows entities to continue to apply theprovisions of Accounting Principles Board Opinion No. 25, “Accounting for StockIssued to Employees” (APB Opinion No. 25), whereby compensation expense isrecorded on the date the options are granted to employees equal to the excessof the market price of the underlying stock over the exercise price. We haveelected to continue to apply the provisions of APB Opinion No. 25 and providepro forma disclosure of the provisions

of SFAS No. 123.

 

Fair value estimates used inpreparation of the consolidated financial statements are based upon certainmarket assumptions and pertinent information available to management. Therespective carrying value of certain on-balance-sheet financial instrumentsapproximated their fair values. These financial instruments include cash,accounts receivable, accounts payable, and accrued expenses. Fair values wereassumed to approximate carrying values for these financial instruments sincethey are short-term in nature and their carrying amounts approximate fairvalues or they are receivable or payable on demand. The fair value of theCompany’s notes payable is estimated based upon the quoted market prices forthe same or similar issues or on the current rates offered to the Company fordebt of the same remaining maturities.

 

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Deferred tax assets andliabilities are recognized for the estimated future tax consequencesattributable to differences between the consolidated financial statementscarrying amounts of existing assets and liabilities and their respective incometax bases. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporarydifferences are expected to be recovered or settled. The effect on deferred taxassets and liabilities of a change in tax rates is recognized as income in theperiod that included the enactment date.

 

We record stock as issued atthe time consideration is received or the obligation is incurred.

 

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**Item 3****.    Controls andProcedures**

 

(a)          Evaluationof disclosure controls and procedures. Based on their evaluation as of a datewithin 90 days of the filing date of this Quarterly Report on Form 10-QSB, theRegistrant’s principal executive officer and principal financial officer haveconcluded that the Registrant’s disclosure controls and procedures, as definedin Rules 13a-14(c) under the Securities Exchange Act of 1934 (the “ExchangeAct”), are effective.

 

**(b)****         **Changesin internal controls. There were no significant changes in the Registrant’sinternal controls or other factors that could significantly affect thesecontrols subsequent to the date of their evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses.

 

**PART II – OTHER INFORMATION**

 

**Item 1.    LegalProceedings**

 

None.

 

**Item 2.    Changesin Securities**

 

During the nine month periodended November 30, 2003, there was no modification of any instruments definingthe rights of holders of the Company’s common stock and no limitation orqualification of the rights evidenced by the Company’s common stock as a resultof the issuance of any other class of securities or the modification thereof.

 

On March 11, 2003, 305,000shares of common stock were issued in conversion of options.  Also on March 11, 2003, 95,000 shares ofcommon stock were issued for services valued at $3,400.  On May 8, 2003, 117,600 shares of commonstock were issued in conversion of options for $2,831.

 

On June 2, 2003, 6,000,000shares of common stock were issued in conversion of options at a price of 85%of fair market value on the date of conversion.  On June 10, 2003, 6,000,000 shares of common stock were issued inconversion of options at a price of 85% of fair market value on the date ofconversion.  On June 13, 2003, 200,000shares of common stock were issued in conversion of options at a price of 85%of fair market value on the date of conversion.  On June 27, 2003, 6,000,000 shares of common stock were issued inconversion of options at a price of 85% of fair market value on the date ofconversion.  On July 9, 2003, 2,000,000shares of common stock were issued in conversion of options at a price of 85%of fair market value on the date of conversion.  On July 24, 2003, 10,200,000 shares of common stock were issuedin conversion of options at a price of 85% of fair market value on the date ofconversion.  On August 4, 2003, theCompany issued 450,000 shares of common stock in exchange for services valuedat $3,600.  On August 22, 2003, 7,000,000shares of common stock were issued in conversion of options at a price of 85%of fair market value on the date of conversion.

 

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On September 9, 2003, 5,000,000shares of common stock were issued in conversion of options at a price of 85%of fair market value on the date of conversion.  On September 11, 2003, 3,000,000 shares of common stock wereissued in conversion of options at a price of 85% of fair market value on thedate of conversion.  On September 13,2003, 2,150,000 shares of common stock were issued in conversion of options ata price of 85% of fair market value on the date of conversion.  On October 10, 2003, 4,500,000 shares ofcommon stock were issued in conversion of options at a price of 85% of fairmarket value on the date of conversion. On October 13, 2003, 15,189,285 shares of common stock were issued infor legal services.  Also on October 13,2003, 2,197,802 shares of common stock were issued for the acquisition of asubsidiary.  On October 29, 2003,7,000,000 shares of common stock were issued in conversion of options at aprice of 85% of fair market value on the date of conversion.  On November 14, 2003, 6,500,000 shares ofcommon stock were issued in conversion of options at a price of 85% of fairmarket value on the date of conversion. On November 29, 2003, 4,949,979 shares of common stock were issued forguaranty’s of debt and a pledge of assets.

 

During November and May 2003,dividends of 115 and 111 shares of Series B preferred stock were issued in lieuof cash dividends, respectively.

 

**Item3.    Defaults Upon Senior Securities**

 

The Company has defaulted on atotal of $419,488 of notes payable to several stockholders.  The amount of principal payments in arrearswas $419,488, with an additional amount of $173,371 of interest due at November30, 2003.  These defaults are the resultof a failure to pay in accordance with the terms agreed.

 

**Item4.    Submission of Matters to a Vote ofSecurity Holders**

 

During the nine month periodended November 30, 2003, the Company did not submit any matters to a vote ofits security holders.  However, on June4, 2003 there was delivered to the Board of Directors of the company, a writtendemand from stockholders representing more than fifty percent of the totalvoting shares of forms of the company stock, for the authorized shares of thecompany stock to be increased to 350,000,000 common shares and 5,000,000 blankcheck preferred shares. Additional demand was made for the Board to consider,after due diligence and legal opinion, the redomicile of the corporation fromDelaware to Florida.

 

**Item 5.    OtherMatters**

 

The Company does not have anyother material information to report with respect to the nine month periodended November 30, 2003.

 

**Item 6.    Exhibitsand Reports on Form 8-K**

 

(a)   Exhibits included herewith are:

03-01Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuit to Section906 of the Sarbanes-Oxley Act of 2002

 

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(b)         Reportson Form 8-K – The Company filed Form 8-K on October 24, 2003 to disclose theacquisition of Chariot Manufacturing Company, Inc. from `International Commerceand Finance, Inc., Robert D. Hott, Jr. and Gerald F. Schiedel for total the sumof $360,000 in cash, assignment of note receivable and Stock.

 

(c)          S-8Filings included by reference

 

(d)         ****Employee Stock Option Plan andNon Employee Directors****andConsultants****Retainer Plan for 2003included by reference

 

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SIGNATURES

 

Pursuant to the requirements ofthe Securities and Exchange Act of 1934, the registrant has caused this reportto be signed on its behalf by the undersigned, thereto duly authorized:

 

 
|   |             |   | AMERICAN  COMMERCE SOLUTIONS, INC. |
|--------|------------------|--------|------------------------------------|
|   |             |   |                               |   |
| Dated: | January 14, 2004 |   |                               | By: | /s/ Daniel  L. Hefner |
|   |             |   |                               |   | Daniel L.  Hefner, President |

 

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