U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No.2
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Commission File No. 000-29209
21st CENTURY TECHNOLOGIES, INC.
------------------------------------------
(Exact name of registrant as specified in its Charter)
NEVADA 48-1110566
--------------------------- --------------------------------
(State or Other Jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)
2513 East Loop 820 North
Ft. Worth, TX 76118
-----------------------------------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number, including area code: (817) 284-0099
Facsimile Number: (817) 284-7528
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [ X ] Yes [ ] No
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Part I.
FINANCIAL INFORMATION
This report includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended. All statements other than statements of
historical fact included in this report are forward looking statements. Such
forward looking statements include, without limitation, statements as to
estimates, expectations, beliefs, plans, and objectives concerning the
Company's Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources" regarding the Company's estimate
of sufficiency of existing capital resources and its ability to raise
additional capital to fund cash requirements for future operations and
acquisitions. The forward looking statements are subject to assumptions and
beliefs based on current information known to the Company and factors that are
subject to uncertainties, risk and other influences, which are outside the
Company's control, and could yield results differing materially from those
anticipated. The ability to achieve the Company's expectations is contingent
upon a number of factors which include (i) availability of sufficient capital
and capital market conditions, (ii) the Company's ability to produce and
market its products as produced by its various subsidiaries (including, but
not limited to, the PT Night Sights, Sea Patch, Gripper, Griffon 1911 Colt 45
replica sidearm, and tire sealant), (iii) effect of any current or future
competitive products, (iv) on going cost of research and development
activities, and (v) the retention of key personnel. "PT Night Sights", "Sea
Patch", "Gripper" and "Griffon" are our trademarks. This report may contain
trademarks and service marks of other companies.
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
21st Century Technologies, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
Restated
Sept 30, 2000 Sept 30, 1999
-------------- --------------
Assets
Current Assets:
Cash and cash equivalents $ 280,601 $ 15,478
Accounts Receivable, Net 457,390 1,000,859
Inventories 610,099 159,416
Notes Receivable 692,580 55,873
-------------- --------------
Total Current Assets 2,040,670 1,231,626
Property, Plant, and Equipment, Net 461,081 201,415
Other Assets, Net 535,410 485,511
-------------- --------------
Total Assets $ 3,037,161 $ 1,918,552
============== ==============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable-trade $ 59,844 $ 123,056
Accounts Payable-other 90,356 52,685
Deferred Income 225,000 0
-------------- --------------
Total Current Liabilities 375,200 175,741
Other Liabilities:
Working Capital Advances 1,765,458 0
Customer Deposits 0 5,526
Notes Payable 141,678 67,245
-------------- --------------
Total Other Liabilities 1,907,136 72,771
-------------- --------------
Total Liabilities: 2,282,336 248,731
Stockholders' Equity:
Common Stock, issued 52,857,240 and
outstanding shares at $.001 par value
at September 30, 2000 52,857 40,450
Paid-in Capital 4,730,298 3,895,467
Common Stock Earned, but not Issued 360,000 360,000
Retained Earnings (Deficit) (4,351,602) (2,585,788)
Treasury Stock (33,728) (30,089)
Stock Subscriptions (3,000) (10,000)
-------------- --------------
Total Stockholders' Equity 754,825 1,670,040
-------------- --------------
Total Liabilities and Stockholders' Equity $ 3,037,161 $ 1,918,552
============== ==============
See Notes to Consolidated Financial Statements
<PAGE>
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Restated Restated
3 Mos. Ended 3 Mos. Ended 9 mos. ended 9 mos. ended
Sept 30, 2000 Sept 30, 1999 Sept 30, 2000 Sept 30, 1999
-------------- -------------- -------------- -------------
Net Sales
Innovative Weaponry $ 163,080 $ 191,648 $ 611,425 $ 685,179
-------------- -------------- -------------- -------------
Total Net Sales 163,080 191,648 611,425 685,179
Cost of Sales 150,996 172,121 562,606 489,919
-------------- -------------- -------------- -------------
Gross Profit 12,084 19,527 48,819 195,259
General and
administrative
expenses 266,762 151,319 1,235,896 485,486
Depreciation and
Amortization 28,626 30,901 99,812 92,703
-------------- -------------- -------------- -------------
Net Income (Loss) (283,304) (162,693) (1,286,889) (382,930)
Estimated Income
Taxes 0 0 0 0
-------------- -------------- -------------- -------------
Net Income (Loss) $ (283,304) $ (162,693) $ (1,286,889) $ (382,930)
============== ============== ============== =============
Earnings (Loss) Per
Common Share:
Basic & Diluted $ (0.00) $ (0.00) $ (0.02) $ (0.01)
See Notes to Consolidated Financial Statements
<PAGE>
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended Sept 30, 2000
Restated
2000 1999
------------- -------------
Cash Flows From Operating Activities:
Net Income (Loss) $ (1,286,889) $ ( 382,930)
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and Amortization 99,812 92,703
Change in operating assets and liabilities:
Accounts receivable ( 375,504) 4,196
Sale of Receivable 150,000 -
Deferred Revenue 225,000 -
Inventory (260,974) (440)
Other non-current assets and liabilities, net (75,205) 5,817
Accounts payable (118,249) (136,465)
------------- -------------
Net Cash Provided (Used) by Operating Activities (1,642,009) (417,119)
Cash Flows From Investing Activities:
Purchase Equipment (333,642) 14,101
------------- -------------
Net Cash Provided (Used) by Investing Activities (333,642) 14,101
Cash Flows From Financing Activities:
Working Capital Advances 1,765,458 -
Increase/(Decrease) in long-term debt 68,268 (74,663)
Sale of stock and subscriptions received 310,712 482,038
------------- -------------
Net Cash Provided (Used) by Financing Activities 2,144,438 407,375
------------- -------------
Net Increase(Decrease) in Cash & Cash Equivalents 168,787 4,357
Cash and Cash Equivalents at Beginning of Period 111,814 11,121
------------- -------------
Cash and Cash Equivalents at End of Period $ 280,601 $ 15,478
============= =============
See Notes to Consolidated Financial Statements
<PAGE>
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
For the Nine Months Ended Sept 30, 2000
(Unaudited)
Restated
<TABLE>
<CAPTION>
Common Paid-in Retained Treasury Stock Stock
Stock Capital (Deficit) Stock Subscribed Earned Total
--------- ------------ ------------ --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1999 $ 50,083 $ 4,420,260 $(3,064,715) $(31,628) $(79,700) $ 360,000 $ 1,654,300
Sale of Stock 2,774 310,038 - (2,100) - - 310,712
Subscriptions Received - - - - 76,700 - 76,700
Net Income (Loss) - - (1,286,889) - - - (1,286,889)
--------- ------------ ------------ --------- --------- ------------ ------------
Balance Sept 30, 2000 $ 52,857 $ 4,730,298 $(4,351,602) $(33,728) $ (3,000) $ 360,000 $ 754,825
========= ============ ============ ========= ========= ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
21st Century Technologies, Inc. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
For the Three Months Ended September 30, 2000 and 1999
(Unaudited)
Note 1: Summary of Significant Accounting Policies:
a. Organization and Business Activities
21st Century Technologies, Inc. was incorporated under the laws of the State
of Delaware on May 15, 1967 as Satcom Corporation. On November 6, 1991, the
Company changed its name to Hughes Pharmaceutical Corporation. Subsequent to
1991, the Company changed its name from Hughes Pharmaceutical Corporation to
First National Holding Corporation(FNHC) Delaware. The Company became public
in 1985 through a merger with International Fluidics Control, Inc. (formerly
Sensory Systems, Inc., Training With The Pros, Inc., and/or M-H Studios,
Inc.). International Fluidics Control, Inc. successfully completed a public
offering of its securities in 1969 under Regulation A of the Securities Act of
1933.
As of December 31, 1985, the Company had liquidated all business operations
and began the search for a suitable merger or acquisition candidate. As a
result of this action, the Board of Directors approved a quasi-reorganization
for accounting purposes, effective January 1, 1986, whereby all accumulated
deficits in shareholders' equity were offset against additional paid-in
capital and common stock balance sheet accounts to the extent of reducing
these accounts to equal the par value of the issued and outstanding shares of
common stock.
During the third quarter of 1994, in conjunction with the execution of a
letter of intent to acquire Innovative Weaponry, Inc. (a New Mexico
corporation), the Company consummated a plan of merger between FNHC Nevada
and FNHC Deleware whereby the Nevada Corporation was the survivor (see below)
and changed its corporate name to Innovative Weaponry, Inc. to better reflect
its future actions and pending relationship with the acquisition target. On
September 15, 1997, the Board of Directors approved a name change to 21st
Century Technologies, Inc.
Innovative Weaponry, Inc. - New Mexico was incorporated on June 22, 1988 under
the laws of the State of New Mexico. The Company was formed for the
development and sale of specialized firearms, firearm systems and related
equipment. On September 14, 1992, Innovative Weaponry, Inc. filed a petition
for relief under Chapter 11 of the Federal Bankruptcy Laws in the United
States Bankruptcy Court of the District of New Mexico. Under Chapter 11,
certain claims are stayed while the Debtor continues business operations as
Debtor-in-Possession. On August 19, 1994, IWI-NV (now 21st Century
Technologies, Inc.) and IWI-NM entered into a letter of intent whereby IWI-NV
would use its unregistered, restricted common stock and cash to satisfy
certain obligations of IWI-NM in settlement of IWI-NM's bankruptcy action.
On February 1, 1995, the U. S. Bankruptcy Court of the District of New Mexico
confirmed the IWI-NM's
<PAGE>
plan of reorganization. The plan became effective 30 days after its
confirmation. IWI-NM became a wholly owned subsidiary of Innovative Weaponry,
Inc. (IWI-NV) (formerly First National Holding Corporation) (FNHC Nevada) (now
known as 21st Century Technologies, Inc.), a publicly owned company.
b. Cash and Cash Equivalents:
For purposes of reporting cash flows, the Company considers all cash on hand
and in banks, certificates of deposit and other highly liquid debt instruments
with a maturity of three months or less at the date of purchase to be cash and
cash equivalents.
c. Revenue recognition and credit policies:
In the normal course of business, the Company sells its goods on "cash in
advance" or "cash on delivery", but primarily extends unsecured credit to its
customers involved in the retail and wholesale sale of the Company's products.
Revenue is recognized when products are shipped to the wholesale or retail
purchaser. All products are shipped F.O.B. the Company's facilities.
Management has provided an allowance for doubtful accounts, which reflects its
opinion of amounts, which will eventually become uncollectible. In the event
of complete non-performance by the Company's customers, the maximum exposure
to the Company is the outstanding trade accounts receivable balance at the
date of non-performance.
d. Inventory:
Inventory consists of raw materials used in the manufacture of firearm
products and finished goods imported for resale. Inventory is carried at the
lower of cost or market value, using the first-in, first-out method (FIFO).
e. Property and equipment:
Property and equipment is recorded at its historical cost. Depreciation is
provided in amounts sufficient to relate the asset cost to operations over the
estimated useful life (three to seven years) using the straight-line method
for financial reporting purposes. Gains and losses from disposition of
property and equipment are recognized as incurred and are included in
operations.
f. Income Taxes:
The Company uses the asset and liability method as identified in SFAS 109,
Accounting for Income Taxes.
<PAGE>
g. Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
h. Asset Impairment:
The Company adopted the provisions of SFAS 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, in its
financial statements for the year ended December 31, 1995. The Company
prepares an undiscounted estimate of future cash flows for each long-lived
asset (excluding production equipment) on an annual basis. If the carrying
value of the asset exceeds undiscounted future cash flows expected to be
produced by the asset, the Company recognizes an impairment loss. The Company
measures the amount of the impairment loss as the amount by which the carrying
value of the asset exceeds its fair value. The Subsidiary Bankruptcy Excess
Reorganization Value is evaluated annually for events or conditions which
would indicate impairment. Management estimates cash flows which can be
expected for continuing to use the asset and then compares these estimated
cash flows to the asset's carrying amount. If the estimated cash flows
resulting from continuing to use the asset exceed the carrying amount of the
asset, an impairment adjustment is not necessary. There has been no effect as
of December 31, 1999 of adopting SFAS 121.
i. Stock-Based Compensation:
The Company will follow the fair value based method of accounting as
prescribed by SFAS No. 123, Accounting for Stock-Based Compensation, for its
stock-based compensation. The Company currently does not have a stock option
plan.
j. Principles of Consolidation and Presentation --Wholly-Owned Subsidiaries:
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Intercompany transactions and accounts have been eliminated
in the consolidation.
k. License Agreement:
The License agreement is amortized over the life of the related patent
technology (generally 17 years) using the straight-line method.
<PAGE>
l. Research and Development Costs:
The Company expenses any research and development costs in the period which
they are incurred. There are no research and development costs incurred in
the periods presented.
m. Treasury Stock:
The Company utilizes the cost method to account for the acquisition of
Treasury Stock.
n. Basis of Presentation:
Financial information presented as of any date other than December 31 has been
prepared from the books and records without audit. The accompanying financial
statements have been prepared in accordance with the instructions to Form
10QSB and do not include all of the information and the footnotes required by
generally accepted accounting principles for complete statements. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such financial statements,
have been included.
These financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1999.
Note 2: Accounts Receivable
On November 6, 1998, Innovative Weaponry received a purchase order from
Continental Weapons Ltd for 32,103 Night Sights. Continental was invoiced and
a quantity of sights were shipped to South Africa. The balance of the order (
approximately 1,000 sights) has been manufactured and is being held at the
Company's manufacturing facility to be installed on the Griffon replica of the
Colt 45 as they are received by the Company. The Company is receiving the
first 1000 pistols sightless and are invoiced for a pistol without sights.
The receivable is decreased by the number of sights used when they are
installed on the pistols and income is credited for the sights installed. Due
to Continental's inability to ship the entire 1000 pistol order, the
receivable was not decreased materially during 1999. The Continental Weapons
invoice remained unpaid as of December 31, 1999; however, the Company
negotiated an agreement to sell the receivable for the full invoice value.
The sale was consumated April 1, 2000 to Great Mughal Trade Associates,
Ltd.(GMTA). GMTA purchased the receivable and the rights to 31,103 Night
Sights for $900,000.00 paying $50,000.00 down and a note for $850,000.00
payable $85,000.00 per month for 10 months. $900,000 was removed from
Continental's receivable account and was placed in a note receivable-GMTA
account as a current asset due with in one year. This is a non-recourse
transaction (Griffon has surrendered control and has no obligation to buy the
receivable back) and has been accounted for as a secured note rather than the
sale of a financial asset under Statement of Financial Accounting Standards
No. 125. The night sights which under lie the receivable were valued at the
original sales price to Continental for the purpose of the sale of the
receivable. The $900,000 sales price represents the balance of the receivable
after
<PAGE>
subtracting the sale of the 1000 night sights installed on the first 1000
pistols. GMTA has the right to repossess the sights and resell them to
another purchaser should they be unable to collect from Continental.
9/30/00 6/30/00 3/31/00 12/31/99 12/31/98
Outstanding Invoice-
Continental $ 7,432 $23,422 $923,422 $923,422 $930,987
Receivable-GMTA $725,000 $815,000
Note 3: 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.
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
<PAGE>
amounts allocable to identifiable assets". This balance is being amortized
over ten (10) years using the straight-line method. The amortization period
began on March 1, 1995, concurrent with the effective date of IWI's Plan of
Reorganization.
The adjustment necessary to reflect the "fresh-start" accounting, as
prescribed by Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" issued by the American Institute of
Certified Public Accountants reflected a Reorganization value in excess of
amounts allocable to identifiable assets.
Note 4: Stockholders' Equity
The total number of all classes of authorized capital stock is 200,000,000
shares, all of which are Common Stock, $0.001 par value per share. As of
September 30, 2000, there are 52,857,240 shares of common stock issued. An
additional 19,000,000 shares of common stock has been earned under a previous
consulting agreement with the Chairman. These shares were not issued to Mr.
Wilson because the Company needed the shares to raise equity capital.
Additionally, it was discovered that the authorized shares had not been
properly filed with the State of Nevada. The Company retroactively corrected
this issue during the second quarter. Mr. Wilson's shares are represented in
the Equity section of the balance sheet as common stock earned but not issued.
An adjustment to the 1997 ending retained earnings was recorded to record the
compensation expense incurred by the Company
Note 5: Earnings (Loss) Per Common Share
Earnings per common share are computed by dividing net income by the weighted
average number of common shares outstanding during the years 1999 and 1998.
There were no common stock equivalents outstanding during the years 1999 and
1998. SFAS No. 128, Earnings per Share applies to entities with publicly held
common stock and establishes standards for computing and presenting earnings
per share (EPS). Basic EPS excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity.
For the Quarter Ended Sept 30, 2000
---------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
------------- -------------- ---------
Income ($133,304)
Basic EPS
Income available to Common Stockholders (133,304) 52,857,240 $(0.00)
<PAGE>
Effect of Dilutive Securities
Common Stock Earned but not Issued 19,000,000
Diluted EPS
Income available to common stockholders
plus assumed conversions ($133,304) 71,857,240 $(0.00)
Note 6: Income Taxes
At December 31, 1999, the Company has available net operating loss
carryforwards of approximately $2,704,715 for federal income tax purposes that
begin to expire in 2008. The federal carryforwards resulted from losses
generated in prior years and have created a deferred tax asset o $919,603. It
is believed to be "more likely than not" that taxable income in the periods
prior to the expiration of the deferred tax assets will not be sufficient for
the deferred tax assets to be recognized; therefore, a valuation allowance of
$919,603 has been recognized to offset the deferred tax assets. There are no
deferred tax liabilities. Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes.
Note 7: Risks and Uncertainties
The Company operates in highly specialized industries. There are only four
companies worldwide who manufacture and sell night sights using tritium. The
Company ranks number three out of four. The gun sight industry is highly
dependent on major firearms manufacturers as well as consumer and governmental
demand for weapons. World conditions and economies can affect the future
sales of this product.
The Company's magnetic and hydraulic-magnetic technologies have been tested
and approved by the American Bureau of Shipping and are being used by
Louisianna Emergency Response Training facilities in Holden, LA.; Texas A&M
Emergency Services Training Institute in College Station, TX; and
Transportation Technology Center Emergency Response Training facility in
Pueblo, CO. 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.
These products have been marketed outside the United States. In future
marketing, the Company may be subject to foreign currency fluctuation risks.
The Company's firearm replica and tire sealant import division has not been
tested in the U. S. market and the estimated demand for these products may not
reach the Company's expectations.
<PAGE>
Note 8: Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Cash and Cash Equivalents. The carrying amount reported in the balance sheet
for cash and cash equivalents approximates its fair value.
Accounts Receivable and Accounts Payable. The carrying amount of accounts
receivable and accounts payable in the balance sheet approximates fair value.
Short-Term and Long-Term Debt. The carrying amount of the debts recorded in
the balance sheet approximates fair value.
The carrying amounts of the Company's financial instruments at December 31,
1999 and 1998 represent fair value.
Note 9: Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. It requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement
and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid in capital in the equity
section of a statement of financial position. The Company's comprehensive
income does not differ from its reported net income.
Note 10: Business Segments
The Company has five business segments: (a) Manufacture of night sights for
handguns, (b) Manufacture of "the Gripper", a patented device used for
climbing steel surfaces, (c) Manufacture of an Emergency Magnetic-Hydraulic
Sea Patch System (d) Importation and resale of firearms and (e) Manufacture
and Distribution of a Tire Sealant product. The majority of the Company's
sales are derived from sales of night sights. Segments sales, other than by
Trident, are not material to these financial statements.
During the quarter ended Septemeber 30, 2000, Trident received an order from
Great Mughal Trade Associates for 500 units of the Sea Patch. The terms of
the order included a non refundable advance payment of $225,000.00.
$75,000.00 was used to purchase raw materials to manufacture the order. The
balance of the payment has been, or will be, used to defray the normal costs
of manufacturing and overhead. The profit or loss on this order will not be
determined until the fourth quarter of 2000. The revenues from this sale
<PAGE>
represent 26% and 57% of the Company's annual and fourth quarter revenues,
respectively. There were no intersegment revenues or expenses. Since there
were no material segment revenues or assets at the 1999 year end, none were
reported. This contraxts with $225,000 in revenues and $75,000 in inventory
at September 30, 2000.
Note 11: Working Capital Advances
During the first quarter of 2000, the Company received advances of funds from
various individuals. These funds have been or will be used for operating
capital funding current operations. All individuals have agreed to receive
shares of the Company's common stock as repayment of the advances plus
interest thereon. These shares of common stock will be issued by the Company
during the quarter ending December 31, 2000.
Note 12: Restatement of Prior Period Financials
As disclosed in Note 4 to these financial statements and more fully disclosed
in the December 31, 1999 audited financial statement notes, the Company's
Chairman has earned 19,000,000 shares of the Company's common stock under a
previous consulting agreement. These shares have not been issued and are noted
on the balance sheet as "Common Stock Earned but not Issued." The Retained
Earnings Deficit has been increased by $360,000 to reflect the charge to
earnings for the periods affected by this charge. The first and second quarter
Consolidated Balance Sheets have been restated to reflect this unissued common
stock.
As Previously Issued As Restated
--------------------- ---------------------
3/31/2000 3/31/1999 3/31/2000 3/31/1999
---------- --------- --------- ---------
Stocks Earned, Not Issued 0 0 360,000 360,000
Retained Earnings (Deficit) (3,553,316) (2,005,066)(3,553,316)(2,365,066)
6/30/2000 6/30/1999 6/30/2000 6/30/1999
---------- --------- ---------- ----------
Stock Earned, Not Issued 0 0 360,000 360,000
Retained Earnings (Deficit) (3,744,928) (2,044,484)(4,104,928)(2,404,484)
Note 13: Restatement of September 30, 2000 Financials
During the third quarter of fiscal 2000, Great Molgul Trade Associates made a
non refundable prepayment on the purchase of 500 sea patches from Trident.
Since the prepayment was non refundable in the event that Great Molgul elected
not to take delivery of this order, the Company recorded the prepayment as
revenue in the third quarter. These financial statements have been restated
to reclassify the prepayment as deferred revenue. The Company will recognize
these revenues as the patches are delivered, in proportion to the total sea
patch kits to be purchased under the contract as a whole.
As previously issued As Restated
Balance Sheet:
--------------
Inventories $ 535,099 $ 610,099
Deferred Revenue 0 $ 225,000
Retained Earnings (Deficit) $(4,201,602) $(4,351,602)
Stockholders' Equity $ 904,825 $ 754,825
Statement of Operations: 3 months ended 9/30/00 9 months ended 9/30/00
------------------------ ---------------------- ----------------------
As As
previously As previously As
Issued Restated Issued Restated
------------- ----------- ------------- -----------
Total Sales $ 388,080 $ 163,080 $ 836,425 $ 611,425
Cost of Sales $ 225,996 $ 150,996 $ 635,606 $ 562,606
Gross Profit $ 162,084 $ 12,084 $ 198,819 $ 48,819
Net Income $ (133,304) $ (283,304) $(1,136,889) $(1,286,889)
Earnings(Loss) per share $ (0.00) $ ($0.00) $ (0.02) $ (0.02)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS
The Company's current revenue is derived from sales of product by its four
operating subsidiaries as follows:
1. Innovative Weaponry Incorporated.
Innovative Weaponry Incorporated and its line of P-T Night Sights will always
strive to make a great product even better. We therefore utilize the input and
suggestions from our vast customer base to constantly enhance and upgrade our
sight line. Our talented machinists and gunsmiths can then engineer a product
which meets the approval of the shooting public. We have been known for our
fixed tritium sights for years. In the 3Q00 we have begun proto-typing
adjustable sights for those shooters desiring that particular quality in a
sight system. More and more shooters have asked us to develop a durable
adjustable sight which isn't cost prohibitive. We feel secure that we have the
personnel and manufacturing capability to do just that. Incorporating a
complete line of adjustable sights to complement our fixed sights, in 3Q00 we
have designed and manufactured some proto-type sights using fiber optic
material. Fiber optic utilizes ultra-violet rays and transmits these rays
through a tube giving the shooter a phenomenal daytime sight picture. These
fiber optic strands come in various colors giving the shooter various choices.
Manufacturing both adjustable sights and fiber optic sights would be a logical
and easy transition for Innovative Weaponry as everything is in place for a
transition such as this to occur.
2. Trident Technologies Corporation.
Trident Technologies Corporation "TTC," acquired a new manufacturing facility
(11634 Darryl Drive, Baton Rouge, LA 70815). The building is situated on three
lots and consists of a total of 9000 square feet. This move allows for easier
access to the industrial sector of Baton Rouge, making day-to-day activities
more efficient. The warehouse area will house a machining division as well as
all uninstalled kit components and emergency response equipment. The adjoining
lots will serve as a complete training facility having all of the scenarios
needed to completely train anyone on the use of the Sea Patch, Pro Mag Kits.
After demonstrating the Kits to numerous Industrial Response Personnel, the
need has arisen for the Kits to be made out of different materials. We now
offer the Sea Patch Kit as well as the Pro Mag Kit in an all stainless steel
version, an all carbon steel version as well as the Standard
Aluminum/Stainless Steel version. All components are powder-coated and
electro-polished giving them superior corrosion resistance as well as cosmetic
appeal. The magnets will also come housed in a brass "Sheath" therefore
reducing spark.
The Pro Mag Kits have been accepted as both classroom and field training tools
at three of the largest HAZMAT training facilities in
<PAGE>
the world. They are: The Louisiana Emergency Response Training Center in
Holden, LA, The Emergency Response Training Program at the Transportation
Technology Center in Pueblo, CO, and the Texas Engineering Extension Service,
Emergency Services Training Institute at Texas A&M, in College Station, TX.
This allows every HAZMAT technician that trains at one of these facilities to
train in an actual leak scenario using the Pro Mag Systems.
TTC has increased its sales staff by adding three new salespersons. Ron
Gorsline is working the Virginia Beach, VA area, Ed Drew is working the
Houston, TX area and Jeff Bailey will be in-house coordinating sales efforts
as well as working the industrial sectors. Ron is retired Navy having retired
from the SEAL Teams in October 1997. He is working extensively on sales to the
Navy, Coast Guard, and Virginia Area Shipping Industry. Ed Drew is retired
Coast Guard having spent many years in the Houston area and currently consults
for many of the largest shipping companies in the U.S. Jeff Bailey will be
joining the sales team in 1Q01. He is currently employed by Nalco/Exxon and
has 20 years of sales experience in the petro-chemical industry.
The Response Team successfully stopped an acid leak in the Mississippi River
for one of the country's largest inland barge companies. The call was made and
within minutes of arrival, the leak was stopped and the situation was under
control. The use of the Sea Patch allowed the barge to safely travel up-river
and easily off load with no threat to the environment or workers.
TTC has entered into sales agreements with Kirby Inland Marine, BASF Germany,
Hammond Louisiana Fire Department as well as Rubicon Chemical. They also have
verbal agreements with the Louisiana State Police, Louisiana Department of
Environmental Quality, and numerous others as the new 2001 budget goes into
place.
TTC will be attending three shows in 4Q00. Those shows are the Fire Chief's
Convention in Maui, HI, the Clean Gulf 2000, and the International Workboat
Show. Both of the later shows will be held in New Orleans, LA.
3. Griffon USA, Inc.
Griffon USA, Inc. ("Griffon"), imports a .45 caliber semi-auto pistol from
Continental Weapons (Pty) located in South Africa. Combat Handguns featured
the Griffon pistol in an article appearing in their June issue. The article
was well received and generated interest across the country. Guns & Ammo
published a feature article in their November issue. We have also advertised
in Shot Business, which caters to the firearm business owners.
The Griffon has been well received by numerous gun writers from various
magazines. Several independent testing facilities, gun ranges and police
departments have evaluated the pistol and recommend it highly. We feel this
pistol satisfies a niche market because of its price and features that come as
standard equipment, not found on similarly priced competitive models. Standard
equipment includes P-T tritium night sights, beavertail grip safety, Commander
hammer, aluminum trigger,
<PAGE>
extended slide shop and thumb safety, full length guide rod, beveled magazine
well and Pearce grips.
Griffon USA Inc. will soon be offering both a full size 1911 as well as the
Commander version. We also intend to make a Custom version designed for the
more discriminating shooter. This particular pistol will be targeted for those
individuals demanding a higher degree of fit and finish. These pistols will be
built one at a time to the customer's specifications, which may include carry
pistols, target pistols and IDPA or IPSIC style race guns. We intend to
showcase the Custom Shop pistol at the Shot Show next year in New Orleans.
4. TRADE PARTNERS INTERNATIONAL, INC.
Continuing in 2000, Trade Partners International, Inc. ("Trade Partners")
continued to work with William Baylor, formerly a principal of Vee Tubes USA,
a bicycle inner tube company, based in Olney, IL. Mr. Baylor is a 25-year
veteran in the bike industry.
In August 2000 the company was presented with an opportunity to acquire "Bike
Doctor," a privately owned California company. Bike Doctor was established
five years ago with sales to a major distributor of bicycle parts and
accessories and to regional dealers. The company has signed a letter of intent
to acquire "Bike Doctor" with expected completion by year-end 2000. Mr. Bayler
is in the process of obtaining information, customer data, meeting with
vendors and sales representatives. Bike Doctor has great potential to expand
its sales throughout North America and Internationally.
REVENUES
Our primary source of revenue during the three months ended September 30, 2000
continued to be from the sales of PT Night Sights. The political issues
surrounding handgun registration and ownership may contribute to a continuing
softening of sales. In addition, the U.S. Presidential election outcome may
dramatically affect sales in the future either positively or negatively
depending on which candidate wins.
Trident Technologies, Inc. currently has a contract with Great Mughal Trade
Association (GMTA), for 500 Sea Patches. The contract specifies a
non-refundable payment of $200,000.00, a second installment of $200,000.00
during the manufacturing process and a third installment payable when the
order is complete and ready to ship. The first installment of $200,000.00 was
received in three wire transfers of $75,000.00 each totaling $225,000.00. This
included $25,000.00 to apply against the second installment.
COST OF SALES
Cost of sales for PT Night Sights and Sea Patch consists primarily of material
and labor costs. Cost of goods sold increased during the quarter due to the
increased sales of the Sea Patch.
MARKETING AND SALES EXPENSE
<PAGE>
During the 3Q00, we spent approximately $40,000.00 on print media, sales, and
marketing, to keep our product circulating among gun enthusiasts and those
targeted by the Sea Patch. This amount is slightly less than we spent during
2Q00.
GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expense is comprised primarily of compensation and
related expenditures for administrative and executive personnel, professional
fees associated with legal, consulting, accounting services, and general
corporate overhead.
LIQUIDITY AND CAPITAL RESOURCES.
Our cash position, less known commitments and contingencies, plus outside
financing received through September 30, 2000, plus cash generated from
operations for the balance of fiscal year 2000 should be adequate to fund our
on-going operations and to fund the further development of the Sea Patch and
ProMag, including any patent applications. Although we should have improved
operating results, we will still require substantial additional capital during
fiscal 2000 to go into manufacture and marketing the Sea Patch following
design modification and testing.
Our capital requirements will depend on many factors, including, cash flow
from operations, additional working capital requirements, additional product
development expenses and capital expenditures. To the extent existing
resources are insufficient to fund our operations in the short- or long-term,
we will need to raise additional funds through public or private financings.
We may not be able to raise additional financing on terms favorable to us or
to our stockholders without substantial dilution of their ownership and
rights. If we are unable to raise sufficient funds to satisfy either short-
or long-term there would be substantial doubt as to our ability to continue as
a going concern on either a consolidated basis or through continued operation
of any subsidiary, and we may be required to significantly
<PAGE>
curtail our operations, significantly alter our business strategy, forego
market opportunities, or obtain funds through arrangements with strategic
partners or others that may require us to relinquish material rights to
certain of our technologies or potential markets.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings to which we are a party or which any
of our property is the subject other than ordinary, routine claims incidental
to our business.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Exhibit 27 Financial Data Schedule
REPORTS ON 8-K
During the Company's third quarter ending 9/30/00, the following Current
Report was filed on Form 8K: Item 4, Resignation of Accountant, Alvin L. Dahl
& Associates, and Item 7, Letter from Alvin L. Dahl attached as exhibit. The
date of the event was 08/14/00 and the report was filed with the SEC on
8/21/00. No financials were filed.
During the Company's third quarter ending 9/30/00, the following Current
Report was filed on Form 8K: Item 4.appointment of new accountant, Tuner,
Stone & Company. The date of the event was 09/06/00 and the report was filed
with the SEC on 09/07/00. No financials were filed.
During the Company's third quarter ending 9/30/00, the following Current
Report was filed on Form 8K: Item 2, Acquisition of Assets of Estate of John
Unertl. The date of the event was 09/07/00 and the report was filed with the
SEC on 09/07/00. No financials were filed.
Subsequent to the Company's third quarter ending 9/30/00, the following
Current Report was filed on Form 8K: Item 2, Acquisition of Assets of Bike
Doctor. The date of the event was 09/26/00 and the report was filed with the
SEC on 10/02/00. No financials were filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
21ST Century Technologies, Inc.
_______________________________
Registrant
01/16/01 /s/ Kenneth E. Wilson
_________________________ _________________________
Date Kenneth E. Wilson
