U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
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
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(State or Other Jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)
2513 East Loop 820 North
Ft. Worth, TX 76118
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(Address of Principal Executive Offices)
Issuer's Telephone Number, including area code: (817) 284-0099
Facsimile Number: (817) 284-7528
Securities Registered under Section 12(b) of the Exchange Act:
None.
Securities Registered under Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
------------------------------------------
Title of Class
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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
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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 78.197 and
78.200, respectively.
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General
-------
The Company has five subsidiaries:(1) Innovative Weaponry Incorporated
("Innovative Weaponry"); (2) Trident Technologies Corporation ("Trident"); (3)
Griffon USA, Inc. ("Griffon"); (4) CQB Armor, Inc. ("CQB Armor"); and (5)
Trade Partners International, Inc. ("Trade Partners").
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 (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.
NASD OTC Bulletin Board Quotations
----------------------------------
On June 1, 1995 the NASD confirmed un-priced quotations of the Company's
common stock on the OTC Bulletin Board under the symbol "IWI". On October 31,
1997 the Company changed its OTC trading symbol to "TEXN". On March 24, 2000,
the Company's trading symbol became "TEXNE" with the "E" appendage denoting
its de-listing status with the National Association of Securities Dealers,
Inc. ("NASD"). As discussed below, the NASD who has required all bulletin
board companies to become both reporting and comment free with the SEC by
certain phase
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in dates. If de-listed from the bulletin board the Company's share price will
be quoted on the National Quotation Bureau under the symbol "TEXN". For
information concerning these and other stock quotations regarding the
Company's common stock, which do not represent actual transactions or
broker-dealer markups, markdowns or commissions, see the caption "Market Price
of and Dividends on the Company's Common Equity and Other Stockholder
Matters".
OTC Bulletin Board Eligibility Rule
-----------------------------------
In January of 1999, the SEC granted approval of amendments to the NASD OTC
Bulletin Board Eligibility Rule 6530 and 6540. These amendments now require a
company listed on the OTC Bulletin Board to be a reporting company and current
in its reports filed with the SEC. As a result of this rule change we have
voluntarily filed this registration statement in order to become a fully
reporting company and maintain the listing of our common stock on the OTC
Bulletin Board. The rule requires that the SEC come to a position of no
further comment regarding the registration statement before a company is
considered compliant. We cannot assure that the SEC will come to such a
position in regards to this registration statement prior to our phase-in date
of March 1, 2000. According to the rules, if we are not in compliance at our
phase-in-date our common stock will be removed from the OTC Bulletin Board. At
that time we intend to move our listing to the National Quotation Bureau's
Pink Sheets. This possible move to the "pink sheets" may adversely affect the
market, if any, in our stock.
For information concerning sales of "unregistered" and "restricted" securities
during the past three years, see the caption "Recent Sales of Unregistered
Securities", Item 10.
Business
--------
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, members of the United States military (including Navy Seal Team
and Delta Forces), United States Customs, Drug Enforcement, Fish and Game, and
state and local police departments nationwide.
Innovative Weaponry sells under the federal trade mark protected name "PT
Night SightsTM" 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. Innovative Weaponry is the third largest "tritium" manufacturer
of night sights in the United States with estimated market share of thirty
percent (30%). This figure is based on the Company's internal estimate of the
tritium enhanced night sight market. The Company's competition is (1)
Ultimate Weapons
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Systems selling under the trade name "Trijicon"; (2) Meprolight; and
(3)Truglow. Each of these companies is private and no public sales figures
are available. However, based on anecdotal data collected at trade shows and
industry sources, we have the smallest overall 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 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
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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 and is without commercial competition in
the United States. There is a wide range of potential applications for this
technology from the military and special operations groups worldwide to the
commercial sector. These applications include 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. Further, based on
commercial response to this technology to date, it is believed that numerous
additional applications will evolve as the technology penetrates initial
market areas.
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
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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.
Distribution Methods of the Products or Services
------------------------------------------------
The Company's distribution methods vary with each subsidiary. The Innovative
Weaponry, Griffon and CQB Armor 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 SightsTM 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
8
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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 market entry
thereby providing the Company with a slight competitive advantage.
PT Night SightsTM represents a narrow market segment for gun users who desire
help in alleviating the poor level of accuracy in low light conditions. PT
Night SightsTM 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
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international marine industry, with the mission of promoting the safety of
life, property, and natural environment.
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 SightTM (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.
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The Griffon subsidiary has an exclusive import license granted to it by
Continental Weapons International (Pty) Ltd. of South Africa who manufactures
the 1911 Colt 45 replica. The South African manufacturer charges Griffon a
flat rate on goods purchased based on volume of sales and other marketing
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.
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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 SightsTM.
However, Innovative Weaponry is highly regulated in its importation, storage,
and distribution of radioactive 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"
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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 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
13
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
--------
Management has focused on increasing sales of the PT Night SightsTM 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 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 SightsTM. 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
14
<PAGE>
and Innovative Weaponry uses "tritium". Innovative Weaponry and Griffon are
required to maintain required books and records in connection with their
firearms business and are subject to onsite inspection by these agencies
and/or the Department of Justice, at anytime. In addition, the Company shared
plant facility is subject to certain safety requirements imposed upon it by
NRC, OSHA and the State of Texas Department of Health.
Year 2000
----------
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
December 31 December 31, March 31,
1998 1999 2000
------------- ------------- -------------
AMOUNT
PERCENTAGE OF REVENUES
Revenues $ 1,701,013 $ 889,327 $ 222,660
100% 100% 100%
Cost of Revenues 469,910 547,013 185,397
28% 62% 83%
Gross Profit 1,231,103 342,314 37,263
72% 38% 17%
Selling/General and Administrative 752,769 1,094,713 188,642
44% 123% 84%
Income (Loss) from Operations 113,869 (881,929) (182,280)
7% (99)% (82)%
Liquidity.
----------
The Company is dependent on cash on hand, revenue from the sales of PT Night
SightsTM, 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.
15
<PAGE>
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.
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
16
<PAGE>
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 19,001,000 24.9%
Chm. and President
Common Patricia Wilson 600,000 .01%
Common 21st Century
Technologies 9,790,000 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.
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 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 6,790,000
shares at an exercise price of $0.10 per share and in return 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
17
<PAGE>
shares purchased by it in 1998. The options have been exercised in full by
21st Century Technology Funding LP I with payment of $679,000 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 19,001,000 24.9%
Chm. and President
Common Patricia Wilson 600,000 .01%
President of Trade
Partners and Director
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.
(2) The addresses of all executive officers are at the Company's headquarters,
2513 East Loop, 820 North, Ft. Worth, TX 76118.
18
(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.
Mr. Wilson has waived any claim to the shares owned by Mrs. Patricia Wilson
which were acquired by her during their marriage and, therefore, these shares
have not been included above. Also, it is unclear under Texas community
property laws whether the shares due Mr. Wilson would be aggregated with the
shares currently held by Mrs. Wilson as part of the marital estate since they
have not been issued and the Company's Board of Directors have broad
discretionary authority over the issuance of said shares in any event.
However, if these shares were aggregated then the total holdings of Mr. Wilson
and Mrs. Wilson would as a group account for a total of 19,601,000 shares or
25.8% of the Company's issued and outstanding shares.
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.
19
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Identification of Directors and Executive Officers.
---------------------------------------------------
Our directors, executive officers and key employees and their respective ages
and positions are set forth below. Biographical information for each of those
persons is also presented below. Our executive officers are appointed by our
Board of Directors and serve at its discretion.
Directors and Officers
Name Age Position Held
---- --- -------------
Kenneth E. Wilson 58 Chief Executive Officer, President and
Chairman of the Board
Patricia G. Wilson 52 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
20
<PAGE>
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 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
21
<PAGE>
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.
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.
22
<PAGE>
(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.
(4) 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
--------------------------
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
23
<PAGE>
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 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 6,790,000 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 $679,000 has been made
to the Company by the General Partner's principal effective March 2000.
24
<PAGE>
Part II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND DIVIDENDS OF
21st CENTURY TECHNOLOGIES AND OTHER SHAREHOLDER MATTERS
Our common stock is traded over-the-counter and quoted on the OTC 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.
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.
The Company settled a lawsuit (involving a contract dispute) styled Morgan
Casner Associates, Inc. vs. Innovative Weaponry, et al, Cause No. 96CA006325,
in the Civil Division, Superior Court of the District of Columbia. The
Company paid $150,000 and received a release of Judgment, which had been
granted in the suit.
The Company entered into a settlement agreement settling a certain action
under United States District Court for the Northern District of Oklahoma Case
No. 97-CV-004-H. Cunningham will return 71,000 shares of the Company's common
stock after such time as the Company pays $39,000.00 plus interest. Said
payment due and payable on May 12, 1998. The Company paid this settlement on
May 8, 1998 and said shares were returned to the treasury.
Further, to the knowledge of management, no director or executive officer is
party to any action in which any has an interest adverse to the Company.
ITEM 3: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no change in, or disagreements with, our principal independent
accountant during our last two fiscal years.
ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities we have sold within the past
three fiscal years without registration:
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
26
<PAGE>
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
27
<PAGE>
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
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
28
<PAGE>
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
Acquisition
L.P. (multi-
investment)
21st Century 9,000,000 .08 3/23/98
Technologies
Funding L.P.
Alpha
Technologies 1,000,000 .08 7/17/98 and 7/24/98
L.P. (multi-
investment)
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
<PAGE> 29
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
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
<PAGE> 30
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
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
M.J. Barot 500,000 .06 2/26/99 and 4/29/99
<PAGE> 31
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
Continental 2,177,254 .03 2/23/99
Weaponry (PTY)
Ltd. (1)
A. Criscione 115,000 .07 8/31/99
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
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
<PAGE> 32
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
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
33
<PAGE>
$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.
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.
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)
34
<PAGE>
* 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.
35
<PAGE>
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 -
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
Retained Earnings (Deficit) (3,193,316) (2,005,066)
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 - -
-------------- --------------
Net Income (Loss) $ (488,601) $ (182,280)
============== ==============
Earnings (Loss) Per Common Share:
Primary $ (0.0096) $ (0.0115)
Fully Diluted $ NA $ NA
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>
Balance December 31, 1999 $ 50,083 $ 4,420,260 $(2,704,715) $(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 $(3,193,316) $(31,628) $ (3,000) $1,322,640 51,667,753
========= ============ ============ ========= ========= =========== ==========
Notes to Consolidated Financial Statements
</TABLE>
<PAGE> 39
21st Century Technology, Inc.
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 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 15,1995, the Board of Directors approved a name change to 21st
Century Technologies, Inc.
Innovative Weaponry, Inc. - New Mexico was incorporated on June 22, 1988 under
the laws of the State of New Mexico. The Company was formed for the
development and sale of specialized firearms, firearm systems and related
equipment. On September 14, 1992, Innovative Weaponry, Inc. filed a petition
for relief under Chapter 11 of the Federal Bankruptcy Laws in the United
States Bankruptcy Court of the District of New Mexico. Under Chapter 11,
certain claims are stayed while the Debtor continues business operations as
Debtor-in-Possession. On August 19, 1994, IWI-NV (now 21st Century
Technologies, Inc.) and IWI-NM entered into a letter of intent whereby IWI-NV
would use its unregistered, restricted common stock and cash to satisfy
certain obligations of IWI-NM in settlement of IWI-NM's bankruptcy action.
On February 1, 1995, the U. S.
<PAGE> 40
Bankruptcy Court of the District of New Mexico confirmed IWI-NM's plan of
reorganization. The plan became effective 30 days after its confirmation.
IWI-NM became a wholly owned subsidiary of Innovative Weaponry, Inc. (IWI-NV)
(formerly First National Holding Corporation) (a Nevada Corporation) (now
known as 21st Century Technologies, Inc.), a publicly owned company.
b. Cash and Cash Equivalents:
For purposes of reporting cash flows, the Company considers all cash on hand
and in banks, certificates of deposit and other highly liquid debt instruments
with a maturity of three months or less at the date of purchase to be cash and
cash equivalents.
c. Revenue recognition and credit policies:
In the normal course of business, the Company primarily sells its goods on
either a "cash in advance" or "cash on delivery" basis but primarily extends
unsecured credit to its customers involved in the retail sale of the Company's
products. All customers are located throughout the United States and some
European Countries. Revenue is recognized when products are shipped to the
wholesale or retail purchaser. All products are shipped F.O.B. the Company's
facilities in Ft. Worth, Texas. The Company has, on occasion, engaged in
"bill and hold" transactions which are not material to the financial
statements. On these "bill and hold" transactions, the Company received a
purchase order, manufacturing was completed and the majority of the product
was shipped. All such transactions have been initiated by the customers and
ownership of the goods has passed to the buyer.
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 and finished goods imported for resale. Inventory
is carried at the lower of cost or market value, using the first-in, first-out
method.
e. Property and equipment:
Property and equipment is recorded at its historical cost. Depreciation is
provided for in amounts sufficient to relate the asset cost to operations over
the estimated useful life (three to five years) using the straight-line method
for financial reporting purposes.
Gains and losses from disposition of property and equipment are recognized as
incurred and are included in operations.
<PAGE> 41
f. Income Taxes:
The Company uses the asset and liability method as identified in SFAS 109,
Accounting for Income Taxes.
g. Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
h. Asset Impairment:
The Company adopted the provisions of SFAS 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, in its
financial statements for the year ended December 31, 1995. There has been no
effect as of March 31, 2000 of adopting SFAS 121.
i. Stock-Based Compensation:
The Company will follow the fair value based method of accounting as
prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, for its
stock-based compensation. The Company has not adopted a stock option plan.
j. Principles of Consolidation and Presentation --Wholly-Owned Subsidiaries:
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Intercompany transactions and accounts have been eliminated
in the consolidation.
k. License Agreement:
The License agreement is amortized over the life of the related patent
technology (generally 17 years) using the straight-line method.
l. Basis of Presentation:
Financial information presented as of any date other than December 31 has been
prepared from the books and records without audit. The accompanying financial
statements have been prepared in accordance with the instructions to Form
10QSB and do not include all of the information and the footnotes required by
generally accepted accounting principles for complete statements. In the
opinion of management, all adjustments, consisting only
<PAGE> 42
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: Other Assets
License Agreement: In June 1995, Trident entered into a license agreement
(Agreement) with Trade Partners International, Inc. (TPI) to acquire the
exclusive license to certain patent rights conveyed to TPI by The University
of California as operators of Los Alamos National Laboratory (patent holder)
related to the development, marketing and sales rights to certain specified
magnetic and/or magnet technology.
The agreed-upon and negotiated value of the Agreement at acquisition date was
$75,000. Subsequently, the transaction was re-negotiated and 21st Century
acquired all of the common stock of TPI in a Type B reorganization.
Trident, as sub-licensee, is obligated to pay a royalty fee of 8.0% on net
income (as defined in the Agreement) of products sold using the patented
technology. Further, Trident is to pay an annual maintenance fee, which was
$24,000 for the third and all subsequent years of the Agreement. All royalty
fees paid during a specific year are to be credited to that year's maintenance
fee and the maintenance fee requirement is considered met if the royalty
payments during an Agreement year are equal to or exceed the required
maintenance fee.
Trademark:
---------
The trademark "PT Night Sights" has been capitalized at cost and is being
amortized over its term.
Bankruptcy excess Re-Organization Cost:
-------------------------------------
Innovative Weaponry, Inc. (IWI) emerged from a bankruptcy filing under Chapter
11 of the US Bankruptcy Code, effective March 1, 1995. As a result of the
Plan of Reorganization, IWI became a wholly owned subsidiary of 21st Century
Technologies, Inc. and all prior IWI shareholders retained less that a 50%
interest in the combined reorganized entities.
In conjunction with IWI's emergence from protection under Chapter 11, IWI
recognized "fresh-start" accounting as a result of its acquisition by 21st
Century. "Fresh start" accounting allows for the restatement of all assets
and liabilities being set to the fair market value of each respective category
and the restatement of retained earnings to "0". The resulting amount was
debited to the account "Reorganization value in excess of amounts allocable to
identifiable assets". This balance is being amortized over ten (10)
<PAGE> 43
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 3: 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.
Note 4: Earnings (Loss) Per Common Share
Earnings per common share are computed by dividing net income by the weighted
average number of common shares outstanding during the 3 months ended March
31. 2000. SFAS No. 128, Earnings per Share applies to entities with publicly
held common stock and establishes standards for computing and presenting
earnings per share (EPS). Basic EPS excludes dilution and is computed by
dividing income available to common shareholders by the weighted-average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
Note 5: Income Taxes
At December 31, 1999, the Company had 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 in losses
generated in prior years. For financial purposes, a valuation allowance has
been recognized to offset the deferred tax assets. There are no deferred tax
liabilities. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Note 6: Risks and Uncertainties
The Company operates in highly specialized industries. There are only four
companies worldwide who manufacture and sell night sights using tritium. The
Company ranks number three out of four. The gun sight industry is highly
dependent on major firearms manufacturers as well as consumer and governmental
demand for weapons. World conditions and economies can affect the future
sales of this product.
<PAGE> 44
The Company's magnetic and hydraulic-magnetic technologies are largely
un-proven and may require additional extensive testing before marketing these
products can continue. Demand for these products from governmental and
industrial sources is largely estimated and while the Company has studied
various markets, no assurance can be given that these products can be
successfully marketed.
In the future, these products will be marketed outside the United States,
which will subject the Company to foreign currency fluctuation risks.
The Company's firearm replica import division has not been tested in the U. S.
market and the estimated demand may not reach the Company's expectations.
Note 7: Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Cash and Cash Equivalents. The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Accounts Receivable and Accounts Payable. The carrying amount of accounts
receivable and accounts payable in the balance sheet approximates fair value.
Short-Term and Long-Term Debt. The carrying amount of the debts recorded in
the balance sheet approximates fair value.
The carrying amounts of the Company's financial instruments at December 31,
1997 and 1996 represent fair value.
Note 8: Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. It requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement
and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid in capital in the equity
section of a statement of financial position. The Company's comprehensive
income does not differ from its reported net income.
<PAGE> 45
Note 9: 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 sale of handguns, 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
<Letterhead of
ALVIN L. DAHL
& Associates, PC
Certified Public Accountants
A Professional Corporation
appears here>
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, 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, PC
ALVIN L. DAHL & Associates, PC
March 14, 2000
Dallas, Texas
<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) - 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
Retained Earnings (Deficit) (2,704,715) (1,822,786)
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 1,094,713 752,769
Depreciation and Amortization 129,530 123,604
Non-Operating Expenses - 240,861
Income (Loss) before Income Taxes (881,929) 113,869
Estimated Income Taxes - -
------------- -------------
Net Income (Loss) $ (881,929) $ 113,869
============= =============
Earnings (Loss) Per Common Share: (Note 12)
Primary $ (0.0207) $ 0.004
Fully Diluted $ NA $ 0.0017
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 -
----------------
Comprehensive income $ (881,929)
================
1998
----
Net Income $ 113,869
Other comprehensive income, net of tax -
----------------
Comprehensive income $ 113,869
================
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) $ 113,869
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) (18,359)
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 - (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
<TABLE>
<CAPTION>
Common Paid-in Retained Treasury Stock Issued
Stock Capital (Deficit) Stock Subscribed Total Shares
--------- ------------ ------------ --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
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) - - 113,869 - - 113,869 -
--------- ------------ ------------ --------- --------- ----------- ----------
Balance December 31, 1998 35,022 3,418,856 (1,822,786) (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 $(2,704,715) $(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
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 plan of reorganization. The plan became effective 30
days after its confirmation. IWI-
<PAGE> 54
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" and periodically 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.
The Company has, on occasion, engaged in bill and hold transactions which are
not material to the financial statements. On these "Bill and Hold"
transactions, the Company received a purchase order, manufacturing was
completed and the majority of the product was shipped. All such transactions
have been initiated by the customers and ownership of the goods has passed to
the buyer.
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> 55
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
amount of the asset exceeds the estimate of the undiscounted cash flow
expected to be produced by the asset, the excess amount is written off. 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> 56
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 -
------------- -------------
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 - $ 25,000
Carl Swan - $ 10,000
Note 5: Accounts Payable
As of December 31, 1999 and 1998, the Company was obligated on the following
accounts payable amounts:
<PAGE> 57
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 (320,289) (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.
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.
<PAGE> 58
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.
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
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
<PAGE> 59
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 -
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
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
<PAGE> 60
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 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. 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 - -
Note 13: Related-Party Transactions/Stock-Based Compensation
The Company accounts for stock-based compensation using the principles
prescribed in Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation which states that "...the fair value of the
equity instruments used to measure the transaction if that value is more
reliably measurable than the fair value of the
consideration received."
In September of 1994, the board of directors entered into a consulting
contract with Ken Wilson, (husband of the current Company President). This
agreement required the Company to issue 1,000,000 shares of Company common
stock to Mr. Wilson and to compensate him at the rate of $10,000.00 per month.
Should the Company be unable to pay Mr. Wilson in cash, the Company would
issue Mr. Wilson its common stock in amount equal to $0.02 per share (which
was the share price at the time the consulting contract was entered into
between the Company and Mr. Wilson). The Company paid Mr. Wilson through
December of 1994. In January of 1995, the Company and Mr. Wilson
re-negotiated the agreement to remunerate him solely in stock of the Company.
This was necessary because of the Company's cash flow position and inability
to pay Mr. Wilson the previously agreed upon fee under the original consulting
agreement. The agreement required Mr. Wilson to perform services for the
Company in exchange for 500,000 shares of Company common stock per month. As
of the expiration date of the
<PAGE> 61
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. Compensation Expense will be recorded when the stock is issued.
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
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.
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.
<PAGE> 62
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
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 18: 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.
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 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.
<PAGE> 63
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 settled a lawsuit (involving a contract dispute) styled Morgan
Casner Associates, Inc. vs. Innovative Weaponry, et al, Cause No. 96CA006325,
in the Civil Division, Superior Court of the District of Columbia. The
Company paid $150,000 and received a release of Judgement, which had been
granted in the suit.
The Company entered into a settlement agreement settling a certain action
under United States District Court for the Northern District of Oklahoma Case
No. 97-CV-004-H. Cunningham will return 71,000 shares of the Company's common
stock after such time as the Company pays $39,000.00 plus interest. Said
payment due and payable on May 12, 1998. The Company paid this settlement on
May 8, 1998 and said shares were returned to the treasury.
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.
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
--------- -------------- ---------
1.1 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 Attached
Incorporation filed June 12, 2000
6.1 Lease Agreement between 21st Century *
Technologies, Inc. and Landlord
6.2 Los Alamos Exclusive Patent License *
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
6.10 NRC Registration Amendment dated *
August 22, 1997
<PAGE> 65
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 Attached
Corporation and Dixie Business Development
6.15 Lease Agreement between 21st First Century Attached
Technologies, Inc. and Dyer Business Associates
6.16 Employment Agreement between 21st First Century Attached
Technologies, Inc. and Douglas N. Spring
6.17 Employment Agreement between 21st Century Attached
Technologies, Inc. and Burren Palmer
6.18 Agreement between 21st Century Technologies, Attached
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 Attached
*Filed with company's initial Form 10-SB on January 27, 2000.
<PAGE> 66
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 June 26, 2000. 21st Century Technologies, Inc.
By: /s/ Kenneth E. Wilson
_______________________
Kenneth E. Wilson
Chairman of the Board
Chief Executive Officer
