-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PGc1+KMGL6r4jAtJG6YW8tYF1TIvp/p6slNVeH2Rb+q75xqNVRJyL6+Ieq7d2qV8 CnV6RFl9BX28fTB3hBFuVQ== 0001092306-02-000389.txt : 20021119 0001092306-02-000389.hdr.sgml : 20021119 20021119155110 ACCESSION NUMBER: 0001092306-02-000389 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 21ST CENTURY TECHNOLOGIES INC CENTRAL INDEX KEY: 0001090870 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 481110566 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29209 FILM NUMBER: 02833107 BUSINESS ADDRESS: STREET 1: 5050 EAST BELKNAP CITY: HALTOM CITY STATE: TX ZIP: 76117 BUSINESS PHONE: 8172840099 MAIL ADDRESS: STREET 1: 5050 EAST BELKNAP CITY: HALTOM CITY STATE: TX ZIP: 76117 10QSB 1 form10qsb.txt FORM 10-QSB PERIOD 09/30/02 ________________________________________________________________________________ SEC POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION 2334(6- CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM 00) DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. ________________________________________________________________________________ __________________________ OMB APPROVAL OMB Number: 3235-0416 Expires: April 30, 2003 Estimated average burden hours per response: 32.00 __________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _________________ to _________________ Commission file number: 000-29209 21ST CENTURY TECHNOLOGIES, INC. _________________________________________________________________ (Exact name of small business issuer as specified in its charter) Nevada 48-1110566 ____________________________________ _________________________________ (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 5050 East Belknap, Haltom City, Texas, 76117 ____________________________________________ (Address of principal executive offices) (817) 838-8011 ___________________________ (Issuer's telephone number) ________________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 199,927,145 as of October 7, 2002. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] 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, MMC gun sights and the SeaPatch/ProMag), (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. INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholders 21st Century Technologies, Inc. and subsidiaries Haltom City, Texas We have reviewed the accompanying consolidated balance sheet of 21st Century Technologies, Inc. and subsidiaries as of September 30, 2002 and the related consolidated statements of operations and cash flows for the nine months then ended. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. /s/ TURNER, STONE & Company, L.L.P. ____________________________________ Turner, Stone & Company, L.L.P. Certified Public Accountants Dallas, Texas November 15, 2002
21ST CENTURY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) SEPT 30, 2002 SEPT 30, 2001 _____________ _____________ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 83,330 $ 99,892 Accounts Receivable, Net 347,686 692,621 Inventories 537,547 1,001,514 Notes Receivable 208,593 494,854 _____________ _____________ Total Current Assets 1,177,156 2,288,881 Property, Plant, and Equipment, Net 1,386,781 2,081,214 Other Assets, Net 744,362 891,336 _____________ _____________ Total Assets $3,308,299 $ 5,261,431 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable-trade $ 116,385 $ 875,516 Accounts Payable-other 458,991 360,595 Deferred Income 0 225,000 _____________ _____________ Total Current Liabilities 575,376 1,461,111 OTHER LIABILITIES: Working Capital Advances 0 1,562,314 Notes Payable-Stockholder 315,017 0 Notes Payable 368,433 534,648 _____________ _____________ Total Other Liabilities 683,450 2,096,962 _____________ _____________ TOTAL LIABILITIES: 1,258,826 3,558,073 MINORITY INTEREST-MMC 3,158 0 STOCKHOLDERS' EQUITY: Common Stock, issued 199,927,145 and 115,169,300 and outstanding shares at $.001 par value at Sept 30, 2002 and 2001 199,927 115,169 Paid-in Capital 13,719,440 9,072,821 Common Stock Earned, but not Issued 0 360,000 Retained Earnings (Deficit) (11,493,608) (7,678,254) Treasury Stock (376,444) (163,378) Stock Subsriptions (3,000) (3,000) _____________ _____________ Total Stockholders' Equity 2,046,315 1,703,358 _____________ _____________ Total Liabilities and Stockholders' Equity $ 3,308,299 $ 5,261,431 ============= ============= SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21ST CENTURY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 3 MOS. ENDED 3 MOS. ENDED 9 MOS. ENDED 9 MOS. ENDED SEPT 30, 2002 SEPT 30, 2001 SEPT 30, 2002 SEPT 30, 2001 _____________ _____________ _____________ _____________ NET SALES Innovative Weaponry $ 218,826 $ 455,464 $1,147,087 $ 1,023,679 Club 2826 0 164,081 250,312 208,562 Hallmark 0 125,130 19,645 170,091 Trident 95,905 22,065 106,155 48,567 _________ _________ __________ ___________ TOTAL NET SALES 314,731 766,740 1,523,199 1,450,899 Cost of Sales 116,087 215,187 682,733 609,486 _________ _________ __________ ___________ Gross Profit 198,644 551,553 840,466 841,413 General and administrative expenses 85,664 241,375 378,066 869,038 Advertising & Selling 31,165 84,001 91,804 316,247 Compensation Costs 115,359 414,439 314,761 1,151,338 Depreciation and Amortization 63,898 273,485 216,025 422,326 _________ _________ __________ ___________ Net Income (Loss) (97,442) (461,747) $ (160,190) $(1,917,536) Gain (Loss) on Sale of Assets 128 0 324,867 0 Recapitalization Expense (130,995) 0 (130,995) 0 Estimated Income Taxes 0 0 0 0 _________ _________ __________ __________ NET INCOME (LOSS) $(228,309) $(461,747) $ 33,682 $(1,917,536) ========= ========= ========== =========== EARNINGS (LOSS) PER COMMON SHARE: Basic & Diluted $ (0.00) $ (0.00) $(0.00) $(0.04) SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21st CENTURY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 2002 2001 _________ ___________ Cash flows from operating activities: Net income (loss) 33,682 (1,917,536) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 107,616 375,221 Amortization 108,409 47,105 Allowance for doubtful accounts - - Common stock issued for services 37,500 557,460 Gain on disposition of net assets (324,867) - Changes in operating assets and liabilities Accounts receivable, trade 38,219 82,600 Inventories 286,665 (555,885) Prepaid expenses 25,093 - Other assets (294,642) 131,117 Accounts payable, trade (708,010) 609,974 Accrued expenses 460,219 310,595 _________ ___________ (263,798) 1,558,187 _________ ___________ Cash used in operations (230,116) (359,349) _________ ___________ Cash flows from investing activities: Purchase of property and equipment (1,619,121) Sale of property and equipment 123,123 Purchase of other assets (315,279) Repayment of stockholder advances (4,031) _________ ___________ Cash provided by (used in) investing activities 119,092 (1,934,400) _________ ___________ Cash flows from financing activities: Advances from officer - (44,647) Treasury stock - (220,000) Proceeds from notes payable 200,000 463,464 Repayment of notes payable (256,702) (290,591) Advances from stockholders 214,917 1,391,234 Issuance of common stock 28,918 1,005,837 _________ ___________ Cash provided by financing activities 187,133 2,305,297 _________ ___________ Net increase (decrease) in cash 76,109 11,548 Cash at beginning of period 7,221 88,344 _________ ___________ Cash at end of period 83,330 99,892 _________ ___________ The accompanying notes are an integral part of the consolidated financial statements
21ST CENTURY TECHNOLOGIES, INC. AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (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 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. 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. 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, 2001. NOTE 2: OTHER ASSETS TRADEMARK: The trademark "PT Night Sights" has been capitalized at cost and is being amortized over 17 years. BANKRUPTCY EXCESS RE-ORGANIZATION COST: Innovative Weaponry, Inc. (IWI) emerged from a bankruptcy filing under Chapter 11 of the US Bankruptcy Code, effective March 1, 1995. As a result of the Plan of Reorganization, IWI became a wholly owned subsidiary of 21st Century Technologies, Inc. and all prior IWI shareholders retained less that a 50% interest in the combined reorganized entities. In conjunction with IWI's emergence from protection under Chapter 11, IWI adopted "fresh-start" accounting as a result of its acquisition by 21st Century. "Fresh start" accounting allows for the restatement of all assets and liabilities being set to the fair market value of each respective category and the restatement of retained earnings to "0". The resulting amount was debited to the account "Reorganization value in excess of amounts allocable to identifiable assets". This balance is being amortized over ten (10) years using the straight-line method. The amortization period began on March 1, 1995, concurrent with the effective date of IWI's Plan of Reorganization. The adjustment necessary to reflect the "fresh-start" accounting, as prescribed by Statement of Position 90-7 "FINANCIAL REPORTING BY ENTITIES IN REORGANIZATION UNDER THE BANKRUPTCY CODE" issued by the American Institute of Certified Public Accountants reflected a Reorganization value in excess of amounts allocable to identifiable assets. NOTE 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 September 30, 2002, there are 199,927,145 shares of common stock issued and outstanding. 19,000,000 shares of common stock was earned under a previous consulting agreement with the prior 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 of 2000. Mr. Wilson's shares were 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. Mr. Wilson resigned May 1, 2002 and transferred his rights to the stock to ES, Inc. in settlement of a personal obligation. 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 years 2002 and 2001. There were no common stock equivalents outstanding during the years 2002 and 2001. 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, 2002 _________________________________________ INCOME SHARES PER-SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ___________ _____________ _________ Income $(228,309) BASIC EPS Income available to Common Stockholders (228,309) 199,927,145 $0.00 EFFECT OF DILUTIVE SECURITIES NA DILUTED EPS Income available to common stockholders plus assumed conversions $(228,309) 199,927,145 $0.00 ========= =========== ===== NOTE 5: INCOME TAXES At December 31, 2001, the Company has available net operating loss carryforwards of approximately $11,000,000 for federal income tax purposes that begin to expire in 2008. The federal carryforwards resulted from losses generated in prior years and have created a deferred tax asset of $3,781,915. 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 $3,781,915 has been recognized to offset the deferred tax assets. There are no deferred tax liabilities. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. NOTE 6: RISKS AND UNCERTAINTIES The Company operates in highly specialized industries. There are only four companies worldwide who manufacture and sell night sights using tritium. The Company ranks number three out of four. The gun sight industry is highly dependent on major firearms manufacturers as well as consumer and governmental demand for weapons. World conditions and economies can affect the future sales of this product. The Company's magnetic and hydraulic-magnetic technologies 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. 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, 2001 and 2000 represent fair value. NOTE 8: COMPREHENSIVE INCOME SFAS No. 130, REPORTING COMPREHENSIVE INCOME establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. It requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS No. 130 requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid in capital in the equity section of a statement of financial position. The Company's comprehensive income does not differ from its reported net income. NOTE 9: CHANGE OF OFFICERS AND DIRECTORS On May 1, 2002, Kenneth W. Wilson submitted his resignation as President and Chairman of the Board of the Company. Arland D. Dunn was elected to serve as President and Chairman of the Board. Additionally, the Board of Directors appointed Duane Cocheneur to serve an unexpired term on the Board of Directors. Larry Bach was appointed Secretary-Treasurer. Following surgery and effective July 25, 2002, James Mydlach resigned as a Director and Vice-Chairman of the Board. Richard Grob resigned as a Director effective July 25, 2002 to pursue other business opportunities. Dwane Cocheneur submitted his resignation as a Director effective August 2002. Larry Bach and Kevin Romney were appointed to the Board of Directors to serve unexpired terms. NOTE 10: SALE OF ASSETS On June 26, 2002, the Company completed the sale of the assets of 2826 Elm St., Inc. to ES, Inc., a Nevada Corporation. The corporate shell was retained as an asset of the Company. The assets of 2826 Elm, Inc. were sold for $360,000.00 plus assumption of notes payable and all current liabilities. ES, Inc. tendered the common stock rights it had received from Kenneth Wilson to 2826 Elm St., Inc. This is now represented in the equity section as Treasury Stock. During April of 2002, a preliminary contract was signed which will allow the sale of Unertl Optical, Inc. Details between the Company and the purchaser are being finalized and it is believed that a finalized document will be executed during the fourth quarter. On July 23, 2002, an auction was held on the Company's premises. Certain unused and surplus machinery and equipment and tire sealant inventory was sold. The auction raised approximately $75,000 of additional working capital. NOTE 11: EXCHANGE AGREEMENT On August 1, 2002, the Company offered to issue and exchange a maximum of 70,000,000 Series A Preferred Warrants for a maximum of 70,000,000 shares of the Company's outstanding common stock. The offer was restricted to "accredited investors", as such term is defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended. The issue is fully subscribed and the exchange offer is being closed effective November 16, 2002. The offer was mailed to all stockholders of record, their stockbroker (if held in "street name"), or the DTC holder. It appears that there may have been stock sold in excess of the Company's authorized shares that is not represented by stock certificates; a practice known as "naked shorting", in which shares are represented in the shareholder's brokerage account but are not reflected in the Company's stock records. NOTE 12: SUBSEQUENT EVENTS A Form 8-K issued subsequent to the end of the quarter on October 23, 2002 announced that the Fredericks Partners exercised its option to convert $200,000 in debt to stock. The Company has determined that a recapitalization is necessary to continue as a going concern. Accordingly, the Board of Directors has voted to merge 21st Century Technologies-Nevada into our yet to be formed 21st Century Technologies-Delaware. The merger will take place in the fourth quarter of 2002. All stockholders of record as of the merger date will exchange shares of 21st Century Technologies-Nevada for shares of 21st Century Technologies-Delaware. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. DESCRIPTION OF SUBSIDIARIES. The Company had 7 wholly owned subsidiaries at the end of the third quarter of 2002. The three subsidiaries with active operations include: 1. Innovative Weaponry Inc. Innovative Weaponry is a manufacturer of tritium products available in night sights and other "night seeing" sights in the weapons industry. Law enforcement, military and private gun owners currently purchase tritium-based night sights with additional applications currently in the process of research and development. Innovative Weaponry products feature tritium sights with the front sight designed to be brighter than the rear sight which enhances low light sighting. Innovative Weaponry products have been sold to original equipment manufacturers, certain members of the United States military establishment (including two Navy Seal Teams, the Customs Service and the DEA) and numerous retail outlets for purchase by the general public. In addition, numerous law enforcement agencies at the state and local level on a nationwide basis are customers for Innovative Weaponry's night sights, including major police departments, such as the Los Angeles Police Department. Innovative Weaponry night sight products are sold under the name "PT Night Sights"(TM), a federally-trademark protected name. Available in a variety of colors, the product consists basically of a 3-dot night sight using the radioactive isotope tritium encapsulated in phosphor-lined glass. Beta particles emitted by the tritium excites the phosphors, causing a substantial glow, providing sight pictures in low light and no light situations. Innovative Weaponry has also designed and manufactured some prototype sights using fiber optic material, utilizing ultra-violet rays and transmits them through the glass fibers, giving the shooter a phenomenal daytime sight picture. 2. Trident Technologies Inc. Trident Technologies Inc. manufactures and distributes SeaPatch and ProMag magnetic-powered leak and rupture sealing devices. Designed for application on ferrous hulls of ships, railroad tank cars, storage tanks, pipelines or other containers. Powered by high technology composite permanent magnets, SeaPatch and ProMag operate in similar ways, with some structural differences reflecting either marine or dry land applications. Using a unique "cam-on/cam-off" device, these powerful yet easy to apply leak sealing systems have a broad range of applications in both disaster situations and environmental hazmat protection. 3. Miniature Machine Corporation, Inc. Acquired in March, 2001, Miniature Machine Corporation, Inc. manufactures and distributes high-quality adjustable open gun sights. Manufactured with watch-like precision, Miniature Machine sights can be enhanced by application of tritium-powered sighting materials, such as employed in PT Night Sights (above described). These upscale sights are marketed mainly to serious hobbyists, but interest is being displayed by law enforcement agencies. 4. Unertl Optical Company, Inc. In fiscal year 2000, the Company purchased the assets of the former John Unertl Optical Company, Inc. of Mars, Pennsylvania, a long time manufacturer of high quality rifle scopes and optical equipment and formed Unertl Optical Company, Inc. ("Unertl") as a wholly owned subsidiary to carry on the business. During the fourth quarter of 2000, 21st Century Technologies acquired the assets of the former John Unertl Optical Company. During the first quarter of 2001, the machinery, equipment and work in process inventory was relocated to our Ft. Worth, Texas manufacturing facility. As of June 30, 2002, the Company has entered into a sales agreement for Unertl. Completion of the sale is expected in the fourth quarter. 5. Hallmark Human Resources, Inc. Operations of this subsidiary have been discontinued. 6. Griffon, USA, Inc. Operations of this subsidiary have been discontinued. 7. Trade Partners International Operations of this subsidiary have been discontinued. RESULTS OF OPERATIONS INCOME STATEMENT 21ST Century Technologies, Inc. incurred an operating loss of $97,442 for the 3 months ending September 30, 2002. Recapitalization expense of $130,995 increased the loss for the period to $228,309. For the nine months ended September 30, 2002, the company has net income of $33,682 compared to a net loss of $1,917,536 loss for the same period during the previous year. General and administrative expenses of $378,066 have been sharply reduced for the 9 months ending September 30, 2002 compared with $869,038 for the 9 months ending September 30, 2001. Due to the reduction of mid level and upper management, compensation costs are likewise reduced from $1,151,338 in 2001 to $314,761 in 2002. Management continues to concentrate on reducing costs particularly overhead. General and administrative costs were reduced to 24% of sales during the nine months ended September 30, 2002 compared to 59% of sales during the same period in the previous year. Compensation costs during the same period were reduced to 20% of sales in 2002 compared with 79% of sales in 2001. BALANCE SHEET 21st Century Technologies, Inc. continues to streamline operations. Receivables have decreased from $692,621 in 2001 to $347,686 in 2002 by increasing collection efforts, which has reduced days outstanding from 174 days in 2001 to 83 days in 2002. Inventory has decreased from $1,001,514 in 2001 to $537,547 in 2002. Management efforts to reduce inventory levels have resulted in a decrease in the turn of inventory from 608 days in 2001 to 287 days in 2002. Improved management of receivables and inventory levels along with the reduction in payables has resulted in an improvement in our current ratio from 1.56:1 to 2.04:1 from last year to the current year. FACTORS AFFECTING LIQUIDITY AND CAPITAL RESOURCES The Company is dependent upon cash on hand and revenues from the sales of its products. At present the Company needs cash for monthly operating expenses in excess of its historic sales revenues, and will continue to need additional capital funding until sales of products increases. The Company will finance further growth through both public and private financing, including equity resources in the event of recapitalization. Shareholders' interests may be diluted. If the Company is unable to raise sufficient funds to satisfy either short term or long term needs, there would be substantial doubt as to whether the Company could continue as a going concern on either a consolidated basis or through continued operation of any subsidiary. It might be required to significantly curtail its operations, significantly alter its business strategy or forego market opportunities PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. 1) Patricia Wilson Litigation-Suit by former officer, director and shareholder against the company and individual directors for breach of employment contract, wrongful termination, negligent investigation, breach of fiduciary duty and defamation. This suit is pending in the 153rd District court of Tarrant County, Texas in Cause No. 153-189311-01. It appears at this time that Plaintiff cannot legally prevail on many of her claims because they do not belong to her individually. As to the breach of contract claim, we believe that Plaintiff will be unable to establish a legally enforceable contract. 2) Bike Doctor - In the year 2000 21st Century agreed to purchase the assets of Bike Doctor, a manufacturer of bicycle tire sealant, for $150,000. 21st Century made an initial payment of $5000.00 but failed to pay the balance and has now indicated that it does not intend to go through with the deal. Suit was subsequently filed in March 2002 in U.S. District Court for the State of California, Central Division, Cause No. CV-0201927 for the balance of the contract amount ($145,000.00) and punitive damages. This suit has recently been filed and is in the discovery phase. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS UNTO A VOTE OF SECURITY MATTERS None ITEM 5. OTHER INFORMATION On August 6, 2002, the Company filed a Form S-8 with the Securities and Exchange Commission. This filing authorizes the Company to issue stock to various employees, officers, directors and consultants. ITEM 6(A). EXHIBITS Exhibit # Description _________ ___________ 99.1 Certification - CEO 99.2 Certification - CFO ITEM 6(B). REPORTS ON FORM 8-K. Several Form 8-Ks were issued and submitted to the Securities and Exchange Commission during or subsequent to the quarter. August 7, 2002 a Form 8-K was submitted reporting the resignation of Jim Mydlach as a Director and Vice-Chairman of the board and Richard Grob's resignation as a Director of the board. A Form 8-K submitted on August 9, 2002 announced the resignation of Duane Cocheneur as a Director of the board. August 15, 2002, a Form 8-K was submitted to the Securities and Exchange Commission regarding the change in management that occurred on May 1, 2002. A Form 8-K issued on August 20, 2002 announced that Larry Bach and Kevin Romney were named as Directors to the board. Spetember 16, 2002 a Form 8-K announced the resignation of Scott Sheppard as the COO of 21st Century Technologies, Inc. A Form 8-K issued subsequent to the end of the quarter on October 23, 2002 announced that the Fredericks Partners exercised its option to convert $200,000 in debt to stock. No financial statements were presented with these filings. 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, thereunto duly authorized. Additionally, the undersigned hereby certify the correctness and completeness, in all material respects, of the information contained in this quarterly report and their responsibility for the Company's internal controls and the periodic evaluation of such internal controls. 21ST CENTURY TECHNOLOGIES, INC. _______________________________ (Registrant) Date 11/15/02 /s/ ARLAND D. DUNN ________ _______________________________ Arland D. Dunn Chief Executive Officer/President Date 11/15/02 /s/ ALVIN L. DAHL ________ _______________________________ Alvin L. Dahl Chief Financial Officer 21ST CENTURY TECHNOLOGIES, INC. I, ARLAND D. DUNN, certify that: ______________ 1. I have reviewed this quarterly report on Form 10-QSB of 21st Century Technologies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a.) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b.) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "EVALUATION DATE"); and _______________ c.) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a.) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. DATED: NOVEMBER 19, 2002 21ST CENTURY TECHNOLOGIES, INC. _________________________ __________________________________________ (Registrant) /s/ ARLAND D. DUNN __________________________________________ Arland D. Dunn Chief Executive Officer/President 21ST CENTURY TECHNOLOGIES, INC. I, ALVIN L. DAHL, certify that: _____________ 1. I have reviewed this quarterly report on Form 10-QSB of 21st Century Technologies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a.) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b.) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "EVALUATION DATE"); and _______________ c.) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a.) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. DATED: NOVEMBER 19, 2002 21ST CENTURY TECHNOLOGIES, INC. _________________________ __________________________________________ (Registrant) /s/ ALVIN L. DAHL __________________________________________ Alvin L. Dahl Chief Financial Officer EX-99 3 exhibit99-1.txt EXHIBIT 99.1 - CERTIFICATION - CEO EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of 21st Century Technologies, Inc. on Form 10-QSB for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date 11/19/02 /s/ ARLAND D. DUNN _______ ______________________________________ Arland D. Dunn, Chief Executive Officer/President EX-99 4 exhibit99-2.txt EXHIBIT 99.2 - CERTIFICATION - CFO EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of 21st Century Technologies, Inc. on Form 10-QSB for the period ended September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date 11/19/02 /s/ ALVIN L. DAHL _______ ______________________________________ Alvin L. Dahl, Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----