UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X)QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD JUNE 30, 2002
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission File Number: 000-28005
MetaSource Group, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 88-0422028
- ------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
40 Exchange Place, Suite 1607, New York, New York 10005
- -------------------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(646) 805-5141
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(Registrant's Telephone Number, Including Area Code)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of August 19, 2002 there were
17,108,681 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MetaSource Group, Inc.
[formerly Cobra Tech International, Inc.]
(a Development Stage Company)
Balance Sheet
(unaudited)
June 30,
2002
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Assets
Current assets:
Cash $ -
Loan to stockholder 9,511
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Total current assets 9,511
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$ 9,511
=============
Liabilities and Stockholders' (Deficit)
Current liabilities:
Accounts payable $ 35,376
Loan from stockholder 72,375
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Total current liabilities 107,751
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Stockholders' (Deficit):
Preferred stock, $0.001 par value, 10,000,000
shares authorized, zero shares issued and
outstanding -
Common stock, $0.001 par value, 100,000,000
shares authorized; 12,890,870 shares issued and
outstanding at 6/30/02 12,891
Additional paid-in capital 21,569
Treasury stock 10,000
(Deficit) accumulated during development stage (142,300)
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(98,240)
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$ 9,511
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The accompanying notes are an integral part of these financial statements.
2
MetaSource Group, Inc.
[formerly Cobra Tech International, Inc.]
(a Development Stage Company)
Statements of Operations
(unaudited)
March 30, 1999
Three Months Ending Six Months Ending (Inception) to
----------------------------- ---------------------------- June 30,
2002 2001 2002 2001 2002
------------- ------------- ------------- ------------ -------------
Revenue $ - $ - $ - $ - $ -
------------- ------------- ------------- ------------ -------------
Expenses:
General and administrative expenses 63,143 - 85,395 - 117,940
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Total expenses 63,143 - 85,395 - 117,940
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Net (loss) $ (63,143) $ - $ (85,395) $ - $ (117,940)
============= ============= ============= ============ =============
Weighted average number of
common shares outstanding - basic and fully diluted 12,890,870 12,890,870 12,890,870 12,890,870
============= ============= ============= ============
Net (loss) per share - basic and fully diluted $ (0.00) $ - $ (0.00) $ -
============= ============= ============= ============
The accompanying notes are an integral part of these financial statements.
3
MetaSource Group, Inc.
[formerly Cobra Tech International, Inc.]
(a Development Stage Company)
Statements of Cash Flows
(unaudited)
March 30,
Six Months Ending 1999
June 30, (Inception)
---------------------- to June 30,
2002 2001 2002
--------- --------- ---------
Cash flows from operating activities
Net (loss) $ (85,395) $ - $(117,940)
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
Increase in accounts payable 25,376 - 35,376
--------- --------- ---------
Net cash (used) by operating activities (60,019) - (82,564)
--------- --------- ---------
--------- --------- ---------
Cash flows from investing activities - - -
--------- --------- ---------
Cash flows from financing activities
Loan (to) from stockholder 60,000 - 62,864
Issuance of common stock - - 19,700
--------- --------- ---------
Net cash provided by financing activities 60,000 - 82,564
--------- --------- ---------
Net (decrease) in cash (19) - -
Cash - beginning 19 - -
--------- --------- ---------
Cash - ending $ - $ - $ -
========= ========= =========
Supplemental disclosures:
Interest paid $ - $ - $ -
========= ========= =========
Income taxes paid $ - $ - $ -
========= ========= =========
The accompanying notes are an integral part of these financial statements.
4
METASOURCE GROUP, INC.
[formerly Cobra Tech International, Inc.]
(a Development Stage Company)
NOTES
NOTE 1 - BASIS OF PRESENTATION
The interim financial statements included herein, presented in accordance with
United States generally accepted accounting principles and stated in US dollars,
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
interim financial statements be read in conjunction with the financial
statements of the Company for the year ended December 31, 2001 and notes thereto
included in the Company's Form 10-KSB. The Company follows the same accounting
policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
NOTE 2 - ORGANIZATION
On April 2, 2002, the Company incorporated its wholly owned subsidiary, Meta
Source Acquisition Corporation (MSAC) and received 1,000 shares of MSAC in
exchange for services valued at $1,000.
On May 28, 2002, the Company amended its articles of incorporation to change its
name to MetaSourceGroup, Inc and to increase its authorized capital to
100,000,000 shares of $0.001 par value common stock and 10,000,000 shares of
$0.001 par value preferred stock.
NOTE 3 - GOING CONCERN
The Company's financial statements have been prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Without realization of additional capital, it would be
unlikely for the Company to continue as a going concern. Because the Company
does not have any cash or other material other assets, nor does it have an
established source of revenue sufficient to cover its operating costs, the
shareholder/officers will continue advancing enough cash to cover the operating
costs of the Company. The advances do not bear any interest.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
that might arise from this uncertainty.
NOTE 4 - LOANS FROM STOCKHOLDER
On April 1, 2002 the Company executed a promissory note for $12,375 with the
Company's president that is due upon demand and bears no interest.
On April 12, 2002, the Company executed a promissory note for $25,000 with the
Company's president that is due on June 30, 2002 and bears no interest.
On May 15, 2002, the Company executed a promissory note for $30,000 with the
Company's president that is due on June 30, 2002 and bears no interest.
5
MetaSource Group, Inc.
[formerly Cobra Tech International, Inc.]
(a Development Stage Company)
Notes
As of June 30, 2002, the total amount due to the shareholder is $72,375 and
during the six-month period ended June 30, 2002, there have been no payments to
the shareholder.
NOTE 5 - MERGER OF METASOURCE ACQUISITION CORPORATION (MSAC) AND METASOURCE
SYSTEMS, INC. (MSS)
MetaSource Group, Inc., a Nevada corporation (formerly CobraTech International,
Inc.) (the "Company"), formed two wholly-owned subsidiaries, Meta Source
Acquisition Corp., a Delaware corporation (MSAC), and Kensington Consulting
Acquisition Corporation, a Delaware corporation (KCAC), with the intent that
MSAC and KCAC would merge with and into MetaSource Systems, Inc., a Delaware
corporation (MSS), and Kensington Group, Inc., a Massachusetts corporation (KG),
respectively. On July 12, 2002, MSAC merged with and into MSS pursuant to a
merger agreement (the MSS/MSAC Merger), the surviving corporation being MSS.
Also on July 12, 2002 KCAC merged with and into KG pursuant to a Merger
Agreement (the KG/KCAC Merger) with KG being the surviving corporation. The
MSS/MSAC and KG/KCAC mergers will be accounted for as reorganizations.
Prior to the MSS/MSAC and KG/KCAC Mergers and in an effort to satisfy certain
conditions to the closing of the MSS/MSAC Merger, MSS entered into agreements to
acquire certain entities: Digit Digital Experiences Limited, a United Kingdom
corporation (Digit), Global Systems and Technologies Corp., a Virginia
corporation (GSS), PFA Research Limited, a UK corporation (PFAR) and Prime
Marketing Publications Limited, a UK corporation (PMP) (collectively, the
"Acquired Entities"). MSS had also merged with MetaSource Systems UK, a United
Kingdom corporation (MSS UK). MSS was the surviving entity in that merger.
Courtney Smith, our sole officer and director, is a director and a shareholder
of MSS UK. The Company intends to pursue further acquisitions with the goal of
becoming a provider of software solutions and technology consulting. We intend
to focus on acquiring companies that complement MSS's existing assets.
The transactions described in this Note were stock for stock transactions. The
total number of shares issuable to the Acquired Entity shareholders is subject
to specific formulas as detailed in the acquisition agreements attached as
exhibits to the Company's Form 8-K filed on July 19, 2002. The shares in the
transaction described above have not yet been issued.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the quarter ended June 30, 2002, the Company executed three promissory
notes for a total of $67,375 with the Company's president of which $12,375 is
due upon demand and $55,000 is due on June 30, 2002 and bears no interest.
As of June 30, 2002, the total amount due to the shareholder is $72,375 and
during the six-month period ended June 30, 2002, there have been no payments to
the shareholder.
NOTE 7 - SUBSEQUENT EVENTS
On July 10, 2002, the Company incorporated its wholly owned subsidiary,
Kensington Consulting Acquisition Corporation (KCAC) and received 1,000 shares
of KCAC in exchange for services valued at $1,000.
On July 11, 2002, the Company executed a convertible debenture agreement with
Big Plans Investment, Ltd. (BPI), in the amount of $350,000. The note bears an
interest rate of 8% per annum and is due in one year. At the request of BPI, any
unpaid balance of principal and interest due will be converted into the
Company's $0.001 par value common stock at a rate of $2.25 per share. In
addition, BPI will receive one warrant attached to each share of common stock
they convert, which will allow BPI to purchase the Company's $0.001 par value
common stock on a one-for-one basis. The warrant exercise price is $2.50 per
share of common stock exercisable over a period of one year from the date the
common stock is converted.
On July 12, 2002, the Company executed a secured promissory note with MetaSource
Systems, Inc. (MSS), in the amount of $350,000 as a bridge loan. The note bears
an interest rate of 8% per annum and is due in one year. This note is secured by
a 7% non-dilutable equity interest in MSS in the form of common stock, which
shall remain non-dilutable for a period of at least 12 months from the date of
conversion.
6
Item 2. Management's Discussion and Plan of Operation
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.
In July 2002, we consummated an agreement and plan of merger with MetaSource
Systems, Inc., a Delaware corporation. Pursuant to that agreement, Meta Source
Acquisition Corp., a Delaware corporation and our recently formed wholly owned
subsidiary, merged with and into MetaSource Systems, Inc. MetaSource Systems,
Inc. is a software development firm, which recently acquired other software
development companies to grow and expand its operations. We cannot guarantee
that the above transaction with MetaSource Systems, Inc. will increase the value
of our common stock.
We intend to provide software development, research and consulting services to
businesses. We sell these services through our subsidiaries, each of which was
purchased by MetaSource Systems, Inc. prior to the merger with Meta Source
Acquisition Corp. in July 2002. At least one of the original founding members of
each firm currently manages each subsidiary.
7
Management's operating strategy centers on the following goals:
o To acquire profitable Information Technology (IT)-related companies for
stock: our goal is to build a company of entrepreneurs committed to our
company's bottom line.
o To make acquisitions which are accretive to earnings, by swapping stock at
a rate well below our P/E ratio.
o To lower software development costs for our subsidiaries through the use
of offshore coding centers. Management believes it has developed a robust
project management process for offshore development.
o To tie each manager's compensation in large part to divisional and Company
profits, and leave our subsidiaries largely autonomous. Our goal is to
incentivize the manager-entrepreneur towards building shareholder value,
and to give them the power to accomplish this.
o To build sales growth by providing a wider range of services/products each
of our subsidiaries can sell to their clients.
o To create opportunities for our subsidiaries to expand geographically,
vertically, and horizontally.
o To build a base of services that all our partner companies can use.
o To create economies of scale in providing benefits and reducing property
and equipment prices for each of our subsidiaries.
We are committed to acquiring like-minded entrepreneurs and companies. Our
acquisition strategy builds upon the strengths and direction of our founding
companies. We are currently targeting the following areas:
o Companies possessing key vertical expertise, specifically in the Media,
Travel, Finance, Health Care and Logistics industries.
o Consulting and research companies which complement our expertise with IT
marketing and research services.
o Companies providing innovative e-marketing services which extend our
capabilities in design, branding and delivery.
We believe we have a large pool of candidates for acquisition. There are over
12,000 IT- related companies in the US. The Group's candidate profile focuses on
profitability and demonstrated leadership in a particular niche or vertical
market segment.
Our subsidiaries are described more particularly below.
Software Development Companies
Digit Business Description
Since 1995, Digit has provided interactive digital business solutions to a
corporate client base. Those solutions include a combination of design,
marketing, branding, merchandising and technology integration skills to create
business value.
Digit specializes in navigation and flow within interactive design solutions and
are experienced structural architects for complex information management
systems. By carefully selecting technologies Digit has navigated an uncertain
market environment by establishing a reputation as the European leader in design
and innovation.
Recognition of Digit's work has resulted in the award of a BAFTA for Interface
Design and Best of Show at the International Design Week Awards 2001.
Furthermore in a recent Financial Times survey of the leading 50 Creative Minds
of 2001, Digit's Creative Director, Daljit Singh, was the only New Media
personality to feature alongside the likes of Greg Dyke, Sir Paul Smith, Sir
Martin Sorrell and Ridley Scott.
8
Recent Work includes:
Habitat - Digit has redesigned and revitalized Habitat's global website which
was launched in September in five countries - the UK, Eire, France, Spain and
Germany. The new site has been designed to allow a seamless migration to
e-commerce elements in the future. Partnering with MetaSource to handle all of
Habitat's online customer relationship marketing, Digit will introduce dynamic
digital mailers throughout the year, informing customers of promotions and new
ranges within the stores.
o World Wide Learning - Part of News Corporation, (a division of the News
International plc). WorldWide Learning has commissioned Digit to look at
the branding and design for several projects both on and off-line. Digit
has been asked to re-design their existing corporate Worldwide Learning
website, as well as design an interface and navigation for one of their
main on-line learning products - LENS. In addition to these on-line
projects Worldwide Learning has asked Digit to design and produce their
company information brochure pack.
o MTV Source - MTV approached Digit to design and produce a viral flash
animation and a dedicated micro site. The brief for the animation was that
it should attract students and non-professional designers to design screen
identifications for the MTV channel. After viewing the animation the user
then clicks on a link taking them directly to the microsite, which gives
further information about the project. The animation is around twenty
seconds long and produced entirely in Flash.
o Disney Channel - Digit has completed several projects and is currently
working with Disney Channel on various activities. One such project is the
Disney Channel site, the brief was to create an entertaining and animation
rich environment that allows children to explore and interact directly
with the Live Studio in an innovative way. It aims to encourage
interactivity and communication with playful and humorous content. The
project is divided into two phases, the second phase currently being
developed concentrates on interactive content and gaming. The aim is to
create a synergy between the on-air studio and the website. Children will
be able to interact and affect aspects of the studio by visiting the site
which will encourage children to stay and re-visit regularly.
www.disneychannel.co.uk Other projects completed for Disney include a
re-design of the Disney Kids Awards Site, the brief was to take the
existing content for the Kids Awards site www.disney.co.uk/kidsawards, and
to redesign and incorporate new content, the look and feel of the site
needed to be in keeping with the existing marketing collateral produced
for the event. Digit has also produced several content specific homepage
re-fresh for the main European Disney channel homepage, the existing Buzz
Lightyear page is soon to be replaced with a new Tarzan themed homepage.
Global Systech (GSTC) Business Description.
GSTC specializes in integrated software systems and solutions. GSTC employs
highly skilled, experienced individuals able to provide software development, as
well as engineering, management, web-site development, and technical support
services. GSTC staff provide solutions for individual requirements in e-commerce
and web design to global businesses and government.
Typical e-commerce services include:
o Homepage design;
o Domain name registration or transfer;
o HTML coding/conversion;
o Navigation icons;
o Interactive forms of moderate complexity (cgi and Java scripts);
o Secure sockets layer (VeriSign, Thawte, or similar certificate);
o Shopping cart;
o Email links [direct mailto capability];
o Web Hosting; and
o Site statistics.
9
MetaSource Systems (MSS/MSS UK) Business Description.
MSS is a New York and London-based company which provides solutions to software
development and maintenance problems that companies encounter in the current
business environment.
MSS provides professional services through an integrated business model that
combines technical, project and relationship management teams located in the
U.S. and U.K., along with development companies located in China and Taiwan.
MSS's solutions include application development and integration, application
management, and e-commerce services.
MSS's core competencies include webcentric applications, database programming,
and programming. To date, MSS has assembled the following resources:
Sales, Project Management and Client Service Team. MSS performs all
client-facing functions using local sales, service and project
management personnel. The experienced, high quality professionals
ensure seamless integration of client needs and company capabilities.
Offshore development platform in China. Through an exclusive agreement
with Greater China Technology, Inc. located in China, MSS has an
exclusive agreement to outsource programming and development work at
costs significantly less than those in the U.S.
MSS focuses first and foremost on managing the software development process. MSS
can provide complete system analysis and design as well as hard core project
management. Typically, MSS will receive program specifications from the client
so that the primary function of MSS is to ensure that the project is implemented
on time and on budget. MSS professionals will work with the client to ensure
that the specifications will precisely solve the clients' problem.
Research and Consulting Companies
Kensington Group, Inc. Business Description.
Kensington Group, Inc. provides companies with services such as research,
consulting, and training to assist their clients to achieve corporate
objectives, maximize sales and business opportunities, and increase shareholder
value.
Kensington Group, Inc. has clients which are Fortune 500 and Global 2000
companies. Kensington Group, Inc. believes its customers benefit by Kensington
Group, Inc.'s knowledge and hands-on experience as its principals have over 20
years of experience in the information technology ("IT") industry.
Kensington Group, Inc. provides its clients with research that exposes those
factors which could influence a company's future success such as:
Custom Influencer Win/Loss Analysis -- Kensington Group, Inc. will work
with clients to determine the impact of certain influencers on
corporate sales and take corrective action to resolve negative
influences on a particular companies business, whether real or
perceived. The term "influencers" covers industry analysts,
consultants, the press, and others who can impact customers' buying
decisions.
Analyst Quotation Tracking System(TM) -- Kensington Group Inc. uses a
global system that tracks trends and industry analysts' and financial
analysts' quotes in the media, both print and online, of business,
trade and news press. Media quotations are a key channel through which
analysts influence the course of the market and the fortunes of
individual companies. This service comes with unlimited access to
Kensington Group, Inc.'s extensive "searchable and sortable" database
and custom, monthly executive "key indicator" reports.
Public Analyst/Consultant Relations Effectiveness Benchmark Studies(TM)
for IT and telecommunications companies. This is an annual series of
reports to companies that includes performance measurements, program
concepts, best practices and recommendations for all IT and
telecommunications companies worldwide.
10
Watching the Watchers(TM) --- an annual benchmark study for users,
vendors, venture capitalists and others. These reports seek to answer
important questions such as: Who uses which research firms, and for
what? How much are they really spending? Who is really being used to
influence sales? What are their strengths and weaknesses? Kensington
Group, Inc. is in a position to answer these questions and provide an
objective guide to these critical influencers.
Best Practices and Trends Report -- These reports detail lessons
learned in eleven years of industry studies. They incorporate thousands
of interviews with analysts and consultants from around the world in an
understandable format.
Analyst Relations Manager's Companion and Guide -- This guide is a
one-stop-shopping guide to influencer programs and processes: planning,
templates, checklists and concepts for today's analyst or consultant
relations professional. The Guide is updated annually to address new
and changing market conditions.
Kensington Group, Inc. also provides public and private forums for their
clients' analyst and consultant relations staff. The available forums are
detailed immediately below.
Private Forums include:
Specialized Analyst Relations Training and Coaching: During these
forums, Kensington Group, Inc. stresses message development, briefing
preparation, spokesperson training and executive coaching with a clear
focus on content, information flow and style.
Custom Public Relations Agency Training: These training sessions focus
on learning how to be more competitive in analyst relations.
Consulting Services: Kensington Group, Inc. works to analyze its
client's specific needs for analyst and consultant services. Kensington
Group, Inc. provides its clients with a customized approach to analyst
and consultant relations.
PFA Research Business Description.
PFA Research ("PFAR") has been providing business-to-business market research,
data management services and web & on-line solutions for over 10 years. PFAR
specializes in the e-commerce, IT and telecommunications sectors and has a
reputation for solid, reliable and statistically robust research combined with a
flexible and personal approach.
Market research services range from projects to provide a basis for new product
development thru market sizing to customer satisfaction surveys. Data management
services cover customer relationship management (CRM) database building and
maintenance through to basic data cleansing. They include:
o Data cleansing - PFAR calls corporate contacts and validates and/or updates
the data. Contact data continuously changes and needs to be verified and
updated periodically.
o Database building - corporate sales and marketing efforts need to be
targeted - procurement needs up-to-date supplier data. PFAR builds
databases to customer specifications.
PFAR has been involved in Internet applications since the mid-90s. It has
accumulated many years of experience with Internet applications on behalf of
clients. The resulting level of expertise enables PFAR to help clients make the
best possible use of the Internet.
PFAR's approach is based on putting data management/business needs on a par with
presentation and design. PFAR has led the development of basic corporate web
sites, portal sites and Application Service Providers (ASPs) using both third
party design and technical resources and proprietary resources.
11
Specific capabilities include:
o Design and development of dynamic, database driven web sites with
comprehensive online administration facilities and graphic usage
statistics;
o Analysis of market positioning and branding, plus re-branding; and
o Domain name registration.
Prime Marketing Publications (PMP) Business Description.
The PMP Group provides a range of services for those responsible for purchasing,
advising on or marketing IT. Among these services are (i) publications, (ii)
conferences, (iii) market research and (iv) interactive services. PMP publishes
established reports and newsletters for those responsible for IT and their
advisors.
Publications include:
Conspectus: Conspectus authoritatively addresses a different IT topic
every month. We believe it is one of the leading journals in the IT
industry and is used by many organizations to help them in their
selection of IT software and technology. Website: www.conspectus.com
IT Services & Solutions: IT Services & Solutions focuses on IT services
issues each quarter. IT services are forecast to be the most
competitive of the major technology sectors and we believe that IT
Service & Solutions provides a significant marketing opportunity for
its clients. Website: www.itssonline.co.uk
Consultants' Advisory: Consultants' Advisory reviews a different IT
sector each issue and is focused on those companies and subjects of
particular relevance to consultants, systems integrators and analysts
(CSI's). We believe that it is a strong UK vehicle for those IT vendors
who wish to ensure this influential community is well informed on their
products and services. Website: www.consultants-advisory.com
International Consultants' Guide (ICG): A pan-European report designed
to keep consultants, systems integrators and analysts working in Europe
and wider international markets up-to-date with current business and
associated software and technology issues. We believe that it is a
strong vehicle for those organizations who wish to work with CSI's on a
European or international basis. Website: www.consultants-guide.com
Management Consultants' News (MCN): The original newsletter concept,
designed to provide news, trends and IT supplier updates to its UK
consultant and systems integrator readers. We believe that MCN provides
a valuable corporate positioning opportunity for its clients. Website:
www.mconsultantsnews.com
International Consultants' News (ICN): ICN is the sister publication of
Management Consultants' News, and is sent to PMP's non-UK consultant
readership. It is usually produced in local language for Germany,
France, Italy and Spain whereas an English version covers the Benelux
countries, Scandinavia and other European countries. ICN has a
circulation dependent on selected countries but in total can reach
20,000 management consultants. Website: www.iconsultantsnews.com
Conferences: PMP organizes industry conferences and seminars for consultants and
decision makers. They are run under the established PMP "Facing the Future"
brand, which provides an authoritative platform to present application
technology and business issues to consultants and decision makers. They can be
single or multi-client sponsored where, in the latter case, all day events such
as the Annual Consultants' Forum and Conspectus Symposium have become
significant "thought leadership" activities. www.conferencepage.com
Market Research: PMP Research acts as a strategic partner to its clients,
helping them to understand, anticipate and address opportunities in information
technology, telecommunications and consultancy services. PMP understands that
quality, timely information and knowledgeable analysis provide real competitive
advantage.
12
PMP's range of programs includes:
Enterprise Mobility 2002: A global program for telecoms and IT
suppliers who need to understand the dynamics for wireless data
adoption in the corporate market.
Strategic Alliances: A pan-European program that examines the influence
of consultants on the IT marketplace, and their views on technologies,
vendors and partnerships.
Win/ Loss Reporting: A program that establishes the real reasons behind
winning or losing major tenders and evaluates the strengths and
weaknesses of competitors and sales strategies.
Bespoke Programs: Either complementing existing research programs or
tailored as a unique package to individual requirements.
Interactive Services
MCN Direct: An on-line weekly newswire service initially for UK
consultants and systems integrators (CSI's) providing up-to-the-minute
industry news in brief with links to relevant websites. Register (via
MCN website): www.mconsultantsnews.com
PMP Online Content Search: Multi-client sponsorship reaches over 8,000
CSI email addresses. All PMP's printed publications are posted
electronically on the website where a powerful content search facility
enables thousands of pages of relevant information to be instantly
retrieved.
Conspectus Interactive: An integrated marketing program designed to
deliver awareness, market intelligence on active projects and direct
decision-maker contacts. Results are achieved over a year via a
combination of research, Conspectus participation and two subject
focused conferences.
Liquidity and Capital Resources. Our total current assets were $9,511 as of June
30, 2002, which was represented solely by a loan to a stockholder. We had no
other assets as of June 30, 2002. We believe that we will be able to pay our
day-to-day expenditures after our acquisition of MetaSource Systmes, Inc. is
complete.
As of June 30, 2002, our total liabilities were $107,751, of which $35,376 was
represented by accounts payable, and $72,375 was represented by loan from Mr.
Cheung, our former officer, sole director and principal shareholder. Those notes
do not bear interest and are payable on demand. In April 2002, Mr. Cheung loaned
us $25,000 to pay our expenses and provide us with working capital. That note
matures on June 30, 2002, and does not bear any interest. Also in April 2002,
Big Plans Investments Ltd. loaned us $350,000. That note matures on April 20,
2003 and bears simple interest at the rate of 8%. Pursuant to the terms of our
agreement and plan of merger with MetaSource Systems, Inc., we loaned those
funds to MetaSource Systems, Inc. as bridge financing. In May 2002, Mr. Cheung
loaned us an additional $55,000 to pay our expenses and provide us with working
capital. Those notes also mature on June 30, 2002, do not bear interest and
are payable on demand. Subsequent to June 30, 2002, all these notes have been
repaid.
On July 12, 2002, and pursuant to the Merger Agreement, we issued three
convertible debentures to three investors for a total of $2,000,000. One of
those investors had previously loaned us $350,000, which we had loaned to MSS
pursuant to the Merger Agreement, Amendment No.1 and Amendment No. 2. Upon the
closing of the MSS/MSAC Merger, the investor agreed to convert that promissory
note in exchange for a convertible debenture in the amount of $350,000.
a) The debentures shall bear interest of eight percent (8%).
b) Interest and principal shall be due and payable on July 12,
2003.
c) The debenture holders shall have the right, at any time on or
prior to July 11, 2003, to convert that debt into one share of
our common stock at $2.25 per share and one warrant to
purchase one share of our common stock at $2.50 per share.
d) Upon seventy five (75) days prior written notice, we have the
right to require and compel the debenture holders to convert
the principal indebtedness into shares of common stock at such
time as our historical net annual income, evidenced by
reviewed financial statements, exceeds Five Million Dollars
($5,000,000).
Results of Operations.
Revenue. We have not generated any revenues to date. We expect to generate
revenues after the acquisition of MetaSource Systems, Inc.
Operating Expenses. We have incurred expenses of approximately $85,395 for the
six-month period ended June 30, 2002. Expenditures were primarily due to costs
incurred for professional fees, services and general and administrative
expenses.
Our Plan of Operation for the Next Twelve Months. Our plan of operation will be
affected by the acquisition of MetaSource Systems, Inc. We cannot guarantee that
the acquisition of MetaSource Systems, Inc. will increase the value of our
common stock.
13
In the opinion of management, available funds will satisfy our working capital
requirements for the next twelve months. Our forecast for the period for which
our financial resources will be adequate to support our operations involves
risks and uncertainties and actual results could fail as a result of a number of
factors.
We are not currently conducting any research and development activities. We do
not anticipate conducting any other such activities in the next twelve months,
unless we complete the acquisition of MetaSource Systems, Inc. We do not
anticipate that we will purchase or sell any significant equipment or hire any
employees in the next six to twelve months unless we complete the acquisition of
MetaSource Systems, Inc.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
- --------------------------
None.
Item 2. Changes in Securities.
- -------------------------------
On April 22, 2002, our Board of Directors unanimously approved: (i) an amendment
to our Articles of Incorporation to increase the authorized number of shares of
common stock, $.001 par value per share, from 25,000,000 to 100,000,000; (ii) an
amendment to our Articles of Incorporation to authorize 10,000,000 shares of
preferred stock, $.001 par value per share; and (iii) a reverse split of our
issued and outstanding common stock on a 1 for 1.8773 basis. On April 22, 2002,
one shareholder who individually owns in excess of the required majority of our
outstanding common stock necessary for the adoption of the actions, approved
those actions taken by written consent.
Item 3. Defaults Upon Senior Securities
- -----------------------------------------
None.
Item 4. Submission of Matters to Vote of Security Holders
- -----------------------------------------------------------
On April 22, 2002, the holder of 14,000,000 shares of our issued and outstanding
common stock or 57.85% of the shares of outstanding common stock approved by
action of written consent, the amendment to our Articles of Incorporation to
change our corporate name to MetaSource Group, Inc., and approved the increase
in the number of authorized shares of common stock, the authorization of shares
of preferred stock, and the reverse stock split mentioned above.
Item 5. Other Information
- ---------------------------
On July 12, 2002, Meta Source Acquisition Corp., a Delaware corporation and our
wholly-owned subsidiary ("MSAC") merged with MetaSource Systems, Inc., a
Delaware corporation ("MSS"). MSAC was formed by us for the purpose of
effectuating a merger with MSS. The merger transaction between MSS and MSAC was
consummated pursuant to an Agreement and Plan of Merger dated April 24, 2002
with subsequent amendments dated May 23, 2002 and July 11, 2002.
On July 18, 2002 we filed a Form 8-K attaching our July 15, 2002 press release
describing the merger transaction, with the text of the press release attached
as exhibit 99.1. Our Form 8-K filed July 19, 2002 describes the merger
transaction, and attaches the text of the Agreement as Exhibit 2.1, along with
the amendments to that Agreement, attached as Exhibit 2.1.1 and 2.1.2. The
merger and acquisition agreements pertaining to the transactions by which MSS
acquired other entities pursuant to this transaction are attached as follows:
Exhibit 2.2 is the Agreement of Merger between MSS, Digit, and Digit
Stockholders, Exhibit 2.3 is the Acquisition Agreement between MSS and
Stockholders of PFA Research Ltd., Exhibit 2.4 is the Acquisition Agreement
between MSS and the Stockholders of Prime Marketing Publications Limited,
Exhibit 2.5 is the Agreement of Merger between MSS, Global SysTech, and
Stockholders of Global Systech, Exhibit 2.6 is the Agreement of Merger between
MSS, MSS UK, and Stockholders of MSS UK, and Exhibit 2.7 is the Agreement and
Plan of Merger between MSAC, Kensington Group, Inc., and Stockholders of
Kensington Group, Inc. We anticipate filing the financial statements to
accompany our Form 8-K dated July 19, 2002 within the required timeframe.
Pursuant to the Merger Agreement, Joe Cheung resigned as our sole officer and
sole member of our Board of Directors and Courtney Smith was appointed as
president, secretary, treasurer, and a member of our Board of Directors. Mr.
Cheung's resignation is attached as Exhibit 17.1 to our 8-K filed July 19, 2002.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
None.
14
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 in the City of New York, New York, on August 19, 2002.
MetaSource Group, Inc.
By: /s/ Courtney Smith
--------------------------------------------
Courtney Smith
Its: President, Secretary, Treasurer and Director
15
CERTIFICATIONS
I, Courtney Smith, certify that:
1. I have read this quarterly report on Form 10-QSB of MetaSource Group,
Inc.;
2. To my knowledge, the information in this report is true in all
important respects as of June 30, 2002; and
3. This report contains all information about the company of which I am
aware that I believe is important to a reasonable investor, in light of
the subjects required to be addressed in this report, as of June 30,
2002.
For purposes of this certification, the information is "important to a
reasonable investor" if:
(a) There is substantial likelihood that a reasonable investor would view
the information as significantly altering the total mix of information
in the report; and
(b) The report would be misleading to a reasonable investor if the
information was omitted from the report.
Date: August 19, 2002
By: /s/ Courtney Smith
---------------------------
Courtney Smith
Its: Chief Executive Officer and
Chief Financial Officer