Modulex A/S was founded in Denmark in 1963 by the Lego Group and the association is maintained to this day. Located in over 35 countries, and with 40 locations in the US alone as a result of a merger with ASI in 1993.
In the 1960s, the designer of the modern Lego brick Godtfred Kirk Christiansen was building a new house and, naturally, he tried to model the structure with Lego bricks. The problem was that the Lego brick, with an aspect ratio of 6:5, was different than standard European construction modules of 1:1. Rather than contend with the problems of using regular Lego bricks he simply had new, special bricks molded for him. Bricks that would allow him to more closely copy his architectural plans.
Modulex bricks are smaller 'cousins' of LEGO bricks. They were originally developed by the LEGO company and marketed to professional architecture firms and such (not as a retail toy).
Possibly to the surprise of many LEGO collectors, these bricks are still manufactured today (by the now independent, but LEGO-related, company Modulex).
Modulex bricks are not compatible with typical LEGO bricks. The standard 1x1 Modulex brick (or 'component' as the company refers to them) is 5mm cubed (yes, they are perfect cubes, unlike LEGO unit bricks which are taller than they are wide or deep).
Read more about Modulex history (PDF 1,6mb.)