U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
21st CENTURY TECHNOLOGIES, INC.
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(Name of Small Business Issuer in its Charter)
NEVADA 48-1110566
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
2513 East Loop 820 North
Ft. Worth, TX 76118
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(Address of Principal Executive Offices)
Issuer's Telephone Number, including area code: (817) 284-0099
Facsimile Number: (817) 284-7528
Securities Registered under Section 12(b) of the Exchange Act:
None.
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Securities Registered under Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
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Title of Class
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Table of Contents
PART I
Item 1: Description of Business 3
Item 2: Management's Discussion and Analysis or Plan of Operations 17
Item 3: Description of Property 18
Item 4: Security Ownership of Certain Beneficial Owners and Management 18
Item 5: Directors, Executive Officers, Promoters and Control Persons 20
Item 6: Executive Compensation 22
Item 7: Certain Relationships and Related Transactions 23
Item 8: Description of Securities 24
PART II
Item 1: Market Price for Common Equity and Dividends of 21st Century
Technologies, Inc. and Other Shareholder Matters 24
Item 2: Legal Proceedings 25
Item 3: Changes In and Disagreements With Accountants 26
Item 4: Recent Sales of Unregistered Securities 26
Item 5: Indemnification of Directors and Officers 27
PART F/S
Index to Financial Statements 28
PART III
Item 1: Index to and Description of Exhibits 29
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2
FORWARD LOOKING STATEMENTS
In this registration statement references to "21st Century Technologies,
Inc.," "we," "us," and "our" refer to 21st Century Technologies, Inc.
This Form 10-SB contains certain forward-looking statements. For this
purpose any statements contained in this Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
our control. These factors include but are not limited to economic conditions
generally and in the industries in which 21st Century Technologies, Inc. may
participate; competition within 21st Century Technologies, Inc. chosen
industry, including competition from much larger competitors; technological
advances and failure by 21st Century Technologies, Inc. to successfully
develop business relationships.
Part I
ITEM 1. DESCRIPTION OF BUSINESS.
Business Development
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21st Century Technologies, Inc. (the "Company")is a Nevada corporation.
The Company merged into a "public shell" (formerly First National Holding
Corporation)and began trading effective June 1, 1995 after acquiring certain
assets of Innovative Weaponry, Inc., a debtor in bankruptcy. The authorized
capital of the Company is 100,000,000 shares of common voting stock par value
$.001 per share. The Company has issued to date 40,218,478 shares with
59,218,478 shares outstanding on a fully diluted basis.
Organization and Charter Amendments
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This registration is being filed on a voluntary basis to maintain the
Company's quotations on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. ("NASD").
In January of 1999, the SEC granted approval of amendments to the NASD
OTC Bulletin Board Eligibility Rule 6530 and 6540. These amendments now
require a company listed on the OTC Bulletin Board to be a reporting company
and current in its reports filed with the SEC. As a result of this rule
change we have voluntarily filed this registration statement in order to
become a fully reporting company and maintain the listing of our common stock
on the OTC Bulletin Board. The rule requires that the SEC come to a position
of no further comment regarding the registration statement before a company is
considered compliant. We cannot assure that the SEC will come to such a
position in regards to this registration statement prior to our phase-in date
in April 2000. According to the rules, if we are not in compliance at our
phase-in-date our common stock will be removed from the OTC Bulletin Board. At
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that time we intend to move our listing to the National Quotation Bureau's
Pink Sheets. This possible move to the "pink sheets" may adversely affect the
market, if any, in our stock. See the heading "Effects of Existing or
Probable Governmental Regulations".
The following amendments to the Articles of Incorporation of the Company
(formerly First National Holding Corporation as filed January 28, 1994 with
the Nevada Secretary of State) have been made since its organization.
(1) On September 9, 1994, a Merger Agreement was entered into by and between
First National Holding Corporation, a Nevada corporation, and First
National Holding Corporation, a Delaware corporation.
(2) On September 19, 1994 an amendment was filed with the Nevada Secretary
of State changing the name from First National Holding Corporation to
Innovative Weaponry, Inc.
(3) On May 19, 1995, First National Holding Corporation (Nevada) filed
Articles of Merger with First National Holding Corporation, a Delaware
corporation, with the Nevada Secretary of State with the Nevada
corporation as the surviving entity.
(4) On September 25, 1995, an amendment was filed with the Nevada Secretary
of State changing the name from Innovative Weaponry, Inc. to 21st
Century Technologies, Inc.
All computations in the Registration Statement take into account these
adjustments.
Copies of the initial Articles of Incorporation and these amendments, supra,
are attached and are incorporated herein by reference.
General
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The Company is presently operating five active subsidiaries:
(1) Innovative Weaponry Incorporated ("IWI"), a manufacturer of night sights
for the military, law enforcement and gun enthusiasts using radioactive
"tritium" for illumination in low light and no light applications; (2) Trident
Technologies Corporation ("Trident"), a manufacturer of the Gripper (a
magnetic climbing device worn on the hand and feet), Sea Patch and Underwater
Seal (magnetic "cam-on/cam-off" devices to seal leaks in the metal hulls of
ships with both disaster and environmental markets); (3) Griffon USA, Inc.
("Griffon"), importer, distributor and licensee of Continental Weapons (Pty)
Ltd. of South Africa of a custom line of replica 1911 Colt 45 sidearm; (4) CQB
Armor, Inc. ("CQB"), a manufacturer of soft and hard body armor for the
military, law enforcement and the private sectors; and (5) Trade Partners
International, Inc. ("Trade Partners") which acted as a technology transfer
facilitator of a license from the Los Alamos National Laboratory ("LANL")
involving certain magnetic technology used by Trident became active when it
acquired the USA, Canada, Caribbean, India, and Mexico distribution rights to
a tire sealant product manufactured in South Africa by FinnCo Manufacturing.
The sealant is a mono-ethylene glycol water based product used to prevent
punctures in both "tube" and "tubeless" tires.
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NASD OTC Bulletin Board Quotations
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On June 1, 1995 the NASD confirmed un-priced quotations of the Company's
common stock on the OTC Bulletin Board under the symbol "IWIL". On October
31, 1997 the Company changed its OTC trading symbol to "TEXN". For
information concerning these and other stock quotations regarding the
Company's common stock, which do not represent actual transactions or
broker-dealer markups, markdowns or commissions, see the caption "Market Price
of and Dividends on the Company's Common Equity and Other Stockholder
Matters".
Mergers and Acquisitions
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The Company is currently evaluating other companies that are in the same or
related industries as its subsidiaries with a view towards gaining market
share through possible mergers and acquisitions. However, at this date the
Company has entered into no definitive Memorandum of Understandings ("MOU's")
or Letters of Intent ("LOI")with any said companies.
Changes of Control During the Past Three Years
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In September of 1994, the board of directors entered into a consulting
contract with Kenneth E. Wilson, (husband of the current Company President).
This agreement required the Company to issue 1,000,000 shares of Company
common stock to Mr. Wilson and to compensate him at the rate of $10,000.00 per
month. Should the Company be unable to pay Mr. Wilson in cash, the Company
would issue Mr. Wilson its common stock in amount equal to $0.02 per share
(which was the share price at the time the consulting contract was entered
into between the Company and Mr. Wilson). The Company paid Mr. Wilson through
December of 1994. In January of 1995, the Company and Mr. Wilson
re-negotiated the agreement to remunerate him solely in stock of the Company.
This was necessary because of the Company's cash flow position and inability
to pay Mr. Wilson the previously agreed upon fee under the original consulting
agreement. The agreement required Mr. Wilson to perform services for the
Company in exchange for 500,000 shares of Company common stock per month. As
of the expiration date of the agreement, January 5, 1998, Mr. Wilson earned a
total of 19,000,000 shares of the Company's common stock. The agreement
required that the stock not be issued until after the end of the initial term
of the agreement, which was three years. To date, no shares have been issued
to Mr. Wilson. However, before any shares are issued to Mr. Wilson, the
Company will provide in advance full public disclosure to its shareholders.
See the caption "Security Ownership of Certain Beneficial Owners and
Management", Item 4, for information respecting the beneficial ownership of
securities of the Company by Messrs. Kenneth E. Wilson, Patricia G. Wilson and
others; and see caption "Directors, Executive Officers, Promoters and Control
Persons," Item 5, for other material information regarding these persons.
OTC Bulletin Board Eligibility Rule
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In January of 1999, the SEC granted approval of amendments to the NASD
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OTC Bulletin Board Eligibility Rule 6530 and 6540. These amendments now
require a company listed on the OTC Bulletin Board to be a reporting company
and current in its reports filed with the SEC. As a result of this rule
change we have voluntarily filed this registration statement in order to
become a fully reporting company and maintain the listing of our common stock
on the OTC Bulletin Board. The rule requires that the SEC come to a position
of no further comment regarding the registration statement before a company is
considered compliant. We cannot assure that the SEC will come to such a
position in regards to this registration statement prior to our phase-in date
of March 1, 2000. According to the rules, if we are not in compliance at our
phase-in-date our common stock will be removed from the OTC Bulletin Board. At
that time we intend to move our listing to the National Quotation Bureau's
Pink Sheets. This possible move to the "pink sheets" may adversely affect the
market, if any, in our stock.
For information concerning sales of "unregistered" and "restricted" securities
during the past three years, see the caption "Recent Sales of Unregistered
Securities", Item 10.
Business
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The Company is presently operating five active subsidiaries:
1. INNOVATIVE WEAPONRY INCORPORATED
The Company's IWI subsidiary is a manufacturer of tritium products available
in night sights and other "night seeing" sights in the weapons industry. Both
military and private gun owners currently purchase tritium based night sights
with additional applications to other industries which is under research and
development. The IWI tritium products are of the finest quality in the
industry featuring color options with the front sight brighter than the rear
sights thereby enhancing low light sighting. Chosen by world famous gun
manufacturers as their OEM gun sight of choice, the IWI tritium products are
industry leaders used by all branches of the United States military, including
the Navy Seal Team and Delta Forces, United States Customs, United States Drug
Enforcement, United States Department of Fish and Game, and state and local
police departments nationwide.
IWI sells under the federal trade mark protected name "PT Night Sights TM" a
multi-color 3-dot night sight using the radioactive isotope "tritium" in
encapsulated form to provide light in low light and no light situations. IWI
is one of four companies in the United States that use "tritium" in the
manufacture of night sights. Tritium, is a radioactive product, which is
highly regulated by the U.S. Nuclear Regulatory Commission ("NRC"). IWI is
licensed with the NRC to import "tritium" in connection with the manufacture
of its night sights. IWI is a New Mexico corporation and is 100% owned by the
Company.
IWI continues the business of Innovative Weaponry, Inc., a New Mexico
corporation, which filed a Chapter 11 bankruptcy plan in the U.S. Bankruptcy
Court for the District of New Mexico on August 26, 1994. Key to the business
is the use of the radioactive isotope "tritium" which is luminescent (i.e.
tritium glows in low and no light environments.)
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2. TRIDENT TECHNOLOGIES CORPORATION
Trident Technologies Corporation ("Trident"), a manufacturer of the Gripper (a
magnetic climbing device worn on the hand and feet), Sea Patch and Underwater
Seal (magnetic "cam-on/cam-off" devices to seal leaks in the metal hulls of
ships with both disaster and environmental markets. Trident has experienced
insignificant sales to date of the Gripper. Trident has redesigned the Sea
Patch and Underwater Seal in November 1998 when they were introduced at the
Ship Repair and Conversion Exhibit '98 in London, England. Trident intends on
marketing the Gripper, Sea Patch and Underwater Seal to the maritime and
salvage repair industries. Currently, the Sea Patch and the Under Water Seal
is being evaluated by the American Bureau of Shipping (the "ABS") an
independent testing agency. The Company has been informed that a favorable
evaluation report will be issued by the ABS in the next 45 days.
The magnetic technology utilized by Trident is licensed from the Los Alamos
National Laboratory ("LANL") in Los Alamos, New Mexico. The license is
caption "Limited Exclusive Patent License Agreement Between The Regents of the
University of California and Trident Technologies Corporation for Seal Device
for Ferromagnetic Containers" (LANL Control Number 97-41-00226. Trident is a
Nevada corporation and is 100% owned by the Company.
The Gripper was invented at the Los Alamos National Laboratory ("LANL") at the
request of the United States Department of Defense. The technology transfer
from LANL to Trident was facilitated through Trade Partners International,
Inc.. The founder and President of TPI was Dr. Thomas E. Murphy. Dr. Murphy's
background includes extensive work and experience in the field of "special
operations". Dr. Murphy is a recognized national expert in the field of
special operations, paramilitary, and counter-terrorist operations and
activities. Trident holds an exclusive worldwide, all applications license to
commercially exploit the technology.
The Grippers are "worn" on hands and feet to enable the user to climb or
traverse any steel surface. It is a lightweight magnetic device (each Gripper
weighs only 1.5 pounds) that attaches to any ferromagnetic material-iron,
steel, or their alloys. It fastens smoothly to a surface and can be attached
or detached with only one hand or foot. Using a set of Grippers (i.e. two
devices on the hands and two on the feet) the user can climb a vertical
surface, releasing and repositioning the Grippers as he ascends. Wearing
Grippers, a person can move up, down, or sideways with relative ease. Grippers
enable the user to:
a. bridge inspection
b. tank inspection
c. underwater welding on ships hulls
d. underwater inspection of off-shore oil rigs structural support towers
e. ships hull inspections
f. coating inspections
g. emergency repairs on ship's hulls, etc.
It is believed that the Gripper technology is unique and without commercial
competition at this time. There are a wide range of potential applications for
this technology from the military/ and special operations groups worldwide to
the commercial sector including areas such as bridge inspection, tank
inspection, underwater welding on ship's hulls, underwater inspection of
off-shore oil rigs structural support towers, ship's hull inspections, coating
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inspections, emergency repairs on ship's hulls, etc. Further, based on
commercial response to this technology to date, it is believed that numerous
additional applications will evolve as the technology penetrates initial
market areas.
Under Water Seal and Sea Patch
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The Under Water Seal or Sea Patch is under developmental license from LANL.
The technology is based on a patented magnetic-hydraulic means of implementing
emergency ship, storage container, pipeline and other repairs where surface
integrity has been breached as in the case of a rip or tear to a ship's hull.
This technology poses a new approach to resolving a problem having high public
visibility due to the extensive environmental focus on hazardous chemical and
oil spillage in the environment from pipelines, storage containers, railroad
cars and maritime transport vessels.
This technology utilizes certain aspects of the "Gripper" magnetic pack and
cam-on-cam-off technology to attach a compression Patch to tears/punctures in
a ship's hull above or below the waterline. Trident's engineers working with
the inventor of the technology have significantly advanced the technology, as
well as, having prototyped and tested the underlying concepts involved.
3. GRIFFON USA, INC.
Griffon USA, Inc. ("Griffon"), importer and licensee of the Griffon line of
the replica 1911 Colt 45 sidearm. Griffon is the exclusive USA licensee of
Continental Weapons (Pty), Inc., a South African manufacturer of side arms,
rifles and guns. Griffon is regulated by the U.S. Bureau of Alcohol, Tobacco
and Firearms. Griffon is a Nevada corporation and is 100% owned by the
Company.
4. CQB ARMOR, INC.
CQB Armor, Inc. ("CQB"), is in the developmental stage of becoming a
manufacturer of soft and hard body armor for the military, law enforcement and
the private sectors. CQB is a Nevada corporation and is 100% owned by the
Company. CQB is seeking to acquire an existing soft and hard body armor
business, but no MOU's have been signed or are contemplated in the near
future.
5. TRADE PARTNERS INTERNATIONAL, INC.
Trade Partners International, Inc. ("Trade Partners") was not actively engaged
in any trade or business, acting solely as a technology transfer facilitator
of a license from the Los Alamos National Laboratory ("LANL") involving
certain magnetic technology used by Trident. However, on October 15, 1999,
the Company entered into a Memorandum Agreement with FinnCo Manufacturing,
LLC, a privately owned corporation based in South Africa. Under the terms of
the distribution agreement, the Company has the right to distribute a
mono-ethylene glycol and water based product used to prevent punctures in tube
and tubeless tires (the "sealant") exclusively in the U.S., Canada, Caribbean,
India and Mexico for a ten-year initial period subject to extension. TPI is a
Nevada corporation and is 100% owned by the Company.
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RISK FACTORS
In any business venture, there are substantial risks specific to the
particular enterprise, which cannot be ascertained in total until the business
is underway. However, at a minimum, the Company's present and proposed
business operations will be highly speculative and be subject to the same
types of risks inherent in any new or unproven venture, and will include those
types of risk factors outlined below.
Limited Operating History.
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The Company's five subsidiaries have a limited operating history with five
years or less. During this period of time, the Company was profitable only in
1998. These profits were used to sustain the growth and development of the
various subsidiaries on a consolidated basis.
Government Regulation and Legal Uncertainties.
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SEC, Blue Sky Laws and OTC Bulletin Board
As a public company, we are regulated by the Securities and Exchange
Commission and the rules and regulations set-forth in the federal securities
laws. In addition, we are regulated as an Issuer by the various Blue Sky Law
commissioners in the various states where we may make offers and effect sales
of our securities under applicable private placement exemptions. Finally, we
are regulated by any rules and regulations pertinent to companies listed on
the over-the-counter bulletin board.
No "Established Trading Market" for Common Stock.
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Although the Company's common stock is quoted on the OTC Bulletin Board there
is currently no "established trading market" for its common stock; and there
can be no assurance that any such market will ever develop or be maintained.
Any market price for shares of the common stock of the Company is likely to be
very volatile, and numerous other factors beyond the control of the Company
may have a significant adverse effect. In addition, the stock markets
generally have experienced, and continue to experience, extreme price and
volume fluctuations, which have affected the market price of many small
capital companies. These broad market fluctuations, as well as general
economic and political conditions, may adversely affect the market price of
the Company's common stock in any market that may develop. See the caption
"Market for Common Equity".
With the National Association of Securities Dealers, Inc. (the "NASD"),
there is currently no market for such shares; there can be no assurance
that such a market will ever develop or be maintained. Any market price for
shares of common stock of the Company is likely to be very volatile, and
numerous factors beyond the control of the Company may have a significant
effect. In addition, the stock markets generally have experienced, and
continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies.
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These broad market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the Company's common
stock in any market that may develop. See the caption "Market for Common
Equity and Related Stockholder Matters". Sales of "restricted securities"
under Rule 144 may also have an adverse effect on any market that may develop
in the Company's common stock. See the caption "Recent Sales of Unregistered
Securities".
Further, effective January 4, 1999, the NASD adopted rules and regulations
requiring that prior to any issuer having its securities quoted on the OTC
Bulletin Board of the NASD that such issuer must be a "reporting issuer" which
is required to file reports under the Section 13 or 15(d) of the Securities
and Exchange Act of 1934, as amended (the "1934 Act"). The Company is not
currently a "reporting issuer"," and this Registration Statement will bring
the Company into compliance with this listing provision of the OTC Bulletin
Board and should prevent the NASD from de-listing quotations of the Company's
common stock. Under the "phase-in" schedule of the NASD, the Company has
until April 2000 within which to become a "reporting issuer" and to satisfy
all comments of the Securities and Exchange Commission respecting this
Registration Statement.
Risks of "Penny Stock."
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The Company's common stock may be deemed to be "penny stock" as that
term is defined in Reg. Section 240.3a51-1 of the Securities and Exchange
Commission.
Penny stocks are stocks (i) with a price of less than five dollars per share;
(ii) that are not traded on a "recognized" national exchange; (iii) whose
prices are not quoted on the NASDAQ automated quotation system
(NASDAQ-listed stocks must still meet requirement (i) above); or (iv) is an
issuer with net tangible assets less than $2,000,000 (if the issuer has
been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average revenues of
less than $6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Potential investors in the
Company's common stock are urged to obtain and read such disclosure carefully
before purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any
investor for transactions in such stocks before selling any penny stock to
that investor. This procedure requires the broker-dealer to (i) obtain from
the investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the
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investor's financial situation, investment experience and investment
objectives. Compliance with these requirements may make it more difficult for
investors in the Company's common stock to resell their shares to third
parties or to otherwise dispose of them.
ATF, NRC, OSHA and Texas Department of Health
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The Company is currently regulated by three agencies of the United States and
the Department of Health of the State of Texas in connection with its
activities involving firearms and "tritium". These agencies are the Bureau of
Alcohol, Tobacco and Firearms (the "ATF"); the Nuclear Regulatory Commission
(the "NRC"); the Occupational Health and Safety Administration ("OSHA") and
the State of Texas.
The ATF regulates the import and sale of firearms by IWI and Griffon. The NRC
regulates the importation of "tritium" and its use in the manufacture of PT
Night Sights TM. Each of these agencies has respectively granted IWI and
Griffon all necessary permits, licenses and/or grants of authority to transact
business. Substantial rules and regulations control the manner in which IWI
and Griffon transacts business in firearms and IWI uses "tritium". IWI and
Griffon are required to maintain required books and records in connection with
their firearms business and are subject to onsite inspection by these agencies
and/or the Department of Justice, at anytime. In addition, the Company shared
plant facility is subject to certain safety requirements imposed upon it by
NRC, OSHA and the State of Texas Department of Health.
Year 2000
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The Company and its management believe that the computer hardware intended for
use in its manufacturing and business administration is Y2K compliant. The
Company's equipment is new, and the architecture and design of its software
was taken into account in all equipment purchases. Purchases have been
limited to equipment from well-known computer companies like IBM, Cisco and
other reputable hardware manufacturers.
The Company can give no assurance that the third parties with whom it intends
to do business (e.g. banks, financial institutions, businesses and utilities)
will ensure Year 2000 compliance in a timely manner or that, if they do not,
their computer systems will not have an adverse effect on the Company.
However, the Company does not believe that the Year 2000 compliance issues of
such third parties will result in a material adverse effect on its financial
condition or result of operations.
Distribution Methods of the Products or Services
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The Company's distribution methods vary with each subsidiary. The IWI,
Griffon and CQB subsidiaries sell their products and services through a
combination of (1) direct sales; (2) sales through 5 distribution agents; and
(3) sales through manufacturers and supply houses. The Trident subsidiary has
sold a limited amount of its Gripper products directly to customers. The
distribution of Trident's Under Water Seal and Sea Patch will utilize both
direct sales and agency representation in the maritime salvage and repair
industry.
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Competitive Business Conditions
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The Company through its operating subsidiaries enjoys a generally favorable
competitive business condition based upon the quality of its products and
value pricing. In addition, the Company has been able to lower the price of
goods sold through various cost saving measures that has enabled it to remain
competitive. The demand for the Company's IWI, Griffon, and CQB lines of
products has been steadily growing as law enforcement, military and private
sectors expand crime prevention and defensive programs. This trend is
expected to continue. The demand for the Trident line of products should be
great given the recent enforcement efforts by the Department of Justice with
respect to polluters of the nation's coastline and waterways. These
enforcement efforts are both civil and criminal in nature. With the
environmental concerns over pollution, the Trident line of products should
appeal to the shipping industry as a means of accident prevention and disaster
relief.
The Company believes that the market for IWI's line of tritium products will
track the growth in the public sector purchase of handguns in the United
States. However, handguns are a highly politicized issue subject to increased
public sector and governmental scrutiny similar to the tobacco industry. The
Company does not believe, however, that this scrutiny is directed towards the
ownership, registration, and limitation on the private sector ownership of
handguns and not towards the military and law enforcement sectors (which
comprise the majority of IWI sales to date).
Competitive Advantages & Differentiation
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The Company has the following competitive advantages and differentiation of
its respective subsidiaries' products and services.
The IWI subsidiary is the only U.S. manufacturer of night sights that is
allowed to import "tritium" from South Africa. The license to import
"tritium" is issued by the U.S. Nuclear Regulatory Commission. This license
confers a distinct competitive advantage in that any new manufacturer of gun
sights would have to obtain regulatory approval to import "tritium". Although
it is possible that a new manufacturer could obtain the necessary license to
import "tritium" in order to compete with IWI the issuance of the license may
delay market entry by up to 24 months.
PT Night Sights TM represents a relatively new market segment for gun users
which can be used to help alleviate the poor level of accuracy in low light
conditions that gun owners are currently experiencing. PT Night Sights TM have
gained popularity with the military, sportsmen, law enforcement and government
agencies.
IWI has expanded its market share under its new management team. The annual
sales rate currently exceeds $1.5 million. Customers include more than 100
government agencies throughout the country. This client base includes police
departments in some of the largest metropolitan areas such as Los Angeles,
Chicago, Dallas/Ft. Worth, and in Florida.
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The Company's products are unique and distinctive in their respective product
lines. IWI is the only manufacturer of the multi-colored 3-dot system and the
innovative bar dot configuration. Other manufactures produce an "all green"
version that according to many experts, can cause some confusion in the
lining-up of the sights. IWI is the only manufacturer that provides complete
custom work for a broad line of guns and offers a 15-year warranty on its
products. Competitors offer only limited custom work and warranties of 10-12
years. Because of the Gripper's patented technology there are no other
companies with similar technology in the market place.
The Trident subsidiary has no known competitors either in the United States or
elsewhere. The magnetic technology utilized by Trident is licensed from LANL
and, therefore, competitors (if any) would have to replicate the technology in
such a manner as not to infringe upon the aforesaid intellectual property.
Trident has adopted an aggressive intellectual property protection program
with respect to its magnetic technology. The market for Trident's Gripper,
Under Water Seal and the Sea Patch has been relatively untested to date. The
future growth of Trident will depend on the acceptance of its products. As
the market for Trident's products expands it can be expected that competitors
will seek to introduce alternative products. Trident will seek to
differentiate its products based upon superior design and functionality.
The maritime industry represents the largest market for the Underwater Seal
technology. In conjunction with maritime insurance carriers, dry dock repair
and salvage operators, Trident will be able to offer its technology to the
maritime industry.
Trident will launch its Sea Patch Under Water Seal at maritime trade shows,
where it will, among other things:
* display the Gripper and Underwater Seal technology;
* increase awareness in the maritime and insurance
industries for the Gripper and Underwater Seal;
* meet with maritime insurers to increase policy holder demand;
* add product outlets or other means of distribution.
Trident has submitted the Sea Patch and Under Water Seal to the American
Bureau of Shipping for classification. The American Bureau of Shipping (ABS)
is one of the world's leading ship classification societies. The primary
purpose of ABS is to determine the structural and mechanical fitness of ships
and other marine structures for their intended purpose. It does this through a
procedure known as classification. Classification involves the establishing
and administering of standards, known as Rules, for the design, construction,
and operational maintenance of marine vessels and structures.
As a not-for-profit and non-governmental organization, ABS acts as a
self-regulating agency to the international marine industry, with the mission
of promoting the safety of life, property, and natural environment. The
company also has affiliated companies which provide inspection, certification,
verification, quality assurance and consulting services not only to the marine
industry but industries worldwide.
The Griffon subsidiary faces strong competition from established handgun
manufacturers (who have established themselves as the industry leaders).
However, Griffon believes that its value pricing will enable it to penetrate
13
<PAGE>
market share. In addition, the Griffon 1911 Colt 45 replica will come with
the "tritium" PT Night Sights TM manufactured by its sister subsidiary, IWI,
other custom up-grades (such as gun handle), and an optional leather holster.
All of these custom features will differentiate the Griffon's product in the
eyes of the consumer. In addition, Griffon will benefit from its ability to
cross sell existing customers of IWI (who have already established themselves
as satisfied customers of the Company).
The CQB subsidiary will face strong competition from a number of established
body armor companies. As with the Griffon subsidiary, CQB will benefit from
cross selling to existing customers of IWI. These existing customers
currently purchase body armor products from competitors. CQB will attempt to
differentiate its body armor products based on value pricing, tie-ins to
purchases of PT Night Sights TM and Griffon products.
The TPI subsidiary will face strong competition from a number of established
sealant companies. However, the unique properties of the sealant make it
"water friendly" giving it an advantage over sealant that tend to clump when
exposed to moisture. TPI will demonstrate its sealant at trade shows and seek
to penetrate large distribution channels such as established chain stores and
outlets. TPI enjoys a 10-year exclusive on the sale of the tire sealant.
Patents, Trademarks, Licenses, Franchisees,
Concessions, Royalty Payments or Labor Contract
- -----------------------------------------------
The IWI subsidiary has the only U.S. license from the Nuclear Regulatory
Commission to import "tritium" a radioactive isotope. Currently, IWI is
importing 100% of its "tritium" from suppliers in South Africa.
The Trident subsidiary has an exclusive LANL license granted through TPI to
use patented and trade secret protected magnetic technology. In June 1995,
Trident entered into a license agreement (Agreement) with Trade Partners
International, Inc. (TPI) to acquire the exclusive license to certain patent
rights conveyed to TPI by The University of California as operators of Los
Alamos National Laboratory (patent holder) related to the development,
marketing and sales rights to certain specified magnetic and/or magnet
technology.
The agreed-upon and negotiated value of the Agreement at acquisition date was
$75,000. Subsequently, the transaction was re-negotiated and the Company
acquired all of the common stock of TPI in a Type B reorganization.
Trident, as sub-licensee, is obligated to pay a royalty fee of 8.0% on net
income (as defined in the Agreement) of products sold using the patented
technology. Further, Trident is to pay an annual maintenance fee, which was
$24,000 for the third and all subsequent years of the Agreement. All royalty
fees paid during a specific year are to be credited to that year's maintenance
fee and the maintenance fee requirement is considered met if the royalty
payments during an Agreement year are equal to or exceed the required
maintenance fee.
The Griffon subsidiary has an exclusive import license granted to it by
Continental Weapons International (Pty) Ltd. of South Africa who manufactures
the 1911 Colt 45 replica. The South African manufacturer charges Griffon a
flat rate on goods purchased based on volume of sales and other marketing
14
<PAGE>
considerations. Prices are inclusive of all payments and there is no separate
license or royalty payment due on Griffon's purchases.
Need for Governmental Approval of Principal Products or Services
- -----------------------------------------------------------------
The IWI subsidiary will continue to need ATF and NRC approval to continue to
do business. The Griffon subsidiary will continue to need an import license
from the ATF in order to continue its business. The grant of these licenses
from governmental agencies is subject to certain record keeping requirements,
periodic inspections, and timely reporting. If either IWI or Griffon failed
to comply with these requirements it is possible that the responsible
government agency could cancel, suspend, or qualify those companies right to
do business in regulated fields.
Effect of Existing or Probable Government Regulations on Business
- -----------------------------------------------------------------
Currently, the existing regulations of the ATF and NRC impact upon the
Company's business with respect to the IWI subsidiary and the ATF with respect
to the Griffon subsidiary which imports and distributes hand guns from South
Africa.
The Company believes that there is a push towards legislation mandating some
type of lock on firearms as a safety measure. In addition, there may be an
attempt by both the public and private sectors to hold firearm manufacturers
liable for damages caused by a criminal who while committing a crime uses a
firearm to cause harm or death. Class actions in the asbestos, breast implant
and cigarette industries are examples of this type of litigation.
Class action litigation against handgun manufacturers by Attorney Generals of
various states, municipalities and federal governmental agencies have been
initiated against well-known manufactures such as Colt Industries, Inc. As a
result, many hand gun manufacturers are being forced to defend multimillion
dollar lawsuits seeking damages for personal and property damages caused by
the illegal use of hand guns by criminals. These class actions are in the
very early stages of litigation and it is uncertain whether these actions will
go forward to trial. If these class actions are not settled their impact on
gun manufacturers could result in monetary judgments that could effectively
bankrupt these manufacturers. Although the regulation of the ownership of
fire arms, including hand guns, is protected by the Bill of Rights of United
States Constitution, hand gun manufacturers may be unsuccessful in defending
themselves or getting judgments over turned on appeal.
We distribute handguns through our Griffon subsidiary as opposed to being a
manufacturer. To date, sales of Griffon's line of replica handguns has been
limited to less than 500 Colt 45 1911 replicas. We are currently evaluating
the likelihood of future class action litigation to determine how we will
continue, if at all, in the distribution of the Griffon line of hand guns.
For example, we could limit our sales to police, military and governmental
customers. If we were to stop selling the Griffon line of hand guns to the
public it would have at this point a minimal impact upon the company overall.
We are currently reviewing our strategy to determine the best course of
action.
15
<PAGE>
There will be no impact on IWI since it does not manufacture hand guns
limiting its business to re-fitting hand guns with PT Night Sights TM.
However, IWI is highly regulated in its importation, storage, and distribution
of radioactive gaseous "tritium". Tritium, as a commodity, is supplied by
various countries, including Canada, Russia, South Africa, and Switzerland.
"Tritium" is a radioactive isotope of hydrogen and is highly regulated to
prevent over-exposure which can be dangerous and even life threatening to
humans. Tritium emits low energy beta particles and almost no gamma rays
transforming itself simultaneously into helium. This process is called
radioactive decay and proceeds at an unalterable rate for each type of
radioisotope. The time required for a radioactive isotope to decay is half of
its original strength or to lose half of its activity is called "half-life".
Tritium decays with a half-life of 12.3 years. The conventional unit of
measurement of radioactivity is the Curie (symbol Ci) (3.7 x 10 disintegration
per second). The newer, S.1., Unit is the Becquerel (symbol Bq) (1
disintegration per second). Ionizing radiation is part of our natural
surroundings. The natural sources of radiation include: minerals in the
earth; radioactive gasses in the air; cosmic rays from outer space and the
sun. All of these sources are referred to as "natural background" radiation.
Some manufactured products, such as building materials and luminous paints, as
well as, our food and water, contain small quantities of radioactive material.
Also, for many years, X-rays have been used for medical purposes.
When a person is exposed to radiation, some of it is absorbed by the body
causing ionization of molecules of tissue. The amount of radiation that is
absorbed is measured as a "radiation dose". Two units of dose measurement are
currently in use. The conventional unit is the "rem". The other unit is
Sievert (Sv) with 1 Sv equal to 100 rems. In terms of strength, 1 rem and 1
Sv are relatively large doses of radiation. It is more usual to refer to
lilrem (abbreviated as mrem) which represents one-thousandth of a rem and a
milliSiever or mSv.
In everyday life, we are exposed to different sources of radiation as follows:
Natural Background 1 to 3.5 mSv per year
Medical X-Ray 0.002 mSv per year
Chest 0.06 mSv per year
Skull 0.20 mSv per year
Spinal Column 1.30 mSv per year
Upper GI 2.45 mSv per year
Abdomen 0.55 mSv per year
Barium Enema 4.05 mSv per year
Pelvis 0.65 mSv per year
Bone Fracture 0.01 mSv per year
Tritium Encapsulated 0.001 mSv per year or less
The Company has insurance coverage as follows: $10 million face, $1 million
radioactive liability policy, $1 million per instance, $1 million product
liability, $5 million gun, and general liability. The Company does not believe
that it is subject to environmental or personal injury liability with respect
to exposure to its "tritium" based product used in gaseous form to light
devices (even assuming the destruction of the encapsulated tritium in its
entirety). Nonetheless, the Company maintains strict safety guidelines in the
handling, storage and manufacture of its tritium products. IWI has passed all
of its NRC and State of Texas audits for each of its years of operation.
16
<PAGE>
Research and Development
- ------------------------
The Company has a limited research and development group devoted principally
to the design applications for the Gripper, Under Water Seal and Sea Patch.
Any design patents are covered by the LANL license that developed the core
magnetic technology.
Number of Employees
- --------------------
The Company currently employs 14 full time, and 2 part time employs; and 2
outside consultants. We train our employees in house and are not dependent on
recruitment programs. All of our hourly employees are at will with hourly
wages based upon level of experience and the length of employment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
- --------
Management has focused on increasing sales of the PT Night Sights TM to law
enforcement and the military. Direct sales marketing has been headed-up by
Kenneth E. Wilson who as Chairman deals directly with police departments
across the country. In addition, IWI attended trade shows including the Shot
Show in Atlanta (January 1999); International IWA in Nuremberg, Germany (March
1999); Trexpo West (Los Angeles June 1999); Trexpo East (Washington, D.C. June
1999); International Chief's of Police (North Carolina October 1999); and the
National Wholesalers Buying Show (October 1999). In addition, IWI has
established a representative office in Denham Springs, LA which is in close
proximity to the gulf port facilities surrounding New Orleans, LA. The
Griffon subsidiary has imported to date less than 700 1911 Colt 45 replicas
with an order of 1,000 additional replicas subject to importation upon
securing financing. The Trident subsidiary introduced its product lines at a
maritime and salvage trade show in London, England in the fall of 1998 with
certification by the American Bureau of Shipping expected by the first quarter
of 2000. Trident also attended the Maritime Ship Repair and Emergency
Response Seminar (Washington, DC August 1999). The CQB subsidiary was
recently incorporated by the Company with no operations to date. Future growth
will depend on marketing the Company's products and services. TPI attended
the Interbike bicycle trade show (Las Vegas September 1999).
17
<PAGE>
Results of Operations
- ---------------------
The following table sets forth selected consolidated statements of
operating data as a percentage of total revenues:
Year ended Year ended 9 months ended
Dec 31 Dec 31 Sept 30
1997 1998 1999
AS A PERCENTAGE OF REVENUES
Revenues..................... 100% 100% 100%
Cost of revenues............. 28% 23% 70%
Gross profit.................. 72% 77% 30%
Operating expenses: 0% 0% 0%
Selling ....................
General and administrative.. 52% 82% 92%
Total operating expenses.... 52% 82% 92%
Gain/(Loss) from operations .. 21% (5)% (62)%
Other income (expense), net... (14)% 0% 0%
Revenues...................... 1,701,013 713,471 683,507
Cost of Sales. ............... 469,910 165,020 475,533
Selling Expenses. ............ 876,373 583,856 628,822
General and Administration.... 0% 0% 0%
Interest Expense. ............ 0% 0% 0%
Liquidity.
- ----------
The liquidity of the Company is dependent on a number of factors related to
share price. Currently, the Company has more orders for product than it can
afford to purchase raw products for fabrication. The Company will require
additional capital funding in order to satisfy new orders and continued growth
of market share.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company leases 4,000 square feet consisting of executive, manufacturing,
and storage space at the same address of its principal executive office at a
monthly lease charge of $2,400. As lessee, the Company has made substantial
leasehold improvements to the space. The space is divided into an executive
office suite; mail room; manufacturing facility; tritium storage vault;
tritium curing and assembly line; raw materials storage; and employee
cafeteria. The cost of these improvements is subject to depreciation expense
adjustments over
18
<PAGE>
the lease term. At the termination of the lease on December 31, 2000 (subject
to renewal), the Company will not be able to recover the cost of these
improvements. In addition, the Company owns certain manufacturing equipment
(drill presses, grinders, cutters and computer lathes), raw materials for the
manufacture of product, product inventory, general business equipment,
furniture, and related office supplies.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 15, 1999, the beneficial
ownership of our outstanding common stock of; (I) each person or group known
by us to own beneficially more than 5% of our outstanding common stock, (ii)
each of our executive officers, (iii) each of our director's and (iv) all
executive officers and directors as a group. Beneficial ownership is
determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Except as indicated by
footnote, the persons named in the table below have sole voting power and
investment power with respect to all shares of common stock shown as
beneficially owned by them. The percentage of beneficial ownership is based
on 40,218,478 shares of common stock outstanding as of this date.
CERTAIN BENEFICIAL OWNERS
Common Stock Beneficially Owned
------------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
- ------------------ ------------------- -------------------
Kenneth E. Wilson (1) 19,000,000* 32%
5601 Lindsey Drive
Plano, TX 75093
21st Century Technologies 11,000,000 18%
Funding LP (2)
281 Independent Blvd. #205
Virginia Beach VA, 23462
Notes:
(1) Following a discussion of possible settlement of past due compensation,
Mr. Wilson may elect to receive the past due compensation versus the
issuance of stock. Mr. Wilson is married to Patricia G. Wilson who is
President of the Company. Patricia G. Wilson owns 600,000 shares of the
Company's stock over which she has voting control.
(2) On March 1, 1998, the Company entered into an agreement with 21st
Century Technologies Funding Limited Partnership, a Virginia Limited
Partnership (21st Century Technologies Funding LLC, a Virginia Limited
Liability Company, General Partner). The Company agreed to sell
10,000,000 shares of unregistered common stock to the partnership at
$0.08 per share, which would raise $800,000.00 in unrestricted working
capital for general corporate uses. The Partnership offered for sale
1000 partnership units priced at $1,000.00 each to up to 35
non-accredited investors and unlimited
19
<PAGE>
offerings to accredited investors. The offering began on March 30, 1998
and was thereafter increased by 1,000,000 shares.
Security Ownership of Management
- --------------------------------
The following table sets forth the share holdings of the Company's directors
and executive officers as of the date hereof:
Number of Shares Percentage
Name and Address Beneficially Owned of Class (1)
- -------------------------- -------------------- --------------
Kenneth E. Wilson, Chm 19,000,000* 32.08%
5601 Lindsey Drive
Plano, TX 75093
Patricia G. Wilson, Pres 600,000 0.01%
A5601 Lindsey Drive
Plano, TX 75093
Fred W. Rauch, Jr. 400,000 0.006%
- ------------------------------
All Executive Officers 20,000,000 33%
And Directors As Group
Notes:
(1) Following a discussion of possible settlement of past due compensation,
Mr. Wilson may elect to receive the past due compensation versus the
issuance of stock. Mr. Wilson is married to Patricia G. Wilson who is
President of the Company. Patricia G. Wilson owns 600,000 shares of the
Company's stock over which she has voting control.
Changes In Control
- ------------------
There are no present arrangements or pledges of the Company's securities which
may result in a change of control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Identification of Directors and Executive Officers.
- --------------------------------------------------
Our directors, executive officers and key employees and their respective
ages and positions are set forth below. Biographical information for each of
those persons is also presented below. Our executive officers are appointed
by our Board of Directors and serve at its discretion. Kenneth E. Wilson and
Patricia G. Wilson are married.
20
<PAGE>
Directors and Officers
- ----------------------
Name Age Position Held
- ---- --- -------------
Kenneth E. Wilson 58 Chief Executive Officer and Chairman of
the Board
Patricia G. Wilson 43 President and Director
Maura J. Bartley 42 Secretary/Treasurer and Director
Lee Pitts 47 Director
Fred W. Rausch, Jr. 70 Director
Business Experience.
- --------------------
Kenneth E. Wilson, 58, is the Chairman of the Board of Directors of the
Company. Mr. Wilson has acted as a consultant to IWI while it was in
bankruptcy in New Mexico and was instrumental in formulating a plan of
reorganization. Since 1995, Mr. Wilson has acted as a consultant of the
Company and its various subsidiaries until he was elected Chairman in 1998.
Prior to joining the Company, Mr. Wilson was experienced in mergers and
acquisitions, corporate finance, and investment banking. During the five
years preceding his affiliation with the Company, Mr. Wilson provided estate
planning, living trust, annuities and other insurance programs. Mr. Wilson is
married to Patricia G. Wilson (who is President of the Company) with five
children. Mr. Wilson has been instrumental in guiding the Company through its
early development and acquisition of key licenses and products. In addition,
Mr. Wilson has been the chief sales person on behalf of the Company
negotiating contracts and product delivery specifications with customers. Mr.
Wilson has traveled extensively for the Company in the U.S., England, Germany
and South Africa where he has successfully concluded various contracts.
Patricia G. Wilson, 43, is President of the Company. Ms. Wilson earned a B.A.
Degree with Honors in Psychology from the University of Texas at Dallas. Ms.
Wilson has been employed by the company in an executive capacity since its
inception in 1995. In addition, Ms. Wilson is the Company's radiation safety
officer and handles various licensing matters with the NRC, ATF, and the State
of Texas. Before joining the Company, Ms. Wilson was employed as a research
assistant (1992-1994); paralegal (1991-1992; 1986-1989; 1981-1985); and
self-employed in 1984-1986. Ms. Wilson is the mother of 5 children and is
married to Kenneth E. Wilson.
Maura J. Bartley, 42, is a Director of the Company since 1998. Ms. Bartley
earned a B.S. Degree Magnum Cum Laude in Business Administration from the
University of Texas at Dallas in 1984. Prior to joining the Company, Ms.
Bartley worked for Dallas Telco Credit Union (1984-1998; an accounting
specialist (1984-1988); Investment Representative (1984-1988); data entry at
Veterans Medical Center (1982-1984); and a testing administrator at Mountain
View College (1980-1982).
21
<PAGE>
Lee Pitts, 47, is a Director of the Company since 1998. Mr. Pitts earned a
Bachelor of Applied Arts and Sciences in Business Administration from Northern
Texas State University in 1985. Mr. Pitts also attended the Southwestern Law
Enforcement Institute in Richardson, TX. From 1993 until 1998, Mr. Pitts was
a police captain and Division Commander of the Uniformed Services Division in
the North Richland Hills Police Department in North Richland Hills, TX. From
1986 to 1993, Mr. Pitts was a police sergeant. From 1983-1986, Mr. Pitts was
a police corporal. From 1982 to 1983, Mr. Pitts was a police officer. Mr.
Pitts served in the U.S. Marine Corps, U.S. Marine Corps Reserve, U.S. Army
National Guard, and U.S. Army Reserve. Mr. Pitts has earned the rank of
Sergeant Major (E-9). Mr. Pitts served one tour of duty in the Republic of
Viet Nam (USMC); one tour of duty Iceland (USMC); 9 months active duty Desert
Storm (USAR). While in the military, Mr. Pitts earned various course
certificates, including First Sergeant Course; Advanced NCO Course; Primary
Leadership Course; Counter Terrorism Course; Protective Services Training; and
Military Operations on Urban Terrain.
Fred W. Rausch, Jr.,70, earned his J.D. Degree from Washburn University Law
School. Mr. Rausch has over 30 years experience in various legal tenures
including 2 years Assistant Revisor of Kansas Statutes; 7 years Assistant
Attorney General, Kansas; 8 years Workers Compensation Fund Director, Kansas;
10 years General Counsel, Kansas Association of School Boards, and 30 years,
Municipal Counsel, various Kansas municipalities. Mr. Rausch is admitted to
practice law before the U.S. Supreme Court; U.S. Military Court of Appeals;
U.S. Court of Appeals for the 10th Circuit; U.S. District Court Kansas; Kansas
Supreme Court; and all other Kansas courts. Mr. Rausch is a U.S. Army Reserve
Colonel having served duty in World War II and Korea.
Significant Employees.
- -----------------------
The Company currently has significant employees who are not executive
officers. These employees handle "tritium" and perform various precision
machine functions whose quality could be diminished and/or interrupted if they
terminated their employment with the Company. As business develops, it may be
required to engage the services of additional technical employees to diminish
this possibility.
Family Relationships.
- ---------------------
Kenneth E. Wilson and Patricia G. Wilson are husband and wife. There are no
other family relationships between any director or executive officer.
However, Josh Macalik Wilson, who is the son of Kenneth and Patricia Wilson,
is Executive Vice President of Marketing for the Company.
22
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth the aggregate compensation paid by the Company
for services rendered during the periods indicated.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Other
Fiscal Annual
Name and Principal Position Year Salary ($) Bonus Compensation
- ---------------------------- ------ ---------- ----- ------------
Kenneth E. Wilson, 1998 $ 120,000* $ 0 $ 0
Chairman
Patricia G. Wilson 1998 70,000 0 0
President and Director
Maura J. Bartley 1998 45,000 0 0
Chief Financial Officer
and Secretary
* Effective January 1999, Mr. Wilson was to be paid $10,000 per month. The
company did not have sufficient revenue to pay Mr. Wilson paying him to date
only $30,000 of the amount due.
Compensation of Directors
- -------------------------
We do not have any standard arrangement for compensation of our directors
for any services provided as director, including services for committee
participation or for special assignments.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements through 1999.
- -----------------------------------------------------
To date, there are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change of control of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The only transactions between members of management, nominees to become
directors or executive officers, 5% stockholders, or promoters or persons who
may be deemed to be parents of the Company are:
23
<PAGE>
If 19,000,000 shares of common stock are to be issued versus settlement of
cash payment to Kenneth E. Wilson.
Under a consulting agreement we were required to issue 1,000,000 shares of
Company common stock to Mr. Wilson and to compensate him at the rate of
$10,000.00 per month. We agreed that if the Company be unable to pay Mr.
Wilson in cash, the Company would issue Mr. Wilson its common stock in amount
equal to $0.02 per share (which was the share price at the time the consulting
contract was entered into between the Company and Mr. Wilson). The Company
paid Mr. Wilson through December of 1994. In January of 1995, the Company
and Mr. Wilson re-negotiated the agreement to remunerate him solely in stock
of the Company. This was necessary because of the Company's cash flow
position and inability to pay Mr. Wilson the previously agreed upon fee under
the original consulting agreement. The agreement required Mr. Wilson to
perform services for the Company in exchange for 500,000 shares of Company
common stock per month. As of the expiration date of the agreement, January
5, 1998, Mr. Wilson earned a total of 19,000,000 shares of the Company's
common stock. The agreement required that the stock not be issued until after
the end of the initial term of the agreement, which was three years. To date,
no shares have been issued to Mr. Wilson. However, before any shares are
issued to Mr. Wilson, the Company will provide in advance full public
disclosure to its shareholders.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
- ------------
We are authorized to issue 100,000,000 shares of common stock, par value
$.001, of which 40,218,478 were issued and outstanding as of September 30,
1999 and 59,218,478 shares on a fully diluted basis. All shares of common
stock have equal rights and privileges with respect to voting, liquidation and
dividend rights. Each share of common stock entitles the holder thereof (i)
to one non-cumulative vote for each share held of record of all matters
submitted to a vote of the stockholders, (ii) to participate equally and to
receive any and all such dividends as may be declared by the Board of
Directors out of funds legally available; and (iii) to participate pro rata in
any distribution of assets available for distribution upon our liquidation.
Our stockholders have no preemptive rights to acquire additional shares of
common stock or any other securities. All outstanding shares of common stock
are fully paid and non-assessable.
Preferred Stock
- ---------------
We have not authorized or issued any preferred stock.
24
<PAGE>
PART II
ITEM 1: MARKET PRICE FOR COMMON EQUITY AND DIVIDENDS OF
21st CENTURY TECHNOLOGIES AND OTHER SHAREHOLDER MATTERS
Our common stock is traded over-the-counter and quoted on the OTC NASDAQ
Electronic Bulletin Board under the symbol "TEXN". The following table
represents the range of the high and low bid prices of our stock as reported
by the Nasdaq Trading and Market Services for each fiscal quarter for the last
two fiscal years ending December 31, 1999. Such quotations represent prices
between dealers and may not include retail markups, markdowns, or commissions
and may not necessarily represent actual transactions.
Year Quarter High Low
---- ------- ---- ---
1998 First Quarter .31 .16
Second Quarter .48 .165
Third Quarter .46 .18
Fourth Quarter .23 .11
1999 First Quarter .24 .11
Second Quarter .17 .10
Third Quarter .165 .08
Fourth Quarter .19 .087
Our market has traded sporadically and is often thinly traded. Shareholders
should consider the possibility of the loss of the entire value of their
shares.
As of December 31, 1999, we had approximately 792 stockholders of record.
Management controls 20,600,000 shares of our outstanding shares.
Dividends
- ----------
We have not declared dividends on our common stock and do not anticipate
paying dividends on our common stock in the foreseeable future.
Stock Splits
- ------------
We have not declared any stock splits in our common stock.
25
<PAGE>
ITEM 2: LEGAL PROCEEDINGS
We are not involved in any material pending legal proceedings, other than
routine litigation incidental to our business, to which we are a party or of
which any of our property is subject.
During 1998, the Company entered into a settlement agreement settling a
certain action styled Paul A. McCullough vs. Innovative Weaponry, Inc., At Law
No. 96-133 in the Circuit Court for Arlington County, Virginia, which
consisted, in part, of a Confessed Judgment Promissory Note obligating IWI to
pay McCullough in monthly installments of $1647.67. The balance owing on said
note was settled by issuing John E. McCullough, Sr., Two Hundred Twelve
Thousand Four Hundred (212.400) shares of common stock, without restrictive
legend, of 21st Century Technologies, Inc.
The Company settled a lawsuit (involving a contract dispute) styled Morgan
Casner Associates, Inc. vs. Innovative Weaponry, et al, Cause No. 96CA006325,
in the Civil Division, Superior Court of the District of Columbia. The
Company paid $150,000 and received a release of Judgment, which had been
granted in the suit.
The Company entered into a settlement agreement settling a certain action
under United States District Court for the Northern District of Oklahoma Case
No. 97-CV-004-H. Cunningham will return 71,000 shares of the Company's common
stock after such time as the Company pays $39,000.00 plus interest. Said
payment due and payable on May 12, 1998. The Company paid this settlement on
May 8, 1998 and said shares were returned to the treasury.
Further, to the knowledge of management, no director or executive officer
is party to any action in which any has an interest adverse to the Company.
ITEM 3: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no change in, or disagreements with, our principal
independent accountant during our last two fiscal years.
ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities we have sold within the
past three fiscal years without registration:
Limited Private Offering
- ------------------------
1997. Effective January 1, 1997, the Company had 13,311,000 shares issued and
outstanding. During the calendar year ending December 31, 1997, the Company
issued an additional 5,515,000 shares pursuant to an exemption provided by
Sections 3(b) and 4(2) of the Securities Act of 1933 and Regulation D
promulgated thereunder, and the corresponding exemptions available under state
securities laws.
26
<PAGE>
1998. Effective January 1, 1998, the Company had 18,825,863 shares issued and
outstanding. During the calendar year ending December 31, 1998, the Company
issued an additional 14,461,967 shares pursuant to an exemption provided by
Sections 3(b) and 4(2) of the Securities Act of 1933 and Regulation D
promulgated thereunder, and the corres-ponding exemptions available under
state securities laws.
1999. Effective January 1, 1999, the Company had 33,287,830 shares issued and
outstanding. Effective August 30, 1999, the Company had issued an additional
6,930,648 shares pursuant to an exemption provided by Sections 3(b) and 4(2)
of the Securities Act of 1933 and Regulation D promulgat-ed thereunder, and
the corresponding exemptions available under state securities laws with a
total of 40,218,478 shares issued and outstanding.
The issuance of such shares was exempt from registration under the Securities
Act of 1933 by reason of Sections 3(b) and 4(2) as a private transaction not
involving a public distribution.
In each of the private transactions above, we believe that each purchaser
(i) was aware that the securities had not been registered under federal
securities laws; (ii) acquired the securities for his/her/its own account for
investment purposes of the federal securities laws; (iii) understood that the
securities would need to be indefinitely held unless registered or an
exemption from registration applied to a proposed disposition; and (iv) was
aware that the certificate representing the securities would bear a legend
restricting its transfer. We believe that, in light of the foregoing, the
sale of our securities to the respective acquirers did not constitute the sale
of an unregistered security in violation of the federal securities laws and
regulations by reason of the exemptions provided under Sections 3(b) and 4(2)
of the Securities Act, and the rules and regulations promulgated thereunder.
ITEM 5: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation and bylaws provide for the indemnification of
present and former directors and officers and each person who serves at our
request as our officer or director. To the full extent of Nevada Revised
Statutes Sections 78.7502 and 78.751 indemnification for a director is
mandatory and indemnification for an officer, agent or employee is permissive.
We will indemnify such individuals against all costs, expenses and liabilities
reasonably incurred in a threatened, pending or completed action, suit or
proceeding brought because such individual is our director or officer. Such
individual must have conducted himself in good faith and reasonably believed
that his conduct was in, or not opposed to, our best interest. In a criminal
action he must not have had a reasonable cause to believe his conduct was
unlawful. This right of indemnification shall not be exclusive of other
rights the individual is entitled to as a matter of law or otherwise.
We will not indemnify an individual adjudged liable due to his negligence or
willful misconduct toward us, adjudged liable to us, or if he improperly
received personal benefit. Indemnification in a derivative action is limited
to reasonable expenses incurred in connection with the proceeding. Also, we
are authorized to purchase insurance on behalf of an individual for
liabilities incurred whether or not we would have the power or obligation to
indemnify him pursuant to our bylaws.
27
<PAGE>
PART F/S
INDEX TO FINANCIAL STATEMENTS
21st Century Technologies, Inc. and its wholly owned subsidiaries,
Consolidated Financial Statements (un-audited) for the nine months ended
September 30, 1999.
* Consolidated Balance Sheet For the Nine Months Ended September 30, 1999
(Unaudited)
* Consolidated Statements of Operations For the Nine Months Ended
September 30, 1999 (Unaudited)
* Consolidated Statements of Cash Flows (Unaudited) For the Nine Months
Ended September 30, 1999
* Consolidated Statements of Stockholders' Equity (Unaudited) for the Nine
Months Ended September 30, 1999
* Notes to Consolidated Financial Statements for the Nine Months Ended
September 30, 1999 (Unaudited)
21st Century Technologies, Inc. and its wholly owned subsidiaries, Audited
Financial Statements for December 31, 1998 and December 31, 1997
* Independent Auditor's Report
* Consolidated Balance Sheet December 31, 1998 and 1997
* Consolidated Statements of Operations For the Two Years Ended December
31, 1998 and 1997
* Consolidated Statements of Comprehensive Income for the Two Years Ended
December 31, 1998 and 1997
* Consolidated Statements of Cash Flows for the Two Years Ended December
31, 1998 and 1997
* Supplemental Schedule of Non-Cash Investing and Financing Activities
* Consolidated Statements of Stockholders' Equity For the Two Years Ended
December 31, 1998
* Notes to Consolidated Financial Statements For the Years Ended December
31, 1998 and 1997
28
<PAGE>
21st Century Technologies, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
September 30, 1999
-------------------
Assets
- ------
Current Assets:
Cash and cash equivalents $ 17,623
Accounts Receivable 1,002,866
Inventories 159,416
Notes Receivable 35,000
-----------------
Total Current Assets 1,214,905
Property, Plant, and Equipment, Net 158,274
Other Assets, Net 462,726
-----------------
Total Assets $ 1,835,905
=================
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities:
Accounts Payable-trade 119,440
Accounts Payable-other 7,882
-----------------
Total Current Liabilities 127,372
Other Liabilities:
Notes Payable 208,843
-----------------
Total Liabilities: 336,215
Stockholders' Equity:
Common Stock, 40,218,478 issued and
outstanding shares at $.001 par value
at September 30, 1999 40,218
Paid-in Capital 3,360,096
Retained Earnings (Deficit) (1,479,776)
Current Earnings (420,848)
Total Stockholders' Equity 1,499,690
-----------------
Total Liabilities and Stockholders' Equity $ 1,835,905
=================
See Notes to Consolidated Financial Statements
<PAGE> 29
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
3 Months Ended 9 Months Ended
Sept 30,1999 Sept 30, 1999
---------------- ----------------
Net Sales $ 191,615 $ 683,507
Cost of Sales 157,736 475,533
---------------- ----------------
Gross Profit 33,879 207,974
General and administrative expenses 166,022 536,119
Depreciation and Amortization 30,901 92,703
---------------- ----------------
Net Income (Loss) (163,044) (420,848)
Estimated Income Taxes 0 0
---------------- ----------------
Net Income (Loss) $ (163,044) $ (420,848)
================ ================
Earnings (Loss) Per Common Share:
Primary $ (0.0044) $ (0.0115)
Fully Diluted $ (0.0029) $ (0.0075)
See Notes to Consolidated Financial Statements
<PAGE> 30
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 1999
Sept 30, 1999 Dec 31, 1998
--------------- --------------
Cash Flows From Operating Activities:
Net Income (Loss) $ (420,848) $ 113,869
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and Amortization 92,703 123,604
Change in operating assets and liabilities:
Accounts receivable (6,203) (860,773)
Inventory 440 (74,396)
Other non-current assets (37,496) (18,359)
Accounts payable 88,096 (31,763)
--------------- --------------
Net Cash Provided (Used) by
Operating Activities (283,308) (747,818)
Cash Flows From Investing Activities:
Purchase Equipment (66,568)
--------------
Net Cash Provided (Used) by
Investing Activities (66,568)
Cash Flows From Financing Activities:
Increase/(Decrease) in long-term debt 23,659 (53,552)
(Purchase)/Sale of Treasury Stock 39,889 (39,889)
Sale of stock 226,262 910,745
--------------- --------------
Net Cash Provided (Used) by
Financing Activities 289,810 817,304
--------------- --------------
Net Increase (Decrease) in Cash and Cash
Equivalents 6,502 2,918
Cash and Cash Equivalents at Beginning of Period 11,121 8,203
--------------- --------------
Cash and Cash Equivalents at End of Period $ 17,623 $ 11,121
=============== ===============
See Notes to Consolidated Financial Statements
<PAGE> 31
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(unaudited)
For the Nine Months Ended September 30, 1999
<TABLE>
<CAPTION>
Common Paid-In Retained Treasury
Stock Capital Earnings Stock Total
--------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1998 $ 32,410 $ 3,117,085 $(1,479,776) $(39,889) $ 1,629,830
Sale of Treasury Stock 39,899 39,889
Sale of Common Stock $ 7,808 $ 243,011 250,819
Net Income $ (420,848) $ (420,848)
Balance 9/30/99 $ 40,218 $ 3,360,096 $(1,900,624) $ 1,499,690
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 32
21st Century Technology, Inc.
Notes to Consolidated Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
Note 1: Summary of Significant Accounting Policies:
a. Organization and Business Activities
21st Century Technologies, Inc. was originally incorporated under the laws of
the State of Delaware on May 15, 1967 as Satcom Corporation. On November 6,
1991, the Company changed its name to Hughes Pharmaceutical Corporation.
Subsequent to 1991, the Company changed its name from Hughes Pharmaceutical
Corporation to First National Holding Corporation. The Company became public
in 1985 through a merger with International Fluidics Control, Inc. (formerly
Sensory Systems, Inc., Training With The Pros, Inc., and/or M-H Studios,
Inc.). International Fluidics Control, Inc. successfully completed a public
offering of its securities in 1969 under Regulation A of the Securities Act of
1933.
As of December 31, 1985, the Company had liquidated all business operations
and began the search for a suitable merger or acquisition candidate. As a
result of this action, the Board of Directors approved a quasi-reorganization
for accounting purposes, effective January 1, 1986, whereby all accumulated
deficits in shareholders' equity were offset against additional paid-in
capital and common stock balance sheet accounts to the extent of reducing
these accounts to equal the par value of the issued and outstanding shares of
common stock.
During the third quarter of 1994, in conjunction with the execution of a
letter of intent to acquire Innovative Weaponry, Inc. (a New Mexico
corporation), the Company changed its corporate name to Innovative Weaponry,
Inc. to better reflect its future actions and pending relationship with the
acquisition target. On September 25,1995, the Board of Directors approved a
name change to 21st Century Technologies, Inc.
Innovative Weaponry, Inc. - New Mexico was incorporated on June 22, 1988 under
the laws of the State of New Mexico. The Company was formed for the
development and sale of specialized firearms, firearm systems and related
equipment. On September 14, 1992, Innovative Weaponry, Inc. filed a petition
for relief under Chapter 11 of the Federal Bankruptcy Laws in the United
States Bankruptcy Court of the District of New Mexico. Under Chapter 11,
certain claims are stayed while the Debtor continues business operations as
Debtor-in-Possession. On August 19, 1994, IWI-NV (now 21st Century
Technologies, Inc.) and IWI-NM entered into a letter of intent whereby IWI-NV
would use its unregistered, restricted common stock and cash to satisfy
certain obligations of IWI-NM in settlement of IWI-NM's bankruptcy action.
On February 1, 1995, the U. S. Bankruptcy Court of the District of New Mexico
confirmed the IWI-NM's plan of reorganization. The plan became effective 30
days after its confirmation. IWI-NM
<PAGE> 33
became a wholly owned subsidiary of Innovative Weaponry, Inc. (IWI-NV)
(formerly First National Holding Corporation) (a Nevada Corporation) (now
known as 21st Century Technologies, Inc.), a publicly owned company.
b. Cash and Cash Equivalents:
For purposes of reporting cash flows, the Company considers all cash on hand
and in banks, certificates of deposit and other highly liquid debt instruments
with a maturity of three months or less at the date of purchase to be cash and
cash equivalents.
c. Revenue recognition and credit policies:
In the normal course of business, the Company primarily sells its goods on
either a "cash in advance" or "cash on delivery" basis and periodically
extends unsecured credit to its customers involved in the retail sale of the
Company's products. All customers are located throughout the United States
and some European Countries. Because of the credit risk involved, management
has provided an allowance for doubtful accounts, which reflects its opinion of
amounts, which will eventually become uncollectible. In the event of complete
non-performance by the Company's customers, the maximum exposure to the
Company is the outstanding trade accounts receivable balance at the date of
non-performance.
d. Inventory:
Inventory at September 30, 1999, consists of raw materials used in the
manufacture of firearm products and finished goods. Inventory is carried at
the lower of cost or market value, using the first-in, first-out method.
e. Property and equipment:
Property and equipment is recorded at its historical cost. Depreciation is
provided for in amounts sufficient to relate the asset cost to operations over
the estimated useful life (three to five years) using the straight-line method
for financial reporting purposes.
Gains and losses from disposition of property and equipment are recognized as
incurred and are included in operations.
f. Income Taxes:
The Company uses the asset and liability method as identified in SFAS 109,
Accounting for Income Taxes.
g. Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the
<PAGE> 34
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
h. Asset Impairment:
The Company adopted the provisions of SFAS 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, in its
financial statements for the year ended December 31, 1995. There has been no
effect as of June 30, 1998 of adopting SFAS 121.
i. Stock-Based Compensation:
The Company will follow the fair value based method of accounting as
prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, for its
stock-based compensation. The Company has not adopted a stock option plan.
j. Principles of Consolidation and Presentation --Wholly-Owned Subsidiaries:
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Intercompany transactions and accounts have been eliminated
in the consolidation.
k. License Agreement:
The License agreement is amortized over the life of the related patent
technology (generally 17 years) using the straight-line method.
l. Basis of Presentation:
Financial information presented as of any date other than December 31 has been
prepared from the books and records without audit. The accompanying financial
statements have been prepared in accordance with the instructions to Form
10QSB and do not include all of the information and the footnotes required by
generally accepted accounting principles for complete statements. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such financial statements,
have been included.
These financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1998.
Note 2: Other Assets
License Agreement: In June 1995, Trident entered into a license agreement
(Agreement) with Trade Partners International, Inc. (TPI) to acquire the
exclusive license to certain
<PAGE> 35
patent rights conveyed to TPI by The University of California as operators of
Los Alamos National Laboratory (patent holder) related to the development,
marketing and sales rights to certain specified magnetic and/or magnet
technology.
The agreed-upon and negotiated value of the Agreement at acquisition date was
$75,000. Subsequently, the transaction was re-negotiated and 21st Century
acquired all of the common stock of TPI in a Type B reorganization.
Trident, as sub-licensee, is obligated to pay a royalty fee of 8.0% on net
income (as defined in the Agreement) of products sold using the patented
technology. Further, Trident is to pay an annual maintenance fee, which was
$24,000 for the third and all subsequent years of the Agreement. All royalty
fees paid during a specific year are to be credited to that year's maintenance
fee and the maintenance fee requirement is considered met if the royalty
payments during an Agreement year are equal to or exceed the required
maintenance fee.
Trademark:
The trademark "PT Night Sights" has been capitalized at cost and is being
amortized over its term.
Bankruptcy excess Re-Organization Cost:
Innovative Weaponry, Inc. (IWI) emerged from a bankruptcy filing under Chapter
11 of the US Bankruptcy Code, effective March 1, 1995. As a result of the
Plan of Reorganization, IWI became a wholly owned subsidiary of 21st Century
Technologies, Inc. and all prior IWI shareholders retained less that a 50%
interest in the combined reorganized entities.
In conjunction with IWI's emergence from protection under Chapter 11, IWI
recognized "fresh-start" accounting as a result of its acquisition by 21st
Century. "Fresh start" accounting allows for the restatement of all assets
and liabilities being set to the fair market value of each respective category
and the restatement of retained earnings to "0". The resulting amount was
debited to the account "Reorganization value in excess of amounts allocable to
identifiable assets". This balance is being amortized over ten (10) years
using the straight-line method. The amortization period began on March 1,
1995, concurrent with the effective date of IWI's Plan of Reorganization.
The adjustment necessary to reflect the "fresh-start" accounting, as
prescribed by Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" issued by the American Institute of
Certified Public Accountants reflected a Reorganization value in excess of
amounts allocable to identifiable assets.
<PAGE> 36
Note 3: Stockholders' Equity
The total number of all classes of authorized capital stock is 100,000,000
shares, all of which are Common Stock, $0.001 par value per share. As of
September 30, 1999, there are 40,218,478 shares of Common Stock issued and
outstanding.
Note 4: Earnings (Loss) Per Common Share
Earnings per common share are computed by dividing net income by the weighted
average number of common shares outstanding during the 9 months ended
September 30, 1999. SFAS No. 128, Earnings per Share applies to entities with
publicly held common stock and establishes standards for computing and
presenting earnings per share (EPS). Basic EPS excludes dilution and is
computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in the earnings
of the entity.
Note 5: Income Taxes
At December 31, 1998, the Company had available net operating loss
carryforwards of approximately $1,479,776 for federal income tax purposes that
begin to expire in 2008. The federal carryforwards resulted in losses
generated in prior years. For financial purposes, a valuation allowance of
$1,479,776 has been recognized to offset the deferred tax assets. There are
no deferred tax liabilities. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes.
Note 6: Risks and Uncertainties
The Company operates in highly specialized industries. There are only four
companies worldwide who manufacture and sell night sights using tritium. The
Company ranks number three out of four. The gun sight industry is highly
dependent on major firearms manufacturers as well as consumer and governmental
demand for weapons. World conditions and economies can affect the future
sales of this product.
The Company's magnetic and hydraulic-magnetic technologies are largely
un-proven and may require additional extensive testing before marketing these
products can continue. Demand for these products from governmental and
industrial sources is largely estimated and while the Company has studied
various markets, no assurance can be given that these products can be
successfully marketed.
<PAGE> 37
In the future, these products will be marketed outside the United States,
which will subject the Company to foreign currency fluctuation risks.
The Company's firearm replica import division has not been tested in the U. S.
market and the estimated demand may not reach the Company's expectations.
Note 7: Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Cash and Cash Equivalents. The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Accounts Receivable and Accounts Payable. The carrying amount of accounts
receivable and accounts payable in the balance sheet approximates fair value.
Short-Term and Long-Term Debt. The carrying amount of the debts recorded in
the balance sheet approximates fair value.
The carrying amounts of the Company's financial instruments at December 31,
1997 and 1996 represent fair value.
Note 8: Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. It requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement
and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid in capital in the equity
section of a statement of financial position. The Company's comprehensive
income does not differ from its reported net income.
Note 9: Business Segments
The Company has six business segments: (a) Manufacture of night sights for
handguns, (b) Manufacture of "the Gripper", a patented device used for
climbing steel surfaces, (c) Manufacture of an Emergency Magnetic-Hydraulic
Sea Patch System, (d) Manufacture of body armor, (e) Importation and sale of
handguns, and (f) Importation and distribution of a tire sealant product. The
majority of the Company's sales are derived from sales of night sights. The
other segments sales are not material to these financial statements.
<PAGE> 38
Note 10: Year 2000 Issues
The Company employed an independent consultant to evaluate is internal
hardware and software with respect to the Year 2000 issue (Y2K). The Y2K
issue is the result of computer programs being written using two digits rather
than four to define the applicable year. Any programs that have time
sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system failure
or malfunction. Other applications such as telephone systems, etc. are being
reviewed by their vendors for compliance. No cost has been estimated at this
time.
<PAGE> 39
<Letterhead of
ALVIN L. DAHL
& ASSOCIATES,PC
Certified Public Accountants
A Professional Corporation>
Independent Auditor's Report
----------------------------
Board of Directors and Stockholders
21st Century Technologies, Inc.
2513 East Loop 820 North
Ft. Worth, TX 76118
We have audited the accompanying balance sheets of 21st Century Technologies,
Inc. as of December 31, 1998 and 1997, and the related statements of
operations, retained earnings, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 21st Century Technologies,
Inc. as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Alvin L. Dahl & Associates
ALVIN L. DAHL & Associates, PC
March 15,1999
Dallas, Texas
903 N. Bowser Road, Suite 370 * Richardson, Texas 75801 *
(972) 664-1527 * FAX (972) 664-1430
<PAGE> 40
21st Century Technologies, Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 1998 and 1997
1998 1997
------------- -------------
Assets As Restated
Current Assets:
Cash and cash equivalents $ 11,121 $ 8,203
Accounts Receivable(Note 2) 996,663 135,890
Inventories(Note 3) 158,976 84,580
Notes Receivable(Note 4) 35,000 35,000
------------- -------------
Total Current Assets 1,201,760 263,673
Property, Plant, and Equipment, Net (Note 6) 187,314 190,003
Other Assets, Net (Note 7) 425,230 527,733
------------- -------------
Total Assets $ 1,814,304 $ 981,409
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable-trade (Note 5 ) 38,929 70,692
Accounts Payable-other 347 22,078
------------- -------------
Total Current Liabilities 39,276 92,770
Other Liabilities:
Deposits 3,372
Notes Payable (Note 9) 141,908 193,460
------------- -------------
Total Liabilities: 184,556 286,230
Stockholders' Equity (Note 10):
Common Stock, issued and outstanding
33,287,830 shares in 1998 and
18,825,863 shares in 1997 32,410 18,826
Paid-in Capital 3,117,085 2,269,998
Retained Earnings (Deficit) (1,479,776) (1,593,645)
Treasury Stock ( 39,889) -0-
Total Stockholders' Equity 1,629,830 695,179
------------- -------------
Total Liabilities and
Stockholders' Equity $ 1,814,304 $ 981,733
============= =============
See Notes to Consolidated Financial Statements
<PAGE> 41
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Two Years Ended December 31, 1998 and 1997
1998 1997
------------- -------------
Net Sales $ 1,701,013 $ 712,471
Cost of Sales 469,910 165,020
------------- -------------
Gross Profit 1,231,103 547,471
General and administrative expenses 752,769 465,386
Non-Operating Expenses 240,861 -0-
Depreciation and Amortization 123,604 118,470
------------- -------------
Income (Loss) before Income Taxes 113,869 (36,405)
Estimated Income Taxes 0 0
------------- -------------
Net Income (Loss) $ 113,869 $ (36,405)
============= =============
Earnings (Loss) Per Common Share: (Note 12)
Primary $ 0.004 $ (0.002)
Fully Diluted $ NA $ NA
See Notes to Consolidated Financial Statements
<PAGE> 42
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Note 17)
For the Two Years Ended December 31, 1998
1998
- ----
Net Income $ 113,869
Other comprehensive income, net of tax 0
-----------
Comprehensive income $ 113,869
===========
1997
- ----
Net Income $ ( 36,405)
Other comprehensive income, net of tax 0
-----------
Comprehensive income $ ( 36,405)
===========
See Notes to Consolidated Financial Statements
<PAGE> 43
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Two Years Ended December 31, 1998 and 1997
1998 1997
------------- -------------
Cash Flows From Operating Activities:
Net Income (Loss) $ 113,869 $ (36,405)
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and Amortization 123,604 118,470
Change in operating assets and liabilities:
Accounts receivable (860,773) (29,147)
Inventory ( 74,396) 35,400
Other non-current assets (18,359) (84,711)
Accounts payable-trade (31,763) (66,582)
------------- -------------
Net Cash Provided (Used) by
Operating Activities (747,818) (62,975)
Cash Flows From Investing Activities:
Purchase Equipment (66,568) 0
------------- -------------
Net Cash Provided (Used) by
Investing Activities (66,568) 0
Cash Flows From Financing Activities:
Decrease in long-term debt (53,552) (1,454)
Purchase Treasury Stock (39,889) 0
Sale of stock 910,745 55,506
------------- -------------
Net Cash Provided (Used) by
Financing Activities 817,304 54,052
------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents 2,918 (8,923)
Cash and Cash Equivalents at Beginning of Year 8,203 17,126
------------- -------------
Cash and Cash Equivalents at End of Year $ 11,121 $ 8,203
============= =============
See Notes to Consolidated Financial Statements
<PAGE> 45
21st Century Technologies, Inc. and Subsidiaries
Supplemented Schedule of Non-Cash Investing and Financing Activities
For the Two Years Ended December 31, 1998 and 1997
1998 1997
------------- -------------
Issue Common Stock for Debt $ 28,410
See Notes to Consolidated Financial Statements
<PAGE> 46
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
For the Two Years Ended December 31, 1998
Common Treasury Paid-In Retained
Stock Stock Capital Earnings Total
------- -------- ----------- ------------ -----------
Balance, January 1, 1997 13,311 2,220,007 (1,060,297) 1,173,021
Adjustment for 1996
Payables paid in 1998 (111,646) 1,061,375
Correction of Prior
Period Accounting Error
(Note 23) (385,297) 676,078
Sale of Common Stock 5,515 49,991 55,506
Net Income (36,405) (36,405)
------- -------- ----------- ------------ -----------
Balance, Dec. 31, 1997 18,826 2,269,998 (1,593,645) 695,179
Sale of Common Stock 13,584 847,087 860,671
Purchase of Treasury
Stock (39,889) (39,889)
Net Income 113,869 113,869
------- -------- ----------- ------------ -----------
Balance, Dec. 31, 1998 $32,410 (39,889) $3,117,085 $(1,479,776) $1,629,830
======= ======== =========== ============ ===========
See Notes to Consolidated Financial Statements
<PAGE> 47
21st Century Technology, Inc.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1998 and 1997
Note 1: Summary of Significant Accounting Policies:
a. Organization and Business Activities
21st Century Technologies, Inc. was originally incorporated under the laws of
the State of Delaware on May 15, 1967 as Satcom Corporation. On November 6,
1991, the Company changed its name to Hughes Pharmaceutical Corporation.
Subsequent to 1991, the Company changed its name from Hughes Pharmaceutical
Corporation to First National Holding Corporation. The Company became public
in 1985 through a merger with International Fluidics Control, Inc. (formerly
Sensory Systems, Inc., Training With The Pros, Inc., and/or M-H Studios,
Inc.). International Fluidics Control, Inc. successfully completed a public
offering of its securities in 1969 under Regulation A of the Securities Act of
1933.
As of December 31, 1985, the Company had liquidated all business operations
and began the search for a suitable merger or acquisition candidate. As a
result of this action, the Board of Directors approved a quasi-reorganization
for accounting purposes, effective January 1, 1986, whereby all accumulated
deficits in shareholders' equity were offset against additional paid-in
capital and common stock balance sheet accounts to the extent of reducing
these accounts to equal the par value of the issued and outstanding shares of
common stock.
During the third quarter of 1994, in conjunction with the execution of a
letter of intent to acquire Innovative Weaponry, Inc. (a New Mexico
corporation), the Company changed its corporate name to Innovative Weaponry,
Inc. to better reflect its future actions and pending relationship with the
acquisition target. On September 15, 1997, the Board of Directors approved a
name change to 21st Century Technologies, Inc.
Innovative Weaponry, Inc. - New Mexico was incorporated on June 22, 1988 under
the laws of the State of New Mexico. The Company was formed for the
development and sale of specialized firearms, firearm systems and related
equipment. On September 14, 1992, Innovative Weaponry, Inc. filed a petition
for relief under Chapter 11 of the Federal Bankruptcy Laws in the United
States Bankruptcy Court of the District of New Mexico. Under Chapter 11,
certain claims are stayed while the Debtor continues business operations as
Debtor-in-Possession. On August 19, 1994, IWI-NV (now 21st Century
Technologies, Inc.) and IWI-NM entered into a letter of intent whereby IWI-NV
would use its unregistered, restricted common stock and cash to satisfy
certain obligations of IWI-NM in settlement of IWI-NM's bankruptcy action.
On February 1, 1995, the U. S. Bankruptcy Court of the District of New Mexico
confirmed the IWI-NM's plan of reorganization. The plan became effective 30
days after its confirmation. IWI-NM became a wholly owned subsidiary of
Innovative Weaponry, Inc. (IWI-NV) (formerly
<PAGE> 48
First National Holding Corporation) (a Nevada Corporation) (now known as 21st
Century Technologies, Inc.), a publicly owned company.
b. Cash and Cash Equivalents:
For purposes of reporting cash flows, the Company considers all cash on hand
and in banks, certificates of deposit and other highly liquid debt instruments
with a maturity of three months or less at the date of purchase to be cash and
cash equivalents.
c. Revenue recognition and credit policies:
In the normal course of business, the Company primarily sells its goods on
either a "cash in advance" or "cash on delivery" basis and periodically
extends unsecured credit to its customers involved in the retail sale of the
Company's products. All customers are located throughout the United States
and some European Countries. Because of the credit risk involved, management
has provided an allowance for doubtful accounts, which reflects its opinion of
amounts, which will eventually become uncollectible. In the event of complete
non-performance by the Company's customers, the maximum exposure to the
Company is the outstanding trade accounts receivable balance at the date of
non-performance.
d. Inventory:
Inventory at December 31, 1998 and 1997, respectively, consists of raw
materials used in the manufacture of firearm products and finished goods.
Inventory is carried at the lower of cost or market value, using the average
cost method.
e. Property and equipment:
Property and equipment is recorded at its historical cost. Depreciation is
provided for in amounts sufficient to relate the asset cost to operations over
the estimated useful life (three to five years) using the straight-line method
for financial reporting purposes.
Gains and losses from disposition of property and equipment are recognized as
incurred and are included in operations.
f. Income Taxes:
The Company uses the asset and liability method as identified in SFAS 109,
Accounting for Income Taxes.
g. Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities
<PAGE> 49
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
h. Asset Impairment:
The Company adopted the provisions of SFAS 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, in its
financial statements for the year ended December 31, 1995. There has been no
effect as of December 31, 1998 of adopting SFAS 121.
i. Stock-Based Compensation:
The Company will follow the fair value based method of accounting as
prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, for its
stock-based compensation. The Company has not adopted a stock option plan.
j. Principles of Consolidation and Presentation --Wholly-Owned Subsidiaries:
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Intercompany transactions and accounts have been eliminated
in the consolidation.
k. License Agreement:
The License agreement is amortized over the life of the related patent
technology (generally 17 years) using the straight-line method.
Note 2: Accounts Receivable
At December 31, 1998 and 1997, accounts receivable is comprised of the
following:
1998 1997
------------ -----------
Trade Receivables $ 995,790 $ 112,266
Plus: Other 873 23,624
------------ -----------
Total $ 996,663 $ 135,890
Credit is extended on an evaluation of the customer's financial condition and
generally collateral is not required.
On November 6, 1998, Innovative Weaponry received a purchase order from
Continental Weapons Ltd for 32,103 Night Sights. Continental has been
invoiced and a quantity of sights have been shipped to South Africa. The
balance of the order has been manufactured and is being held at the Company's
manufacturing facility to be installed on
<PAGE> 50
the Griffon replica of the Colt 45 as they are received by the Company. The
Company receives credit against the purchase price of the pistols they import
for the sales price of the sights.
Note 3: Inventories
Ad December 31, 1998 and 1997, inventories are comprised of the following:
1998 1997
-------------- -------------
Finished goods $ 17,376 $ 20,216
Work In Process $ $ 8,570
Raw materials $ 141,600 $ 55,774
-------------- -------------
Total current cost $ 158,976 $ 84,580
Note 4: Notes Receivable
As of December 31, 1998 and 1997, Notes Receivable of the Company are as
follows:
1998 1997
-------------- -------------
Frank Mahan $ 25,000 $ 25,000
Carl Swan $ 10,000 $ 10,000
Note 5: Accounts Payable
As of December 31, 1998 and 1997, the Company was obligated on the following
accounts payable amounts:
1998 1997
------------- ------------
Trade Payables $ 38,929 $ 70,692
Payroll Tax Settlement 15,662
Other Payables 347 6,416
------------- ------------
Total Payables $ 39,276 $ 92,770
Note 6: Property, Plant, and Equipment
1998 1997
------------- ------------
Leasehold improvements $ -0- $ -0-
Machinery and Equipment 310,260 247,699
Computer Equipment 50,826 35,407
Show Modules 30,586 30,586
Furniture and Fixtures 24,061 33,235
Real Estate 10,000 10,000
------------- ------------
Total $ 425,733 $ 359,165
Less: Accumulated depreciation ( 238,419) (166,924)
------------- ------------
Net property, plant, and equipment $ 187,314 $ 190,003
<PAGE> 51
There are no capitalized leases included above. All equipment leases
maintained by the Company are expense leases, which are expensed as paid.
Note 7: Other Assets
License Agreement: In June 1995, Trident entered into a license agreement
(Agreement) with Trade Partners International, Inc. (TPI) to acquire the
exclusive license to certain patent rights conveyed to TPI by The University
of California as operators of Los Alamos National Laboratory (patent holder)
related to the development, marketing and sales rights to certain specified
magnetic and/or magnet technology.
The agreed-upon and negotiated value of the Agreement at acquisition date was
$75,000. Subsequently, the transaction was re-negotiated and 21st Century
acquired all of the common stock of TPI in a Type B reorganization.
Trident, as sub-licensee, is obligated to pay a royalty fee of 8.0% on net
income (as defined in the Agreement) of products sold using the patented
technology. Further, Trident is to pay an annual maintenance fee, which was
$24,000 for the third and all subsequent years of the Agreement. All royalty
fees paid during a specific year are to be credited to that year's maintenance
fee and the maintenance fee requirement is considered met if the royalty
payments during an Agreement year are equal to or exceed the required
maintenance fee.
Trademark:
The trademark "PT Night Sights" has been capitalized at cost and is being
amortized over its term.
Bankruptcy excess Re-Organization Cost:
Innovative Weaponry, Inc. (IWI) emerged from a bankruptcy filing under Chapter
11 of the US Bankruptcy Code, effective March 1, 1995. As a result of the
Plan of Reorganization, IWI became a wholly owned subsidiary of 21st Century
Technologies, Inc. and all prior IWI shareholders retained less that a 50%
interest in the combined reorganized entities.
In conjunction with IWI's emergence from protection under Chapter 11, IWI
recognized "fresh-start" accounting as a result of its acquisition by 21st
Century. "Fresh start" accounting allows for the restatement of all assets
and liabilities being set to the fair market value of each respective category
and the restatement of retained earnings to "0". The resulting amount was
debited to the account "Reorganization value in excess of amounts allocable to
identifiable assets". This balance is being amortized over ten (10)
years using the straight-line method. The amortization period began on March
1, 1995, concurrent with the effective date of IWI's Plan of Reorganization.
<PAGE> 52
The adjustment necessary to reflect the "fresh-start" accounting, as
prescribed by Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" issued by the American Institute of
Certified Public Accountants reflected a Reorganization value in excess of
amounts allocable to identifiable assets.
Other Assets of the Company are as follows:
1998 1997
------------ -----------
PT Night Sight Trademark $ 25,000 $ 25,000
Subsidiary Bankruptcy Excess Reorganization Value 511,303 511,303
License Agreement 75,000 75,000
Prepaids and deposits 8,769
Amortization (196,488)
Note 8: Short-Term Borrowings
None
Note 9: Long-Term Debt and Related Matters
The President of the Company and her husband, a consultant to the Company,
have advanced personal funds to the Company to cover cash operating
shortfalls. These advances were made during various critical periods when
bank financing or the sales of shares were not economically feasible due, in
part, to the Company's creditworthiness and cash flow position. These
advances have been made over a period of years and are not represented by a
note payable. The balance of the advances by the Wilson's is $93,828 at
December 31, 1997 and $117,230 at December 31, 1998. No maturity date or
interest rate has been established.
The Company is also indebted to the Odyssey Group, a payroll service in
Albuquerque, NM.
1998 1997
------------- ----------------
McCoullough $ $ 28,410
Odyssey Group 46,080 57,484
Wilsons 95,828 107,566
------------- ----------------
Notes Payable $ 141,908 $ 193,460
<PAGE> 53
Note 10: Stockholders' Equity
At December 31, 1998 and 1997. the number of authorized and issued common
shares and the related par value and dividends paid are as follows:
1998 1997
----------- ----------
Common stock, authorized 500,000,000 50,000,000
Common stock issued 33,287,830 18,825,863
Common stock outstanding 33,287,830 18,825,863
Common stock, per share par value $ 0.001 $ 0.001
Cash dividends paid on common stock none none
Note 11: Earnings (Loss) Per Common Share
Earnings per common share are computed by dividing net income by the weighted
average number of common shares outstanding during the years 1998 and 1997.
There were no common stock equivalents outstanding during the years 1998 and
1997. SFAS No. 128, Earnings per Share applies to entities with publicly held
common stock and establishes standards for computing and presenting earnings
per share (EPS). Basic EPS excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Note 12: Income Taxes
At December 31, 1998, the Company has available net operating loss
carryforwards of approximately $1,479,776 for federal income tax purposes that
begin to expire in 2008. The federal carryforwards resulted in losses
generated in prior years. For financial purposes, a valuation allowance of
$1,479,776 has been recognized to offset the deferred tax assets. There are
no deferred tax liabilities. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company's deferred tax assets as
of December 31, 1998 and 1997 are as follows:
1998 1997
----------- ------------
Deferred tax assets:
Net operating loss carryforwards $1,479,776 $ 1,593,645
Valuation allowance for deferred tax assets (1,479,776) ( 1,593,645)
----------- ------------
Deferred tax assets 0 0
<PAGE> 54
Note 13: Related-Party Transactions/Stock-Based Compensation
The Company accounts for stock-based compensation using the principles
prescribed in Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation which states that "...the fair value of the
equity instruments used to measure the transaction if that value is more
reliably measurable than the fair value of the consideration received."
In September of 1994, the board of directors entered into a consulting
contract with Ken Wilson, (husband of the current Company President). This
agreement required the Company to issue 1,000,000 shares of Company common
stock to Mr. Wilson and to compensate him at the rate of $10,000.00 per month.
Should the Company be unable to pay Mr. Wilson in cash, the Company would
issue Mr. Wilson its common stock in amount equal to $0.02 per share (which
was the share price at the time the consulting contract was entered into
between the Company and Mr. Wilson). The Company paid Mr. Wilson through
December of 1994. In January of 1995, the Company and Mr. Wilson
re-negotiated the agreement to remunerate him solely in stock of the Company.
This was necessary because of the Company's cash flow position and inability
to pay Mr. Wilson the previously agreed upon fee under the original consulting
agreement. The agreement required Mr. Wilson to perform services for the
Company in exchange for 500,000 shares of Company common stock per month. As
of the expiration date of the agreement, January 5, 1998, Mr. Wilson earned a
total of 19,000,000 shares of the Company's common stock. The agreement
required that the stock not be issued until after the end of the initial term
of the agreement, which was three years. The stock has not been issued and
will be subject to rule 144 of the US Securities and Exchange Commission when
issued and will be further subject to a five year "lock-up" requirement. This
requirement precludes Mr. Wilson from selling said stock for five years from
the date of issuance.
The Wilson's have advanced personal funds to the Company to cover cash
operating shortfalls (See Note 9).
Note 14: Commitments and Contingent Liabilities
A dispute exists regarding the attorney's fees owed by Innovative Weaponry,
Inc. and 21st Century Technologies, Inc. to their attorneys in the lawsuit
styled "Morgan Casner Associates, Inc. v. Innovative Weaponry, Inc. et al."
The attorneys in this matter, the law firm of Eckert, Seamans, Cherin &
Mellott, L.L.C. had billed $22,596 as of December 31, 1997, which had been
paid at December 31, 1998. As of December 31, 1998, Eckert, Seamans had
billed an additional $71,500, and there is a dispute as to the appropriateness
of these attorneys' fees. The Company is attempting to resolve this matter
and the actual liability has not been determined at balance sheet date. (See
Note 20)
<PAGE> 55
Note 15: Risks and Uncertainties
The Company operates in highly specialized industries. There are only four
companies worldwide who manufacture and sell night sights using tritium. The
Company ranks number three out of four. The gun sight industry is highly
dependent on major firearms manufacturers as well as consumer and governmental
demand for weapons. World conditions and economies can affect the future
sales of this product.
The Company's magnetic and hydraulic-magnetic technologies are largely
un-proven and may require additional extensive testing before marketing these
products can continue. Demand for these products from governmental and
industrial sources is largely estimated and while the Company has studied
various markets, no assurance can be given that these products can be
successfully marketed.
In the future, these products will be marketed outside the United States,
which will subject the Company to foreign currency fluctuation risks.
The Company's firearm replica import division has not been tested in the U. S.
market and the estimated demand may not reach the Company's expectations.
Note 16: Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Cash and Cash Equivalents. The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Accounts Receivable and Accounts Payable. The carrying amount of accounts
receivable and accounts payable in the balance sheet approximates fair value.
Short-Term and Long-Term Debt. The carrying amount of the debts recorded in
the balance sheet approximates fair value.
The carrying amounts of the Company's financial instruments at December 31,
1998 and 1997 represent fair value.
Note 17: Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. It requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 requires that an enterprise (a)
<PAGE> 56
classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid in capital in the
equity section of a statement of financial position. The Company's
comprehensive income does not differ from its reported net income.
Note 18: Business Segments
The Company has four business segments: (a) Manufacture of night sights for
handguns, (b) Manufacture of "the Gripper", a patented device used for
climbing steel surfaces, (c) Manufacture of an Emergency Magnetic-Hydraulic
Sea Patch System, and (d) Importation and resale of firearms. The majority of
the Company's sales are derived from sales of night sights. The other segments
sales are not material to these financial statements.
Note 19: Year 2000 Issues
During 1998, the Company employed an independent consultant to evaluate its
internal hardware and software with respect to the Year 2000 issue (Y2K). The
Y2K issue is the result of computer programs being written using two digits
rather than four to define the applicable year. Any programs that have time
sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system failure
or malfunction. The Company's current accounting software, office software,
and hardware applications are believed to be Y2K compliant. The Company
purchased new accounting software, up-dated office application software and
hardware during 1998, the cost of which was not material to the financial
statements. Other applications such as telephone systems, etc. are being
reviewed by their vendors for compliance. No cost has been estimated at this
time.
Note 20: Sale of Common Stock/Underwriting
On or about March 1, 1998, the Company entered into an agreement with 21st
Century Technologies Funding Limited Partnership, a Virginia Limited
Partnership (21st Century Technologies Funding LLC, a Virginia Limited
Liability Company, General Partner). The Company agreed to sell 10,000,000
shares of unregistered common stock to the partnership at $0.08 per share,
which would raise $800,000.00 in unrestricted working capital for general
corporate uses. The Partnership offered for sale 1000 partnership units
priced at $1,000.00 each to up to 35 non-accredited investors and unlimited
offerings to accredited investors. The offering began on March 30, 1998 and
is substantially complete.
Note 21: Subsequent Events
The Company entered into an agreement to acquire CQB Armor, Inc. CQB
manufactures body armor which is used in law enforcement and military
applications. The addition of body armor and other specialty items increase
the Company's product lines.
<PAGE> 57
Note 22: Non-Operating Expenses:
During 1998, the Company entered into a settlement agreement settling a
certain action styled Paul A. McCullough vs. Innovative Weaponry, Inc., At Law
No. 96-133 in the Circuit Court for Arlington County, Virginia, which
consisted, in part, of a Confessed Judgement Promissory Note obligating IWI to
pay McCullough in monthly installments of $1647.67. The balance owing on said
note was settled by issuing John E. McCullough, Sr., Two Hundred Twelve
Thousand Four Hundred (212.400) shares of common stock, without restrictive
legend, of 21st Century Technologies, Inc.
The Company settled a lawsuit (involving a contract dispute) styled Morgan
Casner Associates, Inc. vs. Innovative Weaponry, et al, Cause No. 96CA006325,
in the Civil Division, Superior Court of the District of Columbia. The
Company paid $150,000 and received a release of Judgement, which had been
granted in the suit.
The Company entered into a settlement agreement settling a certain action
under United States District Court for the Northern District of Oklahoma Case
No. 97-CV-004-H. Cunningham will return 71,000 shares of the Company's common
stock after such time as the Company pays $39,000.00 plus interest. Said
payment due and payable on May 12, 1998. The Company paid this settlement on
May 8, 1998 and said shares were returned to the treasury.
Note 23: Correction of Prior Period Accounting Error
As a part of the Company's reorganization, certain payables were accrued and
expensed by IWI New Mexico. These expenses were later booked as an
intercompany transaction and paid by 21st Century Technologies which, again
expensed the transactions as payables in the Parent's books and records.
These transactions have been corrected in these financial statements.
Retained earnings has been adjusted in these financial statements for this
accounting error. In addition, $111,646 of payables incurred in 1996 have
been paid in 1998. These payables were not carried forward in the new
accounting system and have been charged directly to retained earnings. The
1997 balance sheet has been restated to show these adjustments.
<PAGE> 58
PART III
ITEM 1: INDEX TO AND DESCRIPTION OF EXHIBITS
Exhibit
Number Description Location
- -------- ----------- --------
2.1 Articles of Incorporation of First National
Holding Corporation dated January 28, 1994 Attached
2.2 Certificate of Amendment to Articles of
Incorporation filed September 19, 1994 Attached
2.3 Certificate of Amendment to Articles of
Incorporation filed September 29, 1995 Attached
2.4 Articles of Merger filed May 19, 1995 Attached
2.5 Bylaws Attached
6.1 Lease Agreement between 21st Century Attached
Technologies, Inc. and Landlord
6.2 Los Alamos Exclusive Patent License Attached
Agreement dated May 23, 1995 between
The Regents of the University of California
and Trade Partners International Incorporated
6.3 Trident Technologies Sub-License Agreement Attached
dated July 31, 1996
6.4 Limited Exclusive Patent License Attached
Agreement between The Regents of the University
of California and Trident Technolgies Corporation
6.5 Application and Permit for Firearms Attached
Importation dated November 20, 1998
6.6 License of Dept. of Treasury, Bureau Attached
Of Alcohol, Tobacco and Firearms
6.7 Representation Agreement dated Attached
May 3, 1999
6.8 Registry of Radioactive Sealed Sources Attached
and Devices dated February 20, 1996
6.9 U.S. Nuclear Regulatory Commission Attached
Materials License dated October 18, 1996
6.10 NRC Registration Amendment Attached
dated August 22, 1997
<PAGE> 59
6.11 Request to Rescind Confirmatory Order Attached
dated September 14, 1998
6.12 Distribution and Agency Agreement Attached
dated October 15, 1999
6.13 Radioactive Materials License dated Attached
October 09, 1996
8.1 U.S. Bankruptcy Court Order Confirming Attached
Plan of Reorganization dated February 1,
1995
22.1 Subsidiaries of the Registrant Attached
27.1 Financial Data Schedule Attached
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
21st Century Technologies, Inc. has caused this registration statement to be
signed on its behalf by the undersigned, who is duly authorized.
Date January 27, 2000. 21st Century Technologies, Inc.
By: /s/ Kenneth E. Wilson
---------------------------
Kenneth E. Wilson
Chairman of the Board
Chief Executive Officer
<Stamp:
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 28 1994
Cheryl A. Lau, Secretary of State>
/s/ Cheryl A. Lau>
CERTIFICATE OF INCORPORATION
OF
FIRST NATIONAL HOLDING CORPORATION
THE UNDERSIGNED, in order to form a corporation for the purposes hereinafter
stated, under and pursuant to the provisions of the general Corporation Law of
the State of Nevada, does hereby certify as follows:
FIRST: The name of the Corporation is FIRST NATIONAL HOLDING CORPORATION.
SECOND: The registered office of the Corporation is to be located at 3750
S Arville, in the city of Las Vegas, in the county of Clark, in the state of
Nevada. The name of its registered agent at that address is Paul J. Angelo.
THIRD: Duration is perpetual.
The purpose of the Corporation is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of
Nevada.
FOURTH: The total number of shares of stock which the Corporation is
authorized to issue is Fifty Million (50,000,000) shares of Common Stock all
of which shall have a par value of .001.
FIFTH: The name and address of the Directors are as follows:
NAME ADDRESS
- ---- --------
N. Murray Modlin 2829 West NW Highway
Site 940
Dallas, Texas 75220
Wayne Coverdale 103 Sheffield Place
London. KY 407641
Mark O. Justus 728 Emory Street
Harriman, TN. 37748
Wendy Ames 3339 Nogales
Dallas, Texas 75220
<PAGE>
FIRST NATIONAL HOLDING CORPORATION of NEVADA
Page 2
SIXTH:
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(l) The number of directors of the Corporation shall be such as from time to
time shall be fixed by, or in the manner provided in, the by-laws. Election of
directors need not be by waiver unless the by-laws so provide
(2) The Board of Directors shall have power without the consent or vote of
the stockholders to make, alter, amend, change, add to or repeal the by-laws
the Corporation, to fix and vary the amount to be reserved for any proper
purpose; to authorize and cause to be executed mortgages and liens and all
or any part of the property of the Corporation; to determine the use and
disposition of any surplus or net profits, and to fix the times for the
declaration and payment of dividends.
(3) The Directors in their desecration may submit any contract or ad for
approval or ratification at any annual meeting or the stockholders or at any
meeting of the stockholders called for the purpose of considering any such
act or contract, and any contract or act that shall be approved or be ratified
by the vote of the holders of a majority of the stock of the Corporation which
is represented in person or by proxy at such meeting and entitled to vote
there at (provided that a lawful quorum of stockholders be there represented
in person or by proxy) shall be as valid and as binding upon the Corporation
and upon all the stockholders as though it had been approved or ratified by
every stockholder of the Corporation, whether or not the contract or act
would otherwise be open to legal attack because of directors' interest or for
any other reason.
(4) In addition to the powers and authorities herein before or by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised
or done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Nevada, of this Certificate, and to any by-laws from time to time
made by the stockholders; provided however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-laws had not been made.
<PAGE>
FIRST NATIONAL HOLDING CORPORATION of NEVADA
Page 3
SEVENTH: The Corporation shall, to the full extent permitted by Nevada
General Corporation Law, as amended from time to tlme, imdemnify all persons
whom it may indemnify pursuant thereto.
EIGHTH: The Corporation reserves the right to amend alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power
IN WITNESS WHEREOF. I hove hereunto set my hand and seal
/s/ N. Murray Modlin
---------------------
N. Murray Modlin
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on the 26th day of January,
1994 by N. Murray Modlin who personally appeared before me.
/s/ Glenna Sotos
------------------------
Notary Public, State of Texas
Notary's Name Printed: Glenna Sotos
Notary's Commission Expires: 11-1-97
/s/ Wendy Ames
-----------------------------
Wendy Ames
STATE OF TEXAS
This instrument was acknowledged before me on the 26th day of January,
1994 by Wendy Ames who personally appeared before me.
Notary Public, State of Texas
Notary's Name Printed: Glenna Sotos
Notary's Commission Expires:
<Stamp appears here:
Received
JAN 28 1994
Secretary of State>
FILED Filed by: TS
IN THE OFFICE OF THE Rec. # C32691
SECRETARY OF STATE OF THE Exp. # E68871
STATE OF NEVADA
SEP-19 1994
CHERYL A. LAU SECRETARY OF STATE
/S/ Cheryl A. Lau
No. 1472 -94
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
FIRST NATIONAL HOLDING CORPORATION
Name of Corporation
We the undersigned Fred W. Rausch, Jr.
---------------------------------------------------and
President or Vice President
Patricia Wilson, of First National Holding Corporation
- --------------------------------------- -----------------------------------
Secretary or Assistant Secretary Name of Corporation
do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 11th day of September 1994, adopted a resolution to
amend the original articles as follows:
Article I is hereby amended to read as follows:
That the name of First National Holding Corporation is changed to
Innovative Weaponry Inc.
The number of shares of the corporation outstanding and entitled to vote
on an amendment to the Articles of Incorporation is 11,461,000 that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Fred W. Rausch Jr.
-----------------------
President or Vice President
/s/ Patricia Wilson
---------------------
Secretary or Assistant Secretary
<Stamped: RECEIVED
9:35
sep 19 1994>
State of KANSAS )
)ss
County of SHAWNEE )
On September 15, 1994, personally appeared before me a Notary Public,
Fred W. Rausch,Jr., who acknowledged that they executed the above instrument.
<Notary Seal appears here>
/s/ Cynthia R. Stansell
----------------------------
Signature of Notary
ORIGINAL NOTARY OF PATRICIA WILSON IS IN BACK SIDE
OF THIS AMENDMENT DOCUMENT. MADE COPY FOR OUR FILE.
FILED C09988
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
SEP 29 1995
No. 1472-94
/s/ Dean Heller
- ---------------
Dean Heller, Secretary of State
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
Innovative Weaponry, Inc.
We the undersigned Fred W. Rausch, Jr. and
---------------------------------------------------
President or Vice President
Patricia Wilson, of Innovative Weaponry, Inc.
---------------------- ------------------------
do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 21st day of September 1995, adopted a resolution to
amend the original articles as follows:
Article I is hereby amended to read as follows:
That the name of Innovative Weaponry, Inc. is changed to
21st Century Technologies, Inc. <Stamped:
RECEIVED
SEP 26 1995
Secretary of State>
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 3,7000,000 that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Fred W. Rausch Jr.
-----------------------
President or Vice President
/s/ Patricia Wilson
---------------------
Secretary or Assistant Secretary
State of Kansas )
)ss
County of Shawnee )
On September 25, 1995, personally, appeared before me, a Notary Public,
Fred W. Rausch, Jr. who acknowledged that they executed the above instrument.
(NOTARY STAMP OR SEAL) /s/ Cynthia R. Stansell
------------------------
(Signature of Notary)
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 19 1995
No. 1472-94
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF MERGER
MERGER AGREEMENT AND
MINUTES OF MEETING ATTACHED
A plan of merger between First National Holding Corporation
Delaware, a Delaware corporation, and First National Holding
Corporation- Nevada, a Nevada corporation, has been approved by
the shareholders and adopted by the Board of Directors of both
corporations. Therefore, pursuant to NRS, Sec. 78.458, First
National Ho1ding Corporation-Nevada, the surviving corporation,
files these Articles of Merger.
I.
Constituent corporations:
A. First National Holding Corporation - Delaware, a
corporation duly constituted and organized under the
laws of the State of Delaware:
B. First National Holding corporation - Nevada, a
corporation duly constituted and organized under the
laws of the State of Nevada.
Surviving Corporation:
A. First National Holding corporation - Nevada.
II.
The plan of merger has been adopted by the Board of Directors
of both of the corporations that are parties to the merger, to wit:
First National Holding corporation - Delaware and First National
Holding Corporation - Nevada.
III.
The plan of merger has been approved by unanimous consent of
the shareholders of both of the corporations that are parties to the
merger, to wit: First National Holding corporation - Delaware and First
National Holding Corporation - Nevada.
IV.
The merger will not result in any amendments to the Articles
or Incorporation of First National Holding Corporation - Nevada,
the surviving corporation.
V.
The complete, executed plan of merger on file at the
registered office or other place of business of First National
Holding Corporation - Nevada, the surviving corporation.
<PAGE>
VI.
A copy of the plan of merger wil1 be furnished by the
surviving corporation, First National Holding Corporation - Nevada,
upon request and without cost to any stockholder of either First
National Holding Corporation - Delaware or First National Holding
Corporation - Nevada.
VII.
That this merger was voted upon prior to First National
Holding Corporation of Nevada changing its name to Innovative
Weaponry, Inc.
IN WITNESS THEREOF, the parties hereto have caused these Articles of
Merger to be duly executed and acknowledged on this the 19th day of May, 1995.
FIRST NATIONAL HOLDING CORPORATION - NEVADA, A Nevada Corporation
By: /s/ Fred W. Rausch, Jr.
----------------------
Fred W. Rausch, Jr.
President
Before me a Notary Public in and for Shawnee County, Kansas came Fred W.
Rausch, Jr., who is personally known to me and signed his name above in my
presence on May l9, 1995.
<Notary Seal Appears Here> /s/ Cynthia R. Stansell
------------------------
Notary Public
My commission expires 4/15/97
--------
FIRST NATIONAL HOLDING CORPORATION - NEVADA, A Nevada Corporation
By: /s/ Patricia Wilson
----------------------
Pat Wilson
Assistant Secretary
Before me a Notary Public in and for Bernaullo County, New Mexico came Pat
Wilson who is personally known to me and signed her name above in my presence
on May l9, 1995.
/s/ James W. Washburne
----------------------------
Notary Public
My Commission expires: 12-1-96
<Stamped:
RECEIVED
MAY 19 1995
SECRETARY OF STATE>
BYLAWS
OF
First National Holding Corporation
A Nevada Corporation
ARTICLE I
Stockholders
Section 1. Annual Meeting. Annual meetings of the stockholders shall
be held on the 5TH day of MAY each year if not a legal holiday and, if a legal
holiday, then on the next secular day following, or at such other time as may
be set by the Board of Directors from time to time, at which the stockholders
shall elect by vote a Board of Directors and transact such other business as
may properly be brought before the meeting.
Section 2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the President or the Secretary by
resolution of the Board of Directors or at the request in writing of
stockholders owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose of the proposed meeting.
Section 3. Place of Meetings. All annual meetings of the stockholders
shall be held at the registered office of the corporation or at such other
place within or without the State of Nevada as the directors shall determine.
Special meetings of the stockholders may be held at such time and place within
or without the State of Nevada as shall be stated in the notice of the
meeting, or in a duly executed waiver of notice thereof. Business transacted
at any special meeting of stockholders shall be limited to the purposes stated
in the notice.
Section 4. Quorum; Adjourned Meetings. The holders of a majority of
the stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise provided
by statute or by the Articles of Incorporation. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 5. Voting. Each stockholder of record of the corporation
holding stock which is entitled to vote at this meeting shall be entitled at
each meeting of stockholders to one vote for each share of stock standing in
his name on the books of the corporation. Upon the demand of any stockholder,
the vote for directors and the vote upon any question before the meeting shall
be by ballot.
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall be sufficient to elect directors or to decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the Articles of Incorporation, a
different vote is required in which case such express provision shall govern
and control the decision of such question.
Section 6. Proxies. At any meeting of the stockholders any stockholder
may be represented and vote by a proxy or proxies appointed by an instrument
in writing. In the event that any such instrument in writing shall designate
two or more persons to act as proxies, a majority of such persons present at
the meeting, or, if only one shall be present, then that one shall have and
may exercise all of the powers conferred by such written instrument upon all
of the persons so designated unless the instrument shall otherwise provide.
No proxy or power of attorney to vote shall be used to vote at a meeting of
the stockholders unless it shall have been filed with the secretary of the
meeting. All questions regarding the qualification of voters, the validity of
proxies and the acceptance or rejection of votes shall be decided by the
inspectors of election who shall be appointed by the Board of Directors, or if
not so appointed, then by the presiding officer of the meeting.
Section 7. Action Without Meeting. Any action which may be taken by
the vote of the stockholders at a meeting may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority
of the voting power, unless the provisions of the statutes or of the Articles
of Incorporation require a greater proportion of voting power to authorize
such action in which case such greater proportion of written consents shall be
required.
ARTICLES II
Directors
Section 1. Management of Corporation. The business of the corporation
shall be managed by its Board of Directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
Section 2. Number, Tenure, and Qualifications. The number of directors
which shall constitute the whole board shall be at least one. The number of
directors may from time to time be increased or decreased to not less than one
nor more than fifteen. The directors shall be elected at the annual meeting
of the stockholders and except as provided in Section 2 of this Article, each
director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
Section 3. Vacancies. Vacancies in the Board of Directors including
those caused by an increase in the number of directors, may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the stockholders.
The holders of two-thirds of the outstanding shares of stock entitled to vote
may at any time peremptorily terminate the term of office of all or any of the
directors by vote at a meeting called for such purpose or by a written
statement filed with the secretary or, in his absence, with any other officer.
Such removal shall be effective immediately, even if successors are not
elected simultaneously.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at
any annual or special meeting of stockholders at which any director or
directors are elected to elect the full authorized number of directors to be
voted for at that meeting.
If the Board of Directors accepts the resignation of a director tendered
to take effect at a future time, the Board or the stockholders shall have
power to elect a successor to take office when the resignation is to become
effective.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of his term of office.
Section 4. Annual and Regular Meetings. Regular meetings of the Board
of Directors shall be held at any place within or without the State which has
been designated from time to time by resolution of the Board or by written
consent of all members of the Board. In the absence of such designation
regular meetings shall be held at the registered office of the corporation.
Special meetings of the Board may be held either at a place so designated or
at the registered office.
Regular meetings of the Board of Directors may be held without call or
notice at such time and at such place as shall from time to time be fixed and
determined by the Board of Directors.
Section 5. First Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
meeting of stockholders and at the place thereof. No notice of such meeting
shall be necessary to the directors in order legally to constitute the
meeting, provided a quorum be present. In the event such meeting is not so
held, the meeting may be held at such time and place as shall be specified in
a notice given as hereinafter provided for special meetings of the Board of
Directors.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman or the President or by any
Vice-President or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records or if such address is not readily
ascertainable, at the place in which the meetings of the directors are
regularly held. In case such notice is mailed or telegraphed, it shall be
deposited in the United States mail or delivered to the telegraph company at
least three (3) days prior to the time of the holding of the meeting. In case
such notice is hand delivered as above provided, it shall be so delivered at
least twenty-four (24) hours prior to the time of the holding of the meeting.
Such mailing, telegraphing or delivery as above provided shall be due, legal
and personal notice to such director.
Section 7. Business of Meetings. The transactions of any meeting of
the Board of Directors, however called and noticed or wherever held, shall be
as valid as though had at a meeting duly held after regular call and notice,
if a quorum be present, and if, either before or after the meeting, each of
the directors not present signs a written waiver of notice, or a consent to
holding such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 8. Quorum; Adjourned Meetings. A majority of the authorized
number of directors shall be necessary to constitute a quorum for the
transaction of business, except to adjourn as hereinafter provided. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the
Board of Directors, unless a greater number be required by law or by the
Articles of Incorporation. Any action of a majority, although not at a
regularly called meeting, and the record thereof, if assented to in writing by
all of the other members of the Board shall be as valid and effective in all
respects as if passed by the Board in regular meeting.
A quorum of the directors may adjourn any directors meeting to meet
again at a stated day and hour; provided, however, that in the absence of a
quorum, a majority of the directors present at any directors meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
Notice of the time and place of holding an adjourned meeting need not be
given to the absent directors if the time and place be fixed at the meeting
adjourned.
Section 9. Committees. The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees of
the Board of Directors, each committee to consist of at least one or more of
the directors of the corporation which, to the extent provided in the
resolution, shall have and may exercise the power of the Board of Directors in
the management of the business and affairs of the corporation and may have
power to authorize the seal of the corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be determined from time to time by the Board of Directors. The
members of any such committee present at any meeting and not disqualified from
voting may, whether or not they constitute a quorum, unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. At meetings of such committees, a majority
of the members or alternate members shall constitute a quorum for the
transaction of business, and the act of a majority of the members or alternate
members at any meeting at which there is a quorum shall be the act of the
committee.
The committees shall keep regular minutes of their proceedings and
report the same to the Board of Directors.
Section 10. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if a written consent thereto is signed
by all members of the Board of Directors or of such committee, as the case may
be, and such written consent is filed with the minutes of proceedings of the
Board or committee.
Section 11. Special Compensation. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
reimbursement and compensation for attending committee meetings.
ARTICLE III
Notices
Section 1. Notice of Meetings. Notices of meetings shall be in writing
and signed by the President or a Vice-President or the Secretary or an
Assistant Secretary or by such other person or persons as the directors shall
designate. Such notice shall state the purpose or purposes for which the
meeting is called and the time and the place, which may be within or without
this State, where it is to be held. A copy of such notice shall be either
delivered personally to or shall be mailed, postage prepaid, to each
stockholder of record entitled to vote at such meeting not less than ten (10)
nor more than sixty (60) days before such meeting. If mailed, it shall be
directed to a stockholder at his address as it appears upon the records of the
corporation and upon such mailing of any such notice, the service thereof
shall be complete and the time of the notice shall begin to run from the date
upon which such notice is deposited in the mail for transmission to such
stockholder. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice to such corporation, association or partnership. In
the event of the transfer of stock after delivery of such notice of and prior
to the holding of the meeting it shall not be necessary to deliver or mail
notice of the meeting to the transferee.
Section 2. Effect of Irregularly Called Meetings. Whenever all parties
entitled to vote at any meeting, whether of directors or stockholders,
consent, either by a writing on the records of the meeting or filed with the
secretary, or by presence at such meeting and oral consent entered on the
minutes, or by taking part in the deliberations at such meeting without
objection, the doings of such meeting shall be as valid as if had at a meeting
regularly called and noticed, and at such meeting any business may be
transacted which is not excepted from the written consent or to the
consideration of which no objection for want of notice is made at the time,
and if any meeting be irregular for want of notice or of such consent,
provided a quorum was present at such meeting, the proceedings of said meeting
may be ratified and approved and rendered likewise valid and the irregularity
or defect therein waived by a writing signed by all parties having the right
to vote at such meeting; and such consent or approval of stockholders may be
by proxy or attorney, but all such proxies and powers of attorney must be in
writing.
Section 3. Waiver of Notice. Whenever any notice whatever is required
to be given under the provisions of the statutes, of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE IV
Officers
Section 1. Election. The officers of the corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a
Treasurer, none of whom need be directors. Any person may hold two or more
offices. The Board of Directors may appoint a Chairman of the Board,
Vice-Chairman of the Board, one or more vice presidents, assistant treasurers
and assistant secretaries.
Section 2. Chairman of the Board. The Chairman of the Board shall
preside at meetings of the stockholders and the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect.
Section 3. Vice-Chairman of the Board. The Vice-Chairman shall, in the
absence or disability of the Chairman of the Board, perform the duties and
exercise the powers of the Chairman of the Board and shall perform such other
duties as the Board of Directors may from time to time prescribe.
Section 4. President. The President shall be the chief executive
officer of the corporation and shall have active management of the business of
the corporation. He shall execute on behalf of the corporation all
instruments requiring such execution except to the extent the signing and
execution thereof shall be expressly designated by the Board of Directors to
some other officer or agent of the corporation.
Section 5. Vice-President. The Vice-President shall act under the
direction of the President and in the absence or disability of the President
shall perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe. The Board of Directors
may designate one or more Executive Vice-Presidents or may otherwise specify
the order of seniority of the Vice-Presidents. The duties and powers of the
President shall descend to the Vice-Presidents in such specified order of
seniority.
Section 6. Secretary. The Secretary shall act under the direction of
the President. Subject to the direction of the President he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the President or
the Board of Directors.
Section 7. Assistant Secretaries. The Assistant Secretaries shall act
under the direction of the President. In order of their seniority, unless
otherwise determined by the President or the Board of Directors, they shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary. They shall perform such other duties and have
such other powers as the President or the Board of Directors may from time to
time prescribe.
Section 8. Treasurer. The Treasurer shall act under the direction of
the President. Subject to the direction of the President he shall have
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation
and shall deposit all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the
Board of Directors. He shall disburse the funds of the corporation as may be
ordered by the President or the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
If required by the Board of Directors, he shall give the corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 9. Assistant Treasurers. The Assistant Treasurers in the order
of their seniority, unless otherwise determined by the President or the Board
of Directors, shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer. They shall perform such
other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe.
Section 10. Compensation. The salaries and compensation of all
officers of the corporation shall be fixed by the Board of Directors.
Section 11. Removal; Resignation. The officers of the corporation
shall hold office at the pleasure of the Board of Directors. Any officer
elected or appointed by the Board of Directors may be removed at any time by
the Board of Directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
Board of Directors.
ARTICLE V
Capital Stock
Section 1. Certificates. Every stockholder shall be entitled to have a
certificate signed by the President or a Vice-President and the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the corporation.
If the corporation shall be authorized to issue more than one class of stock
or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of the various
classes of stock or series thereof and the qualifications, limitations or
restrictions of such rights, shall be set forth in full or summarized on the
face or back of the certificate, which the corporation shall issue to
represent such stock.
If a certificate is signed (1) by a transfer agent other than the
corporation or its employees or (2) by a registrar other than the corporation
or its employees, the signatures of the officers of the corporation may be
facsimiles. In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to be such officer. The seal of the
corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
Section 2. Surrendered; Lost or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the corporation
alleged to have been lost or destroyed upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or give the corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
Section 3. Replacement Certificates. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation, if it is
satisfied that all provisions of the laws and regulations applicable to the
corporation regarding transfer and ownership of shares have been complied
with, to issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.
Section 4. Record Date. The Board of Directors may fix in advance a
date not exceeding sixty (60) days nor less than ten (10) days preceding the
date of any meeting of stockholders, or the date for the payment of any
distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining the consent of stockholders for any purpose,
as a record date for the determination of the stockholders entitled to notice
of and to vote at any such meeting, and any adjournment thereof, or entitled
to receive payment of any such distribution, or to give such consent, and in
such case, such stockholders, and only such stockholders as shall be
stockholders of record on the date so fixed, shall be entitled to notice of
and to vote at such meeting, or any adjournment thereof, or to receive payment
of such distribution, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record
date fixed as aforesaid.
Section 5. Registered Owner. The corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and distribution, and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise
provided by the laws of Nevada.
ARTICLE VI
General Provisions
Section 1. Registered Office. The registered office of this
corporation shall be in the County of Clark, State of Nevada.
The corporation may also have offices at such other places both within
and without the State of Nevada as the Board of Directors may from time to
time determine or the business of the corporation may require.
Section 2. Distributions. Distributions upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Distributions may be paid in cash, in property or
in shares of the capital stock, subject to the provisions of the Articles of
Incorporation.
Section 3. Reserves. Before payment of any distribution, there may be
set aside out of any funds of the corporation available for distributions such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
distributions or for repairing or maintaining any property of the corporation
or for such other purpose as the directors shall think conducive to the
interest of the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Section 4. Checks; Notes. All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
Section 6. Corporate Seal. The corporation may or may not have a
corporate seal, as may from time to time be determined by resolution of the
Board of Directors. If a corporate seal is adopted, it shall have inscribed
thereon the name of the corporation and the words "Corporate Seal" and
"Nevada". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE VII
Indemnification
Section 1. Indemnification of Officers and Directors, Employees and
Other Persons. Every person who was or is a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a director or officer
of the corporation or is or was serving at the request of the corporation or
for its benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless to the fullest extent legally
permissible under the general corporation law of the State of Nevada from time
to time against all expenses, liability and loss (including attorneys' fees,
judgments, fines and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him in connection therewith. The expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. Such right of
indemnification shall be a contract right which may be enforced in any manner
desired by such person. Such right of indemnification shall not be exclusive
of any other right which such directors, officers or representatives may have
or hereafter acquire and, without limiting the generality of such statement,
they shall be entitled to their respective rights of indemnification under any
bylaw, agreement, vote of stockholders, provision of law or otherwise, as well
as their rights under this Article.
Section 2. Insurance. The Board of Directors may cause the corporation
to purchase and maintain insurance on behalf of any person who is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the corporation would
have the power to indemnify such person.
Section 3. Further Bylaws. The Board of Directors may from time to
time adopt further Bylaws with respect to indemnification and may amend these
and such Bylaws to provide at all times the fullest indemnification permitted
by the General Corporation Law of the State of Nevada.
ARTICLE VIII
Amendments
Section 1. Amendments by Stockholders. The Bylaws may be amended by a
majority vote of all the stock issued and outstanding and entitled to vote for
the election of directors of the stockholders, provided notice of intention to
amend shall have been contained in the notice of the meeting.
Section 2. Amendments by Board of Directors. The Board of Directors by
a majority vote of the whole Board at any meeting may amend these Bylaws,
including Bylaws adopted by the stockholders, but the stockholders may from
time to time specify particular provisions of the Bylaws which shall not be
amended by the Board of Directors.
APPROVED AND ADOPTED this 24 day of November, 1994.
X /s/ David Gregor (Sign)
-------------------------
PRESIDENT
COMMERCIAL LEASE
This lease is made between Miniature Machine Corporation, herein called
Lessor, and 21st Century Technologies and Innovative Weaponry, herein called
Lessee.
Lessee hereby offers to lease from Lessor the premises situated in the City of
Fort Worth, County of Tarrant, State of Texas, described as space located at
2513 E. Loop 820 North, upon the following TERMS and CONDITIONS:
1. Term and Rent. Lessor demises the above premises for a term of three (3)
years, commencing November 01, 1996 and terminating on February 28, 1999 or
sooner as provided herein at the annual rental of ($See attached exhibit A)
payable in equal installments in advance on the first day of each month for
that month's rental, during the term of this lease. All rental payments shall
be made to Lessor, at the address specified above.
2. Use. Lessee shall use and occupy the premises for manufacturing. The
premises shall be used for no other purpose.
Lessor represents that the premises may lawfully be used for such purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the premises are
in good order and repair, unless otherwise indicated herein. Lessee shall, at
his own expense and at all times, maintain the premises in good and safe
condition, including plate glass, electrical wiring, plumbing and heating
installations and any other system or equipment upon the premises, and shall
surrender the same at termination hereof, in as good condition as received,
normal wear and tear excepted. Lessee shall be responsible for all repairs
required, excepting the roof, exterior walls, structural foundations, and:
4. Alterations. Lessee shall not, without first obtaining the written consent
of Lessor, make any alterations, additions,
or improvements, in, to or about the premises.
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5. Ordinances and Statutes. Lessee shall comply with all statutes, ordinances
and requirements of all municipal, state and federal authorities now in force,
or which may hereafter be in force, pertaining to the premises, occasioned by
or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or sublet any
portion of the premises without prior written consent of the Lessor, which
shall not be unreasonably withheld. Any such assignment or subletting without
consent shall be void and, at the option of the Lessor, may terminate this
lease.
7. Utilities. All applications and connections for necessary utility services
on the demised premises shall be made in the name of Lessee only, and Lessee
shall be solely liable for utility charges as they become due, including those
for sewer, water, gas, electricity, and telephone services.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's agents to
enter upon the premises at reasonable times and upon reasonable notice, for
the purpose of inspecting the same, and will permit Lessor at any time within
sixty (60) days prior to the expiration of this lease, to place upon the
premises any usual "To Let" or "For Lease" signs, and permit persons desiring
to lease the same to inspect the premises thereafter.
9. Possession. If Lessor is unable to deliver possession of the premises at
the commencement hereof, Lessor shall not be liable for any damage caused
thereby, nor shall this lease be void or voidable, but Lessee shall not be
liable for any rent until possession is delivered. Lessee may terminate this
lease if possession is not delivered within 30 days of the commencement of the
term hereof.
10. Indemnification of Lessor. Lessor shall not be liable for any damage or
injury to Lessee, or any other person, or to any property, occurring on the
demised premises or any part thereof, and Lessee agrees to hold Lessor
harmless from any claim for damages, no matter how caused.
11. Insurance. Lessee, at his expense, shall maintain plate
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glass and public liability insurance including bodily injury and property
damage insuring Lessee and Lessor with minimum coverage as follows:
Lessee shall provide Lessor with a Certificate of .Insurance showing Lessor as
additional insured. The Certificate shall provide for a ten-day written notice
to Lessor in the event of cancellation or material change of coverage. To the
maximum extent permitted by insurance policies which may be owned by Lessor or
Lessee, Lessee and Lessor, for the benefit of each other, waive any and all
rights of subrogation which might otherwise exist.
12. Eminent Domain. If the premises or any part thereof or any estate therein,
or any other part of the building materially affecting Lessee's use of the
premise, shall be taken by eminent domain, this lease shall terminate on the
date when title vests pursuant to such taking. The rent, and any additional
rent, shall be apportioned as of the termination date, and any rent paid for
any period beyond that date shall be repaid to Lessee. Lessee shall not be
entitled to any part of the award for such taking or any payment in lieu
thereof, but Lessee may file a claim for any taking of fixtures and
improvements owned by Lessee, and for moving expenses.
13. Destruction of Premises. In the event of a partial destruction of the
premises during the term hereof, from any cause, Lessor shall forthwith repair
the same, provided that such repairs can be made within sixty (60) days under
existing governmental laws and regulations, but such partial destruction shall
not terminate this lease, except that Lessee shall be entitled to a
proportionate reduction of rent while such repairs are being made, based upon
the extent to which the making of such repairs shall interfere with the
business of Lessee on the premises. If such repairs cannot be made within said
sixty (60) days, Lessor, at his option, may make the same within a reasonable
time, this lease continuing in effect with the rent proportionately abated as
aforesaid, and in the event that Lessor shall not elect to make such repairs
which cannot be made within sixty (60) days, this lease may be terminated at
the option of either party. In the event that the building in which the
demised premises may be situated is destroyed to an extent of not less than
one-third of the replacement costs thereof, Lessor may elect to terminate this
lease whether the demised premises be injured or not. A total destruction of
the building
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in which the premises may be situated shall terminate this lease.
14. Lessor's Remedies on Default. If Lessee defaults in the payment of rent,
or any additional rent, or defaults in the performance of any of the other
covenants or conditions hereof, Lessor may give Lessee notice of such default
and if Lessee does not cure any such default within 30 days, after the giving
of such notice (or if such other default is of such nature that it cannot be
completely cured within such period, if Lessee does not commence such curing
within such 30 days and thereafter proceed with reasonable diligence and in
good faith to cure such default), then Lessor may terminate this lease on not
less than 30 days' notice to Lessee. On the date specified in such notice the
term of this lease shall terminate, and Lessee shall then quit and surrender
the premises to Lessor, but Lessee shall remain liable as hereinafter
provided. If this lease shall have been so terminated by Lessor, Lessor may at
any time thereafter resume possession of the premises by any lawful means and
remove Lessee or other occupants and their effects. No failure to enforce any
term shall be deemed a waiver.
15. Security Deposit. Lessee shall deposit with Lessor on the signing of this
lease the sum of zero Dollars ($0) as security deposit for the performance of
Lessee's obligations under this lease, including without limitation, the
surrender of possession of the premises to Lessor as herein provided. If
Lessor applies any part of the deposit to cure any default of Lessee, Lessee
shall on demand deposit with Lessor the amount so applied so that Lessor shall
have the full deposit on hand at all times during the term of this lease.
16. Tax Increase. In the event there is any increase during any year of the
term of this lease in the City, County or State real estate taxes over and
above the amount of such taxes assessed for the tax year during which the term
of this lease commences, whether because of increased rate or valuation,
Lessee shall pay to Lesser upon presentation of paid tax bills an amount equal
to DNA% of the increase in taxes upon the land and building in which the
leased premises are situated. In the event that such taxes are assessed for a
tax year extending beyond the term of the lease, the obligation of Lessee
shall be proportionate to the portion of the lease term included in such year.
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<PAGE>
17. Common Area Expenses. In the event the demised premises are situated in a
shopping center or in a commercial building in which there are common areas,
Lessee agrees to pay his pro-rata share of maintenance, taxes, and insurance
for the common area.
18. Attorney's Fees. In case suit should be brought for recovery of the
premises, or for any sum due hereunder, or because of any act which may arise
out of the possession of the premises, by either party, the prevailing party
shall be entitled to all costs incurred in connection with such action,
including a reasonable attorney's fee.
19. Notices. Any notice which either party may, or is required to give, shall
be given by mailing the same, postage prepaid, to Lessee at the premises, or
Lessor at the address shown below, or at such other places as may be
designated by the parties from time to time.
20. Heirs, Assigns, Successors. This lease is binding upon and inures to the
benefit of the heirs, assigns and successors in interest to the parties.
21. Option to Renew. Provided that Lessee is not in default in the performance
of this lease, Lessee shall have the option to renew the lease for an
additional term of to be determined at a later date months commencing at the
expiration of the initial lease term. All of the terms and conditions of the
lease shall apply during the renewal term except that the monthly rent shall
be the sum of $TBD. The option shall be exercised by written notice given to
Lessor not less than 60 days prior to the expiration of the initial lease
term. If notice is not given in the manner provided herein within the time
specified, this option shall expire.
22. Subordination. This lease is and shall be subordinated to all existing and
future liens and encumbrances against the property.
23. Entire Agreement. The foregoing constitutes the entire agreement between
the parties and may be modified only by a writing signed by both parties. The
following Exhibits, if any, have been made a part of this lease before the
parties, execution hereof:
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<PAGE>
Signed this __ day of 19 __.
/s/ /s/
___________________________ _________________________
By : /s/ Patricia Wilson, Pres. By: /s/ Tom Dodger, VP
------------------------------- -----------------------
Lessee Lessor
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ADDENDUM TO COMMERCIAL LEASE
THIS ADDENDUM to the Commercial Lease Agreement entered into by and between
Miniature Machine Corporation 9the "Lessor") and 21" Century Technologies.
Inc. (the "Lessee") this 21st day of December 1999, as follows:
WHEREAS, the parties desire to enter into this Addendum to continue a
commercial lease entered into by the Lessor and Lessee for the premises
located at 25 13 E. Loop 820 North, Fort Worth, Texas; and
WHEREAS, the parties hereby attach a true cop), of the commercial lease as
Exhibit "A" and incorporate the same in its entirety by reference as if it
were set-forth in its entirety,
WITNESSETH
1. Continuation of Term and Rent. Lessor demises the above premises for a term
of two (2) years commencing from the date of expiration of the original
commercial lease on February 28, 1999 and continuing until February 28, 2001
at a monthly rent set-forth in Exhibit "A" Sub-Paragraph "I". The rent shall
be payable in monthly installments in advances of the I" day of the month for
each month's rental during the term of this Addendum. All other conditions
set-forth in the Commercial Lease attached hereto as Exhibit "A" is
republished and affirmed as to Paragraphs 2 through 23.
2. Option to Terminate. Lessee reserves the right to terminate the lease as
renewed by this Addendum upon 60 days notice after February 28, 2000.
Agreed and Accepted By: Agreed and Accepted by:
Miniature Machine Corporation 21st Century Technologies, Inc.
By /s/ Signature illegible By: /s/ Patricia Wilson
-------------------------- ----------------------
Authorized Signatory Authorized Signatory
Dated: December 21, 1999 December 21, 1999
Page 1 of 1
LANL Control Number 95-41-00059
EXCLUSIVE PATENT LICENSE AGREEMENT
BETWEEN
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
AND
TRADE PARTNERS INTERNATIONAL INCORPORATED
<PAGE>
EXCLUSIVE PATENT LICENSE AGREEMENT
Trade Partners International Incorporated
THIS LICENSE AGREEMENT is entered into by and between THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA, a nonprofit educational institution and a public
corporation of the State of California, hereinafter referred to as the
"University;" and TRADE PARTNERS INTERNATIONAL INCORPORATED, 3200 Don Quixote
NW, Albuquerque, New Mexico 87104, hereinafter referred to as the "Licensee,"
the partiesto this License Agreement being referred to individually as a
"Party," and collectively as "Parties."
BACKGROUND
The University conducts research and development at the Los Alamos
National Laboratory (LANL) for the U.S. Government under Contract No.
W-7405-ENG-36 with the U.S. Department of Energy (DOE).
Rights in inventions and technical data made in the course of the
University's research and development at LANL are governed by the terms and
conditions of the Contract.
Certain Technology relating to a magnetic Gripper device for climbing
vertical ferromagnetic surfaces has been developed in the course of the
University's research and development at LANL.
The University desires that such Technology be developed and utilized to
the fullest extent possible so as to enhance the accrual of economic and
technological benefits to the U.S. domestic economy, and is therefore willing
to grant an exclusive license to Licensee for that part of the Technology to
which the University has title.
The Licensee desires to obtain from the University certain exclusive
rights for the commercial development, manufacture, use, and sale of the
Technology.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 "Technology", means technical information, know-how and data
owned or controlled by the University and relating to a magnetic gripper
device as applied in U.S. Patent Application Serial Number 07/870,965 (filed
April 20, 1992) and as disclosed in U.S. Patent 5,192,155.
1.2 "Patent Rights" means the University's rights arising from U.S.
Patent Application Serial Number 07/870,965, filed April 20, 1992, Magnetic
Gripper Device, by Ross Meyer and Andrew Jason, now U.S. Patent 5,192,155,
issued March 9, 1993, including any continuing-applications thereof including
divisions and reissues (but not including continuations-in-part); any patents
issuing on the applications or continuing
Los Alamos National Laboratory 1 of 16
<PAGE>
applications; and any corresponding foreign patents or patent applications.
1.3 "Licensed Method" means any method, procedure or process covered
by any subsisting claim of any patent or patent application identified in
paragraph 1.2.
1.4 "Licensed Product" means any article of manufacture, machine or
composition of matter covered by any subsisting claim of any patent or patent
application identified in paragraph 1.2, and any article of manufacture,
machine or composition of matter produced through the practice of a Licensed
Method.
1.5 "Licensed Invention" means any Licensed Product or Licensed
Method.
1.6 "Net Income" means the gross revenue from sales of Licensed
Products or from the sales of services using a Licensed Method by Licensee and
sublicensees, less the following deductions where applicable: (a) sales
returns; (b) allowances; (c) trade discounts, (d) transportation charges; (e)
sales and excise taxes, and; (f) duties and tariffs.
2. GRANT
2.1 The University grants to the Licensee an exclusive license to make,
use, and sell Licensed Products and to practice Licensed Methods under the
Patent Rights, with the right to sublicense others under Article 3, in all
fields-of-use and in all markets.
2.2 The University expressly reserves the right to use the Technology,
including the right to make and use Licensed Products and to practice Licensed
Methods, for noncommercial educational and research purposes.
2.3 The U.S. Government has a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced throughout the
world, for or on behalf of the United States, inventions covered by the
University's Patent Rights, and has certain other rights under 35 USC 200-212
and applicable implementing regulations and under the U.S. Department of
Energy Assignment and Confirmatory License, if any, attached as Appendix A to
this Agreement.
2.4 Under 35 U.S.C. 203 the U.S. Department of Energy has the right
to require the Licensee to grant a nonexclusive, partially exclusive or
exclusive license under the Patent Rights in any field of use to a responsible
applicant or applicants, 48 CFR 27.304-1(g).
2.5 The Licensee will make available to the University and will grant
an irrevocable, paid-up, royalty-free nonexclusive license to the University
to make and use for noncommercial purposes any developments to the Technology
made by Licensee.
3. SUBLICENSES
3.1 The University grants to Licensee the right to grant sublicenses
to third parties to make, have made, use and sell Licensed Products and to
practice Licensed
Los Alamos National Laboratory 2 of 16
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Methods in which the Licensee has current exclusive rights-under this License.
But sublicenses may be granted only under the following conditions:
(a) Licensed Products sold in the United States will be substantially
manufactured in the United States; or
(b) (i) the sublicensee has a business unit located in the United States
and significant economic and technical benefits will flow to the U.S. as a
result of the sublicense agreement; and,
(ii) in sublicensing any entity subject to the control of a
foreign company or government, such foreign government permits U. S. agencies,
organizations, or other persons to enter into cooperative R&D agreements and
licensing agreements, and has policies to protect U.S. intellectual property
rights.
If Licensee determines that neither conditions (a) nor (b) can be met,
Licensee must obtain the written approval of the University prior to granting
a sublicense.
(c) Sublicenses granted under this clause must contain all of the
conditions, restrictions and reservations of this Agreement, except for those
provisions related to the License Fee and annual minimum royalties, and shall
preserve the rights and reservations of the University and the U.S. Government
existing under this License Agreement.
3.2 Licensee shall provide the University with a copy of each
sublicense entered into with a third party within 30 days after execution.
3.3. Licensee must pay to the University the earned royalties prescribed
in Paragraph 5.1 on all Net Income of Licensee's sublicensees. With respect to
any sublicense, this obligation continues for so long as a sublicense granted
by Licensee is in effect, and is an obligation of the Licensee whether or not
royalty payments are actually received by Licensee from its sublicensee.
3.4 Termination of this Agreement automatically operates as an
assignment by Licensee to the University of all Licensee's right, title and
interest in and to each sublicense granted by Licensee.
If this Agreement terminates, any sublicensee, who is not in default of the
terms and conditions of its sublicense agreement with Licensee may make a
written election to continue such sublicense agreement as a license agreement
with the University.
4. LICENSE FEE
4.1 Licensee must pay to the University a one-time, nonrefundable
License Fee of ten-thousand U.S. dollars ($10,000.00) payable in five
installments of two thousand U.S. dollars ($2,000.00) as follows:
a. Licensee must pay to the University the first installment of the
License Fee, in the amount of two-thousand U.S. dollars ($2,000.00), within
one (1) calendar month after the last day of the month when the parties
executed this Agreement, and;
Los Alamos National Laboratory 3 of 16
<PAGE>
b. Licensee's second installment of the License Fee, in the amount of
two-thousand U.S. dollars ($2,000.00), occurs on the day December 31 of the
first calendar year after the calendar year when the parties executed this
Agreement and must be paid within one calendar month from such day, and;
c. Licensee's third installment of the License Fee, in the amount of
two-thousand U.S. dollars ($2,000.00), occurs on the day June 30 of the second
calendar year after the calendar year when the parties executed this Agreement
and must be paid within one calendar month from such day, and;
d. Licensee's fourth installment of the License Fee, in the amount of
two-thousand U.S. dollars ($2,000.00), occurs on the day December 31 of the
second calendar year after the calendar year when the parties executed this
Agreement and must be paid within one calendar month from such day, and;
e. Licensee's fifth and last installment of the License Fee, in the
amount of two-thousand U.S. dollars ($2,000.00), occurs on the day June 30 of
the third calendar year after the calendar year when the parties executed this
Agreement and must be paid within one calendar month from such day.
5. EARNED ROYALTIES
5.1 The Licensee will pay to the University an earned royalty of
eight percent (8.0%) on Net Income received during the term of this License
Agreement.
5.2 Notwithstanding Paragraph 5.1 above, Licensee has no obligation
to pay earned royalty on any sale of any Licensed Invention to the U.S.
Government or any agency thereof or any U.S. Government contractor who
certifies that its purchase of the Licensed Invention is for or on behalf of
the U.S. Government. Licensee will not impose royalty charges in sales of
Licensed Inventions to U.S. Government entities, and will refund to them any
royalty collected on such sales.
5.3 The first earned royalty payment due under this Agreement is
based on Net Income received by Licensee from the effective date of this
Agreement through December 31 of the same calendar year, and must be paid
within one month from the end of such period. Subsequent earned royalty
payments shall be calculated based on Net Income received by Licensee during
the semiannual periods extending from January 1 through June 30 and from July
1 through December 31 of each year, for as long as this Agreement remains in
effect. Royalty payments must be paid within one month from the end of the
respective semiannual period.
5.4 If any patent claim included within the University's Patent
Rights is held invalid by a decision of a court of competent jurisdiction in
any country and from which no appeal has or can be taken, the obligation to
pay earned royalties on sales in that country of products or methods covered
by the invalidated claim and not covered by valid patent claims subsisting
under the University's Patent Rights will be reduced as of the date of such
decision to fifty percent (50.0%) of the royalty rate set forth in Paragraph
5.1, and must be paid on the sale of such products or methods for a further
period of three (3) years or until the expiration date of the patent
containing the invalidated claim, whichever is sooner, in consideration of the
University having
Los Alamos National Laboratory 4 of 16
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<PAGE>
provided valuable know-how and technical assistance to the Licensee in
entering the market in a timely manner.
Licensee must still pay any earned royalties that have accrued before the
decision of the Court.
5.5 All payments due the University must be paid in United States
funds to the University of California, Los Alamos National Laboratory, at the
address set forth in Paragraph 20.1. Licensee must convert Net Income received
in foreign currencies into equivalent United States funds at the exchange rate
for the foreign currency prevailing as of the last day of the reporting
period, as reported in the Wall Street Journal.
5.6 If the University reduces the exclusive license granted under
Article 2 to a nonexclusive license pursuant to Paragraph 10.2, Licensee will
pay to the University fifty percent (50.0%) of the earned royalties of
Paragraph 5.1 on Net Income received after the effective date of the reduction
to a nonexclusive license.
6. ANNUAL MAINTENANCE FEE
6.1 Licensee's first maintenance fee occurs on the day December 31 of
the first calendar year after the calendar year when the parties executed this
Agreement and must be paid within one calendar month from such day; and
Licensee's subsequent maintenance fees occur on the day December 31 of each
calendar year thereafter and must be paid within one calendar month from such
day. The amount of Licensee's maintenance fees are:
a. Six-thousand U.S. dollars ($6,000.00) for the first maintenance
fee, and;
b. twelve-thousand U.S. dollars ($12,000.00) for the second
maintenance fee, and;
c. twenty-four-thousand U.S. dollars ($24,000.00) for the third
and subsequent maintenance fees.
6.2 The University will credit Royalty payments made to the
University, in the same calendar year that the maintenance fee occurs, against
such maintenance fee and the Licensee must pay the remaining maintenance fee
balance.
6.3 Licensee fulfills its maintenance fee requirement for a calendar
year if Licensee's Royalty payments made to the University for such calendar
year exceed the maintenance fee for such calendar year.
7. SEMIANNUAL REPORTS
7.1 Progress Reports. Licensee must submit semiannual progress
reports certified by an officer of the Licensee. The reports are due by
February 1 and August 1 of each year, except that the first report is due on
August 1 following the effective date of this Agreement. This report covers
the Licensee's activities related to the development of the Technology and the
securing of approvals necessary for commercialization of the Technology. The
reports must be made until earned royalties
Los Alamos National Laboratory 5 of 16
<PAGE>
payable to the University exceed the annual minimum royalty stated in
Paragraph 6.1. The reports must conform with the Report Format set forth in
Appendix B hereof. Reports marked by Licensee as proprietary financial or
business information of Licensee will be treated by the University as
proprietary information.
7.2 Financial Reports. Licensee must submit semiannual financial
reports. The reports are due on the dates that payments of earned or annual
minimum royalties are due under Articles 5 and 6, and must be submitted
regardless of whether any payment is actually made. The reports must be
certified by an officer of the Licensee, must cover the period for which
royalty payments are calculated, and must show total sales or commercial uses
made of Licensed Products or Licensed Methods by Licensee and any sublicensed
during the reporting period. If no sale, sublicense, or use of Licensed
Products or Licensed Methods has been made during a reporting period, a
statement to this effect must be made. Reports marked by Licensee as
proprietary financial or business information of the Licensee will be treated
as such by the University.
8. BOOKS AND RECORDS
8.1 The Licensee must keep books and records according to generally
accepted accounting procedures, accurately showing all sales of Licensed
Products or practice of the Licensed Method by Licensee or sublicensees under
the terms of this License Agreement. Such books and records must be open to
inspection and audit on a proprietary basis by representatives or agents of
the University at reasonable times, but in no event more than once for each
calendar year, for the purpose of verifying the accuracy of the semiannual
reports and the royalties due. Licensee may request that any such inspection
and audit be conducted by an independent auditor, in which event, Licensee
will pay the reasonable costs of such auditor.
8.2 The fees and expenses of the representatives performing the
inspection and audit will be borne by the University. However, if an error in
royalties owed the University of more than Ten Thousand dollars ($10,000.00)
is discovered by the representatives of the University, then Licensee must pay
the fees and expenses of these representatives.
8.3 The books and records required by Paragraph 8.1 must be preserved
for at least three (3) years from the date of the royalty payment to which
they pertain.
9. TERM OF THE AGREEMENT
9.1 This License Agreement is effective as of the later of the dates
of execution by the Parties.
9.2 This License Agreement is in full force and effect from the
effective date and remains in effect until the expiration of the last to
expire of the patents included within the University's Patent Rights, unless
sooner terminated by operation of law or by acts of the Parties in accordance
with the terms of this License Agreement.
Los Alamos National Laboratory 6 of 16
<PAGE>
10. TERMINATION OR MODIFICATION BY THE UNIVERSITY
10.1 If the Licensee fails to deliver to the University any report when
due, or fails to pay any royalty or fee when due, or if the Licensee breaches
any material term of this License Agreement, the University may give written
notice of default to the Licensee. If the Licensee fails to cure the default
within ninety (90) days from the date of delivery of notice to Licensee, the
University has the right to terminate this License Agreement. This License
Agreement will terminate upon delivery of written notice of termination to the
Licensee. Termination does not relieve the Licensee of its obligation to pay
any royalty or license fees due or owing at the time of termination and does
not impair any accrued right of the University.
10.2 If Licensee fails to make any annual maintenance fee payment
identified in Paragraph 6.1 for any year, the University may terminate this
License Agreement, or, at the University's sole option, reduce the Licensee's
exclusive license to a nonexclusive license under the terms of Paragraph 5.6.
The University will not exercise this option if Licensee demonstrates to the
University's satisfaction that Licensee is fully exploiting the market for the
Licensed Invention.
11. TERMINATION BY THE LICENSEE
11.1 The Licensee may terminate this License Agreement by giving
written notice to the University. Such termination will be effective ninety
(90) days from the date of delivery of the notice, and all the Licensee's
rights under this Agreement will cease as of that date.
11.2 Any termination pursuant to the above paragraph does not relieve
the Licensee of any obligation or liability accrued by Licensee prior to the
effective date of termination.
12. PATENT PROSECUTION AND MAINTENANCE
12.1 The University will diligently prosecute any U.S. patent
applications identified in Article 1.2, and will maintain any U.S. patents
identified in Article 1.2, using counsel of its choice. The University will
provide the Licensee, on request, with copies of relevant documentation
relating to any such patent prosecution. The Licensee will hold such
documentation in confidence.
12.2 The University will use its best efforts to amend any patent
application to include claims reasonably requested by the Licensee and
required to protect the Licensed Invention.
12.3 The Licensee may request that the University obtain patent
protection corresponding to the Patent Rights in foreign countries in which
the University has not already sought patent protection as of the effective
date of this Agreement. The Licensee must submit any such request to the
University within ten months of the filing date of a U.S. or PCT application
identified in paragraph 1.2. The University may, at its discretion, seek such
foreign patent protection in the name of the University, using counsel of the
University's choice. If the University declines to seek foreign patent
protection requested by the Licensee, the University may, at its discretion,
authorize
Los Alamos National Laboratory 7 of 16
<PAGE>
the Licensee to seek the requested foreign patent protection in the name of
the University and to use counsel of the Licensee's choice, which
authorization shall not be unreasonably withheld.
The failure of the Licensee to request that the University seek foreign patent
protection will be considered an election by the Licensee not to secure such
foreign patent protection.
12.4 The preparation, filing and prosecuting of all foreign patent
applications filed at the Licensee's request, as well as the maintenance of
all resulting patents, will be at the sole expense of the Licensee, whether
conducted by counsel selected by the University or by the Licensee. Expenses
incurred for patent protection in a particular country may be credited against
royalty payments which would otherwise be due for Net Income derived from that
foreign country.
12.5 The University will bear the costs incurred up to the effective
date of this Agreement for any foreign patent applications or patents,
including international (PCT) applications, identified in 1.2 above. Costs
associated with the foreign applications or patents after the effective date
of this Agreement will be borne by the Licensee and will be reimbursed to the
University within thirty days of invoicing.
12.6 The Licensee's obligation to pay for costs of foreign patents and
patent applications under 12.3, 12.4 and 12.5 continues as long as this
Agreement remains in effect. Licensee may terminate its obligations with
respect to any foreign patent application or patent by giving 90 days' written
notice to the University. The University will use its best efforts to curtail
foreign patent costs upon receipt of notice from the Licensee. The University
may at its election continue prosecution or maintenance of such applications
or patents at the University's expense. But Licensee shall have no further
right or license thereunder.
12.7 The University has the right to seek patent protection, at its
own expense, in any country for which a patent application has not been filed
as of the effective date of this Agreement, and for which the Licensee has not
requested foreign patent protection. Any applications and resultant patents
are not covered by this License Agreement. But Licensee shall have a first
option to negotiate a license agreement in such countries with the University
under mutually agreeable terms.
13. USE OF NAMES, TRADENAMES, AND TRADEMARKS
13.1 Nothing contained in this License confers any right to use in
advertising, publicity, or other promotional activities any name, tradename,
trademark, or other designation of either Party hereto (including any
contraction, abbreviation, or simulation of any of the foregoing). Unless
required by law, the use of the name "the University of California" or the
name of any facility or campus of the University of California is expressly
prohibited.
13.2 The University may disclose to third parties the existence of this
License Agreement and the extent of the grant in Article 2, but must not
disclose information identified as proprietary by Licensee under 13.4, except
where the University is required to release such information under either the
California Public Records Act or other applicable law. A decision to release
information under applicable law will be at
Los Alamos National Laboratory 8 of 16
<PAGE>
the sole discretion of the University.
13.3 Licensee may disclose to third parties the existence of this License
Agreement and the terms and conditions to the extent determined appropriate by
Licensee.
13.4 Licensee will mark those portions of a copy of this License
Agreement which Licensee believes contain proprietary business information of
Licensee and return such copy to the University within thirty days of the
effective date of this License Agreement.
14. WARRANTY BY THE UNIVERSITY
14.1 The University warrants that it has the lawful right to grant this
license, subject to DOE assignment of rights in the Technology to the
University in the event such rights are not owned by the University, and that
it has not granted any rights under the University's Patent Rights to any
other party that diminish any right granted to Licensee, except as required by
action of law or by the University's prime contract with DOE.
14.2 This license is provided WITHOUT warranty of merchantability or
fitness for a particular purpose or any other warranty, express or implied.
The University makes no representation or warranty that the Licensed Products
or Licensed Methods will not infringe any patent or other proprietary right.
14.3 IN NO EVENT WILL THE UNIVERSITY BE LIABLE FOR ANY INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR
THE USE OF LICENSED PRODUCTS OR LICENSED METHODS.
14.4 Nothing in this License Agreement shall be construed as:
a. a warranty or representation by the University as to the
validity or scope of University's Patent Rights;
b. an obligation to bring or prosecute actions or suits against
third parties for patent infringement, except as provided in Article 15
(Infringement);
c. conferring by implication, estoppel, or otherwise any license or
rights under any patents of the University other than University's Patent
Rights, copyrights, or other intellectual property of the University; or
d. an obligation by University to furnish any know-how, technical
assistance, or technical data [that is unrelated or unnecessary to the
transfer of the Technology to the Licensee for the purpose of implementing
this License Agreement]*.
15. INFRINGEMENT
15.1 In the event that either Party to this License Agreement learns of
the infringement of any of University's Patent Rights, that Party will inform
the other Party in writing and will provide the other Party with available
evidence of the infringement.
Los Alamos National Laboratory 9 of 16
15.2 Both Parties will use their best efforts in cooperating with each
other to terminate the infringement without litigation.
15.3 If the efforts of the Parties are not successful in abating the
infringement within ninety (90) days after the infringer has been formally
notified of infringement by the University, the University has the right to:
15.3a commence suit on its own account;
15.3b join the Licensee in a suit; or
15.3c refuse to participate in a suit,
and the University shall give notice in writing to the Licensee within ten
(10) working days after the 90 day period of its election. The Licensee may
bring suit for patent infringement only if the University elects not to
commence or join in any suit other than as nominal party plaintiff and if the
infringement occurred during the period and in a country where the Licensee
had exclusive rights under this License Agreement.
15.4 Any legal action under this article will be at the expense of the
Party on account of whom suit is brought. If legal action is brought by
Licensee, the University will be entitled to 25% of any damage recovery based
on lost profits of Licensee. Legal action brought jointly by the University
and the Licensee and fully participated in by both will be at the joint
expense of the Parties and all recoveries will be shared jointly by them in
proportion to the share of expenses paid by each.
15.4 Each Party will cooperate with the other in proceedings
instituted hereunder, provided expenses are borne by the Party bringing suit.
Litigation will be controlled by the Party bringing suit, except that the
University will control the litigation if brought jointly. The University may
be represented by its choice of counsel in any suit brought by the Licensee.
15.6 Neither Party will settle or compromise any suit without the other
Party's consent.
16. WAIVER
16.1 No waiver by either Party of any breach or default of any of the
covenants or agreements of this Agreement is a waiver as to any subsequent or
similar breach or default.
17. ASSIGNABILITY
17.1 This License Agreement may be assigned by the University, but
shall be personal to Licensee and assignable by Licensee only with the written
consent of the University.
17.2 In the event that a controlling interest in Licensee is obtained
by a
Los Alamos National Laboratory 10 of 16
different entity, the University may terminate this License Agreement at its
discretion, which discretion shall not be exercised unreasonably. Licensee
will notify the University of any such change in controlling interest within
thirty days of its occurrence.
18. INDEMNITY - PRODUCT LIABILITY
18.1 The Licensee will indemnify the U.S. Government and the
University, and their officers, employees, and agents, against any damages,
costs and expenses, including attorneys' fees, arising from the
commercialization and utilization of the Technology by Licensee, including but
not limited to the making, using, selling or exporting of products, processes,
or services derived therefrom. This indemnification will include, but will not
be limited to, any product liability.
19. LATE PAYMENTS
19.1 In the event royalty payments or fees are not received by the
University within thirty (30) days of when due, the Licensee will pay to the
University interest charges at the rate of ten percent (10%) per annum on the
amount of the royalty payments or fees overdue.
20. NOTICES
20.1 Any payment, notice, or other communication required or permitted
to be given to either party hereto is properly given and effective on the date
of delivery if delivered in person or by first-class certified mail, postage
paid, or by facsimile transmission with confirmation, to the respective
address or facsimile number given below, or to any other address designated by
written notice to the other party as follows:
In the case of the Licensee:
Trade Partners International
3200 Don Quixote NW
Albuquerque, New Mexico 87104
Attn.: Dr. Thomas Murphy
FAX Number (505) 247-2134
In the case of the University:
Los Alamos National Laboratory
Industrial Partnership Office
P.O. Box 1663, Mail Stop K571
Los Alamos, New Mexico 87545
Licensing Administrator
FAX Number (505) 665-0154
Los Alamos National Laboratory 11 of 16
<PAGE>
21. FORCE MAJEURE
21.1 Neither party is responsible for delay or failure in performance
of any of the obligations imposed by this License Agreement, if the failure is
caused by fire, flood, explosion, lightning, windstorm, earthquake, subsidence
of soil, court order or government interference, civil commotion, riot, war,
or by any cause of like or unlike nature beyond the control and without fault
or negligence of a party.
22. EXPORT CONTROL LAWS
22.1 Licensee acknowledges and understands that the export of certain
goods or technical data from the United States requires an export control
license from the United States Government, and that failure to obtain an
export control license may result in violation of U.S. laws.
23. PREFERENCE FOR UNITED STATES INDUSTRY
23.1 Any products embodying Licensed Products or produced through the
use of a Licensed Method will be manufactured substantially in the United
States.
24. DISPUTE RESOLUTION
24.1 The Parties will use their best efforts to resolve disputes
arising from this Agreement. Any dispute that cannot be resolved by the
Parties will be resolved by non-binding arbitration in accordance with the
rules and procedures of the American Arbitration Association, acting in the
state of New Mexico, and shall be enforceable in accordance with New Mexico
law.
25. CONFLICT OF INTEREST
25.1 Licensee represents that Licensee does not now employ and has
made no offers of employment to members of the University Negotiating Team set
out in Appendix C. Licensee agrees to make no offers of employment to any
member of the University Negotiating Team for a period of two years after the
effective date of this Agreement without the express written permission of the
University. Licensee understands that this clause is a material undertaking by
Licensee without which the University would not enter into this Agreement. The
University has the option to terminate this Agreement for breach of this
clause by Licensee.
26. MISCELLANEOUS
26.1 The headings of the several sections of this Agreement are
included for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this License Agreement.
26.2 No amendment or modification of this Agreement is binding on
the Parties unless made in a writing executed by duly authorized
representatives of the
Los Alamos National Laboratory 12 of 16
<PAGE>
Parties.
26.3 This License Agreement embodies the entire understanding of the
Parties and supersedes all previous communications, representations, or
understandings, either oral or written, between the Parties relating to this
License Agreement.
26.4 In the event any one or more of the provisions of this License
Agreement is held to be invalid, illegal, or unenforceable in any respect, the
invalidity, illegality, or unenforceability will not affect any other
provisions hereof, and this License Agreement will be construed as if such
invalid or illegal or unenforceable provisions had never been part of this
License Agreement.
26.5 This License Agreement will be interpreted and construed in
accordance with the laws of the New Mexico.
IN WITNESS WHEREOF, both the University and the Licensee have executed
this License Agreement, in duplicate originals, by their respective officers
on the day and year hereinafter written.
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
By /s/ S.S. Hecker
- -------------------
Siegfried S. Hecker, Director
Los Alamos National Laboratory
Date: 5/19/95
LICENSEE
By: /s/ Thomas E. Murphy
- ---------------------------
Thomas E, Murphy, President
Trade Partners International, Incorporated
Date: 5/23/95
Los Alamos National Laboratory 12 of 16
<PAGE>
APPENDIX A
ASSIGNMENT AND CONFIRMATORY LICENSE
<PAGE>
APPENDIX B
REPORT FORMAT
1. DEVELOPMENT:
- -Progress towards commercialization
- -Problems encountered
- -Precommercialization marketing efforts
- -Any shift in time-line from original business plan
- -Expected launch date
- -Any improvements, new patents, derivative works, etc. arising from
the work
2. COMMERCIALIZATION:
- -First launch date in US
- -Sales, production or other royalty-generating activity
- -Royalty calculations and royalties due
3. CONTINUING:
- -Continued efforts in evolving the product/service
- -Improvements
- -Sublicenses
- -Foreign registrations, licenses, commercializations, etc.
- -Any problems which would potentially effect the contract
- -Any infringements of intellectual property (as provided in the
contract)
- -Any potential litigation involving the licensed intellectual
property
4. OF GENERAL INTEREST:
- -Promotional material, news releases, etc.
- -Company annual reports
- -Testing activity, scientific publications
- -Any feedback, positive or negative
- -Suggestions
Los Alamos National Laboratory 15 of 16
<PAGE>
APPENDIX C
DESIGNATION OF LICENSING TEAM
"Licensing Team" means the Negotiating Team and the Technical Advisors
"Negotiating Team" means personnel responsible for evaluating the Licensee's
entire business plan and having sole responsibility for negotiating with the
Licensee on all terms and conditions (including terms for royalties and fees
and all other financial terms) of this License Agreements, for deciding to
grant this license, for drafting this License Agreement, and for obtaining
legal approval and the Director's signature. The Negotiating Team is not
bound, in any way, by the technical opinions of the Technical Advisors.
Negotiating Team:
Jerome Gercia, Licensing Executive, Industrial Partnership Office, MS C334
Ray Wilson, Patent Attorney, Business & Patent Law, MS D412
"Technical Advisors" means personnel responsible for evaluating only the
technical portion of Licencee's business plan and, based on their relevant
technical expertise and opinions, for advising the Negotiating Team on whether
the Licensee has the technical resources to commercialize the University's
Patent Rights.
Technical Advisors
Andrew Jason, Group Leader, AOT-1 Ms H808
Ross Meyer, Laboratory Associate, AOT-1, MS H808
Los Alamos National Laboratory 16 of 16
<Letterhead/Seal of Trident Technologies Corporation appears here>
MEMORANDUM
TO: Trident Technologies Board of Directors
FROM: Patricia Wilson
DATE: July 31, 1996
RE: Meeting regarding TPI and Exclusive Sub-License granted to Trident
__________________________________________________________________________
I attended a lunch meeting today which included: Thomas E. Murphy, James
Hamill, Arlan K. Andrews, Sr., Ken Wilson and myself. During this meeting an
issue was raised by me regarding the problem of the sub-license being an
exclusive sub-license to Trident. This problem as I explained had been
brought to my attention by our Auditor. I was assured that the sub-license was
an exclusive license issued to Trident Technologies Corporation but that in
the event the sub-license does not read exclusively then TPI will amend the
sub-license to include this exclusivity.
AGREED TO FORM AND CONTENT.
/s/ Patricia Wilson /s/Ken Wilson
- ------------------------ ---------------------
Patricia Wilson Ken Wilson
/s/ Thomas E. Murphy /s/ James Hamil
- ---------------------- ----------------------
Thomas E. Murphy James Hamil
/s/ Arlan K Andrews
- ------------------------
Arlan K. Andrews
337 Eubank NE Albuquerque New Mexico 87123 USA Tel: 505-296-0125
Fax: 505-271 2633
LANL Control Number: 97-41-00226
LIMITED EXCLUSIVE
PATENT LICENSE AGREEMENT
BETWEEN
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
AND
TRIDENT TECHNOLOGIES CORPORATION
FOR
SEAL DEVICE FOR FERROMAGNETIC CONTAINERS
<PAGE>
TABLE OF CONTENTS
BACKGROUND..................................................... 1
1. DEFINITIONS.................................................1
2. GRANT.......................................................2
3. SUBLICENSES.................................................3
4. FEES........................................................4
5. EARNED ROYALTIES ...........................................4
6. ANNUAL MINIMUM ROYALTY .....................................5
7. SEMIANNUAL REPORTS .........................................6
8. BOOKS AND RECORDS ..........................................7
9. TERM OF THE AGREEMENT ......................................7
10. TERMINATION OR MODIFICATION BY THE UNIVERSITY...............7
11. TERMINATION BY THE LICENSEE ................................8
12. PATENT PROSECUTION AND MAINTENANCE .........................8
13. USE OF NAMES, TRADENAMES, AND TRADEMARKS ...................8
14. WARRANTY BY THE UNIVERSITY .................................9
15. INFRINGEMENT ...............................................9
16. WAIVER.....................................................10
17. ASSIGNABILITY .............................................10
18. INDEMNITY - PRODUCT LIABILITY .............................11
19. LATE PAYMENTS .............................................11
20. NOTICES....................................................11
21. FORCE MAJEURE .............................................11
22. EXPORT CONTROL LAWS .......................................12
23. PREFERENCE FOR UNITED STATES INDUSTRY .....................12
24. DISPUTE RESOLUTION ........................................12
25. CONFLICT OF INTEREST ......................................12
26. MISCELLANEOUS .............................................12
APPENDIX A - ASSIGNMENT AND CONFIRMATORY LICENSE ..............14
APPENDIX B - REPORT FORMAT ....................................15
APPENDIX C - DESIGNATION OF LICENSING TEAM ....................16
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement ii
<PAGE>
LIMITED EXCLUSIVE PATENT LICENSE AGREEMENT
TRIDENT TECHNOLOGIES CORPORATION
THIS LICENSE AGREEMENT is entered into by and between THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA, a nonprofit educational institution and a public
corporation of the State of California, hereinafter referred to as the
"University;" and Trident Technologies Corporation, 2513 East Loop 820 North,
Fort Worth, Texas, 76118, a New Mexico corporation, hereinafter referred to as
the "Licensee," the parties to this License Agreement being referred to
individually as a "Party," and collectively as "Parties."
BACKGROUND
The University conducts research and development at the Los Alamos
National Laboratory (LANL) for the U.S. Government under Contract No.
W-7405-ENG-36 with the U.S. Department of Energy (DOE).
Rights in inventions and technical data made in the course of the
University's research and development at LANL are governed by the terms and
conditions of the Contract.
Certain Technology relating to a seal device for ferromagnetic containers
has been developed in the course of the University's research and development
at LANL.
The University desires that such Technology be developed and utilized to
the fullest extent possible so as to enhance the accrual of economic and
technological benefits to the U.S. domestic economy, and is therefore willing
to grant an exclusive license to Licensee for that part of the Technology to
which the University has title.
The Licensee desires to obtain from the University certain exclusive
rights for the commercial development, manufacture, use, and sale of the
Technology.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 "Technology", means technical information, know-how and data
owned or controlled by the University and relating to seal devices for
ferromagnetic containers.
1.2 "Patent Rights" means the University's rights arising from the
following:
U.S. Patent No. 5,355,824, issued on October, 18, 1994, "SEAL DEVICE FOR
FERROMAGNETIC CONTAINERS," by Ross E Meyer and Andrew J. Jason.
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 1 of 16
<PAGE>
1.3 "Licensed Method" means any method, procedure or process covered
by any subsisting claim of any patent or patent application identified in
paragraph 1.2.
1.4 "Licensed Product" means any article of manufacture, machine or
composition of matter covered by any subsisting claim of any patent or patent
application identified in paragraph 1.2, and any article of manufacture,
machine or composition of matter produced through the practice of a Licensed
Method.
1.5 "Licensed Invention" means any Licensed Product or Licensed
Method.
1.6 "Sale" means providing or contracting to provide Licensed
Invention to a purchaser.
1.7 "Net Sales" means the total amounts invoiced to purchasers during
the accounting period in question because of Sale by Licensee or sublicensee,
or use or practice of Licensed Invention by Licensee, sublicensee or such
purchasers, less allowances for returns of Licensed Invention, freight, and
taxes on Licensed Invention. Net Sales in the case of Licensed Invention used
or transferred shall mean the fair market value of Licensed Invention as if
they were sold to an unrelated third party in similar quantities.
1.8 "Improvement" means any modification of a device, apparatus,
method or composition of matter described in a patent or patent application
identified above, provided such modified device, apparatus, composition or
method would infringe the Patent Rights.
2. GRANT
2.1 The University grants to the Licensee an exclusive license to
make, use, and sell Licensed Products and to practice Licensed Methods under
the Patent Rights, with the right to sublicense others in accordance Article
3.
2.2 The University expressly reserves the right to use the Technology,
including the right to make and use Licensed Products and to practice Licensed
Methods, for noncommercial educational and research purposes.
2.3 The U.S. Government has a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced throughout the
world, for or on behalf of the United States, inventions covered by the
University's Patent Rights, and has certain other rights under 35 USC 200-212
and applicable implementing regulations and under the U.S. Department of
Energy Assignment and Confirmatory License, if any, attached as Appendix A to
this Agreement.
2.4 Under 35 U.S.C. 203 the U.S. Department of Energy has the right
to require the Licensee to grant a nonexclusive, partially exclusive or
exclusive license under the Patent Rights in any field of use to a responsible
applicant or applicants, 48 CFR 27.304-1(g).
2.5 The Licensee will make available to the University and will grant
an
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 2 of 16
<PAGE>
irrevocable, paid-up, royalty-free nonexclusive license to the University to
make and use for noncommercial purposes any Improvements to the Technology
made by Licensee.
3. SUBLICENSES
3.1 The University grants to Licensee the right to grant sublicenses
to third parties to make, have made, use and sell Licensed Products and to
practice Licensed Methods in which the Licensee has current exclusive rights
under this License. But sublicenses may be granted only under the following
conditions:
(a) Licensed Products sold in the United States will be
substantially manufactured in the United States; or
(b) (i) the sublicensee has a business unit located in the United States
and significant economic and technical benefits will flow to the U.S. as a
result of the sublicense agreement; and,
(ii) in sublicensing any entity subject to the control of a
foreign company or government, such foreign government permits U. S. agencies,
organizations, or other persons to enter into cooperative R&D agreements and
licensing agreements, and has policies to protect U.S. intellectual property
rights.
If Licensee determines that neither conditions (a) nor (b) can be met,
Licensee must obtain the written approval of the University prior to granting
a sublicense.
(c) Sublicenses granted under this clause must contain all of the
conditions, restrictions and reservations of this Agreement, except for those
provisions related to the License Fee and annual minimum royalties, and shall
preserve the rights and reservations of the University and the U.S. Government
existing under this License Agreement.
3.2 Licensee shall provide the University with a copy of each
sublicense entered into with a third party within 30 days after execution.
3.3. Licensee must pay to the University the earned royalties
prescribed in Paragraph 5.1 on all Net Sales of Licensee's sublicensees. With
respect to any sublicense, this obligation continues for so long as a
sublicense granted by Licensee is in effect, and is an obligation of the
Licensee whether or not royalty payments are actually received by Licensee
from its sublicensee.
3.4 Termination of this Agreement automatically operates as an
assignment by Licensee to the University of all Licensee's right, title and
interest in and to each sublicense granted by Licensee.
If this Agreement terminates, any sublicensee who is not in default of the
terms and conditions of its sublicense agreement with Licensee may make a
written election to continue such sublicense agreement as a license agreement
with the University.
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 3 of 16
<PAGE>
4. FEES
4.1 For the rights, privileges and license granted under this
Agreement, Licensee shall pay to the University the following fees:
a. License Issue Fee of twenty-five thousand U.S. Dollars($25,000.00),
which is due in accordance with the following schedule:
five-thousand U.S. dollars ($5,000.00) due on November 30, 1996;
five-thousand U.S. dollars ($5,000.00) due on January 1, 1997;
five-thousand U.S. dollars ($5,000.00) due on March 1, 1997;
five-thousand U.S. dollars ($5,000.00) due on May 1, 1997;
five-thousand U.S. dollars ($5,000.00) due on July 1, 1997.
b. License Maintenance Fees of fifty-thousand U.S. Dollars($50,000.00)
per year payable on December 31, 1999, and on December 31 of each year
thereafter; provided, however, that the Earned Royalty due for each year, if
any, will be creditable against the License Maintenance Fee for that year.
License Maintenance Fees paid in excess of Earned Royalties will neither be
refundable nor creditable to future years.
c. In addition to Earned Royalties, Fifty Percent (50%) of other
payments, including, but not limited to, sublicense issue fees, received from
sublicensees in consideration for the Licensed Invention.
5. EARNED ROYALTIES
5.1 The Licensee will pay to the University an Earned Royalty of ten
percent (10%) of Net Sales for Licensed Inventions sold or practiced each
calendar year (January 1 to December 31).
5.2 Notwithstanding Paragraph 5.1 above, Licensee has no obligation
to pay an Earned Royalty on Sales where the purchaser is the U.S. Government
or any agency thereof or any U.S. Government contractor who certifies that its
purchase of the Licensed Invention is for or on behalf of the U.S. Government.
Licensee will not impose royalty charges in Sales where the purchaser is a
U.S. Government entity, and will refund to it any royalty collected on such
Sales.
5.3 The first Earned Royalty payment due under this Agreement is
based on Net Sales from the effective date of this Agreement through December
31 of the same calendar year, and must be paid within one month from the end
of such period. Subsequent earned royalty payments shall be calculated based
on Net Sales during the semiannual periods extending from January 1 through
June 30 and from July 1 through December 31 of each year, for as long as this
Agreement remains in effect. Royalty payments must be paid within one month
from the end of the respective semiannual period.
5.4 All payments due the University must be paid in United States
funds to
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 4 of 16
<PAGE>
the University of California, Los Alamos National Laboratory, at the address
set forth in Paragraph 20.1. Licensee must convert Net Sales into equivalent
United States funds at the exchange rate for the foreign currency prevailing
as of the last day of the month when such Net Sales occurred, as reported in
the Wall Street Journal.
5.5 If the University reduces the exclusive field of use license
granted under Article 2 to a nonexclusive license pursuant to Paragraphs 10.2,
6.2, or 6.3, Licensee will pay to the University fiftypercent (50%) of the
Earned Royalties payable to the University in accordance with Paragraph 5.1
after the effective date of the reduction to a nonexclusive license.
5.6 If any patent claim included within the University's Patent Rights
is held invalid by a decision of a court of competent jurisdiction in any
country and from which no appeal has or can be taken, Licensee's obligation to
pay Earned Royalties on Sales in that country of Licensed Inventions covered
by the invalidated claim and not covered by valid patent claims subsisting
under the University's Patent Rights will be reduced as of the date of such
decision to fifty percent (50%) of the royalty rate set forth in Paragraph
5.1, and must be paid on the Sale of such Licensed Inventions for a further
period of six (6) years or until the expiration date of the patent containing
the invalidated claim, whichever is sooner, in consideration of the University
having provided valuable know-how and technical assistance to the Licensee in
entering the market in a timely manner.
6. DILIGENCE
6.1 Licensee shall use its best efforts to bring one or more Licensed
Inventions to market through a thorough, vigorous and diligent program for
exploitation of the Patent Rights and to continue active, diligent marketing
efforts for one or more Licensed Inventions throughout the life of this
Agreement.
6.2 Licensee shall achieve the following milestones and demonstrate to
the University on or before the corresponding Completion Dates that Licensee
satisfied such milestones:
a. Milestone I: Design, Build, Test Underwater Seal Device Prototype.
Licensee must design, build, and Successfully Complete alpha tests
of the underwater seal device prototype ("Prototype"): Licensee must test the
Prototype device under scenarios which simulate real world operational
conditions. Successfully Complete means that upon obtaining unsatisfactory
results (based on reasonable system specifications which incorporate
reasonable safety margins) from any alpha test, Licensee will modify the
Prototype, re-test, and continue this cycle until the Prototype passes all
alpha-tests with the same Prototype design by satisfying the subsystem and
system specifications.
Licensee must complete Milestone I by April 1, 1997.
b. Milestone 11: Design, Build, Test Underwater Seal Device Product.
Licensee must design, build, and Successfully Complete beta tests of the
underwater seal device product ("Product"): Licensee must test the Product
under scenarios which simulate real world operational
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 5 of 16
<PAGE>
conditions. Successfully Complete means that upon obtaining unsatisfactory
results (based on reasonable system specifications which incorporate
reasonable safety margins) from any beta test, Licensee will modify the
Product, re-test, and continue this cycle until the Product passes all
beta-tests with the same Product design by satisfying the subsystem and system
specifications.
Licensee must complete Milestone II by November 1, 1998.
c. Milestone III: Manufacturing Facility & First Commercial Sale of
Underwater Seal Device Product.
Licensee must establish vendor contracts as required to obtain components
to manufacture the underwater seal device or Licensed Product, and establish a
manufacturing facility capable of assembling Licensed Products for safe.
Licensee must make its first commercial sale of an underwater seal device
(Licensed Product) by January 1, 1999.
Licensee must complete Milestone III by January 1, 1999.
Licensee shall permit an in-plant inspection by the University in confidence
on or before the Completion Date of each milestone, and thereafter permit
in-plant inspections by the University at intervals of at least six (6) months
between each such inspection.
6.3 Licensee's failure to perform in accordance with Paragraphs 6.1
and 6.2 shall be grounds for the University, at the University's sole option,
to reduce the Licensee's exclusive license to a nonexclusive license under the
terms of Paragraph 5.5, or to terminate the exclusive license under the terms
of Paragraph 10.1
7. SEMIANNUAL REPORTS
7.1 Progress Reports. Licensee must submit semiannual progress
reports certified by an officer of the Licensee. The reports are due by
February 1 and August 1 of each year beginning in the year 1998, except that
the first reports are due the last day of the month of the milestone
Completion Dates under Paragraph 6.2. This report covers the Licensee's
activities related to the Diligence milestones and to other development of the
Technology and the securing of approvals necessary for commercialization of
the Technology. The reports must be made until earned royalties payable to the
University exceed the annual License Maintenance Fee stated in Paragraph 4.1.
The reports must conform with the Report Format set forth in Appendix B.
Reports marked by Licensee as proprietary financial or business information of
Licensee will be treated by the University as proprietary information.
7.2 Financial Reports. Licensee must submit semiannual financial
reports. The reports are due on the dates that payments of License Maintenance
Fees, other fees, and Earned Royalties are due under Articles 4 and 5, and
must be submitted regardless of whether any payment is actually made. The
reports must be certified by an officer of the Licensee, must cover the period
for which royalty payments are calculated, and must show total sales or
commercial uses made of Licensed Products or Licensed Methods by Licensee and
any sublicensed during the reporting period. If no sale, sublicense, or use of
Licensed Products or Licensed Methods has been made
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 6 of 16
<PAGE>
during a reporting period, a statement to this effect must be made. Reports
marked by Licensee as proprietary financial or business information of the
Licensee will be treated as such by the University.
8. BOOKS AND RECORDS
8.1 The Licensee must keep books and records according to generally
accepted accounting procedures, accurately showing all sales of Licensed
Products or practice of the Licensed Method by Licensee or sublicensees under
the terms of this License Agreement. Such books and records must be open to
inspection and audit on a proprietary basis by representatives or agents of
the University at reasonable times, but in no event more than once for each
calendar year, for the purpose of verifying the accuracy of the semiannual
reports and the royalties due. Licensee may request that any such inspection
and audit be conducted by an independent auditor, in which event, Licensee
will pay the reasonable costs of such auditor.
8.2 The fees and expenses of the representatives performing the
inspection and audit will be borne by the University. However, if an error in
royalties owed the University of more than Ten Thousand dollars ($10,000.00)
is discovered by the representatives of the University, then Licensee must pay
the fees and expenses of these representatives.
8.3 The books and records required by Paragraph 8.1 must be preserved
for at least three (3) years from the date of the royalty payment to which
they pertain.
9. TERM OF THE AGREEMENT
9.1 This License Agreement is effective as of the later of the dates
of execution by the Parties.
9.2 This License Agreement is in full force and effect from the
effective date and remains in effect until the expiration of the last to
expire of the patents included within the University's Patent Rights, unless
sooner terminated by operation of law or by acts of the Parties in accordance
with the terms of this License Agreement.
10. TERMINATION OR MODIFICATION BY THE UNIVERSITY
10.1 If the Licensee fails to deliver to the University any report
when due, or fails to pay any royalty or fee when due, or if the Licensee
breaches any material term of this License Agreement except for the
performance terms under Paragraph 6.2, the University may give written notice
of default to the Licensee. If the Licensee fails to cure the default within
ninety (90) days from the date of delivery of notice to Licensee, the
University has the right to terminate this License Agreement. This License
Agreement will terminate upon delivery of written notice of termination to the
Licensee. Termination does not relieve the Licensee of its obligation to pay
any royalty or license fees due or owing at the time of termination and does
not impair any accrued right of the University.
10.2 If Licensee fails to make the payment for fees identified in
Article 4 for any
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Limited Exclusive Patent License Agreement Page 7 of 16
<PAGE>
year, the University may terminate this License Agreement, or, at the
University's sole option, reduce the Licensee's exclusive license to a
nonexclusive license under the terms of Paragraph 5.5. The University will not
exercise this option if Licensee demonstrates to the University's sole and
subjective satisfaction that Licensee is fully exploiting the market for the
Licensed Invention.
11. TERMINATION BY THE LICENSEE
11.1 The Licensee may terminate this License Agreement by giving
written notice to the University. Such termination will be effective ninety
(90) days from the date of delivery of the notice, and all the Licensee's
rights under this Agreement will cease as of that date.
11.2 Any termination pursuant to the above paragraph does not
relieve the Licensee of any obligation or liability accrued by Licensee prior
to the effective date of termination.
12. PATENT PROSECUTION AND MAINTENANCE
12.1 The University will diligently prosecute any U.S. patent
applications identified in Article 1.2, and will maintain any U.S. patents
identified in Article 1.2, using counsel of its choice. The University will
provide the Licensee, on request, with copies of relevant documentation
relating to any such patent prosecution. The Licensee will hold such
documentation in confidence.
13. USE OF NAMES, TRADENAMES, AND TRADEMARKS
13.1 Nothing contained in this License confers any right to use in
advertising, publicity, or other promotional activities any name, tradename,
trademark, or other designation of either Party hereto (including any
contraction, abbreviation, or simulation of any of the foregoing). Unless
required by law, the use of the name "the University of California" or the
name of any facility or campus of the University of California is expressly
prohibited.
13.2 The University may disclose to third parties the existence of this
License Agreement and the extent of the grant in Article 2, but must not
disclose information identified as proprietary by Licensee under 13.4, except
where the University is required to release the information under either the
California Public Records Act or other applicable law. A decision to release
information under applicable law will be at the sole discretion of the
University.
13.3 Licensee may disclose to third parties the existence of this
License Agreement and the terms and conditions to the extent determined
appropriate by Licensee.
13.4 Licensee will mark those portions of a copy of this License
Agreement which Licensee believes contain proprietary business information of
Licensee and return such copy to the University within thirty days of the
effective date of this License Agreement.
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Limited Exclusive Patent License Agreement Page 8 of 16
<PAGE>
14. WARRANTY BY THE UNIVERSITY
14.1 The University warrants that it has the lawful right to grant
this license, subject to DOE assignment of rights in the Technology to the
University in the event such rights are not owned by the University, and that
it has not granted any rights under the University's Patent Rights to any
other party that diminish any right granted to Licensee, except as required by
action of law or by the University's prime contract with DOE.
14.2 This license is provided WITHOUT warranty of merchantability or
fitness for a particular purpose or any other warranty, express or implied.
The University makes no representation or warranty that the Licensed Products
or Licensed Methods will not infringe any patent or other proprietary right.
14.3 IN NO EVENT WILL THE UNIVERSITY BE LIABLE FOR ANY INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR
THE USE OF LICENSED PRODUCTS OR LICENSED METHODS.
14.4 Nothing in this License Agreement shall be construed as:
a. a warranty or representation by the University as to the
validity or scope of University's Patent Rights;
b. an obligation to bring or prosecute actions or suits against
third parties for patent infringement, except as provided in Article 15
(Infringement);
c. conferring by implication, estoppel, or otherwise any license
or rights under any patents of the University other than University's Patent
Rights, copyrights, or other intellectual property of the University; or
d. an obligation by University to furnish any know-how,
technical assistance, or technical data that is unrelated or unnecessary to
the transfer of the Technology to the Licensee for the purpose of implementing
this License Agreement.
15. INFRINGEMENT
15.1 In the event that either Party to this License Agreement learns
of the infringement of any of University's Patent Rights, that Party will
inform the other Party in writing and will provide the other Party with
available evidence of the infringement.
15.2 Both Parties will use their best efforts in cooperating with
each other to terminate the infringement without litigation.
15.3 If the efforts of the Parties are not successful in abating the
infringement within ninety (90) days after the infringer has been formally
notified of infringement by the University, the University has the right to:
15.3a commence suit on its own account;
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Limited Exclusive Patent License Agreement Page 9 of 16
<PAGE>
15.3b join the Licensee in a suit; or
15.3c refuse to participate in a suit,
and the University shall give notice in writing to the Licensee within ten
(10) working days after the 90 day period of its election. The Licensee may
bring suit for patent infringement only if the University elects not to
commence or join in any suit other than as nominal party plaintiff and if the
infringement occurred during the period and in a country where the Licensee
had exclusive rights under this License Agreement.
15.4 Any legal action under this article will be at the expense of the
Party on account of whom suit is brought. If legal action is brought by
Licensee, the University will be entitled to 25% of any damage recovery based
on lost profits of Licensee. Legal action brought jointly by the University
and the Licensee and fully participated in by both will be at the joint
expense of the Parties and all recoveries will be shared jointly by them in
proportion to the share of expenses paid by each.
15.4 Each Party will cooperate with the other in proceedings instituted
hereunder, provided expenses are borne by the Party bringing suit. Litigation
will be controlled by the Party bringing suit, except that the University will
control the litigation if brought jointly. The University may be represented
by its choice of counsel in any suit brought by the Licensee.
15.6 Neither Party will settle or compromise any suit without the other
Party's consent.
16. WAIVER
16.1 No waiver by either Party of any breach or default of any of the
covenants or agreements of this Agreement is a waiver as to any subsequent or
similar breach or default.
17. ASSIGNABILITY
17.1 This License Agreement may be assigned by the University, but
shall be personal to Licensee and assignable by Licensee only with the written
consent of the University.
17.2 In the event that a controlling interest in Licensee is obtained
by a different entity, the University may terminate this License Agreement at
its discretion, which discretion shall not be exercised unreasonably. Licensee
will notify the University of any such change in controlling interest within
thirty days of its occurrence.
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 10 of 16
<PAGE>
18. INDEMNITY - PRODUCT LIABILITY
18.1 The Licensee will indemnify the U.S. Government and the
University, and their officers, employees, and agents, against any damages,
costs and expenses, including attorneys' fees, arising from the
commercialization and utilization of the Technology by Licensee, including but
not limited to the making, using, selling or exporting of products, processes,
or services derived therefrom. This indemnification will include, but will not
be limited to, any product liability.
19. LATE PAYMENTS
19.1 In the event royalty payments or fees are not received by the
University within thirty (30) days of when due, the Licensee will pay to the
University interest charges at the rate of ten percent (10%) per annum on the
amount of the royalty payments or fees overdue.
20. NOTICES
20.1 Any payment, notice, or other communication required or permitted to
be given to either party hereto is properly given and effective on the date of
delivery if delivered in person or by first-class certified mail, postage
paid, or by facsimile transmission with confirmation, to the respective
address or facsimile number given below, or to any other address designated by
written notice to the other party as follows:
In the case of the Licensee:
Trident Technologies Corporation
2513 East Loop 820 North
Fort Worth, Texas 76118
Attn.: Mr. Ken Wilson
FAX Number (817) 595-3074
In the case of the University:
Los Alamos National Laboratory
Industrial Partnership Office
P.O. Box 1663, Mail Stop C334
Los Alamos, New Mexico 87545
Attn.: Licensing Administrator
FAX Number (505) 665-0154
21. FORCE MAJEURE
21.1 Neither party is responsible for delay or failure in performance
of any of the obligations imposed by this License Agreement, if the failure is
caused by fire, flood, explosion, lightning, windstorm, earthquake, subsidence
of soil, court order or government interference, civil commotion, riot, war,
or by any cause of like or unlike nature beyond the control and without fault
or negligence of a party.
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 11 of 16
22. EXPORT CONTROL LAWS
22.1 Licensee acknowledges and understands that the export of certain
goods or technical data from the United States requires an export control
license from the United States Government, and that failure to obtain an
export control license may result in violation of U.S. laws.
23. PREFERENCE FOR UNITED STATES INDUSTRY
23.1 Any products embodying Licensed Products or produced through the
use of a Licensed Method will be manufactured substantially in the United
States.
24. DISPUTE RESOLUTION
24.1 The Parties will use their best efforts to resolve disputes
arising from this Agreement. Any dispute that cannot be resolved by the
Parties will be resolved by non-binding arbitration in accordance with the
rules and procedures of the American Arbitration Association, acting in the
state of New Mexico, and shall be enforceable in accordance with New Mexico
law.
25. CONFLICT OF INTEREST
25.1 Licensee represents that Licensee does not now employ and has
made no offers of employment to members of the University negotiating team set
out in Appendix C. Licensee agrees to make no offers of employment to any
member of the University negotiating team for a period of two years after the
effective date of this Agreement without the express written permission of the
University. Licensee understands that this clause is a material undertaking by
Licensee without which the University would not enter into this Agreement. The
University has the option to terminate this Agreement for breach of this
clause by Licensee.
26. MISCELLANEOUS
26.1 The headings of the several sections of this Agreement are
included for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this License Agreement.
26.2 No amendment or modification of this Agreement is binding on the
Parties unless made in a writing executed by duly authorized representatives
of the Parties.
26.3 This License Agreement embodies the entire understanding of the
Parties and shall supersede all previous communications, representations, or
understandings, either oral or written, between the Parties relating to this
License Agreement.
26.4 In the event any one or more of the provisions of this License
Agreement is held to be invalid, illegal, or unenforceable in any respect, the
invalidity, illegality, or unenforceability will not affect any other
provisions hereof, and this License
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 12 of 16
<PAGE>
Agreement will be construed as if such invalid or illegal or unenforceable
provisions had never been part of this License Agreement.
26.5 This License Agreement will be interpreted and construed in
accordance with the laws of the New Mexico.
IN WITNESS WHEREOF, both the University and the Licensee have executed
this License Agreement, in duplicate originals, by their respective officers
on the day and year hereinafter written.
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
By: /s/ S S Hecker
- ----------------------------
Siegfried S. Hecker
Date: 10/31/96
TRIDENT TECHNOLOGIES CORPORATION
By: /s/ Ken Wilson /s/ David Gregor
Printed Name: Ken Wilson David Gregor
Title: Consultant Vice-President
Date: 11/3/96
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 13 of 16
<PAGE>
APPENDIX A
ASSIGNMENT AND CONFIRMATORY LICENSE
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<PAGE>
APPENDIX B
REPORT FORMAT
1. DEVELOPMENT:
A. Progress towards satisfying Diligence milestones under Paragraph 6.2
B. Progress towards commercialization
C. Problems encountered
D. Precommercialization marketing efforts
E. Any shift in time-line from original business plan
F. Expected launch date
G. Any improvements, new patents, derivative works, etc. arising from
the work
2. COMMERCIALIZATION:
A. First launch date in US
B. Sales, production or other royalty-generating activity
C. Royalty calculations and royalties due
3. CONTINUING:
A. Continued efforts in evolving the product/service
B. Improvements
C. Sublicenses
D. Foreign registrations, licenses, commercializations, etc.
E. Any problems which would potentially effect the contract
F. Any infringements of intellectual property (as provided in the
contract)
G. Any potential litigation involving the licensed intellectual
property
4. GENERAL INTEREST:
A. Promotional material, news releases, etc. .
B. Company annual reports
C. Testing activity, scientific publications
D. Any feedback, positive or negative
E. Suggestions
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 15 of 16
<PAGE>
APPENDIX C
DESIGNATION OF LICENSING TEAM
Licensing Team:
I. Negotiating SubTeam:
Jerome Jay Garcia, Licensing Team Chairperson, Lead Negotiator for Negotiating
Subteam, IPO
Ray Wilson, Counsel to Licensing Team, member of Negotiating Subteam, BPL
II. Technical Advisors:
Andrew Jason, Principal Investigator, Technical Advisor to Licensing Team,
AOT-1.
Los Alamos National Laboratory - Trident Technologies Corporation
Limited Exclusive Patent License Agreement Page 16 of 16
Form Approved: OMB No. 1512-0017
For ATF ONLY
PERMIT NO. 98-11040
VALID FOR 12 MONTHS AFTER THE
DATE OF APPROVAL (ITEM 17 BELOW)
DEPARTMENT OF THE TREASURY- BUREAU OF ALCOHOL, TOBACCO AND FIREARMS
APPLICATION AND PERMIT FOR IMPORTATION OF FIREARMS
AMMUNITION AND IMPLEMENTS OF WAR
NOT FOR USE BY MEMBERS OF THE UNITED STATES ARMED FORCES
(Submit in triplicate)
_____________________________________________________________________________
SECT10N I - APPLICATION
_____________________________________________________________________________
3. COUNTRY OF
1. FEDERAL FIREARMS LICENSE (if Any) 2. TELEPHONE NO. EXPORTATION
- ------------------------------------- ----------------- ---------------
LICENSE NO. EXPIRATION DATE 817-284-7474 South Africa
5-75-220 08-1J-41795 09-01-2001
_____________________________________________________________________________
4.RETURN APPROVED PERMIT TO (Enter name, address 5. APPLICANTS NAME AND
ADDRESS and ZIP Code if different than applicant's) (Including ZIP Code)
Griffon USA, INc.
2513 E Loop 820 N
Fort Worth TX 76118
_____________________________________________________________________________
6. NAME AND ADDRESS OF FOREIGN SELLER 7. NAME AND ADDRESS OF FOREIGN SHIPPER
GRIFFON GRIFFON
322 15TH ST. 322 15TH STREET
RANDIES PARK, MIDRAND 1685 RANDIES PARK, MIDRAND 1685
______________________________________________________________________________
8. DESCRIPTION of FIREARMS AND AMMUNITION (For firearms, enter SG)-Shotgun;
(RI)-Rifle; (PI)-Pistol; (RE)-Revolver)
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________
NAME AND ADDRESS OF MANUFACTURER TYPE CALIBER MODEL LENGTH OVERALL SERIAL NEW(N) QUANTITY UNIT
a (SG),(RI) GAUGE (MFRS.) OF LENGTH NO. OR (Each Type) COST
(PI),(RE) OR SIZE DESIGN BARREL (Inches) g. USED(U) i. j.
b. c. d. e. f. h.
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
F
I GRIFFON PI .45 1911 A1 4.14 7.88 R5A N 700 $375.00
R 322 15TH STREET 302002 ALL EACH
E RANDIES PARK THRU TOGETHER
A MIDRAND 1685 RSA
R 302701
M
S
_____________________________________________________________________________________________________________________
A
M <Stamp appears here: Title CFR Part 178.92 requires that within 15 days after
U release from Customs custody, each firearm imported shall be
N identified by engraving or casting on the frame or receiver the serial number,
I and on the frame, receiver or the barrel, the following: (1) model (2) caliber
T or gauge, (3) name of manufacturer or country where manufactured, (4) the name
I city and state of importer.>
O
N
____________________________________________________________________________________________________________________
I
M 0
P F <Stamped here: RECEIVED
L OCT 28 1998>
M W
E A
N R
T
S
____________________________________________________________________________________________________________________
</TABLE>
9. SPECIFIC PURPOSE OF INFORMATION (Use additional sheets, if necessary)
To sale
_____________________________________________________________________________
10. ARE YOU REGISTERED PURSUANT TO THE ARMS 11.IF"YES",GIVE REGISTRATION NO.
EXPORT CONTROL ACT OF 1976 [ ]YES [x] NO
_____________________________________________________________________________
Under the penalties provided by law, I declare that I have examined this
application, including the documents submitted in support of it, and, to the
best of knowledge and belief, it is true, correct, and complete.
_____________________________________________________________________________
12. SIGNATURE OF APPLICANT 13. TITLE 14. DATE
/s/ David Gregor President 10/16/98
_____________________________________________________________________________
SECTION II - FOR ATF USE ONLY (Please make no entries in this section)
______________________________________________________________________________
15.THE APPLICATION HAS BEEN EXAMINED AND THE IMPORTATION OF THE FIREARMS,
AMMUNITION, AND IMPLEMENTS OF WAR DESCRIBED HEREIN IS:
[ x ] APPROVED <Stamp: Upon the date of enact-
ment of the violent crime
[ ] PARTIALLY APPROVED FOR THE REASON control and law enforcement
INDICATED HERE OR ON ATTACHED LETTER Act of 1994 (Crime Bill), this
permit does not authorize the
[ ] DISAPPROVED FOR THE REASON importation of any ammunition,
INDICATED HERE OR ON ATTACHED LETTER magazine, drum, belt, feed
strip, or similar device
having a capacity of more than
ten rounds of ammunition.
Please note: this restriction
does not apply to an attached
tubular device designed to
accept and capable of
operating only with .22 cali-
ber rimfire ammunition.>
_____________________________________________________________________________
16. SIGNATURE OR THE DIRECTOR OF BUREAU OF ALCOHOL 17. DATE
TOBACCO AND FIREARMS
/S/ Laurence L. White Nov 20,1998
DEPARTMENT OF THE TREASURY- BUREAU OF ALCOHOL, TOBACCO AND FIREARMS
LICENSE (18 U.S.C. Chapter 44)
<Seal of Bureau of
Alcohol, Tobacco
and Firearms appears
here>
In accordance with the provisions of the Title I, Gun Control Act of 1968,
and the regulations issued thereunder (27 CFR Part 178), you are licensed to
engage in the business specified in this license, within the limitations of
Chapter 44, Title 18, United States Code, and the regulations issued
thereunder, until the expiration date shown. See WARNINGS and NOTICE on
reverse.
______________________________________________________________________________
Chief, F & E Licensing Center License
Direct ATF Number 5-75-220-08-1J-41795
Correspondence BATF, PO BOX 2994 -----------------------------------
To ATLANTA, GA 30301-2994 Expiration
Date SEPTEMBER 1, 2001
______________________________________________________________________________
Licensed Premises: 2513 E LOOP 820 N
Name GRIFFON USA INC FORT WORTH, TX 76118
______________________________________________________________________________
08 - IMPORTER OF FIREARMS OTHER THAN DESTRUCTIVE DEVICES
Type of R AMMUNITION FOR FIREARMS OTHER THAN DESTRUCTIVE DEVICES
License R AMMUNITION OTHER THAN ARMOR PIERCING AMMUNITION
______________________________________________________________________________
Chief, F & E
Licensing Center /s/ stamped signature (illegible) appears here
______________________________________________________________________________
Purchasing certification Licensee MAILING ADDRESS
I certify that this is a true copy of GRIFFON USA INC
a license issued to me to engage in the 2513 E LOOP 820 N
business specified. FORT WORTH, TX
76118
_____________________________________
(Signature of Licensee)
The licensee named herein shall use a reproduction
of this license to assist a transferor of firearms
to verify the identity and the licensed status of the
licensee as provided in 27 CFR Part 178. The
signature on each reproduction must be an
ORIGINAL signature.
_____________________________________________________________________________
<Letterhead of Continental Weapons (Pty) Ltd
Licensed Manufacturers and Wholesalers in Arms and Ammunition
Co. Reg. No. 94/02537/07
322, 15th Street
Randjespark, Midrand 1685
PO Box 6692
Halfway House, 1685
Tel: 27 11 314-5088
Fax: 27 11 314-5050
Representation Agreement between Continental
-------------------------------------------
Weapons (Pty) Ltd and Griffon USA Inc.
--------------------------------------
1. The following agreement is between Continental Weapons (Pty) Ltd,
hereafter referred to as "The Supplier", and Griffon USA Inc., hereafter
referred to as "The Importer".
2. The Supplier agrees to offer marketing assistance to The Importer in the
form of co-operative advertising, the sums concerned to be discussed and
mutually agreed upon on a case-by-case basis, prior to commitment to an
advertising agency or publisher by The Importer.
3. The Supplier agrees to assist, financially, towards the floor space
utilised by The Importer at the Shot Show, annually.
4. The Supplier agrees to supply goods to The Importer on a 60-day credit
term, from date of entry into the USA, verifiable by the US Customs stamp, on
condition that The Importer can supply The Supplier with an Irrevocable 60 day
Letter of Credit.
5. The Supplier commits to supplying a range of commonly replaceable spare
parts to The Importer, at no charge, for the purpose of warrantee repairs. The
relevant technical representatives for both parties will mutually agree upon
this parts list.
6. The Importer undertakes to import the Griffon products into the USA and
to market and promote these products to the best of their ability.
7. The Importer also undertakes to take responsibility for the Public
Liability Insurance, which is required by any distributor, prior to delivering
any Griffon product within the USA.
8. The Importer undertakes to perform the fimction of a Warrantee Repair
Centre for the Griffon products, only for the regions of the USA, utilising
the spare parts supplied by The Supplier. The Importer also undertakes to
cover the small labour factor, which might be applicable for
warranty repairs.
9. The Importer undertakes to assist The Supplier in obtaining BATF
approval for any new products that may be launched. This assistance would be
in the form of importing a sample/s of the said new product/s, and forwarding
it/these to the BATE for evaluation and certification.
10. The Supplier agrees to appoint The Importer as the sole importer and
distributor of the Griffon products for the USA. This appointment will be for
a period of 24 months, initially, from the date of this agreement being signed
by both parties, and will be renewableannually thereafter.
thereafter.
<PAGE>
11. In the event that either of the parties involved wish to withdraw from the
above agreement, written notice of such intention should be received by the
other party at least 30 days prior to such withdrawal being effective, i.e. a
30 day notice period, and such intention of cancellation should be for just
cause. Faxes or e-mails will not since. Only original documents will be
accepted in such an event. Also, in such an event, the reasons for the
intended withdrawal should be clearly stated and opportunity should be given
to the other party to rectify any problems, within a reasonable period of
time, if such opportunity has not previously been offered.
The Supplier Details The Importer Details Company Stamp
Chu Cheng Kan Kenneth Eugene Wilson
- ----------------------------- -------------------------------
Full Name (Proxy) Full Name (Proxy)
Chairman Chairman
- ----------------------------- -------------------------------
Designation Designation
/s/ Chu Cheng Kan /s/ Kenneth Eugene Wilson
- ----------------------------- -------------------------------
Signature Signature
3 May 1999 3 May 1999
- ------------------------------ -------------------------------
Date Date
<Stamp:
CONTINENTAL WEAPONS
PO Box 6692
Halfway House
1685
TEL (001) 314-5088
FAX (011) 314-5050>
- ------------------------------ -------------------------------
Company Stamp Company Stamp
REGISTRY OF RADIOACTIVE SEALED SOURCES AND DEVICES
SAFETY EVALUATION OF DEVICE
(CORRECTED PAGE - 8/22/97)
NO.: NR-365-D-101-E DATE: February 20, 1996 PAGE 1 OF 9
- --- ---- -----------
DEVICE TYPE: Gun Sight
- -----------
MODELS: Series 100-900, and Models: RDI111, RBI010, SIC123,
- ------- CGF003, CGR030, GKF001, GKROlO,SSF002, SSR020, SWF004,
SWR040, SWR041
MANUFACTURER / DISTRIBUTOR: 21st Century Technologies
- -------------------------- (Formerly Innovative Weaponry, Inc.)
2513 E Loop 820 N
Fort Worth, TX 76118-6919
SEALED SOURCE MODEL DESIGNATION: Lumitec Models CL/1, 5/4, 85
- ------------------------------- and CL/0, 95/3, 3 (See
Description section)
SRB Technologies, Inc.
Model PRH-800/G/200 (See
Description)
ISOTOPE: MAXIMUM ACTIVITY:
- -------- ----------------
Hydrogen-3 90 millicuries (3.33 GBq) per weapon
30 millicuries (1.11 GBq) per source
LEAK TEST FREQUENCY: Not Required
- -------------------
PRINCIPAL USE: (W) Self-Luminous Applications
- -------------
CUSTOM DEVICE: YES X NO
- ------------- -------- ---------
NRC FORM 374 PAGE 1 OF 3 PAGES
(7-94)
U.S NUCLEAR REGULATORY COMMISSION
MATERIALS LICENSE
Pursuant to the Atomic Energy Act of 1954. as amended. the Energy
Reorganization Act of 1974 (Public Law 93-438). and Title 10. Code of Federal
Regulations. Chapter 1. Parts 30. 31. 32. 33. 34. 35. 36. 39. 40. and 70. and
in reliance on statements and representations heretofore made by the
licensee. a license is hereby issued authorizing the licensee to receive.
acquire. possess. and transfer byproduct. source. and special nuclear material
designated below: to use such material for the purposes) and at the place(s)
designated below: to deliver or transfer such material to person, authorized
to receive it in accordance with the regulations of the applicable Part(s).
This license shall be deemed to contain the condition: specified in Section
183 of the Atomic Energy Act of 1954. as amended. and is subject to all
applicable rules. regulations. and orders of the Nuclear Regulatory Commission
now or hereafter in effect and to any conditions specified below.
_____________________________________________________________________________
Licensee In accordance with 1etter dated
September 25, 1996,
-----------------------------------
1. 21st Century Technologies, Inc. 3. License Number
42-23850-02E is issued in
its entirety to read as follows:
___________________________________
2. 2513 East Loop 820 North
Fort Worth, Texas 76118 4. Expiration Date May 31, 2001
___________________________________
5. Docket or
Reference No.
030-34261/Ref.
-----------------------------------
No. 30-23697-01E
_____________________________________________________________________________
6. Byproduct. Source. and/or 7. Chemical and/or 8. Maximum amount that L
Special Nuclear Material Physical Form May Possess at Any One
Time Under This License
A. Hydrogen-3 A. Sealed Light Sources A. Not applicable.
(SRB Technologies, Inc. (See Condition 10)
Model PRH-800/G/200, and
Lumitec Models CL/1,5/4,85
and CL/0,95/3,3)
_____________________________________________________________________________
9. Authorized Use
Pursuant to Section 32.22, 10 CFR Part 32, the licensee is authorized to
distribute only those luminous gunsights containing sealed light sources
identified in Condition 7.A. above, whether or not mounted on a weapon,
identified in Condition 10 of this license to persons exempt from the
requirements for a license pursuant to Section 30.19, 10 CFR Part 30, or
equivalent provisions of the regulations of any Agreement State.
______________________________________________________________________________
CONDITIONS
10. The approved gunsights are limited to the following model designs and
attachments as listed in Registration Certificate No. NR-365-D-101-E:
The Model CGF003 is a front "dot" sight designed for Colt pistols (see
Attachments 3 and 14).
The Model CGR030 is a rear 2 "dot" or "bar" sight designed for Colt
pistols (see Attachments 4, 12, and 13).
The Model GKF001 is a front "dot" sight designed for Glock pistols (see
Attachments 5 and 14).
The Model GKRO10 is a rear 2 "dot" or "bar" sight designed for Glock
pistols (see Attachments 6, 12, and 13).
<PAGE>
_____________________________________________________________________________
NRC FORM 374A U.S. NUCLEAR REGULATORY COMMISSION PAGE 2 Of 3 PAGES
(7-94) License Number
42-23850-02E
MATERIALS LICENSE Docket or Reference Number
SUPPLEMENTARY SHEET 030-34261
Reference No. 30-23697-01E
_____________________________________________________________________________
CONDITIONS
(Continued)
The Model SSF002 is a front "dot" sight designed for Sig-Sauer pistols
(see Attachments 7 and 14).
The Model SSR020 is a rear 2 "dot" or "bar" sight designed for Sig-Sauer
pistols (see Attachments 8, 12, and 13).
The Model SWF004 is a front "dot" sight designed for Smith and Wesson
pistols (see Attachments 9 and 29).
The Model SWR040 is a rear 2 "dot" sight designed for Smith and Wesson
pistols (se(Attachments 10 and 29).
The Model SWR041 is a rear "bar" sight designed for Smith and Wesson
pistols (see Attachments 11 and 28).
The Series 100 is a single "dot" front sight (see Attachment 17).
The Series 200 is a 2 "dot" rear sight (see Attachment 18).
The Series 300 is a single "bar" rear sight (see Attachment 19).
The Series 400 is a recessed, single "bar" rear sight(see Attachment 20).
The Series 500 is a 2 "bar" rear sight (see Attachment 21).
The Series 600 is a recessed, 2 "bar" rear sight (see Attachment 22).
The Series 700 is a 3 "bar" rear sight (see Attachment 23).
The Series 800 is a 3 "bar" rear sight (see Attachment 24).
The Series 900 is a 2 "dot," single "bar" rear sight (see Attachment 25).
Series 200 - 900 rear sights have a notch cut out for lining up the front
sight in either of the two configurations shown in Attachment 26.
ll.a. No "dot" or "bar" tritium light source listed in Condition 7.A. may
contain more than 30 millicuries.
ll.b. No combination of "dot" or "bar" tritium light source listed in
Condition 7.A. or any set of sights distributed for use on a single
weapon may contain more than 90 millicuries.
12. This license does not authorize possession or use of licensed
material.
13. Licensed material shall be distributed only from the licensee's
facility located a 2513 East Loop 820 North, Fort Worth, TX.
<PAGE>
_____________________________________________________________________________
NRC FORM 374A U.S. NUCLEAR REGULATORY COMMISSION PAGE 3 of 3 PAGES
(7-94) License Number
42-23850-02E
MATERIALS LICENSE Docket or Reference Number
SUPPLEMENTARY SHEET 030-34261
Reference No. 30-23697-01E
_____________________________________________________________________________
CONDITIONS
(Continued)
14. The licensee shall file periodic reports as specified in 10 CFR
32.25(c).
15. The licensee shall, in writing, inform the Director, Office of Nuclear
Material Safety and Safeguards, at least 15 days before Mr. Barry Mowry
becomes involved in any activity authorized pursuant to this license.
16. Except as specifically provided otherwise by this license, the licensee
shall conduct its program in accordance with the statements,
representations, and procedures contained in the documents, including
any enclosures, listed below. The U.S. Nuclear Regulatory Commission's
regulations shall govern unless the statements, representations, and
procedures in the licensee's application and correspondence are
more restrictive than the regulations.
A. Letter dated March 1, 1996;
B. Letter dated March 4, 1996;
C. Facsimile received February 29, 1996;
D. Facsimile received April 29, 1996;
E. Registration Certificate No. NR-365-D-101-E; and
F. Letter dated September 25, 1996.
FOR THE U.S. NUCLEAR REGULATORY COMMISSION
/s/ Susan L. Greene
Susan L. Greene
Medical, Academic, and Commercial
Use Safety Branch
Division of Industrial and
Medical Nuclear Safety
Office of Nuclear Material Safety and
Safeguards
Washington, DC 20555
DATE: October 18, 1996
<PAGE>
NRC FORM 374A U.S. NUCLEAR REGULATORY COMMISSION PAGE 1 OF 1 PAGES
(7-94)
License Number
30-23697-01E
MATERIALS LICENSE Docket or Reference Number
SUPPLEMENTARY SHEET 030-30266
Amendment No. 06
______________________________________________________________________________
21st Century Technologies, Inc.
337 Eubank NE
Albuquerque, New Mexico 87123
In accordance with letter dated September 25, 1996, NRC License No.
30-23697-01E is hereby terminated.
FOR THE U.S. NUCLEAR REGULATORY COMMISSION
/s/ Susan L. Greene
-------------------------------
Susan L. Greene
Medical, Academic, and Commercial Use
Safety Branch
Division of Industrial and
Medical Nuclear Safety
Office of Nuclear Material Safety and
Safeguards
Washington, DC 20555
DATE: October 18, 1996
<Seal of Nuclear
Regulatory Commission
Appears Here> UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D.C. 20555-0001
August 22, 1997
Ms. Patricia Wilson
21st Century Technologies
2513 E Koop 820 N
Fort Worth, TX 76118-6919
Dear Mr. Wilson:
This is in reference to a request that we recieved from our License Fee Debt
Collection Branch, to amend registration certificate NR-365-D-101-E.
Amendments have been made to the registration certificate to reflect the new
address.
Please be advised that you must manufacture and distribute the product in
accordance with the statements and representations contained in your
application, with enclosures thereto, and the information set out in your
registration certificate. As a general rule, you must request and obtain an
amendment to the certificate before you make changes or modification to the
information submitted to obtain the certificate.
Please read over the enclosed registration certificate in its entirety and
notify us immediately of any errors or omissions.
Please be aware that, as a holder of an NRC registration, you may be subject
to the NRC's licensing and inspection fees in accordance with 10 CFR Part 170,
and annual fees in accordance with 10 CFR Part 171. If you have any questions
concerning the fee requirements, please contact the License Fee and Debt
Collection Branch at (301) 415-7544.
If you have any questions, please contact me at (301) 415-8140 or Mr. Thomas
Rich at (301) 415-7893.
Sincerely.
/s/ Kim Randall
Kim Randall, Sealed Source Device Assistant
Sealed Source Safety Section
Source Containment and
Devices Branch
Division of Industrial and
Medical Nuclear Safety
Office of Nuclear Material Safety
and Safeguards
cc: SKimberley, LFCDB
Enclosure: As stated
21st Century Technologies, Inc.
2513 E Loop 820 N
Ft. Worth, TX 76118
September 14, 1998
Mr. Ellis Merschoff
Regional Administrator
NRC Region IV
611 Ryan Plaza Dr Suite 400
Arlington, TX 76011 License Number 42-23850-02E
Dear Mr. Merschoff,
As you are aware, pursuant to the May 5, 1996, Confirmatory Order issued by
the U.S. NRC to IWI, IWI is required to conduct periodic audits by an
independent third party auditor. The Order also gives the Regional
Administrator, Region IV, authority to relax or rescind any of the Order
conditions upon a showing of good cause by the licensee.
Since the issuance of the Order, audits have been conducted by Dr. John M.
Montgomery. All requirements of the Order have been met and we have put
improvements in place in our operation above and beyond those required by the
government. In addition, we have received multiple inspections from government
entities, including the State of New Mexico, the State of Texas, and of
course, the U.S. NRC. That extraordinary level of oversight over the past two
years has shown that our company can and will comply with all government
regulations. I can assure you that the concerns expressed by the NRC that
resulted in the above Order no longer apply to the conduct of our operations.
We fully understand the significance of compliance with our license and the
regulations; and we are fully committed to assure that compliance, regardless
of the level of external oversight involved.
Therefore, pursuant to the provisions of the Order, we are requesting that you
rescind the provision for periodic audits by an independent outside auditor.
We will continue to comply with all other provisions of the Order, including
continuing initial and refresher training. Our auditor, Dr. Montgomery, has
recommended that we make this request. It is his belief that continuing this
practice is unnecessary and unnecessarily costly. We remain under periodic
State of Texas and NRC monitoring, which we believe provides adequate
assurance of public health and safety. We recognize our responsibility to
assure cognizance of and compliance with all regulatory requirements.
Continued auditing will not further that objective.
If you have any questions regarding this request, please let me know.
Sincerely
/s/ Patricia Wilson
Patricia Wilson
President
DISTRIBUTION & AGENCY
AGREEMENT
ENTERED INTO & BETWEEN:
FinnCo Manufacturing
&
21st Century Technologies, Inc.
<PAGE>
INDEX
1. Parties
2. Definitions
Distribution Agreement
1. Introduction
2. Price and Payment
3. Delivery, Title and Risk
4. Representation and Warranty
5. Term and Termination
6. Product Tampering
7. Applicable Law and Jurisdiction
8. Whole Agreement
9. Domicilium Et Executandi
10. Schedule "A'
<PAGE>
___________________________________________________________________________
Distribution & Agency Agreement
MEMORANDUM OF AGREEMENT
Article 1 Parties
- -------------------
1.1 The parties to this agreement are:
1.1.1 21st Century Technologies, Inc.
(hereinafter referred to as the "Distributor" and the "Principle")
1.1.2 FinnCo Manufacturing
(hereinafter referred to as the "Manufacturer")
Article 2 - Definitions
- -----------------------
In this agreement and any appendixes thereto, unless inconsistent with or
otherwise indicated by the context:
The "Distributor" means 21st Century Technologies, Inc, being a public
company organized under the laws of The State of Nevada. Having its
registered Office at 2513 East Loop 820 North, Fort Worth, TX, 78118, USA.
The "Manufacturer" FinnCo Manufacturing being a private company with
limited liability, incorporated and registered under the laws of South Africa.
Having its registered office at Unit 12, 94 Dunswart Road, Dunswart, South
Africa.
The "Tire Sealant" Means a Mono-Ethylene Glycol & water based product, used
to prevent punctures in tubed and tubeless tires, as produced by the
manufacturer.
The "Area Of Distribution" In relation to the distributor is:
(I) USA
(II) Canada
(III) Caribbean
(IV) India
(V) Mexico
The "Effective Date" is October 15, 1999
<PAGE>
_____________________________________________________________________________
Distribution & Agency Agreement
Article 3 - Introduction
- ------------------------
3.1 The manufacturer has developed a tire sealant/ repair gel, and has
knowledge which may be beneficial to the distributor, in both sales &
marketing of the above mentioned products.
3.2 The manufacturer has appointed the distributor as the exclusive
distributor of the products for the territories listed in Article 2.
3.3 The manufacturer has agreed to manufacture the tire sealant/ repair gel
in an unbranded form, which is to be distributed by the distributor under any
brand name.
DISTRIBUTION AGREEMENT
- ----------------------
Article 4 Orders
- -------------------
4.1 Subject to the terms of this agreement, the manufacturer agrees to sell
to the distributor such quantities that the distributor may require for the
sales and distribution of bottled product, bulk product and self-repairing
bicycle inner tubes.
4.2 The distributor shall place an annual minimum order (as stipulated in
Schedule A) with the manufacturer. These orders will be collected from the
manufacturer's factory by the distributor's appointed shipping company. The
order will be placed complete with payment as specified in Article 5.
4.3 The distributor agrees that it will offer the manufacturer the first
right of supply for all its puncture repair requirements for the duration of
this period. By right of supply, it is implied that the distributor will
invite the manufacturer to propose a solution to any of its new puncture
repair requirements, and, if the solution is effective, the distributor and
manufacturer will in good faith enter into negotiations for the supply of the
product in question. The distributor agrees that it will not, during a
reasonable time period, while the manufacturer is investigating the
distributors requirements, and while supply negotiations are in progress,
seek to source, supply from a third party manufacturer.
_____________________________________________________________________________
Distribution &Agency Agreement
Article 5- Prices and Payment
- ------------------------------
5.1 The agreed purchase price per item is detailed in Schedule "A". The
initial purchase price referred to in article 5.1 is the product price, which
will be maintained for 12 (TWELVE) months from the date of this agreement.
The manufacturer will inform the distributor of any price revisions 3 (THREE)
months prior to the end of this 12 month period and 3 (THREE) months prior to
each calendar year thereafter.
If any unrealistic price increase makes it economically unfeasible for the
Distributor to continue, this agreement will be terminated.
5.2 Invoice payment is made as per our standard trading terms: 50 (FIFTY)
percent of total invoice amount is payable upon order, the remaining fifty
percent is payable upon presentation of the "Shipped On Board" documentation.
Upon receipt of cleared funds, the original "Shipped On Board" documentation
will be "FEDEXED" to the Fort Worth offices.
Article 6 - Delivery, Title and Risk
- ------------------------------------
6.1 Deliveries of the product are made Ex-Works Dunswart, South Africa.
6.2 Title and ownership shall pass to the distributor upon receipt of full
payment.
6.3 Physical product risk shall pass to the distributor upon collection of
the products at the manufacturer's factory by the appointed shipping company.
Article 7 - Representation and Warranty
- ---------------------------------------
7.1 The manufacturer represents and warrants that it shall have full title
and ownership of all products prior to the sale and delivery of said products
to the distributor, and that the products shall comply to all predetermined
product specifications.
7.2 The manufacturer guarantees that the product will be produced in
compliance of the relevant standards at all times.
7.3 In the event that a product fails to meet with the product
specifications, the manufacturer will, at its option, either replace the
defective product with product that meets specifications or refund the
invoiced price to the distributor. Product liability to the distributor for
any fault or negligence proven shall in no event exceed the invoice amount of
the delivered product plus 50% of the shipping cost to replace the defective
product.
<PAGE>
______________________________________________________________________________
Distribution & Agency Agreement
Article 8 Term and Termination.
- -------------------------------
8.1 This agreement shall become effective upon the signatory date. This
agreement shall have an initial period of 10 (TEN) years. At least six months,
before the initial period expires, the parties shall negotiate in good faith
the terms and conditions for an extension to this agreement. During this
negotiation both parties are under the obligation to propose reasonable terms
and conditions with the intent to extend this agreement.
8.2 This agreement may not be unilaterally terminated before the expiration
of its, term, whether initial or extended, except in the event of a material
breach of agreement, which is not rectified within thirty days of the receipt
of written notice thereof from the non-defaulting party.
8.3 The distributor shall be entitled to terminate this agreement without
payments or compensation being due, but with a notice period of six months,
should one of the following events occur:
(i) The distributor is liquidated
(ii) The manufacturer is liquidated.
8.4 The manufacturer shall be entitled to terminate this agreement without
payments or compensation being due, but with a notice period of six months,
should one of the following events occur
(i) The distributor is liquidated
(ii) The manufacturer is liquidated.
Article 9 Product Tampering
- -----------------------------
9.1 The distributor shall sell and distribute the manufacturer's products
as received and shall not alter, remove or add any chemicals or liquids to the
product.
9.2 The distributor is not entitled to conduct any chemical research or
laboratory testing of the manufacturer's products without written consent
from the manufacturer.
Article 10 Applicable Law and Jurisdiction
- ---------------------------------------------
10.1 This agreement is construed and shall be interpreted in accordance
with the laws of South Africa. All disputes arising in connection with this
agreement, or further agreements arising therefrom, shall be finally settled
in accordance with the Rules of the South African Arbitration Institute.
Article 11 Whole Agreement
- ----------------------------
11.1 This agreement embodies the entire undertaking of the parties. There
are no promises, terms, conditions or obligations, oral or written, expressed
or implied other than those contained herein.
<PAGE>
_____________________________________________________________________________
Distribution & Agency Agreement
Article 12 DOMICILIUM CITANDI ET EXECUTANDI
The parties hereto choose as domicilium citandi at executandi for all
notices and the services of all processes the following addresses:
The Manufacturer Unit 12, 94 Dunswart Road, Dunswart,
South Africa.
The Distributor 2513 East Loop 820 North, Fort Worth, TX,
76118, USA
Any notice of change of address must be given in writing by the party
concerned and delivered by registered mail to the other party. Addresses in
terms of this article must be physical addresses and not postal addresses.
Ken Wilson, for and on behalf of 21st Century Technologies, Inc.
SIGNED at Dunswart, South Africa on the 15 day of October 1999.
Witnesses:
1. /s/ signature illegible /s/ Laurence Finn
------------------------- --------------------------
2. /s/ signature illegible Laurence Finn, for and on behalf
------------------------ Of FinnCo Manufacturing
Singed at Boksburg, South Africa on the 17 day of October 1999
Witnesses:
1. /s/ David Gregor /s/ Ken Wilson
-------------------------- -----------------------------
Ken Wilson, for and on behalf
of 21st Century Technologies, Inc.
2. /s/ signature illegible
---------------------------
<PAGE>
_____________________________________________________________________________
Distribution & Agency Agreement
Schedule "A"
- ------------
1. Pricing
1.1 Bottles - non-branded - complete with a metal valve tool and
filler pipe. Liquid blue in color. Price US1.04
1.2 Inner tubes pre treated with sealant. Non-branded, packaged
loose. Price US1.645
1.3 Bulk product non-branded. Packaged in twenty-five liter drums.
Price US1.70/ liter + US3.50 drum deposit
2. Minimum Annual Order
2.1 As per the July 1999 meeting and the letter dated Monday, July
12, 1999. The above mentioned pricing was offered subject to a
minimum order of one twenty-foot container every three months.
TRC Form 12-1
7/90 Texas Department of Health Page 1 of 2
BUREAU OF RADIATION CONTROL 090946
RADIOACTIVE MATERIAL LICENSE
Pursuant to the Texas Radiation Control Act and Texas Health Department
regulations on radiation, and in reliance on statements and representations
heretofore made by the licensee, a license is hereby issued authorizing the
licensee to receive, acquire, possess and transfer radioactive material listed
below; and to use such radioactive material for the purposes) and at the
places) designated below. This license is subject to all applicable rules,
regulations and orders of the Texas Department of Health (Agency) now or
hereafter in effect and to any conditions specified below.
_____________________________________________________________________________
LICENSEE This license is issued pursuant to
and in accordance with an application
1. Name 21st Century Technologies, Inc. Dated: September 25, 1996
Attn: Patricia Wilson signed by: Patricia Wilson
_____________________________________
2. Address 2513 East Loop 820 North
Fort Worth, Texas 76118 3. License Number Amendment Number
L05013 00
_____________________________________
PREVIOUS AMENDMENTS ARE VOID
_____________________________________
______________________________________ 4. Expiration Date
RADIOACTIVE MATERIAL AUTHORIZED October 31, 2003
______________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C>
5. Radioisotope 6.Form of Material 7.Maximum 8. Authorized Use
Activity *
A. H-3 A. Sealed A. No single A. Possession and storage only
source source to ex- pursuant to U.S.N.R.C. license
(Lumitec Models ceed 30 mCi number 30-23697-O1E.
CL/1,5/4,85, each.
CL/0,95/3,3, Total not to
SRB Tech. Model exceed 2,000 Ci
PRH-800/G/200)
______________________________________________________________________________________
</TABLE>
9. Radioactive material shall only be stored at:
Site Number Location
- ----------- ---------
000 Fort Worth - 2513 East Loop 820 North
10. Each site shall maintain documents and records pertinent to the
operations at that site. Copies of all documents and records required
by this license shall be maintained for agency review at site 000.
11. The licensee shall comply with the provisions of Parts 11, 12, 13, 21,
22, 40 and 41 of the Texas Regulations for Control of Radiation (TRCR).
12. The individual designated to perform the functions of Radiation Safety
Officer (RSO)for activities covered by this license is Patricia Wilson.
13. This license does not authorize the handling or distribution of
radioactive material.
14. Sealed sources containing radioactive material shall not be opened or
removed from their respective source holders.
<PAGE>
Page 2 of 2
TRC Form 12-1 090947
7/90 Texas Department of Health LICENSE NUMBER
BUREAU OF RADIATION CONTROL L05013
RADIOACTIVE MATERIAL LICENSE AMENDMENT NUMBER
00
15. Except as specifically provided otherwise by this license, the licensee
shall possess and use the radioactive material authorized by this
license in accordance with statements, representations, and procedures
contained in the following:
application dated September 25, 1996.
The TRCR shall prevail over statements contained in the above documents
unless such statements are more restrictive than the regulations.
_____________________________________________________________________________
FOR THE TEXAS DEPARTMENT OF HEALTH
DBF:sw
/s/ signature illegible
-----------------------------
Date: October 9, 1996 Industrial Licensing Project
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
IN RE:
INNOVATIVE WEAPONRY, INC. NO. 11-92-13242 MA
Debtor.
ORDER CONFIRMING PLAN
THE PLAN under Chapter 11 of the Bankruptcy Code filed by
Innovative Weaponry, Inc. on August 26, 1994 as modified by a
modification filed November 14, 1994 having been transmitted to
creditors and equity security holders; and
It having been determined after hearing on notice that the
requirements for confirmation set forth in 11 U.S.C. S1129(a) have
been satisfied;
IT IS ORDERED that:
1. The Plan filed by Innovative Weaponry, Inc, on August 26, 1994,
as modified by the modification filed November 14, 1994, and as
further modified herein is confirmed.
2. On or before the effective date, First National Holding
Corporation, nka Innovative Weaponry, Inc., a Nevada Corporation
shall pay the Internal Revenue Service the sum of $71,622.09 in
full satisfaction of all claims against the Estate held by the
Internal Revenue Service.
3. On or before the effective date, First National Holding
Corporation shall pay the New Mexico Department of Taxation and
Revenue $5,882.00 plus such penalty and interest as may have
however, that in-the event such amounts total more than $10,000.00,
accrued for unpaid gross receipts and withholding tax, provided
however, that in the event such amounts total more than $10,000.00,
<PAGE>
the Department and First National shall enter into an installment
agreement to pay the amount in excess of $10,000.00
4. Should the results of an audit presently being conducted reveal
that the Debtor has a cause of action against any present or former
officers which First National determines is economically
practicable to pursue, the benefits of any recovery thereunder
shall be paid first to unsecured creditors and then to equity
security holders of the Debtor.
5. The Debtor or First National Holding Corporation shall file
with the Nuclear Regulatory Commission a Certification of Small
Entity Status for the purpose of establishing the correct licensing
fees owed for the Debtor's NRC licenses, and shall pay to the NRC
such amounts as are properly chargeable for such fees for an entity
of its size to the NRC.
6. Creditors and equity security holders receiving common stock
shall receive stock bearing a Securities and Exchange Commission
Rule 144 restriction. The Rule 144 restriction shall remain intact
subsequent to the receipt thereof by the creditor or equity
security holder. Warrants, if any, shall not be so encumbered.
Rule 145 shall apply to the stock issued, after a period of sixty
(60) days after receipt thereof by the creditor or equity security
holder.
7. The attorneys for the Unsecured Creditors' Committee shall be
paid in such amount as the Court allows on hearing after notice to
creditors and parties in interest.
8. The Administrative Claim of the New Mexico Department of Labor,
-2-
<PAGE>
Employment Security Division shall be allowed at $13,246.01, and shall be
paid in installments, the initial installment of $3,000.00 being due on or
before the effective date, and subsequent installments of $500.00 being due on
the first of each succeeding month until the balance, with interest of 12% per
annum, is paid in full. The Department of Labor's pre-petition claim of
$3,415.68 shall be paid in installments of $75.00 per month, commencing on the
effective date, due the first of each month. In the event of a default in
payment, the Department of Labor shall have available
to it without further order of the Court any and all remedies available to it
under the Laws of the State of New Mexico.
6. A copy of the confirmed Plan is attached.
<stamped name of Mark B. McFeeley appears here>
-----------------------------------------------
Mark B. McFeeley
United States Bankruptcy Judge
Submitted By:
JACOBSEN & LEVY,P.A.
By: /s/ JCJ
- ---------------------
James C. Jacobsen
1110 Pennsylvania NE, Suite A
Albuquerque, NM 87110
(505) 268-6707
Approved By:
JOHN J. KELLY
United States Attorney
By: telephonic approval 1/31/95
-----------------------------
Manuel Lucero
Attorney for the NRC & IRS
625 Silver SW
Albuquerque, NM 87102
-3-
<PAGE>
NEW MEXICO DEPARTMENT OF TAXATION & REVENUE.
By: telephonic approval 2/1/95
-----------------------------
Donald F. Harris
P.O. Box 22690
Santa Fe, New Mexico 87502
JOHN E. FOULSTON
United States Trustee
BY: ------------------------------
Leonard R. Martinez-Metzgar
P.O. Box 608
Albuquerque, New Mexico 87103
UNSECURED CREDITORS' COMMITTEE
By: telephonic approval 2/1/95
- -------------------------------
Daniel J. Behles
P.O. Box 415
Albuquerque, New Mexico 87103
NEW MEXICO DEPARTMENT OF LABOR
EMPLOYMENT SECURITY DIVISION
By: telephonic approval 1/31/95
- -------------------------------
D. Sandi Gilley
P.O. Box 1928
Albuquerque, New Mexico 87103
-4-
Subsidiaries of the Registrant
Name Where Incorporated Date of Incorporation
- ---- ------------------ ---------------------
Innovative Weaponry Incorporated New Mexico January 28, 1994
Trident Technologies Corporation Nevada July 15, 1996
Griffon USA, Inc. Nevada March 26, 1998
CQB Armor, Inc. Nevada February 10, 1999
Trade Partners International, Inc. Nevada June 22, 1988
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's unaudited balance sheet and income statement as of the nine months
ended September 30, 1999 and from the audited balance sheet and income statement
as of the Company's year ended December 31, 1998.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> SEP-30-1999 DEC-31-1998
<CASH> 17,623 11,121
<SECURITIES> 0 0
<RECEIVABLES> 1,002,866 996,663
<ALLOWANCES> 0 0
<INVENTORY> 159,416 158,976
<CURRENT-ASSETS> 1,214,905 1,201,760
<PP&E> 250,977 310,918
<DEPRECIATION> 92,703 123,604
<TOTAL-ASSETS> 1,835,905 1,814,304
<CURRENT-LIABILITIES> 127,372 39,276
<BONDS> 0 0
0 0
0 0
<COMMON> 40,218 32,410
<OTHER-SE> 1,459,472 1,597,420
<TOTAL-LIABILITY-AND-EQUITY> 1,835,905 1,814,304
<SALES> 683,507 1,701,013
<TOTAL-REVENUES> 683,507 1,701,013
<CGS> 475,533 469,910
<TOTAL-COSTS> 475,533 469,910
<OTHER-EXPENSES> 628,822 1,117,234
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (420,848) 113,869
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (420,848) 113,869
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (420,848) 113,869
<EPS-BASIC> (0.012) 0.004
<EPS-DILUTED> (0.008) 0.004
</TABLE>
