MAJESTIC COMPANIES LTD, 10SB12G/A, 2000-01-20

MAJESTIC COMPANIES LTD
10SB12G/A, 2000-01-20
GENERAL BLDG CONTRACTORS - NONRESIDENTIAL BLDGS

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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-SB/A

GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
THE MAJESTIC COMPANIES, LTD.

(Name of Small Business Issuer in its charter)

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

Nevada 88-0293171

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(Address of principal executive offices) (Zip Code)

8880 Rio San Diego Drive, 8th Floor
San Diego, California 92108

Issuer's telephone number, including area code 619-209-6077
Securities to be registered under Section 12(b) of the Act:

Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value

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(Title of class)

On October 11, 1999, the Registrant had outstanding 26,834,070 shares of Common
Stock, par value $.001 per share.

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

COMPANY OVERVIEW

The Majestic Companies, Ltd., hereinafter referred to as ("the Company")
was incorporated under the laws of the State of Nevada on December 3, 1992 under
the name of Rhodes, Wolters & Associates, Inc. ("Rhodes"). In May 1998, Rhodes
changed its name to SKYTEX International, Inc. ("SKYTEX") a company with no
operations, and

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in December, 1998, merged with a Delaware corporation named "The Majestic
Companies, Ltd.", formerly doing business as "Majestic Motor Car Company, Ltd."
and prior to that "Majestic Minerals, Ltd." As a part of the merger SKYTEX's
corporate name was changed to "The Majestic Companies, Ltd."

To consummate the merger, stockholders of the pre-merger "The Majestic
Companies, Ltd.", were issued one share of SKYTEX common stock with par value of
$.001 for each one (1.00) share of common stock owned as of December 11, 1998,
of the pre-merger Delaware Corporation "The Majestic Companies, Ltd."

The Company engages in the business of manufacturing, leasing and selling
modular structures such as classrooms, office buildings, medical facilities and
telecommunication equipment shelters by its subsidiary, Majestic Modular
Buildings, Ltd., and, the acquisition and lease of modular buildings by its
subsidiary, Majestic Financial, Ltd. Additionally, the Company has developed and
is in the process of marketing a school bus safety restraint device known as the
SAFE-T-BAR(R) through its third subsidiary, Majestic Transportation Products,
Ltd.

The Majestic Companies Ltd. is a development stage company and therefore is
subject to certain risks going forward including the risk of being able to
continue as a going concern. To date, the operations of the Company's business
units have not generated sufficient earnings to cover the cost of operations.
Therefore, the Company has incurred a net loss of; $301,952 for year end 1997
(audited), $2,373,288 for year end 1998 (audited) and $2,157,324 for the first
nine months of 1999 (unaudited). To date, revenues have been generated from the
manufacture and sale of Modular Buildings; $395,857 for year end 1998 (audited)
and $2,172,325 for the first nine months of 1999 (unaudited), and from the
leasing of modular classroom buildings owned by the Company; $117,876 for the
first nine months of 1999. In order for the Company to continue as a going
concern, it will be necessary to raise additional equity and or debt financing
to cover the cost of future operations. There can be no assurance that the
Company will be able to attain such additional financing on terms satisfactory
to the Company.

Also due to the fact that The Majestic Companies, Ltd. is a development
stage company, the management team had no direct prior operating experience in
the manufacture of modular buildings prior to inception of modular construction
operations in April of 1998 and no direct prior operating experience in the
safety transportation industry prior to development of the Company's
transportation safety product in the first quarter of 1998.

An investment in securities of the Company is therefore highly speculative
and investors should carefully consider the foregoing risks and the risks
described in the RISK FACTORS section beginning on page 15 of this Form 10-SB
before investing in the Company's securities.

BUSINESS OF THE COMPANY

MODULAR STRUCTURE PRODUCTS-GENERAL BACKGROUND

The Company's core business is the manufacturing and sale or leasing of
modular classrooms. The Company began these operations in April of 1998. These
classrooms are being sold and leased to California school districts as well as
to third party dealers including G.E. Capital Modular Space, a division of
General Electric. The Company's modular classroom structures are engineered and
constructed in accordance with pre-approved building plans, commonly referred to
as "P.C.'s" or "pre-checked plans", that conform to structural and seismic
safety specifications adopted by the California Department of State Architects
("DSA"). The DSA regulates all California school construction on public land and
the DSA's standards are

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believed to be more rigorous than the standards that typically regulate other
classes of commercial portable structures. The Company also manufactures modular
re-locatable structures for use as offices, temporary construction facilities,
medical facilities and equipment bunkers for the cellular telecommunications
industry. These structures are designed and manufactured to conform to
Department of Housing (DOH) specifications.

MODULAR STRUCTURE PRODUCTS-CURRENT MARKET ENVIRONMENT

Many of the school districts located within larger cities of the State are
experiencing space restrictions for expansion. The State regulates the amount of
open land required for each student enrolled in each school. Many of the most
crowded schools are at their maximum land to building use ratio. In order for
these schools to add modular classrooms and conserve their land use they must
build compliant two story structures. The Company is currently attempting to
obtain DSA approval for a clustered modular building that would comprise eight
to ten classrooms in a two-story building.

As a result of net enrollment increase in California schools and budgetary
constraints experienced by the state, California public schools are among the
most crowded in the nation. As the country's fastest growing State, California
public classrooms have experienced class sizes averaging 35 students to one
teacher. In an attempt to improve the quality of public education offered to the
state's student population, California voters approved Proposition 1A. This bond
measure provides $9.2 billion aimed at lowering the teacher to student class
size ratio to 20 students per one teacher. The aim of the bond measure therefore
is to provide funding for additional classroom space, teaching staff, and,
curriculum.

With the passage of this bond measure, Proposition 1A, classroom space
became an issue. The public school system administrators were anxious to create
a better learning environment for the students through the addition of extra
classrooms. In the formula for class size reduction, California, therefore,
earmarked money for the purchase of modular classrooms for each school district
that identified the need and presented a proposal to the State. Once approved,
the State sends $35,000 per class to the individual school district for the
purchase of each modular classroom. A 1976 State adopted Senate Bill (SB50)
mandated at least 30% of all new classroom space added using State funds must be
re-locatable unless re-locatable classrooms are not available, or, the terrain
of the school property being utilized would make the use of re-locatable
classrooms impracticable. Proposition 1A, coupled with Senate Bill SB50, has
increased the demand for re-locatable modular classrooms.

Recently approved public school bond measures to assist school districts in
meeting classroom size reduction goals include: Prop. 1A and Prop. MM, which
collectively provide an aggregate of over $10.7 billion to education facilities
for programs to reduce class size, to relieve overcrowding, to accommodate
student enrollment growth, to repair older schools and to obtain additional
teaching staff.

Since classroom staffing and curriculum development must be considered
within the scope of bond measure funding, it is difficult to ascertain precisely
the amount of funding these bond measures will allow school districts to utilize
toward modular classroom acquisitions. These bond measures funds, nonetheless,
provide school districts with a budgetary allowance to comply with classroom
size reduction.

Modular re-locatable classrooms cost significantly less and take much less
time to construct and install than conventional school facilities. Currently,
modular classroom space costs $30 per square foot, versus, $125 per square foot
for

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traditional non re-locatable classroom construction. Also, their use permits
a school district to relocate the units as student enrollments shift. Most
importantly, the Company's modular products provide added flexibility to school
districts in financing the costs of adding classroom space because modular
classrooms are considered personal property that can be financed out of a
district's operating budget rather than by Bond facility only. Although there
can be no assurance, the Company believes these factors will continue to fuel
the demand for modular re-locatable classrooms.

MODULAR STRUCTURE PRODUCTS-LEASING OPERATIONS

The Company entered into an agreement in May 1999 to purchase a selected
number of modular buildings currently under lease by several School districts in
California from Custom Modular Structures, located in Pleasanton, California.
The modular buildings, valued at approximately $200,000, were purchased in
exchange for 390,000 Company shares of Common Stock. The lease contracts are for
terms of between 12 and 46 months. At the end of the current contract term, the
Company believes the modular buildings will have a residual value of $150,000.
Presently, the Company has a total of 14 modular classrooms under lease to
various school districts. Of the 14 modular classrooms under lease, 13 of these
were leased in 1999, and, 1 was under lease in 1998. Although there can be no
assurance, the Company hopes that given the present demand for modular
buildings, the Company will have the opportunity to re-lease the buildings under
essentially the same terms and conditions.

MODULAR STRUCTURE PRODUCTS-DEPENDENCE ON ONE OR FEW MAJOR CUSTOMERS

In April of 1998, Majestic Modular Buildings, Ltd., entered into a
subcontract agreement with Cal-American Building Company, Inc., to manufacture
an order of re-locatable classrooms for a client, GE Capital Modular Space.
Also, at this time, Majestic purchased raw materials from Cal-American, and,
obtained licensing rights from Cal-American to utilize its PC's (Plan Checks)
for the manufacture of these units. Although there can be no assurance, the
Company believes it has obtained customers to replace the revenues form Cal-
American, and does not expect the loss of Cal-American to materially, adversely
affect the Company's operations.

MODULAR STRUCTURE PRODUCTS-MARKETING STRATEGY

The Company has approached marketing of its modular structures in a common-
sense, long-term fashion. The Company developed or obtained architectural plans
that are or have been previously approved, obtained contracts with school
districts for long-term orders, hired personnel with modular construction
experience, and negotiated favorable terms with suppliers of construction
materials and parts that the Company believes are favorable. In addition, the
Company is designing a new multiple story clustered modular classroom structure
for DSA review.

Production output for 1998 was 35 units built and 12 units sold, in 1999
there were 70 units built and 53 units sold. At present, the Company's modular
production capacity is capable of one (1) standard 24' x 40' unit per 1.5 days,
giving it an annual production capacity of 240 units per year. The Company
believes it can increase this capacity to 1 unit per day, or, 360 units annually
with the addition of automation equipment, i.e., overhead cranes. The Company
also plans on

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adding at least one additional manufacturing facility within one (1) year to
increase its current output capacity. The Company believes that this growth
strategy is warranted to gain market share early and help ensure stability and
profit margin for the long term.

The goal of the marketing effort is to gain additional market share through
a concentrated campaign of: direct contact with customers using in-house
marketing representatives, a high visibility presence at modular industry trade
shows, open bids, and print advertisements carefully placed in industry trade
periodicals. Management believes that this comprehensive marketing plan will
help establish the Company as a market leader in the construction of quality
modular structures.

MODULAR STRUCTURE PRODUCTS-COMPETITION

There are approximately 19 companies currently building modular structures
in California. The largest of these companies, Modtech, Inc.("Modtech"),
operates from multiple facilities located in Lathrop and Perris, California.
Other primary competitors in California for modular structures include American
Modular Systems and Design Mobile Systems. Outside of California, the Company's
competitors include a number of publicly traded companies currently
manufacturing pre-fabricated modular structures, and pre-fabricated housing.
This industry group includes; Miller Business Systems (MBSI NASD), Nobility
Homes (HOBH NASD), Cavalier Homes (CAV NYSE), Palm Harbor Homes (PHHM NASD) and
Clayton Homes (CMH NYSE). All of these competitors have capital and other
resources greater than the Company and could adversely impact the Company's
marketing plans.

MODULAR STRUCTURE PRODUCTS-POTENTIAL ACQUISTIONS: WALDEN STRUCTURES INC.

On September 29, 1999, the Company entered into preliminary discussions to
acquire Walden Structures and Constructions, Inc. ("Walden"), a privately held
manufacturer of modular structures primarily for use by commercial enterprises.
The Company believes the addition of Walden's operations could add significantly
to the Company's annual revenues and allow the Company to become more involved
in manufacturing modular structures other than classrooms.

No formal Letter of Intent outlining the price, terms, and timetable of the
proposed acquisition has been executed and there can be no assurance that a
transaction will be consummated with Walden.

SAFETY RESTRAINT PRODUCTS-GENERAL BACKGROUND

In the U.S. there are approximately 24,000,000 students transported daily
to and from school utilizing approximately 440,000 school buses. Less than 20%
of these buses have any type of occupant restraint. No federal requirement
currently exists for requiring restraints to be installed on these school buses
and this lack of federal regulation has resulted in five separate states (NY,
NJ, FL, LA, CA)adopting their own occupant restraint regulations, three of which
have just passed in 1999 (California, Florida & Louisiana), with over 20 states
having planned or pending legislation. During the past five years New Jersey and
New York have mandated two-point lap belts to be installed in all new school
buses purchased and as a result more than 80% of the school buses in these two
states now have seat belts. Although the law in these two states require the
belts to be installed, there is no law mandating that the students wear them and
while questioning officials from these areas, it was stated that the percentage
of students voluntarily buckling up was well below 50%.

The SAFE-T-BAR(R) is a passive restraint and one of it's main advantages is
that it has an almost 100% use rate. The design requires the occupant to lift,
sit

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and allow the bar to rest down in place and requires virtually no attention
from the driver. The SAFE-T-BAR(R) is patent pending and has been designed to
lock in the down position during the events that take place during a collision
thus holding the occupant within the padded seating area.

The cost to retrofit a school bus with the SAFE-T-BAR(R) is less than the
cost to add seat belts, as the SAFE-T-BAR(R) does not require the seat to be
changed. At the point of manufacture, the SAFE-T-BAR(R) cost is approximately
the same as that of a lap-shoulder belt restraint although a lap-shoulder belt
system reduces the typical three position seat to a two position seat resulting
in the need to purchase additional buses and adding an additional financial
burden.

With 440,000 school buses in the U.S. and an average of 22 seats per school
bus, this represents a potential market for 9.7 million restraints. Industry
analysts predict the growth of the industry to continue at around 2% to 4% per
year.(Industry statistics source: School Bus Fleet Magazine Annual Fact Book
1999).

SAFETY RESTRAINT PRODUCTS-SAFE-T-BAR(R)

The Company has the exclusive manufacturing and marketing rights for an
innovative new product known as the SAFE-T-BAR(R) that the Company's management
believes has the potential to become a preferred solution for on-board school
bus passenger restraint systems. The general product design, closely
approximates the type of lap bar safety restraint systems commonly found on high
velocity amusement park rides. The Company plans to produce and currently is
marketing the product to school bus manufacturers and operators nationwide,
including governmental agencies and school systems.

As of March 3, 1999 the SAFE-T-BAR(R) completed and passed the full
complement of testing required under FMVSS 222 & 302 (Federal Motor Vehicle
Safety Standards) and is ready for market roll-out. The test results were
delivered to the Company in a comprehensive fifty page report rendered by KARCO
Engineering, a Federally approved collision testing facility located in
Adelanto, CA. Now that all federal compliance testing milestones for the SAFE-T-
BAR(R) school bus passenger restraint have been met, the Company is moving
quickly into the Pilot Program stage of this new product on a state by state
basis. Glenn Gruber, Marketing Director for Majestic Transportation Products,
Ltd., is currently in talks with transportation officials and/or legislators in
the States of Minnesota, New Jersey, Delaware, Florida, Illinois, Tennessee, New
Mexico and New York that have requested information about the SAFE-T-BAR(R)
passenger restraint system.

The Company conducted its first pilot program with the Oceanside
(CA)Unified School District and recently completed the program on August 24,
1999. The program received high marks from the Transportation Staff as well as
the many bus drivers who drove the SAFE-T-BAR(R)'s outfitted bus. The Company
has not sold any SAFE-T-BAR(R)'s to date and has no existing contracts or orders
to produce SAFE-T-BAR(R)'s.

SAFETY RESTRAINT PRODUCTS-SAFE-T-SEAT(TM)

The Company is in the process of developing a new seat design for school
buses, officially labeled the "SAFE-T-SEAT(TM)" restraint system. The Company
envisions that the SAFE-T-SEAT(TM) will enhance students' safety in school buses
and hopes to commence the marketing of SAFE-T-SEAT(TM) devices in the year 2000.
The Company expects to release details of the new SAFE-T-SEAT(TM) design in the
near future.

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SAFETY RESTRAINT PRODUCTS-INTELLECTUAL PROPERTY RIGHTS

SAFE-T-BAR(R). The Company has the exclusive right and license to
manufacture and sell the SAFE-T-BAR(R) product under a Patent that is owned
individually by Adrian Corbett, the Company's Vice President of Engineering. The
license from Mr. Corbett is for a period of seven (7) years renewable for two(2)
additional terms of five (5) years. The mark SAFE-T-BAR(R) is a trademark
registered by the Company with the United States Patent and Trademark
Office("PTO").

SAFE-T-SEAT(TM). The Company's new proposed product SAFE-T-SEAT(TM) is the
subject of a patent application currently pending with the PTO filed by Adrian
Corbett and the Company has applied to register this mark with the PTO as a
trademark.

SAFETY RESTRAINT PRODUCTS-AMOUNT SPENT ON RESEARCH AND DEVELOPMENT ACTIVITIES

During the last two (2) fiscal years the Company has spent approximately
$188,810.00 on research and development activities.

SAFETY RESTRAINT PRODUCTS-COMPETITION IN SCHOOL BUS SAFETY RESTRAINT INDUSTRY

The Company's competition in the safety restraint products is with
companies that produce different safety restraint devices for school buses such
as Seat Belts. The Company has no knowledge of any other company that produces a
lap bar restraint device similar to the SAFE-T-BAR(R).

Most of the larger sized C & D type school buses currently rely on the
concept of "compartmentalization" to ensure the safety of onboard passengers.
This is a passive type of protection that is meant to contain the child within a
structurally reinforced passenger compartment of padded high-back seats and
crash barriers. There is no assurance that this "compartmentalization" approach
will not continue to be the dominant approach in the school bus safety restraint
industry or that one of the Company's safety restraint competitors will not
succeed in marketing a competing product as the chosen lap belt solution.

Further, there is no assurance that the federal government, the states,
local governments, and/or school districts will not opt to use seat belts
instead of the Company's SAFE-T-BAR(R) product to enhance school bus safety.

Companies such as Bus Belts Development, Indiana Mills, BESI and Kinedyne
are involved in the manufacturing of seat belts and are competitors of the
Company.

THE MAJESTIC COMPANIES, LTD.-EMPLOYEES

As of October, 1999, the Company has forty-four (44) employees, none of whom
have entered into an employment agreement with the Company, other than the
Company's President, Chief Executive Officer, and Director, Francis A.
Zubrowski. The Company has no collective bargaining agreements covering any of
its employees, has not experienced any material labor disruption and is unaware
of any efforts or plans to organize its employees. The Company considers
relations with its employees to be good.

YEAR 2000 COMPLIANCE

BACKGROUND. Some computers, software and other equipment include
programming code in which calendar year data is abbreviated to only two digits.
As a result of this design decision, some of these systems could fail to operate
or fail to produce correct results if "00" is interpreted to mean 1900, rather
than 2000.

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These problems are widely expected to increase in frequency and severity as the
year "2000" approaches and are commonly referred to as the "Millennium Bug" or
"Year 2000 Problem."

ASSESSMENT. The Year 2000 Problem could affect computers, software and
other equipment used, operated or maintained by the Company. Accordingly, the
Company is reviewing its internal computer programs and systems to ensure that
the programs and systems will be Year 2000 compliant. The Company presently
believes that its computer systems will be Year 2000 compliant in a timely
manner. However, while the estimated cost of these efforts is not expected to be
material to the Company's financial position or any year's results of
operations, there can be assurance to this effect.

INTERNAL INFRASTRUCTURE. The Company believes that it has reviewed and
assessed all of the major computers, software applications, and related
equipment used in connection with its internal operations that would potentially
require modification, upgrade, or replacement to minimize the possibility of a
material disruption to its business. The Company's internal review of such
systems did not identify any material Year 2000 Problem. If the Company had
identified an exposure to the "Year 2000 Problem," Management currently
estimates the total cost of internal reprogramming of its software products and
the upgrading of purchased hardware and software would not be material. While
this is management's best current estimate, items outside management's control
relating to the "Year 2000 Problem" may impact the Company. The Company
estimates the total cost to the Company of completing any required
modifications, upgrades, or replacements of these internal systems would not
have a material adverse effect on the Company's business or results of
operations.

SYSTEMS OTHER THAN INFORMATION TECHNOLOGY SYSTEMS. In addition to computers
and related systems, the operations of office and facilities equipment such as
fax machines, photocopiers, telephone switches, security systems, and other
common devices may be affected by the Year 2000 Problem.

DISCLAIMER. The discussion of the Company's efforts, and management's
expectations, relating to Year 2000 compliance are forward-looking statements.
The Company's Year 2000 compliance status and the level of incremental costs
associated therewith, if any, could be adversely impacted by, among other
things, the availability and cost of programming and testing resources, vendors'
ability to modify proprietary software, and unanticipated problems identified in
ongoing internal compliance reviews.

ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following Management Discussion and Analysis should be read in
conjunction with the financial statements and accompanying notes included in
this Registration Statement.

GENERAL

Since its inception in 1992, The Majestic Companies, Ltd., (the 'Company'),
has undergone a succession of developmental changes, which has brought it to
focus on its current set of operations carried out by three wholly owned
subsidiaries. The manufacture and sale of re-locatable modular buildings by its
subsidiary, Majestic Modular Buildings, Ltd., and, the acquisition and lease of
modular buildings by the subsidiary, Majestic Financial, Ltd. Additionally, the
Company has

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developed and is in the process of marketing a school bus safety restraint
device known as the SAFE-T-BAR(R) through its third subsidiary, Majestic
Transportation Products, Ltd.

The Company's manufacturing division, Majestic Modular Buildings, Ltd.,
which began operations in April of 1998, provides Department of State Architects
(DSA), and, Department of Housing (DOH), certified modular buildings to public,
private and commercial consumers throughout the State of California. Buildings
are manufactured to meet customer specifications while complying with
specifically licensed design plans known as PC's (Previously Checked-State
plans). Typically, the market for DSA approved modular classrooms experiences a
seasonal demand during the first four months of the calendar year when school
districts prepare for the new school year later in the Fall. However, the
Company's management believes recent legislation and statewide funding has
resulted in a higher year-round demand to satisfy an increasing student
population and statewide mandates. Majestic Modular Buildings, Ltd., is in the
process of developing a two story modular classroom design that has been
inspired by the need for schools to maximize the utilization of economic
resources and limited lands available to them. The Company's management feels
that the above need, as well as, state mandated classroom size reduction
policies and statewide enhanced funding of nearly 11 billion dollars, will
continue to substantiate the production and demand of modular classrooms for
years to come.

With the placement of its first single unit operational lease, Majestic
Financial, Ltd. began operations in December of 1998. Its primary mission is to
supply modular classrooms for lease to school districts. This is accomplished by
directly providing modular classrooms for lease, or, through the acquisition of
existing leased fleets from small to medium size entities. The focus is to
establish an asset base that will continuously provide a turnover of revenue
from the renewal of existing leases. Although Majestic Financial, Ltd.'s current
fleet is only a modest fourteen units, Majestic Financial, Ltd., is seeking to
augment its fleet while providing schools with limited budgetary resources the
ability to obtain much needed classroom space under affordable lease terms.

The SAFE-T-BAR(R) school bus safety restraint has been designed to fulfill
a critical need in the area of school bus safety transportation. Majestic
Transportation Products, Ltd.'s development of a safety restraint device similar
to lap bars found on high velocity amusement park rides was designed to provide
an effective passive restraint system for school buses. The SAFE-T-BAR(R), as
the device is known, has passed a battery of computerized, sled, and federal
testing requirements. The passive application of the device while in a 'down'
position provides student riders an increased measure of security not found in
conventional seat belts which have proven expensive to install, easily
vandalized, and, not always utilized by the student rider. Currently, Majestic
Transportation Products, Ltd., is aggressively marketing the SAFE-T-BAR(R)
throughout the United States with emphasis being placed on the states with
existing and pending legislation requiring safety restraints for school buses. A
test program with a school bus retrofitted with the SAFE-T-BAR(R) in Oceanside,
California has resulted in successful utilization of a pilot program.

Beginning in 1998 with the start up of Majestic Modular Buildings, Ltd.,
the Company experienced a modest revenue flow along with the costs and growing
pains of venturing into a new business. At the quarter ending September 30,
1999, the Company's modular division has posted an increase of 500% in sales
compared to its total first year results. The Company desires to augment
Majestic Financial, Ltd., lease fleet in a modest fashion and establish an asset
base capable of generating a consistent stream of revenues to complement its
modular manufacturing operations. Revenues generated by leases this year have
been modest and have provided the

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Company with a source of liquid cash alternatives to fund operations. After two
years of development and testing, the Company expects that Majestic
Transportation, Ltd., SAFE-T-BAR(R) extensive marketing efforts will start
resulting in its first revenues within the first quarter of year 2000.

Although, The Majestic Companies, Ltd., has experienced growth in revenues
since the inception of operations in 1998, the Company has experienced losses in
each year of its operations, and, there can be no assurance, that, in the
future, The Majestic Companies, Ltd., will sustain revenue growth or achieve
profitability. The Company has identified several steps it feels will begin to
move it toward profitability: (I) provide timely and adequate working capital
for the modular division, (II) further automate the modular production process,
which the Company has started with the purchase of an overhead crane system,
(III) pursue volume purchase discounts for raw materials, (IV) capitalize on
federal and state legislation requiring safety restraints on school buses, and,
begin realizing sales from, Majestic Transportation Products, Ltd., marketing
efforts, (V) continual improvement and development of safety restraint devices
within the same transportation division, and, (VI) control all-around general
overhead cost.

Further, as a development stage company, purchasers of the Company's
securities are subject to the risk that the company will be unable to continue
as a going concern. See Footnote to the Financial Statements.

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1998 AND 1997

NET SALES. In fiscal year ending December 31, 1998, the Company achieved
annual sales of $395,857. Net sales in 1997 were non-existent since the Company
had not yet commenced operations, and/or, it was still in a research and
development phase. The 1998 year end sales consisted primarily of the modular
division sales which commenced operations in April of 1998. These sales
comprised 99% of the year's total sales. Sales for this division were modest due
to the fact that start-up and `growing' issues occupied the focus of this
division in its first year. Furthermore, sales for the year were minimal as
reflected by the modular division's attention to assembling a sales force toward
the last quarter of the year. The remaining 1% of sales for 1998 was comprised
of lease revenue from the Company's lease division, which had just commenced
operations in December of 1998.

COST OF SALES. Cost of sales for the modular division totaled $425,281 in
1998. This was primarily due to the fact the Company's modular division was in
the process of establishing and improving its labor efficiency and materials
acquisition during this start up year. In 1997 there was no cost of sales since
the Company had not yet commenced operations, and/or, it was still in a research
and development phase.

RESEARCH AND DEVELOPMENT. Research and Development expenses in 1998 reached
$191,687. These research and development expenses were primarily comprised of
operations related to the development of the SAFE-T-BAR(R), which had just begun
research in January of 1998. There were no research and development expenses in
1997.

SELLING AND MARKETING. Selling and marketing expenses for 1998 were
$144,044. The Company's corporate headquarters accounted for $90,000 of these
expenses, $35,750 was within the modular division and the balance of $18,294 was
a result of marketing within the transportation division. Total selling and
marketing expenses increased slightly over 4 times to $144,044 in 1998 from
$35,000 in 1997. The

10
<PAGE>

increase was a result of the Company's concentration on supporting its newly
commenced operations.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
nine times to $1,987,527 in 1998 from $214,866 in 1997, due in part to
management additions, re-location of both the current corporate headquarters and
the modular division, accounting and legal costs related to the start up of the
modular division, financing activities, and the amortization expense of a master
license once held by the Company in 1997 to market an all composite vehicle
internationally.

OTHER EXPENSES. Other expenses decreased 63% from $52,086 in 1997 to
$19,178 in 1998. Interest expense totaled $1,428 in 1998, a result of equipment
financing for the modular division. There was no interest expense in 1997.

NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

NET SALES. Net sales for the nine months ended September 30, 1999 were
$2,290,201, a 20.9 times increase from $109,506 in the same period in 1998. This
increase was primarily due to an increase in modular product sales of $2,172,325
through September 1999, which increased 20 times from $107,640 in the same
period in 1998. This increase was a direct result of a concerted sales effort
beginning in the last quarter of 1998. Lease sales comprised $113,725 through
September 30, 1999. There was no sales resulting from leases for the same period
in 1998.

COST OF SALES. Cost of sales increased 20.6 times to $2,072,429 through
September 1999 from $100,494 in the same period 1998. The increase was
attributable mostly to the Company's modular division, which posted an increase
of 20.4 times to $2,055,762 from $100,494 for the same period in 1998. The
Company's transportation division posted a total of $16,667 in royalty fees
through September 1999. There was no royalties paid for the same period in 1998.
Gross profit percentage increased to 10% from a negative (7%) in 1998.

RESEARCH AND DEVELOPMENT. Research and Development expenses increased 45%
to $198,043 through the period September 1999 from $136,847 in the same period
1998. The increase resulted primarily from additional consulting fees and other
costs related to ongoing development projects.

SELLING AND MARKETING. Selling and Marketing expenses increased 43% to
$165,993 through the period September 1999 from $116,033 in the same period
1998. The increase was a result of the Company's overall operational expansions
and concerted efforts to market its products.

GENERAL AND ADMINISTRATIVE. General and Administrative expenses increased
37% to $1,959,840 through the period September 1999 from $1,428,326 in the same
period 1998. This was partly due to an increase in consultant, managerial, and
professional compensations, financing activities, and, an increase in product
insurance coverage and rent factors.

OTHER EXPENSES. Other expenses increased 67% to $27,242 for the period
ending September 1999 from $16,278 in the same period 1998. This was primarily
due to an increase of depreciation and amortization expenses resulting from the
acquisition of additional capital assets. Interest expenses increased twenty-
eight folds to $23,979 for the period ending September 1999 from $828 in the
same period 1998. Interest expense was primarily a result of repayment of debt
acquired in 1999.

THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

11
<PAGE>

NET SALES. Net sales for the three months ended September 30, 1999 were
$647,471, a six-fold increase from $109,506 in the same period ending 1998. The
sales consisted of $554,910 in modular product sales for the three periods
ending September 1999, compared to $109,506 for the same period in 1998, a five-
fold increase. The increase is directly attributable to a structured sales
effort by the modular division. The Company's leasing division accounted for
$90,025 in period sales for 1999. There were no lease sales in the same period
1998. A total of $70,369 of this period's lease sales were a result of the
Company selling off future revenue streams from a portion of its lease
fleet.

COST OF SALES. Cost of sales for the three months ended September 30, 1999
totaled $497,670, a five-fold increase from $100,494 in the same period ending
1998. The cost of sales increased for the modular division in that period five-
fold to $483,503 in 1999 from $100,494 in the same period ending 1998. The
Company's transportation division experienced a total of $5,555 in royalty
expenses for this period. There was no royalty expense for the same period in
1998. The leasing division experienced $8,612 in cost of sales for this period
in 1999. There was no leasing division cost for the same period in 1998. Gross
profit percentage for this period increased to 23% in 1999 from 8% in the same
period last year. The period's gross profit was affected by the period sale of
future revenue streams from the leasing division.

RESEARCH AND DEVELOPMENT. Research and Development expenses increased by
49% to $76,014 for the three-month period ending September 30, 1999, from
$51,115 in the same period in 1998. This was primarily a result of the
transportation division continuing improvement of the SAFE-T-BAR(R) as well as
the development of a new product, the SAFE-T-SEAT(TM), a product incorporating
the features of the SAFE-T-BAR(R) on an original seat design.

SELLING AND MARKETING. Selling and marketing expense increased by 48% to
$60,331 for the three months period ending September 30, 1999, from $40,677 in
the same period in 1998. The increase in expense is largely attributable to the
modular and transportation divisions marketing of their products in 1999.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
25% to $736,222 for the three-month period ending September 30, 1999, from
$584,061in 1998. This was largely the result of increases in operational
overheads and corporate financing activities.

OTHER EXPENSES. Other expenses increased 86% to $10,230 for the three
months period ending September 30, 1990, from $5,502 in the same period 1998.
This was primarily due to depreciation expense from the modular division's
acquisition of capital equipment in the period ending 1999. Interest expense
increased for the period 15.8 times to $11,516, from $729 in the same three-
month period ended 1998. The interest is largely attributable to repayment of
debt financing and loans.

LIQUIDITY AND CAPITAL RESOURCES

The Majestic Companies, Ltd. has largely financed its operations through
private placements of common and preferred stock, raising net proceeds of
approximately $2.5 million from sales of these securities. Additionally, the
Company has raised approximately $1 million through a Section 504 offering in
1999. Since December 31, 1997 and September 30, 1999, The Majestic Companies has
invested approximately $686,582 (net of accumulated depreciation) in leasehold
improvements, plant and office equipment to support its developmental,
production and administrative activities. An additional $91,996 has been
invested into licenses of trademarks and PC's. The Company anticipates no other
material commitments in the near term future.

12
<PAGE>

The Majestic Companies, Ltd., principal sources of liquidity are short and
long term debt financing, of which $615,039 remains outstanding as of September
30, 1999. Other credit facilities of $1,250,000 for Majestic Modular Buildings,
Ltd., and, $2,000,000 for Majestic Transportation Products, Ltd. were intended
for working capital use, but subsequently became unavailable due to the fact
that the lending source ceased operations and became inactive. Additionally, the
Company has recently obtained lines of credit totaling $1 million dollars, which
will become available in November of 1999.

The loss of Cal-American Building Company, Inc., as a major customer did
not materially affect Majestic Modular Buildings, Ltd., sales or market
development. Majestic has focused the development of modular sales directly with
end users, i.e., school districts or modular dealers, versus, subcontracting
work from modular manufacturers. The Company has included discussions to this
effect in the Form 10-SB.

RECENT ACCOUNTING PRONOUNCEMENTS

During 1997, the Company adopted the disclosure requirements under
Statement of Financial Accounting Standards No. 123 (SFAS No. 123) Accounting
for Stock-Based Compensation. See Note 1 in the Consolidated Financial
Statements of the Company, included in this Report on Form 10-SB, for the full
disclosure. In 1997, the Company was required to adopt Statement of Financial
Accounting Standards No. 121 (SFAS No. 121) Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed, which prescribes
accounting and reporting standards when circumstances indicate that the carrying
amount of a long-lived asset may be not recoverable. SFAS No. 121 had no impact
on the Company's financial statements.

The Company adopted Statement of Financial Account Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year ended December 31, 1998. SFAS establishes standards for reporting
information regarding operating segments in annual financial statements and
requires selected information for those segments to be presented in interim
financial reports issued to stockholders. SFAS 131 also establishes standards
for related disclosures about products and services and geographic areas.
Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions how to
allocate resources and assess performance. The information disclosed herein,
materially represents all of the financial information related to the Company's
principal operating segment.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

This Registration Statement on Form 10-SB contains forward-looking
statements consisting of any statement other than a recitation of historical
facts that are identified by words such as "may", "expect," "anticipate,"
"estimate," "hopes," "believes," "continue," "intends," "seeks," "contemplates,"
"suggests," "envisions" or the negative thereof or other variations thereon or
comparable terminology. These forward-looking statements are based largely on
the Company's expectations and are subject to a number of risks and
uncertainties, including but not limited to, those risks associated with
economic conditions generally and the economy in those areas where the Company
has or expects to have assets and operations; competitive and other factors
affecting the Company's operations, markets, products and services; those risks
associated with the Company's ability to maintain the exclusive right and
license to use the Patent owned by Adrian Corbett; those risks associated with
the Company's ability to successfully negotiate with certain

13
<PAGE>

customers, risks relating to estimated contract costs, estimated losses on
uncompleted contracts and estimates regarding the percentage of completion of
contracts, risks relating to the ability of the Company to raise the funds
necessary to operate, design, develop, construct, and manage modular classrooms,
risks related to the outcome of Cal-American's Chapter 11 bankruptcy proceeding
because Cal-American has been one of the Company's primary customers; those
risks involved in lobbying the appropriate governmental units or agencies in
California or elsewhere to allocate funding to school districts to purchase or
lease modular classrooms; associated costs arising out of the Company's
activities and the matters discussed in this report; risks relating to changes
in interest rates and in the availability, cost and terms of financing; risks
related to the performance of financial markets; risks related to changes in
domestic laws, regulations and taxes; risks related to changes in business
strategy or development plans; risks associated with future profitability; and
other factors discussed elsewhere in this report and in documents filed by the
Company with the Securities and Exchange Commission. Many of these factors are
beyond the Company's control. Actual results could differ materially from these
forward-looking statements. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained in this
registration on Form 10-SB will, in fact, occur. The Company does not undertake
any obligation to revise these forward-looking statements to reflect future
events or circumstances and other factors discussed elsewhere in this report and
the documents filed or to be filed by the Company with the Securities and
Exchange Commission.

RISK FACTORS

The securities of the Company are speculative, involve a high degree of
risk and immediate substantial dilution to the public investors, and should not
be purchased by persons who cannot afford to lose their entire investment.
Prospective investors should consider carefully the following risk factors
inherent in and affecting the Company's business and the Offering, as well as
all other information set forth in this Form 10-SB, before they invest in the
Company's Securities.

QUARTERLY FLUCTUATIONS AND SEASONALITY OF OPERATING RESULTS

Operating results may fluctuate on a quarterly basis due to a variety of
factors, including the cycles of orders, shipment of products from suppliers,
the number and timing of new product introductions, the timing of operation and
advertising expenditures, weather, the year end purchasing cycle, and other
factors. The Company believes that factors such as fluctuations in the quarterly
operating results could affect the value of the Company's stock.

RELIANCE UPON SAFETY PRODUCT DEMAND AND ACCEPTANCE OF SAFE-T-BAR(R) SYSTEM

Management believes that demand for the Company's SAFE-T-BAR(R) product
will depend in part, upon the continued interest in improving safety on public
and private bus transportation. There are no assurances that current trends
towards passenger safety will continue. Even if such trends continue, there are
no assurances that the Company's products will find acceptance with purchasers
and operators of school bus fleets, or if accepted, that such acceptance will
continue. While the conclusions reached by the Company's limited market research
have been favorable, there are no assurances that actual operating results will
reach the levels indicated by such research.

DEPENDENCE ON CERTAIN CUSTOMERS; NO LONG-TERM SUPPLY CONTRACTS WITH
CUSTOMERS

14
<PAGE>

Although the Company sells its products both through distributors and
directly to end users, it relies significantly on relationships with several
customers. The Company does not have any long-term supply agreements with any of
its customers. The loss of any of these customers could adversely affect the
Company's profitability.

During fiscal year 1999 the Company recognized approximately forty percent
(40%) of its revenues from Cal-American Building Co., Inc.,("Cal-American"), a
California corporation which subsequently filed a Chapter 11 bankruptcy and
ceased operations. Management of the Company believes the Company has obtained
customers to replace the Cal-American revenues, and although there can be no
assurance, does not anticipate the loss of Cal-American to have a material
adverse effect on the Company.

SIGNIFICANT INDEBTEDNESS MAY IMPACT COMPANY'S BUSINESS

The Company has incurred substantial short-term indebtedness and long-term
indebtedness which aggregated $228,139 and $386,900 respectively as of September
30, 1999. Funds generated by the Company's operations have been sufficient to
pay the interest on its short-term and long-term indebtedness. There can be no
assurance, however, that the Company will be able to pay the principal due on
its short-term and long-term indebtedness.

DEPENDENCE ON CERTAIN SUPPLIERS; NO LONG-TERM CONTRACTS WITH SUPPLIERS

Although the Company has a favorable relationship with its suppliers,
marketplace variants such as a bankruptcy, strike, liquidation, acquisition or
merger, war, civil unrest, and atmospheric and other weather-related phenomenon
could disrupt these relationships at any time. The Company currently has no long
term supply agreements to control costs and assure availability of inventory.
Historically, the Company has generally been able to obtain its inventory
without significant difficulty or delay. There have, however, been times when
the Company was forced to pay a premium for inventory in short supply and has
experienced occasional delays. Any significant changes in supply, including
increased costs, could adversely affect planned growth. The Company has not
experienced any such significant changes in supply or increased costs, other
than the moderate effect of changes in the exchange rate of foreign currencies
against the U.S. dollar, and does not anticipate significant difficulty
regarding these matters.

GOVERNMENT REGULATIONS COULD IMPACT COMPANY'S BUSINESS

The Company's design, manufacturing, and construction activities are subject to
various federal, state, local and foreign laws and regulations designed to
protect the environment from waste emissions and the handling, treatment and
disposal of solid and hazardous wastes, as well as California, Federal and other
state regulations governing the design and construction of classroom and other
modular structures, and transportation safety devices. Although the Company
believes that it is and has been in substantial compliance with all such laws,
ordinances and regulations applicable to these operations, there may be
liabilities or conditions associated with such activities of which the Company
is not aware. Accordingly, there can be no assurance that future compliance
with such requirements will not have a material adverse effect on the Company's
financial condition and operations.

The Company is also subject to the Federal Occupations Safety and Health
Act and other laws and regulations affecting the safety and health of employees
and the Fair Labor Standards Act and various state laws governing such matters
as minimum wage requirements, overtime and other working conditions and
citizenship requirements. The Company is also subject to various state and local
building codes

15
<PAGE>

and licensing requirements. Management of the Company believes the Company has
obtained all necessary licenses and permits and that the Company is in
substantial compliance with applicable federal, state and local laws and
regulations.

LIABILITY INSURANCE MAY NOT BE ADEQUATE

The Company is and may be subject to product liability claims arising out
of the use of the Company's products. In addition, the Company is and may be
subject to other liability resulting from its day to day operations, including
claims for negligence and environmental liability. On April 20, 1999, the
Company procured general liability, automobile and property insurance coverage
with limits in the respective amounts of $1,000,000 ($10,000,000 umbrella),
$1,000,000, and $2,250,000 ($5,000,000 umbrella). If not renewed, these
coverages are scheduled to expire on April 20, 2000. Although management of the
Company believes these coverage limits to be adequate, there can be no assurance
that these limitations are adequate or that the coverage will continue to be
available at affordable rates.

THE STATES OTHER THAN CALIFORNIA MAY NOT APPROVE COMPANY'S EXISTING MODULAR
STRUCTURES

Currently, the Company's modular classroom structures used in various
California school districts have been approved by the State of California.

There is no guarantee or assurance that other states will approve the form,
composition, size, specifications, materials or components of the Company's
modular classroom or other structures that have already been approved in
California. If other states require the Company to modify the Company's basic
modular classrooms or other structures used in California, the Company could
incur substantial costs to make these classrooms and/or other structures comply
with other states laws and building codes. The incurring of such costs could
significantly, adversely affect the Company's profitability, revenues and
operations.

LABOR AVAILABILITY AND EMPLOYEE RELATIONS COULD IMPACT THE COMPANY'S
BUSINESS

Currently skilled and unskilled labor is reasonably available in California, but
additional light industry moving to the area could reduce these labor pools.
Furthermore, there can be no assurance that the unskilled work force currently
available will be trainable as employees for the Company that such labor will
remain available. Any increase in the competition for employees could have a
significant adverse effect upon both the availability and the price of skilled
and unskilled labor.

The Company currently believes its employee relations are good. Currently,
none of the Company's employees are unionized. There can be no assurance,
however, that a collective bargaining unit will not be organized and certified
in the future. If certified in the future, a work stoppage by a collective
bargaining unit could be disruptive and have a materially adverse effect on the
Company until normal operations resume.

DIVIDENDS UNLIKELY ON COMMON STOCK

The Company has never paid dividends on any class of its common stock.
Management of the Company anticipates that earnings generated from the Company's
operations will be used to finance the Company's working capital and market
expansion opportunities and that for the foreseeable future cash dividends will
not be paid to holders of the Company's Common Stock.

DILUTION TO HOLDERS OF COMMON STOCK

16
<PAGE>

The Company has Warrants and stock options outstanding that could result in
the issuance of 1,270,000 shares of Common Stock. To the extent such shares are
issued, the percentage of Common Stock held by existing Company common
stockholders will be reduced. Under certain circumstances the exercise of any or
all of the Warrants or stock options might result in further dilution of the net
tangible book value of the existing Company stockholders' shares. For the life
of the Warrants or stock options, the holders thereof are given, at nominal
cost, the opportunity to profit from a rise in the market price of the Common
Stock, if any. The holders of the Warrants or stock options may be expected to
exercise them at a time when the Company may, in all likelihood, be able to
obtain needed capital on more favorable terms. In addition, there can be no
assurance that future sales of Company stock will not result in further dilution
to existing Company common stockholders, which future sales may be made at the
discretion of the Company's Board of Directors.

FUTURE SALES PURSUANT TO RULE 144 MAY DEPRESS MARKET PRICE OF COMMON STOCK

Approximately 15,350,555 shares of the Company's Common Stock presently
outstanding are "restricted securities" that may be resold under Rule 144
promulgated under the Securities Act of 1933, as amended. In general, under Rule
144 a person who has satisfied a one (1) year holding period may, under certain
circumstances, sell shares of Common Stock subject to sales volume restrictions.
Rule 144 also permits the sale of shares by a person who is not an affiliate of
the Company and who has satisfied a two (2) year holding period without any
volume limitation. Sales of these shares of Common Stock under Rule 144 may have
a material adverse effect on the market price and liquidity of the Common Stock
thereby affecting a public investors ability to resell shares of the Company and
the price at which such shares can be resold.

UNCERTAINTY OF GOVERNMENT FUNDING TO SCHOOL DISTRICTS FOR PURPOSES OF PURCHASING
OR LEASING MODULAR STRUCTURES IN CALIFORNIA OR ELSEWHERE

The Company has historically relied on the financial ability of various
school districts to purchase or lease the Company's modular classrooms. Since
the school district's source of funding originates from the government or
various state bonds, there is no guarantee that the government or state bonds
will continue to be available to provide the funding necessary for the school
districts to purchase or lease the Company's modular classrooms.

UNCERTAINTY THAT SCHOOL DISTRICTS WILL CONTINUE TO PURCHASE OR LEASE MODULAR
RELOCATABLE STRUCTURES OVER MORE FIXED, PERMANENT STRUCTURAL ALTERNATIVES

Although the Company believes the conditions affecting the market for
modular buildings to be favorable, there is no assurance that individual school
districts will opt to purchase or lease the Company's modular re-locatable
classrooms over more fixed, permanent structural alternatives.

UNCERTAINTY OF PROTECTION OF PATENTS, LICENSES, TRADE SECRETS AND
TRADEMARKS

The Company is the exclusive licensee for a patent related to its SAFE-T-
BAR(R) product. The Company's success depends, in part, on its ability to
maintain the exclusive right and license to manufacture and sell the SAFE-T-
BAR(R). There can be no assurance that the Patent License Agreement between the
Company and Adrian Corbett will continue in full force and effect. If the
Patent License Agreement was to be terminated, or the patent for the SAFE-T-
BAR(R) cancelled for any reason, the Company's prospects could be adversely
affected.

17
<PAGE>

There is also no assurance that Adrian Corbett will be able to obtain a
patent on the "SAFE-T-SEAT(TM)" product, or that the Company will be successful
in obtaining the exclusive right and license to use the "SAFE-T-SEAT(TM)"
product from Mr. Corbett.

LIMITED PUBLIC MARKET; POSSIBLE VOLATILITY IN STOCK PRICES; PENNY STOCK RULES

There has, to date, been no substantial, consistent, public market for the
Company's Common Stock, and there can be no assurance that a substantial,
consistent, public market will develop or, if developed, that it will be
sustained. Although the Company's Common Stock has been traded on the OTC
Bulletin Board, the trading has been sporadic without significant volume.
Moreover, the over-the-counter markets for securities of small companies such as
the Company historically have experienced extreme price and volume fluctuations
during certain periods. These broad market fluctuations and other factors, such
as new product developments and trends in the Company's industry and the
investment markets, and economic conditions generally, as well as quarterly
variation in the Company's results of operations, may adversely affect the
market price and trading volume of the Company's Common Stock. In addition, the
Company's Common Stock is subject to rules adopted by the Securities and
Exchange Commission regulating broker-dealer practices in connection with
transactions in the Company's Common Stock because of the added disclosure
requirements.

LIMITED OPERATING HISTORY; LACK OF PROFITABILITY

The Company commenced its operations in 1992. Since that date, the
Company's operations have not been profitable. There can be no assurances that
the Company will be successful in increasing its revenues or developing
profitable operations in the future. Results of operations in the future will be
influenced by numerous factors including increases in expenses associated with
growth, market acceptance of the Company's "SAFE-T-BAR(R)" product and "SAFE-T-
SEAT(TM)" product, competition, the ability of the Company to control costs and
development of its plan of business. There can be no assurance that revenue
growth or profitability on a quarterly or annual basis can ever by obtained.
Additionally, the Company will be subject to all the risks incident to a
developing business with only a limited history of operations. Prospective
investors should consider the frequency with which relatively newly developed
and/or expanding businesses encounter unforeseen expenses, difficulties,
complications and delays, as well as such other factors as the possibility of
competition with larger companies.

EFFECT OF INTEREST RATE CHANGES

The Company is exposed to the impact of interest rate changes. Such
exposure to market risk is inherent in certain of the Company's financial
instruments which arise from transactions entered into in the normal course of
business.

RELIANCE ON KEY PERSONNEL

The success of the Company is dependent upon the experience and abilities
of its senior management. Key senior management include: Francis A. Zubrowski,
Lawrence W. Holland, Adrian P. Corbett, Alejandro V. Tovar, Michael F. Hecker
and Clayton S. Chase all of whom are full-time and work a standard 40 hour plus
weekly work schedule. There is significant competition in the Company's
industry for qualified personnel, and there can be no assurance that the Company
will be able to retain its existing personnel or recruit new personnel to
support its marketing objectives, goals and plans.

18
<PAGE>

ITEM 3. DESCRIPTION OF PROPERTY

The Company's principal executive and administrative offices are located in
San Diego, California at 8880 Rio San Diego Drive, 8th floor, San Diego,
California 92108 ("Executive Offices"). The Company leases the Executive Offices
from Mission Valley Business Center LLC at a monthly rental of $5,361.00 for a
term scheduled to expire June 30, 2000. The Company considers the Executive
Offices to be adequate and suitable for its current needs.

The Company's subsidiary, Majestic Modular Buildings, Ltd., leases property
at 320 9th Street, Modesto, California from Berberian Farms Corporation at a
monthly rental of $12,500.00 for a term scheduled to expire April 30, 2003
("Modesto Property"). The monthly rental for the Modesto Property will increase
to $13,500.00 in December 1999, $14,500.00 in December, 2000, $15,000.00 in
December 2001, and $15,500.00 in December 2002. The Company considers the
Modesto Property to be adequate and suitable for its current needs.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANGEMENT

The following tables set forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 11, 1999 by (i) each
person (or group of affiliated persons who to the knowledge of the Company is
the beneficial owner of five percent or more of the Company's outstanding shares
of Common Stock, (ii) each director and each Named Executive Officer (as defined
in Part I Item 6 of this Form 10-SB) of the Company and (iii) all directors and
executive officers of the Company as a group. Except as otherwise noted, the
Company believes that the persons listed in this table have sole voting and
investment power respecting all shares of Common Stock owned by them.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

SECURITY OWNERSHIP OF MANAGEMENT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
Title of Class Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Owner Class
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Francis A. Zubrowski (1)(2) 1,193,578 4.45%
Common Shares
- ------------------------------------------------------------------------------------------------------------
Common Ralph D. Morren, Jr. (2) 150,000 0.55%
Common Shares
- ------------------------------------------------------------------------------------------------------------
Common Paul S. Hewitt (2) 0 Common Shares 0.00%
- ------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Does not include 250,000 shares which could be obtained upon exercise of
nonstatutory stock option for years 1999, 2000, 2001, 2002, and 2003.

(2) The Business address of each director and Named Executive Officer listed
above is the Company's corporate address, 8880 Rio San Diego Drive, 8th floor,
San Diego, California, 92108.

19
<PAGE>

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information as of the date of this
Registration Statement with respect to the directors and executive officers of
the Company. A summary of the background and experience of each of these
individuals is set forth after the table. The executive officers serve at the
discretion of the Company's Board of Directors. All employees are full time and
work a standard 40 plus hour work schedule.

<TABLE>
<CAPTION>
Name Age Position with the Company
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Francis A. Zubrowski 64 President, Chief Executive Officer, Director
- -----------------------------------------------------------------------------------------------------------------
Adrian A. Corbett 37 Vice President of Engineering
- -----------------------------------------------------------------------------------------------------------------
Ralph D. Morren, Jr. 43 Director
- -----------------------------------------------------------------------------------------------------------------
Lawrence W. Holland 32 Vice President of Sales and Marketing
- -----------------------------------------------------------------------------------------------------------------
Michael F. Hecker 51 Vice President Manufacturing
- -----------------------------------------------------------------------------------------------------------------
Alejandro V. Tovar 41 Secretary, Controller
- -----------------------------------------------------------------------------------------------------------------
Clayton S. Chase 41 Vice President of Investor Relations
- -----------------------------------------------------------------------------------------------------------------
Paul S. Hewitt 47 Director
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

FRANCIS A. ZUBROWSKI - Mr. Francis A. Zubrowski is the President and Chief
Executive Officer of The Majestic Companies, Ltd. Mr. Zubrowski has over 39
years of senior management experience and has served as a managing director of
The Owen Stringfellow Ltd. ("Owen Stringfellow"), a Baltimore based consulting
firm with offices in New York, Connecticut and Massachusetts. Owen Stringfellow
provides services in relation to mergers and acquisitions, debt restructuring,
public offerings and turn-around situations. Prior to joining Owen Stringfellow,
Mr. Zubrowski was Chairman and Chief Executive Officer of Consolidated
Industries, a New England based group in the chemical manufacturing and heavy
equipment industries. He has also worked with Bethlehem Steel, U.S. Steel and
Union Carbide operating mining and transportation companies. He represented
Kaiser-Roth Industries on the New York Stock Exchange. Mr. Zubrowski holds a
Bachelors degree in Theology from Fordham University and a Masters in Business
Administration from New York University.

RALPH D. MORREN, JR. - Mr. Morren is a director of the Company and was the
Company's President from May, 1998 through December, 1998. Mr. Morren is a
Director of the Company serving since May 22, 1998 and has over 17 years of
managerial and operational experience in both domestic and international
businesses. From 1994 to 1998 Mr. Morren was the President/CEO of Morren/Laurin
Marketing, LLC, President CEO of Morren Laurin, LLC and President/Chairman of
Creation Homes, Inc. Responsibilities with these businesses have included the
day to day management of corporate affairs and operations and planning
implementation, identification, acquisition and development of company
objectives. Mr. Morren has been the Chief Executive Officer of several companies
specializing in Custom Homebuilding, Real Estate Sales and Marketing, and
Management Asset Evaluation Services. Mr. Morren has extensive expertise in
organizing and technically analyzing project management's optimal critical
paths. Mr. Morren was the President of SKYTEX International, Inc.

ALEJANDRO V. TOVAR - Mr. Alejandro V. Tovar has served as the Company's
secretary and controller since December 23, 1998. With several years experience
as a management accountant, controller and manager with Bonaventure Minerals,
Inc., a California corporation, and Grana Baja, S.A. de C.V. a Mexican
corporation, Mr. Alejandro V, Tovar controls a wide range of business functions
involving the daily and strategic administrative activities of the Company. Mr.
Tovar was also an audit supervisor for Doubletree Hotels and a branch manager
for Norwest Financial in Southern California. Mr. Tovar has extensive tax
preparation education and

20
<PAGE>

experience having worked both with H&R Block and as an independent tax preparer.
He served as a captain in the United States Marine Corps in which he specialized
in artillery and logistics. Mr. Tovar is fluent in Spanish and has maintained an
in depth knowledge of Mexican business and accounting practices. Mr. Tovar
attended the University of California, San Diego, where he received a Bachelors
degree in Biology and Certificate of Accounting. He received his Masters degree
in Business Administration from National University and was recognized with a
University Leadership Award.

CLAYTON S. CHASE - Mr. Clayton S. Chase has served as Vice President of Investor
Relations of the Company since April, 1999 and has been employed by the Company
since 1998. Mr. Chase has nearly ten (10) years experience in representing and
raising capital for both public and private companies. He passed the NASD Series
7 registered representative exam in 1987. Mr. Chase headed the Arete' Design
Group, a company that designs and markets audio accessories from 1994 to 1998.
He was responsible for the identification and certification of a manufacturer in
Tecate, Mexico, which mass produced these audio accessories. Mr. Chase graduated
from the University of Colorado with a B.S. in Engineering Design and Economic
Evaluation. He has served as an account executive for several businesses
including: ROYALE SECURITIES (public) and MOA INVESTMENT CORP. (private), both
located in San Diego, CA. MOA INVESTMENT CORP. acted as the General Partner in
Limited Partnership syndications that purchased mostly all-cash real estate
properties in the hospitality industry and ROYALE SECURITIES acted as the
General Partner in Limited Partnership syndications that purchased and developed
oil and natural gas reserves.

LAWRENCE W. HOLLAND - has served as Vice President of The Majestic Companies
Ltd. since December 23, 1998. Mr. Holland has over ten (10) years in sales and
marketing as an owner of Pinnacle Trading Company, a company which conducts
commerce primarily with Mexico and Central American. He has served as a Senior
Account Executive at Physicians Capital Company, and First Nationwide Investment
Center from March, 1993 to September, 1996. His most recent project was a direct
sales program for Collegiate Sports of America. Mr. Holland received his
Bachelor of Science in Business Administration with an emphasis in Finance from
San Diego State University. His graduate studies include a Professional Degree
in International Business, with an emphasis in Mexican and Latin American Trade,
from the University of California, San Diego.

ADRIAN P. CORBETT - Mr. Adrian P. Corbett has been the Company's Vice President
of Engineering from April, 1998 to the present and has served as President, Vice
President and Director of the Company's subsidiary, Majestic Transportation
Products, Ltd. He is also the inventor of the SAFE-T-BAR(R) bus seat safety
restraint product. Mr. Corbett has an extensive background in automotive and
mechanical design work. He served as Program Manager for Santa Barbara based
ASHSA Corporation in which he was responsible for concept to production of a
third world public transit bus development program. As an engineering planner
for Lockheed Space Operations at Vandenberg Air Force Base from February, 1984
to October, 1986, Mr. Corbett's responsibilities included coordinating
management, engineering, logistics and operations personnel for launch
construction schedules. He received his education in Aerospace at Northrop and
Arizona State University.

MICHAEL HECKER - Mr. Michael Hecker has served as Vice President of
Manufacturing of the Company since December 23, 1998. He has a background in the
construction industry as well as over twenty-seven (27) years experience in
product development, production control and manufacturing. Mr. Hecker's
background in construction began with his early involvement in the family
roofing contractor business until joining the Navy where he attended the U.S.
Naval Construction School in Port Hueneme, California in 1966. Upon graduation
Mr. Hecker was assigned as a Heavy Builder to U.S. Mobile Construction Battalion
Eleven. He spent two tours, attached to the 3rd

21
<PAGE>

Marine Division, in Vietnam building storage facilities, mess halls, bunkers,
medical facilities and airstrips from 1967 through 1968. After leaving the
military service, Mr. Hecker focused on remodeling homes and was Project Manager
for several public utility construction contracts in the Southern California
area. Mr. Hecker joined Industrial Automation Corporation in 1970. He served as
both Engineering and Production Manager and was responsible for the development
and manufacturing of equipment for automated packaging lines. He worked closely
with such customers as Coca-Cola, Procter & Gamble, Lever Brothers, Labatts
Breweries and was instrumental in the design, manufacturing and installation of
the first Pepsi-Cola plant in China. When Industrial Automation Corporation was
purchased by Figgie International, Mr. Hecker became General Manager of Research
& Development for the Packaging Machinery Division.

PAUL S. HEWITT - Mr. Hewitt has served as Executive Director of the National
Taxpayers Union Foundation ("NTUF") from 1990 to present. The NTUF has been one
of Washington's most effective and widely publicized research and public
education programs, focusing on policy issues ranging from demographics and
interest group behavior to health care, budget process and Social Security
reform. From 1988 to 1989 Mr. Hewitt served as Corporate Development Consultant
for New Century Petroleum in which he assisted in raising $1.3 million in seed
capital from private investors. Mr. Hewitt has also served as a Professional
Staff Member and Staff Director on the U.S. Senate Subcommittee on Inter-
Government Relations. Mr. Paul Hewitt graduated from the University of Berkeley
with a B.A. in Economics. He received a Masters of Public Administration from
American University in Washington, D.C.

ITEM 6. EXECUTIVE COMPENSATION

The following table sets forth certain information relating to the
compensation paid by the Company during the last three (3) fiscal years to the
Company's former Chief Executive Officer ("Named Executive Officer"). No other
executive officer of the Company received total salary and bonus in excess of
$100,000 during the fiscal year ended December 31, 1998.

SUMMARY COMPENSATION TABLE
- --------------------------

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Award Pay-outs
- -------------------------------------------------------------------------------------------------------------------------------

(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------------------------------------------------------------------------------------------------------------------------

Name Year Salary ($) Bonus ($) Other Restricted Securities LTIP All
And Annual Stock Underlying Pay-outs Other
Principal Compensation Award ($) Options ($) Compensation
Position ($) SARs (#) ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Francis A. 1999 180,000 0 0 0 0 0 0
Zubrowski 1998 60,000 0 0 18,000 0 0 0
CEO, 1997 48,000 0 0 18,000 0 0 0
President 1996 0 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

22
<PAGE>

FRANCIS A. ZUBROWSKI - EMPLOYMENT AGREEMENT

On November 1st, 1998, the Company and its President and Chief Executive
Officer, Francis A. Zubrowski, renewed and amended a five year employment
agreement ("Employment Agreement") whereby the Company paid Mr. Zubrowski an
annual salary of one hundred eighty thousand dollars ($180,000.00) for 1999 and
10% increases in Mr. Zubrowski's salary per year for years 2000, 2001, 2002, and
2003. Under the Employment Agreement the Company also granted Mr. Zubrowski
nonstatutory stock options for two hundred fifty thousand (250,000) shares of
the Company's common stock for each year of Mr. Zubrowski's employment. The
exercise price for the stock option is ($0.25) twenty-five cents per share for
year 1999, thirty five cents ($0.35) per share for year 2000, fifty cents per
share ($0.50) for year 2001, seventy-five cents per share ($0.75) for year 2002,
and one dollar per share ($1.00) for year 2003. The Employment Agreement also
grants Mr. Zubrowski $1,000 a month as an automobile allowance, $500.00 per
month medical insurance allowance, and a term life insurance policy in the face
amount of one million dollars ($1,000,000.00).

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company executed a Promissory Note in October, 1998, whereby the
Company agreed to pay the aggregate amount of Two Hundred Sixty Thousand Dollars
($260,000.000) to Mei Wah Company, Inc., a California corporation, by December
31, 1999 ("Promissory Note"). The terms, rights, title and interest to the
Promissory Note were restructured and assigned to Francis A. Zubrowski's wife,
Gail E. Bostwick, on April 8, 1999. The Company thereby received more favorable
terms and conditions permitting payment over a period of seventy (70) months
rather than maturing on December 31, 1999.

In May, 1999 the Company obtained a $1,250,000 line of credit from a
private lender for use in its modular operations in Modesto, California. The
Company had drawn a total of $186,680 in proceeds from this facility as of
September 30, 1999, but was unable to draw further sums under the line of credit
due to the fact that the lending source ceased operations. Subsequent to these
events, the Company's CEO, Francis Zubrowski, liquidated the balance payable on
the line of credit in a private transaction with an exchange of restricted stock
he owned. The Company thereupon agreed to repay to Mr. Zubrowski the amount of
$186,680 that Mr. Zubrowski paid on the line of credit.

ITEM 8. DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue 50,000,000 shares of Common Stock, $.001
par value, of which, as of October 11, 1999, 26,834,070 shares were issued and
outstanding. Holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders generally. The
approval of proposals submitted to stockholders at a meeting other than for the
election of directors requires the favorable vote of a majority of the shares
voting, except in the case of certain fundamental matters (such as certain
amendments to the Certificate of Incorporation, and certain mergers and
reorganizations), in which cases Nevada's law and the Company's Bylaws require
the favorable vote of at least a majority of all outstanding shares.
Stockholders are entitled to receive such dividends as may be declared from time
to time by the Board of Directors out of funds legally available therefor, and
in the event of liquidation, dissolution or winding up of the Company to share
ratably in all assets remaining after payment of liabilities. The holders of
shares of Common Stock have no preemptive, conversion, subscription or
cumulative voting rights.

23
<PAGE>

PART II

ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.

The Company's Common Stock is currently quoted on the OTC Bulletin Board
under the symbol "MJXC". The Company's Common stock is thinly traded and any bid
or sale prices reported on the OTCBB may not be a true market-based valuation of
the Common Stock. As of October 11, 1999, there were approximately 650 record
holders of the Company's Common Stock.

On December 11, 1997 the Board of Governors of the National Association of
Securities Dealers, Inc. ("NASD") approved a series of changes for the OTC
Bulletin Board which affect the Company. The principal changes include: (i) a
rule that only those companies that report their current financial information
to the Securities and Exchange Commission, banking or insurance regulators will
be included for quotation on the OTC Bulletin Board, (ii) that brokers must
review current financial statements on a company they are recommending before
they recommend a transaction in an OTC security, and (iii) that prior to the
initial purchase of an OTC security, every investor must receive a standard
disclosure statement prepared by the NASD emphasizing the differences between
the OTC securities and other market-listed securities, such as those traded on
the NASDAQ Stock Market, Inc. This Registration Statement is being filed on Form
10-SB with the Securities and Exchange Commission to register the Company's
Common Stock under Section 12(g) of the Securities Exchange Act of 1934, as
amended, which, if declared effective by the Securities and Exchange Commission,
will require the Company to make current financial filings with the Securities
and Exchange Commission, thus qualifying the Company under the proposed rule
change. In the event the Company's proposed Registration Statement is not
declared effective, the Company's securities would not remain eligible for
quotation on the OTC Bulletin Board, which would materially and adversely affect
the liquidity in the Company's Common Stock.

PRICE RANGE OF COMMON STOCK

On June 25, 1998, the Company's Common Stock began trading on the OTC
Bulletin Board under the symbol SKTX. It now trades on the OTC Bulletin Board
under the symbol MJXC. Prior to such date, there had been no market for the
Company's Common Stock; hereafter, there has been a limited trading market.
While a limited public market currently exists, there can be no assurances that
this market will be sustained or that if sustained, such market will operate in
a stable manner. The following table sets forth for the periods indicated the
high and low closing prices of the Company's Common Stock as reported on the OTC
Bulletin Board. The following quotations are over-the-market quotations and,
accordingly, reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.

COMMON STOCK

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
1999 1998 1997
QUARTER TRADE TRADE TRADE
High Low High Low High Low
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1/st/ Quarter 1.62 .38 - - - -
- -------------------------------------------------------------------------------------------------
2/nd/ Quarter 1.03 .34 - - - -
- -------------------------------------------------------------------------------------------------
3/rd/ Quarter .56 .18 5.50 4.05 - -
- -------------------------------------------------------------------------------------------------
</TABLE>

24
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4/th/ Quarter - - 4.05 1.00 - -
- -------------------------------------------------------------------------------------------------
</TABLE>

NO DIVIDENDS ANTICIPATED TO BE PAID

The Company has not paid any cash dividends on its Common Stock since its
inception and does not anticipate paying cash dividends in the foreseeable
future. The future payment of dividends is directly dependent upon future
earnings of the Company, its financial requirements and other factors to be
determined by the Company's Board of Directors, in its sole discretion. For the
foreseeable future, it is anticipated that any earnings which may be generated
from the Company's operations will be used to finance the growth of the Company,
and that cash dividends will not be paid to Common Stockholders.

ITEM 2. LEGAL PROCEEDINGS

CITIBANK, FEDERAL SAVINGS BANK, a federal savings bank, by and through its
service agent, CITIBANK, N.A., a national banking association v. MAJESTIC
MODULAR BUILDINGS, LTD., CAL-AMERICAN BUILDING COMPANY, INC. et al. (Case No.
182714 in the Superior Court of the State of California for the County of
Stanislaws). On October 19, 1998, Plaintiff commenced an action by filing a
Complaint alleging that Majestic Modular Buildings, Ltd., leased raw materials
from Cal-American Building Company, Inc. that was subject to a security interest
owned by Plaintiff. The Complaint also alleges that Majestic Modular Buildings,
Ltd.'s entering into a License Agreement and Real Property Lease with Cal-
American Building Company, Inc., constituted fraudulent transfers or conveyances
by Cal-American Building Company, Inc. to Majestic Modular Buildings, Ltd.
Plaintiff seeks damages against Majestic Modular Buildings, Ltd., and the other
defendants in the amount of $299,822 and seeks to set aside the transfers of any
asset that occurred under the Equipment Lease Agreement, the License Agreement
and the Real Estate Property Lease between Majestic Modular Buildings, Ltd. and
Cal-American Building Company, Inc. The Company has answered Plaintiff's
complaint and believes it has properly responded to Plaintiff's Discovery
Demands to date. No trial date has yet been set. The Company believes it bears
no liability to Plaintiff, intends to vigorously defend this lawsuit and is
prepared to take the case to trial if Plaintiff does not agree to a reasonable
nuisance value settlement amount.

The business relation between Majestic Modular Buildings, Ltd., and, Cal-
American Building Company, Inc., was a contractor/subcontractor relationship.
Majestic entered into an agreement with Cal-American to perform subcontract work
on an order belonging to Cal-American. Additionally, Majestic Modular Buildings
made a one-time purchase of raw materials from Cal-American's inventory.
Majestic Modular paid fair market value for these materials valued at
approximately $68,000. These building materials consisted of items such as
steel, electric wiring, insulation, etc. A licensing agreement mentioned in the
complaint by Citibank consisted of an agreement between Majestic Modular
Buildings, Ltd., and, Cal-American Building Company, Inc., in which Majestic was
allowed the use of building specific plans called "P.C.'s" belonging to Cal-
American for construction of the buildings called for in the subcontract.

ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

The Company has not had any changes in or disagreements with its
accountants.

ITEM 4. RECENT SALES IN UNREGISTERED SECURITIES

25
<PAGE>

In it's placements exempt from Securities Act Registrations under Section
4(2), the Company relied upon representations from the purchasers that they were
acquiring the shares for investment without any present intention to
redistribute the shares, that the investors had sufficient experience and
knowledge to protect their interests, either alone or with a representative, and
that such purchasers had received all information requested by them, and
acknowledgements from the investors that the shares were unregistered,
"restricted" securities subject to Rule 144 under the Securities Act, with all
certificates for such shares containing a legend to this effect restricting
transfer.

In its placement exempt from Securities Act registration under Section 3(b)
the Company relied upon representations from the purchasers that the purchasers
had sufficient knowledge and experience to protect their interests either alone
or with a representative and had received all information they had requested
from the Company.

During the last three (3) years the Company has sold unregistered shares of
its Common Stock in the following transactions:

THE MAJESTIC COMPANIES, LTD. (SECTION 4(2) PRIVATE PLACEMENT) - COMMON
STOCK - Between March 18, 1999 and June 29, 1999 the Company, THE MAJESTIC
COMPANIES, LTD., sold 725,000 common shares at a basis cost of between $0.40 and
$0.50 to two (2) individuals pursuant to a private placement exempt under
Section 4(2) of the Securities Act of 1933, as amended, for an aggregate
consideration of $350,000.

THE MAJESTIC COMPANIES, LTD. - 504 REGULATION D OFFERING - Between March
10, 1999 and August 30, 1999, the Company, THE MAJESTIC COMPANIES, LTD., sold
2,115,498 shares of common stock to a total of 64 individuals at a basis cost
between $0.40 and $0.85 cents in a Rule 504 regulation D offering for an
aggregate consideration of $978,275 exempt under Section 3(b) of the Securities
Act.

MAJESTIC MINERALS, LTD. (SECTION 4(2) PRIVATE PLACEMENT) - COMMON STOCK -
On September 11, 1995 the Company, MAJESTIC MINERALS, LTD. sold 150,328 shares
of common stock at a basis cost of $0.06 cents to five (5) individuals pursuant
to a private placement exempt under Section 4(2) of the Act. A total of $28,000
(US) was raised.

MAJESTIC MOTOR CAR COMPANY, LTD. (SECTION 4(2)PRIVATE PLACEMENT) - SPECIAL
WARRANTS SALE - $0.10 CENT WARRANTS Between April 16, 1997 and June 15, 1998,
the Company, MAJESTIC MOTOR CAR COMPANY, LTD., sold 1,000,000 special warrants
(each warrant good for the purchase of one share of common stock, no strike
price) at a basis cost of $0.10 to 18 individuals pursuant to a private
placement exempt under Section 4(2) of the Act. A total of $100,000 was
raised.

MAJESTIC MOTOR CAR COMPANY, LTD. (SECTION 4(2) PRIVATE PLACEMENT) - SPECIAL
WARRANTS SALE - $0.25 CENT WARRANTS - Between September 16, 1997 and April 7,
1998, the Company, MAJESTIC MOTOR CAR COMPANY, LTD., sold 1,013,322 special
warrants (each warrant good for the purchase of one share of common stock, no
strike price) at a basis cost of $0.25 to 51 individuals pursuant to a private
placement exempt under Section 4(2) of the Act. A total of $253,333 was
raised.

MAJESTIC MOTOR CAR COMPANY, LTD. (SECTION 4(2) PRIVATE PLACEMENT) - SPECIAL
WARRANTS SALE - $0.35 CENT WARRANTS - Between January 2, 1998 and June 2, 1998,
the Company, MAJESTIC MOTOR CAR COMPANY, LTD., sold 1,200,000 special warrants
(each warrant good for the purchase of one share of common stock, no strike
price) at a basis cost of $0.35 to 32 individuals pursuant to a private
placement exempt under Section 4(2) of the Act. A total of $420,000 was
raised.

26
<PAGE>

MAJESTIC MOTOR CAR COMPANY, LTD. (SECTION 4(2) PRIVATE PLACEMENT) - SPECIAL
WARRANTS SALE - $0.50 CENT WARRANTS - Between May 1, 1998 and June 29, 1998, the
Company, MAJESTIC MOTOR CAR COMPANY, LTD., sold 400,000 special warrants (each
warrant good for the purchase of one share of common stock, no strike price) at
a basis cost of $0.50 to 18 individuals pursuant to a private placement exempt
under Section 4(2) of the Act. A total of $200,000 was raised.

THE MAJESTIC COMPANIES, LTD. - PREFERRED CONVERTIBLE STOCK (SECTION 4(2)
PRIVATE PLACEMENT) - Between July 3, 1998 and December 9, 1998. The pre-merger
Delaware corporation, THE MAJESTIC COMPANIES, LTD., ("Delaware Company") sold
127 units of preferred convertible offering comprised of a class of preferred
shares with detachable warrants to a total of 48 individuals pursuant to a
private placement exempt under Section 4(2) of the Act, at a price of $6,000 per
unit raising a total of $762,000. Each unit was broken down to 5,000 preferred
shares at a basis cost of $1.00 per share and 10,000 warrants (price at $0.10
each) to purchase the common stock in the future at a strike price of $1.50,
$1.75 or $2.00 (depending on the exercise date). All unit holders elected to
convert their preferred shares to common shares immediately upon acceptance of
the investment by the Company. Each unit of 5,000 shares preferred converted to
7,500 shares of common resulting in a total of 952,000 shares of common stock
issued for a total amount raised of $635,000 (approx. $0.67 per share basis) and
the issuance of 1,270,000 (at $0.10 cents each) warrants raising an additional
$127,000.

ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation provides that the directors of
the Company shall be protected from personal liability to the fullest extent
permitted by the laws of the State of Nevada. The Company's Bylaws also contain
a provision for the indemnification of the Company's directors (see
"Indemnification of Directors and Officers - Bylaws" in Exhibit 3.4).

PART III

ITEMS 1 AND 2 INDEX TO AND DESCRIPTION OF EXHIBITS

EXHIBIT DESCRIPTION

2.1- Articles of Incorporation of The Majestic Companies, Ltd., as amended.

2.2- By-Laws of The Majestic Companies, Ltd., as amended.

3.1- Specimen of Common Stock Certificate.

6.1- Office Lease dated December 31, 1997, between Mission Valley Business
Center LLC and The Majestic Companies, Ltd.

6.2- Real Property Lease dated May 1, 1998, between Berberian Farms
Corporation and Majestic Modular Buildings, Ltd.

6.3- Equipment Lease dated August 10, 1999, between Saddleback Financial
Corporation and Majestic Modular Buildings, Ltd.

6.4- Lease/Purchase Agreement dated August 31, 1999, between A-Z BusSales,
Inc., and The Majestic Companies, Ltd.

6.5- Employment Agreement dated November 1, 1998, between Francis A.
Zubrowski and The Majestic Companies, Ltd.

27
<PAGE>

6.6- Assignment by Mei Wah Company, Inc. Note of $260,000 to Gail E.
Bostwick dated April 8, 1999.

6.7- Security Agreement dated May 21, 1999, between Gail E. Bostwick and
The Majestic Companies, Ltd.

6.8- License Agreement dated April 22, 1998, between Cal-American Building
Company, Inc., Steven D. Rosenthal and Majestic Modular Buildings,
Ltd.

6.9- Promissory Note dated August 27, 1999, payable to Margaret C. Hubard
by The Majestic Companies, Ltd. and Majestic Transportation
Products, Ltd. in the Aggregate Amount of $100,000.00.

6.11- Agreement for a Funding Source dated May 21, 1999, between Rick
Griffey and Majestic Modular Buildings, Ltd.

6.12- Patent License Agreement dated February 20, 1998, between Adrian P.
Corbett and Majestic Motor Car Company, Ltd.

6.13- Promissory Note payable in the aggregate amount of $260,000.00 from
Skytex International, Inc. to Mei Wah Company, Inc.

6.14- Consulting Agreement dated May 28, 1999, between The Majestic
Companies, Ltd., a Delaware corporation and Venture Consultants, LLC,
terminating May 28, 2000.

6.15- Investment Banking Services Agreement date September 29, 1999 between
NC Capital Markets, Inc. and The Majestic Companies, Ltd.

6.16- Warrants to purchase 100,000 shares of The Majestic Companies, Ltd.,
owned by Margaret C. Hubard expiring August 27, 2001 and executed on
August 27, 1999.

6.17- Security Agreement dated August 26, 1999 between The Majestic
Companies, Ltd. and Majestic Transportation Products, Ltd. and
Margaret C. Hubard.

6.18- Disbursement Agreement dated August 26, 1999 between The Majestic
Companies, Ltd., Majestic Transportation Products, Ltd. and Margaret
C. Hubard in the aggregate amount of $100,000.00.

6.19- Promissory Note between Francis A. Zubrowski and The Majestic
Companies, dated October 20, 1999.

8.1- Agreement and Plan of Merger dated October 8, 1998, between Skytex
International, Inc., and The Majestic Companies, Ltd.

8.2- First Amendment to Agreement and Plan of Merger dated December 10,
1998.

8.3- State of Delaware Certificate of Merger of Domestic Corporation and
Foreign Corporation dated December 16, 1998.

8.4- Articles of Merger of Domestic and Foreign Corporations into Skytex
International, Inc., dated November 3, 1998.

27 Financial Data Schedule.

28
<PAGE>

In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

THE MAJESTIC COMPANIES, LTD.

By: /s/ Francis A. Zubrowski January 17, 2000

------------------------------------------ ----------
Francis A. Zubrowski, Chairman and C.E.O. DATE

29
<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FINANCIAL STATEMENTS AND SCHEDULES

DECEMBER 31, 1998 AND 1997

FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934

THE MAJESTIC COMPANIES, LTD.
<PAGE>

THE MAJESTIC COMPANIES, LTD.

Index to Financial Statements

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
<S> <C>

Report of Independent Certified Public Accountants F-3

Consolidated Balance Sheet at December 31, 1998 and 1997 F-4

Consolidated Statements of Losses for the two years
ended December 31, 1998 and 1997 F-6

Consolidated Statements of Stockholders' Equity for
the two years ended December 31, 1998 and 1997 F-7

Consolidated Statements of Cash Flows for the two
years ended December 31, 1998 and 1997 F-8

Notes to Consolidated Financial Statements F-9

INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Consolidated Balance Sheet as of September 30, 1999
and December 31, 1998 F-19

Consolidated Statement of Losses for the nine months ended
September 30, 1999 and 1998 F-20

Consolidated Statement of Cash Flows for the nine months ended
September 30, 1999 and 1998 F-21

Notes to Consolidated Financial Statements at September 30, 1999
</TABLE>
<PAGE>

STEFANOU & COMPANY, LLP
Certified Public Accountants

1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------

Board of Directors
The Majestic Companies, Ltd.
San Diego, California

We have audited the accompanying consolidated balance sheets of The
Majestic Companies, Ltd. and subsidiaries as of December 31, 1998 and 1997 and
the related consolidated statements of losses, stockholders' equity, and cash
flows for the two years then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based upon our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Majestic Companies, Ltd.
and subsidiaries as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the two years ended, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note O, the Company
is experiencing difficulty in generating sufficient cash flow to meet it
obligations and sustain its operations, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note O. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ STEFANOU & COMPANY, LLP
-----------------------
Stefanou & Company, LLP
Certified Public Accountants
McLean, Virginia
April 23, 1999

F-3
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
ASSETS 1998 1997
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 305,639 $141,319
Accounts receivable 147,238 36,095

Inventory, at lower of cost or market 1,214,026 -
Deposits 64,213 -
Prepaid expenses 12,500 -
---------- --------
Total current assets 1,743,616 177,414

PROPERTY AND EQUIPMENT-AT COST:
Buildings under operating leases (Note E) 35,000 -
Furniture, equipment and leasehold improvements 279,095 778
---------- --------
314,095 778

Less accumulated depreciation 18,430 86
---------- --------
295,665 692

OTHER ASSETS:
Intangible assets (Note F) 5,942 208,000
---------- --------
$2,045,223 $386,106
========== ========
</TABLE>

See accompanying notes to consolidated financial statements

F-4
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
---- ----
LIABILITIES
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt (Note D) $ 271,604 $ -
Accounts payable and accrued expenses 458,318 238,458
Customer deposits 933,446 -
----------- ---------

Total current liabilities 1,663,368 238,458

LONG-TERM DEBT, less current maturities 21,738 -

COMMITMENTS AND CONTINGENCIES (Note K)

STOCKHOLDERS' EQUITY (NOTES G AND J)
Common stock, par value, $.001 per share in 1998;
$.01 per share in 1997
50,000,000 shares authorized; 21,111,863 issued
at December 31, 1998; 4,024,758 shares issued
at December 31, 1997 21,112 40,247
Additional paid-in-capital 3,073,945 445,053

Stock subscription receivable (24,000) -
Accumulated deficit (2,710,940) (337,652)
----------- ---------
360,117 147,648
----------- ---------
$ 2,045,223 $ 386,106
=========== =========
</TABLE>

See accompanying notes to consolidated financial statements

F-5
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED STATEMENTS OF LOSSES
YEARS ENDED DECEMBER 31, 1998 and 1997

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues:

Modular buildings $ 393,382 $ -
Rental income 2,475 -
----------- ----------
Cost and expenses: 395,857 -

Modular buildings 425,281 -
Selling, general and administrative 2,131,571 249,866
Research and development 191,687 -
Interest 1,428 -
Depreciation and amortization 19,178 52,086
----------- ----------
2,769,145 301,952
Operating loss (2,373,288) (301,952)

Income (taxes) benefit - -
----------- ----------

Net loss $(2,373,288) $ (301,952)
=========== ==========

Loss per common share (basic and assuming dilution)
$(.20) $ (.08)
=========== ==========

Weighted average common shares outstanding (Note L) 11,998,422 3,929,792
</TABLE>

See accompanying notes to consolidated financial statements

F-6
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
Stock
Common Stock Additional Subscription Accumulated
Shares Amount Paid-in-Capital Receivable Deficit Total
------ ------ --------------- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 920,329 $ 9,203 26,497 - $ (35,700) $ -

Sale of stock in connection with private
placement, net of costs 1,624,429 16,244 285,356 - - 301,600

Shares issued to consultants and
employees in exchange for services 1,480,000 14,800 133,200 - - 148,000

Net loss - - - - (301,952) (301,952)
---------- --------- ------------- ---------------- ----------- -----------

Balance at December 31, 1997 4,024,758 40,247 445,053 - (337,652) 147,648

Shares issued in connection with merger
with Skytex, International, Inc. 2,500,000 25,000 - - - 25,000

Shares issued to consultants and
employees in exchanged for services 5,162,044 51,620 636,695 - - 688,315

Sale of stock issued pursuant to private
placement, net of costs 2,855,403 28,554 1,047,888 - - 1,076,442

Stock split (Note J) 4,904,658 49,047 (49,047) - - -

Reduction in par value of common stock - (190,006) 190,006 - - -

Issuance of stock in exchange for debt
(Note M) 1,665,000 16,650 803,350 - - 820,000

Subscription note receivable - - - (24,000) - (24,000)

Net loss - - - - (2,373,288) (2,373,288)
---------- --------- ------------- ---------------- ----------- -----------

Balance at December 31, 1998 21,111,863 $ 21,112 $3,073,945 $(24,000) $(2,710,940) $ 360,117
========== ========= ============= ================ =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements

F-7
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Increase (decrease) in cash and equivalents
Cash flows from operating activities
Net loss for the year $(2,373,288) $ (301,952)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Common stock issued in connection for services rendered 688,315 148,000
Depreciation and amortization 19,178 52,086
Write-down in value of asset 260,000 -
(Increase) decrease in:
Accounts receivable (111,143) (36,095)
Prepaid expenses and other (82,655) -
Inventory (1,214,026) -
Increase (decrease) in:
Accounts payable and accrued expenses, net 219,860 238,457
Customer deposits 933,446 -
----------- -----------
Net cash (used) provided by operating activities (1,660,313) 219,860
Cash flows used in investing activities:
Capital expenditures, net of disposals (313,318) (260,777)
----------- -----------
Net cash used in investing activities (313,318) (260,777)
Cash flows used in financing activities:
Proceeds from sale of common stock, net of costs 1,076,442 301,600
Proceeds from loans 1,092,935 -
Repayments of loans, net (31,426) -
----------- -----------
Net cash, provided (used) in financing activities 2,137,951 301,600
Net (decrease) increase in cash and equivalents 164,320 141,319
Cash and equivalents at beginning of year 141,319 -
----------- -----------
Cash and equivalents at end of year $ 305,639 $ 141,319
=========== ===========

Supplemental Disclosures of Cash Flow Information

Cash paid during the year for interest $ 1,428 $ -
Common stock issued for services $ 688,315 $ 148,000

Acquisition:
Assets acquired $ 10 -
Accumulated deficit 3,334 -
Liabilities assumed (115) -
Common stock issued (3,229) -
----------- -----------
Net cash paid for acquisition $ - $ -
=========== ===========

Noncash financing activities
Issuance of common stock in exchanged for debt (Note M) $ 820,000 -
Common stock subscriptions receivable $ 24,000 $ -
</TABLE>

See accompanying notes to consolidated financial statements

F-8
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 and 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements follows.

Business and Basis of Presentation
- ----------------------------------

On December 11, 1998, The Majestic Companies, Ltd. ("Company") completed a
merger with Skytex International, Inc., an inactive corporation with no
significant assets or operations. The resulting merged corporation was named The
Majestic Companies, Ltd. Effective with the merger, all previously outstanding
common stock of the Company was exchanged for common stock of Skytex
International, Inc., resulting in the previous security holders of the Company
owning approximately 84% of the voting stock of Skytex,, in an exchange ratio of
one (1) share of the Company in exchange for one (1) share of Skytex.

The Company develops, manufactures and markets relocatable modular classrooms,
office buildings, telephone equipment bunkers and modular structures. This
activity is conducted primarily in the western part of the United States. The
Company is also engaged in the origination and servicing of new modular building
leases. This activity is conducted primarily in the state of California. All of
the leases which the Company enters into are accounted for as operating leases.
The Company is also in the business of developing and marketing a proprietary
passenger restraint system for the school bus industry.

The consolidated financial statements include the accounts of The Majestic
Companies, Ltd., and its wholly-owned subsidiaries, Majestic Modular Buildings,
Ltd., Majestic Financial, Ltd., and Majestic Transportation, Ltd. Significant
intercompany transactions have been eliminated in consolidation.

Inventories
- -----------

Inventories are stated at the lower of cost or market determined by the first-
in, first-out (FIFO) method. Inventories consist of modular buildings available
for sale to contract clients and the public, along with materials and work-in
progress.

Components of inventories as of December 31, 1998, are as follows:

<TABLE>
<S> <C>
Raw materials $ 143,119
Finished goods and work-in-progress 1,070,907
-----------
$ 1,214,026
===========
</TABLE>

The Company had no inventory as of December 31, 1997.

F-9
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997 AND 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)

Revenue Recognition
- -------------------

The Company follows a policy of recognizing modular building sales at the time
of shipment. The Company follows a policy of recognizing revenue from leasing
modular buildings as operating leases. At the inception of the lease, no lease
revenue is recognized and the leased building appears on the balance sheet as
"buildings under operating leases". The capitalized cost of each modular
building is depreciated over the lease term on a straight line basis down to the
Company's original estimate of the projected value of the building at the end of
the scheduled lease term (the "Residual"). Monthly lease payments are
recognized as rental income.

Advertising
- -----------

The Company follows the policy of charging the costs of advertising to expenses
incurred.

Property and Equipment
- ----------------------

For financial statement purposes, property and equipment are depreciated using
the straight-line method over their estimated useful lives (five years for
furniture, fixtures and equipment and 15 years for building and improvements).
The straight line method of depreciation is also used for tax purposes.

Intangible Assets
- -----------------

Intangible assets consist of patents, trademarks, licensing agreements to build
transportation equipment and organization costs, which are amortized using the
straight line method over the estimated useful lives of the assets which range
from five to seven years. Organization costs incurred after December 31, 1998
will be expensed as incurred in accordance with AICPA Statement of Position
98-5.

In 1998 the Company abandoned the development of building transportation
equipment and, accordingly, the asset was disposed of (See Note F).

Income Taxes
- ------------

Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes".

F-10
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)

Under this method deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be removed or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
the consolidated statements of operations in the period that includes the
enactment date.

Cash Equivalents
- ----------------

For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.

Impairment of Long-Lived Assets
- -------------------------------

The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. SFAS No.121 also requires assets to be
disposed of be reported at the lower of the carrying amount or the fair value
less costs to sell.

Use of Estimates
- ----------------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly actual results
could differ from those estimates.

Research and Development
- ------------------------

Company-sponsored research and development costs related to both present and
future products are expended in the year incurred. Total expenditures on
research and product development for 1998 and 1997 were $191,687 and $0,
respectively.

Concentrations of Credit Risk
- -----------------------------

Financial instruments and related items which potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents and
trade receivables. The Company places its cash and temporary cash investments
with credit quality institutions. At times, such investments may be in excess of
the FDIC insurance limit. The Company's customers are concentrated primarily in
the state of California and it periodically reviews its trade receivables in
determining its allowance for doubtful accounts.

F-11
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE A-SUMMARY OF ACCOUNTING POLICIES (continued)

Stock Based Compensation
- ------------------------

The Company accounts for stock transactions in accordance with APB Opinion 25,
"Accounting for Stock Issued to Employees." In accordance with statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the Company has adopted the proforma disclosure requirements.

Liquidity
- ---------

As shown in the accompanying financial statements, the Company incurred a net
loss of $2,373,288 during the year ended December 31, 1998 and $301,952 during
the year ended December 31, 1997. The Company's current assets exceeded its
current liabilities by $80,248 as of December 31, 1998. At December 31, 1998 a
substantial portion of all of the Company's assets are illiquid.

Comprehensive Income
- --------------------

The Company does not have any items of comprehensive income in any of the
periods presented.

New Accounting Pronouncements
- -----------------------------

The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year ended December 31, 1998. SFAS establishes standards for reporting
information regarding operating segments in annual financial statements and
requires selected information for those segments to be presented in interim
financial reports issued to stockholders. SFAS 131 also establishes standards
for related disclosures about products and services and geographic areas.
Operating segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions how to
allocate resources and assess performance. The information disclosed herein,
materially represents all of the financial information related to the Company's
principal operating segment.

Earnings Per Share
- ------------------

The Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share," specifying the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings per share has
been calculated based upon the weighted average number of common shares
outstanding. Stock options and warrant's have been excluded as common stock
equivalents in the diluted earnings per share because they are either
antidilutive, or their effect is not material. There is no effect on earnings
per share information for the year ended December 31, 1998 relating to the
adoption of this standard.

F-12
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE B-BUSINESS COMBINATION

On December, 11, 1998, the Company merged, in an exchange for common stock,
Skytex International, Inc. (Skytex) in a transaction accounted for using the
purchase method of accounting. The total purchase price and carrying value of
net assets acquired of Skytex was $3,229. The net assets acquired were as
follows:

Net assets $ 10
Accumulated deficit 3,334
Net liabilities (115)
--------
$ 3,229
========

As Skytex was an inactive corporation with no significant operations, the
Company recorded the carryover historical basis of net tangible assets acquired,
which did not differ materially from their historical cost. The results of
operations subsequent to the date of acquisition are included in the Company's
consolidated statement of losses.

NOTE C-ACQUISITIONS

In April, 1998, the Company purchased the inventory (consisting of primarily raw
materials) and licensing rights of Cal-American Building Company for $68,000.
Cal-American manufactures, markets and distributes modular classrooms, office
buildings, medical facilities and telephone communication shelters.

The purchase of inventory and licensing rights were accounted for accordingly
and, the operating results of the business has been included in the Company's
consolidated financial statements since the date of purchase and inception of
operations.

NOTE D-LONG-TERM DEBT

Long-term debt at December 31, 1998 and 1997 consists of the following:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Note payable in monthly installments of $23,101, including
interest at 12% per annum, unsecured; granted by Company Directors
and secured third party collateral (See Note M) $ 260,000 $ -

Note payable in monthly installments of $1,187 including
interest at 9.75% per annum; secured by office equipment 33,342 -
--------- -----
293,342 -

Less current portion 271,604 -
--------- -----
$ 21,738 $ -
========= =====
</TABLE>

F-13
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE D-LONG-TERM DEBT (continued)

Aggregate maturities of long-term debt as of December 31, 1998 and 1997 are as
follows:

Year Amount
---- -------
1999 271,604
2000 12,677
2001 9,061
2002 -
2003 and after -
--------
$293,342
========

NOTE E-BUILDINGS UNDER OPERATING LEASES

Buildings under operating leases consist of the following:

1998 1997
---- ----
Buildings $ 35,000 $ -

Less: accumulated 194 -
depreciation --------- -----

$ 34,806 $ -
========= =====

The buildings are depreciated to their estimated residual value of $28,000 over
the life of the lease contracts.

The following is a schedule by years of minimum future rentals on noncancellable
operating leases as of December 31, 1998:

Year ending December 31,

1999 $ 9,900
2000 9,900
2001 7,425
------
$27,225
=======

F-14
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE F-INTANGIBLE ASSETS

The costs and accumulated amortization of intangible assets at December 31 are
summarized as follows:

1998 1997
------- --------
Product License Agreement $ - $260,000
Trademarks 5,168 -
Organization costs 1,642 -
------- --------
6,810 260,000

Less: accumulated amortization 868 52,000
------- --------
Intangible assets, net $ 5,942 $208,000
======= ========

Amortization expense included as a charge to income amounted to $868 and $52,000
for the year ended December 31, 1998 and 1997, respectively.

The Company determined that there would be no cash flows derived from its
product license agreement. Accordingly, the Company recognized an asset
impairment loss of $208,000, the carrying value of the asset, as of December 31,
1998.

NOTE G-STOCK OPTIONS AND WARRANTS

The following table summarizes the changes in options outstanding and the
related prices for the shares of the Company's common stock issued to a key
employee of the Company.

<TABLE>
<CAPTION>
Number Weighted Avg. Number of
of shares Exercise Price Shares Exercisable
--------- --------------- ------------------
<S> <C> <C> <C>
Outstanding at December 31, 1996 - - -
=========
Granted 250,000 .25 250,000
Exercised- - - -
Cancelled - - -
------- --------------
Outstanding at December 31, 1997 250,000 - 250,000
=========
Granted 500,000 .45 500,000
Exercised - - -
Cancelled - - -
------- -------------- ---------
Outstanding at December 31, 1998 750,000 - 750,000
======= ============== =========
</TABLE>

F-15
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE G-STOCK OPTIONS AND WARRANTS (continued)

For disclosure purposes the fair value of each stock option grant is estimated
on the date of the grant using the Black-Scholes option pricing model with the
following weighted-average assumptions used for stock options granted during the
years ended December 31, 1998 and 1997, respectively: annual dividends of $0.00
for both years, expected volatility of 50%, risk free interest rate of 6.0% an
expected life of two years for all grants. The weighted-average fair values of
the stock options granted during the years ended December 31, 1998 and 1997 were
$.03 and $.04, respectively.

If the Company recognized compensation cost for the employee stock option plan
in accordance with SFAS No. 123, the Company's pro forma net loss and net loss
per share would have been $(2,383,188) and $(.20) in 1998 and $(309,027) and
$(.08) in 1997, respectively.

NOTE H-INCOME TAXES

The Company has adopted Financial Accounting Standard number 109 which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax bases of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes are
insignificant.

For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $2,700,000, which expire through 2013. The future
utilization of the operating loss carryfowards or the time period in which the
carryforwards could be utilized could be limited if certain historical
stockholders of Majestic sell their shares within two years of the purchase of
Skytex. The deferred tax asset related to the carryforward is approximately
$920,000. The Company has provided a valuation reserve against the full amount
of the net operating loss benefit, since in the opinion of management based upon
the earning history of the Company, it is more likely than not that the benefits
will be realized.

NOTE H-INCOME TAXES

Components of deferred tax assets as of December 31, 1998 are as follows:

Non Current:
Net operating loss carryforward $ 920,000
Valuation allowance 920,000
---------
Net deferred tax asset $ -
=========

F-16
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE I-MAJOR CUSTOMERS

Revenue from three (3) major customers approximated $178,000 or 45% of sales for
the year ended December 31, 1998. There were no significant revenues for the
year ended December 31, 1997.

NOTE J-CAPITAL STOCK

The Company was incorporated in August, 1995 under the name Majestic Minerals,
Ltd., (the Predecessor), a Company formed under the laws of British Columbia,
Canada. In 1995 the Predecessor issued a total of 150,329 shares of its common
stock in a private placements to sophisticated investors in the United States
and Province of British Columbia, Canada and 770,000 shares to consultants for
services rendered on its behalf. In April, 1997, the Predecessor changed its
name to Majestic Motor Car Company, Ltd. During 1997, the Predecessor issued a
total of 1,624,429 shares of its common stock in private placement to
sophisticated investors, primarily in the United States in exchange for $301,600
net of costs and fees. In addition, the Predecessor issued 1,480,000 shares to
consultants and employees for services rendered during 1997.

In February, 1998, the Company's Board of Directors approved a three (3) share
for one (1) common stock split.

In March, 1998, the Shareholders of the Predecessor exchanged all of the
outstanding shares of common stock of the Predecessor on a share for share basis
for shares of common stock in The Majestic Companies, Ltd., a Delaware
Corporation (Company).

In 1998, the Company issued a total of 4,520,403 shares of common stock in a
private placements and exempt offerings to sophisticated investors, primarily in
the United States in exchange for $1,896,442 net of costs and fees. Certain
investors received warrants to purchase the Company's common stock at exercise
prices ranging from $1.50 to $2.00 per share. The warrants expire at various
dates through December 31, 2000. As of December 31, 1998, the Company had
outstanding warrants for 1,270,000 shares.

In December 1998, the Company completed a merger with Skytex International, Ltd.
(Skytex). The Shareholders of the Company exchanged all of the outstanding
shares of common stock of the Company on a one for one basis for shares of
common stock in Skytex.

Immediately following the merger, Skytex was renamed The Majestic Companies,
Ltd.

Share amounts presented in the consolidated balance sheets and consolidated
statements of stockholders' equity reflect the actual share amounts outstanding
for each period presented.

F-17
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE K-COMMITMENTS AND CONTINGENCIES

Lease Commitments
- -----------------

The Company leases office space on a year-to-year basis in San Diego, California
for its Corporate offices. The Company also leases warehouse and plant
facilities in Modesto, California. Commitments for minimum rentals under non-
cancelable leases at the end of 1998 are as follows:

1999 $152,000
2000 164,000
2001 175,000
2002 181,000
2003 62,000
--------
$734,000
========

Employment and Consulting Agreements
- ------------------------------------

The Company has an employment agreement with the Company's President and Chief
Executive Officer. In addition to salary and benefit provisions, the agreement
includes defined commitments should the employee terminate the employment with
or without cause.

The Company has consulting agreements with outside contractors, certain of whom
are also Company stockholders. The Agreements are generally for a term of 12
months from inception and renewable automatically from year to year unless
either the Company or Consultant terminates such engagement by written notice.

Litigation
- ----------

In 1998, a financial institution filed a complaint against Majestic Modular
Buildings, Ltd, a wholly-owned subsidiary of the Company in the Stanislaus
County Superior Court. The complaint alleges the previous owners of Cal-
American Buildings, Inc. (See Note C) improperly transferred property to the
Company in connection with the Sale of certain assets. The Company believes
that it has meritorious defenses to the plaintiff's claims and intends to
vigorously defend itself against the bank's claims.

NOTE L-LOSSES PER COMMON SHARE

The following table presents the computation of basic and diluted loss per
share:

1998 1997
------------ -----------
Net loss available for common shareholders $(2,373,288) $ (301,952)
Basic and fully diluted loss per share $ (.20) $ (.08)
Weighted average common shares outstanding 11,988,422 3,929,792
=========== ==========

F-18
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE L-LOSSES PER COMMON SHARE (continued)

Net loss per share is based upon the weighted average number of shares of common
stock outstanding. In February, 1998, a three (3) for one (1) stock split of
the Company's common stock was effected in the form of a 200 percent stock
split (See Note J). Accordingly, all historical weighted average share and per
share amounts have been restated to reflect the stock split.

NOTE M-RELATED PARTY TRANSACTIONS

In 1998, the Company's president advanced the Company in the form of a loan,
$820,000. The loan was unsecured and was payable on demand at 0% interest per
annum. The loan was paid in full in 1998 in exchange for 1,665,000 shares of
restricted common stock in the Company. The Company valued the shares based
upon the Company's estimated fair market value of the Company's common stock at
the time of the exchange.

NOTE N-SUBSEQUENT EVENT

Subsequent to the date of the Company's financial statements, the spouse of the
Company's President and Chief Executive Officer purchased, for consideration,
the $260,000 note payable from the Note holder (See Note D). The Company and
the note holder have amended the repayment terms of the note to provide for
seventy (70) equal monthly installments of principal and interest at 12% per
annum.

NOTE O-GOING CONCERN MATTERS

The accompanying statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As shown in the financial statements during the
years ended December 31, 1998 and 1997, the Company incurred loses from
operations of $2,373,288 and $301,952 respectively. These factors among others
may indicate that the Company will be unable to continue as a going concern for
a reasonable period of time.

The Company's existence is dependent upon management's ability to develop
profitable operations and resolve it's liquidity problems. Management
anticipates the Company will attain profitable status and improve it liquidity
through the continued developing, marketing and selling of its products and
additional equity investment in the Company. The accompanying financial
statements do not include any adjustments that might result should the Company
be unable to continue as a going concern.

In order to improve the Company's liquidity, subsequent to the date of these
financial statements the Company has obtained a $1,250,000 credit facility for
the Majestic Modular Buildings, Ltd. subsidiary and a $2,000,000 credit facility
for Majestic Transportation, Ltd. The credit facilities will be utilized for
working capital purposes.

F-19
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997

NOTE O-GOING CONCERN MATTERS (continued)

In addition, the Company is actively pursing additional equity financing through
discussions with investment bankers and private investors. There can be no
assurance the Company will be successful in its effort to secure additional
equity financing.

If operations and cash flows continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of it's liquidity problems.

F-20
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED BALANCE SHEET
(Unaudited)

<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
---- ----
<S> <C> <C>
Current Assets:
Cash and Equivalents $ 73,781 $ 305,639
Accounts Receivable 176,124 147,238
Deposits and Other Prepaid Expenses 88,763 76,713
Inventory, at Cost 261,443 1,214,026
----------- -----------

Total Current Assets 600,111 1,743,616

Property and Equipment At Cost:
Building under operating leases 236,084 35,000
Furniture, equipment and leasehold improvements 496,170 279,095
----------- -----------
732,254 314,095
Less accumulated depreciation 45,672 18,430
----------- -----------
686,582 285,665

Other Assets:
Intangible Assets 91,996 5,942
----------- -----------

$ 1,378,689 $ 2,045,223
=========== ===========
LIABILITIES & STOCKHOLDERS EQUITY

Current Liabilities:
Current Maturities of Long Term Debt 228,139 271,604
Accounts Payable and Accrued Liabilities 569,596 458,318
Customer Deposits 62,175 933,446
----------- -----------

Total Current Liabilities 859,910 1,663,368

Long Term Debt, Less Current Maturities 386,900 21,738

Stockholders' Equity:
Common Stock, Par Value $.001 per share:
50,000,000 shares authorized; 21,111,863
issued at December 31, 1998, 26,834,070
shares issued at September 30, 1999 26,834 21,112
Additional Paid-in Capital 4,973,309 3,073,945
Stock Subscription Receivable - (24,000)
Accumulated Deficit (4,868,264) (2,710,940)
----------- -----------
131,879 360,117
----------- -----------
$ 1,378,689 $ 2,045,223
=========== ===========
</TABLE>

F-21

<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED STATEMENT OF LOSSES
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept 30, Sept 30,

1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Modular buildings $ 554,910 $ 107,640 $ 2,172,325 $ 107,640
Leases and other 92,561 1,866 117,876 1,866
----------- ----------- ----------- -----------
647,471 109,506 2,290,201 109,506

Cost and Expenses:
Modular buildings 497,670 100,494 2,072,429 100,494
Selling, general and administrative 796,553 624,739 2,125,832 1,544,359
Research and development 76,014 51,115 198,043 136,847
Interest 11,516 729 23,979 828
Depreciation and amortization 10,230 5,502 27,242 16,278
----------- ----------- ----------- -----------
1,391,983 782,579 4,447,525 1,798,806

Operating loss (744,512) (673,073) (2,157,324) (1,689,300)

Income tax benefit - - - -
----------- ----------- ----------- -----------

Net loss (744,512) (673,073) (2,157,324) (1,689,300)
=========== =========== =========== ===========

Loss Per Common Share
(Basic and Assuming Dilution) (0.03) (0.05) (0.09) (0.17)
=========== =========== =========== ===========

Weighted Average Common Shares 26,424,551 14,375,646 24,366,373 10,141,345
Outstanding
</TABLE>

F-22
<PAGE>

THE MAJESTIC COMPANIES, LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
Nine Months Ended
Sept 30,
1999 1998
---- ----
<S> <C> <C>
Increase (Decrease) in Cash and Equivalents Cash Flows from Operating
Activities:
Net Loss for the Period $(2,157,324) $(1,689,300)

Adjustments to Reconcile Net Earnings (Loss) to Net Cash
Provided By Operating Activities:
Common Stock Issued in Connection with Services Rendered 314,727 151,705
Write Down in Value of Asset - 260,000
Depreciation and Amortization 27,242 16,278

(Increase) Decrease in:
Accounts Receivables (28,886) -
Prepaid Expenses and Other (12,050) (70,155)
Inventory 952,584 (1,022,112)

Increase (Decrease) in:
Accounts Payable and Accrued Expenses, net 111,278 196,320
Customers Deposits (871,271) 873,446
----------- -----------
Net Cash (used) Provided by Operating Activities (1,663,700) (1,283,818)

Cash Flows Used in Investing Activities:
Capital Expenditures, Net of Disposals (130,874) (297,605)
----------- -----------
Net Cash Used in Investing Activities (130,874) (297,605)

Cash Flows Used in Financing Activities:
Proceeds from Sale of Common Stock, Net of Costs 1,328,275 1,037,379
Proceeds from Loans 286,680 932,410
Repayments of Loans, Net (52,239) (121,000)
----------- -----------
Net Cash, Provided (Used) in Financing Activities 1,562,716 1,848,789
Net (Decrease) Increase in Cash and Equivalents (231,858) 267,366
Cash and Equivalents at beginning of Period 305,639 141,319
----------- -----------
Cash and Equivalents at end of Period 73,781 408,685

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash Paid During the Period for Interest 23,979 828
Common Stock Issued for Services 314,727 151,705
Common Stock Issued for Capital Expenditures 286,084 -
Notes Incurred for Capital Assets Acquired 86,276 -

NONCASH FINANCING ACTIVITIES

Issuance of Common Stock In Exchange for Debt - 545,000
</TABLE>

F-23
<PAGE>

THE MAJESTIC COMPANIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE A - SUMMARY OF ACCOUNTING POLICIES

General
- -------

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the requirements of Item 310(b) of Regulation S-B, and
therefore, do not include all the information necessary for a fair presentation
of financial position, results of operations and cash flows in conformity with
generally accepted accounting principles.

In the opinion of the Company, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's annual report for the year ended
December 31, 1998 on Form 10-SB.

Amounts for the nine months ended September 30, 1998 have been reclassified to
conform with the September 30, 1999 presentation.

Consolidated Statements
- -----------------------

The consolidated financial statements include the accounts of The Majestic
Companies, Ltd. and its wholly owned subsidiaries. Significant intercompany
transactions have been eliminated in consolidation.

Capital Stock
- -------------

During the nine months ended September 30, 1999, the Company issued 3,090,498
shares of common stock to private investors and exempt offerings in exchange for
$1,328,275, net of offering costs.

In addition, the Company issued 2,631,709 shares of common stock during the nine
months ended September 30, 1999 in exchange for goods and services.

Notes Payable
- -------------

During the nine months ended September 30, 1999, the Company borrowed $186,680
from its President and Chief Executive Officer. The loan is payable on demand
and incurs interest at 12% per annum.

F-24
<PAGE>

EXHIBIT INDEX

Number Description of Exhibit Page
------ ---------------------- ----

(11) Computation of Losses per Common
and Common Share Equivalents E-1

<PAGE>

EXHIBIT 11

THE MAJESTIC COMPANIES, LTD.

COMPUTATION OF LOSSES PER COMMON
AND COMMON EQUIVALENT SHARES

For the years ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Shares outstanding at beginning of period 4,024,758 920,329

Weighted average of common shares issued
during the period 7,963,664 3,009,463

Weighted average of common shares
outstanding during the period (adjusted for 3
for 1 stock split in 1998) 11,988,422 3,929,792

Stock options and warrants outstanding-not
included as they have no dilutive effect - -

Shares used in computing earnings per
common share 11,988,422 3,929,792

Loss per common share ($2,373,288/11,988,422)

Loss per common share ($301,952)/3,929,792) $ (.20) $ (.08)
=========== ==========
</TABLE>

E-1