U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For The Fiscal Year Ended June 30, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File #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 Identification Number
Incorporation or Organization)
461 Beach 124 Street Belle Harbor, NY 11694
-----------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code (718)318-0994
----------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
None
----
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 and (2) has been subject to
such filing requirements for the past ninety days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405
or Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filed (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ ]
As of September 3, 2003, there was no aggregate market value of the voting
stock held by non-affiliates of the Registrant due to the fact that there
was no trading market in the shares of the Registrant. The Number of
Shares Outstanding of the Registrant at September 3, 2003 was 20,150,000.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-K into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule
424(b) of the Securities Act of 1933 ("Securities Act").
Not Applicable.
Transitional Small Business Disclosure Form (check one):
Yes No X
--- ---
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
The discussion in this Annual Report on Form 10-K regarding Modern
Technology Corp and its business and operations includes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1996. This report and the information incorporated by reference in
it contain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company intends the forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements in these sections. Such statements consist of any statement
other than a recitation of historical fact and can be identified by the
use of forward-looking terminology such as "may," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations
thereon or comparable terminology. The reader is cautioned that all
forward-looking statements are necessarily speculative and there are
certain risks and uncertainties that could cause actual events or results
to differ materially from those referred to in such forward looking
statements. We do not have a policy of updating or revising forward-
looking statements and thus it should not be assumed that silence by us
over time means that actual events are bearing out as estimated in such
forward looking statements.
When used in this Annual Report, the terms " we," "our," "us," and "Modern
Technology" refers to Modern Technology Corp., a Nevada corporation. The
term "Pharmavet" refers to our subsidiary, Pharmavet Inc., a Delaware
corporation.
PART I
Item 1. Business
The Registrant is engaged in aiding prospective clients in obtaining
financing and in providing managerial services to client companies.
During the quarter ended March 31, 2003, the Registrant concluded
agreements with Atlas Exportaciones e Importaciones S.A. ("Atlas") and
Esmeralda S.A., ("Esmeralda") both Chilean food products company which
grants the Registrant the exclusive rights to represent their products for
sale in Israel for the remainder of calendar year 2003 and to be
compensated on a commission basis if the Registrant introduces any Israeli
buyer to either Atlas or Esmeralda who ultimately purchase product from
either company. The Registrant may also introduce buyers outside of Israel
to either Atlas or Esmeralda but without any exclusivity of representation
and the registrant will be compensated on a commission basis. During the
six months ended June 30, 2003 and to the date of this report, no revenues
have been generated from activities with Atlas or Esmeralda.
On April 1, 2003, the Registration signed a memorandum of understanding
with Centrovet, Ltda. ("Centrovet"), a Chilean veterinary pharmaceutical
company which will result in the Registrant being compensated for the
introduction of buyers worldwide for Centrovet's veterinary products or
Chilean human pharmaceutical products marketed by Centrovet.
The Registrant will also be compensated for the establishment of any joint
ventures in the pharmaceutical field between Centrovet and others through
the Registrant's introduction. The memorandum of understanding also speaks
of compensation for the Registrant through the introduction of a potential
acquisition in the pharmaceutical field for Centrovet. No assurance can be
given that the Registrant will be successful in generating any commission
revenues in the future from activities on behalf of Atlas, Esmeralda or
Centrovet.
On April 15, 2003, the Registrant established a subsidiary, entitled
Pharmavet Inc. ("Pharmavet"). The Registrant assigned its agreement with
Centrovet to Pharmavet. Presently, the Registrant owns approximately 97.5%
of the outstanding shares of Pharmavet. Pharmavet intends to assist
Centrovet in obtaining new customers primarily in parts of Africa, the
Middle East and Central America. The Registrant has agreed to advance up
to $100,000- to cover Pharmavet's working capital needs and the costs of
filing a proposed registration statement for the twelve month period
ending June 30, 2004.
Centrovet has a working relationship with six Chilean pharmaceutical
companies who manufacture products for human use (generic drugs) which
allows Pharmavet to act as Centrovet's representative to solicit customers
for purchase of their human use pharmaceutical products. Centrovet would
acquire such pharmaceutical products directly from these six Chilean based
manufacturers and after receipt of payment compensate us for introducing
Centrovet to the customer. Pharmavet will focus its marketing efforts on
buyers of human use pharmaceuticals primarily in parts of Africa and
Central America and will not solicit any customers in the U.S., Canada and
Western Europe.
During the period beginning May 19, 2003 through July 21, 2003, Pharmavet
signed non exclusive agreements with the following veterinary and human
pharmaceutical manufacturers and one manufacturer of pharmaceutical bulk
ingredients and intermediaries (Supriya Chemical) to work to bring them
customers for their products:
Laboratorios Pino (Spain) starting May 19, 2003 until December 31, 2003
renewable for an additional year unless dissolved by either party
(Veterinary products)
Von Franken S.A.I.C. (Argentina) starting on May 20, 2003 for a two year
period, renewable for two additional years unless objection by either
party; (Veterinary products)
Biovac Ltd. (Israel) starting June 16, 2003 for a two year period,
renewable for two additional years unless objection by either party;
(Veterinary products).
Nirlac Chemicals (India) starting June 5, 2003 for a one year period. If
any orders are received within this period, the memorandum automatically
continues for a second year and can be renewed for two additional years
unless objection by either party. (Veterinary products).
Wockhardt Ltd (India) starting July 21, 2003 for two years and can be
renewed for two additional years unless objection by either party.
(Veterinary products).
East African Pharmaceuticals PLC (Ethiopia) starting August 27, 2003 for
two years and can be renewed for two additional years unless objection by
either party. (Veterinary and human use pharmaceutical products).
Geno Pharmaceuticals (India) starting August 28, 2003 for two years and
can be renewed for two additional years unless objection by either party.
(human pharmaceuticals).
Supriya Chemicals (India) starting August 25, 2003 for two years beginning
August 25, 2003 for two years and can be renewed for two additional years
unless objection by either party. (pharmaceutical bulk ingredients and
intermediaries).
Pharmavet has started marketing efforts on behalf of Centrovet, the six
chilean pharmaceutical companies with human use products, Laboratorios
Pino S.A., Biovac Company, Nirlac Chemicals, Wockhardt Ltd., East African
Pharmaceuticals, Geno Pharmaceuticals and Supriya Chemicals.
They have received proforma written orders from three customers in Togo
and one in Benin for veterinary and human use pharmaceutical products
(total of five orders) where Pharmavet and or the manufacturers have
already shipped samples and registration documents. One of these orders
has also received regulatory approval in Togo, according to an email
received from one customer.
Before Pharmavet can receive its commission from the manufacturers, the
following actions are necessary:
Pharmavet or the manufacture has to supply each customer with product
samples and documents for registration of these pharmaceutical products by
the health authorities of their local country. The customer has to advance
the local registration fees to these local health agencies. Once
registration is approved by the health authorities, the customer has to
arrange payment to the manufacture, either by an irrevocable letter of
credit or by wiring funds directly to the manufacturer's bank. The
manufacturer has to complete production of the product and then ship the
product. Pharmavet's commission is determined between itself and the
manufacturer before a proforma invoice is prepared and issued by the
manufacturer and Pharmavet is to be paid thirty days after the
manufacturer is paid and ships out the merchandise. To date, Pharmavet has
not generated any revenues. No assurance can be given that any or all of
these events per customer order will occur.
The Registrant signed a consulting agreement on December 8, 2000 to invest
$238,500 in exchange for 403,000 shares of Scientio Inc., ("Scientio") a
United Kingdom based development stage company engaged in developing a
line of software products (XML products). The shares received by the
Registrant represented a 20% ownership interest in Scientio. Scientio was
a newly formed U.S. company established in the state of Delaware with
operations conducted in the United Kingdom. During the quarter ended June
30, 2002, Scientio generated revenues of $2,700. Before the quarter ended
June 30, 2002, Scientio did not generate any revenues.
Scientio registered the shares owned by the Registrant under the
Securities Act, for distribution and trading. During the first week of
October 2001, the Registrant distributed its 403,000 share position in
Scientio to its shareholders in a transaction similar to the Omnicomm
distribution to be discussed later in this management's discussion. The
Registrant covered registration costs and expenses in connection with the
preparation and filing of the proposed registration statement of the
Scientio shares.
An investment of $188,500 by the Registrant was used by Scientio to
complete and test its initial XML software products and enable Scientio to
begin a marketing program. Scientio's XML Miner and XML Rule products have
been targeted to software developers as they relate to the field of data
mining. In the consolidated statement of operations for the year ended
June 30, 2001, the Registrant has recorded goodwill amortized amounting to
$27,881 and has recorded its share of Scientio's loss amounting to
$15,314. On the consolidated balance sheet at June 30, 2001, part of the
Registrant's investment in Scientio has been carried as Goodwill-
$139,406.
On May 29, 2002, a form 8-K was filed by Scientio. As a result of
Scientio's inability to raise additional funds for operations and to
generate a material amount of licensing revenues, the board of directors
of Scientio took the following actions:
Scientio transferred all assets and its software business to a British
Virgin Island private company entitled Scientio Inc. (BVI). All software
improvements and new products related to the software business will also
be transferred into this private BVI company and Andrew Edmonds, former
president of Scientio and its current secretary and director has agreed
not to compete with this private BVI company in the field of datamining
for the next 3 years. BVI hopes to raise capital from private sources.
Scientio had received a 27% ownership interest in Scientio Inc BVI with
the family of Andrew Edmonds receiving a 73% ownership interest. Anneke
Edmonds, Andrew Edmonds' wife returned 1,541,850 shares of Scientio,
retaining a 50,000 share ownership interest in Scientio. As a result, the
outstanding shares of Scientio was reduced to 661,900 shares from
approximately 2.2 million shares. Scientio was offering itself as a
reporting trading public company for merger with a private company.
During the six month period ended June 30, 2002, the Registrant purchased
117,250 shares of Scientio for $82,075 (70 cents per share).
On February, 7, 2003, Scientio concluded an agreement of merger with
International Integrated Incorporated, ("III") a company in the breast
implant business. At the time of closing, Scientio issued approximately
15,079,333 million restricted shares to the owners of III with the present
shareholders of Scientio owning approximately 4.2% of the outstanding
shares of the merged company after merger. Scientio has changed its name
to Medicor Ltd with its shares traded on the OTC Bulletin Board (symbol
MDCR).
The Registrant signed a consulting agreement on March 19, 2001 with
Interactive Medicine, Inc. ("Interactive"), a Florida based development
stage company engaged in the healthcare Internet business. The Registrant
invested $100,000 and received 790,604 shares of Interactive, representing
a 5% ownership interest in Interactive. Interactive aggregates medical
opinion leaders, physician peer groups, shared content and commerce into
specific web based communities, each a Healthcare Channel. With its
proprietary technology, consisting of a set of Internet-based connectivity
tools and solutions, it hopes to become a medical specialty network used
by doctors and other healthcare providers.
Interactive, on February 11, 2002, filed a form SB-2 registration
statement to register the shares owned by the Registrant under the
Securities Act, for distribution and trading. Upon the effective date of
the filed Registration Statement, the Registrant intends to distribute its
790,604 share position in Interactive to its shareholders in a transaction
similar to the Omnicomm and Scientio distributions discussed earlier in
this management's discussion.
Management of the Registrant has no knowledge as to whether Interactive
intends to complete the registration process. No assurance can be given
that Interactive's Registration Statement will be declared effective and
the Registrant will be able to distribute its shares in Interactive to the
Registrant's shareholders. As a result of this uncertainty to complete its
registration process, we have established a valuation allowance against
our investment in shares of Interactive Medicine Inc. of $100,000 to
reflect the uncertainty of the fair market value of the investment as of
June 30, 2003.
On December 20, 2002, Daine Industries Inc. ("Daine") completed a merger
with Westport Cruise Corp, ("Westport Cruise") whereby Daine issued
11,181,366 restricted shares to the owners of Westport Cruise and Westport
Cruise merged into Daine. Upon signing the merger agreement, the officers
and directors of Daine resigned (the same officers and directors of the
Registrant), and were replaced by officers and directors of Westport
Cruise Corp. Westport Cruise Corp operates a travel agency business in
Canada. As a result of the merger, the owners of Westport Cruise own 90%
of the outstanding shares of Daine. The Registrant owns 360,000 shares of
Daine's common stock.
Presently, the Registrant is seeking out joint venture candidates and
companies for which it can aid in providing financing and managerial
services although no assurances can be given that the Registrant will be
successful in gaining new clients in the near future.
For the fiscal year ended June 30, 2003, the Registrant incurred a net
loss of $197,549 which was attributable to an unrealized loss of $102,344
primarily associated with a valuation allowance for its investment in
shares of Interactive Medicine Inc ($100,000), and officers' salaries of
$33,374 and general and administrative expenses ($63,264) balanced by
revenues of $4,054 generated from interest income. In fiscal years 2002
and 2001, the Registrant generated gains, both realized (fiscal year 2002)
and unrealized (fiscal year 2001) from trading securities which balanced
the expenses incurred during fiscal years 2002 and 2001.
During the fiscal year ended June 30, 2002, the Registrant generated net
income of $12,079. Its revenue for the year ended June 30, 2002 was
derived from interest income of $8,287 and gain on securities sales (sale
of Lite King shares) of $102,430 and an unrealized gain- trading
securities (Lite King shares) of $14,814. The Registrant's revenues of
$125,531 for the year ended June 30, 2002 has been offset by the following
expenses: Officers' salaries of $38,578 and general and administrative
expenses, consisting of those generated by the Registrant's 70% owned
subsidiary, Excess Materials Inc., office salaries, and accounting and
legal fees totaling $71,549. There was also income tax expense of $3,325.
Excess Materials Inc. has since terminated its activities and the Company
was liquidated during the calendar year 2002.
For the year ended June 30, 2001, the Registrant generated a net loss of
$27,996 which can be attributed primarily to expenses generated by the
Registrant's 70% owned subsidiary, Excess Materials Inc.
Risk Factors
We Are Dependent On The Continued Contributions Of Our Key Personnel.
We are currently dependent on our president. The loss of his services, may
significantly adversely affect our performance and our ability to carry
out the successful development and implementation of our business plan.
Failure to retain him or to attract and retain other key employees could
have an adverse effect upon our growth and our ability to achieve and
maintain profitability.
We May Be Unable To Forecast Our Revenues Accurately.
Our revenues to date have consisted of consulting fees and sale of
securities. Therefore, our period-to-period comparisons contained in our
SEC filings cannot be relied on as indicators of future performance. Such
future revenues are difficult to forecast with any specificity.
Our Subsidiary, Pharmavet Inc is Dependent On A New Business Model Whose
Acceptance Is Uncertain.
Our subsidiary, Pharmavet intends to derive revenues from commissions
generated from the introduction of new customers to several pharmaceutical
companies they represent. There can be no assurance that Pharmavet will be
successful in obtaining customers for its clients and even if so that all
the events leading to the paying of a commission to Pharmavet will occur.
Pharmavet will continue to need capital, without which its business may
fail.
Our subsidiary, Pharmavet has required capital to date and will require
additional capital to fully implement our business plan. Through its
relationship with the Registrant, we believe it has access to funding to
be sufficient to fund its anticipated level of operations for the next
twelve months. However, its business or operations may change in a manner
that would consume available resources more rapidly than anticipated.
Pharmavet may need additional funds sooner than planned to meet
operational needs and capital requirements for marketing current and
additional products from existing or new client manufacturers. Additional
funds may not be available when needed or on terms acceptable to them.
They do not currently have arrangements with respect to other sources of
additional financing. Pharmavet may be unable to raise additional capital
or generate the significant revenues necessary to sustain or expand its
operations. The inability to obtain additional financing, when needed
would have a material adverse affect on them, including possibly requiring
them to curtail or cease their operations.
Lack of Trading Market
There currently exists no public trading market for the Registrant's
common stock, and there can be no assurance that a public trading market
will develop or be sustained in the future. Without an active public
trading market, there can be no assurance that shareholders of the
Registrant will be able to sell their shares without considerable delay,
if at all. If a market does develop the price for the Registrant's shares
may be highly volatile and may bear no relationship to the Registrant's
actual financial condition or results of operations.
Item 2. Properties.
As of June 30, 2003, the Registrant owned no property. The Registrant
utilizes some space in the home of Arthur and Anne Seidenfeld, president
and treasurer-secretary of the Registrant.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholders
Matters.
During the past three fiscal years there was no market for the shares of
the Registrant.
Number of Shareholders- 376 shareholders of record as of August 15, 2003.
Dividends:
During October 2001, the Registrant distributed the 403,000 shares it
owned in Scientio to its shareholders. These 403,000 shares represent a
dividend of equity investment stock of $178,864 for the year ended June
30, 2002. The Registrant has registered these shares with the Securities
and Exchange Commission with the intention of distributing these shares to
the Registrant's shareholders in the form of a dividend.
During the year ended June 30, 1999, the Registrant was involved in
providing consulting services to Coral Development Corp. During December
1996, the Registrant purchased 403,000 shares of Coral Development Corp.
("Coral") for $30,300. The Registrant had registered these shares with the
Securities and Exchange Commission with the intention of distributing
these shares to the Registrants' shareholders in the form of a dividend.
As of June 30, 1999, the Registrant declared a distribution to its
shareholders in the form of all of the 403,000 shares of Omnicomm Systems
Inc. ("Omnicomm") common stock that the Registrant owned.
Item 6. Selected Financial Data
For the Year ended June 30,
2003 2002 2001 2000 1999
-------- -------- --------- --------- --------
Total Revenues 4,054 $125,531 $ 101,200 $ 43,812 $266,984
Operating Income
(Loss) before tax (204,759) 15,404 (23,400) (42,326) 144,323
Net Income (Loss) (197,549) 12,079 (27,996) (39,216) 103,105
Net Income (Loss)
Per share $(.01) NIL NIL NIL $.01
Total Assets 415,524 586,225 759,174 788,106 902,861
Long Term Debt -0- -0- -0- -0- -0-
Dividends -0- 178,864* -0- 30,300* -0-
* these are not cash dividends; please see discussion in Item 5.
"Dividends" listed above.
Item 7. Management's Discussion and Analysis of Results of Operations.
General
The following information should be read in conjunction with the
Consolidated Audited Financial Statements and Notes thereto and other
information set forth in this report.
Forward-Looking Statements
Statements contained in this Form 10-K that are not historical fact are
"forward looking statements". These statements can often be identified by
the use of forward-looking terminology such as "estimate", "project",
"believe", "expect", "may", "will", "should", "intends", or "anticipates"
or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy that involve risks and
uncertainties. We wish to caution the reader that these forward-looking
statements, such as statements relating to timing, costs and of the
acquisition of, or investments in, existing business, the revenue or
profitability levels of such businesses, and other matters contained in
this Form 10-K regarding matters that are not historical facts, are only
predictions.
No assurance can be given that plans for the future will be consummated or
that the future results indicated, whether expressed or implied, will be
achieved. While sometimes presented with numerical specificity, these
plans and projections and other forward-looking statements are based upon
a variety of assumptions, which we consider reasonable, but which
nevertheless may not be realized. Because of the number and range of the
assumptions underlying our projections and forward-looking statements,
many of which are subject to significant uncertainties and contingencies
that are beyond our reasonable control, some of the assumptions inevitably
will not materialize, and unanticipated events and circumstances may occur
subsequent to the date of this Form 10-K. Therefore, our actual experience
and results achieved during the period covered by any particular
projections or forward-looking statements may differ substantially from
those projected.
Consequently, the inclusion of projections and other forward-looking
statements should not be regarded as a representation by us or any other
person that these plans will be consummated or that estimates and
projections will be realized, and actual results may vary materially.
There can be no assurance that any of these expectations will be realized
or that any of the forward-looking statements contained herein will prove
to be accurate. The Company does not undertake any obligation to update or
revise any forward-looking statement made by it or on its behalf, whether
as a result of new information, future events or otherwise.
Overview
The Registrant is engaged in aiding prospective clients in obtaining
financing and in providing managerial services to client companies.
On April 15, 2003, the Registrant established a subsidiary, entitled
Pharmavet Inc. ("Pharmavet"). The Registrant assigned its agreement with
Centrovet Ltda ("Centrovet") to Pharmavet. Centrovet manufactures and
markets veterinary pharmaceutical products. Presently, the Registrant owns
approximately 97.6% of the outstanding shares of Pharmavet. Pharmavet also
has signed agreements with five other veterinary pharmaceutical companies
to assist them and Centrovet in obtaining new customers. Through
Centrovet, Pharmavet is also assisting six human use pharmaceutical
product manufacturers in seeking out new customers.
Results of Operations
During the fiscal year ended June 30, 2003, the Registrant incurred a net
loss of $197,549. Its revenues for the year ended June 30, 2003 was
derived from interest income of $4,054-. The Registrant's expenses
consisted of officers' salaries of $33,374 ($31,574 to the Registrant's
president and $1,800- to the Registrant's treasurer-secretary), general
and administrative expenses of $63,264, the principal items consisting of
legal and accounting fees, telephone and insurance expenses, a realized
loss from the sale of Lite King shares amounting to $9,831- and an
unrealized loss primarily attributable to an investment allowance of
$100,000- related to Interactive Medicine Inc. shares. The Registrant did
not generate any gains from trading securities during the fiscal year
ended June 30, 2003. In fiscal years 2002 and 2001 the Registrant
generated most of its revenues from trading in securities.
In comparing fiscal year expense items for fiscal year 2003 with fiscal
year 2002 items, the Registrant experienced declines in officers salaries
of 13% or $5,204 (from $38,578 in 2002 to $33,374 in 2003) and a decline
of 12% or $8,285- in general and administrative expenses (from $71,549 in
2002 to $63,264 in 2003).
For revenue items, the Registrant experienced a decline of $4,233 in its
interest income account during fiscal year 2003 as compared with interest
income generated during fiscal year 2002 ($4,054 in interest income in
2003 as compared with $8,287 in fiscal year 2002). This decline can be
attributable to lower interest rates available along with a lower cash
balance experienced during fiscal year 2003.
During the fiscal year ended June 30, 2002, the Registrant had generated
net income of $12,079. Its revenues for the year ended June 30, 2002 was
derived from interest income of $8,287, gain on securities sales (sale of
shares in Lite King) of $102,430 and unrealized gain from trading
securities (Lite King) of $14,814. The Registrant's revenues of $125,531
have been offset by the following: officers' salaries of $38,578 and
general and administrative expenses, primarily attributable to its former
70% owned subsidiary, Excess Materials (no longer in business) and
accounting and legal fees totaling $71,549. During the fiscal year, income
tax expenses amounted to $3,325.
During the fiscal year ended June 30, 2001, the Registrant had a net loss
of $27,996. Its revenue for the year ended June 30, 2001 was derived from
the realized gain from trading securities (sale of shares in Omnicomm
Systems) amounting to $65,683 and from interest income of $35,517. The
loss can be attributed primarily to expenses related to the Registrant's
former 70% owned subsidiary, Excess Materials, which is no longer in
existence.
Liquidity and Capital Resources
At June 30, 2003, the Registrant's total assets amounted to $415,524 as
compared with $586,225 at June 30, 2002. The decline of $170,701 can be
attributable to a decline in the Registrant's cash accounts amounting to
$76,039 and to a reduction in the Registrant's investments account of
$124,956- offset by an increase in deferred registration costs of $25,000-
attributable to the Registrant's subsidiary, Pharmavet Inc. The decline in
the investments account consists of an investment allowance of $100,000-
attributable to the Registrant's shares in Interactive Medicine Inc and to
sale of Lite King shares. During the fiscal year ended June 30, 2003, we
have experienced negative cash flows and have relied primarily on the
Registrant's cash balances to fund our operations. We are not currently
bound by any long or short-term agreements for the purchase or lease of
capital expenditures.
Our ability to continue in existence is dependent on our having sufficient
financial resources to cover operating expenses for the Registrant and its
subsidiary, Pharmavet Inc. We believe we have enough cash and equivalents
to cover operations for the next twelve month period.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United
States requires management to make judgments, assumptions and estimates
that affect the amounts reported. Note 2 of Notes to the Consolidated
Financial Statements describes the significant accounting policies used in
the preparation of the consolidated financial statements. Certain of these
significant accounting policies are considered to be critical accounting
policies, as defined below.
A critical accounting policy is defined as one that is both material to
the presentation of our financial statements and requires management to
make difficult, subjective or complex judgments that could have a material
effect on our financial condition and results of operations. Specifically,
critical accounting estimates have the following attributes: 1) we are
required to make assumptions about matters that are highly uncertain at
the time of the estimate; and 2) different estimates we could reasonably
have used, or changes in the estimate that are reasonably likely to occur,
would have a material effect on our financial condition or results of
operations.
Estimates and assumptions about future events and their effects cannot be
determined with certainty. We base our estimates on historical experience
and on various other assumptions believed to be applicable and reasonable
under the circumstances. These estimates may change as new events occur,
as additional information is obtained and as our operating environment
changes. These changes have historically been minor and have been included
in the consolidated financial statements as soon as they became known. In
addition, our Management is periodically faced with uncertainties, the
outcomes of which are not within our control and will not be known for
prolonged periods of time.
Based on a critical assessment of its accounting policies and the
underlying judgments and uncertainties affecting the application of those
policies, our Management believes that our consolidated financial
statements are fairly stated in accordance with accounting principles
generally accepted in the United States (GAAP), and present a meaningful
presentation of our financial condition and results of operations.
Our Management believes that the following are our critical accounting
policies:
ESTIMATES IN FINANCIAL STATEMENTS
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 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.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." SFAS 109 has as its basic objective the recognition of current and
deferred income tax assets and liabilities based upon all events that have
been recognized in the financial statements as measured by the provisions
of the enacted tax laws. Valuation allowances are established when
necessary to reduce deferred tax assets to the estimated amount to be
realized. Income tax expense represents the tax payable for the current
period and the change during the period in the deferred tax assets and
liabilities.
Item 8. Financial Statements
Attached.
Item 9. Changes In and Disagreement With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers.
The executive officers and directors of the Registrant are as follows:
Name Age Title Term Expires
- ---- --- ----- ------------
Arthur Seidenfeld 52 President and Director Next Annual Meeting
Anne Seidenfeld 90 Treasurer, Secretary and
Director Next Annual Meeting
Gerald Kaufman 62 Director Next Annual Meeting
Each of the above named individuals has served the Registrant in the
capacity indicated since its formation on July 27, 1982 (with the
exception of Anne Seidenfeld who became a director of the Company on March
31, 1989 and treasurer on December 17, 1989 and Gerald Kaufman who became
a director in 1990).
Arthur Seidenfeld, has been president and a director of the Registrant
since its formation. Mr. Seidenfeld was awarded a B.S. Degree in
Accounting from New York University in 1972 and a M.B.A. Degree in Finance
in 1978 from Pace University.
He is also president and director of Pharmavet Inc., a subsidiary of the
Registrant since its formation in April 2003. He was secretary and a
director of Scientio Inc., a company in the software development field
from December 2000 (its inception) until May 29, 2002 when he became
President and Treasurer of Scientio, a position he served in until
February 7, 2003 when Scientio merged with International Integrated Inc.
He was president and director from 1988 until 2002 of Daine Industries,
Inc., a "blind pool" which merged with Westport Cruise Company. He was
president and director of Lite King Corp., a public reporting company from
February 1989 until March 2001 when Lite King Corp merged with National
Cabling Services Inc. He was also president and director of Davin
Enterprises, Inc., ( a publicly traded company that went public in Sept.
1987) from 1987 until December 1997 when Davin merged with Creative
Masters International Inc., a manufacturer of replica cars. From July 1994
until April 1997, he was also treasurer-secretary of Soft Sail Wind Power
Inc., newly established company engaged in wind energy research and
development activities. From December 1996 until December 1998, he was
president and director of Coral Development Corp., a public company which
merged with Omnicomm Systems Inc., a company engaged in the computer
software/internet field. He was president of Excess Materials Inc, a 70%
owned subsidiary of the Registrant engaged in the internet commerce field
from 1999 until early 2002 when Excess Materials operated were closed and
the company liquidated.
Anne Seidenfeld, Treasurer, Secretary and Director, received her diploma
from Washington Irving High School, New York City, in 1931. She is
Secretary and a director of Pharmavet Inc., a subsidiary of the
Registrant. Mrs. Seidenfeld was the Treasurer, Secretary and Director of
Daine Industries, Inc. from 1988 until December 2002 when Daine merged
with Westport Cruise Corporation. She was treasurer and secretary of
Excess Materials Inc until Excess Material's operations were terminated
and the company liquidated. She was treasurer, secretary and director of
Coral Development Corp. from December 1996 to December 1998 and was
Treasurer, Secretary and Director of Davin Enterprises Inc. from 1987
until December 1997. Mrs. Seidenfeld also was treasurer and director of
Lite King Corp until March 2001 when Lite King Corp merged with National
Cabling Services Inc.
Gerald Kaufman, Director, has been a practicing attorney for over thirty
years. He has served as a director of the Registrant, along with being a
director of Daine Industries Inc. from 1990 until December 2002 when Daine
merged with Westport Cruise Corporation. He was also a director of Lite
King Corp from 1998 until March 2001. He has also been a director of
American Mayflower Life Insurance Co. since 1973.
Arthur Seidenfeld is the son of Anne Seidenfeld.
Item 11. Management Executive Compensation.
During the fiscal year ended June 30, 2003, management salaries were as
follows:
Anne Seidenfeld - Treasurer/Secretary $ 1,800
Arthur Seidenfeld - President $31,574
Anne Seidenfeld, the Registrant's treasurer secretary earned the above
listed $1,800 during the quarter ended September 30, 2002. She has
declared that she will not receive any salary for any period beyond
September 30, 2002. There is no employment agreement in place for either
officer.
During the year ended June 30, 2002, Anne Seidenfeld, pursuant to an oral
agreement with the Company earned $7,200 as an annual salary. Arthur
Seidenfeld, the Registrant's present earned a salary of $31,378, pursuant
to an oral agreement with the Company.
PART IV
Item 12. Security Ownership of Certain Beneficial Owners and Management.
a. The following are known to Registrant to be beneficial owners of 5% or
more of the Registrant's common stock.
Title of Class of Common Stock
Name of Beneficial Owner Amount & Nature of Percentage
Beneficial Ownership of Class
------------------------ -------------------- ----------
Arthur Seidenfeld
461 Beach 124 Street
Belle Harbor, New York 9,654,820 47.9%
Anne Seidenfeld
461 Beach 124 Street
Belle Harbor, New York 2,426,500 12.0%
All Officers and
Directors as a Group (3) 12,081,320 59.9%
b. The shares owned by management are as follows:
Common Stock.
Name of Beneficial Owner Amount & Nature of Percentage
Beneficial Ownership of Class
------------------------ -------------------- ----------
Arthur Seidenfeld 9,654,820 47.9%
Anne Seidenfeld 2,426,500 12.0%
Item 13. Certain Relationships and Related Transactions:
For the year ended June 30, 1998, the Registrant received management fees
from Davin Enterprises, Inc., amounting to $3,200. Arthur Seidenfeld,
President and a director of the Registrant owned 44,063 of the outstanding
shares of Davin Enterprises, Inc. Anne Seidenfeld, Treasurer-Secretary and
a director of the Registrant owned 5,470 of the outstanding shares of
Davin Enterprises, Inc. Davin Enterprises, Inc.'s name was changed to
Creative Master International Inc. after Creative Master Inc. merged with
Davin Enterprises, Inc. Arthur Seidenfeld and Anne Seidenfeld sold the
shares they held in Davin Enterprises Inc. in 1999.
Item 14. Controls and Procedures.
Based on their evaluation as of a date within 90 days of the filing date
of this Annual Report on Form 10-K, the Company's principal executive
officer and principal financial officer have concluded that the Company's
disclosure controls and procedures as defined in Rules 13a-14(c) and 15d-
14(c) under the Securities Exchange Act of 1934 (the Exchange Act) are
effective to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to
the date of their evaluation and up to the filing date of this Annual
Report on Form 10-K. There were no significant deficiencies or material
weaknesses, and therefore there were no corrective actions taken. It
should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that
the objectives of the system are met. In addition, the design of any
control system is based in part upon certain assumptions about the
likelihood of future events. Because of these and other inherent
limitations of control systems, there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote.
MODERN TECHNOLOGY CORP.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
FILED WITH THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K.
PART IV
Item 15. Exhibits, Financial Statements Schedules and Reports on Form 8-K.
Exhibit 99.1 Section 302 of the Sarbanes-Oxley Act of 2002 Certification
of Arthur Seidenfeld, CEO.
Exhibit 99.2 Section 302 of the Sarbanes-Oxley Act of 2002 Certification
of Arthur Seidenfeld, CFO.
Exhibit 99.3 Section 906 of the Sarbanes-Oxley Act of 2002 Certification
of Arthur Seidenfeld, CEO
Exhibit 99.4 Section 906 of the Sarbanes-Oxley Act of 2002 Certification
of Arthur Seidenfeld, CFO
Exhibit 99.5 Consolidated Financial Statements consisting of:
ACCOUNTANT'S REPORT
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2003 AND JUNE 30, 2002
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD
JULY 1, 2000 TO JUNE 30, 2003.
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2003,
2002, AND 2001.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2003,
2002, 2001.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Other schedules not submitted are omitted, because the information is
included elsewhere in the financial statements or the notes thereto, or
the conditions requiring the filing of these schedules are not applicable.
Supplemental information to be furnished with reports filed pursuant to
Section 15 (d) of the Securities Act of 1934 by Registrant which have not
registered securities pursuant to Section 12 of the Securities Act of
1934.
(a) No annual report or proxy material has been sent to security holders.
When such report or proxy materials are furnished to securities
holders subsequent to the filing of this report, copies shall be
furnished to the Commission when sent to securities holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, Principal Executive Officer
And Principal Financial Officer
Dated: September 3, 2003
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.
Name Title Date
- ---- ----- ----
Arthur Seidenfeld President and Director Sept. 3, 2003
Anne Seidenfeld Treasurer, Secretary and
Director Sept. 3, 2003
Gerald Kaufman Director Sept. 3, 2003