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On May 19, 1992 UN Security Council  brought sanctions to import and export of weapons for Socialist Federative Republic of Yugoslavia. That stops the placement of Zastava's weapons to foreign markets and the factory falls into a new crisis. The export of large quantities of new pistol CZ99 that the factory planned was postponed for some other time.
The factory finished the development and testing and started batch production of 7.62 mm submachine gun M92, based on submachine gun M85.
The factory also developed 10 mm pistol 10AUTO, based on pistol M57.


The factory started the development of small calibre revolver, R22 Kobac.
Using the Mauser mechanism, the factory developed 12.7 mm long range rifle Black Arrow M93. The factory later developed .50 Browning model, as well. Equipping of the Army of Federal Republic of Yugoslavia started in 2001, while the Police used the rifle during the ninetis of the twentieth century. 
The factory finished the development of 30 mm automatic grenade launcher M93. After thorough testing, the Army of FRY included it into the armament in March 2003. Batch production started during the sam year.
The factory developed police sniper repeating rifle M93, for calibres 7.62x51 mm and 7.92 mm.


The factory developed semi-automatic sporting rifle LKP 96 in .308 Win., based on automatic rifle M77.
Pilot batch of revolver R22 Kobac was finished.
The factory started the development of revolver .44 Remington Magnum King Kraguj.
Semi-automatic small-bore rifle in .22LR was developed.


The factory developed semi-automatic sporting rifle in 7.62x39 mm based on military rifle M59, that got mark LKP 66.
The factory developed and produced pilot batch of Pump Action shotgun, gauge 12/70.
Development of pistol Dark Lady, calibre 6.35 mm.
Production of pilot batch of revolver .44 Remington Magnum King Kraguj.


Development of 9 mm submachine gun MASTER FLG based on the design of rifle M70.
Start of batch production of revolver .44 Remington Magnum King Kraguj.


In February, the factory signed a contract with German distributor Kettner, that brought Zastava Arms back to the European market of hunting and sporting guns. In the following five years, Kettner generally represents Zastava Arms in five European countries: Germany, Belgium, Austria, France and Spain. 
In March, Zastava Arms, for the first time after 1992, participated at international fair in Nuremberg with the complete program of sporting, hunting and self-defense weapons, using a part of the booth of the new partner Kettner. 
By the end of the year, the factory exports to Europe products in the value of 3 milion German marks.
The factory developed a new generation of shotguns in gauges 12/70 and 12/76, shotguns over-and-under M75/97, Kipplauf rifles with changeable barrels in 7.26x54R mm and 12/76.


The factory was bombed on April 9 with four guided missiles. Total direct damage was estimated to be approximately 60 million USD.
By the end of the year, all machines that were moved outside the factory during the bombing and saved, were returned to the factory and the production process was renewed. Missing equipment was partially purched, and the process of completion of production lines was continued in the following years.


By the decisions of the Government of Republic of Serbia, the factory comes out from the Zastava Group and changes its name into Zastava namenski proizvodi d.p. (Zastava special purpose products).


The factory started the development of the system for heavy infantry machine gun in calibre 12.7 on a tripod, named COYOTE, and later it got mark M02.
The factory developed and tested pistol CZ 999, based on previous model CZ99.
Automatic rifle M21 in calibre 5.56 mm was presented to public on September 26.


The factory was re-registered to Zastava oruzje (Zastava Arms) on October 22.
Pistol CZ 999A, intended for the Army and Police was produced.
On occasion of celebration of 150 years of the factory, on October 27th, the guest of the factory was Mikhail Timofeyevich Kalashnikov.


In January, the factory started the export of hunting and sporting guns into the US, after a pause of twelve years. The American Senat returned the status of normal trade relations to Serbia. American trade company KBI became the importer. 
In May, the Army of FRY included the automatic rifle M21 into its armament.


On March 10, the Government of Serbia and Montenegro renders Conclusions to start the restructuring of the companies of defense industry of Serbia and Montenegro. They anticipated financial consolidation at the level of December 31, 2004, as well as the need for the factory to reduces the workforce.
At the beginning of July, 914 employees voluntarily left the factory. They decided to accept the leaving money that the factory defined together with the Government of the Republic of Serbia and that were at the highest level in Serbia.
Financial consolidation was done by the conversion of debts into state shares, so that after that, Zastava Arms owned 33% of the capital.
From April 1, there was a new Law on trade with arms and army equipment, which introduces civilian control through the participation of several Government Ministries for issuing of export permits. Same Law defines conditions for obtaining export licences. By the end of the year, over 100 Serbian private export companies obtained export licence.
On April 5, there was a re-registration and transformation of the factory into a joint stock company, with the state of Serbia as the majority shareholder.  Company changes the name to Zastava oruzje AD.
On October 18, teh factory signed a Memorandum of Understanding with American company Remington and first commercial contract for the placement of sporting guns to the USA, Canada and Mexico through Remington's sales network, for the following five years.  The contract became valid on Januar 1, 2006 and it was signed with Remington's importer, company USSG.
In August, the factory entered the list of proven suppliers of military weapons for UN missions.
During the year, production and business areas were reorganized. Production plant for military weapon and Production plant for civilian program were formed, with Common capacities.


First delivery for Remington was done on January 15. By the end of the year, all deadlines were met and the factory exported 24,000 units of hunting and sporting guns.
64 young workers were employed for training in production.
In April, another 110 workers were employed training in production. 
During the year, 11 CNC machines came to the factory - modern machining centres, which further improved the productivity of the factory.
The factory bought the licence for 3-D design from IBM - software CATIA.
On December 26, the factory received a diploma Golden Applause, as the most successful company in Serbia in 2006, for the employment of young workers. 
During the year, the factory started to form the production of stainless steel sporting rifle, using technologies received from the American partner Remington.


The factory developed a model of small-bore rifle Youth, model 05, intended for the youth in the USA and the placement throught company Remington. 
The factory continued to form the production of stainless steel sporting rifles, primarily for export to the USA.
In September and November, the factory signed contracts for equipping of UN peace missions, in the value of approximately 20 million USD.


In February, at the session of the Military Council of the Serbina Army, a decision was rendered to accept the pilot batch of automatic rifle M21 and the batch production was allowed.
The factory received approval for batch production of assault rifle M21 on August 26.