Item 2. Properties.
As of June 30, 2000, the Registrant owned no property. The Registrant utilizes some space in the offices of Lite King Corp., an affiliated company.
Item 3.
Item 3. Legal Proceedings.
None
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5.
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 - 367 shareholders of record of 9/13/00.
Dividends - 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.
Item 6. Selected Financial Data
for the Year ended June 30, 2000 1999 1998 1997 1996
Total Revenues $ 43,812 $266,984 $102,991 $72,985 $46,449 Operating Income (Loss) before tax (42,326) 144,323 28,160 6,388 (2,709) Net Income (Loss) (39,216) 103,105 16,198 11,925 (3,720) Net Income (Loss) per share NIL $.01 NIL NIL NIL Total Assets 788,106 902,861 752,417 731,238 718,443 Long Term Debt -0- -0- -0- -0- -0- Dividends -0- 30,300 -0- -0- -0-
Item 7.
Item 7. Management's Discussion and Analysis of Results of Operations.
During the fiscal year ended June 30, 2000 the Registrant had a net loss of $39,216. Its revenue for the year ended June 30, 2000 was derived from interest income of $43,812. The loss can be attributed primarily to expenses related to the Registrant's 70% owned subsidiary, Excess Materials Inc.
Fiscal year 1999 revenues and income was influenced by interest income and gains from the sale of securities. During fiscal year 1999, the revenues amounted to $266,984 as compared with the comparative fiscal year 1998 figure of $102,991. The net income figure for fiscal year 1999 was principally due to the sale of Davin Enterprises Inc. securities (Davin Enterprises Inc. merged with Creative Master International Inc. in December 1997).
The Registrant received 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.
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 Registrant's 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.
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.
During the fiscal year ended June 30, 1999 the Registrant established a subsidiary entitled Excess Materials Inc. ("Excess Materials"). Excess Materials is an electronic internet marketplace for corporate buyers and sellers of industrial supplies, equipment, metals, animal hides and textile items. Excess Materials derives its revenues from commissions paid by the seller on completed transactions. The Registrant owns 70% of the shares of Excess Materials.
For the year ended June 30, 2000 Excess Materials did not generate any revenues. At June 30, 2000 Excess Materials had approximately 540 registered members.
At June 30, 2000 the Registrant's total assets amounted to $788,106 and as compared with $902,861 at June 30, 1999. At June 30, 2000, stockholders' equity amounted to $777,806, as compared with $817,022 at June 30, 1999.
Item 8.
Item 8. Financial Statements.
Attached.
Item 9.
Item 9. Changes In and Disagreement With Accountants on Accounting and Financial Disclosure.
None. PART III
Item 10.
Item 10. Directors and Executive Officers.
The executive officers and directors of the Registrant are as follows:
Name Age Title Term Expires
Arthur Seidenfeld 49 President and Next Annual Director Meeting Anne Seidenfeld 87 Treasurer, Secretary Next Annual and Director Meeting Gerald Kaufman 59 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 and Lite King Corp, a publicly traded company 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 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 is president of Excess Materials, Inc., a 70% owned subsidiary of the Registrant engaged in the internet ecommerce 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 Lite King Corp. She is treasurer and secretary of Excess Materials Inc. 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.
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. since 1990 and a director of Lite King Corp since 1998. He has also been a director of American Mayflower Life Insurance Co. since 1973.
Arthur Seidenfeld is the son of Anne Seidenfeld.
Item 11.
Item 11. Management Executive Compensation.
During the fiscal year ended June 30, 2000, management salaries were as follows:
Anne Seidenfeld - Treasurer-Secretary $7,000 Arthur Seidenfeld - President $-0-
During the year ended June 30, 1999, Anne Seidenfeld, pursuant to an oral agreement with the Company earned $7,200 as an annual salary and Arthur Seidenfeld earned $22,375 effective through June 30, 1999.
PART IV
Item 12.
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.
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.
MODERN TECHNOLOGY CORP. INDEX TO FINANCIAL STATEMENTS AND SCHEDULES FILED WITH THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K
ITEM 14
ITEM 14 - EXHIBITS
Financial Statements and Schedules and Reports on Form 8-K.
ACCOUNTANT'S REPORT CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 AND JUNE 30, 1999 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD JULY 1, 1997 TO JUNE 30, 2000 CONSOLIDAATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2000, 1999 AND 1998 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 20, 2000
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 20, 2000
Anne Seidenfeld Treasurer, Secretary September 20, 2000 and Director
Gerald Kaufman Director September 20, 2000
MODERN TECHNNOLOGY CORP.
FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
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 6-9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders MODERN TECHNOLOGY CORP. Belle Harbor, New York
We have audited the accompanying consolidated balance sheets of MODERN TECHNOLOGY CORP. as at June 30, 2000 and 1999 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, 2000. 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, 2000 and 1999, and the consolidated results of its operations and cash flows for the three years in the period ended June 30, 2000, in conformity with generally accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey July 26, 2000
Page 1 of 9 MODERN TECHNOLOGY CORP. CONSOLIDATED BALANCE SHEETS
June 30, 2000 1999
A S S E T S
CURRENT ASSETS Cash and Cash Equivalents $663,250 $759,898 Other Current Assets 5,000 22,360 668,250 782,258
EQUIPMENT - At Cost 13,500 13,500 Less: Accumulated Depreciation (11,007) (10,295) 2,493 3,205
OTHER ASSETS Investments, At Cost 16,800 16,800 Note Receivable 100,000 100,000 Other Assets 563 598 117,363 117,398
TOTAL ASSETS $788,106 $902,861
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 $ 10,000 $ 47,326 Income Tax Payable -0- 38,513 Total Current Liabilities 10,000 85,839
MINORITY INTEREST 300 -0-
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 280,630 319,846 777,806 817,022
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $788,106 $902,861
The accompanying notes are an integral part of these financial statements.
Page 2 of 9 MODERN TECHNOLOGY CORP. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD JULY 1, 1997 TO JUNE 30, 2000
Common Stock Total Par Stock- # of Value Paid-In Retained holders' Shares $.0001 Capital Earnings Equity
BALANCES AT JULY 1, 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
Dividend distribution of Omnicomm Systems Inc stock to Modern Technology stockholders (30,300) (30,300)
Net Income (Loss) for the Year Ended June 30, 1999 103,105 103,105
BALANCES AT JUNE 30, 1999 20,150,000 2,015 495,161 319,846 817,022
Net Income (Loss) for the Year Ended June 30, 2000 (39,216) (39,216)
BALANCES AT JUNE 30, 2000 20,150,000 $2,015 $495,161 $280,630 $777,806
The accompanying notes are an integral part of these financial statements.
Page 3 of 9 MODERN TECHNOLOGY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
For The Years Ended June 30, 2000 1999 1998
REVENUES
Interest Income $ 43,812 $ 35,834 $ 32,726
Management Income -0- -0- 3,200
Gain on Securities Sales -0- 231,150 67,065
43,812 266,984 102,991
EXPENSES
Officers' Salaries 7,000 29,575 24,500
General and Administrative Expenses 79,138 65,677 50,331
Merger Related Expense -0- 27,409 -0-
86,138 122,661 74,831
INCOME (LOSS) BEFORE TAXES (42,326) 144,323 28,160
Income Tax Expense (Benefit) (3,110) 41,218 11,962
NET INCOME (LOSS) $(39,216) $103,105 $ 16,198
INCOME (LOSS) PER SHARE NIL $.01 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 9 MODERN TECHNOLOGY CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended June 30, 2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $(39,216) $103,105 $ 16,198 Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating Activities: Depreciation 832 356 -0- Gain on Investments -0- (231,150) (67,065) Merger of Subsidiary -0- (30,300) -0- Changes in Assets and Liabilities: Decrease (Increase) in Other Current Assets 17,360 (22,360) -0- Decrease (Increase) In Deferred Taxes -0- -0- 7,375 Decrease (Increase) in Deferred Registration Costs -0- 26,007 (100) Decrease (Increase) in Other Assets (85) (213) (85) Increase (Decrease) Accrued Expenses and Taxes (75,839) 77,639 4,981 Net Cash Provided By (Used In) Operating Activities (96,948) (76,916) (38,696)
CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures -0- (3,561) -0- (Purchase) Sale of Securities -0- 239,100 92,085 Purchase - Note Receivable -0- (100,000) -0- Net Cash (Used In) Provided By Investing Activities -0- 135,539 92,085
CASH FLOWS FROM FINANCING ACTIVITIES: Capital Contribution - Minority Interest 300 -0- -0- Net Cash (Used In) Provided By Financing Activities 300 -0- -0-
Net Increase (Decrease) in Cash and Cash Equivalents (96,648) 58,623 53,389
Cash and Cash Equivalents, Beginning of Year 759,898 701,275 647,886
CASH AND CASH EQUIVALENTS, END OF YEAR $663,250 $759,898 $701,275
Supplemental Disclosures Of Cash Flow Information Cash Paid During The Period For: Taxes $ 40,405 $ 2,665 $ 2,806 Interest $ -0- $ -0- $ -0-
The accompanying notes are an integral part of these financial statements.
Page 5 of 9 MODERN TECHNOLOGY CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
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 the Company's wholly owned subsidiary through March 31, 1999. (See Spinoff of Omnicomm Systems Inc. Investment.) All significant intercompany balances and transactions have been eliminated in consolidation. Modern invested $30,300 in Coral during the quarter ended December 31, 1996.
During the quarter ended March 31, 1999, Modern merged Coral with Omnicomm Systems, Inc. (Omnicomm). In the exchange, Modern received 403,000 shares of Omnicomm for all of the issued and outstanding shares of Coral. Modern then distributed all the stock of Omnicomm to its shareholders.
In April 1999 the Company formed a subsidiary named Excess Materials Inc. (Excess). Excess accounts are included in the consolidated financial statements at June 30, 2000 and 1999. Modern owns 70% of Excess. Arthur Seidenfeld (Modern's president) owns 10% of Excess, Anne Seidenfeld (Arthur's mother and secretary/treasurer of Modern) owns 10% of Excess and a relative of Mr. Seidenfeld owns 10% of Excess.
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.
NOTE RECEIVABLE
During the year ended June 30, 1999 the Company purchased a $100,000 convertible note in Omnicomm. The note carries a 10%
Page 6 of 9 MODERN TECHNOLOGY CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999 (Continued)
annual interest rate and is convertible at the Company's option into 80,000 shares of Omnicomm common stock. The note matures in 2004.
PROPERTY AND EQUIPMENT
Renewals and betterments are capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight line method over the asset's estimated useful life, which generally approximates 5 years.
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.
DEFERRED REGISTRATION COSTS
As of June 30, 1999, the Company's former subsidiary, Coral, had incurred deferred registration costs of $48,930 relating to expenses incurred in connection with the merger of Coral and Omnicomm Systems Inc. Upon consummation of this merger, the deferred registration costs were 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.
Page 7 of 9 MODERN TECHNOLOGY CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999 (Continued)
SPINOFF OF OMNICOMM SYSTEMS INC INVESTMENT
As of June 30, 1999, Modern declared a distribution to its shareholders in the form of all the 403,000 shares of Omnicomm Systems Inc (Omnicomm) common stock that Modern owns. During the quarter ended March 31, 1999, Modern merged Coral (Modern's 100% owned subsidiary) with Omnicomm. In the exchange, Modern received 403,000 common shares of Omnicomm for all of the issued and outstanding shares of Coral. This represented approximately 30% of the issued and outstanding common shares of Omnicomm at that time. Modern subsequently declared a distribution of the 403,000 common shares of Omnicomm to Modern shareholders on a pro rata basis to their Modern shareholdings. Omnicomm was a privately held computer systems integrator and software development company. Modern recognized no gain or loss on the distribution of the Omnicomm shares. The distribution does not qualify for tax-free treatment under Internal Revenue Section 355. Therefore, the shareholders of Modern will receive the Omnicomm shares as a taxable dividend. The dollar amount of the dividend is $30,300, the amount of Modern's investment in Coral.
NOTE 3: MARKETABLE SECURITIES
During the quarter ended December 31, 1998, the investment in Creative Master International Inc. (CMST) (formerly Davin Enterprises, Inc.) of 37,575 shares was relcassified to a trading security in accordance with Financial Accounting Standard (FAS) 115. CMST shares were listed on the NASD National Market on December 30, 1998. The cost of these shares was $7,950. During the quarter ended March 31, 1999, the entire investment was sold. The total realized gain was $231,150.
NOTE 4: INVESTMENT IN EQUITY SECURITIES (At Cost)
Investments in Non Marketable Equity Securities consist of the following: June 30, June 30, 2000 1999 Investment in 360,000 restricted shares in Daine Industries, Inc. $15,900 $15,900
Investments in other restricted securities 900 900
$16,800 $16,800
Page 8 of 9 MODERN TECHNOLOGY CORP. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999 (Continued)
NOTE 6: INCOME TAX EXPENSE (BENEFIT)
The provision for income taxes is comprised of the following: 6/30/00 6/30/99 6/30/98 Current $ 405 $41,218 $ 4,587 Deferred (3,515) -0- 7,375 $(3,110) $41,218 $11,962
The provision for income taxes differs from the amount computed by applying the statutory federal income rate as follows: 6/30/00 6/30/99 6/30/98 Expected statutory amount $ -0- $40,513 $ 3,200 Net operating loss (3,515) -0- 7,375 State income taxes, net of federal benefit 405 705 1,387 $(3,110) $41,218 $11,962
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 deferred tax assets at June 30, 1998 and 1997 related to Coral, the Company's former 100% owned subsidiary. Since the stock of Coral was merged with Omnicomm, the tax benefits relating to Coral are no longer carried as a deferred tax asset at June 30, 1999.
The tax effect of significant temporary differences, which comprise the deferred tax assets are as follows:
6/30/00 6/30/99 6/30/98 Deferred tax assets: Net operating loss carry forwards $18,000 $-0- $1,323 Valuation allowance (18,000) -0- (1,323) Net deferred tax (assets) $ -0- $-0- $ -0-
The current net operating loss of approximately $39,000 expires in the year ended June 30, 2020. The tax benefit has been fully reserved due to a lack of consistent operating profitability.
NOTE 7: 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.
NOTE 8: 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 9 of 9