OXFORD, Miss., Aug. 2, 2005 (PRIMEZONE) -- Modern Technology Corp. (OTCBB:MOTG), a diversified technology development and acquisition company, has issued the following letter to stockholders:
Dear Fellow Stockholders:
As promised to you earlier in the year, we will issue periodic updates and letters to stockholders regarding our progress and plans. This letter is a continuing fulfillment of that promise.
In 2004 Modern Technology Corp. embarked upon a bold plan of action (I believe chance favors the bold!). We set our sights on rapid acquisitions to build revenues and assets. We combined this effort with transaction strategies designed to mitigate dilution and provide capital appreciation with accretive acquisitions. Our strategy proved effective and our efforts over the last 12 months have produced outstanding results. I would like to briefly review our achievements and relate our plans for the remainder of 2005 and beyond. I shall continue to keep stockholders informed on a timely basis in months to come. Therefore, I shall maintain brevity and cover the main points.
Company Background
The company was founded in 1982. Since inception, we have always been an SEC fully reporting company with uninterrupted operations. Prior to 2004, the company's business plan was in the area of corporate development services. The company has never been through a 'shell' or 'reverse merger' transaction. It has always been in continuous operation and under the same name throughout its 23-year history. In 2004 new management was installed and the company's business plan substantially expanded to a revenue-focused acquisition and synergy model. Also in 2004, the company paid a $383,697 cash dividend and achieved listing its stock under the symbol "MOTG".
Dividends
The company has paid stock dividends in addition to cash dividends. In October of 2001, we distributed a stock dividend of 403,000 shares in our portfolio company, Scientio, as part of a spin-off transaction. As of June 30, 1999, we distributed a stock dividend of 403,000 shares in our portfolio company, Coral Development Corp., as part of a spin-off transaction.
We intend to continue paying dividends as appropriate and as part of our anticipated subsidiary spin-off strategy. As we mature and grow our portfolio companies, it is only natural that a public spin-off transaction be considered. Each stockholder in MOTG would receive a stock in the new public spin-off company in addition to stock they already own in MOTG. Our long-term plan is for stockholders to realize strong capital appreciation from their MOTG stock as well as the appreciation of stock in the spin-off transactions.
Results To Date
In less than one year, the company has grown from its prior nominal operations to achieving superb financial results. We exceeded our 2004 projections by delivering to stockholders revenues of $10,000,000 and assets of $7,000,000. We are well on our way to meeting our mid-2005 prediction of $25,000,000 in revenue from acquisitions currently under consideration.
Sound City
In January 2005, we acquired Sound City (www.soundcity.com) and have expanded that business by the addition of new product lines, increased revenue projections by adding Reliant Distributing, and signed definitive lease agreements on two new retail locations. Sound City is a premier brand and nationally recognized in the consumer electronics sector. With more than 900,000 customers in its database, we are very excited about the distribution and cross-marketing potential with our other subsidiaries along with those under consideration.
Continuing Sector Acquisitions
As part of our electronics and distribution sector strategy, you may recall that in June we signed a Letter of Intent to acquire 100 percent of Innovations in Home Entertainment. We believe this acquisition will add $1,000,000 to our revenues for 2005 and we project another $3,000,000 for 2006. The definitive agreements are under final review and shall be executed shortly and a press release issued. We have several other sector acquisitions under consideration that will further enhance the revenue and synergy equation.
Interesting Asset
Also of positive note is one of our assets in the form of a convertible debenture in DeMarco Energy. This debenture is planned to generate over $1.5 million in cash for MOTG and our interests are further secured by the patents and rights to key geothermal technologies owned by DeMarco Energy Systems (Other OTC:DMES). (www.demarcoenergy.com). This asset serves as a mechanism for funding operations and acquisitions as needed without relying upon 'expensive' and slow-to-get capital as a first resort. We are very pleased to posses this method of creating cash as we need it and the ability to do so in a timely fashion. We hope this fact is of great comfort and interest to stockholders.
H-NET Acquisition
We completed our acquisition of the H-NET software technology. This software is a complete solution for optical labs. The commercialization of this asset is expected to generate $5,000,000 in 2006. Companies using H-NET.NET software include LensCrafters, Pearle Vision, Cole Vision, Eye Care Centers of America, Family Vision, Wal-Mart's Sam's Stores (NYSE: WMT), Macy's Group, Bensons, Standard Optical (Canada), the Bay Group (Canada), Optica Lee Borinquin (Puerto Rico) and Scrivens Optical (UK). (www.h-net.net).
Our Next Phase of Growth
In June we announced a strategic alliance agreement with UTEK Corporation. This alliance represents a significant new phase in our growth. From this alliance we will acquire nascent, market-ready technologies and commercialize them through our existing sales and distribution channels. We have market-ready technology under consideration for immediate acquisition. We project significant revenue potential from these technologies.
Our electronics and distribution sector holdings are expected to increase in revenue this year to approximately $25,000,000. This revenue increase is realized from both internal growth and continuing acquisitions in the sector. We have current acquisition candidates that, if acquired, would bring our sector revenues easily within range of that projection.
We have other acquisitions in our pipeline that can easily take our revenues beyond $50,000,000. We will release news on these acquisitions as they occur. As always, I caution readers that this guidance is our best, good-faith estimate based on current conditions and numerous assumptions about our industry, our access to financing, the competitive and regulatory landscape and our ability to successfully consummate the acquisitions under consideration.
Listing on a Larger National Exchange
Also of note is our plan to list our stock on a national exchange. We intend to list our stock on either the AMEX or NASDAQ concurrently with meeting the qualification criteria. We expect to meet the listing criteria within the next 12 months.
Recent Stock Price and Market Valuation
Many stockholders have expressed concerns over the recent decline in our stock price. I too share these concerns and wish to put forth the following for your consideration: MOTG stock is a relative newcomer to the market. Our audience of potential investors is not as large as many other companies with years of trading history. The decline of any stock price is the result of more stock being sold than being bought. While this point is obvious, it should be carefully noted that our pool of both buyers and sellers is still growing. As such, our share price may not be an accurate measurement of the company's true value. Should a stockholder who owns an comparatively large number of shares wish to exit his position, no single buyer or small group of buyers is likely to absorb the entire amount without the transaction negatively affecting the stock price -- particularly when the number of shares greatly exceeds the average daily trading volume. It is my belief the recent decline in share price is a direct result of a few stockholders exiting their positions for reasons of their own. This process, although disconcerting for the new investor, has a long-term net positive effect: as larger stockholders reduce their holdings, they further expand and diversify the investor base, thereby creating a more appropriate market capitalization. We have a stockholder base of about 400 and that number increases daily. We believe a diverse shareholder base ensures stock ownership is evenly and reasonably distributed in the market. We work every day to raise the profile of the company within the financial community. This is a slow and arduous process. However, the effect is cumulative and we note steadily increasing company interest and investor awareness. Our average trading volume increases weekly. Word is getting out. Our plans to list MOTG on a larger national exchange is a part of this overall strategy. We believe our market capitalization will steadily, and perhaps dramatically, improve with each passing week, as awareness of the company expands. Management believes results speak for themselves. As more people learn of our company, learn of our vision, and learn of our performance, we anticipate an ever-widening audience of investors who will realize the latent value present in MOTG.
We are pleased with our results for the prior 12 months. We have demonstrated to our stockholders their loyalty was not misplaced. We are very excited about the next 12 months and look forward to rewarding stockholders with continued performance.
Regards, Anthony Welch Chairman
About Modern Technology Corp.
Founded in 1982, Modern Technology Corp. is a diversified technology development and acquisition company, building revenues by strategic acquisition and commercialization of nascent commercial technology and by the acquisition of synergistic operating companies. MOTG commercializes technology and provides to its subsidiaries new product lines, operations infrastructure, and significant intellectual capital. The company's mission is to consistently build shareholder value through accretive acquisitions of emerging technology or from acquiring operating companies capable of benefiting from technology infrastructure enhancements or new product lines. For more information, visit: http://www.moderntechnologycorp.com.
Safe-Harbor Statement
This press release contains statements (such as projections regarding future performance) that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to those detailed from time to time in the company's filings with the Securities and Exchange Commission.