UNITED STATES 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 June 30, 2001

[ ]  Transition  Report  Pursuant  to  Section  13  or  15(d)  of The Securities
                                   Exchange Act of 1934

                        Commission File Number 333-29903

                               AMMONIA HOLD, INC.
                 (Name of small business issuer in its charter)

                 Utah                                    75-2337459
    (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                    Identification No.)

                    10 Gunnebo Drive, Lonoke, Arkansas 72086
               (Address of principal executive offices) (Zip Code)

Issuer's telephone no.:  (501) 676-2994

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

Securities registered pursuant to Section 12(g) of the Exchange Act:   Common

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 No o

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the best of the  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.

        State the issuer's revenues for its most recent fiscal year.  $1,177,929

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and ask prices of such stock as of a specified date within 60
days.  $2,036,816  (Based on price of $.30 on September  10, 2001 and  6,789,387
shares held by non-affiliates)

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

                Class                   Outstanding as of September 10, 2001

         Common Stock, Par Value                   10,911,700
           $.001 per share

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

Transitional Small Business Disclosure Format.   Yes [ ]  No [X]



                                       1
<PAGE>

                               AMMONIA HOLD, INC.

                                TABLE OF CONTENTS

                                                                           Page

                                     PART I

Item 1.   Description of Business ............................................ 3

Item 2.   Description of Property............................................. 5

Item 3.   Legal Proceedings................................................... 6

Item 4.   Submission of Matter to a Vote of
          Security Holders.................................................... 6

                                     PART II

Item 5.   Market for Common Equity and Related
          Stockholder Matters................................................. 6

Item 6.   Management's Discussion and Analysis or
          Plan of Operation................................................... 7

Item 7.   Financial Statements................................................ 9

Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure............................. 10

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and
          Control persons; Compliance with Section 16(a)
          of the Exchange Act................................................ 10

Item 10.  Executive Compensation............................................. 11

Item 11.  Security Ownership of Certain Beneficial
          Owners and Management.............................................. 12

Item 12.  Certain Relationships and Related Transactions..................... 13

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K................................... 13


SIGNATURES.................................................................. S-1



                                       2
<PAGE>

                                     PART I

Item 1.  Description of Business

Business Development

         Ammonia Hold, Inc. ("AMHD" or the "Company"),  a Utah  corporation,  is
engaged in the business of manufacturing and marketing odor eliminating products
used in  connection  with  farm and  domestic  animals  and  municipal  biosolid
facilities.  The  Company's  products  are  specifically  designed  to stop  the
formation  of ammonia and other odors  associated  with animal waste and provide
safe,  simple,  economical  reduction of ammonia and associated vapor in poultry
houses and other areas where animal wastes are present.  The Company markets its
products to farms,  poultry  houses,  co-ops,  large  retail  chains and grocery
stores throughout the United States.

         The  Company  manufactures  products  specifically  designed to control
ammonia and other odors  associated with animal urine and feces using a patented
process.  Its line of  products  have the ability to counter  the  formation  of
ammonia  when urine and solid animal waste is exposed to free oxygen in the air.
The Company's  patented  process binds the nitrogen  present in animal waste and
municipal  biosolids,  thus  halting the  natural  production  of  ammonia.  The
Company's  products are designed for  industrial  use in poultry  production and
livestock confinement areas and with household pets.

         The Company's  principal  product is called "Ammonia  Hold,"  developed
after 15 years of  research  and  patented in 1989.  Ammonia  Hold is a granular
light gray  substance  that uses a  mono-calcium  phosphate base with a blend of
trace materials and other inert  ingredients.  Ammonia Hold counters the natural
formation of ammonia  when animal  wastes are exposed to free oxygen in the air.
Use of Ammonia Hold decreases  ammonia levels.  High atmospheric  ammonia levels
have been  shown by  numerous  independent  studies to cause  respiratory  tract
damage in poultry,  resulting in higher  mortality and  condemnation  rates, and
decreasing feed efficiency.

         The Company also markets a related product known as "Odor  Scentry(R)",
a variation of Ammonia Hold sold in smaller  granular form,  which uses the same
process as Ammonia Hold to isolate the individual  elements that must combine to
create ammonia. Odor Scentry(R), the Company's first consumer product previously
marketed under the name Odor Halt, is sold in pet stores and pet  departments of
retail  stores  for home use in the  elimination  of odors  associated  with pet
litter pans for domesticated animals such as cats and birds,  gerbils,  hamsters
and  rabbits.  Odor  Scentry(R)  is added to pets'  litter pan to remove  common
odors.  Odor  Scentry(R) also may be used to prevent odors from forming in trash
cans and in removing  odors from cars and carpets where  undesirable  odors have
developed  previously.  Odor  Scentry(R) for Healthcare  Facilities is a related
product  formulated and packaged for the nursing home industry.  This product is
used as a carpet deodorizer or mixed with water to clean and deodorize.

         Another product,  "Barn  Guard(R)," is a granular product  specifically
intended  for  the  equestrian  market.  It  is  long-lasting,  easy-to-use  and
eliminates  odors in horse stalls and other types of livestock  pens. Barn Guard
is non-toxic and contains no perfumes or masking  agents.  "Odor Scentry Premium
Cat Litter" was developed for use in household  litter pans. It forms  flushable
clumps of both  liquid and solid waste which are both  completely  flushable  in
non-septic  tank  systems.  Odor  Scentry  Premium  Cat  Litter is  all-natural,
biodegradable,  and  almost  completely  dust-free.  It is  designed  to prevent
tracking by cats after using the litter  pan.  Both Barn Guard and Odor  Scentry
Premium  Cat  Litter  use the  same  process  as  Ammonia  Hold to  isolate  the
individual chemical elements that must combine to create ammonia.


                                       3
<PAGE>

         In 1998, the Company acquired Super Dry Industries,  Inc. ("Super Dry")
in exchange  for cash and shares of the  Company's  common  stock.  Super Dry, a
Mississippi  corporation  located in Shuqualak,  Mississippi,  is engaged in the
manufacture and distribution of "Litter  Purrferred," a patented cat litter, and
other oil and grease  absorbent  products.  Super Dry also owns a production and
packaging facility in Shuqualak, associated mineral reserves and certain patents
and trademarks. As a result of the acquisition of Super Dry, the Company expects
to increase its  manufacturing  capacity and to use Super Dry's mineral reserves
in the production of the Company's products.

         The  Company's  principal  executive  offices are located at 10 Gunnebo
Drive, Lonoke, Arkansas 72086, and its telephone number is (501) 676-2994.

Marketing

         Management  estimates  that  more than  half of all  households  in the
United  States have pets.  Management  further  estimates  that over six billion
broiler  chickens,  280 million turkeys and 21 million ducks are produced in the
United States each year. In order to address this market, management has created
a marketing strategy combining the use of direct sales representatives and trade
and  consumer  advertising.  This  strategy  targets not only the retail  market
consisting of pet stores and pet departments of grocery and other retail stores,
but also the commercial and industrial animal markets.

         Presently,  the  Company  employs  one sales  person  and also uses the
services of  independent  sales  representatives  to cover its  marketing  area,
primarily in the continental  United States.  Management intends to increase its
marketing  force as business  demands warrant such expansion and the Company has
sufficient funds available to retain the appropriate personnel.

Patents

         The  Company's  principal  patent,  Method  for  Producing  Monocalcium
Phosphate and Products  Produced  therefrom,  (U.S.  Patent No.  4,838,922)  was
issued in June 1989 and  acquired in 1990 from the  inventor,  Billy J. Green by
the Company's  predecessor for 5,000 shares of AHI-Texas common stock,  $100,000
cash and a note payable in the amount of approximately $312,000. Of this amount,
$250,000 was later  retired by the issuance of 50,000  shares of Company  common
stock.  The  patent  refers  to an  improved  method  of  producing  monocalcium
phosphate. The second patent, Animal Litter containing Magnesium Montmorillonite
(U.S.  Patent No.  5,529,022)  was granted in June 1996 and acquired  from Sanex
Corporation by the Company in August 1996 for $250,000, paid $50,000 in cash and
the  remainder by the issuance of 35,714  shares of common stock valued at $5.60
per share.  The officers and directors of Sanex are Marjorie  Burman-Nelson  and
Scott Burman. The purchase price for these patents and the value attributable to
the shares of common stock issued in the  transaction  was based on  arms-length
negotiations between the parties.

         Pursuant to the Company's  acquisition  of Super Dry, it acquired Super
Dry's U.S.  Patent  No.5,469,809"  (granted  November  28,  1995),  Non  Dusting
Clumping Animal Litter,  related to a process for creating cat litter. Super Dry
acquired the patent by  assignment  on August 11, 1995, at which time the patent
was pending,  from its inventor C. Douglass  Coleman.  The Company also acquired
Super Dry's trademark registrations for "Litter Purrferred" and "Super Dry."

Competition

         Presently,  there are several companies  marketing  products similar to
those  produced  and  marketed by the  Company  including,  without  limitation,
General Chemical Corporation and Jones Hamilton for ammonia abatement  additives

                                       4
<PAGE>

and Clorox,  Oil DRI Corp and  American  Colloid  for cat litter.  Most of these
companies  are larger than the Company with longer  histories  of operation  and
greater financial and personnel resources.  Also, most of these competitors have
established  some  market  share in the  market  in which  the  Company  will be
competing.  The ability of the Company to penetrate these markets will depend on
many  factors  including,  but not limited to, its ability to obtain  sufficient
capital to enhance and broaden its marketing of its products, to develop new and
improved  products,  to obtain  and retain  necessary  management  and  advisory
personnel, and the establishment of a comprehensive marketing plan.

Employees

         Presently,  the Company has six employees  consisting of two management
persons,  one  production  person and two  administrative  persons and one sales
representative.  The Company does not  currently  offer its employees any bonus,
profit  sharing or deferred  compensation  plan. The Company has entered into an
employment contract with its President, Michael Parnell.

         Management intends to hire additional  qualified  personnel as business
conditions warrant. In addition to its full-time employees,  the Company may use
the services of certain outside consultants and advisors as needed on a contract
basis.  Management considers the relations between the Company and its employees
to be good.

Facilities

         The Company's  principal  place of business and  corporate  offices are
located at 10 Gunnebo Drive, Lonoke,  Arkansas 72086. The facilities are in good
condition and consist of approximately  30,000 square feet of manufacturing  and
warehouse  space used for the  production of the Company's  products and storage
area for  inventory  and raw  materials.  The  building and land are held in fee
without  mortgage.  The Company also rents on a month to month basis,  warehouse
space for a mixing  facility in Little  Rock,  Arkansas  for rent of $1,360.  On
August 5, 1997 the Company  purchased  ten acres of land and 55,000  square foot
office and  manufacturing  facility in Lonoke for cash of $392,920,  in order to
meet  expansion  requirements.  This property was  subsequently  exchanged for a
fifteen  percent  (15%)  interest  (1,777,500  shares  of  common  stock) in Pet
Quarters.com, Inc.

         Upon the Company's acquisition of Super Dry, it acquired title to Super
Dry's production and packaging facility located in Shuqualak,  Mississippi.  The
facility is held in fee without mortgage.  The Company intends to continue using
the facility to manufacture Super Dry products and for other uses.

Research and Development

         The Company has not allocated  specific funds for  conducting  research
and development activities.  Due to the nature of the Company's business,  funds
will be allocated for research and development as needed.

Item 2.  Description of Property

         The  information  required by this Item is  contained  in Item 1 above,
under the heading "Facilities."


                                       5
<PAGE>

Item 3.  Legal Proceedings

         There are no material pending legal proceedings to which the Company or
any of its  subsidiaries  is a party or to which any of its  property is subject
and,  to the best of its  knowledge,  no such  actions  against  the Company are
contemplated or threatened.

Item 4.  Submission of Matters to a Vote of Security Holders

         No matters were submitted to a vote of the Company's Securities Holders
during the fourth quarter of the Company's fiscal year ended June 30, 2001.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         The   Company's   common   stock  is  eligible  to  be  traded  in  the
over-the-counter  market and  quotations are published on the OTC Bulletin Board
under the symbol  "AMHD," and in the National  Quotation  Bureau,  Inc.  ("NQB")
"pink  sheets"  under Ammonia  Hold,  Inc.  Inclusion on the OTC Bulletin  Board
permits  price  quotations  for the  Company's  shares to be  published  by such
service.

         The following  table sets forth the range of high and low bid prices of
the Company's  shares for each quarterly period for the past two fiscal years as
reported by the NQB.  These prices  represent  prices  between  dealers,  do not
include retail  markups,  markdowns or commissions  and do not represent  actual
transactions.

           Fiscal Year                            High              Low
                                                ------            ------
         (Starting July 1)
                  2000
                           First Quarter          1.96              1.00
                           Second Quarter         1.31               .69
                           Third Quarter          1.3125             .66
                           Fourth Quarter          .90625            .53125
                  2001     First Quarter           .6875             .3438
                           Second Quarter          .5156             .125
                           Third Quarter           .3125             .125
                           Fourth Quarter(1)       .26               .13
---------------------------
         (1)      Through June 30, 2001

         As of August 15, 2001 there were approximately  1,085 holders of record
of the  Company's  common  stock,  which figure does not take into account those
shareholders whose certificates are held in the name of broker-dealers.

Dividend Policy

         The  Company  has  not   declared  or  paid  cash   dividends  or  made
distributions  in the  past on its  common  stock,  and  the  Company  does  not
anticipate  that  it will  pay  cash  dividends  or  make  distributions  in the
foreseeable  future.  The Company  currently intends to retain and invest future
earnings to finance its operations.


                                       6
<PAGE>

Recent Sales of Unregistered Securities

         In April 1999,  the Company  issued 1,000 shares of common stock to two
individuals,  500 shares each, in  consideration  for marketing and  promotional
services provided to the Company.

         On June 26, 2001,  the Company  issued to  TransAtlantic  Surety & Bond
Company,  Ltd. ("TSB") 3,273,510 shares of authorized,  but previously  unissued
shares of common  stock.  The shares were  issued  pursuant to the terms of that
certain  Acquisition  Agreement dated June 15, 2001 between the Company and TSB.
In  consideration  for the shares,  TSB paid to the  Company the total  purchase
price  of  $1,250,000,  in  the  form  of a 6%  Convertible,  Callable,  Secured
Subordinated  Debenture due June 15, 2004,  executed by TSB Investment  Partners
Inc.  Of the total  shares  issued,  2,618,808  are to be held in escrow,  to be
released to TSB upon payment of the Debenture.  TSB retains voting rights to the
shares  held in escrow.  The  Company  also  granted to TSB  options to purchase
3,000,000  share  of the  Company's  common  stock  at $1.50  per  share  and an
additional  3,000,000  shares at $3.50 per  share.  The  options  have a term of
thirty-six months from the date of issuance.

         The  above   referenced   shares  were  issued  in  private,   isolated
transactions.  In  completing  each  transaction,  the  Company  relied upon the
exemption  from  registration  under the  Securities  Act of 1933,  as  amended,
provided by Section 4(2) of such Act.

Item 6.  Management's Discussion and Analysis or Plan of Operation

         The  following  information  should  be read in  conjunction  with  the
consolidated  financial statements and notes thereto appearing elsewhere in this
Form 10-KSB.

Recent Accounting Pronouncements

         In June 1999, the Financial  Accounting Standards Board ("FASB") issued
SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
which was later amended by SFAS No. 137 "Accounting  for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB No. 133." SFAS
No. 133  established  standards for the  accounting and reporting for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and hedging activities.  The statement generally requires recognition
of gains and  losses on hedging  instruments,  based on changes in fair value or
the  earnings  effect of a forecasted  transaction.  SFAS No. 133, as amended by
SFAS No. 137, is effective  for all fiscal  quarters of fiscal y ears  beginning
after June 15, 2000.  Management  does not believe that SFAS No. 133 or SFAS No.
137 will have a material impact on the Company's financial statements.

                              Results of Operations

         The following table sets forth the percentage relationship to total net
sales of principal items contained in the Company's Statements of Operations for
the two most recent  fiscal  years  ended June 30,  2001 and 2000.  It should be
noted that  percentages  discussed  throughout  this  analysis  are stated on an
approximate basis.


                                       7
<PAGE>
<TABLE>
<CAPTION>

                                                                                    Fiscal Years Ended
                                                                                         June 30,
                                                                                  2001                2000
                                                                                 ------              ------
<S>                                                                               <C>                 <C>
Total net sales..............................................................     100%                100%
Cost of sales................................................................      87                  58
Gross profit.................................................................      13                  42
Sales and marketing expenses.................................................      11                  94
General and administrative expenses..........................................      76                  64
Depreciation and amortization................................................      14                   9
(Loss) from operations.......................................................     (87)                125
Other income (loss)..........................................................    (100)                 14
Unrealized gain from marketable securities...................................       -                   6
Income (loss) before income taxes............................................    (187)               (105)
Provisions (benefit) for income taxes........................................       -                   -
Net income (loss)............................................................    (187)               (105)
</TABLE>


For the Year Ended June 30, 2001 Compared to the Year Ended June30, 2000

         Total sales, net of allowances and discounts, for the fiscal year ended
June 30, 2001  ("2000")  decreased  40% from the fiscal year ended June 30, 2000
("2000")  attributed  to  reduced  orders  for  products.  Cost of  sales  (as a
percentage of total  revenues) in 2001 increase to 87% from 58% in 2000 . Actual
cost of sales decreased 11% for 2000 reflecting the decrease in total sales.

         Sales  and  marketing  expenses  decreased  93% in 2001 due to  reduced
distribution and the discontinuance of certain product lines. As a percentage of
total revenues,  sales and marketing  expenses decreased from 94% in 2000 to 11%
in 2001, attributed to reduced sales staff. General and administrative  expenses
decreased 29% in 2001 primarily due to the decrease in staff. As a percentage of
total revenues,  general and administrative  expenses increased from 64% in 2000
to 76% in 2001. This result is primarily  attributed to reduced sales,  although
partially offset by a reduction in staff.

         During 2001,  the Company  recognized  a loss from trading  equities of
$831,500  compared to a gain of $235,655  gain in 2000.  The 2001 loss is due to
the decrease in the market value of  tradeable  securities  held by the Company.
Also during 2001, the Company  recorded an inventory  write down of $332,027 due
to discontinued  product lines. The Company had a net loss of $2,206,683 in 2001
compared to a net loss of $2,069,050 in 2000.

Net Operating Losses

         The Company has accumulated  approximately  $6,000,000 of net operating
loss  carryforwards  as of June 30,  2001,  which may be offset  against  future
taxable  income.  The net operating  loss begins to expire in the year 2009. The
use of these losses to reduce future income taxes will depend on the  generation
of sufficient  taxable  income prior to the expiration of the net operating loss
carryforwards.  In the event of certain changes in control of the Company, there
will be an annual  limitation on the amount of net operating loss  carryforwards
which can be used. No tax benefit has been reported in the financial  statements
for the year ended June 30, 2001 because the  potential tax benefits of the loss
carryforward is offset by valuation allowance of the same amount.


                                       8
<PAGE>

                         Liquidity and Capital Resources

         Historically,  the Company's  working capital needs have been satisfied
by sales revenues and from the sale of securities.  At June 30, 2001 the Company
had a net working capital  deficit of $528,875,  compared to net working capital
of $1,126,679 at June 30, 2000. The decrease in working capital at June 30, 2001
is primarily  attributed to decreases in accounts  receivable of $956,766 (99%),
investments  in trading  equities of $425,240  (88%) and  inventory  of $512,819
(59%).  Also adding to the deficit was the $153,371  (91%)  increase in accounts
payable and the $212,399  (410%) increase in accrued  expenses.  Working capital
was  positively  effected at June 30,  2001 by the  $710,544  (90%)  decrease in
accrued allowance for coupons / grocery store allowances.

         At June 30, 2001,  the Company had total assets of $2,905,371 and total
stockholders'  equity of $1,801,203,  compared to total assets of $5,450,733 and
total stockholders' equity of $4,007,886 at June 30, 2000.

         Net cash used by operating  activities for 2001 was $96,101 compared to
$530,132 in 2000.  This was due to primarily to the reduced  staff and increases
in non cash expenses for 2001,  including  inventory  write down and decrease in
market  value  of  tradeable  securities.  The  Company  used a net  $16,076  by
investing  activities  in  2001  compared  to  $536,993  provided  by  investing
activities in 2000, primarily due to the sale of investment  securities in 2000.
The Company did not realize  cash from  financing  activities  in 2000,  but did
realize $98,205 in 2001 from debt financing.

         The Company  anticipates  meeting its working capital needs during 2001
fiscal year primarily with revenues and debt  financing.  Under the terms of the
Acquisition Agreement,  TSB has agreed to undertake to issue for the Company, on
a "best  efforts  basis"  within  four  (4)  months  after  the  closing  of the
Acquisition Agreement,  a debt offering up to $10,000,000.00.  The general terms
and  conditions of the debt  offering  shall be; (i) interest at 12% with a five
(5) year term, and (ii)  convertible to common stock of the Company at $5.00 per
share.  There can be no assurance  that such  financing will be realized or that
the Company will be able to secure alternative financing at reasonable terms, or
at all.

         In the opinion of management,  inflation has not had a material  effect
on the operations of the Company.

Risk Factors and Cautionary Statements

         Forward-looking  statements  in this  report are made  pursuant  to the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995.  The  Company  wishes to advise  readers  that  actual  results may differ
substantially from such forward-looking  statements.  Forward-looking statements
involve  risks and  uncertainties  that  could  cause  actual  results to differ
materially from those expressed in or implied by the statements,  including, but
not limited to, the  following:  Changing  economic  conditions,  interest  rate
trends,  continued  acceptance  of the  Company's  products in the  marketplace,
competitive  factors,  and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission.

Item 7.  Financial Statements

         The Company's financial statements as of and for the fiscal years ended
June 30, 2001 and 2000 have all been  examined to the extent  indicated in their
report  by  Crouch,   Bierwolf,  &  Associates,   independent  certified  public
accountants,  and have been  prepared  in  accordance  with  generally  accepted
accounting  principles  and pursuant to  Regulation  S-B as  promulgated  by the
Securities and Exchange Commission.  The aforementioned financial statements are
included herein starting with page F-1.


                                       9
<PAGE>

Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

         This Item is not Applicable.

                                    PART III

Item 9.  Directors,   Executive   Officers,   Promoters  and  Control   Persons;
         Compliance with Section 16(a) of the Exchange Act

         The following  table sets forth the names,  ages, and offices held with
the Company by it's directors and executive officers:

         Name         Position                  Director Since           Age
         ----         --------                  --------------           ---
Michael D. Parnell    President, Chief               1996                42
                      Executive Officer
                      and Director
Dan N. Thompson       Secretary/Treasurer            1994                37
                      Chief Financial
                      Officer and Director
Robert S. Ligon       Director                       1994                78
Charles R. Nickle     Director                       1997                46
William H. Ketchum    Director                       1997                68

         All directors hold office until the next annual meeting of stockholders
and until their  successors  have been duly elected and qualified.  There are no
agreements  with  respect to the  election of  directors.  The Company pays each
director $500 per quarter for service on the Board of Directors. On February 26,
1999,  each  director  received an option to purchase up to 50,000 shares of the
Company's  common stock at an exercise price of $1.06 per share, for a period of
five years.  In order for a director to exercise his  warrant,  the Company must
achieve net sales of $3,000,000 for any continuous twelve month period.

         Any  non-employee  director of the Company is  reimbursed  for expenses
incurred for  attendance at meetings of the Board of Directors and any committee
of the Board of Directors. The Executive Committee of the Board of Directors, to
the extent permitted under Utah law, exercises all of the power and authority of
the Board of  Directors  in the  management  of the  business and affairs of the
Company  between  meetings of the Board of  Directors.  Each  executive  officer
serves at the discretion of the Board of Directors.

         The business  experience of each of the persons listed above during the
past five years is as follows:

         Michael D. Parnell is the President and Chief Executive  Officer of the
Company.  Mr.  Parnell is a graduate of the University of Arkansas with a degree
in  Agricultural  Economics.  He has over 17 years  experience in the investment
banking  business and was  associated  with Paine Webber until 1997. Mr. Parnell
has been  associated  with the Company since its inception and became  President
and a director in 1996.


                                       10
<PAGE>

         In December 1999, the Company and Mr. Parnell,  each without  admitting
or denying  allegations  made by the  Securities  and Exchange  Commission  (the
"Commission"),  consented  to  the  entry  of  separate  Final  Judgments  which
permanently  restrains  and enjoins the Company and Mr.  Parnell from  violating
certain  securities laws and regulations.  The action by the Commission  alleged
certain  violations of securities laws and regulations.  Mr. Parnell was further
required to pay a civil penalty of $25,000.

         Dan N.  Thompson  is the  Secretary  /  Treasurer  and Chief  Financial
Officer of the Company.  Mr. Thompson is a graduate of Texas A & M with a degree
in Industrial Distribution.  Mr. Thompson is currently the Denver district sales
manager for the Trane Corporation.

         Robert S. Ligon is a graduate  from the  University  of Arkansas with a
degree in  business  administration.  In 1989,  Mr.  Ligon  retired  from  Ligon
Brothers,  Inc.,  a heavy  equipment  wholesaler.  Mr.  Ligon  was the  original
President of Ammonia Hold, Inc. of Texas.

         Charles R. Nickle is a graduate from the  University of Arkansas with a
degree in Civil Engineering. Mr. Nickle is currently Senior Vice President of US
Infrastructures,  Inc. His professional  experience  includes project  planning,
design,   and  construction   management  of  water  treatment   facilities  and
distribution   systems,   drainage  facilities  and  wastewater   treatment  and
collection facilities.

         William H. Ketchum is a graduate from the University of Arkansas with a
degree in Business Administration and a masters in operational  management.  Mr.
Ketchum is a retired  Naval  Officer and is  currently  involved in real estate,
cattle and farming operations.

         In addition to the above,  Charles  Giannetto has been  nominated to be
elected  to  the  Board  of  Directors  at  the  Company's   Annual  Meeting  of
Shareholders  scheduled for September 29, 2001.  Mr.  Giannetto's  resume is set
forth below.

         Charles  Giannetto is a graduate of the  University  of  Minnesota.  He
received his law degree from William  Mitchell College of Law in 1980 and was in
private  practice for 20 years.  Mr.  Giannetto  is a presently a principal  and
officer with the investment banking firm of TransAtlantic  Finance Ltd., Orlando
Florida and TransAtlantic Surety & Bond Company. Ltd., UK.

Item 10. Executive Compensation

         The  Company  does  not  have a  bonus,  profit  sharing,  or  deferred
compensation plan for the benefit of its employees,  officers or directors.  The
Company does pay each director $500 per quarter as a directors' fee. On March 1,
1999,  the Company  entered into an  employment  agreement  with its  President,
Michael D. Parnell.  Mr. Parnell's  agreement is for a term of five years with a
base annual salary of $75,000.  The agreement  provides for salary  increases to
$100,000  per annum when the Company  realizes net sales of  $3,000,000  for any
continuous  twelve month period,  and to $150,000 per annum when net sales reach
$5,000,000.  In addition,  Mr.  Parnell will receive stock  purchase  options to
acquire 100,000 shares when net sales reach $3,000,000 for any continuous twelve
month  period,   options  to  purchase  200,000  shares  when  net  sales  reach
$5,000,000.  Mr.  Parnell also  receives  insurance,  vacation and other typical
benefits.


                                       11
<PAGE>

Cash Compensation

         The  following  table  sets  forth  all cash  compensation  paid by the
Company for services rendered to the Company for the fiscal years ended June 30,
1997,  1998 and 1999, to the Company's  Chief  Executive  Officer.  No executive
officer of the Company has earned a salary  greater than  $100,000  annually for
any of the periods depicted.

                           Summary Compensation Table

                                                              Other     All
                                                             Annual     Other
Name and               Fiscal                               Compen-    Compen-
Principal Position      Year      Salary        Bonus        sation    sation
------------------     ------    -------        -----        ------    ------
Michael D. Parnell,     2001      $75,000       $  -0-      $  -0-     $ 2,000
 President, C.E.O.      2000       75,000          -0-         -0-       2,000
                        1999       64,904          -0-         -0-       1,500
------------------

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following  table sets forth  information,  to the best knowledge of
the Company as  September  7, 2001,  with  respect to each  person  known by the
Company to own  beneficially  more than 5% of the Company's  outstanding  common
stock, each director and all directors and officers as a group.

Name and Address                      Amount and Nature of     Percent
of Beneficial Owner                   Beneficial Ownership    of Class(1)
-------------------                   --------------------    -----------
Michael D. Parnell*                              525,000            4.8%
  10 Gunnebo Drive
  Lonoke, AR 72086
Dan N. Thompson*                                   3,353            .03%
  10 Gunnebo Drive
  Lonoke, AR 72086
Robert S. Ligon*                                 197,000            1.8%
  10 Gunnebo Drive
  Lonoke, AR 72086
Charles R. Nickle*                                70,000             .6%
  10 Gunnebo Drive
  Lonoke, AR 72086
William H. Ketchum*                               53,450             .5%
  10 Gunnebo Drive
  Lonoke, AR 72086
TransAtlantic Surety &                         3,273,510             30%
 Bond Company, Ltd.
  c/o 5703 Red Bug Lake Rd. #226
  Winter Springs, FL. 32708
All directors and executive                      848,803            7.8%
  officers as a group
  (5 persons in group)
----------------
*  Director and/or executive officer
Note:    Unless otherwise indicated in the footnotes below, the Company has been
         advised  that each person  above has sole voting  power over the shares
         indicated above.

(1) Based upon  10,911,700  shares of common stock  outstanding  on September 7,
    2001.


                                       12
<PAGE>

Item 12. Certain Relationships and Related Transactions

         Since December 1999 through  August 2001,  the Company's  President has
made a series of five loans to the Company  totaling  $157,013.  The Company has
made  periodic  payments  against  the  loans  and as of August  24,  2001,  the
outstanding  balance is $62,400.  The loans are subject to notes payable bearing
an interest rate of approximately 8.5% per annum.

                                     PART V

Item 13. Exhibits and Reports on Form 8-K

         (a)      Exhibits

Exhibit No.  Exhibit Name
-----------  --------------------------------

*  2.1       Acquisition Agreement
 **3.1       Articles of Incorporation and all amendments thereto
**3.2        By-Laws
**4.1        Instrument defining rights of holders
**10.1       Licensing Agreement dated April 1, 1996 with Grace Holdings
**21.1       Subsidiaries

 *           Previously filed as Exhibit to Form 8-K dated June 26, 2001
 **          Previously filed as Exhibit to Form SB-2

         (b)      The  Company  filed a report on Form 8-K dated  June 26,  2001
                  reporting  under Item 1 a change in control  resulting  in the
                  issuance  of shares to  TransAtlantic  Surety & Bond  Company,
                  Ltd.


                                       13
<PAGE>

                        Ammonia Hold, Inc. and Subsidiary
                              Financial Statements
                                  June 30, 2001


                                       F-1
<PAGE>

                                 C O N T E N T S



Independent Auditors' Report................................................ F-3

Balance Sheets.............................................................. F-4

Statements of Operations/and Other Comprehensive Income..................... F-6

Statements of Stockholders' Equity.......................................... F-7

Statements of Cash Flows.................................................... F-8

Notes to the Financial Statements........................................... F-9


                                       F-2
<PAGE>

                          Crouch Bierwolf & Associates
                          Certified Public Accountants
                             1453 South Major Street
                           Salt Lake City, Utah 84115
                       (801) 363-1175 (FAX) (801) 363-0615


                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of
Ammonia Hold, Inc. and Subsidiaries
Salt Lake City, Utah


We have audited the  accompanying  consolidated  balance  sheet of Ammonia Hold,
Inc. and subsidiaries as of June 30, 2001 and 2000 and the related  consolidated
statement of operations, stockholders' equity and cash flows for the years ended
June 30, 2001, 2000 and 1999. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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 Ammonia Hold, Inc.
and it's  subsidiaries  as of June 30,  2001and  2000 and the  results  of their
operations  and cash flows for the years ended June 30,  2001,  2000 and 1999 in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As discussed in Note 9, the Company's
recurring  operating losses and lack of working capital raise  substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to those matters are also  described in Note 9. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


By: /s/ Crouch, Bierwolf & Associates
-------------------------------------
        Crouch, Bierwolf & Associates

September 7, 2001


                                       F-3
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                                 Balance Sheets

                                     Assets
<TABLE>
<CAPTION>

                                                                   June 30,            June 30,
                                                                     2001                2000
                                                              ------------------  -----------------
CURRENT ASSETS
<S>                                                           <C>                 <C>
     Cash and Cash Equivalents                                $           4,070   $          18,042
     Accounts Receivable Net of Allowance for
       Doubtful Accounts of $20,775                                      10,990             967,766
     Prepaid Expenses                                                    13,615              28,604
     Investments in Trading Equities                                     58,160             483,400
     Inventory                                                          363,795             876,614
     Other Receivables and Accrued Investment Income                     27,177              27,260
     Notes Receivable - Current                                          97,486             167,840
                                                              ------------------  -----------------
         Total Current Assets                                           575,293           2,569,526
                                                              ------------------  -----------------
PROPERTY, PLANT & EQUIPMENT
     Depreciable Assets - Net of Accumulated Depreciation              1,438,987          1,559,845
     Land                                                               296,212             281,212
                                                              ------------------  -----------------
         Total Property, Plant & Equipment                             1,735,199          1,841,057
                                                              ------------------  -----------------
OTHER ASSETS
     Patents - Net of Accumulated Amortization                          324,039             363,050
     Investment in Stock                                                270,840             677,100
                                                              ------------------  -----------------
         Total Other Assets                                             594,879           1,040,150
                                                              ------------------  -----------------
         TOTAL ASSETS                                         $        2,905,371  $       5,450,733
                                                              ==================  =================
</TABLE>


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


                                       F-4
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                                 Balance Sheets

                      Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>

                                                                   June 30,            June 30,
                                                                     2001                2000
                                                              ------------------  -----------------
CURRENT LIABILITIES
<S>                                                           <C>                 <C>
     Accounts Payable                                         $          322,228  $         168,857
     Accrued Expenses                                                    264,191             51,792
     Note Payable - Related Party                                         53,700             21,576
     Notes Payable                                                       388,971            415,000
     Accrued Allowance for
       Coupons/Grocery Store Allowances                                   75,078            785,622
                                                              ------------------  -----------------
         Total Current Liabilities                                     1,104,168          1,442,847
                                                              ------------------ ------------------
STOCKHOLDERS' EQUITY
     Common Stock, par value $.001
      authorized shares 100,000,000:
      10,911,700 and 7,638,190 shares issued and outstanding              10,912              7,638
     Additional Paid-in Capital                                       10,895,317          9,648,591
     Less: Debenture Received for Stock (Note 10)                     (1,250,000)              --
     Accumulated Deficit                                              (7,855,026)        (5,648,343)
                                                              ------------------  -----------------
         Total Stockholders' Equity                                    1,801,203          4,007,886
                                                              ------------------  -----------------
         TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY                                 $        2,905,371  $       5,450,733
                                                              ==================  =================
</TABLE>



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


                                       F-5
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
       Consolidated Statements of Operations & Other Comprehensive Income

<TABLE>
<CAPTION>

                                                                             For the Year Ended June 30,
                                                                    2001                2000                1999
                                                              ------------------  -----------------  -----------------
<S>                                                           <C>                 <C>                <C>
SALES - NET ALLOWANCE
 AND DISCOUNTS                                              $        1,177,929  $       1,974,727  $       2,865,837

COST OF SALES                                                          1,019,456          1,145,394          1,519,614
                                                              ------------------  -----------------  -----------------
GROSS PROFIT                                                             158,473            829,333          1,346,223
                                                              ------------------  -----------------  -----------------
Sales & Marketing                                                        128,982          1,859,600            664,238
General & Administrative                                                 898,910          1,266,016          1,070,483
Depreciation                                                             121,934            133,874            131,496
Amortization                                                              39,011             39,011             39,011
                                                              ------------------  -----------------  -----------------
Loss From Operations                                                  (1,030,364)        (2,469,168)         (559,005)
                                                              ------------------  -----------------  -----------------
OTHER INCOME (LOSS):
   Interest (Net)                                                        (27,668)            26,390             49,630
   Dividends                                                                --                 --               22,528
   Gains (Loss) from Trading Equities                                   (831,500)           235,655            197,194
   Other                                                                  14,876             11,432             10,295
   Inventory Write-Down                                                 (332,027)              --                 --
                                                              ------------------  -----------------  -----------------
OTHER COMPREHENSIVE INCOME:
   Unrealized Gain/Loss
      From Marketable Securities                                            --              126,641            746,156
                                                              ------------------  -----------------  -----------------
INCOME (LOSS) BEFORE
   INCOME TAXES                                                       (2,206,683)        (2,069,050)           466,798
                                                              ------------------  -----------------  -----------------
PROVISIONS (BENEFIT) FOR
   INCOME TAXES                                                             --                 --                 --
                                                              ------------------  -----------------  -----------------
NET INCOME (LOSS)                                             $       (2,206,683) $      (2,069,050) $         466,798
                                                              ==================  =================  =================
NET INCOME AVAILABLE TO
   COMMON SHAREHOLDERS                                        $       (2,206,683) $      (2,069,050) $         466,798
                                                              ==================  =================  =================
NET INCOME (LOSS) PER SHARE                                   $            (0.28) $           (0.27)  $          0.061
                                                              ==================  =================  =================
WEIGHTED AVERAGE
   OUTSTANDING SHARES                                                  7,774,586          7,638,190          7,638,967
                                                              ==================  =================  =================
FULLY DILUTED EARNINGS
   (LOSS) PER SHARE                                           $            (0.28) $           (0.27)  $          0.061
                                                              ==================  =================  =================
FULLY DILUTED AVERAGE
   OUTSTANDING SHARES                                                  7,774,586          7,638,190          7,638,967
                                                              ==================  =================  =================
</TABLE>



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


                                       F-6
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>


                                                                             Additional       Retained
                                                  Common Stock                Paid-In          Earnings         Debenture
                                          Shares            Amount            Capital         (Deficit)         Receivable
                                      ----------------  ----------------  ----------------  ----------------  ----------------
<S>                                   <C>               <C>               <C>               <C>               <C>
Balance on June 30, 1999                     7,638,190  $         7,638   $      9,648,591  $     (3,579,293  $          --

Net Income (Loss) for the
Year Ended June 30, 2000                          --               --                 --          (2,069,050)            --
                                      ----------------  ----------------  ----------------  ----------------  ----------------
Balance on June 30, 2000                     7,638,190             7,638         9,648,591        (5,648,343)            --

Acquisition Agreement                        3,273,510             3,274         1,246,726                          (1,250,000)

Net Income (Loss) for the
Year Ended June 30, 2001                          --                --                --          (2,206,683)             --
                                      ----------------  ----------------  ----------------  ----------------  ----------------
Balance on June 30, 2001                    10,911,700  $         10,912  $      10,895,31  $     (7,855,026  $     (1,250,000)
                                      ================  ================  ================  ================  ================
</TABLE>



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


                                       F-7
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                             Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                    For the Year Ended June 30,
                                                             2001              2000              1999
                                                        ----------------  ----------------  ----------------

<S>                                                     <C>               <C>               <C>
Cash Flows from Operating Activities:
   Net Income (Loss)                                    $     (2,206,683) $     (2,069,050) $        466,798
    Non-Cash items:
     Depreciation                                                121,934           133,874           131,496
     Amortization                                                 39,011            39,011            39,011
     Comprehensive Income/Unrealized
       Loss on Stock                                             831,500          (126,641)         (746,156)
     Stock Issued for Services                                      --                --               1,250
   Changes in current assets and liabilities:
     (Increase) Decrease in:
       Accounts Receivable (Net of Write Offs)                   246,052          (201,020)         (467,660)
       Equities                                                     --             805,340           427,835
       Prepaid Expenses/Deposits                                  14,989            50,186           (48,577)
       Inventories                                               512,819           (17,951)         (271,287)
       Other Receivables                                              83           192,700            52,199
     Increase (Decrease) in:
       Accounts Payable                                          153,371           (69,407)           40,075
       Margin Account                                            (21,576)          (77,538)           99,114
       Accrued Liabilities                                       212,399           810,364             4,030
                                                        ----------------  ----------------  ----------------
         Net Cash Provided (Used)
         by Operating Activities                                 (96,101)         (530,132)         (271,782)
                                                        ----------------  ----------------  ----------------
Cash Flows from Investing Activities
   Purchase/Sale of Equity and Bonds                                --             541,641            47,888
   Purchase of Property and Equipment                            (16,076)           (4,648)         (206,978)
   Purchase Treasury Stock                                          --                --            (412,740)
                                                        ----------------  ----------------  ----------------
         Net Cash Provided (Used)
         by Investing Activities                                 (16,076)          536,993          (571,830)
                                                        ----------------  ----------------  ----------------
Cash Flows from Financing Activities:
   Cash from Debt Financing (Net)                                 98,205             --                 --
                                                        ----------------  ----------------  ----------------
         Net Cash Provided by
         Financing Activities                                     98,205             --                 --
                                                        ----------------  ----------------  ----------------
         Net Increase (Decrease) in Cash                         (13,972)            6,861          (843,702)

         Cash and Cash Equivalents at
         Beginning of Period                                      18,042            11,181           854,883
                                                        ----------------  ----------------  ----------------
         Cash and Cash Equivalents at
         End of Period                                  $          4,070  $         18,042  $         11,181
                                                        ================  ================  ================
Supplemental Cash Flow Information:
   Cash paid for interest                               $          39,992 $           --    $          --
   Cash paid for income taxes                           $            --   $           --    $          --
</TABLE>



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


                                       F-8
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                  June 30, 2001


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization  -  Ammonia  Hold,  Inc.  (AHI-Utah)  (formerly  Key Waste
         Management,  Inc.)  was  incorporated  in the state of Utah on July 10,
         1980.  On  June  30,  1994,  pursuant  to a stock  exchange  agreement,
         AHI-Utah acquired all of the stock of Ammonia Hold, Inc. (AHI-Texas), a
         Texas  corporation,  in exchange for 2,679,391 shares of AHI-Utah which
         represented  71% of the total  outstanding  shares.  Because the shares
         issued in the  acquisition  of  AHI-Texas  represented  71% of the then
         outstanding  shares of AHI-Utah,  AHI-Texas  was deemed,  for financial
         reporting  purposes,  to  have  acquired  AHI-Utah.   Accordingly,  the
         acquisition of AHI-Utah by AHI-Texas was accounted for as a purchase of
         the  net   liabilities  of  AHI-Utah   consisting   principally  of  an
         insignificant amount of accounts payable.

         FiveStar Products Corporation  (FiveStar) was incorporated in the state
         of Utah on March 31, 1995. FiveStar had no material activity.

         Super Dry Industries,  Inc. (a Mississippi corporation) (Super Dry) was
         incorporated  on January 20, 1992.  Effective May 1, 1998 Ammonia Hold,
         Inc. acquired all of the issued and outstanding  shares of Super Dry in
         exchange  for  $175,000  cash,  and  $600,000  worth  of  Ammonia  Hold
         restricted  common stock. The number of shares issued was determined by
         multiplying  the stock price at closing by .70 then dividing the result
         into 600,000. The total number of restricted common stock was 403,362.

         Acquisition of Subsidiary - On May 1, 1998,  the Company  acquired 100%
         of the common stock of Super Dry Industries,  Inc. for $175,000 in cash
         and 403,362  shares of  restricted  common stock in Ammonia  Hold.  The
         stock was valued at $857,143 or $2.15 per share.  The  acquisition  was
         recorded as a purchase for financial accounting purposes.

         Capitalization   Changes  -  Immediately  prior  to  the  merger,   the
         shareholders  of  AHI-Utah  approved a 20 for 1 reverse  split.  Common
         stock issued and outstanding,  and additional paid-in capital have been
         restated to reflect the reverse  stock  split.  The  shareholders  also
         authorized  25,000,000  shares of preferred stock $.001 par value, with
         terms,  rights  and  preferences  to be  determined  by  the  Board  of
         Directors at the time of issuance. As of June 30, 1997, 3,000 preferred
         shares have been issued for $2,625,000 in cash.

         The principal business of the Company is the manufacture of monocalcium
         phosphate  and related  products  for sale to  retailers  mainly in the
         United  States.  The company  sells its products to some  international
         customers (about 5% of total sales).

         Principles of Consolidation - The consolidated  financial statements as
         of June 30, 2001 and 2000 include the accounts of AHI-Utah,  its wholly
         owned subsidiaries FiveStar and Super Dry.

         Collectively,  these  entities  are  referred  to as the  Company.  All
         significant   intercompany   transactions   and   accounts   have  been
         eliminated.

         Accounting  Method - The Company's  financial  statements  are prepared
         using the accrual method of accounting.

         Cash and Cash  Equivalents  - The Company  considers  all highly liquid
         investments  with a maturity of three months or less when  purchased to
         be cash equivalents.

         Inventories -  Inventories  are reported at the lower of cost or market
         as determined on the first-in first-out (FIFO) method.

         Patent - Patent costs are  capitalized  as incurred  and are  amortized
         over the  remaining  life of the  patent.  The  company  considers  the
         estimated life of patents to be 17 years.

         Purchase  and  Sale of  Property  - On  August  5,  1997,  the  Company
         purchased    ten   acres   of   land   and   a   55,000   square   foot
         manufacturing/office  facility  for  $392,920.  The facility was rented
         until  November,  1997.  During  November  1997,  the Company  sold the
         building for $888,750  worth of restricted  common stock of Pet Quarter
         Inc.  (1,777,500  shares).  The shares  were  valued at fifty cents per
         share.  The  property  was  appraised  at  $975,000.  The  stock on the
         Company's balance sheet is recorded as "Investment in Trading Equities"
         and "Investments". (See Note 8)


                                       F-9
<PAGE>

                       Ammonia hold, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                  June 30, 2001


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Depreciable Property- Property,  plant and equipment is stated at cost.
         Major renewals and betterments are capitalized  while  expenditures for
         maintenance   and  repairs  are  charged  to  operations  as  incurred.
         Depreciation  is computed on the  straight-line  method over  estimated
         useful lives of five to ten years for equipment and fixtures and thirty
         years for buildings.

         Property, Plant and Equipment consist of the following:

<TABLE>
<CAPTION>

                                                           June 30,          June 30,
                                                            2001                2000
                                                     -----------------   ----------------
<S>                                                  <C>                 <C>
         Building                                    $         676,152   $         676,152
         Equipment                                           1,660,731           1,659,655
         Fixtures                                               47,596              47,596
         Land                                                  296,212             281,212
                                                     -----------------   ----------------
              Total property, plant and equipment            2,680,691         2,664,615
                                                     -----------------   -----------------
              Less: accumulated depreciation                  (945,492)           (823,558)
                                                     ------------------  -----------------
              Net property, plant and equipment      $       1,735,199   $       1,841,057
                                                     ==================  =================
</TABLE>


         Depreciation expense was $121,934 and $133,874 for the years ended June
         30, 2001 and 2000, respectively.

Net Income  (Loss) Per Share - The  computation  of net income (loss) per common
share is based on the  weighted  average  number  of common  shares  outstanding
during the  period.  Fully  diluted  earnings  per share  includes  the  assumed
conversion of preferred stock into common stock at the beginning of the period.

Provision for Income Taxes - Deferred income taxes arise from timing differences
between  financial  reporting  and tax reporting  income and expenses.  Deferred
taxes are classified as current or noncurrent,  depending on the  classification
of the assets and liabilities to which they relate.  Deferred taxes arising from
timing  differences that are not related to an asset or liability are classified
as  current  or  noncurrent,  depending  on the  periods  in  which  the  timing
differences are expected to reverse.

Super Dry was an S  corporation  prior to its  acquisition  by Ammonia  Hold. As
such, the past operating losses are not available for use by the Company as they
were reported on the individual tax returns of the previous shareholders.

         The Company has a June 30 year end for income tax  reporting  purposes.
         The Company has  approximately  $6,000,000 of net operating losses that
         may be offset against future taxable  income.  These NOL  carryforwards
         begin to expire in 2009. The Company believes there is a 50% or greater
         chance that the remaining  carryforward will expire unused,  therefore,
         no provision for tax benefit has been recorded.

         Use of  Estimates  in the  Preparation  of  Financial  Statements - The
         preparation  of  financial  statements  in  conformity  with  generally
         accepted  accounting  principles  requires management to make estimates
         and assumptions that affect reported amounts of assets and liabilities,
         disclosure  of  contingent  assets and  liabilities  at the date of the
         financial  statements,  and revenues and expenses  during the reporting
         period. In these financial statements, assets, liabilities and earnings
         involve extensive  reliance on management's  estimates.  Actual results
         could differ form those estimates.


                                       F-10
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

NOTE 2 - INVENTORIES

         The Company uses the FIFO  (first-in,  first-out)  method for inventory
valuation.

         Inventories consist of the following at June 30, 2001 and 2000:

                                       2001              2000
                                ----------------   ---------------
         Raw materials          $        155,516   $       209,923
         Work-in-progress                -                 376,977
         Finished goods                  208,279           289,714
                                ----------------   ---------------
              Total             $        363,795   $       876,614
                                ================   ===============

NOTE 3  - OPERATING LEASES

         The Company rents office and warehouse space on a month-to-month  basis
         with  monthly  rental  payments  of  approximately  $1,360.  Total rent
         expense  amounted to  $11,603,  $17,775 and $19,342 for the years ended
         June 30, 2001, 2000 and 1999, respectively.

NOTE 4 - SALES TO PRINCIPAL CUSTOMER

         The majority of the Company's sales  (approximately  21% and 21% in the
         years ended June 30, 2001 and 2000,  respectively)  were to a principal
         customer,  which is a  national  retail  chain  located  in the  United
         States,  of which $0 and  $62,132 was  receivable  at June 30, 2001 and
         2000.

NOTE 5 - STOCKHOLDERS' EQUITY TRANSACTIONS

         During the year ended June 30,  1999,  the  Company  had the  following
stock transactions:

         1. All of the preferred  stockholders  converted  their preferred stock
         for common stock during the year (See Note 7).

         2. The Company  issued 403,362 shares of common stock (along with cash)
         to acquire Super Dry Industries, Inc. (See Note 1)

         3. The Company  issued  25,000  shares of  restricted  common  stock to
         cancel options to purchase 500,000 shares of common stock (see Note 7).
         The Company  recorded an expense of $49,219 to reflect the market price
         of the common stock at the time of the transaction.

         During 1999, the Company  purchased and retired 330,000 shares of their
common stock.

         During the year ended  June 30,  2001,  the  Company  issued  3,273,510
         shares  of  their  common  stock  for a  debenture  in  the  amount  of
         $1,250,000.


                                       F-11
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                  June 30, 2001


NOTE 6-PREFERRED STOCK

         On June 5, 1997 the Company issued 3,000 shares of Series A Convertible
         Preferred  Stock.  These  shares  have a par  value  of  $.001  and are
         entitled to receive dividends as if they were converted to Common Stock
         (see  conversion  rights  below).  Upon  liquidation,  dissolution,  or
         winding up, these shares are entitled to a  liquidation  preference  of
         $1,000 per share.

           Each share is  convertible,  at the option of the holder at any time,
into common stock as follows:

         $1,000  divided  by the  lower of  (1)sixty-five  percent  (65%) of the
         market price of the common stock  (determined  by the closing bid price
         averaged  over  the  five   preceding  days  prior  to  conversion)  or
         (2)$3.515625, adjusted for stock splits or dividends.

         The Company has recorded a deemed  dividend  related to the issuance of
         the preferred stock.  This deemed dividend is due to the large discount
         between the  conversion  price and the market  price of common stock on
         the day of issuance.  The deemed  dividend is  calculated at $1,600,000
         which represents the amount of common stock the preferred  shareholders
         could  have  converted  to (65%  divided by  $3,000,000)  on the day of
         issuance less the $3,000,000 received. Retained earnings and additional
         paid in capital have been adjusted to reflect the dividend.


         During the year ended June 30, 1999, all of the preferred  shareholders
         converted their shares of preferred stock for common stock.

NOTE 7-WARRANTS AND OPTIONS:

         The Board of Directors  (consisting  of 5 members)  were granted  stock
         purchase  warrants  entitling  them to each  purchase  50,000 shares of
         stock at $1.06,  which was the closing price of the Company's  stock on
         the  date  of  issuance   (February  26,  1999).  The  warrants  become
         exercisable  when the Company  attains net sales of  $3,000,000 in a 12
         month period. The warrants expire February 26, 2004.

         The corporate  president and CEO was granted stock purchase  options to
         purchase  100,000  shares of common  stock if the  Company  attains net
         sales of $3,000,000  in a twelve month period.  The price is the market
         price on the date the Company  attains the $3,000,000 in net sales.  If
         the Company  attains  $5,000,000 net sales in a 12 month period the CEO
         will receive an additional  option to purchase  200,000 shares of stock
         at the  market  price at the  date in which  the  Company  reaches  the
         $5,000,000 net sales. The option expire 5 years after issuance

         On June 15, 2001 the Company  granted options to buy 3,000,000 share of
         their  common stock for $1.50 per share,  and options to buy  3,000,000
         shares of their  common  stock for $3.50 . The  options  expire 3 years
         after issuance. (See Note 10)

NOTE 8-OTHER COMPREHENSIVE INCOME

         Other  Comprehensive  Income  includes  unrealized  gains from  trading
         securities. The Company owned the following at June 30, 2001 and 2000:

                                             2000                 2001
         Pet Quarters Stock          $       1,160,500       $     329,000
                                     -----------------       -------------
                                             1,160,500
         Less: current portion                (483,400)            (58,160)
                                     -----------------       -------------
         Other Assets-Investments    $         677,100       $     270,840
                                     =================       =============

         The Company owns a large block of stock in Pet Quarters, Inc. (See Note
         1). The restrictions on selling the stock was lifted during the current
         fiscal year. The Company  recorded  income on the sale of some of their
         Pet  Quarters  stock,  and  recorded  "other  comprehensive  income" to
         reflect the  increase in price on stock they had  intended to sell.  At
         year-end, the price of Pet Quarters stock price dropped and the Company
         recorded a loss from  Trading  Equities  to reflect  the  reduction  in
         price.  The Company  plans on selling a portion of their holding in Pet
         Quarters stock in the current period.


                                       F-12
<PAGE>

                       Ammonia Hold, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                  June 30, 2001


NOTE 9 - GOING CONCERN

         The accompanying  financial statements have been prepared assuming that
         the Company will continue as a going concern.  The Company has negative
         working capital and has had recurring operating losses and is dependent
         upon financing to continue operations.  The financial statements do not
         include  any  adjustments  that might  result  from the outcome of this
         uncertainty.  Management  intends  to locate  and  combine  with  other
         profitable operating companies (see Note 10).

NOTE 10 - ACQUISITION AGREEMENT

         On June 15, 2001 the Company entered into an Acquisition Agreement with
         TransAtlantic  Surety and Bond Co. Ltd. (a U.K.  corporation)  (TSB) in
         which TSB would  purchase  3,273,510  shares  of the  Company's  common
         stock,  which represents 30% of the outstanding stock, for a $1,250,000
         debenture.  The stock was issued  pursuant to a convertible,  callable,
         secured , subordinated debenture,  interest of 6%, with payments of 25%
         due in 12 months,  25% due in 24 months,  and the remaining balance due
         in 36 months.  The  Company  has the option to  convert  any  remaining
         balance at June 15, 2004 into stock of TSB.  TSB has the option to call
         the  debenture  anytime  after June 15, 2002 and pay any  principal and
         accrued interest. On June 15, 2001 the Company issued 654,702 shares of
         common stock to TSB and the  remaining  shares into an escrow  account.
         The  escrowed  shares  are  to be  released  upon  performance  of  the
         debenture.

         In addition to the above,  the Company  entered into an agreement  with
         TSB to undertake to issue, on a best efforts basis, a Debt Offering for
         up  to  $10,000,000.  Also,  TSB  is to  arrange  for  acquisitions  of
         profitable  companies  with gross sales totaling  $60,000,000  over the
         next  36  months.  The  Company  granted  to TSB  options  to  purchase
         3,000,000  shares of the Companies common stock at a price of $1.50 per
         share;  and 3,000,000  shares of the Company's common stock for a price
         of $3.50 per share. These options have a term of 36 months


NOTE 11 - NOTES PAYABLE

         At June 30, 2001, the Company had the following Notes Payable:

            Bank loan for $388,000  with  interest at 9.5%.  Monthly
            payments  of $4,074  with a balloon  payment due May 22,
            2002. The loan is secured by real estate and equipment.

            Note  to an  officer/director  of the  Company.  Current
            balance of $53,700 at 8%  interest,  due on demand.  The
            note is secured by inventory and equipment.


                                       F-13
<PAGE>

<PAGE>

                                   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.

                                      AMMONIA HOLD, INC.



                                      By:  /S/ MICHAEL D. PARNELL
                                         ------------------------
                                               Michael D. Parnell,
                                               President and C.E.O.

Dated:   September 13, 2001


         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.

<TABLE>
<CAPTION>

Signature                       Title                             Date
<S>                             <C>                               <C>
                                President, C.E.O. and
                                Director                          September 13, 2001
By: /S/ MICHAEL D. PARNELL
--------------------------
        Michael D. Parnell

                                Vice President and
                                Director                          September 13, 2001
By: /S/ DAN N. THOMPSON         Chief Accounting Officer
-----------------------
        Dan N. Thompson         Principal Financial Officer


                                                                  September 13, 2001
By: /S/ ROBERT S. LIGON         Director
-----------------------
        Robert S. Ligon


                                                                  September 13, 2001
By: /S/ CHARLES R. NICKLE       Director
-------------------------
        Charles R. Nickle


                                                                  September 13, 2001
By: /S/ WILLIAM H. KETCHUM      Director
--------------------------
        William H. Ketchum
</TABLE>


                                       S-1
<PAGE>