10QSB 1 twenty10qsb.txt FORM 10-QSB FOR PERIOD 09/30/03 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, 2003 [ ] 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) 2700 W. Sahara Blvd., Suite 440, Las Vegas, NV 89102 ________________________________________________________________ (Address of principal executive offices) (702) 248-1588 ___________________________ (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: 270,906,053 as of November 3, 2003. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] TURNER, STONE & COMPANY Certified Public Accountants A Registered Limited Liability Partnership 12700 Park Central Dr., Suite 1400 Dallas, Texas 75251 Telephone (972) 239-1660 Facsimile (972) 239-1665 Member Member Texas Society American Institute of Certified Public Accountants Certified Public Accountants and its Private Companies Practice Section SEC Practice Section INDEPENDENT ACCOUNTANTS' REPORT Board of Directors and Stockholders 21st Century Technologies, Inc. and subsidiaries Las Vegas, Nevada We have reviewed the accompanying consolidated balance sheet of 21st Century Technologies, Inc. and subsidiaries as of September 30, 2003, the related consolidated statements of operations for the nine months and three months then ended and the related consolidated statement of 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. Certified Public Accountants Dallas, Texas November 13, 2003
21ST CENTURY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) SEPT 30, 2003 SEPT 30, 2002 _____________ _____________ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 875,884 $ 83,330 Accounts Receivable, Net 75,169 347,686 Stock Subscription Receivable 673,522 0 Inventories 525,832 537,547 Prepaid Expenses 32,752 0 Advances to Stockholders 77,418 208,593 ____________ ____________ Total Current Assets 2,260,577 1,177,156 Property, Plant, and Equipment, Net 121,706 1,386,781 Other Assets, Net 497,758 744,362 ____________ ____________ Total Assets $ 2,880,041 $ 3,308,299 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable-trade $ 128,269 $ 116,385 Accounts Payable-other 456,604 458,991 ____________ ____________ Total Current Liabilities 584,873 573,376 OTHER LIABILITIES: Notes Payable-Stockholder 505,853 315,017 Notes Payable 236,540 368,433 ____________ ____________ Total Other Liabilities 742,393 683,450 ____________ ____________ TOTAL LIABILITIES: 1,327,266 1,258,826 MINORITY INTEREST-MMC 0 3,158 STOCKHOLDERS' EQUITY: Preferred Stock, issued and Outstanding: Series B--1,200,000 shares and 0 shares; Series C--15,000,000 shares and 0 at $.001 par value at Sept 30, 2003 and 2002 16,200 0 Common Stock, issued 233,220,101 and 1,999,271 and outstanding shares at $.001 par value at Sept 30, 2003 and 2002 233,220 1,999 Paid-in Capital 16,377,018 13,917,368 Retained Earnings (Deficit) (15,073,663) (11,493,608) Treasury Stock 0 (376,444) Stock Subsriptions 0 (3,000) ____________ ____________ Total Stockholders' Equity 1,552,775 2,046,315 ____________ ____________ Total Liabilities and Stockholders' Equity $ 2,880,041 $ 3,308,299 =========== ============ 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, 2003 SEPT 30, 2002 SEPT 30, 2003 SEPT 30, 2002 _____________ _____________ _____________ _____________ NET SALES Innovative Weaponry $ 119,806 $ 218,826 $ 390,779 $ 1,147,087 Club 2826 * 0 * 250,312 Hallmark * 0 * 19,645 Trident 20,321 95,905 76,271 106,155 _________ _________ ___________ ____________ TOTAL NET SALES 140,127 314,731 467,050 1,523,199 Cost of Sales 106,251 116,087 364,084 682,733 _________ _________ ___________ ____________ Gross Profit 33,876 198,644 102,966 840,466 General and administrative expenses 541,700 85,664 1,046,873 378,066 Advertising & Selling 24,325 31,165 70,314 91,804 Compensation Costs 118,391 115,359 303,932 314,761 Depreciation and Amortization 52,110 63,898 163,076 216,025 _________ _________ ___________ ____________ Net Income (Loss) (702,650) (97,442) (1,481,229) (160,190) Other Income 0 0 112,590 0 Gain (Loss) on Sale of Assets 0 128 (210,930) 324,867 Recapitalization Expense 0 (130,995) 0 (130,995) Interest Expense 3,975 0 35,958 0 Estimated Income Taxes 0 0 0 0 _________ _________ ___________ ____________ NET INCOME (LOSS) $(706,625) $(228,309) $(1,615,527) $ 33,682 ========= ========= =========== ============ EARNINGS (LOSS) PER COMMON SHARE: Basic & Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00) * no longer active subsidiaries SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21st CENTURY TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 2003 2002 ___________ ___________ Cash flows from operating activities: Net income (loss) (1,615,527) 33,682 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 90,233 107,616 Amortization 66,444 108,409 Common stock issued for services 341,988 37,500 Gain on disposition of assets (324,867) Changes in operating assets and liabilities Accounts receivable, trade 68,255 38,219 Inventories 35,864 286,665 Prepaid expenses 94,698 25,093 Other assets 7,586 (294,642) Accounts payable, trade (16,643) (708,010) Accrued expenses (323,929) 460,219 ___________ ___________ 364,496 (263,798) ___________ ___________ Cash provided by (used in) operations (1,251,031) (230,116) ___________ ___________ Cash flows from investing activities: Purchase of property and equipment - Proceeds from sale of assets 750,000 123,123 Repayment of stockholder advances 3,375 (4,031) Advances to stockholders (85,377) - ___________ ___________ Cash provided by (used in) investing activities 667,998 119,092 ___________ ___________ Cash flows from financing activities: Proceeds from notes payable 144,921 200,000 Repayment of notes payable (6,566) (256,702) Advances from stockholders 443,886 214,917 Repayment of stockholder advances (231,238) - Issuance of common stock 1,107,914 28,918 ___________ ___________ Cash provided by financing activities 1,458,917 187,133 ___________ ___________ Net increase (decrease) in cash 875,884 76,109 Cash at beginning of period - 7,221 ___________ ___________ Cash at end of period 875,884 83,330 ============ =========== 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 MONTHSENDED SEPTEMBER 30, 2003 AND 2002 (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 and magnetic products and finished goods 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, 2002 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, 2002. NOTE 2: 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. During the year ended December 31, 2002, the Company determined the license was no longer cost beneficial and stopped paying its royalty and annual maintenance fees causing the license to expire. As a result, the Company charged to continuing operations in the year ended December 31, 2002, the unamortized carrying value of the license totalling $49,160. 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 as of September 30, 2003 is 350,000,000 shares, 300,000,000 of which are Common Stock, $0.001 par value per share and 50,000,000 are Preferred Stock, $0.001 par value per share.. As of September 30, 2003, there are 233,220,101 shares of common stock issued and outstanding and 1,200,000 shares of Series B Preferred Stock and 15,000,000 shares of Series C Preferred Stock issued and outstanding. (See Footnote 14: Subsequent Events) 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 2003. There were no common stock equivalents outstanding during 2003. 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 SEPTEMBER 30, 2003 ___________________________________________ INCOME SHARES PER-SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ___________ _____________ _________ Income $(706,625) BASIC EPS Income available to Common Stockholders (706,625) 233,220,101 $0.00 EFFECT OF DILUTIVE SECURITIES NA DILUTED EPS Income available to common stockholders plus assumed conversions $(706,625) 233,220,101 $0.00 ========== =========== ====
NOTE 5: INCOME TAXES At December 31, 2002, the Company has available net operating loss carryforwards of approximately $13,000,000 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 $4,432,891. 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 $4,432,891 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, 2002 and 2001 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: SALE OF ASSETS In June, 2003, the Company completed the sale of the building located in Haltom City, Texas for a net loss of $293,058. NOTE 10: STOCK SUBSCRIPTION RECEIVABLE On September 26, 2003, the Company sold 10,000,000 shares of its common stock for $673,522.00. The proceeds of this transaction was not received by the Company until October 22, 2003. Since these proceeds were received in full prior to the issuance of the current 10QSB, the receivable has been shown as a current asset rather than as a reduction of stockholders' equity. NOTE 11: TREASURY STOCK During the fourth quarter of 2002, the Company determined that the promissory note in the amount of $112,590.43 due form Mike Gatchell, a former officer of Trident, was doubtful as to collectibility. Therefore, an amount equal to the amount of the note was transferred to a reserve for doubtful notes receivable. During this quarter, the debt was settled by cancelling 2,429,157 common shares owned by Mr. Gatchell. This is reflected on the balance sheet as Treasury Stock and by a reduction in the reserve account. The reduction of the reserve account is shown as other income on the statement of operations. NOTE 12: BUSINESS DEVELOPMENT COMPANY In September of 2003, the Company completed the filings to become a Business Development Company ("BDC") in accordance with Securities and Exchange Commission rules and guidelines. The Company will now be regulated pursuant to the provisions of section 54(a) of the Investment Company Act of 1940 and will be subject to the provisions of sections 55 through 65 of the Act. Under the act, 70 % of all new investment falls to the subsidiaries or acquisitions. NOTE 13: INVESTMENT BANKING RELATIONSHIP During the third quarter of 2003, the Company entered into an investment banking relationship with Compass Capital Group for the purpose of raising capital and pursuing an agressive acquisition and intergration strategy. The Company received a commitment from Compass Capital Group to provide $5,000,000.00 in additional capital. Through November 14, 2003, $3,000,000.00 of the commitment had been received by the Company. On November 13, 2003, Compass Capital Group entered into a restricted stock purchase agreement for up to $2,500,000 in additional funding through the purchase of 10,000,000 shares at $0.25 per share. Compass Capital Group will be appointing a board member to the 21st Century Technologies investment committee. NOTE 14: SUBSEQUENT EVENTS An amendment to the Articles of Incorporation was filed to be effective November 11, 2003 which increased authorized capital to 800,000,000 shares consisting of 750,000,000 shares of common stock, $.001 par value and 50,000,000 shares of preferred stock, $.001 par value per share. The Company agreed to acquire Credit Card Financial Corporation ("CCFC"). "CCFC" will engage in the business of buying and selling consumer credit card debt. Closing of the transaction is scheduled for the fourth quarter of 2003. On November 13, 2003, 21st Century Technologies, Inc. and Compass Capital Group of New York City entered into a restricted stock purchase agreement for up to $2.5 million dollars in additional financing. The agreement calls for Compass Capital to purchase 10,000,000 shares of restricted stock at a fixed price of $0.25 per share. Compass Capital will have no registration rights to these shares. Compass Capital will be appointing a board member to the 21st Century Technologies investment committee, to oversee the investment and to bring new acquisitions to the company. 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. The information set forth below should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I - Item I of this Quarterly Report and the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002, which contains the audited consolidated financial statements and notes thereto for the year ended December 31, 2002 and 2001 and the Management's Discussion and Analysis of Financial Condition and Results of Operations for those respective periods. THIS QUARTERLY REPORT OF FORM 10-QSB AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE CONTAIN FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF THE PRIVATE SECURITIES LITAGATION REFORM ACT OF 1995. IN SOME CASES, FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF SUCH WORDS AS "ANTICIPATES", "EXPECTS", "INTENDS", "PLANS", "BELIEVES", "SEEKS", "ESTIMATES", VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS, PARTICULARLY STATEMENTS REFERENCING OUR ANNUAL AND QUARTERLY REVENUE EXPECTATIONS FOR FISCAL 2003. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY'S INDUSTRY, MANAGEMENT BELIEFS AND CERTAIN ASSUMPTIONS MADE BY 21ST CENTURY TECHNOLOGIES, INC. MANAGEMENT. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. UNLESS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. HOWEVER, READERS SHOULD CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION, PARTICULARLY THE ANNUAL REPORTS ON FORM 10-KSB, QUARTERLY REPORTS ON FORM 10-QSB AND ANY CURRENT REPORTS ON FORM 8-K. DESCRIPTION OF SUBSIDIARIES. The Company had 7 wholly owned subsidiaries at the end of the third quarter of 2003. 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. Hallmark Human Resources, Inc. Operations of this subsidiary have been discontinued. 5. Griffon, USA, Inc. Operations of this subsidiary have been discontinued. 6. Trade Partners International Operations of this subsidiary have been discontinued. 7. 2826 Elm Street, Inc. Assets of this corporation were sold in the second quarter of 2002, but 21st Century Technologies, Inc. still retains the coporate shell which had no activity during the quarter. RESULTS OF OPERATIONS INCOME STATEMENT For the three month period ended September 30, 2003, the Company experienced a loss of $706,625 as compared to a loss of $228,309 for the comparable period of 2002. Revenue decreased from $314,731 in the three month period ended September 30, 2002 to $140,127 in the three month period ended September 30, 2003. BALANCE SHEET Total Assets decreased from $3,308,299 to $2,880,041 respectively in the second quarter of 2002 and 2003. The decrease reflects the sale of the Haltom City facility which occured in the second quarter of 2003 and the 2002 year-end write off and reserving of notes and accounts receivables and licenses deemed uncollectible or unuseful. Accounts receivable decreased $272,517 or 78% from 347,686 on September 30, 2002 to $75,169 on September 30, 2003. Inventory decreased $11,715 or 2% from $537,547 to $525,832 during the resppective periods. Total liabilities increased from $1,258,826 on September 30, 2002 to $1,327,266 on September 30, 2003. Accounts payable-trade increased from $116,385 on September 30, 2002 to $128,269 on September 30, 2003. Notes payable increased from $683,450 on September 30, 2002 to $742,393 on September 30, 2003. The decrease in the second quarter of 2003 was offset by additional funds advanced by stockholders to fund ongoing operations. Stockholders equity decreased $493,540 from $2,046,315 on September 30, 2002 to $1,552,775 on September 30, 2003. This is represented by the operating loss for year-end 2002, the current year's net operating loss and the third quarter capital raised which increased the stockholder's equity from $436,015 on June 30, 2003 to $1,5552,775 on September 30, 2003. FACTORS AFFECTING LIQUIDITY AND CAPITAL RESOURCES The Company is dependent upon cash on hand, revenues from the sales of its products, and its ability to raise cash through the sale of its shares. At present, the Company needs cash for monthly operating expenses in excess of its historic sales revenues. The Company will continue to require additional capital funding until sales of current products increase and sales of products under Trident is fully established. The Company intends to finance further growth through both debt and equity offerings, which will further dilute current shareholders' interests. ITEM 3. CONTROLS AND PROCEDURES. (a)EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Within the 90 days prior to the filing of this Quarterly Report on Form 10-QSB (the "Evaluation Date"), the Company carried out an evaluation, under the supervision and with the participation of its managment, including its Chief Executive Officer and its Chief Finacial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as difined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act). Based on that evaluation, the Company's Cheif Executive Officer and its Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that material information required to be disclosed by it in the reports that it files of submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. It should be noted, however, that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succed in achieving its stated goals under all potential future conditions, regardless of how remote. (B) CHANGES IN INTERNAL CONTROLS. The Company evaluates its internal controls for financial reporting purposes on a regular basis. Based on the results of these evaluations, the Company considers what revisions, improvements and/or corrective actions are necessary in order to ensure that its internal controls are effective. The Company has not made any significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their last evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses. 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. Plaintiff recently received a partial summary judgement in the amount of $148,000.00. Final judgement has not been entered and the Company is filing an appeal. ITEM 2: CHANGES IN SECURITES AND USE OF PROCEEDS None ITEM 3: DEFAULTS UPON SENIOR SECURITIES None ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5: OTHER INFORMATION In September of 2003, the Company completed the filings to become a Business Development Company in accordance with Securites and Exchange Commission rules and Guidelines. The Company will now be regulated pursuant to the provisions of section 54(a) of the Investment Company Act of 1940 and will be subject to provisions of section 55 through 65 of the Act. An amendment to the Articles of Incorporation was filed to be effective November 11, 2003 which increased authorized capital to 800,000,000 shares consisting of 750,000,000 of common stockl, $.001 par value and 50,000,000 of preferred stock, $.001 par value. The Company agreed to acquire Credit Card Financial Corporation as a wholly owned subsidiary. Closing of the transaction is expected to occur during the fourth quarter of 2003. ITEM 6(a): EXHIBITS Exhibit # Description 31.1 Section 302 Certification - CEO 31.2 Section 302 Certification - CFO 32.1 Section 906 Certification - CEO 32.2 Section 906 Certification - CFO ITEM 6 (b): REPORTS ON FORM 8-K August 11, 2003 -- 8-K -- Relocation of Office to Las Vegas, NV August 26, 2003 -- S-8 -- Registration of 12,000,000 shares of common stock August 27, 2003 -- N-54A--Notification of Election as a Business Development Co. August 28, 2003 -- 1-E -- Regulation E notification September 3, 2003 -- 8-K -- Resignation of Kevin Romney as a Director and election of James B. Terrell, Shane Traveller and Christian Crespo as Directors. 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 11/14/03 /s/ ARLAND D. DUNN ________ _________________________________ Arland D. Dunn Chief Executive Officer/President Date 11/14/03 /s/ ALVIN L. DAHL ________ _________________________________ Alvin L. Dahl Chief Financial Officer