_____________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  June 30, 2011

     

Commission file number: 000-53214

MEDIA TECHNOLOGIES, INC.

 (Exact name of Registrant as specified in Its Charter)

 

Nevada	26-1703958
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

              

2360 Corporate Circle, Suite 425, Henderson, Nevada 89703 (Address of Principal Executive Offices)

 

(858) 436-3350

 (Registrant's Telephone Number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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  X . No      .

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.   See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      . No  X .

 

As of August 11, 2011, there were 31,083,240 shares of the issuer's Common Stock, no par value, issued and outstanding.

---

MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES

 

Quarterly Report on Form 10-Q

 

For the Quarterly Period Ended June 30, 2011

 

 

INDEX

 

PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	1
	Consolidated Balance Sheets (Unaudited)	2
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Cash Flows (Unaudited)	4
	Notes to Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	15
Item 4T.	Controls and Procedures	16
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	17
Item 5.	Other Information	17
Item 6.	Exhibits	17

 

ii

---

PART I - FINANCIAL INFORMATION

 

Item 1 - Financial Statements

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows, and stockholders' deficit in conformity with generally accepted accounting principles in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

 

Our unaudited condensed consolidated balance sheet as of June 30, 2011 and our unaudited condensed consolidated statements of operations for the three month and six month periods ended June 30, 2011 and 2010, condensed consolidated statement of stockholders equity (deficit) and the unaudited condensed consolidated statements of cash flows for the three month and six month periods ended June 30, 2011 and 2010, are attached hereto and incorporated herein by this reference.

1

---

MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
			June 30			December 31,
			2011			2010
			(Unaudited)
ASSETS
CURRENT ASSETS
	Cash		$	124,458		$	23,902
	Accounts receivable, net			3,846			-
		Total Current Assets		128,304			23,902
EQUIPMENT, NET				207,965			20,709
		TOTAL ASSETS	$	336,269		$	44,611
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	24,465		$	36,061
	Customer deposits			-			5,539
	Related party payable			236,205			210,570
		Total Current Liabilities		260,670			252,170
		TOTAL LIABILITIES		260,670			252,170
STOCKHOLDERS' EQUITY (DEFICIT)
	Preferred stock, par value $0.001; 25,000,000 shares authorized; no shares issued or outstanding			-			-
	Common stock; par value $0.001; 125,000,000 shares authorized; 32,980,000 and 33,480,000 shares issued and outstanding, respectively			32,980			33,480
	Additional paid-in capital			557,840			67,340
	Accumulated deficit			(515,221)			(308,379)
		Total Stockholders' Equity (Deficit)		75,599			(207,559)
		TOTAL LIABILITIES AND STOCKHOLDERS'  EQUITY (DEFICIT)	$	336,269		$	44,611

The accompanying notes are an integral part of these consolidated financial statements.

2

---

MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
			For the Three Months Ended						For the Six Months Ended
			June 30,						June 30,
			2011			2010			2011			2010
			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
REVENUES			$	43,349		$	27,578		$	89,736		$	52,645
OPERATING EXPENSES
	Consulting			45,111			21,468			75,728			37,033
	Professional fees			54,838			30,704			120,991			24,246
	General and administrative			30,315			18,489			99,859			36,261
	Impairment of goodwill			-			-			-			150,594
		Total Operating Expenses		130,264			70,661			296,578			248,134
LOSS BEFORE TAXES				(86,915)			(43,083)			(206,842)			(195,489)
PROVISION FOR INCOME TAXES				-			-			-			-
LOSS FROM CONTINUING OPERATIONS				(86,915)			(43,083)			(206,842)			(195,489)
DISCONTINUED OPERATIONS
	Loss from discontinued operations			-			-			-			(131)
	Gain on discontinued operations			-			-			-			24,518
		Income from Discontinued Operations net of tax		-			-			-			24,387
NET LOSS			$	(86,915)		$	(43,083)		$	(206,842)		$	(171,102)
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:
	Continuing operations		$	(0.00)		$	(0.00)		$	(0.01)		$	(0.01)
	Discontinued operations			0.00			0.00			0.00			0.00
NET LOSS PER COMMON SHARE - BASIC AND DILUTED			$	(0.00)		$	(0.00)		$	(0.01)		$	(0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - basic and diluted				31,131,934			30,416,000			31,520,147			30,342,099

The accompanying notes are an integral part of these consolidated financial statements.

3

---

MEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
					For the Six Months Ended
					June 30,
					2011			2010
					(Unaudited)			(Unaudited)
OPERATING ACTIVITIES
	Loss from continuing operations				$	(206,842)		$	(195,489)
	Income from discontinued operations					-			24,387
	Adjustments to reconcile net loss to net cash used  in operating activities:
		Impairment of goodwill				-			150,594
		Gain on discontinuance				-			(24,387)
		Depreciation				6,333			214
	Changes in operating assets and liabilities
		Accounts receivable				(3,846)			-
		Accounts payable and accrued expenses				(11,596)			25,341
		Customer deposits				(5,539)			5,539
			Net Cash Used in Operating Activities			(221,490)			(13,800)
			Net Cash Used in Discontinued Operating Activities			-			(4,641)
INVESTING ACTIVITIES
		Cash relinquished in discontinued operations				-			(964)
		Purchase of furniture and equipment				(193,590)			(4,289)
			Net Cash Used in Investing Activities			(193,590)			(5,253)
FINANCING ACTIVITIES
		Proceeds from related party payable				25,635			23,981
		Proceeds from sale of common stock				490,000			-
			Net Cash Provided by Financing Activities			515,635			23,981
						100,556			286
CASH AT BEGINNING OF PERIOD						23,902			-
CASH AT END OF PERIOD					$	124,458		$	286
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
	CASH PAID FOR:
		Interest paid			$	-		$	-
		Income taxes paid			$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

4

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

NOTE 1 - ORGANIZATION

Media Technologies, Inc. (“MDTC” or the “Company”) was incorporated under the laws of the State of Nevada on April 16, 2007.  On February 26, 2010, the Company acquired 100% of the issued and outstanding capital stock of Speedpal Broadband, Inc. a Nevada corporation (“Speedpal”), and as a result Speedpal became a wholly-owned subsidiary of the Company.  Speedpal is engaged in the business of providing high speed broadband internet services to both residential and commercial customs.

On January 12, 2011, the Company acquired 100% of the issued and outstanding capital stock of TechTV Media, Inc., a Nevada Corporation (“TechTV”), and as a result, TechTV became a wholly-owned subsidiary of the Company.  TechTV is engaged in the business of providing, installing, selling and managing advertisement insertion systems.  The systems enable local cable television providers to insert advertising onto network channels on their cable systems.  TechTV shares in the revenues generated from advertising with the advertising agencies and the cable system operators.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation– unaudited interim financial information

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 of the Securities and Exchange Commission (“SEC”) for interim reporting.  As such, certain information and disclosures typically required by U.S. GAAP for complete financial statements have been condensed or omitted.    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, 2010 and notes thereto contained in the Company’s Annual Report on Form 10-KA filed with the SEC on May 2, 2011.

Principle of consolidation

The consolidated financial statements include all accounts of the Company as of June 30, 2011 and 2010 and for the interim periods then ended; all accounts of TechTV as of June 30, 2011 and for the period from January 12, 2011 (date of acquisition) through June 30, 2011.  Speedpal is included as of June 30, 2011 and for the period from February 26, 2010 (date of acquisition) through June 30, 2011.  All inter-company balances and transactions have been eliminated.

Reclassifications

Certain prior year amounts in the accompanying condensed financial statements have been reclassified to conform to the current year’s presentation.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reporting period.

The Company’s significant estimates include income taxes provision and valuation allowance of deferred tax assets; the fair value of financial instruments; and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly.  Actual results could differ from those estimates.

5

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

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.

Fair value of financial instruments on a recurring basis

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted 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:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

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.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

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.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not however, practical to determine the fair value of advances from stockholders due to their related party nature.

6

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Carrying value, recoverability and 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 assets, which includes equipment, are 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 considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

The key assumptions used in management’s estimates of projected cash flow deal largely with forecasts of sales levels, gross margins, and operating costs.  These forecasts are typically based on historical trends and take into account recent developments as well as management’s plans and intentions.  Factors, such as increased competition or a decrease in the desirability of the Company’s products, could lead to lower projected sales levels, which would adversely impact cash flows.  A significant change in cash flows in the future could result in an impairment of long lived assets.

The impairment charges, if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).

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.

Equipment and furnishings

Equipment and furnishings are recorded at cost.  Expenditures for major additions and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  Depreciation of equipment and furnishings is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful lives ranging of five (5) years.  Upon sale or retirement of equipment and furnishings, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.  Leasehold improvements, if any, are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.  Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

7

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

Related parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved b. description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitments and contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

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.  

8

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

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 disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary

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 common 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 common 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 the period.  There were no potentially dilutive shares outstanding as of June 30, 2011 or 2010.

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.

9

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

Recent accounting pronouncements

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 requires 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 from major categories of assets to classes of 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 December 2010, the FASB issued the FASB Accounting Standards Update No. 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”). ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amended guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted.

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 consolidated financial statements.

10

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

NOTE 3 - 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 condensed consolidated financial statements, the Company had an accumulated deficit of $515,221 at June 30, 2011, with a net loss from continuing operations of $206,842 and net cash used in operating activities of $221,490 for the interim period then ended, 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 accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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 4 - ACQUISITION

On January 12, 2011, the Company executed a Share Exchange Agreement pursuant to which we acquired 100% of the issued and outstanding capital stock of TechTV Media, Inc., a Nevada Corporation (“TechTV”), in exchange for 5,000,000 shares of the Company’s common stock.  As a result of the stock-for-stock exchange, TechTV became a wholly-owned subsidiary of the Company.   

11

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

NOTE 4 – ACQUISITION (CONTINUED)

As consideration for the purchase, the Company has issued 5,000,000 shares of the Common stock of MDTC, $0.001 par value per share, into an escrow account, for the future transfer to the prior shareholder of TechTV.  The exchange of the total 5,000,000 shares of the Company’s Common Stock, is subject to and based upon TechTV securing 500,000 new subscriptions during the period commencing on January 12, 2011 and ending on the second year anniversary date thereof.    The escrow holder shall release a certificate representing 625,000 MDTC shares for each 62,500 subscribers secured under TechTV contracts.

On May 5, 2011 pursuant to an agreement between the Company and the selling shareholder of TechTV, the number of shares issued to acquire TechTV was reduced to 3,500,000, which shares are currently held in escrow until the performance milestones detailed in the share exchange agreement have been reached. On July 12, 2011, the initial tranche of 437,500 restricted shares were released from escrow as a result of TechTV reaching the initial milestone.

 On the date of acquisition, TechTV had no tangible assets and no liabilities and because the 5,000,000 share purchase price is contingent upon TechTV acquiring a customer base, no acquisition price has been recorded.  The Company will record the acquisition of TechTV’s customer base as each milestone is reached and the shares are released from escrow.  As of the filing of this interim report none of the milestones have been reached and no shares have been released from escrow.

 

NOTE 5 - EQUIPMENT

Equipment consists of the following at June 30, 2011 and December 31, 2010.

		June 30, 2010		December 31, 2010
Equipment	$	215,340	$	21,750
Less accumulated depreciation		(7,375)		(1,041)
	$	207,965	$	20,709

For the three months ended June 30, 2011 and 2010 depreciation expenses totaled $2,110 and $0, respectively.  For the six months ended June 30, 2011 and 2010 depreciation expenses totaled $6,333 and $214, respectively.

NOTE 6 – RELATED PARTY TRANSACTIONS

As of June 30, 2011 and December 31, 2010, the Company owed $236,205 and $210,570, respectively, to related parties for funds advanced for its operations. The advances are unsecured, non-interest bearing, and due upon demand.

NOTE 7 - STOCKHOLDERS’ EQUITY (DEFICIT)

Issuance of common shares

On January 12, 2011, the Company issued 5,000,000 shares of its common stock into an escrow account, for the future transfer to the TechTV shareholder, in exchange for all of the issued and outstanding capital stock of TechTV.  The shares are currently held in escrow until the performance milestones detailed in the share exchange agreement have been reached.

On May 5, 2011, the Company issued 2,133,333 shares of common stock at $0.15 per shares for an aggregate total of $320,000.  

On June 6, 2011, the Company issued 1,336,667 shares of common stock at $0.124 per shares for an aggregate total of $170,000.  

12

---

MEDIA TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2011 and 2010

(Unaudited)

NOTE 7 - STOCKHOLDERS’ DEFICIT (CONTINUED)

Cancellation of common shares

On January 12, 2011, the Company cancelled 7,500,000 shares of common stock in accordance with the Agreement, Consent and Waiver executed by a former officer and director of Media Technologies, Inc.

On May 5, 2011, the Company cancelled 1,500,000 shares of common stock in accordance of the Agreement and Consent which reduced the number of shares to be issued in connection with the acquisition of TechTV Media, Inc. from 5,000,000 shares to 3,500,000.

NOTE 8 - SUBSEQUENT EVENTS

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued.  The Management of the Company determined that there were reportable subsequent events to be disclosed.

Under the terms of the Merger Agreement, the Company will acquire all of the outstanding equity interest of OWL, a private company for 14,103,240 restricted common shares of the Company.  The merger was approved by the shareholders of OWL on July 29, 2011. The agreement and Plan of Merger dated June 14, 2011 was filed as an exhibit to Form 8K.  In connection with the merger certain shareholders of the Company agreed and the Company will cancel 16,000,000 common shares.  After the issuances and cancellation of common shares the Company has 31,083,240 shares issued and outstanding.

In additions as a result of the agreement and Plan of Merger, the Company entered into twelve month Lock-Up Agreements with two shareholders and employee’s family irrevocable trusts.  The same individuals family irrevocable trusts agreed to indemnify the Company with regard to certain claims.  The Lock-Up and Indemnification Agreement are attached as exhibits to the Form 8-K filed on August 1, 2011.

13

---

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

 

Forward-looking Statements

 

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral forward-looking statements, including statements contained in this report and in our other filings with the Securities and Exchange Commission (the "SEC"). These statements use words such as "believes," "expects," "intends," "plans," "may," "will," "should," "anticipates," and other similar expressions. All statements that address operating performance, events, or developments that the Company expects or anticipates will occur in the future, including statements relating to volume growth, share of sales or statements expressing general optimism about future operating results, are forward-looking statements within the meaning of the Act. The forward-looking statements are based on management's current views and assumptions regarding future events and operating performance. We cannot assure that anticipated results will be achieved since actual results may differ materially because of risks and uncertainties. We do not undertake to revise these statements to reflect subsequent developments.

Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside the control of the Company and involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made, including but not limited to the following:

·

The Company’s ability to generate sufficient cash flows to support capital plans, general operating activities and service debt;

·

The Company has currently delayed payments to certain vendors and debt holders and may continue to do so.

·

Loss of key employees, vendors or customers;

·

The effects of competition from other broadband and cable advertising insertion companies;

·

The introduction of new competitive products and/or services;

·

Laws and regulations and/or changes therein including changes in accounting standards, taxation requirements (including tax rate changes, new tax laws and revised tax law interpretations);

·

The Company’s ability to penetrate new markets;

·

Unforeseen economic and political changes;

·

Volatility of stock prices may restrict opportunities;

The foregoing list of important factors and other risks detailed from time to time in the Company’s reports filed with the SEC is not exhaustive.

You are strongly encouraged to consider these factors when evaluating forward-looking statements in this report. The Company undertakes no responsibility to update any forward-looking statements contained in this report.

 

THE THREE MONTHS ENDED JUNE 30, 2011 AND 2010

Revenues – Our revenue is derived from the sale of high-speed broadband internet service.  Sales for the three months ended June 30, 2011 totaled $43,349 compared to $27,468 for the same period last year.  Sales increased $15,881 or 58% due primarily to the increase in the number of customers.

Operating Expenses- Operating expenses totaled $130,265 and $70,661 for the three months ended June 30, 2011 and 2010 respectively, an increase of $59,604 or 84%.  The increase is due to an increase in commissions from $21,468 to $45,111, an increase of $23,643, relating to commissions paid for new customers for primarily TechTV, an increase in professional fees from $30,704 to $54,838, an increase of $24,134 relating to the cost of accounting, audit and legal fees associated with our filings and an increase in general and administrative expenses of $11,827, from $18,489 to $30,316 related to the growth of the business.

Other – The Company had no “Other” income or expense during the three months ended June 30, 2011.  

14

---

THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

Revenues – Our revenue is derived from the sale of high-speed broadband internet service.  Sales for the six months ended June 30, 2011 totaled $89,736 compared to $52,645 for the same period last year.  Sales increased $37,091 or 70% due primarily to the increase in the number of customers.  

Operating Expenses- Operating expenses totaled $296,579 and $248,134 for the six months ended June 30, 2011 and 2010 respectively, an increase of $48,445 or 20%.  The increase is due to an increase in commissions from $37,033 to $75,728, an increase of $38,695, relating to commissions paid for new customers primarily in connection with TechTV advertising insertion business, an increase in professional fees from $24,246 to $120,991, an increase of $96,745 relating to the cost of accounting, audit and legal fees associated with our filings and an increase in general and administrative expenses of $63,599, from $36,261 to $99,860 related to the growth of the business.

Other – The Company had no “Other” income or expense during the six months ended June 30, 2011.  During the six months ended June 30, 2010 the Company recognized an impairment of goodwill expense of $150,594 related to the acquisition of SpeedPal Broadband.  

Also, during the six month period ended June 30, 2010 the Company incurred a loss of $(131) from its discontinued appraisal business along with a onetime gain of $24,518 related to the sale of that 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, 2011, we realized net proceeds of $25,635 from borrowings from related parties and $490,000 gross proceeds from sales of common stock.  After fund ongoing operations and equipment purchases, the Company had available cash of $124,458 as of June 30, 2011.  The Company expects to realize revenue from its Tech TV subsidiary for the first time in the third quarter of 2011.  This increase in revenue should provide some cash for operations but the Company will continue to rely on related parties on an as needed basis and to raise capital through stock offerings or loans until such time that we are able to generate cash from operations sufficient for our needs.  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, 2011, we had total current assets of $128,304 and total current liabilities of $260,670 resulting in a working capital deficit of $132,366.  Current assets consist of cash and a small amount of receivables.  Current liabilities consists of accounts payable and accrued expenses of $24,465 and related party payables of $236,205.  At March 31, 2010 we had total current assets of $23,902 and total current liabilities of $252,170 resulting in a working capital deficit of $228,268.

Net cash used by continuing operating activities was $221,490 and $13,800 for the year six months ended June 30, 2011 and 2010 respectively.  The increase is related to the growth of the business.

Net cash used in investing activities was $193,590 and $4,289 for the six months ended June 30, 2011 and 2010, respectively, related primarily to the purchase of equipment for TechTV.  During the six months ended June 30, 2010, $964 was related to cash relinquished in discontinued operations.  

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company as defined by § 229.10(f)(1) and are not required to provide the information under this item.

15

---

Item 4T - 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 ineffective 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 Chief Financial Officer, to allow timely decisions regarding required disclosure.

  

 Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

 

Item 1 - Legal Proceedings

 

The Company is not aware of pending claims or assessments, other than as described above, which may have a material adverse impact on the Company’s financial position or results of operations.

 

Item 1a - Risk Factors

 

We are a smaller reporting company as defined by § 229.10(f)(1) and are not required to provide the information under this item.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

On January 12, 2011, the Company issued 5,000,000 shares of its common stock to the TechTV shareholder, in exchange for all of the issued and outstanding capital stock of TechTV (See Note 4).   On May 5, 2011 pursuant to an agreement between the Company and the selling shareholder of TechTV, the number of shares issued to acquired TechTV was reduced to 3,500,000, which shares are currently held in escrow until the performance milestones detailed in the share exchange agreement have been reached. On July 12, 2011, the initial tranche of 437,500 restricted shares were released from escrow  as a result of TechTV reaching the initial milestone.

On May 5, 2011, the Company issued 2,133,333 shares of common stock at $0.15 per shares.  The investor money had been received and recorded as an advance liability in March 2011 balance sheet.  The $320,000 proceeds for the investment are being used as general working capital for the Company.

16

---

On June 6, 2011, the Company issued 1,336,667 shares of common stock at $0.124 per shares.   The $170,000 proceeds are being used as general working capital for the Company.

Item 3 - Defaults upon Senior Securities

 

None.

  

Item 5 - Other Information

 

None. 

Item 6 - Exhibits

 

Exhibit
Number	Description of Exhibit
3.01	Articles of Incorporation(1)
3.03	Bylaws(1)
31.01	Certification of Principal Executive Officer and Financial Officer Pursuant to Rule 13a-14(2)
32.01	CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act(2)

⁽¹⁾

Incorporated by reference to our Registration Statement on Form 10 filed on May 1, 2008.

⁽²⁾

Filed herewith.

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 15, 2011

/s/ Bryant D. Cragun              

By: Bryant D. Cragun

Its: President and Secretary

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Dated: August 15, 2011

/s/ Bryant D. Cragun              

By: Bryant D. Cragun

Its:  Director

17