SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the quarterly period ended December 31, 1996 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from to
Commission file number 2-80891-NY
MODERN TECHNOLOGY CORP.
(Exact Name of Registrant as Specified in its Charter)
Nevada 11-2620387
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
240 Clarkson Avenue, Brooklyn, NY 11226
(Address of Principal Executive Office) (Zip Code)
(718)469-3132
(Registrant's Telephone Number, Including Area Code)
461 Beach 124 Street, Belle Harbor, NY 11694
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding twelve
months or for such shorter period that the Registrant was required
to file such reports, and (2) has been subject to such filing
requirements for the past ninety days.
Yes / X / No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date. 20,150,000
10Q-1
MODERN TECHNOLOGY CORP.
FINANCIAL STATEMENTS
DECEMBER 31, 1996
I N D E X
Page
INDEPENDENT ACCOUNTANTS' REVIEW REPORT 1
CONSOLIDATED BALANCE SHEETS 2
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 3
CONSOLIDATED STATEMENTS OF OPERATIONS 4-5
CONSOLIDATED STATEMENTS OF CASH FLOWS 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7-10
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
MODERN TECHNOLOGY CORP.
Brooklyn, NY
We have reviewed the consolidated balance sheets of MODERN
TECHNOLOGY CORP. as at December 31, 1996, and the related
consolidated statements of operations, stockholders' equity and
cash flows for the six month periods ended December 31, 1996 and
1995, in accordance with standards established by the American
Institute of Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an examination 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 consolidated financial statements for
them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of June 30, 1996, and the
related statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our
report dated September 12, 1996, we expressed an unqualified
opinion on those financial statements. In our opinion, the
information set forth in the accompanying balance sheet as of June
30, 1996 is fairly stated in all material respects in relation to
the balance sheet from which it has been derived.
GREENBERG & COMPANY, LLC
Springfield, New Jersey
January 14, 1997
Page 1 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED BALANCE SHEETS
Dec. 31, 1996
(Unaudited) June 30, 1996
A S S E T S
CURRENT ASSETS
Cash and Cash Equivalents $617,185 $616,268
Total Current Assets 617,185 616,268
EQUIPMENT - At Cost 9,939 9,939
Less: Accumulated Depreciation 9,939 9,939
-0- -0-
OTHER ASSETS
Investments, At Cost 74,770 74,770
Investments, At Equity 16,005 16,005
Loan Receivable - Affiliate 11,400 11,400
Other Assets 300 -0-
Total Other Assets 102,475 102,175
TOTAL ASSETS $719,660 $718,443
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES
Accrued Expenses and Taxes $ 1,842 $ 2,349
Total Current Liabilities 1,842 2,349
STOCKHOLDERS' EQUITY
Common Stock Par Value $.0001
Authorized: 150,000,000
Shares Issued and Outstanding:
20,150,000 Shares 2,015 2,015
Paid-In Capital in Excess of Par 495,161 495,161
Retained Earnings 220,642 218,918
Total Stockholders' Equity 717,818 716,094
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $719,660 $718,443
Subject to the comments contained in the Accountants' Review Report.
Page 2 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD JULY 1, 1994 TO DECEMBER 31, 1996
Common Stock Total
Par Stock-
# of Value Paid-In Retained holders'
Shares $.0001 Capital Earnings Equity
BALANCES AT
JULY 1, 1994 20,150,000 $2,015 $495,161 $237,013 $734,189
Net (Loss) for
the Year Ended
June 30, 1995 (14,375) (14,375)
BALANCES AT
JUNE 30, 1995 20,150,000 2,015 495,161 222,638 719,814
Net (Loss) for
the Year Ended
June 30, 1996 (3,720) (3,720)
BALANCES AT
JUNE 30, 1996
(Audited) 20,150,000 2,015 495,161 218,918 716,094
Net Income for the
Six Months Ended
December 31, 1996 1,724 1,724
BALANCES AT
DECEMBER 31, 1996
(Unaudited) 20,150,000 $ 2,015 $495,161 $220,642 $717,818
Subject to the comments contained in the Accountants' Review Report.
Page 3 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For The Three
Months Ended
December 31,
1996 1995
REVENUES
Interest Income $ 6,888 $ 8,350
Management Income 2,400 2,400
9,288 10,750
EXPENSES
Officers Salaries 1,800 1,800
General and Administrative Expenses 6,167 10,536
7,967 12,336
INCOME (LOSS) BEFORE TAXES 1,321 (1,586)
Income Tax Expense (Note 5) 274 -0-
NET INCOME (LOSS) $ 1,047 $(1,586)
NET INCOME (LOSS) PER SHARE NIL NIL
NUMBER OF WEIGHTED AVERAGE SHARES
OUTSTANDING 20,150,000 20,150,000
Subject to the comments contained in the Accountants' Review Report.
Page 4 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For The Six
Months Ended
December 31,
1996 1995
REVENUES
Interest Income $14,553 $16,428
Management Income 4,800 4,800
19,353 21,228
EXPENSES
Officers Salaries 3,600 3,600
General and Administrative Expenses 13,591 15,643
17,191 19,243
INCOME (LOSS) BEFORE TAXES 2,162 1,985
Income Tax Expense (Benefit) (Note 5) 438 (1,008)
NET INCOME (LOSS) $ 1,724 $ 2,993
NET INCOME (LOSS) PER SHARE NIL NIL
NUMBER OF WEIGHTED AVERAGE SHARES
OUTSTANDING 20,150,000 20,150,000
Subject to the comments contained in the Accountants' Review Report.
Page 5 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six
Months Ended
December 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 1,724 $ 2,993
Adjustments to Reconcile Net
Income to Net Cash Provided By
Operating Activities:
Changes in Assets and Liabilities:
(Increase) in Other Assets (300) -0-
(Decrease) Increase in Accrued
Expenses (507) 1,011
Net Cash Provided By (Used In)
Operating Activities 917 4,004
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to Affiliate -0- (11,400)
Net Cash Provided By (Used In)
Investing Activities -0- (11,400)
Net (Decrease) Increase in Cash
and Cash Equivalents 917 (7,396)
Cash and Cash Equivalents,
Beginning of Period 616,268 645,753
CASH AND CASH EQUIVALENTS
END OF PERIOD $617,185 $638,357
Supplemental Disclosures of
Cash Flow Information
Cash Paid During Period For:
Taxes $ 807 $ 143
Interest -0- -0-
Subject to the comments contained in the Accountants' Review Report.
Page 6 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Modern Technology Corp. (Modern) is a Nevada corporation.
Modern is engaged in aiding prospective clients in
obtaining financing and in providing managerial services
to client companies. Modern's office is located in New
York. Modern's clients are located throughout the world.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING POLICIES
Modern Technology Corp.'s accounting policies conform to
generally accepted accounting principles. Significant
policies followed are described below.
BASIS OF PRESENTATION
The accompanying consolidated financial statements
include the accounts of its wholly owned subsidiary Coral
Development Corp (Coral). Modern invested $30,300 in
Coral during the quarter ended December 31, 1996.
Coral's only asset was cash at December 31, 1996.
RECLASSIFICATIONS
Certain items from prior periods within the financial
statements have been reclassified to conform to current
period classifications.
CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less.
PREPARATION OF FINANCIAL STATEMENTS
Preparation of the Company's financial statements in
conformity with generally accepted accounting principles
requires the use of management's estimates, primarily
related to the estimates of fair values for its
investments and depreciable lives of furniture and
equipment. Accordingly, actual results could differ from
those estimates.
Page 7 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
(Continued)
NOTE 3: INVESTMENT IN EQUITY SECURITIES (At Cost, Which
Approximates Market)
Investments in Equity Securities consist of the
following:
Dec. 31, June 30,
1996 1996
Investment in 25,000 Shares
of Delta Three, Inc. $25,000 $25,000
Investment in TTR Inc.
10% Promissory Note 25,000 25,000
Investment in 72 million
restricted shares in
Daine Industries, Inc. 15,900 15,900
Investment in 50,100,000
restricted shares in
Davin Enterprises, Inc. 7,950 7,950
Investments in other
restricted securities 920 920
$74,770 $74,770
The Company purchased 72 million shares of Daine
Industries, Inc. stock at a cost of $15,900. This
represents 29% of the total outstanding shares of common
stock.
The Company purchased 50,100,000 shares of Davin
Enterprises, Inc. at a cost of $7,950. This represents
25.8% of the total outstanding shares of common stock.
The Company purchased an investment in TTR Inc., a 10%
promissory note in the amount of $25,000 with warrants
for 4,000 shares exercisable at $.01 at the time of a TTR
initial public offering. TTR Inc. incorporated for the
purpose of designing, developing, and marketing computer
software products.
The Company purchased 25,000 shares of Delta Three Inc.
for $25,000. Delta Three, Inc. is a telecommunications
provider using Internet technology for voice
transmission.
Page 8 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
(Continued)
NOTE 4: INVESTMENT IN AFFILIATE (At Equity)
Investment in Soft Sail Wind Power Inc.
(representing approximately 36% of the
outstanding common stock) $ 16,005
The summarized unaudited financial information below
represents the Company's nonsubsidiary affiliate:
Balance Sheet Data at June 30, 1996:
Total Assets $ 12,656
Total Liabilities 11,400
Net Assets 1,256
Company's Equity in Net Assets 452
Earnings Data at June 30, 1996:
Net Earnings (Loss) (26,350)
Company's Equity in Net
Earnings (Loss) (9,486)
NOTE 5: INCOME TAXES
The Company has accrued taxes on an income tax basis in
prior periods in accordance with APB opinion No. 11.
Effective 1993 the Company adopted FAS 109 for reporting
income taxes. This did not result in any material
changes from prior periods.
There were no differences between book and tax income.
Income taxes are accrued at statutory income tax rates.
12/31/96 12/31/95
Current tax expense:
Federal income tax $113 $ 427
State & city income tax 325 727
438 1,154
Net operating loss (NOL)
carryback (refunds) -0- (2,162)
Net tax expense (benefit) $438 $(1,008)
NOTE 6: POSTRETIREMENT BENEFITS
The Company does not maintain any employee benefits
currently. The Company does not maintain a plan for any
postretirement employee benefits, therefore, no provision
was made under FAS's 106 or 112.
Page 9 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
(Continued)
NOTE 7: RELATED PARTY TRANSACTIONS
Davin Enterprises, Inc. (Davin) entered into an oral
agreement with Modern Technology Corp. providing for the
partial use of office space for Davin on a month to month
basis. The company does not pay rent but pays a fee to
Modern Technology Corp. for services. There were no
outstanding balances between these companies.
Arthur Seidenfeld, President and a director of the
Company, owns 14.5% of the outstanding shares of Daine
Industries, Inc. and 29.4% of the outstanding shares of
Davin Enterprises, Inc. Anne Seidenfeld, Treasurer,
Secretary and a director of the Company, owns 12% of the
outstanding shares of Modern Technology Corp. Anne
Seidenfeld is Arthur Seidenfeld's mother.
NOTE 8: INTERIM FINANCIAL REPORTING
The unaudited financial statements of the Company for the
period July 1, 1996 to December 31, 1996 have been
prepared by management from the books and records of the
Company, and reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the
financial position and operations of the Company as of
the period indicated herein, and are of a normal
recurring nature.
Page 10 of 10
MODERN TECHNOLOGY CORP.
Part 1. Financial Information
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Modern Technology Corp. ("The Company") is engaged in
aiding prospective clients in obtaining financing and in providing
management services to client companies. During the six months
ended December 31, 1996, the Registrant was involved in providing
managerial services to one firm which it aided in obtaining
financing, namely Davin Enterprises, Inc. ("Davin") and received
management fees of $4,800 from Davin.
During the six months ended December 31, 1996, the
Registrant had net income of $1,724 as compared with net income of
$2,993 during the six months ended December 31, 1995. The decrease
in profitability for the comparative periods discussed in the
previous sentence can be attributed to lower interest income during
the six month period discussed. During the six months ended
December 31, 1996 and 1995, the Registrant's treasurer-secretary,
Anne Seidenfeld received a salary of $3,600.
The cash and cash equivalents balances along with
holdings of U.S. Treasury Obligations of the Company as of December
31, 1996 and June 30, 1996 were $617,185 and $616,268.
On July 27, 1994, the Registrant signed an agreement to
purchase a 40% ownership interest in a company entitled Soft Sail
Wind Power Inc. The purpose of Soft Sail Wind Power Inc. will be
to exploit and commercialize wind power. The Registrant may also
loan up to $60,000 to Soft Sail Wind Power Inc. for marketing and
manufacturing activities, provided the Registrant believes that the
prototype wind energy turbine developed by Soft Sail Wind Power
Inc. proves acceptable for commercialization. As of December 31,
1996, the Registrant owned 404 shares of Soft Sail Wind Power Inc.
at a cost of $40,449 and has loaned Soft Sail Wind Power Inc.
$11,400.
During the quarter ended March 31, 1995, the Registrant
purchased one unit in TTR Inc. in the amount of $25,000, consisting
of a 10% promissory note and warrants to purchase 4,000 shares
exercisable at $.01 at the time of the TTR Inc. initial public
offering. TTR Inc., based in Israel, was incorporated for the
purpose of designing, developing and marketing computer software
products. A registration statement for the sale of 1,275,000
shares and 600,000 warrants has been filed with the Securities and
Exchange Commission on September 12, 1996, with an anticipated unit
price of $6 each to be underwritten by First Metropolitan
Securities Inc. No assurance can be given that the proposed public
offering of TTR Inc. units will be successfully completed.
During the quarter ended June 30, 1996, the Registrant
purchased 25,000 shares of Delta Three Inc. for $25,000. Delta
Three Inc. is an Israeli based telecommunications provider using
Internet technology for voice transmission.
During the quarter ended December 31, 1996, the
Registrant established a new subsidiary entitled Coral Development
Corp. (Coral Dev.). In February 1997, the Registrant filed a
registration statement with the Securities and Exchange Commission
("SEC") to spin off its 100% holdings in Coral Dev. representing
403,000 shares, directly to the Registrant's shareholders, in the
ratio of 1 share of Coral Dev. for each 50 shares of the Registrant
held.
The transfer of shares will take place after the
registration statement for Coral Dev. shares is declared effective
by the SEC and a merger agreement with a privately owned company is
completed. No assurances can be given that the registration
statement will be declared effective and a merger agreement with a
privately owned company will be successfully completed.
The Registrant expects that its current balances of cash
and cash equivalents will be sufficient to meet its minimum planned
capital and liquidity needs for the next year. The Company does
not believe that the impact of inflation on its activities is
significant.
Part 2. Other Information
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Materially Important Events. None.
Item 6. Exhibits and Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MODERN TECHNOLOGY CORP.
By: Arthur J. Seidenfeld
President, Chief Executive and
Chief Financial Officer
February 12, 1997
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