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 June 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: 172,905,360 as of August 1, 2003.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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 June 30, 2003 and the related
consolidated statements of operations and cash flows for the six months and
three 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
August 19, 2003
21st Century Technologies, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
June 30, 2003 June 30, 2002
_____________ _____________
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,010 $ 15,810
Accounts Receivable, Net 56,083 477,492
Stock Subscription Receivable 126,000 0
Inventories 458,617 857,061
Prepaid Expenses 58,500 0
Advances to Stockholders 194,593 200,883
____________ ____________
Total Current Assets 894,793 1,551,246
Property, Plant, and Equipment, Net 149,968 1,537,538
Other Assets, Net 519,548 658,532
____________ ____________
Total Assets $ 1,564,309 $ 3,747,346
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable-trade $ 206,354 $ 113,163
Accounts Payable-other 510,779 581,188
____________ ____________
Total Current Liabilities 717,133 694,351
OTHER LIABILITIES:
Advances from Stockholders 319,542 262,847
Notes Payable 91,619 540,866
____________ ____________
Total Other Liabilities 411,161 803,713
____________ ____________
TOTAL LIABILITIES: 1,128,294 1,498,064
MINORITY INTEREST-MMC 0 3,158
STOCKHOLDER' EQUITY:
Preferred Stock, issued and
outstanding, 1,200,000 shares and 0 shares at
$.001 par value at June 30, 2003 and 2002 1,200 0
Common Stock, issued and outstanding,
144,792,761 and 1,833,145 at $.001 par value
at June 30, 2003 & 2002 respectively 144,793 1,833
Paid-in Capital 14,657,060 13,889,034
Retained Earnings (Deficit) (14,367,038) (11,265,299)
Treasury Stock 0 (376,444)
Stock Subsriptions 0 (3,000)
____________ ____________
Total Stockholders' Equity 436,015 2,246,124
____________ ____________
Total Liabilities
and Stockholders' Equity $ 1,564,309 $ 3,747,346
============ ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21st Century Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
3 Mos. Ended 3 Mos. Ended 6 mos. ended 6 mos. ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
_____________ _____________ _____________ _____________
Revenues, Net $ 154,645 $ 479,710 $ 326,923 $1,208,468
Cost of Revenues 97,999 276,739 257,833 566,646
Gross Profit 56,645 202,971 69,090 641,822
General and administrative expenses 380,317 137,439 505,173 292,402
Advertising & Selling 40,541 26,046 45,989 60,639
Compensation Costs 103,450 74,788 185,541 199,402
Depreciation and Amortization 55,209 70,004 110,966 152,127
_________ _________ _________ __________
Net Income (Loss) $(511,066) $(105,306) $(778,579) $ (62,748)
Other Income 112,590 0 112,590 0
Gain on Sale of Assets 0 324,739 0 324,739
Loss on Sale of Assets (210,930) 0 (210,930) 0
Interest Expense (31,983) 0 (31,983) 0
Estimated Income Taxes 0 0 0 0
_________ _________ _________ __________
NET INCOME (LOSS) $(641,495) $ 219,433 $(908,902) $ 261,991
========= ========= ========= ==========
EARNINGS (LOSS) PER COMMON SHARE:
Basic & Diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
See Notes to Consolidated Financial Statements
21st CENTURY TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
2003 2002
________ ________
Cash flows from operating activities:
Net income (loss) (908,902) 261,991
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 61,971 79,854
Amortization 39,437 72,273
Common stock issued for services 228,039 37,500
Gain on disposition of assets (324,739)
Changes in operating assets and liabilities
Accounts receivable, trade 87,341 (91,587)
Inventories 43,089 (32,849)
Prepaid expenses 68,950 25,093
Other assets 12,803 (172,706)
Accounts payable, trade 61,442 (711,232)
Accrued expenses (269,754) 582,416
________________________
333,318 (535,977)
________________________
Cash used in operations (575,584) (273,986)
________________________
Cash flows from investing activities:
Purchase of property and equipment -
Proceeds from sale of assets 750,000 -
Repayment of stockholder advances 3,375
Advances to stockholders (85,377) 3,679
________________________
Cash used in investing activities 667,998 3,679
________________________
Cash flows from financing activities:
Proceeds from notes payable - 200,000
Repayment of notes payable (6,566) (84,269)
Advances from stockholders 115,400 162,747
Repayment of stockholder advances (231,238)
Issuance of common stock 31,000 418
________________________
Cash provided by financing activities (91,404) 278,896
________________________
Net increase (decrease) in cash 1,010 8,589
Cash at beginning of period - 7,221
________________________
Cash at end of period 1,010 15,810
========================
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 SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 1: ORGANIZATION AND BUSINESS ACTIVITIES
21st Century Technologies, Inc. was incorporated under the laws of the State of
Delaware on May 15, 1967 as Satcom Corporation. On November 6, 1991, the Company
changed its name to Hughes Pharmaceutical Corporation. Subsequent to 1991, the
Company changed its name from Hughes Pharmaceutical Corporation to First
National Holding Corporation (FNHC) Delaware. The Company became public in 1985
through a merger with International Fluidics Control, Inc. (formerly Sensory
Systems, Inc., Training With The Pros, Inc., and/or M-H Studios, Inc.).
International Fluidics Control, Inc. successfully completed a public offering of
its securities in 1969 under Regulation A of the Securities Act of 1933.
As of December 31, 1985, the Company had liquidated all business operations and
began the search for a suitable merger or acquisition candidate. As a result of
this action, the Board of Directors approved a quasi-reorganization for
accounting purposes, effective January 1, 1986, whereby all accumulated deficits
in shareholders' equity were offset against additional paid-in capital and
common stock balance sheet accounts to the extent of reducing these accounts to
equal the par value of the issued and outstanding shares of common stock.
During the third quarter of 1994, in conjunction with the execution of a letter
of intent to acquire Innovative Weaponry, Inc. (a New Mexico corporation), the
Company consummated a plan of merger between FNHC Nevada and FNHC Delaware
whereby the Nevada Corporation was the survivor (see below) and changed its
corporate name to Innovative Weaponry, Inc. to better reflect its future actions
and pending relationship with the acquisition target. On September 15, 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.
21ST CENTURY TECHNOLOGIES, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
NOTE 2: PREPARATION OF INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements as of
June 30, 2003 and for the six months and three months periods ended June 30,
2003 and 2002, have been prepared based upon Securities and Exchange Commission
("SEC") rules that permit reduced disclosure for interim periods and include, in
the opinion of management, all adjustments (consisting of normal recurring
adjustments and reclassifications) necessary to present fairly the financial
position, results of operations and cash flows as of June 30, 2003 and for all
periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America ("USA") have been condensed or omitted. These
condensed consolidated financial statements should be read in conjunction with
the audited financial statements and notes thereto incorporated by reference in
the Company's Form 10-KSB for the year ended December 31, 2002. The results of
operations for the six month and three month periods ended June 30, 2003 and
2002 are not necessarily indicative of the operating results to be expected for
the full year. Certain amounts in prior periods' financial statements and
related notes have been reclassified to conform to the 2003 presentation.
The condensed consolidated financial statements and accompanying notes are
presented in conformity with accounting principles generally accepted in the USA
("USGAAP") which requires management to make certain estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 3: STOCKHOLDERS' EQUITY
The total number of all classes of authorized capital stock 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 June 30, 2003,
there are 144,792,761 shares of common stock issued and outstanding and
1,200,000 shares of preferred stock issued and outstanding.
NOTE 4: 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.
21ST CENTURY TECHNOLOGIES, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
The Company's magnetic and hydraulic-magnetic technologies have been tested and
approved by the American Bureau of Shipping and are being used by Louisiana
Emergency Response Training facilities in Holden, LA; Texas A&M Emergency
Services Training Institute in College Station, TX; and Department of
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 5: SALE OF ASSETS
In June 2003, the Company completed the sale of the building located in Haltom
City, Texas in which the Company's manufacturing and administrative facilities
were located. The Company realized a loss of $210,930 on the disposal. In
connection with the disposal, the Company entered into a lease agreement with
the buyer which allows the Company to continue using the facilities for nine
months through March 2004 for the sum of $1. A fair rental value of $6,000 per
month has been assigned to the lease agreement with the unexpired portion of the
rent reflected in the accompanying consolidated financial statements as a
prepaid expense.
NOTE 6: STOCK SUBSCRIPTION RECEIVABLE
On June 26, 2003, the Company sold 4,000,000 shares of its common stock for
$126,000.00. Because the proceeds from this transaction were received and
deposited by the Company on July 22, 2003, prior to the filing of Form 10-QSB
for this quarterly period, the stock subscription receivable is reflected in the
accompanying consolidated financial statements as a current asset rather than as
a reduction of stockholders' equity.
NOTE 7: 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. Accordingly, the full amount of the
note was transferred to a reserve for doubtful notes receivable. During the
three months ended June 30, 2003, the debt was settled by the return of and
canceling of 2,429,157 common stock shares owned by Mr. Gatchell. The reduction
of the reserve account is shown as other income on the statement of operations.
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 first 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 June 30, 2003, the Company experienced a loss
of $641,495 as compared to a gain of $219,433 for the comparable period of 2002.
The gain for the three months ended June 30, 2002 included revenue from the sale
of 2826 Elm St., Inc. of $324,729. The loss from normal operations in the three
months ended June 30, 2003 was compounded by the loss realized on the sale of
the Haltom City facility of $210,930 (see Footnote 5: Sale of Assets). Revenue
decreased from $479,710 in the three month period ended June 30, 2002 to
$154,645 in the three month period ended June 30, 2003.
BALANCE SHEET
Total assets decreased from $3,747,346 to $1,564,309 respectively in the second
quarter of 2002 and 2003. This reflects management's efforts to collect
receiveables and reduce inventory stocks. The decrease also reflects the sale of
the Haltom City facility which occurred in the 2nd quarter of 2003 and the 2002
year-end write off and reserving of notes and accounts receiveables and licenses
deemed uncollectible or unuseful. Accounts receiveable decreased $421,409 or 88%
from $477,492 on June 30, 2002 to $56,083 on June 30, 2003. Inventory decreased
$398,444 or 46% from $857,061 to $458,617 during the same respective periods.
Total Liabilities were reduced from $1,498,064 on June 30, 2002 to $1,128,294 on
June 30 2003. Notes payable decreased $449,247 or 83% from $540,866 to $91,619
for the respective periods primarily due to payoff from proceeds of the sale of
the Haltom City facility.
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.
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 April 21, 2003 a Form 8-K was submitted to the Securities and Exchange
Commission reporting the removal of Fred Rausch and Dave Gregor as Directors of
the corporation.
On June 18, 2003 a Form 8-K was submitted to the Securities and Exchange
Commission to clarify and accounting matter.
On June 25, 2003 a Form S-8 was submitted to the Securities and Exchange
Commission registering 5,000,000 shares of stock to be issued to a consultant.
ITEM 6(A). EXHIBITS
Exhibit # Description
99.1 Certification-CEO
99.2 Certification-CFO
ITEM 6(B) REPORTS ON FORM 8-k.
Subsequent to the quarter end on August 7, 2003 a Form 8-K was submitted to the
Securities and Exchange Commission reporting the change of address for the
executive offices.
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 8/19/03 /s/ ARLAND D. DUNN
_______ _________________________________
Arland D. Dunn
Chief Executive Officer/President
Date 8/19/03 /s/ ALVIN L. DAHL
_______ _________________________________
Alvin L. Dahl
Chief Financial Officer