<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ______________to___________________
Commission File Number: 33-2822-A
MSU Corporation
(Exact name of registrant as specified in its charter)
Florida 22-274288
(State or other jurisdiction of (IRS Employer ID No)
incorporation or organisation)
Elder House, 526-528 Elder Gate, Central Milton Keynes, MK9 1LR, England
(Address of principal executive offices)
011 44 1908 232100
(Registrant's telephone number, including area code)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period as the Registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of common stock of the Registrant outstanding as of May 11,
2000 was 25,631,202 according to the Company's transfer agent.
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Form 10-Q INDEX
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION
Page No.
<S> <C>
Item 1 Condensed Consolidated Financial Statements
Condensed Consolidated Balance sheets as at March 31, 2000 and June 30,
1999 3
Condensed Consolidated statements of Operations for the three
and nine months ended March 31, 2000 and the three and nine months
ended March 31, 1999 4
Condensed Consolidated statements of Cash Flows for the nine months ended 5
March 31, 2000 and 1999
Notes to Condensed Financial Statements 6-7
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 8-12
PART 11 - OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Change in Securities 13
Item 3 Defaults upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 14
</TABLE>
2
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PART 1 - FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
MSU Corporation
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31 June 30
2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 205,975 $ 2,604,504
Accounts receivable 125,979 566
Inventory 446,091 39,500
Prepaid expenses and other 360,053 170,457
----------- -----------
TOTAL CURRENT ASSETS 1,138,098 2,815,027
EQUIPMENT, net of accumulated depreciation of $218,710 and
$152,279 at March 31, 2000 and June 30, 1999 respectively 176,544 134,959
INVESTMENTS 125,000 390,625
----------- -----------
TOTAL ASSETS $ 1,439,642 $ 3,340,611
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Current portion of debt 825,000 75,000
Accounts payable and accrued liabilities 1,345,484 1,032,947
Related-party notes, advances and payables 84,720 185,811
----------- -----------
TOTAL CURRENT LIABILITIES 2,255,204 1,293,758
LONG TERM DEBT 505,000 505,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY/(DEFICIT)
Common stock, $0.01 par value; 50,000,000 shares authorized
25,631,202 and 25,364,262 shares issued and outstanding at
March 31, 2000 and June 30 1999 respectively 256,312 253,642
Additional paid-in capital 18,643,881 17,854,174
Stock subscriptions receivable (145,000) (148,750)
Accumulated other comprehensive income 149,770 108,820
Net unrealised loss (265,625) 0
Accumulated deficit (19,959,900) (16,526,033)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY/(DEFICIT) (1,320,562) 1,541,853
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) $1,439,642 $ 3,340,611
============ ===========
</TABLE>
See notes to condensed consolidated financial statements
3
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MSU Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31 March 31
2000 1999 2000 1999
<S> <C> <C>
REVENUES $ 397,013 $ 0 $ 397,517 $ 9,808
EXPENSES
Cost of revenues 394,995 2,587 394,995 6,895
Selling, general and
administrative and other 592,796 546,181 1,462,207 1,050,181
Depreciation 18,217 19,806 64,875 57,517
Interest expense 25,584 10,450 81,985 106,283
Research and development 447,594 443,045 1,418,170 1,132,416
----------- ----------- ----------- -----------
TOTAL EXPENSES 1,479,186 1,022,069 3,422,232 2,352,292
----------- ----------- ----------- -----------
OPERATING LOSS (1,082,173) (1,022,069) (3,024,715) (2,343,484)
NON OPERATING INCOME
Interest income (81) (27) 32,098 2,634
Amortization of discount on convertible notes (291,251) - (441,251) -
----------- ----------- ----------- -----------
TOTAL NON-OPERATING
INCOME (EXPENSE) (291,332) (27) (409,153) 2,634
----------- ----------- ----------- -----------
NET LOSS $(1,373,506) $(1,022,096) $(3,433,868) $(2,340,850)
=========== =========== =========== ===========
BASIC AND DILUTED NET
LOSS PER COMMON SHARE $ (0.05) $(0.04) $(0.13) $(0.12)
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES
OUTSTANDING 25,558,230 23,105,043 25,448,784 19,374,838
</TABLE>
See notes to condensed consolidated financial statements
4
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MSU Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
March 31 March 31
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(3,433,868) $(2,340,850)
Adjustments to reconcile net loss to net
cash used in operating activities 27,972 985,412
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (3,405,896) (1,355,438)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of equipment (net) (106,460) (69,429)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 900,000 720,270
Repayment of promissory notes in cash 3,750 (373,439)
Issuance of common stock for cash 169,125 1,035,075
Costs directly related to financing activities (81,570)
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,072,875 1,300,330
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES 40,952 46,892
----------- -----------
NET (DECREASE) IN CASH (2,398,529) (77,645)
CASH AT BEGINNING OF PERIOD 2,604,504 166,040
----------- -----------
CASH AT END OF PERIOD $ 205,975 $ 88,395
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
5
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MSU Corporation
Notes to Condensed Consolidated Financial Statements
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of MSU Corporation and its subsidiaries
(collectively, the "Company") at March 31, 2000, the results of its operations
for three and nine months ended March 31, 2000 and 1999, and its cash flows for
the nine months ended March 31, 2000 and 1999.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed financial statements should be
read in conjunction with the Company's annual report on form 10-K for the fiscal
year ended June 30, 1999. The results of the operations for the three and nine
months ended March 31, 2000 are not necessarily indicative of the operating
results that may be expected for the fiscal year ending June 30, 2000.
NOTE 2 - SHAREHOLDERS' EQUITY
During the nine months ended March 31, 2000, there was a decrease in
shareholders' equity of approximately $2,862,000. Net loss for the nine-month
period was $3,434,000 and the cumulative translation adjustment increased by
approximately $41,000.
During the three month period ended March 31, 2000, the Company issued 152,500
shares of its common stock following the exercise of stock options, of which
150,000 of these shares was to a former director. In addition 23,250 shares of
common stock were sold to a director, J M Simpson at $3.00 per share.
NOTE 3 - NEW CONVERTIBLE PROMISSORY NOTES
In January through March 2000 the Company issued $750,000 new convertible
promissory notes. These Notes are due on the earlier of December 31, 2000 or out
of the proceeds of an offering by the Company that raises a minimum of
$5,000,000 prior to that date. The Notes are convertible into shares of common
stock at $3.00 per share but if at time during the term of the Notes, the
closing market bid price of the common stock equals or exceeds $6.00 per share
for a period of thirty consecutive days, the Notes shall automatically be
converted. Attached to each $50,000 of the Notes are warrants to purchase 20,000
shares of common stock at $3.00 per share on or before December 31, 2001.
The company has chosen to amortize the whole of the discount on the convertible
notes of $291,000 in this quarter.
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NOTE 4 - LOSS PER COMMON SHARE
The basic and diluted net loss per common share are computed based upon the
weighted average of the shares outstanding during the period. Dilutive net loss
per common share is the same as basic net loss per common share since the
inclusion of all potentially dilutive common shares that would be issuable upon
the exercise of outstanding stock options and warrants or upon the conversion of
convertible debt would be antidilutive.
7
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Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Statements
This report on Form 10-Q contains forward looking statements that involve risks
and uncertainties. The statements contained in this report on Form 10-Q that
are not purely historical are forward-looking statements within the meaning of
Section 27A of the Securities Act and 21E of the Exchange Act, including without
limitation statements regarding the Company's expectations, beliefs, intentions
or strategies regarding the future. All forward-looking statements included in
this report on Form 10-Q are based on information available to the Company at
the date of this report on Form 10-Q, and the Company assumes no obligation to
update any such forward-looking statements. The Company's actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including the Company's inability to market its
products, infeasibility of developing new products, the Company's inability to
obtain adequate financing for its continued operations and other factors
discussed elsewhere in this report on Form 10-Q. The following discussion and
analysis should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this report on Form 10-Q.
Overview of Business Operations and Significant Risks
The consolidated financial statements include the accounts of MSU Corporation,
MSU PLC, Web 2 U Limited and MSU Operations (US) Inc. All significant
inter-company accounts have been eliminated in the consolidated financial
statements.
The Company operates primarily through Web 2 U Limited which is principally
engaged in the design and development of software, computer chips and chipsets
principally for use in high volume consumer electronic products. Most of the
Company's chips incorporate multiple functions, thereby eliminating the need for
multiple chips and permitting a more efficient printed circuit board design and
a diminished risk of malfunction and error at a lower cost. The focus of the
Company at this point in time is on the development of the Set Top Internet
Access Device ("herein referred to as IAD") to be used in conjunction with
television and telephones.
During the nine month period ended March 31, 2000 significant software and
hardware modifications to the IAD were completed and the Company has commenced
production, through Shanghai Thakral Electronic Industries Corp., of the latest
4 megabyte version of the proprietary IAD. The Company is continuing to develop
the ISP Chip and related software, which will provide enhanced Internet
features.
The period has also seen significant change in the management of the Company as
it begins to place greater focus on production and sales. The appointment of
Darran H. Evans as Chief Executive Officer and a member of the Board of
Directors and further appointments into executive positions have reflected the
objectives of the Company in commercializing the products that have already been
successfully developed. In addition to changes in the executive team MSU
welcomed Jeffrey N. Green and Stephen W. Coles to the Board of Directors. Mr.
Green is Chairman and Chief Executive Officer of Paradigm Capital, Inc. a
Toronto, Ontario-based investment company focused on the telecommunications,
industrial, technology and niche brand areas. Mr. Coles is an attorney with and
Director of Brinkley Walser PLLC in North Carolina, and specializes in corporate
law. Messrs. Green and Coles provide more depth and add an American presence to
the Board, reflecting the importance of international markets to the success of
MSU. The Board now is comprised of eight members.
The period saw substantive progress in positioning the Company to enter its
chosen markets. Within the UK, Argos, the largest UK catalogue retailer, listed
the IAD in its Spring/Summer catalogue from January 30, 2000. Catalogue
circulation is forecast at approximately 16 million for the Spring/Summer
edition. The IAD product has additionally been included in some specialized in
store catalogues within the 438 stores operated by Argos. Additionally, within
the UK market, Tandy stores, which specialize in consumer electronic products,
began offering the IAD in a majority of their stores in February. Tandy, owned
by Carphone Warehouse in the UK, operates 228 town centre (high street) stores
in the UK. Tandy also is expected to
8
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include the IAD in is its catalogue to be available later in 2000. To ready the
Company for these and further incursions into the UK retail market the Company
has established agreements with a distribution and logistics company, Doro
Audioline as well as a product support specialist, Infoteam. The Company has
achieved an agreement with Doro Audioline to distribute the IAD in selected UK
retail and mail order accounts. Doro Audioline is a 25-year old
telecommunications firm with extensive experience in the UK markets. Doro
Audioline will also provide general warehousing and other distribution services
to MSU Corporation. The Company has achieved an agreement with Infoteam to
provide consumer and technical support for the IAD product in the UK. Infoteam
currently also supports the Sony Playstation(R) as well as other electronic
products in UK markets.
Outside the UK market the Company has chosen to pursue partnering strategies
with companies that can provide MSU with immediate commercial advantages.
In January 2000, the Company's subsidiary, Web 2 U Limited, signed a Swap
Agreement, a Software License Agreement, a Strategic Investment Agreement and a
Product Know--how Agreement (collectively the 'Agreements') with JadooNet.com
Ltd ('JadooNet') a joint venture between Salora International Ltd. and Infoquest
E-Commerce Pvt Ltd. The Agreements, copies of which were attached as exhibits
to the December 31, 1999 10-Q, provide for the exclusive license, manufacture
and sale of the IAD in India, Sri Lanka, Bangladesh, and Nepal (the
'Territory'). JadooNet will exclusively manufacture and market the IAD in the
Territory. MSU Corporation will receive a license fee per Unit on the initial
Units produced and a specified fee per Unit thereafter in addition to a
specified product know-how fee for a specific number of Units produced by
JadooNet. MSU will also help customize the product for the markets covered by
the Agreement. As part of the Agreements, each of MSU and JadooNet will receive
Warrants exercisable for a term of one year to purchase shares in the other, up
to an agreed up of the outstanding capital stock of the other. JadooNet. is
incorporated in India with its registered office in Bombay. It is an associated
company of Salora International Ltd., which is a manufacturer and marketer of a
variety of electronic products. Salora began introducing television sets into
the Indian market in 1977. It presently manufactures and/or markets television
sets, speakers, Panasonic fax machines, printers, and digital cameras. It also
sells colour monitors and cordless phones under its own brand. An on-going
strategy for Salora has been to introduce new technology into the Indian market
with foreign partners. Salora possesses three manufacturing facilities in India
and has its own research and development staff. Infoquest E-Commerce Pvt Ltd. is
an Internet incubator with business interests in innovative Internet access
devices, Internet payment portals, an IT retail chain, and web-based learning
and IT-enabled services.
Within the Americas, in January 2000, the Company entered into a sales agency
agreement with Corstar Business Computing Co., Inc. of Hawthorne, New York, and
McLaughlin International, Inc. in San Antonio, Texas, (collectively the
'Agents') to promote and sell the Company's products. A copy of this agreement
was filed as an exhibit to the December 31, 1999 10-Q. Mark McLaughlin, a
principal shareholder of the Company, is the controlling principal of McLaughlin
International Inc. The Company has agreed to pay the Agents, to be divided
equally between them, a fee plus a commission per Unit of the Company's products
sold. MSU, as additional consideration, also granted the Agents Warrants, and
has agreed to issue them with additional Warrants upon the sale of additional
units of the Company's products. The
9
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Agreement is in force for a period of one year and thereafter unless or until
terminated by either party giving to the other not less than 90 days notice.
The Company is placing significant emphasis on a partnership approach and such
an approach is continuing to be pursued in other geographic territories. These
partnership arrangements are likely to involve long term revenue share
agreements as well as equity participation. In this context many of the
commercial arrangements into which the Company has and will enter will involve
certain revenues arising at times following the initial sale of the IAD. Such
revenues may take the form of shares of "dial-up" income, advertising and
e-commerce revenues and will be recognized in the accounts when received.
Management believes that initial revenues arising from the more aggressive sales
and marketing strategies that are being pursued will continue to be seen during
the next quarter (fourth quarter of fiscal 2000).
Risks
The Company's consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has incurred losses
since inception. At March 31, 2000 there was an accumulated deficit of
$19,959,900. Additionally the Company has had recurring negative cash flows from
operations.
The Company expects that it is likely to incur net losses at least through
fiscal 2000, and possibly into the first quarter of fiscal 2001, as it attempts
to further develop, upgrade and market its products and to develop its
infrastructure and organisation to support anticipated operations, including
anticipated product demand.
The foregoing statements are forward looking statements that involve risks and
uncertainties. The reader should be aware that the Company is likely to incur
net losses beyond fiscal 2000 if anticipated revenues from license fees,
royalties and conditional and forecasted purchase orders of customised IAD's are
not realised. Such conditional and forecasted purchase orders in respect of the
IAD assume, without limitation, approval of final production samples by
potential purchasers; acceptance by and demand for customised IAD by consumers,
satisfactory product performance, including chip and software performance; modem
approval from the local or national telephone company, and the ability of the
products to successfully compete in an extremely competitive marketplace. The
Company believes such assumptions are reasonable, however should any one of such
assumptions prove to be unfounded, the Company could incur net losses beyond
fiscal 2000 and/or be unable to continue as a going concern. The foregoing
factors may obviously raise doubt about the Company's ability to continue as a
going concern without sufficient funds to meet its cash requirements. In this
context there can be no assurance that the Company will be able to obtain
sufficient funds to enable it to continue as a going concern.
The Company anticipates that if revenues from trading operations are not
generated in the coming months, it will, at least in the short term, have to
continue to fund its operations, through private sales of equity or debt
securities to and/or borrowings from third parties, to the extent such sources
of capital are available to the Company.
The markets for the Company's products has only recently begun to develop, are
rapidly evolving and are highly competitive, with many competitors having
greater resources than the Company. The Company and its prospects must be
considered in light of the substantial risks, expenses and difficulties facing
the Company. There can be no
10
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assurance that the Company will be successful in addressing any of the foregoing
risks, that it will be successful in implementing its strategy, that it will
ever achieve profitability or that it will be able to continue as a going
concern.
Results of Operations
Comparison of the three and nine months ended March 31, 2000 to the three and
nine months ended March 31, 1999
There were no Revenues in the three months ended March 31, 1999 and the Revenues
for the nine months ended March 31, 1999 were also negligible.
Sales in the three and nine months ended March 31,2000 were to eight customers,
most of which were based in the United Kingdom.
Revenues stated at the end of March relate only to the selling price of the IAD,
the Company expects in future to report on going revenues relating to these
sales. Reported costs of revenues are higher than would be expected to be
reported on an ongoing basis due to costs involved with the initial production
run.
Research and development expenses generally consist of expenditure related to
the Company's development of its chips, software and prototype products. For the
three months ended March 31, 2000 research and development expenses increased by
approximately $4,550 over $443,045 in the corresponding period in 1999. For the
nine months ended March 31, 2000 research and development expenses increased by
approximately $286,000 over $1,132,416 for the nine months ended March 31, 1999
which reflects the significant increase in resources which the Company has been
able to deploy in this area following the successful raising of additional
capital in the fourth quarter of fiscal 1999. The fluctuations from period to
period reflect the varying demands for research and development which are
dictated by technological changes and the need for the Company's products to
remain competitive and commercially viable, and the requirements of the
Company's customers. The Company has been focussed on the development of
'Version 3' of its IAD which is now in the prototype stage and which will begin
to be produced commercially during the next fiscal quarter. Additionally the
Company will continue to develop its proprietary software. The nature of the IAD
enables software downloads to be provided to customers upon release.
Selling, general and administrative and other expenses for the three and nine
months ended March 31, 2000 increased by approximately $47,000 and $412,000
respectively over $546,181 and $1,050,181 in the same periods of 1999. The
increase in the three and nine months ended March 31, 2000 is primarily due to
an increase in personnel, marketing and promotional costs in these periods
during which the Company announced the formation of a business alliance in the
United States; distribution and support agreements in the United Kingdom; and a
licensing agreement in India, all of which are referred to in more detail above.
Selling, general and administrative and other expenses principally consist of
the cost of employees (other than those dedicated to research and development)
advertising and promotional costs, which are charged to operations as incurred,
communication, rent, occupancy costs and professional fees. In general terms the
Company has begun to develop during the past nine months a structured and
professional sales and marketing framework to exploit the current product.
Investment in this area is likely to increase during the next year.
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Interest expense for the three months ended March 31, 2000 increased by
approximately $15,000 from $10,450 in the corresponding period in 1999; but for
the nine months ended March 31, 2000 interest expense reduced by approximately
$24,000 from $106,283 in the corresponding period in 1999. Interest expense in
the current year represents interest payable on promissory notes totalling
$580,000 through the first two quarters, and on a further $750,000 of promissory
notes that were issued in the current quarter.
Liquidity and Capital resources
The Company has financed its operations through private sales of equity and debt
securities.
For the nine-month period ended March 31, 2000 cash used in operating activities
of approximately $3,406,000 was attributable to the Company's net loss for the
period of $3,434,000. Cash flows used in investing activities of approximately
$106,000 during such period related mainly to the acquisition of computer
equipment.
Cash flows from financing activities of $1,073,000 were attributable to an issue
of new convertible notes of $150,000 which were later converted into shares of
common stock at a conversion price of $2 per share; an issue of $750,000 of new
convertible notes in January through March 2000; and to the sale of 175,750
share of common stock for $169,125 (mostly as a result of a former director
exercising options).
At March 31, 2000 the Company's principal source of liquidity was approximately
$206,000 in cash.
The Company believes that cash flows expected to be generated by operations
through the remainder of fiscal 2000 will be insufficient to meet its cash needs
for working capital and capital expenditures for remainder of fiscal 2000. The
Company is actively pursuing negotiations for additional capital to fund its
operations through private sales of equity or debt securities and or borrowings
from third parties. The sale of additional equity or convertible debt securities
will result in an additional dilution to the Company's stockholders. Even
assuming such additional financing, there can be no assurance that the Company's
liquidity requirements will be met or that the Company will be able to continue
as a going concern.
12
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PART 11 - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in securities
In July 1999 the Company issued 16,000 shares of its common stock in
consideration for the forgiveness of interest due on certain promissory notes,
the principle of which was converted into share of common stock in June 1999.
In November 1999 the Company issued 75,000 shares of its common stock pursuant
to the conversion of $150,000 10% Convertible Promissory Notes
On January 5,2000 Mr K E Peirson, a former director of the Company, exercised
options over 150,000 shares of common stock. The options had been granted to him
in 1998, at $0.65 per share.
In January 2000, warrants to subscribe for 2,500 shares of common stock at $0.75
per share were exercised.
In March 2000, the Company sold to J M Simpson, a director of the Company,
23,250 shares of common stock at $3.00 per share. In addition Mr Simpson
received options to subscribe for a further 27,900 shares of common stock at
$3.00 on or before December 31, 2001
Since June 30, 1999 options over 601,000 shares of common stock were granted to
three new directors at prices between $2.75 and $3.38 and options over 164,000
shares were granted to employees at prices between $2.25 and $3.125
Item 3 - Defaults upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other information
In January through March 2000 the Company sold $750,000 10% Convertible
Promissory Notes. The Notes are due on the earlier of December 31, 2000 or out
of the proceeds of an offering by the Company that raises a minimum of
$5,000,000 prior to that date. The Notes are convertible into shares of common
stock at $3.00 per share but if at any time during the term of the Notes, the
closing market bid price of the common stock equals or exceeds $6.00 per share
for a period of thirty consecutive days, the Notes shall
13
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automatically be converted. Attached to each $50,000 of the Notes are warrants
to purchase 20,000 shares of common stock at $3.00 per share on or before
December 31, 2001
Item 6 - Exhibits and Reports on Form 8-K
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 authorised.
MSU Corporation
(Registrant)
Date May 11, 2000
R H Phillips, Vice President
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements of MSU Corporation and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 205,975
<SECURITIES> 0
<RECEIVABLES> 125,979
<ALLOWANCES> 0
<INVENTORY> 446,091
<CURRENT-ASSETS> 1,138,642
<PP&E> 176,544
<DEPRECIATION> 218,710
<TOTAL-ASSETS> 1,439,642
<CURRENT-LIABILITIES> 2,255,204
<BONDS> 0
0
0
<COMMON> 256,312
<OTHER-SE> (1,576,874)
<TOTAL-LIABILITY-AND-EQUITY> 1,439,642
<SALES> 0
<TOTAL-REVENUES> 397,517
<CGS> 0
<TOTAL-COSTS> 394,995
<OTHER-EXPENSES> 3,027,237
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,985
<INCOME-PRETAX> (3,433,868)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,433,868)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,433,868)
<EPS-BASIC> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
