SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-29693
MSC GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-2217569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
29/31 Gul Avenue
Singapore City
Singapore 629699
(Address of principal executive offices (zip code))
011 65 863 6626
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the last 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at September 30, 2001
Common Stock, $0.0001 21,718,300
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER
30, 2001 (UNAUDITED) AND MARCH 31, 2001
PAGE 2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS
ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED) AND FOR
THE PERIOD FROM DECEMBER 31, 1999 (INCEPTION) THROUGH
SEPTEMBER 30, 2001 (UNAUDITED)
PAGE 3 CONDENSED CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2001 (UNAUDITED)
PAGE 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED) AND FOR THE PERIOD FROM DECEMBER 31, 1999
(INCEPTION) THROUGH SEPTEMBER 30, 2001 (UNAUDITED)
PAGES 5 - 9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONOLIDATED BALANCE SHEETS
------------------------------------
ASSETS
------
September 30,
2001 March 31,
(Unaudited) 2001
-------------- ------------
CURRENT ASSETS
Cash $ 505,477 $ 174,651
Inventories 1,223 -
Other current receivables 87,995 81,368
------------ ------------
Total Current Assets 594,695 256,019
------------ ------------
PROPERTY AND EQUIPMENT, NET 306,046 77,019
------------ ------------
TOTAL ASSETS $ 900,741 $ 333,038
- ------------ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 237,239 $ 109,127
Due to directors 127,211 -
Current portion of capitalized leases 33,345 4,466
------------ ------------
Total Current Liabilities 397,795 113,593
------------ ------------
Long-term portion of capitalized leases 63,257 8,447
------------ ------------
TOTAL LIABILITIES 461,052 122,040
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value,
20,000,000 shares authorized, none
issued and outstanding - -
Common stock, $.0001 par value,
100,000,000 shares authorized,
21,718,300 and 20,500,000 shares
issued and outstanding, respectively 2,172 2,050
Additional paid-in capital 2,357,462 1,140,000
Accumulated deficit during development stage (1,989,434) (938,725)
Accumulated other comprehensive income 69,489 7,673
------------ ------------
Total Stockholders' Equity 439,689 210,998
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 900,741 $ 333,038
- ------------------------------------------ =========== ===========
See accompanying notes to condensed consolidated financial statements.
1
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE LOSS
----------------------
(UNAUDITED)
For the
Period From
December
For the For the For the For the 31, 1999
Three Months Thee Months Six Months Six Months (Inception)
Ended Ended Ended Ended Through
September September September September September
30, 2001 30, 2000 30, 2001 30, 2000 30, 2001
------------ ----------- ---------- ---------- -----------
REVENUES $ - $ - $ - $ - $ -
------------ ----------- ---------- ---------- -----------
OPERATING EXPENSES
Selling, general
and administrative 669,541 - 1,050,709 - 1,989,434
------------ ----------- ---------- ---------- -----------
Total Operating
Expenses 669,541 - 1,050,709 - 1,989,434
------------ ----------- ---------- ---------- -----------
NET LOSS (669,541) - (1,050,709) - (1,989,434)
- -------------------
OTHER COMPREHENSIVE
INCOME
Gain on foreign
currency translation 73,358 - 61,816 - 69,489
------------ ----------- ---------- ---------- -----------
TOTAL COMPREHENSIVE
LOSS $ (596,183) $ - $ (988,893) $ - $(1,919,945)
- ------------------- ============= ========== =========== ========= ============
Net loss per share -
basic and diluted $ (.03) $ - $ (.05) $ - $ (.10)
============ ========== =========== ========= ============
Weighted average
number of shares
outstanding - basic
and diluted 21,648,517 20,000,000 21,406,413 20,000,00 20,181,480
============ ========== =========== ========= ===========
See accompanying notes to condensed consolidated financial statements.
2
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2001
-------------------------------------------
(UNAUDITED)
Deficit
Accumulated Accumulated
Additional During Other Com-
Common Stock Paid-In Development prehensive
Shares Amount Capital Stage Income Total
---------- ------ ---------- ----------- -------- ----------
Balance,
March 31, 2001 20,500,000 $2,050 $1,140,000 $ (938,725) $ 7,673 $ 210,998
Other comprehensive
income - - - - 61,816 61,816
Common stock
issued for cash 1,218,300 122 1,217,462 - - 1,217,584
Net loss for the
six months ended
September 30, 2001 - - - (1,050,709) - (1,050,709)
--------- ------ ---------- ----------- -------- ---------
BALANCE,
September
30, 2001 21,718,300 $2,172 $2,357,462 $(1,989,434) $ 69,489 $ 439,689
- ------------ ========== ======= ========== ============= ========== =========
See accompanying notes to condensed consolidated financial statements.
3
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
For the
Period from
For the For the December 31,
Six Months Six Months 1999 (Inception)
Ended Sept. Ended Sept. Through
30, 2001 30, 2000 Sept. 30, 2001
-------- -------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,050,709) $ - $ (1,989,434)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 45,944 - 60,553
Provision for bad debts 95,903 - 95,903
Changes in operating assets and
liabilities:
Increase in other current receivables (102,530) - (183,898)
Increase in inventories (1,223) - (1,223)
Increase in accounts payable and
accrued liabilities 128,112 - 259,459
--------- -------- -----------
Net Cash Used In
Operating Activities (884,503) - (1,758,640)
--------- -------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (119,309) - (214,550)
--------- -------- -----------
Net Cash Used In
Investing Activities (119,309) - (214,550)
--------- -------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of common stock 1,217,584 - 2,369,286
Payments on capital leases (71,973) - (71,973)
Increase in due to directors 127,211 - 127,211
--------- -------- ----------
Net Cash Provided
By Financing Activities 1,272,822 - 2,424,524
--------- -------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS
PRIOR TO EFFECT OF FOREIGN
CURRENCY TRANSLATION 269,010 - 451,334
FOREIGN CURRENCY TRANSLATION 61,816 - 54,143
--------- -------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 330,826 - 505,477
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 174,651 500 -
--------- -------- ----------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 505,477 $ 500 $ 505,477
- --------------------------- =========== ========== ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
- --------------------------------------------
The Company acquired $62,017 of equipment through capital leases.
See accompanying notes to condensed consolidated financial statements.
4
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization
MSC Group, Inc., formerly Eastward Acquisition Corporation (a
development stage company), ("the Company") was incorporated in the
Delaware on March 24, 1999. On December 29, 2000, the Company
effected a reorganization by acquiring all the outstanding common stock
of Milling Systems & Concepts Private Limited ("MSC") a Singapore
corporation incorporated on December 31, 1999 and its wholly owned
subsidiary MSC Technologies Pte. Ltd. for 20,000,000 shares of
common stock. The acquisition has been treated as an acquisition of the
Company by MSC and as a recapitalization of the Company for
accounting purposes. Accordingly, the financial statements include the
balance sheet, which consists of the net assets of the Company and MSC
at historical cost. As a result of the merger the Company has adopted the
March 31 fiscal year of MSC.
Activities during the development stage include raising capital and
implementing its business plan.
The Company's wholly owned subsidiary MSC is involved in providing
integrated and internet enabled manufacturing solutions. The Company
intends to market its manufacturing solutions in the NAFTA, Europe and
Asia-Pacific region.
On April 14, 2001, MSC formed MSC Precision Pte. Ltd., a Singapore
corporation, to develop manufacturing solution and concepts for use by
the machine manufacturing industry, design and service centers, mold and
die industry and jigs and tooling manufacturers.
On April 19, 2001, MSC formed MSC Industries (Shanghai) Co. Ltd., a
Republic of China corporation, to develop and manufacture dies, molds,
tools, jigs and fixtures.
On June 7, 2001, MSC formed MSC Solar Systems Pte. Ltd., a
Singapore corporation, to research, develop and commercialize energy
inventions.
On June 28, 2001, MSC formed MSC (Beijing) Logistics Technology
Co. Ltd., a Republic of China corporation, to provide logistics and
consulting services and to develop software.
On July 7, 2001, MSC formed I-MSC.com Pte. Ltd., a Singapore
corporation, to provide internet services and to develop, integrate and
deliver enterprise-wide business intelligent solutions and software
applications.
On July 7, 2001, MSC formed MSC Ventures Group (S) Pte. Ltd., a
Singapore corporation, to perform venture capital funding and asset
management.
5
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
On August 16, 2001, MSC formed MSC Design Pte. Ltd., a Singapore
corporation, to design prototypes for appliances.
On August 16, 2001, MSC formed MSC Prototyping (S) Pte. Ltd., a
Singapore corporation, to manufacture, develop and produce a sample or
model of all types of industrial products, machinery, equipment or
devices and other ancillary activities, appliances and services in
connection therein.
The newly formed MSC subsidiaries did not have any revenue for the six
months ended September 30, 2001.
(B) Principles of Consolidation
The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant inter-
company balances and transactions have been eliminated in consolidation.
(C) Use of Estimates
In preparing the condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United
States of America, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
condensed consolidated financial statements and revenues and expenses
during the reported period. Actual results could differ from those
estimates.
(D) Per Share Data
Basic loss per share is based on the net loss divided by the weighted
average number of shares outstanding. Diluted loss per common shares
is adjusted to reflect the incremental number of shares issuable under
stock-based compensation plans and contingently issuable shares, if such
adjustments are dilutive. There were no common stock equivalents
included in diluted loss per share, as their effect would be anti-dilutive.
(E) Interim Condensed Consolidated Financial Statements
The condensed consolidated financials statements as of September 30,
2001 and for the three and six months ended September 30, 2001 and
2000 and for the period from December 31, 1999 (inception) through
September 30, 2001 are unaudited. In the opinion of management, such
condensed consolidated financial statements include all adjustments
(consisting only of normal recurring accruals) necessary for the fair
presentation of the consolidated financial position and the consolidated
results of operations. The consolidated results of operations for the three
and six months ended September 30, 2001 are not
6
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
necessarily indicative of the results to be expected for the full year.
The condensed consolidated balance sheet information as of March 31, 2001
was derived from the audited consolidated financial statements included
in the Company's annual report Form 10-KSB. The interim condensed
consolidated financial statements should be read in conjunction with that
report.
(F) Going Concern
The Company's condensed consolidated financial statements have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business $884,503 for the six months ended September 30, 2001, and
has an accumulated deficit of $1,989,434 at September 30, 2001. These
conditions raise substantial doubt about the Company's ability to continue
as a going concern. The condensed consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
The Company anticipates raising additional capital through the issuance
of debt and/or equity securities. Additionally, management anticipates
that operations which will commence in the fiscal year ending March 31,
2003, will generate profits to absorb overhead expenses.
NOTE 2 AGREEMENTS
(A) On December 27, 2001, the Company entered into an agreement
with its landlord to extend the date to acquire property currently leased
by the Company to December 31, 2002. The purchase price of the
property shall be agreed to by both parties at a price no less than the
market valuation of $6,000,000 (Singapore).
(B) On September 19, 2001 MSC Group executed a joint venture
agreement with Protolex LLC ("Protolex"), located in Washington DC to
jointly develop a new motion controller for new generation milling and
rapid prototyping machines. The agreement is effective for 90 days from
the date of execution and the agreement may be superceded by other
agreements within the 90-day time frame and may be extended based
upon mutual consent of both parties. On January 23, 2002, both parties
executed an extension of the original agreement for 1 year. Protolex
LLC is the manufacturer/producer of state of the art electronic
engineering equipment. According to the agreement, Protolex will
complete the design and development of a commercial use motor control
system according to MSC Group's specification and MSC Group will
fund the project with $200,000. Upon the down payment of $50,000,
Protolex was to provide MSC Group with a detailed project development
plan to meet a three-month completion date requirement of producing a
working prototype. MSC Group paid Protolex the $50,000 on October
1, 2001 and also paid $50,000 on January 31, 2002. MSC Group will be
responsible for the final integration and mass production of the commercial
units. In accordance with the agreement, each party will own its own
7
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
intellectual property for the effort. Additionally, MSC Group
will grant Protolex a non-exclusive license to sell the product for a sales
fee of 12%. The timetable to meet the terms of the joint venture
agreement has been temporarily delayed due to technical issues in the
manufacturing process. Both parties are aware of the issues and the
project is expected to continue in the second quarter of fiscal year 2003.
There have been no revisions to the agreement as a result of the issues.
The agreement also provides MSC Group the ability to invest up to $8
million in Protolex, representing up to 30% ownership of Protolex, given
the occurrence of certain events, as defined in the agreement.
Specifically, the agreement requires MSC Group to make an initial
investment in Protolex during 2001 amounting to $2 million and a $2
million investment during 2002. MSC Group did not make any of the
investments. As discussed above, the timetable to meet the terms of the
joint venture agreement has been temporarily delayed and there have
been no changes to the original agreement.
NOTE 3 RELATED PARTY TRANSACTION
Also included in other current receivables at September 30, 2001 are
advances to directors and employees of $123,647 for establishing new
operations in China. The Company has a reserve of $95,903 relating to
amounts advanced to an ex-director who is no longer with the Company.
The Company is aggressively pursuing the repayment of the amount
owed by the ex-director.
Due to directors at September 30, 2001 of $127,211 consists of $29,573
of expenses paid on the Company's behalf, $16,984 for director's fees
and an $80,654 overpayment for the purchase of common stock.
NOTE 4 SUBSEQUENT EVENTS
(A) MSC acquired the following subsidiaries subsequent to
September 30, 2001:
On January 1, 2002, MSC acquired Modern Handling Equipment (Thai)
Ltd., ("MHE") a Thailand corporation, for approximately $25,000.
MHE provides marketing and after-sale service support. The acquisition
was accounted for under the purchase method and the excess of the net
assets acquired over the purchase price resulted in negative goodwill of
approximately $27,000. The negative goodwill was applied to reduce the
basis of the equipment acquired.
On January 1, 2002, MSC acquired MSC Automation Pte. Ltd.,
("Automation") a Singapore corporation, for approximately $1,400.
Automation designs automation systems for industrial use. The
acquisition was accounted for under the purchase method and the excess
of purchase price over the net assets acquired of approximately $16,000
is goodwill. Due to the operating losses of Automation after the
acquisition, the goodwill was subsequently written off as impaired.
8
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
(B) On November 4, 2001 MSC Technologies Private Limited, a
subsidiary of Milling Systems received an incentive grant from the
Productivity and Standards Board of Singapore to receive grants up to
approximately $385,000. The grant is to be used for the research and
development of a Rapid Prototype machine from January 20, 2001 to
June 30, 2002. On February 8, 2002, the Company received
approximately $92,000 of the grant for reimbursement of expenses
incurred.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion is intended to provide an analysis of the
Company's financial condition and plan of operation and should be read in
conjunction with the Company's condensed financial statements and its
related notes. The matters discussed in this section that are not historical
or current facts deal with potential future circumstances and
developments. Such forward-looking statements include, but are not
limited to, the development plans for the growth of the Company, trends
in the results of the Company's development, anticipated development
plans, operating expenses and the Company's anticipated capital
requirements and capital resources. The Company's actual results could
differ materially from the results discussed in the forward-looking
statements.
Although the Company believes that the expectations reflected in
the forward-looking statements and the assumptions upon which the
forward-looking statements are based are reasonable, these expectations
and assumptions may not prove to be correct.
Plan of Operation
As of September 30, 2001, the Company had not received any
revenues from operations.
MSC Group, Inc. is a holding company with one wholly-owned
subsidiary, Milling Systems & Concepts Private Limited (a Singapore
corporation). As of September 30, 2001, Milling Systems & Concepts
Private Limited had nine subsidiaries.
Subsidiary Date of Country of
Formation Registry
- -------------------------------------- ----------------- ----------
MSC Technologies Private Limited November 14, 2000 Singapore
MSC Precision Private Limited April 14, 2001 Singapore
MSC Industries (Shanghai) Co., Limited April 19, 2001 China
MSC Solar Systems Private Limited June 7, 2001 Singapore
Beijing MSC Logistics
Technology Co., Limited June 28, 2001 China
MSC Ventures Group (S) Private Limited July 7, 2001 Singapore
I-MSC.COM Private Limited July 7, 2001 Singapore
MSC Rapid Prototyping (S) Private
Limited August 16, 2001 Singapore
MSC Design Private Limited August 16, 2001 Singapore
As of September 30, 2001, none of these subsidiaries had
generated revenues. Beginning in November, 2001, MSC Design Pte.
Ltd. generated revenues.
Although the Company has one user of its equipment, who uses
the equipment for functional tests of capability and software friendliness,
the Company does not have any sales, customers or orders. The
Company completed the beta testing of its two products, the MSC RP
2000 and MSC Molding 2000, and is beginning their marketing.
The MSC RP 2000 System is a high-speed milling machine capable
of producing within hours a wood, wax, plastic, light alloy or aluminum
prototype, sample or specimen of any object from a 3-dimensional
drawing. The MSC Molding 2000 is also a high-speed milling machine
that produces a mold or jig from plastic, light alloy or aluminum and can
cut or mill and produce very small features not usually available on
traditional computerized numeric control machines which commonly can
only produce a single product during each manufacturing run.
The Company's activities have been financed by the sales of its
common stock. For the fiscal year ended March 31, 2001, capital
contribution from the sale of the Company's common stock was
$1,151,702. In the quarter ended September 30, 2001, the Company sold
169,300 shares of its common stock at $1.00 per share.
The Company's condensed financial statements have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the normal course
of business. For the six months ended September 30, 2001, the Company had
a net loss of $1,050,709 and a negative cash flow from operations of $884,503.
At September 30, 2001, the Company had an accumulated deficit of
$1,989,434 arising from general administration and start-up expenses.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. The Company's condensed financial
statements have been presented on the basis that it is a going concern,
which contemplates the realization of assets and satisfaction of liabilities
in the normal course of business.
The Company anticipates that it will need to raise additional
capital in the next twelve months to continue its plan of operations
through the issuance of debt and/or equity securities. Management
anticipates that operations will commence in the fiscal year ending March
31, 2003 which will generate revenues possibly sufficient to meet
operating overhead expenses. There is no assurance that revenues will
commence by fiscal year end March 31, 2003, or ever, or if commenced,
such revenues will be sufficient to cover expenses.
From any revenues or capital contributions it receives, if any, the
Company intends to make investments in research and development and
marketing of its products. The Company anticipates that by the year
2003, it will start development of audio and video products, motion
controller cards, wireless PDAs and e-tablets, interacting software for
machine to machine communication. Any such research and development
is dependent upon the ability of the Company to generate revenue either
through sale of its securities or the start of the sale of its products.
In addition marketing and research, the Company intends to spend funds,
when and if available, on construction of a manufacturing and office
complex and new equipment.
There is no assurance that the Company can raise additional funds
either through additional sales of its securities nor through the sale of any
of its products.
In March, 2001, the Company applied to the United States Patent
Office for three provisional patents:
60/275,497 A method and apparatus for producing a prototype
60/275,497 A prototype production system and method
60/275-873 A data processing system for implementing an exchange
As of September 30, 2001, the Company had 27 full time and 4
part time employees. As of March 31, 2002, the Company had 44 full
time employees.
On September 19, 2001 MSC Group executed a joint venture
agreement with Protolex LLC ("Protolex"), located in Washington D.C.
to jointly develop a new motion controller for new generation milling and
rapid prototyping machines. The agreement is effective for 90 days from
the date of execution and the agreement may be superceded by other
agreements within the 90-day time frame and may be extended based upon
mutual consent of both parties. On January 23, 2002, both parties
executed an extension of the original agreement for 1 year. Protolex LLC
is the manufacturer/producer of state of the art electronic engineering
equipment. According to the agreement, Protolex will complete the
design and development of a commercial use motor control system
according to MSC Group's specification and MSC Group will fund the
project with $200,000. Upon the down payment of $50,000, Protolex
was to provide MSC Group with a detailed project development plan to
meet a three-month completion date requirement of producing a working
prototype. MSC Group paid Protolex the $50,000 on October 1, 2001
and also paid $50,000 on January 31, 2002. MSC Group will be
responsible for the final integration and mass production of the
commercial units. In accordance with the agreement, each party will own
its own intellectual property for the effort. Additionally, MSC Group will
grant Protolex a non-exclusive license to sell the product for a sales fee of
12%. The timetable to meet the terms of the joint venture agreement has
been temporarily delayed due to technical issues in the manufacturing
process. Both parties are aware of the issues and the project is expected
to continue in the second quarter of fiscal year 2003. The agreement also
provides MSC Group the ability to invest up to $8 million in Protolex,
representing up to 30% ownership of Protolex, given the occurrence of
certain events, as defined in the agreement. Specifically, the agreement
requires MSC Group to make an initial investment in Protolex during
2001 amounting to $2 million and a $2 million investment during 2002.
MSC Group did not make any of the investments. The timetable to meet
the terms of the joint venture agreement has been temporarily delayed and
there have been no changes to the original agreement.
On September 23, 2001, the Company entered into a joint venture
agreement with two subsidiaries of a Chinese holding company for the
establishment of a precision molding making company to be based in
Jinan, China. Further action on this agreement was postponed until July,
2002.
Subsequent Events
In October 2001, he Company purchased five sets of Catia V5
Product Lifecycle Management software from IBM Singapore for use in
Singapore for approximately $60,000. The Catia V5 shall be resident in
MSC i-MSC.com's collaborative portal where designers, engineers,
manufacturers, and suppliers can meet to procure, request, supply, change
designs or specification, finalize manufacturing contracts and supervise
manufacturing "virtually" on the internet without having a physical
presence in the workshop. The Catia V5 is the leading engineering
platform used by some of the world's leading engineering companies in
automotive, aerospace and marine sectors.
On November 4, 2001 MSC Technologies Private Limited
received an incentive grant from the Productivity and Standards Board of
Singapore amounting to $385,000. The grant is to be used for the
research and development of a rapid prototyping machine from January
20, 2001 to June 20, 2002. During 2001, MSC Group launched a series
of research and development projects in Singapore with the intent to
develop several key technologies in the milling and rapid prototyping
industry. On July 11, 2002, the Company obtained an extension of the
grant until December 2002 due to the debugging of the system.
On January 1, 2002, the Company acquired:
Modern Handling Equipment (Thai) Ltd., a Thailand corporation,
for approximately $25,000. Modern Handling Equipment provides
marketing and after-sale service support.
MSC Automation Pte. Ltd., a Singapore corporation, for
approximately $1,400. MSC Automation Pte designs automation
systems for industrial use.
PART 2 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any legal proceedings pending or threatened
against it.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
MSC GROUP, INC.
By: /s/ Steven Mok
President
Dated: August 12, 2002
By: /s/ Tan Cant Wee
Chief Financial Officer and
Principal Accounting Officer
Dated: August 12, 2002
CERTIFICATIONS
By execution below, the Chief Executive Officer and the
Chief Financial Officer hereby certify that the Quarterly Report on Form
10-QSB for the period ending September 30, 2001, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and the information contained in such periodic report fairly
presents, in all material respects, the financial condition and results of
operations of the issuer.
By: /s/ Steven Mok
Chief Executive Officer
Dated: August 12, 2002
By: /s/ Tan Cant Wee
Chief Financial Officer
Dated: August 12, 2002