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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (Fee Required)
For The Fiscal Year Commission File #2-80891-NY
Ended June 30, 1998
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, New York 11226
(Address of Principal Executive Office) (Zip Code)
(718)469-3132
(Registrant's Telephone Number, Including Area Code)
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
Indicate by check mark if 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. X
As of September 23, 1998, 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 Common Stock $.0001 par value
at September 23, 1998 was 20,150,000.
PART 1
1. Business
The Registrant is engaged in aiding prospective clients in
obtaining financing and in providing managerial services to client
companies. During the year ended June 30, 1997, the Registrant was
involved in providing managerial services to Davin Enterprises Inc.
("Davin") which it also had aided in obtaining financing. The
Registrant received managerial fees of $3,200 from Davin during the
year ended June 30, 1998.
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.
During December 1996 the Registrant purchased 403,000 shares
of Coral Development Corp. for $30,300. The Registrant has
registered these shares with the Securities and Exchange Commission
with the intention to distribute those shares to the Registrant's
shareholders in the form of a dividend. This distribution can only
be made after a merger agreement with a private company is signed
and at least 80% of the Registrant's shareholders approve such
merger. On July 22, 1998, Coral has signed a merger agreement with
OmniComm Systems Inc., a company in the computer software field.
No assurance can be given that a merger agreement will be signed
and that at least 80% of the shareholders of the Registrant will
approve such merger agreement.
During the year ended June 30, 1996, the Registrant purchased
25,000 shares of Delta Three Inc. for $25,000-. Delta Three Inc.
is a telecommunications provider, using Internet technology for
voice transmission. During the quarter ended September 30, 1997
the Registrant sold its 25,000 shares of Delta Three Inc. for
$50,000.
During the fiscal year ended June 30, 1998, the Registrant had
net income of $16,198. Its revenue for the year ended June 30,
1998 was derived from management income amounting to $3,200,
interest income of $32,726 and a gain on securities sales of
$67,065. Total revenues for the year ended June 30, 1998 amounted
to $102,991.
Item 2. Properties.
As of June 30, 1998, the Registrant owned no property. The
Registrant utilizes some space in the offices of Lite King Corp.,
an affiliated company.
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 - 372 shareholders of record of 9/23/98.
Dividends - None paid.
Item 6. Selected Financial Data
for the Year ended June 30,
1998 1997 1996 1995 1994
Total Revenues $102,991 $72,985 $40,449 $40,708 $31,278
Operating Income
(Loss) 28,160 6,388 (2,709) (14,375) (10,694)
Net Income (Loss) 16,198 11,925 (3,720) (14,375) (10,694)
Net Income (Loss)
per share NIL NIL NIL NIL NIL
Total Assets 752,417 731,238 718,443 721,014 735,389
Long Term Debt -0- -0- -0- -0- -0-
Dividends -0- -0- -0- -0- -0-
Item 7. Management's Discussion and Analysis of Results of
Operations.
The Registrant had net income after taxes of $16,198 for the
year ended June 30, 1998. Net income after taxes for the year
ended June 30, 1997 amounted to $11,925.
Fiscal year 1998 revenues and income was influenced by
interest income, management income and gains from the sale of
securities. During fiscal year 1998, the revenues amounted to
$102,991 as compared with fiscal year 1997 revenes of $72,985.
Operating expenses rose in fiscal year 1998 as compared with the
comparative fiscal year 1997 figure. The net income figure for
fiscal year 1998 was principally due to the sale of securities
(Delta Three and Havenwood Corp. shares).
The Registrant received monthly management fees of $3,200 from
Davin for the fiscal year ended June 30, 1998. The Registrant
provided administrative, clerical, bookkeeping and other services
to Davin. The agreement was terminated December 31, 1997. At June
30, 1998, the Registrant owned 50,100 restricted shares of Creative
Master International Inc. (formerly Davin Enterprises Inc.), at a
cost of $7,950, representing less than 1% of the total shares of
Creative outstanding. Davin Enterprises Inc. merged with Creative
Master International Inc. in December 1997.
During December 1996 the Retistrant purchased 403,000 shares
of Coral Development Corp. for $30,300. The Registrant has
registered these shares with the Securities and Exchange Commission
with the intention to distribute those shares to the Registrant's
shareholders in the form of a dividend. This distribution can only
be made after a merger agreement with a private company is signed
and at least 80% of the Registrant's shareholders approve such
merger. In July 1998 Coral merged with Omnicomm Systems Inc. a
computer software company. No assurance can be given that a merger
agreement with OmniComm Systems Inc. will be completed and that at
least 80% of the shareholders of the Registrant will approve such
merger agreement.
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. During the
quarter ended March 31, 1997, TTR completed its initial public
offering and repaid the note with interest. The Company also
exercised its warrants and realized a gain of $29,940 in the year
ended June 30, 1997.
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. This investment was
sold during the year ended June 30, 1998.
During the year ended June 30, 1997 the Registrant recognized
a complete loss on its investment and loan to Soft Sail Wind Power
Inc. (Soft Sail). At the present time the Registrant does not
believe Soft Sail will be able to repay its debt to the Company and
has therefore considered its debt and equity investment in Soft
Sail to be worthless. The loss on the loan was $11,400 and the
loss in fiscal year 1997 on its equity investment was $16,005.
At June 30, 1998 the Registrant's total assets amounted to
$752,417 and as compared with $731,238 for total assets at June 30,
1997. At June 30, 1998, stockholders' equity amounted to $744,217,
as compared with $728,019 at June 30, 1997.
Item 8. Financial Statements.
Attached.
Item 9. Changes In and Disagreement With Accountants on
Accounting and Financial Disclosure.
None.
Year 2000 Issue
The Company has evaluated the impact of the Year 2000 issue on
the business and does not expect to incur significant costs with
Year 2000 compliance. The Company believes that all software and
hardware requirements to enable it to cope with the Year 2000 issue
have been or are being currently implemented. However, there can
be no assurance that unanticipated costs may arise in implementing
these requirements.
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 47 President and Next Annual
Director Meeting
Anne Seidenfeld 85 Treasurer, Secretary Next Annual
and Director Meeting
Gerald Kaufman 57 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
Registrant 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 Daine Industries, Inc.,
a publicly traded company which through its wholly owned
subsidiary, Lite King Corp, is engaged in the manufacture of wiring
devices. 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., a newly established company engaged in wind
energy research and development activities. Since December 1996,
he has been president and director of Coral Development Corp., a
public company which signed a merger agreement in July 1998 with
Omnicomm Systems Inc., a company in the computer software field.
Anne Seidenfeld, Treasurer, Secretary and Director, received
her diploma from Washington Irving High School, New York City, in
1931. Mrs. Seidenfeld is the Treasurer, Secretary and Director of
Daine Industries, Inc. and Coral Development Corp and was
Treasurer, Secretary and Director of Davin Enterprises Inc. from
1987 until December 1997.
Gerald Kaufman, Director, has been a practicing attorney for
over twenty five years. He has served as a director of the
Registrant, along with being a director of Daine Industries Inc.
since November 1990. 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-Remuneration and Transactions.
During the fiscal year ended June 30, 1998, management
salaries were as follows:
Anne Seidenfeld - Treasurer-Secretary $7,200
Arthur Seidenfeld - President $17,300
Anne Seidenfeld, the Company's treasurer and secretary,
pursuant to an oral agreement with the Company earned $7,200 as an
annual salary effective through June 30, 1998.
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
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 owns
44,063 of the outstanding shares of Davin Enterprises, Inc. Anne
Seidenfeld, Treasurer-Secretary and a director of the Registrant
owns 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.
MODERN TECHNOLOGY CORP.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
FILED WITH THE ANNUAL REPORT OF THE COMPANY
ON FORM 10-K
ITEM 14 - EXHIBITS
Financial Statements and Schedules and Reports on Form 8-K.
ACCOUNTANT'S REPORT
BALANCE SHEET AS OF JUNE 30, 1998 AND JUNE 30, 1997
STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD JULY 1, 1995 TO
JUNE 30, 1998
STATEMENT OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND
1996
STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND
1996
NOTES TO 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.
MODERN TECHNNOLOGY CORP.
FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
CONSOLIDATED BALANCE SHEETS 2
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 3
CONSOLIDATED STATEMENTS OF OPERATIONS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6-10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
MODERN TECHNOLOGY CORP.
Belle Harbor, New York 11694
We have audited the accompanying consolidated balance sheets of
MODERN TECHNOLOGY CORP. as at June 30, 1998 and 1997 and the
related consolidated statements of operations and stockholders'
equity and cash flows for each of the three years in the period
ended June 30, 1998. These financial statements are the
responsibility of the company's management. Our responsibility is
to express an opinion on these financial statements based upon our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements enumerated
above present fairly, in all material respects, the consolidated
financial position of MODERN TECHNOLOGY CORP. at June 30, 1998 and
1997, and the consolidated results of its operations and cash flows
for the three years in the period ended June 30, 1998, in
conformity with generally accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
August 6, 1998
Page 1 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED BALANCE SHEETS
June 30,
1998 1997
A S S E T S
CURRENT ASSETS
Cash and Cash Equivalents $701,275 $647,886
EQUIPMENT - At Cost 9,939 9,939
Less: Accumulated Depreciation 9,939 9,939
-0- -0-
OTHER ASSETS
Investments, At Cost 24,750 49,770
Deferred Tax Asset -0- 7,375
Deferred Registration Costs 26,007 25,907
Other Assets 385 300
51,142 83,352
TOTAL ASSETS $752,417 $731,238
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 $ 8,200 $ 3,219
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 495,161 495,161
Retained Earnings 247,041 230,843
744,217 728,019
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $752,417 $731,238
The accompanying notes are an integral part of these financial statements.
Page 2 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD JULY 1, 1995 TO JUNE 30, 1998
Total
Par Retained Stock-
# of Value Paid-In Earnings holders'
Shares $.0001 Capital (Deficit) Equity
BALANCES AT
JULY 1, 1995 20,150,000 $2,015 $495,161 $222,638 $719,814
Net Income (Loss)
for the Year Ended
June 30, 1996 (3,720) (3,720)
BALANCES AT
JUNE 30, 1996 20,150,000 2,015 495,161 218,918 716,094
Net Income (Loss)
for the Year Ended
June 30, 1997 11,925 11,925
BALANCES AT
JUNE 30, 1997 20,150,000 2,015 495,161 230,843 728,019
Net Income (Loss)
for the Year Ended
June 30, 1998 16,198 16,198
BALANCES AT
JUNE 30, 1998 20,150,000 $2,015 $495,161 $247,041 $744,217
The accompanying notes are an integral part of these financial statements.
Page 3 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended June 30,
1998 1997 1996
REVENUES
Interest Income $ 32,726 $33,445 $30,849
Management Income 3,200 9,600 9,600
Gain on Securities Sales 67,065 29,940 -0-
102,991 72,985 40,449
EXPENSES
Officers' Salaries 24,500 7,200 7,200
General and Administrative
Expenses 50,331 31,992 26,472
(Loss) on Worthlessness of
Affiliate -0- (27,405) -0-
Equity in (Loss) of
Affiliated Company -0- -0- (9,486)
74,831 66,597 43,158
INCOME (LOSS) BEFORE TAXES 28,160 6,388 (2,709)
OTHER EXPENSES & TAXES
Income Tax (Expense) Benefit 11,962 5,537 (1,011)
NET INCOME (LOSS) $ 16,198 $11,925 $(3,720)
INCOME (LOSS) PER SHARE NIL NIL NIL
NUMBER OF WEIGHTED AVERAGE
SHARES OUTSTANDING 20,150,000 20,150,000 20,150,000
The accompanying notes are an integral part of these financial statements.
Page 4 of 10
MODERN TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended June 30,
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 16,198 $ 11,925 $ (3,720)
Adjustments to Reconcile Net Income
to Net Cash Provided By (Used In)
Operating Activities:
Changes in Assets and Liabilities:
Decrease (Increase) In Deferred Taxes 7,375 (7,375) -0-
Decrease (Increase) in Deferred
Registration Costs (100) (25,907) -0-
Decrease (Increase) in Other Assets (85) (300) -0-
Increase (Decrease) Accrued
Expenses and Taxes 4,981 870 1,149
Net Cash Provided By (Used In)
Operating Activities 28,369 (20,787) (2,571)
CASH FLOWS FROM INVESTING ACTIVITIES:
Write Down of Investments and Loan -0- 27,405 9,486
Purchase (Sale) of Securities 25,020 25,000 (25,000)
Loan - Affiliate -0- -0- (11,400)
Net Cash (Used In) Provided By
Investing Activities 25,020 52,405 (26,914)
Net Increase (Decrease) in Cash
and Cash Equivalents 53,389 31,618 (29,485)
Cash and Cash Equivalents,
Beginning of Year 647,886 616,268 645,753
CASH AND CASH EQUIVALENTS,
END OF YEAR $701,275 $647,886 $616,268
Supplemental Disclosures Of Cash Flow Information
Cash Paid During The Period For:
Taxes $ 2,806 $ 623 $ -0-
Interest $ -0- $ -0- $ -0-
The accompanying notes are an integral part of these financial statements.
Page 5 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
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.
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). All significant intercompany balances and
transactions have been eliminated in consolidation. Modern
invested $30,300 in Coral during the quarter ended 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. The carrying
amount reported in the accompanying balance sheets
approximates fair value.
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.
Page 6 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(Continued)
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.
DEFERRED REGISTRATION COSTS
As of June 30, 1998, the Company's subsidiary, Coral, has
incurred deferred registration costs of $26,007 relating to
expenses incurred in connection with the Proposed Distribution
of Coral's securities. Upon consumation of this Proposed
Distribution, the deferred registration costs will be charged
to equity. Should the Proposed Distribution prove to be
unsuccessful, these deferred costs, as well as additional
expenses to be incurred, will be charged to operations.
YEAR 2000 COMPLIANCE
The Company has evaluated the impact of the Year 2000 issue on
the business and does not expect to incur significant costs
with Year 2000 compliance. The Company believes that all
software and hardware requirements to enable it to cope with
the Year 2000 issue have been or are being currently
implemented. However, there can be no assurance that
unanticipated costs may arise in implementing these
requirements.
NOTE 3: INVESTMENT IN EQUITY SECURITIES (At Cost)
Investments in Non Marketable Equity Securities consist of the
following:
June 30, June 30,
1998 1997
Investment in 25,000 Shares
of Delta Three, Inc. $ -0- $25,000
Investment in 72 million
restricted shares in
Daine Industries, Inc. 15,900 15,900
Investment in 50,100
restricted shares in
Creative Master
International Inc.
(formerly Davin
Enterprises Inc.) 7,950 7,950
Investments in other
restricted securities 900 920
$24,750 $49,770
Page 7 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(Continued)
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 shares of Creative Master
International Inc. (formerly Davin Enterprises, Inc.) at a
cost of $7,950.
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. During the quarter ended March 31, 1997, TTR
completed its initial public offering and repaid the note with
interest. The Company also exercised its warrants and
realized a gain of $29,940 in the year ended June 30, 1997.
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. This
investment was sold during the year ended June 30, 1998.
NOTE 4: INVESTMENT IN AFFILIATE
Investment in Soft Sail Wind Power Inc. (Soft Sail)
(representing approximately 36% of the outstanding common
stock).
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
Net Earnings (Loss) (26,350)
Company's Equity in Net
Earnings (Loss) (9,486)
During the year ended June 30, 1997 the Company recognized a
complete loss on its investment and loan to Soft Sail. There
is no financial information available since June 30, 1996. At
the present time the Company does not believe Soft Sail will
be able to repay its debt to the Company and has therefore
considered its debt and equity investment in Soft Sail to be
worthless. The loss on the loan was $11,400 and the loss on
its equity investment was $16,005. Both of these losses were
recognized during the year ended June 30, 1997.
Page 8 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(Continued)
NOTE 5: INCOME TAXES
The provision for income taxes is comprised of the
following:
6/30/98 6/30/97 6/30/96
Current $ 4,587 $ 1,838 $1,011
Deferred 7,375 (7,375) -0-
$11,962 $(5,537) $1,011
The provision for income taxes differs from the amount
computed by applying the statutory federal income rate as
follows:
6/30/98 6/30/97 6/30/96
Expected statutory amount $ 3,200 $ 781 $1,011
Net operating loss 7,375 (7,375) -0-
State income taxes, net
of federal benefit 1,387 1,057 -0-
$11,962 $(5,537) $1,011
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes
and amounts used for income tax purposes and the impact
of available net operating loss carryforwards. The net
operating loss, of Coral, of approximately $9,000 will
expire in fiscal year June 30, 2013. The related tax
asset of $1,323 has been fully reserved since it is
highly uncertain if Coral will realize this benefit.
The tax effect of significant temporary differences,
which comprise the deferred tax assets are as follows:
6/30/98 6/30/97 6/30/96
Deferred tax assets:
Net operating loss
carry forwards $1,323 $ 7,375 $-0-
Valuation allowance (1,323) -0- -0-
Net deferred tax (assets) $ -0- $(7,375) $-0-
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 and 112.
Page 9 of 10
MODERN TECHNOLOGY CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(Continued)
NOTE 7: RELATED PARTY TRANSACTIONS
Arthur Seidenfeld, President and a director of the
Company, owns 14.5% of the outstanding shares of Daine
Industries, Inc. Anne Seidenfeld, Treasurer, Secretary
and a director of the Company, owns approximately 8% of the
outstanding shares of Daine Industries, Inc. Anne
Seidenfeld is Arthur Seidenfeld's mother. There were no
related party transactions.
Page 10 of 10
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 23, 1998
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 September 23, 1998
Anne Seidenfeld Treasurer, Secretary September 23, 1998
and Director
Gerald Kaufman Director September 23, 1998