SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 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: 0-12162
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MULTI SOLUTIONS, INC.
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(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2418056
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4262 US Route 1, Monmouth Junction, New Jersey 08852
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(Address of principal executive offices)
Issuer's telephone number, including area code: (732) 329-9200
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at July 31, 2001
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Common Stock, par value 21,096,969
$.001 per share
Transitional Small Business Format (check one); Yes [ ] No [X]
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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The accompanying consolidated financial statements are unaudited for the interim
periods, but include all adjustments (consisting only of normal recurring
accruals) which we consider necessary for the fair presentation of results for
the six and three months ended July 31, 2001.
Moreover, these consolidated financial statements do not purport to contain
complete disclosure in conformity with generally accepted accounting principles
and should be read in conjunction with our audited consolidated financial
statements at, and for the fiscal year ended January 31, 2001.
The results for the six and three months ended July 31, 2001 are not necessarily
indicative of the results for the entire fiscal year.
We operate primarily through our subsidiaries:
Our Approximate
Name of Subsidiary Percentage Ownership
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Multi Soft, Inc. 51.3%
FreeTrek, Inc. 52.9%
NetCast, Inc. 75%.
Our financial statements are consolidated with our subsidiaries. In January
2000, we decided to discontinue any further operations of NetCast.
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MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31, 2001 and January 31, 2001
(Unaudited)
July 31, January 31,
2001 2001
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ASSETS
CURRENT ASSETS
Cash $ 959 $ 22,846
Accounts Receivable (net of allowance
of $49,412 and $49,412 respectively) 40,888 111,099
Prepaid expenses and other current assets 17,287 22,641
Marketable securities-at cost -- 168,000
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59,134 324,586
FURNITURE AND EQUIPMENT
Research and Development Equipment 24,982 24,982
Office furniture and other equipment 89,225 84,590
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114,207 109,572
Less: Accumulated Depreciation (55,238) (45,172)
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58,969 64,400
Organizational costs 11,126 11,126
Less: Accumulated Amortization (6,583) (5,912)
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4,543 5,214
OTHER ASSETS
Capitalized software development costs 2,151,674 1,959,008
Less accumulated amortization (969,820) (892,588)
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1,181,854 1,066,420
$ 1,304,500 $ 1,460,620
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MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31, 2001and January 31, 2001
(Unaudited)
July 31, January 31,
2001 2001
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accrued payroll $ 31,470 $ 14,783
Payroll and other taxes payable 22,724 18,497
Accounts Payable, Accrued expenses and
other Current Liabilities 237,301 119,920
Accrued officer compensation 187,842 187,842
Deferred Revenues 95,241 105,214
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574,578 446,256
Deferred compensation due officer/shareholders 586,605 586,605
Minority interest in subsidiaries 647,512 714,364
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
21,096,969 and 21,096,969 respectively 21,098 21,098
Additional paid-in capital 9,219,532 9,219,532
Accumulated deficit (9,744,825) (9,527,235)
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(504,195) (286,605)
$ 1,304,500 $ 1,460,620
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MULTI SOLUTIONS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six and Three months ended July 31, 2001 and 2000
(Unaudited)
Six Months Ended Three Months Ended
July 31, July 31,
2001 2000 2001 2000
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REVENUES
License fees $ 9,698 $ 14,482 $ 9,698 $ 1,997
Maintenance fees 73,701 117,554 45,981 51,734
Consulting and Other fees 22,781 9,512 13,779 2,813
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Total revenues 106,180 141,548 69,458 56,544
EXPENSES
Software development and technical support 72,255 214,857 25,163 126,229
Selling and administrative 281,730 367,184 122,061 211,737
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Total expenses 353,985 582,041 147,224 337,966
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(Loss) from operations (247,805) (440,493) (77,766) (281,422)
OTHER INCOME (EXPENSE)
Interest/capital gain income (loss) (36,637) 7,223 (20,225) 3,981
Minority share of consolidated subsidiary's loss 66,852 78,259 35,736 36,401
------------ ------------ ------------ ------------
Total other income 30,215 85,482 15,511 40,382
Net (loss) $ (217,590) $ (355,011) $ (62,255) $ (241,040)
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Weighted average shares outstanding 21,096,969 20,572,888 21,096,969 20,886,943
============ ============ ============ ============
Income (Loss) per share (a) (a) (a) (a)
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(a) less than $.01 per share
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MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
July 31, 2001 and July 31, 2000
(Unaudited)
Six months ended
July 31,
2001 2000
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Cash flows from operating activities
Net (loss) $ (217,590) $ (355,011)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 87,969 97,415
Changes in assets and liabilities
Accounts receivable 70,211 85,175
Prepaid expenses and other current assets 5,354 (40,697)
Payroll and other taxes payable 4,227 (468)
Accrued payroll 16,687 --
Accounts payable and accrued expenses 117,381 (24,778)
Accrued officer compensation -- (9,176)
Deferred revenues (9,973) (47,159)
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Net cash provided (used) by operating activities 74,266 (294,699)
Cash flows from investing activities
Capital expenditures (4,635) (17,524)
Capitalized software development costs (192,666) (126,578)
Sales of marketable securities 168,000
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Net cash used in investing activities (29,301) (144,102)
Cash flows from financing activities
Amortization of stock grants -- 15,918
Minority interest and loss in excess of investments (66,852) 93,758
Collection of subscription receivables -- 100,000
Issuances of capital stock -- 205,028
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Net cash provided (used) by financing activities (66,852) 414,704
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NET (DECREASE) IN CASH (21,887) (24,097)
Cash at beginning of year 22,846 342,207
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Cash at end of period $ 959 $ 318,110
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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CAUTIONARY STATEMENT
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This quarterly report on form 10-QSB contains certain forward-looking statements
regarding, among other things, our anticipated financial and operating results
and those of our subsidiaries. For this purpose, forward-looking statements are
any statements contained in this report that are not statements of historical
fact and include, but are not limited to, those preceded by or that include the
words, "believes," " expects," or similar expressions. In connection with the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995,
we are including this cautionary statement identifying important factors that
could cause our or our subsidiaries' actual results to differ materially from
those projected in forward looking statements made by, or on behalf of, us.
These factors, many of which are beyond our control or the control of our
subsidiaries, include:
o Multi Soft's ability to:
o receive royalties from its existing licensing and consulting
arrangements,
o develop additional marketable software and technology,
o compete with larger, better capitalized competitors and
o reverse ongoing liquidity and cash flow problems;
o FreeTrek's ability to:
o support ongoing development and future product enhancements along
with requisite testing;
o raise sufficient additional funds if needed;
o enlist and sustain a sufficient number of sponsors;
o sell and sustain sales of a significant amount of advertising;
and
o operate profitably.
Results of Operations
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SIX MONTHS ENDED JULY 31, 2001 COMPARED TO SIX MONTHS ENDED JULY 31, 2000 AND
THREE MONTHS ENDED JULY 31, 2001 COMPARED TO THREE MONTHS ENDED JULY 31, 2000
We generated revenues during the six months ended July 31,2001, the first six
months of our fiscal year ending January 31, 2002, of $106,180 compared to
revenues of $141,548 during the first six months of fiscal 2001. The revenues
during all these periods were generated by our subsidiary, Multi-Soft. We
believe that the decrease in revenues of $35,368 or approximately 25% was due
primarily to a decrease in Multi-Soft's primary sources of revenues-license, and
maintenance fees, offset by an increase in consulting fees. License fee revenue
decreased 33.0% from $14,482 in the first six months of fiscal 2001 to $9,698
during the first six months of fiscal
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2002. Maintenance fees decreased $43,853 or approximately 37.3%, and consulting
and other fees increased $13,269 or approximately 139.5%.
We generated revenues during the three months ended July 31, 2001, of $69,458
compared to revenues of $56,544 during the second quarter of fiscal 2001.We
believe that the increase in revenues of $12,914, or approximately 22.8%, was
due primarily to an increase in revenue from license and consulting fees, offset
in part by a decrease in maintenance fees. License fee revenue increased $7,701,
or approximately 385.6%, maintenance fees decreased $5,753, or approximately
11.1% and consulting and other fees increased $10,966, or approximately 389.8% .
Multi Soft's two traditional principal sources of revenues were license fees and
maintenance fees which represented approximately 78.5% or $83,399 of revenues
for the six months ended July 31, 2001, and 93.2% or $132,036 of revenues for
the six months ended July 31, 2000. Our principal sources of revenues were
maintenance fees and consulting fees. Maintenance fees represented approximately
$73,701 or 69.4% of revenues for the six months ended July 31, 2001 and
approximately $117,554 or 83.0% of revenues for the six months ended July 31,
2000. Maintenance fees and consulting fees represented approximately $59,760 or
86.0% of revenues for the three months ended July 31, 2001 and approximately
$54,550 or 96.5% of revenues for the three months ended July 31, 2000.
Multi Soft's decrease in licensing fees during the six month periods was due to
reduced software sales. We believe that reduced sales resulted from a decline in
market acceptance of Multi Soft's existing products due to a shift from
mainframe/PC access towards internet access. Multi Soft has been working on
developing products that extend its line to work on Microsoft's new ".NET" and
XML Web services platform.
We believe that the decrease in maintenance fees was due to the non-renewal of
older maintenance contracts by customers.
Our operating expenses were $353,985 for the six months ended July 31, 2001
compared to $582,041 for the comparable six month period in fiscal 2001, a
decrease of $228,056 or approximately 39.2%. Our operating expenses for the
three months ended July 31, 2001 were $147,224 compared to $337,966 for the
comparable three months ended July 31, 2000. a decrease of $190,742 or
approximately 56.4%. We believe that the decrease was a result of both lower
levels of software development costs as well as a reduction in selling and
administrative expenses charged to operations for the six and three month period
ending July 31, 2001 compared to the period ending July 31, 2000.
We had other income of $30,215 during the first six months of fiscal 2002
compared to $85,482 of other income during the first six months of fiscal 2001.
We had other income of $15,511 during the three months ended July 31, 2001
compared to $40,382 during the comparable three months of fiscal 2000. We
believe that the decrease in other income during the first six and three months
of fiscal 2002 as compared to fiscal 2001 was primarily due to a decrease in the
minority share of consolidated subsidiaries losses, and capital losses .
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As a result of all of the foregoing, we incurred a net loss for the first six
months of fiscal 2002 of $217,590 compared to a net loss of $355,011 for the
first six months of fiscal 2001, a decrease of $137,421 or approximately 38.7%.
We incurred a net loss for the current three month period ended July 31, 2001 of
$62,255 compared to a net loss of $241,040 for the three months ended July 31,
2000 a decrease of $178,785 or approximately 74.2%.
Major Customers
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No individual customer accounted for a significant portion of revenues. Multi
Soft has generated revenues from our subsidiary, FreeTrek, for work related to
the prior and ongoing development, maintenance and enhancement of FreeTrek's
products, rent and administrative services. However, FreeTrek is a development
stage company and, although it is marketing its products and services, it has
yet to make its first sale. Fees paid by FreeTrek have come from the proceeds of
private placements of FreeTrek's securities and of our securities. If FreeTrek
is unable to generate substantial revenues or continue to raise funds, revenues
received by Multi Soft from FreeTrek most likely will decrease and eventually
cease.
Although Multi Soft has supplemented its revenues with services provided to
FreeTrek, these revenues are eliminated in as a result of the consolidation of
the financial statements.
Liquidity and Capital Resources
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At July 31, 2001, we had a negative working capital position of ($515,444),
compared to negative working capital of ($121,670) at January 31, 2001 and we
continue to experience cash flow problems.
Working Capital and Current Ratios were:
Descriptions July 31, 2001 January 31, 2001
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Working capital ($515,444) ($121,670
Current ratios .10:1 .73:1
Accounts receivable dropped from $111,099 at January 31, 2001 to $40,888 at July
31, 2001, a decrease of $70,211 or approximately 63.2%. We believe that this
decrease is a reflection of the lower sales over the previous quarters.
Marketable securities dropped from $168,000 at January 31, 2001 to $0 at July
31, 2001, a decrease of $168,000 or 100.0%. This decrease is a direct result of
sales of stock during first six months of fiscal 2002. The losses reflected on
the sales trades are reported in the income statement under the Other income
/expense category.
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Accounts payable increased from $119,920 at January 31, 2001 to $237,301 at July
31, 2001, an increase of $117,381 or approximately 97.8%. We believe that this
increase is due to our delaying certain payments to vendors.
Dividend Policy
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We have not declared or paid any dividends on our common stock since
inception and we do not anticipate that we will be declaring or paying cash
dividends in the foreseeable future. We intend to retain earnings, if any, to
finance the development and expansion of our business. Future dividend policy
will be subject to the discretion of our board of directors and will be
contingent upon future earnings, if any, our financial condition, capital
requirements, general business conditions and other factors. Therefore, we
cannot assure that dividends of any kind will ever be paid.
Effect of Inflation
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We believe that inflation has not had a material effect on our operations
for the periods presented.
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
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None.
Item 2. Changes in Securities and Use of Proceeds
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None.
Item 3. Defaults Upon Senior Securities
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None.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
None.
(b) Reports on Form 8-K
None.
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SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MULTI SOLUTIONS, INC.
Date September 13, 2001 By: /s/Charles J. Lombardo
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Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
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