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
June 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 June 30, 2001
Common Stock, $0.0001 21,549,000
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 JUNE
30, 2001 (UNAUDITED) AND MARCH 31, 2001
PAGE 2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS FOR THE THREE MONTHS
ENDED JUNE 30, 2001 AND 2000 (UNAUDITED) AND FOR THE
PERIOD FROM DECEMBER 31, 1999 (INCEPTION) THROUGH
JUNE 30, 2001 (UNAUDITED)
PAGE 3 CONDENSED CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED
JUNE 30, 2001 (UNAUDITED)
PAGE 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED) AND PERIOD FROM DECEMBER 31, 1999
(INCEPTION) THROUGH JUNE 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
------
June 30, 2001 March 31, 2001
(Unaudited)
-------------- --------------
CURRENT ASSETS
Cash $ 958,206 $ 174,651
Other current receivables 162,532 81,368
------------ ------------
Total Current Assets 1,120,738 256,019
------------ ------------
PROPERTY AND EQUIPMENT, NET 151,618 77,019
------------ ------------
TOTAL ASSETS $ 1,272,356 $ 333,038
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 228,544 $ 109,127
Due to directors 109,289 -
Current portion of capitalized leases 23,479 4,466
------------ ------------
Total Current Liabilities 361,312 113,593
------------ ------------
Long-term portion of capitalized leases 44,756 8,447
------------ ------------
TOTAL LIABILITIES 406,068 122,040
------------ ------------
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,
21,549,000 and 20,500,000 shares
issued and outstanding, respectively 2,155 2,050
Additional paid-in capital 2,187,895 1,140,000
Accumulated deficit during development stage (1,319,893) (938,725)
Accumulated other comprehensive (loss) income (3,869) 7,673
------------ ------------
Total Stockholders' Equity 866,288 210,998
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,272,356 $ 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
Period from
December 31,
For the Three For the Three 1999 (Incep-
Months Ended Months Ended tion) Through
June 30, 2001 June 30, 2000 June 30, 2001
------------- ------------- ---------------
REVENUES $ - $ - $ -
------------- ------------- ---------------
OPERATING EXPENSES
Selling, general and administrative 381,168 - 1,319,893
------------- ------------- ---------------
Total Operating Expenses 381,168 - 1,319,893
------------- ------------- ---------------
NET LOSS (381,168) (1,319,893)
- ----------------------------
OTHER COMPREHENSIVE INCOME
Loss on foreign currency translation (11,542) - (3,869)
------------- ------------- ---------------
TOTAL COMPREHENSIVE LOSS $ (392,710) $ - $ (1,323,762)
- ------------------------ ============= ============= ===============
Net loss per share - basic
and diluted $ (.02) $ - $ (.07)
============= ============= ===============
Weighted average number of shares
outstanding - basic and diluted 21,154,912 20,000,000 19,933,617
============= ============= ===============
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 THREE MONTHS ENDED JUNE 30, 2001
----------------------------------------
(UNAUDITED)
Deficit Accumulated
Accumulated Other Com-
Additional During prehensive
Common Stock Paid-In Development Income
Shares Amount Capital Stage (Loss) Total
---------- ------ ---------- ------------ ------- ---------
Balance,
March 31, 2001 20,500,000 $2,050 $1,140,000 $ (938,725) $ 7,673 $ 210,998
Other comprehensive
loss - - - - (11,542) (11,542)
Stock issued
for cash 1,049,000 105 1,047,895 - - 1,048,000
Net loss for the
three months ended
June 30, 2001 - - - (381,168) - (381,168)
--------- ------ ---------- ----------- -------- ---------
BALANCE,
JUNE 30, 2001 21,549,000 $2,155 $2,187,895 $(1,319,893) $(3,869) $866,288
- ------------- ========== ======= ========== ============= ========== =========
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,
Three Months Three Months 1999 (Inception)
Ended June Ended June Through
30, 2001 30, 2000 June 30, 2001
-------- -------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (381,168) $ - $(1,319,893)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 16,013 - 30,622
Changes in operating assets and
liabilities:
Increase in other current receivables (81,165) - (162,533)
Increase in accounts payable and
accrued liabilities 119,417 - 250,764
--------- -------- ------------
Net Cash Used In
Operating Activities (326,903) - (1,201,040)
--------- -------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (35,289) - (130,530)
--------- -------- ------------
Net Cash Used In
Investing Activities (35,289) - (130,530)
--------- -------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to directors 109,289 - 109,289
Sale of common stock 1,048,000 - 2,199,702
--------- -------- -----------
Net Cash Provided By
Financing Activities 1,157,289 - 2,308,991
--------- -------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS
PRIOR TO EFFECT OF FOREIGN
CURRENCY TRANSLATION 795,097 - 977,421
FOREIGN CURRENCY TRANSLATION (11,542) - (19,215)
--------- -------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS 783,555 - 958,206
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 174,651 500 -
--------- -------- -----------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 958,206 $ 500 $ 958,206
- --------------------------- =========== ========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
- --------------------------------------------
The Company acquired $33,650 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.
The newly formed MSC subsidiaries did not have any revenue for the
three months ended June 30, 2001.
5
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
(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 June 30, 2001
and for the three months ended June 30, 2001 and 2000 and for the
period from December 31, 1999 (inception) through June 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
months ended June 30, 2001 are not 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. The Company has a net
loss of $381,168 and a negative cash flow from operations of
6
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
$326,903 for the three months ended June 30, 2001, and has an
accumulated deficit of $1,319,893 at June 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 AGREEMENT
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).
NOTE 3 RELATED PARTY TRANSACTION
Included in other current receivables in the accompanying condensed
consolidated balance sheet at June 30, 2001 are advances to directors
amounting to $43,872 for establishing the new operations in China.
The amounts were expensed in the second fiscal quarter when the
subsidiary was formed.
Also included in other current receivables at June 30, 2001 are
advances to directors of $97,872 for establishing new operations in
Singapore. The amounts were expensed in the second fiscal quarter
when the subsidiaries were formed.
Due to directors at June 30, 2001 of $109,289 consists of $27,030 of
expenses paid on the Company's behalf and an $82,259 overpayment
for the purchase of common stock
NOTE 4 SUBSEQUENT EVENTS
(A) MSC formed the following subsidiaries subsequent to June 30, 2001:
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.
On August 16, 2001, MSC formed MSC Design Pte. Ltd., a
Singapore corporation, to design prototypes for appliances.
7
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
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.
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.
(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 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
8
MSC GROUP, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
-----------
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.
(C) 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 June 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
June 30, 2001, Milling Systems & Concepts Private Limited had five subsidiaries
and as of August 16, 2001, it 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 June 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 recently completed the
beta testing of its two products, the MSC RP 2000 and MSC Molding 2000, and is
beginning their marketing.
During May 2001, MSC Group enlarged its Internet web site in order to
participate in the worldwide trend towards more electronic trade. The web site
is located at www.mscgroup-usa.com and www.i-msc.com.
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 period April 1,
2001 to June 30, 2001, the Company sold 1,049,000 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
three months ended June 30, 2001, the Company had a net loss of $381,168 and a
negative cash flow from operations of $326,903. At June 30, 2001, the Company
had an accumulated deficit of $1,319,893 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 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 June 30, 2001, the Company had 10 full time employees and by March
31, 2002, the Company had 44 full time employees.
Subsequent Events
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.
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 SECURITY HOLDERS
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 June 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