Guns and ammunition found hidden in the boot of a car were allegedly to be used by dissident republicans in Belfast, the High Court has heard.
Police believe the two weapons, discovered in the spare wheel of a BMW 5 Series stopped in Co Down, had been transported from the Republic.
Details emerged as bail was refused to the vehicle driver arrested on the A1 near Hillsborough on September 10.
Paul McDaid faces charges of having the handguns in suspicious circumstances and with intent to endanger lives.
The 52-year-old, of Sheridan Street, Belfast, denies knowing anything about the weapons. He claims to be a drug addict who agreed to drive the car to a location to pay off a debt to dealers.
The guns were found along with two magazines containing seven and six rounds of 9mm ammunition, and another loose round.
Following his arrest McDaid produced a pre-prepared statement in which he denied being a member of Oglaigh na hEireann, the court heard.
But a prosecution barrister said: “Police believe the handguns and ammunition were in the possession of the applicant for use by a dissident republican group in Belfast.”
The barrister added that detectives are still trying to identify others involved in handling the guns or sending the message.
Despite the offer of a £10,000 cash surety, Mr Justice Horner denied bail due to the perceived risk of not turning up for trial.