21ST CENTURY TECHNOLOGIES INC, 10SB12G/A, 2000-11-01

21ST CENTURY TECHNOLOGIES INC
10SB12G/A, 2000-11-01
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U. S. Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-SB/A
AMENDMENT NO. 2

GENERAL FORM OF REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934

Commission File No. 000-29209

21st CENTURY TECHNOLOGIES, INC.
----------------------------------
(Name of Small Business Issuer in its Charter)

NEVADA 48-1110566
-------------------------- -----------------------
(State or Other Jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)

2513 East Loop 820 North
Ft. Worth, TX 76118
----------------------------------------------
(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.

Securities Registered under Section 12(g) of the Exchange Act:

$0.001 Par Value Common Voting Stock
Title of Class

<PAGE>

Table of Contents

PART I

Item 1: Description of Business

Item 2: Management's Discussion and Analysis or Plan of Operations

Item 3: Description of Property

Item 4: Security Ownership of Certain Beneficial
Owners and Management

Item 5: Directors, Executive Officers, Promoters and
Control Persons

Item 6: Executive Compensation

Item 7: Certain Relationships and Related Transactions

Item 8: Description of Securities

PART II

Item 1: Market Price for Common Equity and
Dividends of 21st Century Technologies, Inc.
and Other Shareholder Matters

Item 2: Legal Proceedings

Item 3: Changes In and Disagreements With Accountants

Item 4: Recent Sales of Unregistered Securities

Item 5: Indemnification of Directors and Officers

PART F/S

Index to Financial Statements

PART III

Item 1: Index to and Description of Exhibits

-ii-

<PAGE> 2

Part I

ITEM 1. DESCRIPTION OF BUSINESS

Business Development
-------------------

21st Century Technologies, Inc. (the "Company") is a Nevada corporation.
The Company merged into a "public shell" (formerly First National
Holding Corporation) after acquiring certain assets of Innovative
Weaponry Weaponry, Inc., a debtor in bankruptcy and commenced trading
on June 1, 1995. The authorized capital of the Company is 200,000,000
shares of common voting stock par value $.001 per share. The Company
has issued 51,667,753 shares effective March 31, 2000 and on a fully
diluted basis 79,587,253 shares.

Organization and Charter Amendments
------------------------------------

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 with the Nevada corporation as the
surviving entity.

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.

5. On June 12, 2000, an amendment was filed with the Nevada
Secretary of State correcting the authorized capital from
50,000,000 to 200,000,000 and granting option holders, bond,
debenture and other persons to whom the Company may be
financially obligated to the same voting rights as
shareholders in accordance with Nevada Revised Statutes
("NRS") 78.197 and 78.200, respectively.

Specifically, under NRS 78.197, a corporation may provide in
its articles of incorporation that the holder of a bond,
debenture or other obligation may have any of the rights of a
stockholder in the corporation. This means that if the
Company were to issue in the future (a) a bond; (b) a
debenture; or (c) any other obligation that it could grant the

<PAGE> 3

holder of these instruments any of the rights enjoyed by
shareholders, including the right to vote on shareholder
matters.

Specifically, under NRS 178.200, a corporation may create and
issue, whether in connection with the issue and sale of any
shares of stock or other securities of the corporation, rights
or options entitling the holders thereof to purchase from the
corporation any shares of its stock of any class or classes,
to be evidenced by or in such instrument or instruments as are
approved by the board of directors. The terms upon which, the
time or times, which may be limited or unlimited in duration,
at or within which, and the price or prices at which any such
shares may be purchased from the corporation upon the exercise
of any such a right or option must be fixed and stated in the
articles of incorporation or in a resolution or resolutions
adopted by the board of directors providing for the creation
and issue of the rights or options, and, in every case, set
forth or incorporated by reference in the instrument or
instruments evidencing the rights or options.

The Company has not granted any such voting rights to holders
of any options, bonds, debentures or other obligations and
therefore the effect, if any, on shareholders is not
applicable with respect to the provisions of NRS 78.187 and
78.200.

However, the Company could in the future issue options, bonds,
debentures or other obligations wherein it grants the holder
shareholder voting rights based upon the amount of the
obligation; whether secured or non-secured; the interest to be
paid on the obligation; the duration or term of the
obligation, and other economic factors. The total number of
shareholder votes to be granted to the holders of options,
bonds, debentures and other obligations could not exceed the
authorized share limitation for the Company of 200,000,000
shares less the number of shares issued and outstanding.

It is possible that these option, bond, debenture and other
obligation holders of the Company could in the aggregate
maintain majority control over shareholder matters in
consideration of their investment in the Company or in the
case of Kenneth E. Wilson, Chairman, President and Chief
Executive Officer voting rights with respect to the 19,000,000
shares due him (i.e. obligations)from the Company as a result
of his consultancy and employment.

Changes of Control During the Past Three Years
----------------------------------------------

In September of 1994, the Board of Directors entered into a
consulting contract with Kenneth E. Wilson, the Company's
current Chairman, President and Chief Executive Officer.
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. In the
event it was unable to pay Mr. Wilson in cash, the Company
agreed that it would issue to him common stock in amount
equal to $0.02 per share

<PAGE> 4

(which was the share price at the
time the consulting contract was executed.) Subsequently,
the Company was only able to pay Mr. Wilson $10,000 per
month from September 1994 through December 1994.

In January 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 under the
original consulting agreement. The new agreement provided
Mr. Wilson would continue 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 new
agreement, January 5, 1998, Mr. Wilson had earned a total
of 19,000,000 shares of the Company's common stock.

Further, the new agreement required that the stock not be
issued until after the end of the initial term of the
agreement, which was three years. However, to date, no
shares have been issued to Mr. Wilson at his request,
firstly because of the income tax consequences to him, and
secondly, because the shares were required by the Company
for its own corporate financing needs to raise additional
working capital. Before any shares are issued to Mr.
Wilson, the Company will provide advance public disclosure
to its shareholders of the full details.

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 Kenneth E. Wilson and others;
and see caption "Directors, Executive Officers, Promoters and Control
Persons," Item 5, for other material information regarding these
persons.

Business
--------

The Company has five subsidiaries:

1. Innovative Weaponry Incorporated.

Innovative Weaponry 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 currently under research and
development. The Innovative Weaponry products feature multi-color
tritium sights with the front sight brighter than the rear sight
thereby enhancing low light sighting. Innovative Weaponry products have
been sold to Original Equipment Manufacturers, certain members of the
United States military (including two Navy Seal Teams and, United
States Customs, Drug Enforcement, Fish and Game, and state and local
police departments nationwide. Specifically, the Texas Department of
Public Safety purchased five thousand (5,000) sets of sights to equip
the patrol officers. Two Navy Seals teams purchased five hundred (500)
sets of sights to equip the teams' hand guns. The United States Army
received one hundred (100) sets of sight for testing. H & K purchased
seven thousand (7,000) sets of sights for resale. During the past
several years the company has outfitted numerous state and local police
departments through out the United States with PT Night Sights on their
officers hand guns.

<PAGE> 5

Innovative Weaponry 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. The Company's competition is (1)
Ultimate Weapons Systems selling under the trade name "Trijicon"; (2)
Meprolight; and (3)Trilux. Each of these companies is private and no
public sales figures are available. We have the smallest market share
of all of our competitors.

Tritium, is a radioactive product, which is highly regulated by the
U.S. Nuclear Regulatory Commission ("NRC"). Innovative Weaponry is
licensed with the NRC to import "tritium" in connection with the
manufacture of its night sights. Innovative Weaponry is a New Mexico
corporation and is 100% owned by the Company.

Innovative Weaponry 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.)

2. Trident Technologies Incorporated.

Trident Technologies Corporation ("Trident"), a manufacturer of the
Gripper (a magnetic climbing device worn on the hand and feet) and the
Sea Patch formerly called the Underwater Seal. Trident is a Nevada
corporation and is 100% owned by the Company. The Sea Patch is a
magnetic "cam-on/cam-off" device used to seal leaks in the metal hulls
of ships with both disaster and environmental markets. Trident has
experienced insignificant sales to date of both the Gripper and Sea
Patch. In November 1998, Trident redesigned the Sea Patch when it was
introduced at the Ship Repair and Conversion Exhibit '98 in London,
England. Trident intends on marketing the Gripper and Sea Patch to the
maritime and salvage repair industries.

The magnetic technology utilized by Trident is licensed from the Los
Alamos National Laboratory ("Los Alamos National Lab") in Los Alamos,
New Mexico. The license is set-forth in a "Limited Exclusive Patent
License Agreement Between The Regents of the University of California
and Trident Technologies Corporation for Seal Device for Ferromagnetic
Containers" (Los Alamos Control Number 97-41-00226.)

The Gripper was invented at the Los Alamos National Lab at the request
of the United States Department of Defense. The technology transfer
from Los Alamos Lab to Trident was facilitated through Trade Partners
International, Inc. The founder and President of Trade Partners was Dr.
Thomas E. Murphy who 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

<PAGE> 6

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.

The Gripper technology is patented in the United States with potential
applications in such 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
inspections, emergency repairs on ship's hulls, etc.

The Sea Patch is also under developmental license from the Los Alamos
National Lab. 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
marine 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,
stress fractures and punctures in a ship's hull above or below the
waterline.

3. Griffon USA, Inc.

Griffon USA, Inc. ("Griffon"), is an importer and licensee of
Continental Weapons (Pty), Inc., a South African manufacturer of a
replica 1911 Colt 45 sidearm, rifles and other 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 Armor"), is a Nevada corporation 100% owned by
the Company. CQB Armor was formed for the purpose of acquiring a line
of soft and hard body armor for the military, law enforcement, and
private protection services. The acquisition failed to close due to
financial terms and CQB Armor has remained inactive. The Company has
no current plans to activate CQB Armor.

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 the magnetic technology license from the Los
Alamos Lab, until October 15, 1999, when it entered into a Memorandum
Agreement with FinnCo Manufacturing, LLC, a privately owned corporation
based in South Africa. Under the terms of the distribution agreement,
Trade Partners 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. Trade
Partners is a Nevada corporation and is 100% owned by the Company.

<PAGE> 7

Distribution Methods of the Products or Services
------------------------------------------------

The Company's distribution methods vary with each subsidiary. The
Innovative Weaponry, Griffon and Trade Partners 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 Sea Patch will utilize both direct sales and
agency representation in the maritime salvage and repair industry.

Competitive Business Conditions
-------------------------------

The Company depends on the quality of its products and a discounted
pricing strategy in comparison to its competitors. The risks
associated with this strategy are that we often must operate on a lower
profit margin than our competitors to gain market share. The demand
for the Innovative Weaponry line of tritium enhanced gun sights has
grown due to our increased marketing efforts. Expanded crime
prevention and discretionary equipment funding by federal and state
governments makes it easier for law enforcement to afford options like
the PT Night Sights TM when ordering new equipment. Without this
funding, individuals must pay for these options themselves. Often we
must work with customers after the sale to help them locate financing
within their own budgets or to provide assistance in the preparation of
requisitions for funding.

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 military and law enforcement sectors (which comprise the
majority of Innovative Weaponry sales to date).

The demand for the Trident line of products is untested, but we believe
that it should increase following certification by the American Bureau
of Shipping and increased product awareness in the maritime industry.
In addition, we believe that the maritime industry is concerned over
anti-pollution enforcement efforts by the Department of Justice, which
have resulted in multi-million dollar fines. We believe that the Sea
Patch provides a tool to fight pollution by leakage from ship's hulls,
pipelines, tanks and other metallic containers.

Competitive Advantages & Differentiation
----------------------------------------

The Company has the following competitive advantages and
differentiation of its respective subsidiaries' products and services.
Innovative Weaponry is one of three U.S. manufacturers who use
"tritium" for gun sights. Innovative Weaponry is currently the only
importer of "tritium" from South Africa. Its two competitors import
from either Switzerland or Canada where they enjoy exclusivity. The
license to import "tritium" is issued by the U.S. Nuclear Regulatory
Commission. This license confers a 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 Innovative Weaponry, the issuance of the license may delay

<PAGE> 8

market entry thereby providing the Company with a slight competitive
advantage.

PT Night Sights TM represents a narrow market segment for gun users who
desire help in alleviating the poor level of accuracy in low light
conditions. PT Night Sights TM are sold primarily to the military,
sportsmen, law enforcement, government agencies and gun enthusiast, and
therefore does not have wide appeal to all gun users.

Innovative Weaponry was the first manufacturer in the United States to
introduce the multi-colored 3-dot design for tritium enhanced gun
sights. Its two competitors produced an "all green" version that can
cause some confusion in the lining-up of the sights, but have now
introduced multi-color sights. Innovative Weaponry provides custom work
(although it is often time consuming and with narrow profit margins)
for a broad line of guns and offers a 15-year warranty on its products
as a means of providing extra services to its customers. Its two
competitors when surveyed offered only limited custom work and
warranties of 10-12 years on its tritium night sights. Because of the
Gripper and Sea Patch patented technology there are no other companies
with similar technology in the market place.

The magnetic technology utilized by Trident is licensed from Los Alamos
National Lab and, therefore, competitors would have to replicate the
technology in such a manner as not to infringe upon the aforesaid
intellectual property. Trident has adopted an intellectual property
protection program with respect to its magnetic technology the
effectiveness of which will be dependent upon having sufficient
resources to take appropriate legal action against possible
infringement. The market for Trident's Gripper and 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, functionality and customer
support.

The maritime industry represents the largest market for the Gripper and
Sea Patch. 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 has submitted the Sea Patch to the American Bureau of Shipping
for classification. The American Bureau of Shipping is one of the
world's leading ship classification societies. The primary purpose of
American Bureau of Shipping 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,
American Bureau of Shipping acts as a self-regulating agency to the
international marine industry, with the mission of promoting the safety
of life, property, and natural environment.

<PAGE> 9

The Griffon subsidiary faces strong competition from established
handgun manufacturers who have established name brand identity and a
strong consumer following. Griffon believes that the suggested retail
price of $450 for the 1911 Colt 45 replica will enable it to penetrate
market share since similarly equipped hand guns are priced in the range
of $600 per gun. In addition, the Griffon 1911 Colt 45 replica will
come with the added feature of having affixed a PT Night Sight? (which
is manufactured by its sister subsidiary, Innovative Weaponry), other
custom up-grades (such as gun handle), and an optional leather holster.
All of these custom features will help 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 Innovative
Weaponry (who have already established themselves as satisfied
customers of the Company).

The CQB Armor subsidiary is inactive. However, any proposed body armor
business will face strong competition from a number of established body
armor companies. As with the Griffon subsidiary, CQB Armor should
benefit from cross selling to existing customers of Innovative
Weaponry.

The Trade Partners 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.
Trade Partners will demonstrate its sealant at trade shows and seek to
penetrate large distribution channels such as established chain stores
and outlets. Trade Partners enjoys a 10-year exclusive on the sale of
the tire sealant.

Patents, Trademarks, Licenses, Franchisees, Concessions, Royalty
----------------------------------------------------------------
Payments or Labor Contract
--------------------------

The Innovative Weaponry subsidiary has a license from the Nuclear
Regulatory Commission to import "tritium" a radioactive isotope from
South Africa. Currently, Innovative Weaponry is importing 100% of its
"tritium" from suppliers in South Africa.

The Trident subsidiary has an exclusive Los Alamos National Lab license
granted through Trade Partners to use patented and trade secret
protected magnetic technology used in the Gripper and the Sea Patch.
The License Agreement was originally valued at $75,000. Subsequently,
it was re-negotiated and the Company acquired all of the common stock
of Trade Partners 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 License Agreement) of products sold using
the patented technology. Further, Trident is to pay an annual
maintenance fee, which was $24,000 for the third year and all
subsequent years of the License 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 a License 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

<PAGE> 10

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 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 Innovative Weaponry 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 Innovative Weaponry 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 Innovative Weaponry 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 has 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.

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. If
we were to stop selling the Griffon line of handguns to the public
because of a change in handgun legislation or anti-handgun lobbying
efforts, it would result in a loss of 14% of total revenues with 85% of
revenues derived from sales by Innovative Weaponry.

There will be no impact on Innovative Weaponry since it does not
manufacture hand guns limiting its business to re-fitting hand guns
with PT Night Sights TM. However, Innovative Weaponry is highly
regulated in its importation, storage, and distribution of radioactive

<PAGE> 11

gaseous "tritium". Various countries, including Canada, Russia, South
Africa, and Switzerland, supply tritium.

"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. Innovative Weaponry has

<PAGE> 12

passed all of its NRC and State of Texas audits for each of its years
of operation.

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

The Company has a limited research and development group devoted
principally to the design applications for the Gripper and Sea Patch.
Any design patents are covered by the Los Alamos National Lab license
that developed the core magnetic technology.

Number of Employees
-------------------

The Company currently employs 19 full time, 2 part time employees, 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.

Risk Factors
------------

We have been in operations for the past five years, but have failed to
achieve profitability in our subsidiaries on a consolidated basis.
This has necessitated that sale of additional shares by the Company in
order to raise working capital. Further, the market for our shares has
been limited necessitating the sale of large blocks of shares at
discounted prices. The Company's liquidity has been adversely affected
by continued expenditures on expanding our subsidiaries businesses
during times when they experience lack of profitability.

Limited Operating History.
-------------------------

We have a limited operating history of five years. The following table
reports revenue from each subsidiary from 1995 through December 31,
1999.

Revenues of Wholly Owned Subsidiaries
And Percentage Attributable to Consolidated Revenues
For the Five Year Period Beginning 1995 through
December 31, 1999
<TABLE>
<CAPTION>

1995/% 1996/% 1997/% 1998/% 1999/%
<S> <C> <C> <C> <C> <C>

Innovative $599,605/100% $247,735/100% $712,471/100% $1,673,443/98% $754,734/85%
Weaponry

Trident n/a n/a n/a $ 27,570/2% $ 5,500/1%

Griffon n/a n/a n/a n/a $131,695/14%

Trade
Partners n/a n/a n/a n/a $0

CQB Armor n/a n/a n/a n/a $0

Total $599,605 $247,735 $712,471 $1,701,013 $882,929

</TABLE>

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

Overview
--------

<PAGE> 13

Management has focused on increasing sales of the PT Night Sights? to
law enforcement and the military. Direct sales marketing has been
headed-up by Kenneth E. Wilson who as Chairman, President and CEO deals
directly with police departments across the country.

Innovative Weaponry 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).

Trident has established a representative office in Denham Springs, LA
that is in close proximity to the gulf port facilities surrounding New
Orleans, LA. The Trident subsidiary introduced its product lines at a
maritime and salvage trade show in London, England in the Fall of 1998.
Trident attended the Maritime Ship Repair and Emergency Response
Seminar (Washington, DC August 1999); the HAZMAT Show (St. Louis, MO
April 2000); the Offshore Technology Conference (Houston, TX May 2000).

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.

Trade Partners attended the Inter Bike trade show in Las Vegas, NV
during September 1999.

The company's plans to acquire CQB Armor, U.S. Optics and Truglow have been
abandoned with no material effect on the company. The CQB Armor subsidiary is
inactive.

Government Regulation and Legal Uncertainties.
---------------------------------------------

We are regulated by the SEC, federal and state securities laws.
Finally, we are regulated by any rules and regulations pertinent to
companies listed on the over-the-counter bulletin board and pink
sheets.

ATF, NRC, OSHA and Texas Department of Health
-----------------------------------------------

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", a radioactive
isotope gas. 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 Innovative
Weaponry 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 Innovative Weaponry and Griffon all
necessary permits, licenses and/or grants of authority to transact
business. Substantial rules and regulations control the manner in
which Innovative Weaponry and Griffon transacts business in firearms
and Innovative Weaponry uses "tritium". Innovative Weaponry and
Griffon are required to maintain required books and records in

<PAGE> 14

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 maintains its own manufacturing
facility which is subject to certain safety requirements imposed upon
it by NRC, OSHA and the State of Texas Department of Health.
Innovative Weaponry and Griffon share the Company's manufacturing
facility.

Year 2000
---------

The Company experienced no problems related to Year 2000 or Y2K
computer remediation issues.

Results of Operations
---------------------

The following table sets forth selected consolidated statements of
operating data as a percentage of total revenues:

Year Ended Year Ended 3 Mos. Ended 3 Mos. Ended
December 31, December 31, March 31, March 31,
1998 1999 1999 2000
------------- ------------- ------------ -------------
AMOUNT
PERCENTAGE OF
REVENUES

Revenues $ 1,701,013 $ 889,327 $ 222,660 $ 274,393
100% 100% 100% 100%

Cost of Revenues 469,910 547,013 185,307 253,930
28% 62% 63% 72%

Gross Profit 1,231,103 342,314 37,2633 20,463
72% 38% 17% 7%

Selling/General and
Administrative 752,769 1,094,713 188,542 476,067
44% 123% 84% 177%

Income (Loss) from
Operations 113,869 (881,929) (182,280) (488,601)
7% (99)% (82)% (178)%

Liquidity.
----------

The Company is dependent on cash on hand, revenue from the sales of PT
Night Sights, and its ability to raise cash through the sale of its
shares. At present, the Company needs cash for monthly operating
expenses in excess of its historic sales revenues. The Company will
continue to require additional capital funding for a significant period
of time until sales increase. The Company will finance further growth
through both debt and equity offerings, which will further dilute
current shareholders.

<PAGE> 15

Cash Flows from operations decreased $847,734 during 1999 decreased due
to the loss from operations of $881,929, an increase in inventory of
$190,149 and a decrease in accounts payable of $229,173. Financing
activities, primarily the sale of common stock, provided $948,427.
This gave net cash gain of $111,814 for the year 1999. The Company has
ordered 1000 Griffon hand guns from Continental Weapons in South
Africa. This will require $130,000 in additional financing during
fiscal 2000.

ITEM 3. DESCRIPTION OF PROPERTY.

Fort Worth, TX.
---------------

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 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.

Santa Ana, CA.
--------------

The Company leases 3,000 square feet consisting of manufacturing and
storage space at 3040 Halladay, Unit A, Santa Ana, CA 92705. The lease
is for five years at $0.63 per square foot with monthly rent of $1,890
per month. The Santa Ana facility produces PT Night Sights and tritium
enhanced fiber optic sights. The facility is equipped with two
Bridgeport computer numerical control milling machines; one Bridgeport
milling machine; one band saw; one parts grinder; one parts tumbler;
and parts inventory. Currently, the facility employs two machinists
with employment capacity for six. The facility will operate on three
shifts of eight hours each.

Denham Springs, LA.
-------------------

The Company leases 1,000 square feet consisting of executive office
space and storage space at 1810 South Range Avenue, Suite 3, Denham
Springs, LA 70726. The lease is for six months at $600.00 per month.
The office is equipped with Sea Patch demonstration equipment including
a 5"x15'Sea Patch, computer, Dillon ED 2000 Dynometer to measure pull
force, a fluid pressure displacement pump to measure back pressure, and
a Pace American single axle enclosed trailer for on site demonstrations
of the Sea Patch.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

<PAGE> 16

The following table sets forth, as of December 31, 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 79,587,253 shares of
common stock outstanding as of March 31, 2000 on a fully diluted basis.

_____________________________________________________________________________

(1) (2) (3) (4)
Title of Class Name and Amount and Percentage of Class
Address of Nature of
Beneficial Beneficial
Owner Owner
_____________________________________________________________________________

Common Kenneth E. Wilson & 19,601,000 25.8% (note 3)
Patricia Wilson

Common Common 21st Century
Technologies 9,000,000 11.8%
Funding LP

Common Executive Officers 21,201,000 27%
As Group

Footnotes:

(1) The Company has authorized one class of common voting shares.

(2) The addresses of all executive officers are at the Company's
headquarters, 2513 East Loop, 820 North, Ft. Worth, TX 76118. The
address of 21st Century Technologies Funding Limited Partnership, a
Virginia Limited Partnership (21st Century Technologies Funding LLC, a
Virginia Limited Liability Company, General Partner) is at 281
Independent Blvd. #205, Virginia Beach VA, 23462.

(3) Mr. Wilson has the right to acquire 19,000,000 shares pursuant to
his past employment and consulting agreements with the Company. The
shares have not been issued to him because of the income tax
consequences and the Company's need for corporate funding principally
through the issuance of its shares. The shares issued to Patricia G.
Wilson were in consideration of her employment with the Company. As
husband and wife, the shares owned by Pat Wilson and those obligated to
Mr. Wilson are for SEC reporting purposes aggregated subject to
disposition under Texas community property laws.

On March 30, 1998, the Company agreed to sell 9,000,000 shares of
unregistered common stock at $0.08 per share in a Private Placement
Offering Memorandum prepared by 21st Century Technologies Funding, LLC
who acted as the General Partner. The Company and the General Partner
are not affiliated. After holding the shares for the one-year period
required under Rule 144, the Partnership subsequently sold a total of

<PAGE> 17

6,000,000 shares in the open market at an average sale price of $0.12
per share.

In November 1999, the Company granted 21st Century Technology Funding LP
and its General Partner (whose sole principal is Allen Drake), 281
Independence Blvd., Suite 205, Virginia Beach, VA 23462 options for a
total of 6,000,000 shares at an exercise price of $0.10 per share. The
options have been exercised in full by 21st Century Technology Funding
LP I with payment of $600,000 receipted by the Company in March 2000.

The Executive Officers as a group acquired their respective shares in
consideration of their employment during the period 1995 through
December 31, 1999. Options covering 600,000 shares were granted in
July 1999 to Douglas N. Spring and Burren Palmer respectively in
connection with their employment with Trident. These options were
exercised in February 2000.

(4) The percentage of class has been calculated on a fully diluted
basis of 79,587,253 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:

_____________________________________________________________________
(1) (2) (3) (4)

Title of Class Name and Amount and Percentage of Class
Address of Nature of
Beneficial Beneficial
Owner Owner
_______________________________________________________________________

Common Kenneth E. Wilson 19,601,000 25.8%
And Patricia Wilson

Common Fred W. Rausch, Jr. 400,000 .5%
Director

Common David Gregor 500,000 .6%
President of
Innovative Weaponry
and Director

Common Douglas N. Spring 700,000 .9%
President of Trident
and Director

All Executive 21,201,000 27%
Officers As Group

Notes:

Footnotes:

(1) The Company has authorized one class of common voting shares.

<PAGE> 18

(2) The addresses of all executive officers are at the Company's
headquarters, 2513 East Loop, 820 North, Ft. Worth, TX 76118.

The Executive Officers as a group acquired their respective shares in
consideration of their employment during the period 1995 through
December 31, 1999.

Mr. Rausch has been a Director since the Company's inception. His
shares were earned in lieu of compensation.

Mr. Gregor was elected to serve as a Director in February 2000. He has
previously served as a Director during the years 1995 through 1998 and
was past President of Innovative Weaponry.

Mr. Spring was employed by the Company as President of its Trident
subsidiary effective July 28, 1999. At the time, Mr. Spring purchased
100,000 shares of the Company at $0.10 per share. Mr. Spring is paid
an annual salary of $65,000 and is to be paid a three per cent sales
commission on goods sold by him for Trident (1.5% paid in cash and 1.5%
paid in stock). In addition, at the time of Mr. Spring's employment,
the Company granted him options for the purchase of 600,000 common
shares at $0.10 per share. These options were exercised by Mr. Spring
in March 2000. Options covering 600,000 shares were granted in July
1999 to Douglas N. Spring and Burren Palmer respectively in connection
with their employment with Trident. These options were exercised in
February 2000.

(4) The percentage of class has been calculated on a fully diluted
basis of 79,587,253 shares as of March 31, 2000.

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

<PAGE> 19

executive officers are appointed by our Board of Directors and serve at
its discretion.

Directors and Officers

Name Age Position Held
---- --- -------------

Kenneth E. Wilson 58 Chief Executive Officer, President
and Chairman of the Board

Patricia G. Wilson 44 Director

David Gregor 42 Secretary/Treasurer and Director

Douglas Spring 30 Director

Fred W. Rausch, Jr. 76 Director

Business Experience.
-------------------

Kenneth E. Wilson, 58, is the Chairman of the Board of Directors, Chief
Executive Officer and President of the Company. Mr. Wilson has acted
as a consultant to Innovative Weaponry 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 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.
Patricia G. Wilson, 42, is President of Trade Partners and Innovative
Weaponry's Safety Officer for the Nuclear Regulatory Commission in
Washington, D.C. A Texas native, Mrs. Wilson is a graduate of the
University of Texas where she received her B.A. with a double major in
psychology and biochemistry. Mrs. Wilson has over 18 years business
experience before joining the Company in 1994. During 1994 through
1999, Mrs. Wilson served as the Company's Chairman and President.

David Gregor, 46, is President of Innovative Weaponry Weaponry. Mr.
Gregor is a graduate of Temple University. From 1984 to 1986, Mr.
Gregor was a member of the U.S. Navy Seal Team (Number 6). Mr. Gregor
received specialized training at the Pennsylvania gunsmith School;
Remington Armory School; Smith and Wesson Armory School; Sig Sauer
Armorer School; Heckler and Koch Armory School (Germany); U.S. Marine
Corps Marksmanship Unit (Quantico, VA); Depart of the Army Armory
Training; Certified Armory Training Instructor for the State of New
Mexico; and attended cross-training at the Federal Bureau of
Investigation Academy (Quantico, VA). Before joining the Company in
1994, Mr. Gregor worked as the chief gunsmith with the U.S. Department

<PAGE> 20

of Energy's Central Training Academy in Albuquerque, NM and A&P Arms,
Virginia Beach, VA.

Douglas N. Spring, 30, is the President of Trident's Sea Patch Sales
Division in Denham Springs, LA. Mr. Spring attended Southeastern
Louisiana University during 1988-1991. Mr. Spring was employed for
eight years by Exxon Company USA in various capacities from 1991-1999.
While employed at Exxon, Mr. Spring became experienced in the handling,
inspection and maintenance of gasoline, diesel and jet fuels. As a
member of the Primary Fire Squad at Exxon, Mr. Spring responded to
emergencies ranging from gas leaks to major fires and fuel spills.

From 1994-1997, Mr. Spring owned and operated Wolf Creek Outdoors a
manufacturer and retailer of hunting products. From 1997-1999, Mr.
Spring was a sales associate at Highlander Sports Inc. where he sold
sporting products to major retailers and distributors. From 1995-1998,
Mr. Spring owned and operated Confederate Coatings and Arma Coatings
South which provided spray-coating materials for truck beds, roofs,
conveyor operators, and grain storage bins. During this period of
time, Mr. Spring distributed coating products to dealers in the
Southeastern United States, trained and certified new dealers as
technicians/sprayers in the polyurethane business.

Fred W. Rausch, Jr., 76, 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 related by marriage.
Further, Josh Edward Wilson, who is the son of Kenneth and Patricia
Wilson, is Director of Marketing for the Company and Executive Vice
President of Innovative Weaponry.

ITEM 6. EXECUTIVE COMPENSATION.

<PAGE> 21

The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated.

Summary Compensation Table

Fiscal
Name and Principal Position Year(s) $Salary Bonus

Kenneth E. Wilson, 1999-00 $120,000* $0
Chairman, President,
CEO and President
Innovative Weaponry

Patricia G. Wilson 1997-00 $65,000 $0
President Trade
Partners, Nuclear Safety
Officer and Director

David Gregor 1997-00 $70,000 $0
Secretary-Treasurer,
Master Gunsmith and
Director

Douglas N. Spring 1999-00 $60,000 $0
President Trident
And Director

(1) For two of the last three fiscal years, Mr. Wilson was paid no
salary. In January 1999, the Company agreed to pay Mr. Wilson $120,000
per annum with payments of $10,000 per month. However, the Company
paid Mr. Wilson only $60,000 in 1999 because it did not have sufficient
revenue to pay him in full. The 1999 balance due Mr. Wilson was waived
by him. Since January 2000, the Company has had sufficient revenues
paying Mr. Wilson $10,000 per month and is current through May 2000.

(2) Mrs. Wilson's terms as President of the Company expired in March
2000. Previously, Mrs. Wilson served as the Company's President since
1995. Mrs. Wilson is currently employed by the Company as both the
President of Trade Partners and the Nuclear Regulatory Safety Officer
for Innovative Weaponry.

(3) Mr. Gregor assumed the responsibilities of Secretary-Treasurer in
March 2000 following the resignation of Ms. Bartley (who performed
those duties since 1998 at a per annum salary of $45,000). In
addition, Mr. Gregor is the master gunsmith in charge of design,
fabrication, and quality control works with the Innovative Weaponry and
Griffon subsidiaries. The salary of Mr. Gregor is $70,000 per annum.

(5) Douglas N. Spring has served as President of Trident since June
1999. Mr. Spring was elected to the Board of Directors in March 2000.

Compensation of Directors
-------------------------

<PAGE> 22

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:

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 was 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 at his request
because of firstly, the income tax consequences to him, and
secondly, because the on going corporate financial needs of
the Company required the issuance of the remaining treasury
shares. 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 200,000,000 shares of common stock, par
value $.001, of which 50,083,763 shares were issued and 43,905,850

<PAGE> 23

outstanding as of December 31, 1999 and on a fully diluted basis
78,873,763 shares. 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.

Options and Warrants
--------------------

On June 12, 1997, we granted Princeton Research, Inc., 3887 Pacific
Street, Las Vegas, NV 89121 staggered options for a total of 3,000,000
shares in consideration of investor relations, investment banking,
corporate finance, and other consulting services. The options have
been extended through December 31, 2002, as follows: options for
1,000,000 shares at $0.50 per share; options for 1,000,000 shares at
$1.25 per share; and options for 1,000,000 shares at $1.50 per share.
Upon exercise of the options, the Company has agreed to file a S-8
registration statement with the SEC to register the shares.

In November 1999, we granted 21st Century Technology Funding LP I and
its General Partner (whose sole principal is Allen Drake), 281
Independence Blvd., Suite 205, Virginia Beach, VA 23462 options for a
total of 6,000,000 shares at an exercise price of $0.10 per share. As
further consideration, 21st Century Technology Funding LP I agreed to
transfer back to the Company's treasury 3,000,000 shares of the
original 9,000,000 shares purchased by it in 1998. The options have
been exercised in full and payment of $600,000 has been made to the
Company by the General Partner's principal effective March 2000.

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 NASD
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.

<PAGE> 24

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

2000 First Quarter 5.343 .14

Our market has traded sporadically and is often thinly traded with
large changes in volume of shares traded on any particular day.
Shareholders should consider the possibility of the loss of the entire
value of their shares. In the opinion of Management, the increase in
our share price in the First Quarter of 2000 was due to American Bureau
of Shipping certification of the Sea Patch with the decline in share
price due to de-listing to the pink sheets.

As of December 31, 1999, we had approximately 792 stockholders of
record. Management controls 21,201,000 shares of our outstanding
shares (including the 19,000,000 shares due Mr. Wilson).

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
------------

When we merged with First National Holdings Corporation in 1995, we
authorized a 250 to 1 reverse stock split resulting in 47,000 shares
being authorized and issued. We then increased our share authorization
to 200,000,000 without any further stock splits.

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
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 Innovative Weaponry 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.

<PAGE> 25

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.

Dr. Frederick C. Lester loaned IWI-New Mexico $80,000 prior to the Bankruptcy.
Under the Plan of Reorganization, he was awarded 80,000 shares in the
reorganized Company. He eventually filed suit and a settlement agreement was
reached after the current balance sheet date which awarded him $10,000 per
month for twelve months. The Company made one $10,000 payment, however, the
stock price increased and Dr. Lester returned the payment and sold his shares.
The Company's attorneys feel that there is no further liability in this case.

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:

1997
----

Effective January 1, 1997, the Company had 13,311,000 shares of common
stock issued and outstanding. During the calendar year ending December
31, 1997, the Company issued an additional 5,515,000 shares of common
stock through a self-underwriting under Rule 504 of Regulation D of the
Securities Act of 1933. The shares were sold for cash with gross
proceeds of less than $1,000,000. No underwriting discounts were paid
directly or indirectly by the Company in connection with the sales of
any of its shares.

1997

Number $ Per
Name Shares(1) Share (2) Date(s)

Austtell J/T 2,500 .04 12/18/97
K. Coffey 40,000 .04 1/29/97
T. Dogson 62,500 .04 3/13/97
Glasgow Trustee 30,000 .04 1/20/97
J. Groves 200,000 .04 1/20/97
Groves Partners 200,000 .04 1/20/97
D. Ishibashi 75,000 .04 1/20/97
K. Jackson 75,000 .04 9/8/97
McDaniel Motors 25,000 .04 1/20/97
R. Meyer 700,000 .04 5/7/97

P. McCarrick 200,000 .04 8/6/97
W. Mowery 300,000 .04 4/9/97
M. Pitel 100,000 .04 3/13/97
Princeton 800,000 .04 8/6/97
Research
Wallstreet
Trading Group 1,000,000 .04 9/8/97
1,000,000 .04 9/8/97
R. Wilpitz 82,500 .04 1/20/97
A.A. Wilson 2,500 .04 12/18/97
A.H.Wilson J/T 2,500 .04 12/18/97
T. Wilson J/T 2,500 .04 12/18/97

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 in a self-underwriting
under Rule 504 of Regulation D of the Securities Act of 1933. The
shares were sold for cash based upon market price for its common shares
with gross proceeds of less than $1,000,000. No underwriting discounts
were paid directly or indirectly by the Company in connection with the
sales of any of its shares.

1998

Number $ Per
Name Shares(1) Share (2) Date(s)

J. Barot 62,500 .08 3/12/98
125,000 .08 3/19/98
K. Barot 125,000 .08 3/9/98
H. Barot 62,500 .08 2/25/98
M. Barot 250,000 .08 2/25/98 and
3/19/98
3,000 .08 7/17/98
S. Barot 125,000 .08 6/22/98

1998 (continued)

Number $ Per
Name Shares(1) Share (2) Date(s)

W. Bell 30,000 .08 1/20/98
C. Bell 10,000 .08 1/20/98
D. Byers 81,500 .08 3/10/98
C. Dacumos 3,109,500 .08 4/2/98, 4/3/98
4/15/98, 5/1/98
6/26/98 and
7/17/98

<PAGE> 27

E. Dahm 27,000 .08 7/17/98 and
9/29/98
K. Dahm 25,000 .08 9/10/98
T. Dodson 62,500 .08 1/16/98
A. Drake 4,000 .08 7/17/98
B. Drake 12,500 .08 7/16/98
K. Drake 2,000 .08 7/17/98
D. Everton 100,000 .08 7/16/98
J. Gavitt 62,500 .08 1/16/98
G. Glasgow 17,550 .08 1/20/98
D. Goins 12,500 .08 7/16/98
R. Green 10,000 .08 1/20/98
100,000 .08 3/11/98
D. Gregor 100,000 .08 3/11/98
P. Hertzman 50,000 .08 1/20/98
G. Hill 10,000 .08 1/20/98
G. Hughes 87,500 .08 1/20/98
K. Jackson 10,000 .08 1/20/98
W. Johnson 10,000 .08 1/20/98
J. Lane 12,500 .08 7/16/98
S. Loftis 10,000 .08 1/20/98
A. Lopez Jr. 5,000 .25 7/16/98
E. Lopez 5,000 .08 8/7/98
J. Macalik 200,000 * 6/22/98
S. Master 62,500 .08 2/24/98
P. Mattson 12,500 .08 7/16/98
V. Mattson 5,000 .08 7/16/98
S. McCullough 200,000 .08 5/6/98
S. Painter 62,500 .08 7/17/98
O.C. Perkins 30,000 .08 1/20/98
E. Picardo 2,000 .08 7/24/98
J. Pitts 8,000 .08 8/7/98
L. Pitts 112,500 .08 3/13/98 and
8/7/98
13,200 .25 7/16/98
M. Roland 2,000 .08 7/17/98
I. Salem 12,500 .08 3/19/98
P. Selevan 62,500 .08 7/16/98
M. Sheppard 17,550 .08 1/20/98
M. Toney 2,000 .08 7/17/98
D. Thompson 5,000 .08 1/20/98
S. Vannocker 32,000 .08 7/16/98 and
7/17/98
J. Wallace 17,500 .20 8/17/98 TST
M. Webster 33,333 .15 3/25/98

1998 (continued)

Number $ Per
Name Shares(1) Share (2) Date(s)

N. Westbrook 5,000 .08 1/20/98

Technologies 87,500 .08 1/27/98

<PAGE> 28

Acquisition
L.P.

21st Century 9,000,000 .08 3/23/98
Technologies
Funding L.P.

Alpha Technologies 1,000,000 .08 7/17/98 and
L.P. 7/24/98

The natural limited partners and the number of units that they
purchased are as follows:

Limited Partners Unit(s)

Shayman Barot 15
Ferdinand and Maria Bayona 10
Robert Bell 4
Denton Byers 15
Lynn Pape Carrol 2
Violah Clark 5
Sandra Cullon 16
Arkumkumar Dewani 5
Corazon Denoste 25
Matthew Diezel 25
Billie Earnest 2
Peggy Economidis 5
Jack Ferebee 3
Denise Kelly 2
Michael Kolodziej 2
Michael Longman 12
Kalpesh Master 10
Melvin and Susan Mathias 2
Russel Moulton 2
Barbara Ogles 2
Elsie Picardo 10
Ginger Power 2
Charene Sellers 5
Thomas Sellers, Jr. 5
Linda Carol Sellers 101
Shantilal N. Shah 10
State Manufacturing of VA 4
Rebecca Van Gosen 2
Elizabeth Wetherington 5

Rocky Allis and Denise Hemilright 5
Romeo and Fe Apilado 10
Gloria and Henry Armstrong 4
Barbara Arthur 2
Anne Baker 5
Rupa Barot 2
S. Barot 7
Felina and Melanie Bayona 12
Ferdinand and Marie Bayona 35
Gerald Brutsman 5
Joseph Burns 5

<PAGE> 29

Aurea Busuego 5
Daniel and Dorisann Cammeron 10
Robert and Lorraine Carr 5
Conception Castro 10
Andres and Violah Celi 10
Andres Celi 5
Violah Celi 7
Barry and Sandra Cornell 10
Wm. and Delia Cumpit 9
Cristeta Dacumos 10
Cristeta Dacumos IRA 11
Elaine Dacumos 6
Virgilio Dacumos 2
Kenneth Dahm 3
Crisostomo and Corazon Denosta 5
Corazon Denosta 7
Arunkamar and Jayshree Dewani 30
Harry Diezel 11
Matthew Diezel 3
Virginia Diezel 4
Allen Drake 24
Daniel Drake 10
Kevin Drake 5
Mary Ruth Drake 10
Charles Driscoll 10
Lyn Fairchild 10
Ralph Ferebee 10
Dennis Friends 10
Donald Gates 3
Jayesh Jhaveri 3
Carmelita Juachon 2
Mervyn Lee Judd 14
Jayne Jungen 2
Alfredo and Cynthia Lasmarias 5
Laeser Lucena 10
Leon Lago 5
Adolfo and Bella Mapanao 5
Dineshchandra and Sarla Master 5
Gregory and Natash Meyer 5
Jamie Milo 5
Mart and Criesta Martin 12
Melvin and Susan Mathias 10
Zaldy and Erlinda Mendoza 25
Robert and Judy Miller 5
Frank Mixner 8
Vernon Meyers 10
Stacy Moore 5
Gerardo Navarrete 5
Barbara Norton 5
Rosario Pacson 4
Elvira Parado 6
Elma Pascual 5
Raymond and Elma Pascual 5
Bharat and Nili Patel 25
Pritesh Patel 25
Ramesh Patel 10
Sanjay and Jeshai Patel 6

<PAGE> 30

Surendra and Hasubala Patel 10
Joni Payne 10
Eisle Picardo 20
Ginger Power 30
Paresh and Shefali Randeria 8
Parag and Janvi Rawall 2
Felicisimo and Juanita Sayco 20
Gerry and May Sayco 13
Steven Schaefer 4
Linda Sellers 25
Rodolfo Sevilla 10
Rakesh Shah 10
Mehul Shah 6
Adeleida Soriano 5
Francine Tanyag 10
Jagdish and Shamilia Tarpara 4
Robert Thurber 8
Avelina Vitug 10
Brian and Luan Wheaton 5
Leon Williams 25
Raymond Wilson 3
Teresa Wright 5
Edna Youngman 5

1999
----

Effective January 1, 1999, the Company had 33,287,830 shares issued and
outstanding. Effective December 31, 1999, the Company had issued an
additional 6,930,648 shares pursuant to a self-underwriting under Rule
504 of Regulation D of the Securities Act of 1933. The shares were
sold for cash based upon market price for its commons shares with gross
proceeds of less than $1,000,000. No underwriting discounts were paid
directly or indirectly by the Company in connection with the sales of
any of its shares.

1999
----

Number $ Per
Name Shares(1) Share (2) Date(s)

D. Barot 600,000 .06 3/9/99 and 5/26/99
P.D. Barot 200,000 .06 3/31/99
J.J. Barot 1,000,000 .06 2/18/99, 2/26/99,
3/9/99, and 3/10/99
J.J. Barot 300,000 .08 12/8/99
K. Barot
M. Barot
M.J. Barot 500,000 .06 2/26/99 and 4/29/99
M.J. Barot 200,000 .07 4/29/99
M.J. Barot 1,100,000 .08 9/8/99
S.J. Barot 100,000 .07 9/7/99
S.J. Barot 100,000 .08 12/10/99
J. Bouck 12,500 .08 12/27/99
K. Bridges 5,000 .08 12/16/99
D. Byers 200,000 .06 4/29/99
A. Carter 12,500 .08 11/17/99

<PAGE> 31

Continental 2,177,254 .03 2/23/99
Weaponry (PTY)
Ltd. (1)
A. Criscione 115,000 .07
A. Criscione 79,300 .10 9/8/99 and 9/13/99
C. Dacumos 25,000 .08 11/17/99
E. Dacumos 12,500 .08 11/17/99
M. Davis 1,000 .14 4/26/99
K. Doerfler 86,250 .06 8/25/99
B. Dorfman 625,000 .08 6/2/99, 8/5/99
9/2/99 and 10/12/99
B. Dorfman 1,070,00 .10 4/9/99, 4/15/99
4/29/99, 5/26/99
6/11/99, 6/22/99
9/22/99 and 9/24/99
A. Drake 96,000 .08 1/22/99, 7/12/99
and 12/9/99
B. Drake 12,500 .08 1/22/99
M. Drake 80,000 .08 1/22/99
R. Duenke 250,000 .08 10/5/99 and 12/13/99
J. Fridley 12,500 .08 12/16/99
R. Green 57,500 .10 1/27/99
R. Greenlee 15,000 .08 12/10/99
L.J. Guarnieri 30,000 .08 12/16/99
G. Hanson 12,500 .08 12/16/99
N. Hanson 12,500 .08 12/16/99
M. Hays 87,500 .08 12/10/99 and 12/16/99
R. Hays 12,500 .08 12/16/99
R. Head 25,000 .08 11/24/99
P. Hertzman 62,500 .08 8/13/99
W. Hood 12,500 .08 12/16/99
J. Ibay 62,500 .08 11/17/99
K. Jackson 25,000 .08 3/29/99
J.D. Johnson 50,000 .08 11/17/99
Z. Kerstner 43,700 .08 11/27/99
F. Klecky 12,500 .08 11/17/99
A. Messler 8,750 .08 12/7/99
D. Mosley 12,500 .08 4/12/99
E.C. Oden 50,000 .08 12/16/99
S. Odinetz 175,000 .08 10/19/99 and 12/13/99
T. Painter 28,572 .07 9/10/99
100,000 .08 12/6/99
S. Patel 300,000 .08 12/6/99 and 12/21/99
D. Phillips 2,500 .08 12/16/99
P. Randeria
G. Russell 25,000 .08 11/17/99
F. Sayco 25,000 .08 11/17/99
John G. Sellers 360,000 .08 11/3/99

On February 23, 1999, the Company issued 2,117,254 shares to
Continental Weaponry (PTY) Ltd., a South African proprietary
corporation, in an offshore transaction pursuant to Regulation S in
consideration of a license fee for the Griffon line of handguns. The
shares were priced at a discount to market with an aggregate value of
$38,750.00

<PAGE> 32

The issuance of our common shares in years 1997, 1998, 1999 and 2000
were exempt from registration under the Securities Act of 1933 as Rule
504 private transaction not involving a public distribution and the
following operative facts: (a) the aggregate offering price of the
common shares offered and sold did not exceed $1,000,000 per year; (b)
we did not advertise or engage in any sales solicitations to the pubic
for the securities, but only made offers and sales of the same to
persons with whom we had a pre-existing relationship to us; (c) all
sales were made by the Company as Issuer or through one of the
Company's executive officers as agents of the Issuer; (d) we did not
pay any sales commissions, bonuses, or other forms of compensation to
any executive officers directly or indirectly for acting as agents of
the Issuer; (e) we believe that each purchaser acquired the securities
for his/her/its own account for investment purposes and not for resale;
(f) we placed on each share certificate a restrictive legend stating
that the securities have not been registered and cannot be resold or
are otherwise restricted from transfer without benefit of registration.

In 1997, we issued in lieu of cash payment 200,000 Rule 144 shares to
Mr. Patrick McCarrick for web design and graphic materials and 800,000
Rule 144 shares to Princeton Research, Inc. for investor relations and
related corporate finance consulting. In 1998, we issued in lieu of
cash payment 200,000 Rule 144 shares to Mr. Josh Macalik for work
performed at the Company's headquarters. Mr. Macalik is the son of
Kenneth Wilson and Patricia Wilson. Mr. Macalik has legally changed
his name to Josh Wilson and is currently employed by the Company as an
executive vice-president in sales and marketing.

Technologies Acquisition LP raised a total of $977,000 by selling 977
units priced at $1,000 per unit in 1998. The General Partner is
Technologies Acquisition Corporation whose president and sole
stockholder is Keith Carroll. After fees and commissions, the
Partnership invested one percent (1%) of its capital or $7,000.00 for
the purchase of 87,500 shares in 21st Century Technologies, Inc. at
$0.08 per share. The balance of the partnership's capital was invested
in unaffiliated companies.

21st Century Technology Funding L.P. raised a total of $900,000 by
selling 900 units priced at $1,000 per unit in 1998. The General
Partner is 21st Century Technologies LLC whose member manager is Allen
Drake. After fees and commissions, one hundred percent (100%) of the
partnership capital was used to buy 9,000,000 restricted shares of 21st
Century Technologies, Inc. at $0.08 per share. A total of 6,000,000
shares were subsequently sold by the partnership after a period of one
year.

Alpha Technologies Limited Partnership raised a total of $332,000 by
selling 332 units priced at $1,000 per unit in 1998. The General
Partner is Alpha Technologies LLC whose member manager is Allen Drake.
After fees and commissions, twenty one percent (21%) of its capital or
$80,000 was used to buy restricted shares of 21st Century Technologies,
Inc. at $0.08 per share. The balance of the partnership's capital was
invested in unaffiliated companies.

21st Century Technologies, Inc. (the "Company") issued in an initial
sale its common stock to the partnerships above. In so issuing its
shares, the Company relied upon an exemption from the registration

<PAGE> 33

requirements in Section 5 of the Securities Act of 1933, as amended
(the "Act"), provided by Regulation D promulgated pursuant to the Act.

These shares so issued bore restrictive legend and were governed by
Rule 144 promulgated under the Act for resale into the public market
place, or otherwise.

Any resale by the partnership not into the public market place would
have been in accordance with Section 4(1) of the Act and the rules and
regulations derivative therefrom.

The Company does not have in its possession documents provided by the
partnerships to purchasers when and if the partnership resold the
corporation's securities, since it does not control directly or
indirectly any activities of the partnerships.

The Company believes, based on the number of shares ever owned at any
given moment by the partnerships, and/or by the partnerships' ability
to control or to be controlled by the Company that the partnerships are
not affiliates of the Company. Further, if the partnerships have acted
as underwriters pursuant to Section 2(11) or any other Section of the
Act, the Company believes that the resultant legal and/or factual
issues are with the partnerships and not the Company.

We believe that, in light of the foregoing, the sale of our securities
to the respective subscribers did not constitute the sale of an
unregistered security in violation of the federal securities laws 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.

<PAGE> 34

PART F/S

INDEX TO FINANCIAL STATEMENTS

21st Century Technologies, Inc. and its wholly owned subsidiaries,
Consolidated Financial Statements (unaudited) for the three months
ended March 31, 2000

* Consolidated Balance Sheet For the Three Months Ended March 31, 2000
and 1999 (unaudited)

* Consolidated Statements of Operations For the Three Months Ended
March 31, 2000 and 1999(unaudited)

* Consolidated Statements of Cash Flows (unaudited) For the Three
Months Ended March 31, 2000 and 1999

* Consolidated Statements of Stockholders' Equity (unaudited) For the
Three Months Ended March, 2000

* Notes to Consolidated Financial Statements For the Three Months
Ended March 31, 1999 (unaudited)

21st Century Technologies, Inc and its wholly owned subsidiaries Audited
Financial Statements December 31, 1999 and December 31, 1998.

* Independent Auditor's Report.

* Consolidated Balance Sheet December 31, 1999 and 1998.

* Consolidated Statements of Operations For the Two Years Ended
December 31, 1999 and 1998.

* Consolidated Statements of Comprehensive Income For the Two Years
Ended December 31, 1999 and 1998.

* Consolidated Statements of Cash Flows For the Two Years Ended
December 31, 1999 and 1998.

* Supplemented Schedule of Non-Cash Financing Activities For the Two
Years Ended December 31, 1999 and 1998.

* Consolidated Statements of Stockholders' Equity For the Two Years
Ended December 31, 1999.

* Notes to Consolidated Financial Statements For the Years Ended
December 31, 1999 and 1998.

<PAGE> 35
21st Century Technologies, Inc. and Subsidiaries

Consolidated Balance Sheet
(Unaudited)

March 31, 2000 March 31, 1999
-------------- --------------
Assets

Current Assets:
Cash and cash equivalents $ 732,069 $ 23,990
Accounts Receivable 1,078,318 982,707
Inventories 435,194 159,416
Notes Receivable 28,465 35,000
-------------- --------------
Total Current Assets 2,274,046 1,201,113

Property, Plant, and Equipment, Net 344,332 188,060

Other Assets, Net 464,392 432,017
-------------- --------------
Total Assets $ 3,082,770 $ 1,821,190
============== ==============

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts Payable-trade 210,069 124,964
Accounts Payable-other 66,079 1,029

Total Current Liabilities 276,148 125,993

Other Liabilities:
Working Capital Advances 1,446,958 0
Customer Deposits 4,304 1,435
Notes Payable 32,720 71,882
-------------- --------------
Total Other Liabilities 1,483,982 73,317
-------------- --------------

Total Liabilities: 1,760,130 199,310

Stockholders' Equity:
Common Stock, issued 51,667,753 and
outstanding shares at $.001 par value
at March 31, 2000 51,667 37,932
Paid-in Capital 4,498,917 3,629,103
Stock Earned, Not Issued 360,000 360,000
Retained Earnings (Deficit) (3,553,316) (2,365,066)
Treasury Stock ( 31,628) (30,089)
Stock Subscriptions (3,000) ( 10,000)
-------------- --------------
Total Stockholders' Equity 1,322,640 1,621,880
-------------- --------------
Total Liabilities and Stockholders' Equity $ 3,082,770 $ 1,821,190
============== ==============

See Notes to Consolidated Financial Statements

<PAGE> 36

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations
(Unaudited)

3 Months Ended 3 Months Ended
Mar 31, 2000 Mar 31, 1999
-------------- --------------
Net Sales $ 274,393 $ 222,660

Cost of Sales 253,930 185,397
-------------- --------------
Gross Profit 20,463 37,263

General and administrative expenses 476,067 188,642

Depreciation and Amortization 32,997 30,901
-------------- --------------

Net Income (Loss) (488,601) (182,280)

Estimated Income Taxes 0 0
-------------- --------------

Net Income (Loss) $ (488,601) $ (182,280)
============== ==============

Earnings (Loss) Per Common Share:
Basic and Fully Diluted $ (0.01) $ (0.01)

See Notes to Consolidated Financial Statements

<PAGE> 37

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended March 31, 2000

Mar 31, 2000 Mar 31, 1999
-------------- --------------
Cash Flows From Operating Activities:
Net Income (Loss) $ (488,848) $ ( 182,280)
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and Amortization 32,997 30,901

Change in operating assets and liabilities:
Accounts receivable ( 90,701) 13,956
Inventory ( 86,069) ( 440)
Other non-current assets and liabilities, net 16,246 ( 6,787)
Accounts payable 7,699 86,717
-------------- --------------
Net Cash Provided (Used) by
Operating Activities (608,676) ( 57,933)

Cash Flows From Investing Activities:
Purchase Equipment (315,467)
--------------
Net Cash Provided (Used) by
Investing Activities (315,467)

Cash Flows From Financing Activities:
Working Capital Advances 1,446,958
Increase/(Decrease) in long-term debt (40,162) (70,027)
Sale of stock and subscriptions received 137,602 140,829
-------------- --------------
Net Cash Provided (Used) by
Financing Activities 1,544,398 70,802
-------------- --------------
Net Increase (Decrease) in Cash
and Cash Equivalents 620,255 12,869
Cash and Cash Equivalents at Beginning of Period 111,814 11,121
-------------- --------------

Cash and Cash Equivalents at End of Period $ 732,069 $ 23,990
============== ==============

See Notes to Consolidated Financial Statements
<PAGE> 38

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

For the Three Months Ended March 31, 2000

<TABLE>
<CAPTION>
Common Paid-in Retained Treasury Stock Issued
Stock Capital (Deficit) Stock Subscribed Total Shares
--------- ------------ ------------ --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock Earned, Not Issued - - - - $ 360,000 $ 360,000 -

Balance December 31, 1999 $ 50,083 $ 4,420,260 $(3,064,715) $(31,628) $ (79,700)$1,654,300 50,083,753

Sale of Stock 1,584 78,657 - - - 80,241 1,584,000

Subscriptions Received - - - - 76,700 76,700 -

Net Income (Loss) - - (488,601) - - (488,601) -
--------- ------------ ------------ --------- --------- ----------- ----------

Balance March 31, 2000 $ 51,667 $ 4,498,917 $(3,553,316) $(31,628) $ 357,000 $1,322,640 51,667,753
========= ============ ============ ========= ========= =========== ==========

</TABLE>
<PAGE> 39
See Notes to Consolidated Financial Statements

21st Century Technologies, Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)

Note 1: Summary of Significant Accounting Policies:

a. Organization and Business Activities

21st Century Technologies, Inc. was 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(FNHC) Delaware. 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 consummated a plan of merger between FNHC Nevada
and FNHC Deleware whereby the Nevada Corporation was the survivor (see below)
and 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

<PAGE> 40

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 First National Holding Corporation) (FNHC Nevada) (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 sells its goods on "cash in
advance" or "cash on delivery", but primarily extends unsecured credit to its
customers involved in the retail and wholesale sale of the Company's products.
Revenue is recognized when products are shipped to the wholesale or retail
purchaser. All products are shipped F.O.B. the Company's facilities.

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 consists of raw materials used in the manufacture of firearm
products and finished goods imported for resale. Inventory is carried at the
lower of cost or market value, using the first-in, first-out method (FIFO).

e. Property and equipment:

Property and equipment is recorded at its historical cost. Depreciation is
provided in amounts sufficient to relate the asset cost to operations over the
estimated useful life (three to seven 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.

<PAGE> 41

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 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. The Company
prepares an undiscounted estimate of future cash flows for each long-lived
asset (excluding production equipment) on an annual basis. If the carrying
value of the asset exceeds undiscounted future cash flows expected to be
produced by the asset, the Company recognizes an impairment loss. The Company
measures the amount of the impairment loss as the amount by which the carrying
value of the asset exceeds its fair value. The Subsidiary Bankruptcy Excess
Reorganization Value is evaluated annually for events or conditions which
would indicate impairment. Management estimates cash flows which can be
expected for continuing to use the asset and then compares these estimated
cash flows to the asset's carrying amount. If the estimated cash flows
resulting from continuing to use the asset exceed the carrying amount of the
asset, an impairment adjustment is not necessary. There has been no effect as
of December 31, 1999 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 currently does not have 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.

<PAGE> 42

l. Research and Development Costs:

The Company expenses any research and development costs in the period which
they are incurred. There are no research and development costs incurred in
the periods presented.

m. Treasury Stock:

The Company utilizes the cost method to account for the acquisition of
Treasury Stock.

n. 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, 1999.

Note 2: Accounts Receivable

On November 6, 1998, Innovative Weaponry received a purchase order from
Continental Weapons Ltd for 32,103 Night Sights. Continental was invoiced and
a quantity of sights were shipped to South Africa. The balance of the order (
approximately 1,000 sights) has been manufactured and is being held at the
Company's manufacturing facility to be installed on the Griffon replica of the
Colt 45 as they are received by the Company. The Company is receiving the
first 1000 pistols sightless and are invoiced for a pistol without sights.
The receivable is decreased by the number of sights used when they are
installed on the pistols and income is credited for the sights installed. Due
to Continental's inability to ship the entire 1000 pistol order, the
receivable was not decreased materially during 1999. The Continental Weapons
invoice remains unpaid as of December 31, 1999; however, the Company has
negotiated an agreement to sell the receivable for the full invoice value.
The sale is scheduled to occur in the second quarter of 2000.

3/31/00 12/31/99 12/31/98
----------- ---------- -----------

Outstanding Invoice-Continental $ 923,422 $ 923,422 $ 930,987

Note 3: Other Assets

<PAGE> 43

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 17 years.

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
adopted "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.

Note 4: Stockholders' Equity

The total number of all classes of authorized capital stock is 200,000,000
shares, all of which are Common Stock, $0.001 par value per share. As of
March 31, 2000, there are 51,667,753 shares of common stock issued.

<PAGE> 44

Note 5: 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 1999 and 1998.
There were no common stock equivalents outstanding during the years 1999 and
1998. 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 6: Income Taxes

At December 31, 1999, the Company has available net operating loss
carryforwards of approximately $2,704,715 for federal income tax purposes that
begin to expire in 2008. The federal carryforwards resulted from losses
generated in prior years and have created a deferred tax asset o $919,603. It
is believed to be "more likely than not" that taxable income in the periods
prior to the expiration of the deferred tax assets will not be sufficient for
the deferred tax assets to be recognized; therefore, a valuation allowance of
$919,603 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 7: 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 and tire sealant import division has not been
tested in the U. S. market and the estimated demand for these products may not
reach the Company's expectations.

<PAGE> 45

Note 8: 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,
1999 and 1998 represent fair value.

Note 9: 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 10: Business Segments

The Company has five 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) Importation and resale of firearms and (e) 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> 46

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 consolidated balance sheets of 21st Century
Technologies, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the related statements of operations, comprehensive income, 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of 21st
Century Technologies, Inc. and subsidiaries as of December 31, 1999 and 1998,
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, P.C.

ALVIN L. DAHL & Associates, PC

March 14, 2000

Dallas, Texas

903 N. Bowser Road, Suite 370 * Richardson, Texas 70581 *
(972)664-1527 * FAX (972) 6664-1430

<PAGE> 47

21st Century Technologies, Inc. and Subsidiaries

Consolidated Balance Sheet
December 31, 1999 and 1998

1999 1998
------------- ------------
Assets
Current Assets:
Cash and cash equivalents $ 111,814 $ 11,121
Accounts Receivable(Note 2) 987,617 996,663
Inventories(Note 3) 349,125 158,976
Notes Receivable(Note 4) 0 35,000
------------- ------------
Total Current Assets 1,448,556 1,201,760

Property, Plant, and Equipment, Net (Note 6) 127,439 187,314

Other Assets, Net (Note 7) 421,475 425,230
------------- ------------
Total Assets $ 1,997,470 $ 1,814,304
============= ============

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable-trade (Note 5 ) 104,790 38,929
Accounts Payable-other 163,659 347
------------- ------------
Total Current Liabilities 268,449 39,276

Other Liabilities:
Deposits 1,311 3,372
Notes Payable (Note 9) 73,410 141,908
------------- ------------
Total Other Liabilities 74,721 145,280
------------- ------------

Total Liabilities: 343,170 184,556

Stockholders' Equity (Note 10):
Common Stock, $0.001 par value, 50,083,763
shares issued and 43,905,850 outstanding in 1999
and 35,023,113 shares issued and 33,477,830
outstanding in 1998 50,083 35,023
Paid-in Capital 4,420,260 3,418,856
Stock Earned, Not Issued (Note 13) 360,000 360,000
Retained Earnings (Deficit) (3,064,715) (2,182,786)
Treasury Stock (31,628) (30,089)
Stock Subscriptions ( 79,700 (10,000)
------------- ------------
Total Stockholders' Equity 1,654,300 1,591,004
------------- ------------
Total Liabilities and Stockholders' Equity $ 1,997,470 $ 1,814,304
============= ============

See Notes to Consolidated Financial Statements

<PAGE> 48

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations
For the Two Years Ended December 31, 1999 and 1998

1999 1998
------------- ------------
Net Sales $ 889,327 $ 1,701,013

Cost of Sales 547,013 469,910
------------- ------------

Gross Profit 342,314 1,231,103

General and administrative expenses 1,094,713 762,769

Depreciation and Amortization 129,530 123,604

Non-Operating Expenses 0 240,861
------------- ------------
Income (Loss) before Income Taxes (881,929) 103,869

Estimated Income Taxes 0 0
------------- ------------

Net Income (Loss) $ (881,929) $ 103,869
============= ============

Earnings (Loss) Per Common Share: (Note 12)
Basic and Diluted $ (0.02) $ 0.00

See Notes to Consolidated Financial Statements

<PAGE> 49

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income
(Note 17)
For the Two Years Ended December 31, 1999

1999
----

Net Income $ (881,929)

Other comprehensive income, net of tax 0
--------------

Comprehensive income $ (881,929)
==============

1998
----

Net Income $ 103,869

Other comprehensive income, net of tax 0
--------------

Comprehensive income $ 103,869
==============

See Notes to Consolidated Financial Statements

<PAGE> 50

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Two Years Ended December 31, 1999 and 1998

1999 1998
------------- ------------
Cash Flows From Operating Activities:
Net Income (Loss) $ (881,929) $ 103,869
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and Amortization 129,530 123,604
Change in operating assets and liabilities:
Accounts receivable 9,046 (860,773)
Inventory ( 190,149) (74,396)
Other non-current assets (143,405) (28,359)
Accounts payable-trade 229,173 (31,763)
------------- ------------
Net Cash Provided (Used) by Operating Activities (847,734) (747,818)

Cash Flows From Investing Activities:

Net Cash Provided (Used) by Investing Activities 0 (66,568)

Cash Flows From Financing Activities:
Decrease in long-term debt (66,498) (53,552)
Purchase Treasury Stock (1,539) (30,089)
Sale of stock 1,016,464 900,945
------------- ------------
Net Cash Provided (Used) by Financing Activities 948,427 817,304
------------- ------------

Net Increase (Decrease) in Cash and Cash Equivalents 100,693 2,918
Cash and Cash Equivalents at Beginning of Year 11,121 8,203
------------- ------------

Cash and Cash Equivalents at End of Year $ 111,814 $ 11,121
============= ============

See Notes to Consolidated Financial Statements

<PAGE> 51

21st Century Technologies, Inc.
and Consolidated Subsidiaries

Schedule of Non-Cash Financing Activities

For the Two Years Ended December 31, 1999 and 1998

1999 1998
------------- ------------
Issue Common Stock for Debt $ $ 28,410

Issue Common Stock for Services $ 133,618 $ 35,553

See Notes to Consolidated Financial Statements

<PAGE> 52

21st Century Technologies, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

For the Two Years Ended December 31, 1999

Balance, January 1, 1998 $ 19,015 $ 2,189,813 $(1,936,655) $ - $ - $ 272,173 19,015,863

Sale of Common stock 16,007 1,235,343 - - - 1,251,350 16,007,250

Purchase of Treasury Stock - - - (39,889) - (39,889) -

Sale of Treasury Stock - (6,300) - 9,800 - 3,500 -

Stock Subscriptions - - - - (10,000) (10,000) -

Net Income(Loss) - - 103,869 - - 103,869 -
--------- ------------ ------------ --------- --------- ----------- ----------
Balance December 31, 1998 35,022 3,418,856 (2,182,786) (30,089) (10,000) 1,591,003 35,023,113

Sale of Common Stock 15,061 901,433 - - - 916,494 15,060,640

Purchase of Treasury Stock - - - (57,200) - (57,200) -

Sale of Treasury Stock - 99,971 - 55,661 - 155,632 -

Subscriptions Paid - - - - 7,000 7,000 -

Subscriptions Received - - - - (76,700) (76,700) -

Net Income(Loss) - - (881,929) - - (881,929) -
--------- ------------ ------------ --------- --------- ----------- ----------

Balance December 31, 1999 $ 50,083 $ 4,420,260 $(3,064,715) $(31,628) $(79,700) $1,654,300 50,083,753
========= ============ ============ ========= ========= =========== ==========

See Notes to Consolidated Financial Statements

</TABLE>
<PAGE> 53

21st Century Technologies, Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1999 and 1998

Note 1: Summary of Significant Accounting Policies:

a. Organization and Business Activities

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 consummated a plan of merger between FNHC Nevada
and FNHC Delaware whereby the Nevada Corporation was the survivor (see below)
and 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.

<PAGE> 54

became a wholly owned subsidiary of Innovative Weaponry, Inc. (IWI-NV)
(formerly First National Holding Corporation) (FNHC Nevada) (now known as 21st
Century Technologies, Inc.), a publicly owned company.

b. Cash and Cash Equivalents:

c. Revenue recognition and credit policies:

d. Inventory:

e. Property and equipment:

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> 55

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:

i. Stock-Based Compensation:

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. Research and Development Costs:

The Company expenses any research and development costs in the period which
they are incurred. There are no research and development costs incurred in
the periods presented.

<PAGE> 56

m. Treasury Stock:

The Company utilizes the cost method to account for the acquisition of
Treasury Stock.

Note 2: Accounts Receivable

At December 31, 1999 and 1998, accounts receivable is comprised of the
following:

1999 1998
-------------- -------------
Trade Receivables $ 988,471 $ 995,790
Plus: Other 873
Less Allowance for bad debts 854 0
-------------- -------------
Total $ 987,617 $ 996,663

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 was invoiced and
a quantity of sights were shipped to South Africa. The balance of the order (
approximately 1,000 sights) has been manufactured and is being held at the
Company's manufacturing facility to be installed on 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. The Continental Weapons invoice remains unpaid as of December 31,
1999; however, the Company has negotiated an agreement to sell the receivable
for the full invoice value. The sale is scheduled to occur in the second
quarter of 2000.

Note 3: Inventories

At December 31, 1999 and 1998, inventories are comprised of the following:

1999 1998
-------------- -------------
Finished goods $ 30,715 $ 17,376
Griffon Pistols 39,930
Purchased for Resale 109,740
Raw materials 168,740 141,600
-------------- -------------
Total current cost $ 349,125 $ 158,976

Note 4: Notes Receivable

As of December 31, 1999 and 1998, Notes Receivable of the Company are as
follows:

1999 1998
-------------- -------------
Frank Mahan 0 $ 25,000
Carl Swan 0 $ 10,000

Note 5: Accounts Payable

<PAGE> 57

As of December 31, 1999 and 1998, the Company was obligated on the following
accounts payable amounts:

1999 1998
-------------- -------------
Trade Payables $ 106,749 $ 38,929
Excise & Sales Tax Payable 16,565
Other Payables & Accruals 147,094 347
-------------- -------------
Total Accounts Payable $ 268,449 $ 39,276

Note 6: Property, Plant, and Equipment

1999 1998
-------------- -------------
Leasehold improvements $ -0- $ -0-
Machinery and Equipment 329,668 310,260
Computer Equipment 52,399 50,826
Show Modules 30,586 30,586
Furniture and Fixtures 25,075 24,061
Real Estate 10,000 10,000
-------------- -------------
Total $ 447,728 $ 425,733
Less: Accumulated depreciation (32,289) (238,419)

-------------- -------------
Net property, plant, and equipment $ 127,439 $ 187,314

There are no capitalized leases included above. All equipment leases
maintained by the Company are expense leases, which are expensed as paid. The
Company has lease commitments for office and manufacturing facilities; and
office equipment of $53,947; $41,902; $36,602; $36,602; $36,602 and $11,454 in
the years 2000 through 2005 respectively.

Note 7: Other Assets

License Agreement: In June 1995, Trident, a wholly owned subsidiary of the
Company, 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.

<PAGE> 58

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 17 years.

Other Assets of the Company are as follows:

1999 1998
-------------- -------------
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 (243,666) (196,488)

Note 8: Short-Term Borrowings

Current portion of Long Term Debt in 1999 includes:

Lee Pitts $ 18,614
Liberty Bank 40,072
Odyssey Group 19,729

<PAGE> 59

Note 9: Long-Term Debt and Related Matters

The President of the Company and her husband, CEO of 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 $95,828 at December 31, 1998 and
$11,896 at December 31, 1999. No maturity date or interest rate has been
established.

The Company is also indebted to the Odyssey Group, a payroll service in
Albuquerque, NM, Liberty Bank, and Lee Pitts. The loan from Liberty Bank is
secured by Equipment and was repaid in 2000. The Loan from Lee Pitts is
unsecured and was repaid in 2000. Mr. Pitts is a former officer and employee
of the IWI subsidiary.

1999 1998
-------------- -------------
Odyssey Group(Recovar Group) $ 39,296 46,080
Liberty Bank 40,072 0
Wilsons(advances) 95,828
-------------- -------------
Notes Payable $ 73,410 $ 141,908

Note 10: Stockholders' Equity

At December 31, 1999 and 1998. the number of authorized and issued common
shares and the related par value and dividends paid are as follows:

1999 1998
-------------- -------------
Common stock, authorized 200,000,000 50,000,000
Common stock issued 50,083,753 35,023,113
Common stock outstanding 45,390,850 33,477,830
Common stock, per share par value $ 0.001 $ 0.001
Cash dividends paid on common stock none none

As part of the Company's re-organization, 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, Inc., which,
again expensed the transactions as accounts payable. These transactions were
corrected in the 1997 financial statements and the 1997 retained earnings has
been restated to show these adjustments.

Note 11: Earnings (Loss) Per Common Share

<PAGE> 60

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, 1999, the Company has available net operating loss
carryforwards of approximately $2,704,715 for federal income tax purposes that
begin to expire in 2008. The federal carryforwards resulted from losses
generated in prior years and have created a deferred tax asset of $919,603.
It is believed to be "more likely than not" that taxable income in the periods
prior to the expiration of the deferred tax assets will not be sufficient for
the deferred tax assets to be recognized; therefore, a valuation allowance of
$919,603 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, 1999 and 1998 are as follows:

1999 1998
-------------- -------------
Deferred tax assets:
Net operating loss carryforwards $ 2,704,715 $ 1,822,786
Deferred Tax Asset, Net 919,603 619,747
Valuation allowance for deferred tax assets (919,603) (619,747)
-------------- -------------
Deferred tax assets 0 0

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.

<PAGE> 61

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
the shares will be subject to Rule 144 of the US Securities and Exchange
Commission when and if 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. To record the prior years'
compensation expense, 1998's Beginning Retained Earnings was debited for
$350,000 and Compensation Expense in January of 1998 was debited for $10,000.
A new classification (stock earned, not issued) was added to the Stockholder's
Equity section of the balance sheet and was credited for $360,000 to record
the stock not issued to Mr. Wilson.

During 1999 and 1998 the Company issued shares to employees for bonus and
other compensatory services. These shares were valued at the then market rate
of $0.08 per share. The Company had not convertible debt outstanding during
these periods.

The Wilson's have advanced personal funds to the Company to cover cash
operating shortfalls (See Note 9).

Note 14: Commitments and Contingent Liabilities

none

Note 15: Risks and Uncertainties

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 and tire sealant import division has not been
tested in the U. S. market and the estimated demand for these products may not
reach the Company's

<PAGE> 62

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,
1999 and 1998 represent fair value.

Note 17: Comprehensive Income

Note 18: Business Segments

Note 19: 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

<PAGE> 63

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 raised $720,000 for 9,000,000 shares.

Note 20: 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 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 21: Subsequent Events

The Company's attorneys determined that the 1995 filing with the State of
Nevada which raised the Company's authorization to issue shares to 500,000,000
had not been recorded by the State. The number of shares issued and
outstanding were not in excess of the state approved authorized amount,
however, commitments for future issuance would have caused the Company to be
in violation of its state charter. Confirmations were obtained from all of
the Company's stockholders verifying the Company's issued and outstanding
shares. The Company took action to re-complete the filing requirements with
the State of Nevada and has authorization to issue up to 200,000,000 shares.

<PAGE> 64

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

2.2 Certificate of Amendment to Articles of *
Incorporation filed September 19, 1994

2.3 Certificate of Amendment to Articles of *
Incorporation filed September 29, 1995

2.4 Articles of Merger filed May 19, 1995 *

2.5 Bylaws of 21st Century Technologies, *
Inc. filed September 28, 1994

2.6 Certificate of Amendment to Articles of **
Incorporation filed June 12, 2000

6.1 Lease Agreement between 21st Century *
Technologies, Inc. and Landlord

6.2 Los Alamos Exclusive Patent License *

6.3 Agreement dated May 23, 1995 between the *
Regents of the University of California and
Trade Partners International, Inc

6.3 Trident Sub-License Agreement *
dated July 31, 1996

6.4 Limited Exclusive Patent License Agreement *
between the Regents of the University of
California and Trident Technologies Corporation

6.5 Application and Permit for Firearms *
Importation dated November 20, 1998

6.6 License of Dept. of Treasury, Bureau *
Of Alcohol, Tobacco and Firearms

6.7 Representation Agreement dated *
May 3, 1999

6.8 Registry of Radioactive Sealed Sources *
and Devices dated February 20, 1996

6.9 U.S. Nuclear Regulatory Commission *
Materials License dated October 18, 1996

<PAGE> 36

6.10 NRC Registration Amendment dated *
August 22, 1997

6.11 Request to Rescind Confirmatory Order *
dated September 14, 1998

6.12 Distribution and Agency Agreement *
dated October 15, 1999

6.13 Radioactive Materials License dated *
October 09, 1999

6.14 Lease Agreement between Trident Technologies **
Corporation and Dixie Business Development

6.15 Lease Agreement between 21st First Century **
Technologies, Inc. and Dyer Business Associates

6.16 Employment Agreement between 21st First Century **
Technologies, Inc. and Douglas N. Spring

6.17 Employment Agreement between 21st Century **
Technologies, Inc. and Burren Palmer

6.18 Agreement between 21st Century Technologies, **
Inc. and Princeton Research, Inc.

8.1 U.S. Bankruptcy Court Order Confirming *
Plan of Reorganization dated February 1,
1995

22.1 Subsidiaries of the Registrant *

27.1 Financial Data Schedule **

*Filed with company's initial Form 10-SB on January 27, 2000.
** Filed with company's Form 10-SB Amendment No. 1.

<PAGE> 37

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of
1934, 21st Century Technologies, Inc. has caused this first amended
registration statement to be signed on its behalf by the undersigned,
who is duly authorized.

Date November 1, 2000. 21st Century Technologies, Inc.

By: /s/ Kenneth E. Wilson
_______________________
Kenneth E. Wilson
Chairman of the Board
Chief Executive Officer