The accompanying notes are an integral part of these consolidated financial statements.
Page 5
| | | | | | | | | |
MEDIA TECHNOLOGIES, INC. |
(Formerly Town and Country Appraisal Service, Inc.) |
Consolidated Statements of Cash Flows |
(Unaudited) |
| | | | | | | | | |
| | | | | For the Six Months Ended |
| | | | | June 30, |
| | | | | 2010 | | 2009 |
OPERATING ACTIVITIES | | | | | | |
| | | | | | | | | |
| Net loss from operations | | $ | (172,687) | | $ | - |
| Net income from discontinued operations | | | 24,387 | | | (3,368) |
| Adjustments to reconcile net loss to net cash | | | | | | |
| used in operating activities: | | | | | | |
| | Impairment of goodwill | | | 150,594 | | | - |
| | Gain on discontinuance | | | (24,387) | | | - |
| | Depreciation | | | 214 | | | 327 |
| Changes in operating assets and liabilities | | | | | | |
| | (Increase) decrease in accounts receivable | | | (7,382) | | | 1,275 |
| | Increase (decrease) in accounts payable and accrued expenses | | | 24,617 | | | (6,825) |
| | | | | | | | | |
| | | Net Cash Used in Operating Activities | | | (4,644) | | | (8,591) |
| | | | | | | | | |
| | | Net Cash Used in Discontinued Operating Activities | | | - | | | (3,186) |
| | | | | | | | | |
INVESTING ACTIVITIES | | | | | | |
| | | | | | | | | |
| Cash relinquished in discontinued operations | | | (964) | | | - |
| Purchase of furniture and equipment | | | (3,497) | | | - |
| | | | | | | | | |
| | | Net Cash Used in Investing Activities | | | (4,461) | | | |
| | | | | | | | | |
FINANCING ACTIVITIES | | | | | | |
| | | | | | | | | |
| | Proceeds from related party payable | | | 13,927 | | | - |
| | Payment of related party payable | | | (5,500) | | | - |
| | | | | | | | | |
| | | Net Cash Provided by Financing Activities | | | 8,427 | | | - |
| | | | | | | | | |
| | NET DECREASE IN CASH | | | (678) | | | (11,777) |
| | | | | | | | | |
| | CASH AT BEGINNING OF PERIOD | | | 964 | | | 11,777 |
| | | | | | | | | |
| | CASH AT END OF PERIOD | | $ | 286 | | $ | - |
| | | | | | | | | |
| CASH PAID FOR: | | | | | | |
| | | | | | | | | |
| | Interest | | $ | - | | $ | - |
| | Income Taxes | | $ | - | | $ | - |
| | | | | | | | | |
| NON CASH FINANCING ACTIVITIES: | | | | | | |
| | | | | | | | | |
| | | Common stock issued for subsidiary | | $ | 2,500 | | $ | - |
The accompanying notes are an integral part of these consolidated financial statements.
Page 6
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 1 - ORGANIZATION
Town and Country Appraisal Service, Inc. (“Town and Country” or the “Company”) was incorporated under the laws of the State of Nevada on April 16, 2007 to succeed an unincorporated entity controlled and operated by its founder, John S. Chidester, since 1976. John S. Chidester was issued 5,340,000 common shares and Kathleen Chidester, our secretary and director and the wife of John W. Chidester, was issued 4,000,000 common shares at the date of incorporation. No value was given to the shares of common stock issued by the newly-formed corporation. Therefore, the shares were recorded to reflect the $.001 par value of $9,340 and paid in capital was recorded as a negative amount, ($9,340). In other words, no net value was assigned to these shares.
All share and per share amounts in the financial statements and notes assume that the capital structure assumed when the Company became a Nevada corporation was in place as of the first date of the first period presented.
On February 26, 2010 (the “Closing Date”), the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Speedpal Broadband, a Nevada corporation (“Speedpal”), and the sole shareholder of Speedpal, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of Speedpal (the “Speedpal Acquisition”). Pursuant to the terms of the Share Exchange Agreement, the Company issued 2,500,000 shares of its common stock to the Speedpal shareholder, in exchange for all the issued and outstanding capital stock of Speedpal, thereby making Speedpal a wholly-owned subsidiary of the Company.
Concurrently with the Closing of the Speedpal Acquisition, John S. Chidester and Kathleen Chidester, the principal shareholders of the Company, sold 7,000,000 of their 9,340,000 shares in the Company to two independent, un-related individuals, and the operations of the current appraisal service business of the Company was transferred to John S. Chidester and Kathleen Chidester, in consideration of the cancellation of 2,340,000 shares of the Company’s common stock, the balance of their shares of common stock in the Company.
Speedpal is engaged in the business of providing high speed broadband internet services to both residential and commercial customs.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2009 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 8, 2010.
The consolidated financial statements include all the accounts of Town and Country as of June 30, 2010 and 2009 and for the interim periods then ended. Speedpal is included as of June 30, 2010 and for the period from February 26, 2010 (date of acquisition) through June 30, 2010. All inter-company balances and transactions have been eliminated.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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.
Page 7
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business combination
In accordance with section 805-10-05 of the FASB Accounting Standards Codification the Company allocates the purchase price of acquired entities to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values.
Management makes estimates of fair values based upon assumptions believed to be reasonable. These estimates are based on historical experience and information obtained from the management of the acquired companies. Critical estimates in valuing certain of the intangible assets include but are not limited to: future expected cash flows from revenues, customer relationships, key management and market positions, assumptions about the period of time the acquired trade names will continue to be used in the Company’s combined product portfolio, and discount rates used to establish fair value. These estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense is included in general and administrative expenses, if any.
Outstanding account balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
The Company does not have any off-balance-sheet credit exposure to its customers.
Impairment of Long-lived Assets
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived asset, which includes goodwill, is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company determined that there was an impairment of the goodwill as of June 30, 2010 and recorded an impairment charge of $150,594 to other income (expe nse).
Page 8
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at June 30, 2010 or 2009, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the interim period ended June 30, 2010 or 2009.
Revenue Recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Income Taxes
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standard Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclo sures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
Page 9
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Loss Per Common Share
Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of June 30, 2010 or 2009.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recent Accounting Pronouncements
In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-01“Equity Topic 505 – Accounting for Distributions to Shareholders with Components of Stock and Cash”, which clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share (“EPS”)). Those distributions should be accounted for and included in EPS calculations in accordance with paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting Standards codification. The amendments in this Update also provide a technical correction to the Accounting Standards Codification. The correction moves guidance that was previously included in the Overview and Background Section to the definition of a stock dividend in the Master Glossary. That guidance indicates that a stock dividend takes nothing from the property of the corporation and adds nothing to the interests of the stockholders. It also indicates that the proportional interest of each shareholder remains the same, and is a key factor to consider in determining whether a distribution is a stock dividend.
In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-02“Consolidation Topic 810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification”, which provides amendments to Subtopic 810-10 and related guidance within U.S. GAAP to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to the following:
1.
A subsidiary or group of assets that is a business or nonprofit activity
2.
A subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture
Page 10
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.
An exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity (including an equity method investee or joint venture).
The amendments in this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the following transactions even if they involve businesses:
1.
Sales of in substance real estate. Entities should apply the sale of real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment) and 976-605 (Retail/Land) to such transactions.
2.
Conveyances of oil and gas mineral rights. Entities should apply the mineral property conveyance and related transactions guidance in Subtopic 932-360 (Oil and Gas-Property, Plant, and Equipment) to such transactions.
If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, an entity first needs to consider whether the substance of the transaction causing the decrease in ownership is addressed in other U.S. GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10.
In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-06“Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements”, which provides amendments to Subtopic 820-10 that require new disclosures as follows:
1.
Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers.
2.
Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number).
This Update provides amendments to Subtopic 820-10 that clarify existing disclosures as follows:
1.
Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities.
2.
Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.
This Update also includes conforming amendments to the guidance on employers' disclosures about postretirement benefit plan assets (Subtopic 715-20). The conforming amendments to Subtopic 715-20 change the terminology frommajor categoriesof assets toclassesof assets and provide a cross reference to the guidance in Subtopic 820-10 on how to determine appropriate classes to present fair value disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.
In February 2010, the FASB issued the FASB Accounting Standards Update No. 2010-09“Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements”, which provides amendments to Subtopic 855-10 as follows:
Page 11
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1.
An entity that either (a) is an SEC filer or(b) is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets) is required to evaluate subsequent events through the date that the financial statements are issued. If an entity meets neither of those criteria, then it should evaluate subsequent events through the date the financial statements are available to be issued.
2.
An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements.
3.
The scope of the reissuance disclosure requirements is refined to include revised financial statements only. The termrevised financial statementsis added to the glossary of Topic 855. Revised financial statements include financial statements revised either as a result of correction of an error or retrospective application of U.S. generally accepted accounting principles.
All of the amendments in this Update are effective upon issuance of the final Update, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010.
In April 2010, the FASB issued the FASB Accounting Standards Update No. 2010-17“Revenue Recognition — Milestone Method (Topic 605) Milestone Method of Revenue Recognition”, which provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive.
Determining whether a milestone is substantive is a matter of judgment made at the inception of the arrangement. The following criteria must be met for a milestone to be considered substantive. The consideration earned by achieving the milestone should:
1.
Be commensurate with either of the following:
a.
The vendor's performance to achieve the milestone
b.
The enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor's performance to achieve the milestone
2.
Relate solely to past performance
3.
Be reasonable relative to all deliverables and payment terms in the arrangement.
A milestone should be considered substantive in its entirety. An individual milestone may not be bifurcated. An arrangement may include more than one milestone, and each milestone should be evaluated separately to determine whether the milestone is substantive. Accordingly, an arrangement may contain both substantive and nonsubstantive milestones.
A vendor's decision to use the milestone method of revenue recognition for transactions within the scope of the amendments in this Update is a policy election. Other proportional revenue recognition methods also may be applied as long as the application of those other methods does not result in the recognition of consideration in its entirety in the period the milestone is achieved.
Page 12
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A vendor that is affected by the amendments in this Update is required to provide all of the following disclosures:
1.
A description of the overall arrangement
2.
A description of each milestone and related contingent consideration
3.
A determination of whether each milestone is considered substantive
4.
The factors that the entity considered in determining whether the milestone or milestones are substantive
5.
The amount of consideration recognized during the period for the milestone or milestones.
The amendments in this Update are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity's fiscal year, the entity should apply the amendments retrospectively from the beginning of the year of adoption. Additionally, a vendor electing early adoption should disclose the following information at a minimum for all previously reported interim periods in the fiscal year of adoption:
1.
Revenue
2.
Income before income taxes
3.
Net income
4.
Earnings per share
5.
The effect of the change for the captions presented.
A vendor may elect, but is not required, to adopt the amendments in this Update retrospectively for all prior periods.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
NOTE 3 - ACQUISITION
On February 26, 2010 (the “Closing Date”), the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Speedpal Broadband, a Nevada corporation (“Speedpal”), and the sole shareholder of Speedpal, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of Speedpal (the “Speedpal Acquisition”). Pursuant to the terms of the Share Exchange Agreement, the Company issued 2,500,000 shares of its common stock to the Speedpal shareholder, in exchange for all of the issued and outstanding capital stock of Speedpal, thereby making Speedpal a wholly-owned subsidiary of the Company.
The acquisition of Speedpal was accounted for using the purchase method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards Codification by allocating the purchase price over the assets acquired, including intangible assets, and liabilities assumed, based on their estimated fair values at the date of acquisition. The excess of the liabilities assumed and the purchase price over the net assets acquired was recorded as goodwill. The purchase price has been allocated to the assets and liabilities as follows:
| | | | | |
Goodwill | | | $ | 150,594 | |
Related party payable | | | | (148,093 | ) |
Cash overdraft | | | | (1 | ) |
Purchase price | | | $ | 2,500 | |
Page 13
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 3 – ACQUISITION (CONTINUED)
The following Proforma Statement of Operations present the combined operations on a pro forma basis as though the acquisition occurred on January 1, 2009:
| | | | | | | | | |
| | | | | Town and Country Appraisal Service, | | Speedpal | | |
| | | | | Inc. | | Broadband, Inc. | | |
| | | | | For the Six | | For the Six | | Proforma |
| | | | | Months Ended | | Months Ended | | Combined |
| | | | | June 30, 2009 | | June 30, 2009 | | Totals |
Revenues | $ - | | $ 52,733 | | $ 52,733 |
General and Administrative | - | | 98,495 | | 98,495 |
Net Loss from Operations | - | | (45,762) | | (45,762) |
Loss from Discontinued Operations | (3,368) | | - | | (3,368) |
| | NET LOSS | $ (3,368) | | $ (45,762) | | $ (49,130) |
| | | | | | | | | |
NOTE 4 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $171,007 at June 30, 2010, with a net loss from continuing operations of $172,687 and net cash used in operating activities of $4,644 for the interim period ended June 30, 2010, respectively.
While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 5 – RELATED PARTY TRANSACTIONS
As of June 30, 2010, the Company owed $156,521 to related parties for funds advanced for its operations. The advances are due upon demand, unsecured and non interest bearing.
NOTE 6 – STOCKHOLDERS’ DEFICIT
Issuance of common stock
On February 26, 2010 the Company issued 2,500,000 shares of its common stock to the Speedpal shareholder, in exchange for all of the issued and outstanding capital stock of Speedpal (See Note 1). Since the issuance was for approximately 25% ownership of the Company, the common stock was valued at its par value of $0.001 per share or $2,500 in aggregate.
Page 14
MEDIA TECHNOLOGIES, INC.
(FKA Town and Country Appraisal Service, Inc.)
Condensed Notes To Financial Statements
June 30, 2010 and December 31, 2009
NOTE 6 – STOCKHOLDERS’ DEFICIT (CONTINUED)
Cancellation of common stock
Concurrently with the acquisition of Speedpal (See Note 1), the Company, cancelled 2,340,000 shares of the Company’s common stock owned by its former marjority stockholders. In consideration for this cancelation, the appraisal service business of the Company was transferred to John S. Chidester and Kathleen Chidester.
The following tables set forth the components of the discontinued operations for the three and six months ended June 30, 2009:
| | | | | | | | |
| | Three Months Ended June 30, 2009 | | | Six Months Ended June 30, 2009 | |
Revenue | | $ | 27,585 | | | $ | 74,110 | |
Operating expenses | | | | | | | | |
Compensation and contractor fees | | | 20,109 | | | | 55,327 | |
General and administrative | | | 10,814 | | | | 16,655 | |
Total operating expenses | | | 30,293 | | | | 77,478 | |
Net loss | | $ | (3,338) | | | $ | (3,368) | |
Summarized Balance Sheet of discontinued operations:
| | | | | | | | |
| | | | | December 31, 2009 | |
Current Assets | | | | | | $ | 964 | |
Total Assets | | | | | | $ | 8,321 | |
Total Liabilities | | | | | | $ | 30,368 | |
Stockholders Deficit | | | | | | $ | (22,047) | |
During the period ended June 30, 2010, the Company changed its name to Media Technologies, Inc. to better reflect the Company’s business plan and operations. In conjunction with the name change, the Company amended it articles of incorporation and is authorized to issue 125,000,000 common shares with a par value of $0.001 per share and 25,000,000 preferred shares with a par value of $0.001 per share.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date throughthe date these financial statements were issued. The Management of the Company determined that there were no reportable events that occurred during that subsequent period to be disclosed or recorded.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY FORWARD - LOOKING STATEMENT
Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations, and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made with the approval of an authorized executive officer which are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect the Company's actual results and could cause the Company's actual financial performance to differ materially from that expressed in any forward-looking statement: (i) the extremely competitive conditions that currently exist in the three dimensional software development marketplace are expected to continue, placing further pressure on pricing which could adversely impact sales and erode profit margins; (ii) many of the Company's major competitors in its channels of distribution have significantly greater financial resources than the Company; and (iii) the inability to carry out marketing and sales plans would have a materially adverse impact on the Company's projections. The foregoing list should not be construed as exhaustive and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
After the acquisition of SpeedPal Broadband, Inc the Company discontinued its prior commercial appraisal business. The figures presented in the financial statements for both the current period and in the comparative statements reflect the continuing operations of the Company’s subsidiary, SpeedPal Broadband, Inc. from the date of acquisition through the end of the reporting period.
THREE MONTHS ENDED JUNE 30, 2010
Revenues- Revenue for the three months ended June 30, 2010 totaled $26,893 from the sale of high-speed broadband internet service.
Operating Expenses-Operating expenses consist primarily of commissions, which totaled $22,508 during the three months ended June 30, 2010. Also included in operating expenses is $11,848 in professional fees and $12,818 in general & administrative expenses.
SIX MONTHS ENDED JUNE 30, 2010
Revenues- Revenue for the six months ended June 30, 2010 totaled $48,751 from the sale of high-speed broadband internet service.
Operating Expenses-Operating expenses consist primarily of commissions, which totaled $32,918 during the six months ended June 30, 2010. Also included in operating expenses is $20,196 in professional fees and $17,730 in general & administrative expenses.
Other –The Company recognized a $150,594 relating to the impairment of goodwill. Company incurred a loss of $(131) from its discontinued operations along with a onetime gain of $24,518 from the sale of the business. This gain is the result of the discharge of liabilities in excess of assets.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 2010, we realized gross proceeds of $8,427 from borrowings from related parties. We have used these proceeds to fund ongoing operations. At June 30, 2010, we had available cash of $286 as compared to $11,777 as of June 30, 2009. We are currently being funded borrowings from related parties. The Company expects to continue to rely on related parties on an as needed basis until such a time that we can procure additional financing. We are currently exploring the possibility of additional alternative financing, but there is no assurance that we will be able to secure financing on favorable terms or at all.
At June 30, 2010, we had total current assets of $7,668 and total current liabilities of $181,138 resulting in a working capital deficit of $173,470. At December 31, 2009, we had total current assets of $5,839 and total current liabilities of $30,368 resulting in a working capital deficit of $24,529. This decrease in working capital for the first six months of 2010 is primarily due to the debt assumed in the acquisition of SpeedPal Broadband, Inc.
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Net cash used by operating activities was $4,644 for the six three months of 2010 compared to $8,591 for the comparable 2009 period. This change is primarily attributed to the income generated from the newly acquired subsidiary, SpeedPal.
Net cash used by investing activities was $4,461 for the first six months of 2010 compared to $-0- for the comparable 2009 period. This change is primarily attributed to the disposition of our discontinued operations.
Net cash provided by financing activities was $8,427 for the first six months of 2010 compared to $-0- for the comparable 2009 period. This change is primarily attributed to additional borrowings from related parties.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.
Critical Accounting Policies
Excepting those accounting policies listed in the footnotes to the financial statements, the Company does not expect other accounting policies to have a significant impact on its results of operations, financial position or cash flow.
Seasonality
We do not typically experience a significant seasonal impact in our business.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Based on an evaluation as of the date of the end of the period covered by report, our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. The Company recognizes a material weakness in its internal controls due to the fact that we are unable, due to lack of resources, to maintain adequate segregation of duties or hire an audit committee to oversee the internal control functions. The Company plans to address these weaknesses as resources become available.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
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Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
We are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS
1.
Financial Statements. The unaudited Balance Sheet of the MEDIA TECHNOLOGIES, Inc., and subsidiaries as of June 30, 2010 and December 31, 2009, the Consolidated Statements of Operations for the period ended June 30, 2010 and 2009, the Consolidated Statements Stockholders’ Equity (Deficit) from inception to June 30, 2010, and Statements of Cash Flows for the period ended June 30, 2010 and 2009, and together with the notes thereto, are included in this Quarterly Report on Form 10-Q.
2.
Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K. Exhibits 10.1 through 10.20 relate to compensatory plans incorporated by reference as exhibits hereto pursuant to Item 15(b) of Form 10-K.
| |
Exhibit | |
Number | Description of Exhibit |
3.01 | Articles of Incorporation(1) |
3.03 | Bylaws(1) |
10.01 | Share Exchange Agreement with Speedpal Broadband, Inc.(2) |
10.02 | Share Purchase Agreement of John and Kathleen Chidester (2) |
10.02 | Assignment and Assumption Agreement(3) |
31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(4) |
31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(4) |
32.01 | CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act(4) |
(1)
Incorporated by reference to our Registration Statement on Form 10 filed on May 1, 2008.
(2)
Incorporated by reference to our Form 8-K filed with the SEC on March 1, 2010.
(3)
Incorporated by reference to our Form 8-K filed with the SEC on March 25, 2010.
(4)
Filed herewith.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the Undersigned, thereunto duly authorized.
MEDIA TECHNOLOGIES, INC.
Dated: August 23, 2010
/s/ J. Michael Heil
By: J. Michael Heil
Its: President and CEO
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