<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                ______________

                                  Form 10-QSB

                                ______________


           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                 For the quarterly period ended April 30, 2000

                                      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 Number 33-40804

                                ______________

                             Modern Records, Inc.
            (Exact name of registrant as specified in its charter)

                                _____________



               California                              95-3404374
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification No.)


    468 North Camden Drive, Third Floor                   90210
         Beverly Hills, California                      (Zip Code)
  (Address of Principal Executive Offices)


      (Registrant's telephone number, including area code) (310) 285-5370

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [ ] No [ ]

     The number of shares of the Registrant's Common Stock outstanding as of
April 30, 2000 was 27,454,114 shares.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
--------------------------------------------------------------------------------
<PAGE>

                     Modern Records, Inc. AND SUBSIDIARIES

                         Quarter Ended April 30, 2000

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
PART I.  FINANCIAL INFORMATION
          <S>                                                                                <C>
          Item 1.    Financial Statements (Unaudited) ...............................          3

                     Condensed Statements of Operation for the Three Months
                     Ended April 30, 2000 ...........................................          4

                     Condensed Statements of Shareholders' Deficiency as of
                     April 30, 2000 .................................................          5

                     Condensed Statements of Cash Flows as of April 30, 2000 ........          6

                     Notes to Financial Statements ..................................          7

          Item 2.    Management's Discussion and Analysis of Financial
                     Condition and Results of Operations ............................          7

PART II. OTHER INFORMATION

          Item 6.    Exhibits and Reports on Form 8-K ...............................         10

SIGNATURE ............................................................................        11
</TABLE>

                                       2
<PAGE>

                PART I. FINANCIAL INFORMATION



Item 1.   Financial Statements



                             MODERN RECORDS, INC.
                           CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                  April 30,
                                                                    2000
                                                                  ---------
                                                                 (unaudited)
<S>                                                             <C>
                     ASSETS

CURRENT ASSETS


  Cash and cash equivalents                                     $   (27,529)
  Accounts receivable, net of allowance in
   April 30, 2000 of $87,985                                        125,649
                                                                -----------
    TOTAL CURRENT ASSETS                                             98,120

PREPAID ROYALTIES                                                   772,913

EQUIPMENT - Net of accumulated depreciation                          37,790

OTHER ASSET                                                          36,894
                                                                -----------
                                                                $   945,717
                                                                -----------

       LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                         $ 1,068,319
  Notes payable                                                      21,205
  Deferred revenue                                                   23,599
  Due to related parties                                            559,960
                                                                -----------
    TOTAL CURRENT LIABILITIES                                     1,673,083

LONG-TERM DEBT                                                       25,000

SHAREHOLDERS' DEFICIENCY
  Preferred stock; authorized - 20,000,000 shares, none issued           --
  Common stock, no par value; authorized - 40,000,000 shares;
   issued and outstanding - 27,454,114 (2000)
                                                                  4,874,857

  Accumulated deficit                                            (5,627,223)
                                                                -----------
    TOTAL SHAREHOLDERS' DEFICIENCY                                 (752,366)
                                                                -----------
                                                                $   945,717
                                                                ===========
</TABLE>
                See accompanying notes to financial statements.

                                       3
<PAGE>

                             MODERN RECORDS, INC.
                      CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Three Months Ended       Six Months Ended
                                                 -----------------------------------------
                                                      April 30,             April 30,
                                                        2000                  2000
                                                      ---------             ---------
                                                     (unaudited)
<S>                                              <C>                      <C>
REVENUE
 Modern/Atlantic agreement                          $           0     $       108,282

COST OF REVENUE                                              6500               6,500
                                                    -------------     ---------------
GROSS PROFIT                                                (6500)            101,782

EXPENSES
 Officer's salaries                                       110,508             173,008
 Other marketing, general and administrative
  expenses                                                669,091           1,316,244
                                                    -------------     ---------------
                                                          779,599           1,489,252
                                                    -------------     ---------------

NET LOSS                                            $    (786,099)    $    (1,387,470)
                                                    =============     ===============
BASIC AND DILUTED LOSS PER SHARE                    $       (0.03)    $         (0.02)
                                                    =============     ===============
WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                                    27,093,739          25,377,301
                                                    =============     ===============
</TABLE>
                See accompanying notes to financial statements.

                                       4
<PAGE>

                 MODERN RECORDS, INC. CONDENSED STATEMENTS OF
                           SHAREHOLDERS' DEFICIENCY

                                  (unaudited)

<TABLE>
<CAPTION>
                              Preferred Stock                   Common Stock
                             ------------------          ---------------------------          Accumulated
                             Shares      Amount          Shares               Amount            Deficit             Total
                             ------      ------          ------               ------          -----------           -----
<S>                          <C>         <C>           <C>                  <C>              <C>                 <C>
Balance, April 30, 2000          --          --        25,110,864           $3,948,462       $(4,269,753)        $  (321,291)

Private placements                                      2,027,500              926,470                               926,470

Net loss                                                                                      (1,387,470)         (1,387,470)
                             ------      ------        ----------           ----------       -----------         -----------
Balance, April 30, 2000          --          --        27,138,364           $4,874,932       $(5,657,223)        $  (782,291)
                             ======      ======        ==========           ==========       ===========         ===========
</TABLE>

                See accompanying notes to financial statements.

                                       5
<PAGE>

                             MODERN RECORDS, INC.
                      CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                             Six Months Ended
                                                                                             ----------------
                                                                                      April 30,
                                                                                        2000
                                                                                      ---------
                                                                                     (unaudited)
<S>                                                                                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                          $(1,357,470)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation                                                                          5,220
    Changes in operating assets and liabilities:
      Accounts receivable                                                                20,000
      Other assets                                                                       (4,392)
      Accounts payable and accrued expenses                                             293,843
      Accrued interest on notes payable                                                     375
      Due to related party for compensation                                                  --
      Deferred revenue                                                                       --
                                                                                    -----------
      NET CASH USED IN OPERATING ACTIVITIES                                          (1,042,424)
                                                                                    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Prepaid royalties                                                                    (122,282)
  Purchase of equipment                                                                      --
                                                                                    -----------
      NET CASH USED IN INVESTING ACTIVITIES                                            (122,282)
                                                                                    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Bank overdraft                                                                             --
  Advances from related parties                                                              --
  Repayments to related parties                                                         (76,358)
  Common stock issued                                                                 1,214,277
  Special warrants issued                                                                    --
                                                                                    -----------
      NET CASH PROVIDED BY FINANCING ACTIVITIES                                       1,137,919
                                                                                    -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                                   (26,787)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           16,535
                                                                                    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $   (10,252)
                                                                                    ===========

SUPPLEMENTAL INFORMATION OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
  Issuance of common stock for services                                             $    72,500
                                                                                    ===========
</TABLE>

                See accompanying notes to financial statements.

                                       6
<PAGE>

                             MODERN RECORDS, INC.
                      NOTES TO FINANCIAL STATEMENTS INC.
                       THREE MONTHS ENDED April 30, 2000
                                  (unaudited)

BASIS OF PRESENTATION

The interim financial statements presented have been prepared by Modern Records,
Inc. (the "Company") without audit and, in the opinion of the management,
reflect all adjustments of a normal recurring nature necessary for a fair
statement of (a) the results of operations for the three months ended April 30,
2000 (b) the financial position at April 30, 2000, (c) shareholders' deficiency
for the Three months ended April 30, 2000, (d) the cash flows for the Six months
ended April 30, 2000. Interim results are not necessarily indicative of results
for a full year.

The balance sheet presented as of April 30, 2000 has been derived from the
financial statements that have been audited by the Company's independent
auditors. The financial statements and notes are condensed as permitted by Form
10-QSB and do not contain certain information included in the annual financial
statements and notes of the Company. The financial statements and notes included
herein should be read in conjunction with the financial statements and notes
included in the Company's Annual Report on Form 10-KSB.


SHAREHOLDERS' EQUITY

Private Placement - There are several private placement in the process but have
-----------------
not been finalized yet. On November 8, 1999 and November 18, 1999, the Company
offered 200,000 Units and 1,350,000 Units, respectively, at $0.75 Cdn. per unit
to private parties. Each unit comprised of one share of common stock and one
non-transferable share purchase warrant. Each share purchase warrant will
entitle the holder to purchase an additional share of common stock for two years
at $0.90 Cdn. per share for the first year and at $1.25 per share for the second
year. Modern Entertainment, a company owned by Mr. R. Jackson, purchased 600,000
units. Payment for this purchase was offset against certain monies advances by
Mr. R. Jackson. The Company paid 72,500 shares as finder's fee. Both private
placements were completed on January 6, 2000.


Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

          The following discussion contains forward-looking statements regarding
events and financial trends that may affect Modern Record's future operating
results and financial position. The following discussion should be read in
conjunction with the Modern Record's financial statements and the notes thereto
appearing elsewhere in this Quarterly Report on Form 10-QSB.

                                       7
<PAGE>

OVERVIEW

     Our principal business activities are producing, acquiring, licensing,
marketing and distributing audio recordings.

     To date, our primary source of revenue has been from the sales of the works
of Stevie Nicks, one of the founders of Modern Records. Ms. Nicks is no longer
under contract with us but these sales continue to provide us with a significant
source of revenue. Additional revenues are provided from the sales of other less
successful artists in our catalogue, although we may not maintain these sources
in the future.

     In the past, we have also licensed our catalogue to others. We believe that
this potential source of revenue has been underutilized and we intend to pursue
additional sources of licensing revenue in the future.

     Funds from sales of securities have provided us with the means to attract
additional talent to our label. In the fiscal year ended October 31, 1998, we
signed Abel Mason, a previously unsigned R&B artist, to our label with a five
album commitment. We expect that the release of his debut album in fiscal 2000
will provide us with an additional source of revenue. In addition, we expect to
release The Jackson's new album in the third quarter of fiscal 2000. We also
recently signed Tiffany to the Modern Records label with a commitment for four
new albums and one greatest hits album. Tiffany has sold over 14 million records
to date and we expect this addition to our artist roster will be a significant
source of additional revenue. We expect to release a single from the new album
in May 2000 with the full album release to follow in June 2000. In February
1999, we also signed and agreement with Butterfly Productions, LLC for the
exclusive rights to record and distribute the original cast recording of the
off-Broadway musical, "Inappropriate." We expect to receive significant revenues
from the distribution of this CD.

     A significant recurring funding requirement for us are the expenses
associated with A&R. These include recording costs and advances to artists prior
to distribution of the final product and before we realize any potential
profits. We make substantial payment each quarter for these expenses to maintain
and enhance our artist roster. To the extent possible, these costs are recouped
form the royalties otherwise payable to the artist from future albums. When an
artist's current popularity and past performance provide a sound basis for
estimating the extent to which we will be able to recoup such costs from
royalties, the advances are capitalized as an asset.

     Our ability to achieve and maintain profitability in the future will depend
on our ability to attract and maintain the talent that will provide us with a
steady source of revenue, as well as our ability to successfully market such
talent.

Results of Operations

     Three Months Ended January 31, 2000 Compared to Three Months Ended January
31, 1999.

     Revenues. For the three months ended January 31, 2000 Modern Records had
revenues of $108,282 compared to revenues of $144,560 for the same period in
1999, a decrease of $36,278 or approximately 25%. This decrease in revenues was
due primarily to a decrease in revenues derived from our distribution agreement
with Atlantic. This decrease reflects declining sales for the three-CD box set
by Stevie Nicks entitled "Enchanted," which was released in May 1998 through a
distribution agreement with Atlantic.

     Expenses. Total expenses for the three months ended January 31, 2000
increased to $679,653 from $276,205 for the same period in 1999, an increase of
$403,448 or approximately 146%. The increase is mainly due to our continued
commitment to developing a strategic business plan, attracting appropriate
equity and debt financing and establishing an organizational infrastructure.

                                       8
<PAGE>

     In connection with developing our organizational infrastructure, marketing,
general and administrative expenses increased to $617,153 for the three months
ended January 31, 2000 from $213,705 for the corresponding period in 1999, an
increase of $403,448 or approximately 188%.

Liquidity and Capital Resources

     Our growth strategy is focused on signing new artists to the Modern Records
label, advancing funds for the production of new albums, marketing albums on the
Modern Records label and retaining an experienced and talented management team.
This strategy requires substantial expenditures before any revenue is realized.
Our current revenue stream is derived largely from the sale of Stevie Nicks'
albums for which we have realized $296,000 in gross profits. This revenue is
insufficient to fund our growth strategy.

     As of January 31, 2000 we had approximately $355,216 in cash and cash
equivalents, compared to $16,535 as of October 31, 1999. We do not have access
to a line of credit. Since Mr. Jackson obtained a controlling interest in Modern
Records in May 1997, our growth strategy has been financed primarily through the
private placement of common stock, no par value, of Modern Records. In the
fiscal year ended October 31, 1999, we raised approximately $1,449,092 through
the private placement of common stock and warrants to purchase common stock. In
November 1999, we raised approximately $809,300 through the private placement of
common stock and warrants to purchase common stock.

     At January 31, 2000 we owed an aggregate of $37,414 in principal plus
accrued and unpaid interest to the father of one of our shareholders pursuant to
a note dated November 7, 1994 and a note dated April 19, 1995. All principal
plus accrued interest thereon is due and payable on demand. In addition, as of
January 31, 2000, we owed an aggregate of $21,205 to two shareholders pursuant
to notes dated September 12, 1995. At January 31, 2000 we also owed an aggregate
of $575,000 in accrued compensation to Mr. Jackson which is due and payable on
demand.

     Our ability to successfully implement our growth strategy depends on our
ability to obtain additional financing. If we are unable to raise additional
funds through the private placement of our securities, we may seek additional
financing from affiliated or unaffiliated third parties. We are currently in
discussions with potential lenders regarding the possibility of obtaining long
term financing. Such financing may not be available on acceptable terms, or at
all. If we are unable to obtain financing to meet our working capital needs,
repay indebtedness or advance royalty payments as they become due, we will have
to consider alternative sources of funding to meet our obligations.

                                       9
<PAGE>

                          PART II. OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds.

          In November 1999, we issued 1,622,500 units in a private placement.
Each unit consists of one share of common stock and one non-transferable warrant
to purchase an additional share of common stock for two years at C$.90
(approximately US$.62) for the first year, and at C$1.25 (approximately US$.86)
for the second year. Of these units, (1) 20,000 units were issued to Jordac
Investments Ltd., (2) 14,000 units were issued to each of Reidar Ostman and
Anders Alsing, and (3) 24,500 units were issued to Yorkton Securities in
consideration of their services in placing the units. The issuances were made in
reliance on Section 4(2) of the Securities Act to investors who were accredited
or sophisticated and had access to information regarding Modern Records. The
proceeds from this offering will be used for continued development of our
organizational infrastructure and general corporate purposes.

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

EXHIBIT
NUMBER          DESCRIPTION
-------         -----------
3.1             Articles of Incorporation of Modern Records (incorporated by
                reference to Exhibit 3.1 of Modern Records's Registration
                Statement on Form S-1 (File No. 33-40804) (the "S-1").
3.2             Bylaws of Modern Records (incorporated by reference to Exhibit
                3.2 of Modern Record's Annual Report on Form 10-KSB for the
                fiscal year ended October 31, 1998 (the "1998 10-KSB")).
3.3             Certificate of Amendment to the Articles of Incorporation of
                Modern Records (incorporated by reference to Exhibit 3.3 of the
                1998 10-KSB).
10.1            Distribution Agreement dated July 1, 1979 between Modern Records
                and Atlantic Recording Corporation as amended (incorporated by
                reference to Exhibit 10.1 of the1998 10-KSB).
10.2            Stock Option Agreement dated July 10, 1998 entered into between
                Modern Records and Randy Jackson directors (incorporated by
                reference to Exhibit 10.16 of the 1998 10-KSB).
10.3            Stock Option Agreement dated July 10, 1998 between Modern
                Records and Jackie Jackson (incorporated by reference to Exhibit
                10.17 of the 1998 10-KSB).
10.4            Stock Option Agreement dated July 10, 1998 between Modern
                Records and Lawrence W. Gallo (incorporated by reference to
                Exhibit 10.18 of the 1998 10-KSB).
10.5            Stock Option Agreement dated July 10, 1998 between Modern
                Records and Johan Grandin (incorporated by reference to Exhbit
                10.19 to the 1998 10-KSB).
10.6            Loan Agreement dated March 16, 1998 between Modern Records and
                Randy Jackson (incorporated by reference to Exhibit 10.21 of the
                10-KSB).
10.7            Employment Agreement dated May 15, 1997 between Modern Records
                and Randy Jackson (incorporated by reference to Exhibit 10.22 of
                the 1998 10-KSB).
10.8            Recording Agreement dated March 1, 1999 between United Leisure
                Corporation and Modern Records and The Jacksons (incorporated by
                reference to Exhibit 10.17 of the 1997 10-KSB).
10.9            Employment Agreement dated May 17, 1999 between Modern Records
                and Henley Regisford, Jr. (incorporated by reference to Exhibit
                10.16 of the 1997 10-KSB).
10.10           Financing Agreement dated May 1, 1997 between United Film
                Distributors, Inc. and Modern Records (incorporated by reference
                to Exhibit 10.12 of Modern Record's Quarterly Report on Form 10-
                QSB for the period ended July 31, 1999 (the "July 31, 1999 10-
                QSB")).
10.11           Letter Agreement dated June 11, 1999 between Modern Records and
                Roland Perry (incorporated by reference to Exhibit 10.2 of the
                July 31, 1999 10-QSB).
10.12           Incentive Stock Option Agreement dated June 11, 1999 between
                Modern Records and Roland Perry (incorporated by reference to
                Exhibit 10.3 of the July 31, 1999 10-QSB).
10.13           License Agreement dated August 18, 1999 between Modern Records
                and MCY Music World, Inc. (incorporated by reference to Exhibit
                10.4 the July 31, 1999 10-QSB).
10.14           Incentive Stock Option Agreement dated January 28, 2000 between
                Modern Records and Randy Jackson (incorporated by reference to
                Exhibit 10.14 of Modern Record's Annual Report on form 10-KSB
                for the fiscal year ended October 31, 1999)
27.1            Financial Data Schedule


          (b)  Reports on Form 8-K

               None.

                                       10
<PAGE>

                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                            Modern Records, Inc.,
                                            a California corporation

June 15, 2000                  By:   /s/ Stephen Randall Jackson
                                  ----------------------------------------------
                               Stephen Randall Jackson
                               Chairman of the Board and Chief Executive Officer
                               (Duly Authorized Officer and Principal Financial
                               Officer)

                                       11