` 

UNITED STATESSECURITIES 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 March 31, 2007
 
**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 2-80891-NY**
 
**MODERN TECHNOLOGY CORP**
(Exact name of registrant as specified in its charter)

 
**Nevada **11-2620387
(State or other jurisdiction of    incorporation or organization) 
(I.R.S. Employer Identification No.)
 
**1739 University Ave #339Oxford, MS 38655**
(Address of principal executive offices)

 

Registrant's telephone number, including area code: **(662)236-5928**
 

Indicate by check mark whether the Registrant (1) has filed all reportsrequired by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports) and (2) has been subject to such filingrequirements for the past 90 days: Yes [X]   No [_] 

 

Indicate the number of shares outstanding of each of the issuer's classes ofcommon stock, as of the latest practicable date. 

 
**Class
 **Outstanding at May 1, 2007
Common stock, $0.0001 par value 
11,019,685
 

 

 

 

 
**MODERN TECHNOLOGY CORP.**
 
**Table of Contents**
 
**PART I.****FINANCIAL INFORMATION**
   
 Item 1.Consolidated Financial Statements (unaudited)
  
Consolidated Balance Sheets

  
Consolidated Statements of Operations

  
Consolidated Statements of Cash Flows

  
Notes to Consolidated Financial Statements

 Item 2.Management's Discussion and Analysis of    Financial Condition and Results of Operations
 Item 3.Quantitative and Qualitative Disclosures About    Market Risk
 Item 4.Controls and Procedures
   
 **PART II.****OTHER INFORMATION**
   
 Item 1.Legal Proceedings
 Item 2.Changes in Securities and Use of Proceeds
 Item 3.Defaults Upon Senior Securities
 Item 4.Submission of Matters to a Vote of Security    Holders
 Item 5.Other Information
 Item 6.Exhibits and Reports on Form 8-K
  Signatures
 
 

2
**Item 1. Consolidated FinancialStatements (unaudited)**
**PART I -- FINANCIAL INFORMATION 

 

MODERN TECHNOLOGYCORP.

NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS

Modern Technology Corp (Modern) is a Nevada Corporation. 

We are engaged in aiding both private and public companies in the areas ofbusiness development, financing, product development, corporate strategy,corporate image and public relations, product distribution and marketing, andexecutive management consulting. We collectively refer to companies in which weown an equity position, our majority owned subsidiaries, corporate customers andclients as "portfolio companies". We charge for our services in cash or equityin the portfolio company. We may also exchange our services for revenue sharingof future sales of products or sharing of proceeds from the sale of licenses andtechnologies owned by our portfolio companies. We seek to grow through strategicacquisitions in addition to generating income from our services.

We seek to build revenues by a model continuous growth, strategicacquisitions, and commercialization of nascent technology. We seek to improveoperating efficiencies among our portfolio companies through elimination of costredundancies and realized synergy between subsidiaries. We also seek tocommercialize new technology and provide to our portfolio companies andsubsidiaries new product lines, operations infrastructure, and significantintellectual capital.

Modern's office was located in New York, but has been relocated toMississippi, with its administrative offices being located in Jackson,Mississippi. 

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM REPORTING 

The accompanying unaudited consolidated financial statements for the threeand nine month periods ended March 31, 2007 and 2006, have been prepared inaccordance with accounting principles generally accepted in the United Statesand with the Securities and Exchange Commission (the "SEC") rules for interimfinancial information reporting. Accordingly, they do not include all of theinformation and footnotes required by accounting principles generally acceptedin the United States for complete financial statements. These statements shouldbe read in conjunction with the consolidated financial statements and notesthereto included in the Company's Annual Report on Form 10-KSB for the fiscalyear ended June 30, 2006. In the opinion of management, all adjustments(consisting only of normal recurring accruals, unless otherwise indicated)considered necessary for a fair presentation of the results of operations forthe indicated periods have been included. Certain amounts recorded in previousperiods have been reclassified to conform to the current period presentation.Operating results for the three and nine months ended March 31, 2007 and 2006are not necessarily indicative of the results for the full fiscal year.

ACCOUNTING POLICIES

Modern Technology Corp's accounting policies conform to U. S. generallyaccepted accounting principles. Significant policies followed are describedbelow. 

The consolidated financial statements include the accounts of the company andall of its subsidiaries in which a controlling interest is maintained. Allconsolidated financial statements have been prepared in US dollars.
*SHARE BASED PAYMENTS*
On July 1, 2006, the Company adopted Statement of Financial AccountingStandards ("SFAS") No. 123 (revised), *Share-Based Payment*("SFAS No.123R"), which requires measurement and recognition of compensation expense forall share-based payment awards made to employees, non-employees and directors.Under SFAS No. 123R the fair value of share-based payment awards is estimated atgrant date using an option pricing model and the portion that is ultimatelyexpected to vest is recognized as compensation cost over the requisite serviceperiod. Prior to the adoption of SFAS No. 123R, the Company accounted forshare-based awards using the intrinsic value method prescribed by AccountingPrinciples Board Opinion No. 25, *Accounting for Stock Issued to Employees*("APBO No. 25"), as allowed under SFAS No. 123, *Accounting for Stock-BasedCompensation*. Under the intrinsic value method no share-based compensationcost was recognized for awards to employees or directors if the exercise priceof the award was equal to the fair market value of the underlying stock on thedate of grant.

RECLASSIFICATIONS

Certain items from prior periods within the financial statements have beenreclassified to conform to current period classifications.     

CASH AND CASH EQUIVALENTS

Cash Equivalents consist of highly liquid, short-term investments withoriginal maturities of 90 days or less. The carrying amount reported in theaccompanying balance sheets approximates fair value.

 

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation of property andequipment is provided using straight-line and accelerated methods. The estimateduseful lives are as follows:

                                                                   Years

Furniture, fixtures and equipment          5 - 7

Transportation equipment                       5

Leasehold improvements                        8 - 10

Buildings                                                   39

Expenditures for major renewals and betterment that extend the useful livesof property and equipment are capitalized. Expenditures for maintenance andrepairs are charged to expense as incurred.

Depreciation expense for the years ended June 30, 2006 and 2005 was $23,734and $11,795, respectively.

ESTIMATES IN FINANCIAL STATEMENTS

The preparation of financial statements in conformity with U. S. generallyaccepted accounting principals requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at thedate of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from thoseestimates.

INCOME TAXES

The company accounts for income taxes in accordance with Statement ofFinancial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes"SFAS 109 has as its basic objective the recognition of current and deferredincome tax assets and liabilities based upon all events that may have beenrecognized in the financial statements as measured by the provisions of theenacted tax laws. 

Valuation allowances are established when necessary to reduce deferred taxassets to the estimated amount to be realized. Income tax expense represents thetax payable for the current period and the change during the period in thedeferred tax assets and liabilities.
** ***EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS*
In September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*.SFAS No. 157 defines fair value, establishes a framework for measuring fairvalue, and expands disclosures about fair value measurements. We plan to adoptSFAS No. 157 on July 1, 2008. We are evaluating the impact, if any, that SFASNo. 157 will have on our financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), *Accounting for Uncertainty in Income Taxes--an interpretation of FASB StatementNo. 109*, which prescribes a recognition threshold and measurement processfor recording in the financial statements uncertain tax positions taken orexpected to be taken in a tax return. Additionally, FIN 48 provides guidance onde-recognition, classification, accounting in interim periods, and disclosurerequirements for uncertain tax positions. FIN 48 is effective for fiscal yearsbeginning after December 15, 2006. The Company is currently assessing the impactof FIN 48 on its consolidated financial position and results of operations.

In February 2006, the FASB issued SFAS No. 155, *Accounting for CertainHybrid Financial Instruments--an amendment of FASB Statements No. 133 and 140*.This statement amends SFAS No. 133, *Accounting for Derivative Instruments andHedging Activities*, and SFAS No. 140, *Accounting for Transfers andServicing of Financial Assets and Extinguishments of Liabilities*, andresolves issues addressed in SFAS No. 133 Implementation Issue No. D1, *Application of Statement 133 to Beneficial Interest in Securitized FinancialAssets*. SFAS No. 155 (a) permits fair value re-measurement for any hybridfinancial instrument that contains an embedded derivative that otherwise wouldrequire bifurcation; (b) clarifies which interest-only strips and principal-onlystrips are not subject to the requirements of SFAS No. 133; (c) establishes arequirement to evaluate beneficial interests in securitized financial assets toidentify interests that are freestanding derivatives or that are hybridfinancial instruments that contain an embedded derivative requiring bifurcation;(d) clarifies that concentrations of credit risk in the form of subordinationare not embedded derivatives; and (e) eliminates restrictions on a qualifyingspecial-purpose entity's ability to hold passive derivative financialinstruments that pertain to beneficial interests that are or contain aderivative financial instrument. The standard also requires presentation withinthe financial statements that identifies those hybrid financial instruments forwhich the fair value election has been applied and information on the incomestatement impact of the changes in fair value of those instruments. The Companyis required to apply SFAS No. 155 to all financial instruments acquired, issuedor subject to a re-measurement event beginning July 1, 2007, although earlyadoption is permitted as of the beginning of an entity's fiscal year. TheCompany is evaluating the provisions of SFAS No. 155. The effects of adopting ofSFAS No. 155 on the Company's financial statements are not known at this time.

In May 2005, FASB issued SFAS No. 154, *Accounting Changes and ErrorCorrections*, which replaces APBO No. 20, Accounting Changes and SFAS No. 3,*Reporting Accounting Changes in Interim Financial Statements*. Thispronouncement applies to all voluntary changes in accounting principle, andrevises the requirements for accounting for and reporting a change in accountingprinciple. SFAS No. 154 requires retrospective application to prior periods'financial statements of a voluntary change in accounting principle, unless it isimpracticable to do so. This pronouncement also requires that a change in themethod of depreciation, amortization, or depletion for long-lived, non-financialassets be accounted for as a change in accounting estimate that is effected by achange in accounting principle. SFAS No. 154 retains many provisions of APBONo. 20 without change, including those related to reporting a change inaccounting estimate, a change in the reporting entity, and correction of anerror. The pronouncement also carries forward the provisions of SFAS No. 3 whichgovern reporting accounting changes in interim financial statements. SFAS No.154 is effective for accounting changes and corrections of errors made in fiscalyears beginning after December 15, 2005. The Statement does not change thetransition provisions of any existing accounting pronouncements, including thosethat are in a transition phase as of the effective date of SFAS No. 154. TheCompany has applied the provisions of this statement effective July 1, 2006.

REVENUE RECOGNITION

The Company generally recognizes revenue upon shipment when thecollect-ability of the resulting receivable is reasonably assured. The Companyallows credit for products returned within its policy terms. Such returns areestimated and an allowance for product returns is recorded at the time of sale,as necessary.

Revenues associated with rewards programs are recorded when the customer isentitled to utilize such rewards. The Company simultaneously records the costsof these rewards. Rewards can be used by customers for one year. After one year,unused rewards are recorded as revenue.

IMPAIRMENT OF LONG-LIVED ASSETS

The company regularly reviews long-lived assets for indicators of impairment.Management's judgments regarding the existence of impairment indicators arebased on performance. Future events could cause management to conclude thatimpairment indicators exist and that the value of long-lived assets is impaired.When events or circumstances indicate that the carrying amount of an asset maynot be recoverable, the fair value of the asset is compared to its carryingvalue. Impairment losses are measured as the amount by which the carrying valueof an asset exceeds its estimated fair value.

 

 

NOTE 3:  CONCENTRATIONS OF CREDIT RISK

The Company's financial instruments that are exposed to concentrations ofcredit risk consist primarily of cash. The Company does not require collateralor other security to support customer receivables of rewards programs. Theexposure to credit risk associated with the nonperformance of customers infulfilling their contractual obligations can be directly impacted by a declinein economic or industry conditions, which could impair the customer's ability tosatisfy its obligations. Credit procedures have been established wherebydetailed analyses are performed to control the granting of credit to high-riskcustomers of rewards programs.

 

NOTE 4: OPERATIONS AND LIQUIDITY

The Company has incurred substantial losses in 2006 and 2005. Until such timethat the Company's products and services can be successfully marketed theCompany will continue to need to fulfill working capital requirements throughthe sale of stock and/or the issuance of debt. The inability of the Company tocontinue its operations as a going concern would impact the recoverability andclassification of recorded asset amounts. 

The ability of the company to continue in existence is dependent on itshaving sufficient financial resources to bring products and services to marketfor marketplace acceptance. As a result of its significant losses, negative cashflows from operations, and accumulated deficits for the periods ending March 31,2007, there is doubt about the Company's ability to continue as a going concern.

Management believes that its current available working capital, anticipatedrevenues, further planned reductions in operating expenses, and subsequent salesof stock and/or placement of debt instruments will be sufficient to meet itsprojected expenditures for a period of at least twelve months from March 31,2007. 

 

 
**Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure**
None.
** 

Controls and Procedures**
Based on their evaluation as of a date within 90 days of the filing date ofthis Annual Report on Form 10-KSB, the Company's principal executive officer andprincipal financial officer have concluded that the Company's disclosurecontrols and procedures as defined in Rules 13a-14(c) and 15d-14(c) under theSecurities Exchange Act of 1934 (the Exchange Act) are effective to ensure thatinformation required to be disclosed by the Company in reports that it files orsubmits under the Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and Exchange Commission rulesand forms.

There were no significant changes in the Company's internal controls or inother factors that could significantly affect these controls subsequent to thedate of their evaluation and up to the filing date of this Annual Report on Form10-KSB. There were no significant deficiencies or material weaknesses, andtherefore there were no corrective actions taken. It should be noted that anysystem of controls, however well designed and operated, can provide onlyreasonable, and not absolute, assurance that the objectives of the system aremet. In addition, the design of any control system is based in part upon certainassumptions about the likelihood of future events. Because of these and otherinherent limitations of control systems, there can be no assurance that anydesign will succeed in achieving its stated goals under all potential futureconditions, regardless of how remote.
**Item 2. Management's Discussionand Analysis of Financial Condition and Results of Operations**
 
*This Report contains forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended, including, without limitation,statements regarding the Company's expectations, beliefs, intentions or futurestrategies that are signified by the words "expects," "anticipates," "intends,""believes," or similar language. These forward-looking statements, includingthose with respect to our operating results for 2004, are based upon currentexpectations and beliefs of the Company's management and are subject to risksand uncertainties that could cause results to differ materially from thoseindicated in the forward-looking statements. Some, but not all, of the factors,which could cause actual results to differ materially include those set forth inthe risks discussed below under the subheading "Risk Factors" and elsewhere inthis report. The Company undertakes no obligation to revise or publicly releasethe results of any revision to these forward-looking statements, or to explainwhy actual results differ. Readers should carefully review the risk factorsdescribed in this section below and in any reports subsequently filed with theSecurities and Exchange Commission.*
 
**Overview**
We were incorporated in Nevada in 1982 as a for-profitcorporation. We have never experienced any bankruptcy or similar proceeding. Weare engaged in aiding both private and public companies in the areas of businessdevelopment, financing, product development, corporate strategy, corporate imageand public relations, product distribution and marketing, and executivemanagement consulting. We collectively refer to companies in which we own anequity position as well as our customers and clients as "portfolio companies".We charge for our services in cash or equity in the portfolio company. We mayalso exchange our services for revenue sharing of future sales of products orsharing of proceeds from the sale of licenses and technologies owned by ourportfolio companies. We seek to grow through strategic acquisitions in additionto generating income from our services.

Our sources of revenue are primarily from:

* Consolidated revenues of      our portfolio companies which we own in majority;

* Management and consulting      fees we may charge our portfolio companies;

* Revenue sharing agreements      we may have with our portfolio companies;

* Royalty and licensing      proceeds from the sale of technology rights we may own in whole or in part      with our portfolio companies;

* Proceeds from the sale of      securities we may own in our portfolio companies;

* Proceeds from the interest      and payment of debt we may hold in our portfolio companies; and

* Proceeds from the      conversion of debt we may hold in our portfolio companies into marketable      securities and subsequent sale of same.
** 

OUR PORTFOLIO COMPANIES

Sound City**
We previously owned 51% of Sound City with an option toacquire the remaining 49%. The option was valid through December 31, 2009, andcould have been exercised for $3,500,000, which was payable in cash, stock or acombination of cash or stock. Sound City, Inc. is a consumer electronics companywith customers across the U.S. Sound City markets audio and video solutions forhome and mobile environments, including the HD-TV, Plasma TV and LCD TV marketsegments. As a full service dealer, Sound City provides a wide range of customhome installations addressing numerous applications. With a customer base ofover 900,000 customers, Sound City is a large electronics mail order companiesin the U.S.,which distributes its products and solutions through its direct mailand Web site channels. Consumers can also find the latest audio, video, carstereo and home theatre products in Sound City's retail locations, including 12custom showrooms. Sound City operates a web site at the following address:http://www.soundcity.com. For various business reasons, wedecided to forego our option to purchase the remaining 49% of Sound City and togive back our 51% ownership interest in exchange for the additional $800,000 ofdebt that we owed to the minority owners of Sound City. The transfer occurred onOctober 1, 2006, and we no longer own any interest in Sound City, nor do we owethe Sound City shareholders the $800,0000 debt we incurred to purchase theoriginal 51%.** **
.
**InMarketing Group Inc.**
 

On December 20, 2005, we acquired 51% of the outstanding common stock ofInMarketing Group Inc. (IMG) for $1,000,000 in cash and $1,210,000 in the formof Series B 4% convertible preferred stock of the Company, with an option toacquire the remaining 49%. The option is valid through December 19, 2007.InMarketing has informed us that it believes the option to purchase theadditional 49% is no longer valid, and that we now only own 29% of InMarketing.The Company disputes the position taken by InMarketing with regards to theownership interest and the rights with regards to the option. InMarketing hasrefused to provide financial information to be included in this filing. As aresult, the financial information provided herein does not include any income orexpenses generated by InMarketing. We intend to distribute shares of inmarketingto all stockholders of MODC as soon as practicable.

 
**Insight Medical**
On January 8, 2007 we entered into an agreement to purchasecertain assets of Insight Medical Group, which has technology that will allowfor the detection of cancer. The technology is ready for final testing andregulatory approval. Our investors have not provided the funding as provided forand in breach of a Term Sheet executed between the Company and the investors. Asa result, we have been unable to meet our commitments to Insight Medical and asa result we have modified the original asset purchase agreement to return theassets in exchange for marketing and distribution rights for the technology anda equity distribution to all MODC stockholders as soon as practicable.

 
**Selecting Portfolio Companies**
We may purchase an equity position, whether minority ormajority, in various companies from time to time. We offer our services to newcustomers, also referred to as portfolio companies, for cash payment. We mayelect to take equity in the portfolio company as payment for our services.

We also seek to grow our revenues and assets by acquisitions.We seek to obtain a majority equity position in any company we acquire. If weacquire a minority position in a company, we will seek to enter into agreementwith that company whereby we will generate income from our services. If weacquire a minority position in a company, we value that equity using agood-faith estimation of its value based on generally accepted accountingprinciples combined with our internal judgment based on industry and economicfactors not encompassed by traditional accounting principles.

We acquire majority or minority equity positions in portfoliocompanies by purchasing the equity with cash, debt, or purchasing the equity byissuing stock in our company. We may pay for the equity position with acombination of both cash and stock and debt.

When presented with a prospective acquisition, we make agood-faith valuation for the business to be acquired and its future prospects.If the assessment of the prospective acquisition appears to offer a good orreasonable chance to increase our revenues and assets both in the short-term andthe long-term, we will seek to acquire the prospective company.

We find new customers and prospective companies to acquirethrough out network of relationships within the business community.
**EMPLOYEES**
We currently have three full time employees and threepart-time employees, including two in management, two in business development,one in business advisory and one administrative position. There exist noorganized labor agreements or union agreements between our employees and us. Webelieve that our relations with our employees are good.
**Results of Operations:*Nine months ended March 31, 2007 vs. 2006*
During the nine months ended March 31, 2007 and 2006, the Registrant had anet loss applicable to common shareholders of $(4,670,956) and $(5,582,783),respectively. 

For the nine months ended March 31, 2007 and 2006, the Registrant had totalrevenues of $-0- and $7,871,185, respectively, as compared with gross margin forthe comparable periods of $-0- and $1,767,521, respectivelyThe net loss for the nine months ended March 31, 2007 isattributable primarily to expenses incurred as part of our reorganizationefforts and activities related to locating and securing new portfolio companies.In addition, we incurred large interest expense and gains on the valuation ofour derivative liabilities. The interest expense amounted to $3,538,760 and thegain from our derivative liability valuation was $2,108,526. The gains on ourderivative liability valuations were the result of our decreasing stock price.We also had a large loss on the impairment of our goodwill of $2,210,000. Thegoodwill impairment was the result of our evaluation of our INmarketing Groupsubsidiary.*Three months ended March 31, 2007 vs. 2006*
During the three months ended March 31, 2007 and 2006, the Registrant had anet income (loss) applicable to common shareholders of $1,458,531 and$(4,222,459), respectively. 

For the three months ended March 31, 2007 and 2006, the Registrant had totalrevenues of $-0- and $4,671,322, respectively, as compared with gross margin forthe comparable periods of $-0- and $779,649, respectivelyThe net income for the three months ended March 31, 2007 isattributable primarily to the change in our derivative liabilities shown on ourbalance sheet. In addition, we incurred a large impairment loss on theevaluation of our INmarketing Group subsidiary. Our interest expense for thethree months ended March 31, 2007 was the result of our large debt balances.**Liquidity and Capital Resources 

The cash and cash equivalent balance of the Registrant was $26,199 and$181,701 as of March 31, 2007 and June 30, 2006, respectively.

The Company has incurred substantial losses through March 31, 2007. Untilsuch time that the Company's products and services can be successfully marketed,the Company will continue to need to fulfill working capital requirementsthrough the sale of stock and/or the issuance of debt. The inability of theCompany to continue its operations as a going concern would impact therecoverability and classification of recorded asset amounts. 

The ability of the company to continue in existence is dependent on itshaving sufficient financial resources to bring products and services to marketfor marketplace acceptance. As a result of its significant losses, negative cashflows from operations, and accumulated deficits for the periods ending March 31,2007, there is doubt about the Company's ability to continue as a going concern.

Management believes that its current available working capital, anticipatedrevenues, further planned reductions in operating expenses, and subsequent salesof stock and/or placement of debt instruments will be sufficient to meet itsprojected expenditures for a period of at least twelve months from March 31,2007.

 
**Item 3.  Controls and Procedures**
 
**Disclosure Controls and Procedures.  The Company's management, withthe participation of the Company's Chief Executive Officer and Chief FinancialOfficer, has evaluated the effectiveness of the Company's disclosure controlsand procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of theend of the period covered by this report.  Based on such evaluation, theCompany's Chief Executive Officer and Chief Financial Officer have concludedthat, as of the end of such period, the Company's disclosure controls andprocedures are effective in recording, processing, summarizing and reporting, ona timely basis, information required to be disclosed by the Company in thereports that it files or submits under the Exchange Act.

 
**Internal Control Over Financial Reporting.  There have not been anychanges in the Company's internal control over financial reporting (as such termis defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during themost recent fiscal quarter that have materially affected, or are reasonablylikely to materially affect, the Company's internal control over financialreporting.

 
**PART II--OTHER INFORMATION**
 
**Item 1. Legal Proceedings**
 

From time to time, we may become involved in various lawsuitsand legal proceedings which arise in the ordinary course of business. However,litigation is subject to inherent uncertainties, and an adverse result in theseor other matters may arise from time to time that may harm our business. We arecurrently not aware of any such legal proceedings or claims that we believe willhave, individually or in the aggregate, a material adverse affect on ourbusiness, financial condition or operating results.

 
**Item 2. Unregistered Sales ofEquity Securities and Use of Proceeds**
 

None.
**Item 3. Defaults Upon SeniorSecurities**
 

None. 

 
**Item 4. Submission of Matters to aVote of Security Holders**
 

None. 
**Item 5. Other Information 

 

None. 

 
**Item 6. Exhibits**
 

a.                                      Exhibits are incorporated herein by reference or are filedwith this report as indicated below: 
 
**Exhibit    Number**
 **Description   31.1* Certificate of Chief Executive    Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated June    4, 2007.31.2* Certificate of Chief Financial    Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated June    4, 2007.32* Certificate of Chief Executive    Officer and Chief Financial Officer pursuant to section 18 U.S.C.    section 1350 dated June 4, 2007.
 

*                                            Filed herewith. 
 

 

 
**Signatures**
 

In accordance with the requirements of the Exchange Act, the Registrant hascaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized. 

 
 MODERN TECHNOLOGY    CORP.    By:***/s/ Anthony K.    Welch***Dated:  June 4, 2007 Anthony K. Welch    Chairman, Chief Executive and Chief Financial Officer 
 

 

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