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 October 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
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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 October 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
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1
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 nine and three months ended October 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 nine and three months ended October 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
October 31, 2001 and January 31, 2001
(Unaudited)
October 31, January 31,
2001 2001
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ASSETS
CURRENT ASSETS
Cash $ 1,534 $ 22,846
Accounts Receivable (net of allowance
of $49,412 and $49,412 respectively) 157,629 111,099
Prepaid expenses and other current assets 26,119 22,641
Marketable securities-at cost -- 168,000
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185,282 324,586
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 (60,079) (45,172)
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54,128 64,400
Organizational costs 11,126 11,126
Less: Accumulated Amortization (6,919) (5,912)
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4,207 5,214
OTHER ASSETS
Capitalized software development costs 2,227,897 1,959,008
Less accumulated amortization (1,008,436) (892,588)
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1,219,461 1,066,420
$ 1,463,078 $ 1,460,620
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3
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 2001and January 31, 2001
(Unaudited)
October 31, January 31,
2001 2001
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accrued payroll $ 60,530 $ 14,783
Payroll and other taxes payable 19,011 18,497
Accounts Payable, Accrued expenses and
other Current Liabilities 361,386 119,920
Accrued officer compensation 212,842 187,842
Deferred Revenues 148,606 105,214
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802,375 446,256
Deferred compensation due officer /shareholders 586,605 586,605
Minority interest in subsidiaries 626,930 714,364
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 (9,793,462) (9,527,235)
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(552,832) (286,605)
$ 1,463,078 $ 1,460,620
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4
MULTI SOLUTIONS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine and Three months ended October 31, 2001 and 2000
(Unaudited)
Nine Months Ended Three Months Ended
October 31, October 31,
2001 2000 2001 2000
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REVENUES
License fees $ 42,068 $ 34,337 $ 32,370 $ 19,855
Maintenance fees 119,041 120,101 45,340 2,547
Consulting and Other fees 37,656 38,780 14,875 29,268
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Total revenues 198,765 193,218 92,585 51,670
EXPENSES
Software development and technical support 135,071 315,712 62,816 100,855
Selling and administrative 380,716 619,077 98,986 251,893
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Total expenses 515,787 934,789 161,802 352,748
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(Loss) from operations (317,022) (741,571) (69,217) (301,078)
OTHER INCOME (EXPENSE)
Interest/capital gain income (loss) (36,639) 9,718 (2) 2,495
Minority share of consolidated subsidiary's loss 87,434 121,669 20,582 43,410
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Total other income 50,795 131,387 20,580 45,905
Net (loss) $ (266,227) $ (610,184) $ (48,637) $ (255,173)
============ ============ ============ ============
Weighted average shares outstanding 21,096,969 20,786,006 21,096,969 21,096,969
============ ============ ============ ============
Income (Loss) per share (a) (a) (a) (a)
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(a) less than $.01 per share
5
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
October 31, 2001 and July 31, 2000
(Unaudited)
Nine months ended
October 31,
2001 2000
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Cash flows from operating activities
Net (loss) $(266,227) $(616,215)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 131,762 148,999
Loss on sale of marketable securities 36,268
Changes in assets and liabilities
Accounts receivable (46,530) 80,140
Prepaid expenses and other current assets (3,478) (12,210)
Payroll and other taxes payable 514 (1,030)
Accrued payroll 45,747 --
Accounts payable and accrued expenses 241,466 (15,398)
Accrued officer compensation 25,000 (18,350)
Deferred revenues 43,392 (62,732)
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Net cash provided (used) by operating activities 207,914 (496,796)
Cash flows from investing activities
Capital expenditures (4,635) (19,009)
Capitalized software development costs (268,889) (152,044)
Proceeds from sales of marketable securities 131,732
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Net cash used in investing activities (141,792) (171,053)
Cash flows from financing activities
Amortization of stock grants -- 24,836
Minority interest and loss in excess of investments (87,434) 80,075
Collection of subscription receivables -- 100,000
Issuances of capital stock -- 205,028
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Net cash provided (used) by financing activities (87,434) 409,939
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NET (DECREASE) IN CASH (21,312) (257,910)
Cash at beginning of year 22,846 342,207
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Cash at end of period $ 1,534 $ 84,297
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6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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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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NINE MONTHS ENDED OCTOBER 31, 2001 COMPARED TO NINE MONTHS ENDED OCTOBER 31,
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2000 AND THREE MONTHS ENDED OCTOBER 31, 2001 COMPARED TO THREE MONTHS ENDED
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OCTOBER 31, 2000
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We generated revenues during the nine months ended October 31,2001, the first
nine months of our fiscal year ending January 31, 2002, of $198,765 compared to
revenues of $193,218 during the first nine months of fiscal 2001. The revenues
during all these periods were generated by our subsidiary, Multi-Soft. We
believe that the increase in revenues of $5,547 or approximately 2.9% was due
primarily to a increase in Multi-Soft's primary source of revenues-license fees,
offset by a decrease in maintenance fees and consulting fees. License fee
revenue increased 22.5% from $34,337 in the first nine months of fiscal 2001 to
$42,068 during the first nine months of fiscal
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2002. Maintenance fees decreased $1,060 or approximately 0.9%, and consulting
and other fees decreased $1,124 or approximately 2.9%.
We generated revenues during the three months ended October 31, 2001 of $92,585
compared to revenues of $51,670 during the third quarter of fiscal 2001.We
believe that the increase in revenues of $40,915, or approximately 79.2%, was
due primarily to an increase in revenue from license and maintenance fees,
offset in part by a decrease in consulting fees. License fee revenue increased
$12,515, or approximately 63.0.6%, maintenance fees increased $42,793, or
approximately 1,680.1% and consulting and other fees decreased $14,393, or
approximately 49.2%.
Multi Soft's two traditional principal sources of revenues were license fees and
maintenance fees which represented approximately 81.1.% or $161,109 of revenues
for the nine months ended October 31, 2001, and 79.9% or $154,438 of revenues
for the nine months ended October 31, 2000. License fees represented
approximately $42,068 or 21.2% of revenues for the nine months ended October 31,
2001 and approximately $34,337 or 17.8% of revenues for the nine months ended
October 31, 2000. Maintenance fees represented approximately $119,041 or 59.9%
of revenues for the nine months ended October 31, 2001 and approximately
$120,101 or 62.2% of revenues for the nine months ended October 31, 2000.
License fees and Maintenance fees represented approximately $77,710 or 83.9% of
revenues for the three months ended October 31, 2001 and approximately $22,402
or 43.4% of revenues for the three months ended October 31, 2000.
Multi Soft's increase in licensing fees was due to increased software sales.
We believe that the decrease in maintenance fees during the nine month period
was due to the non-renewal of older maintenance contracts by customers and that
the increase in maintenance fees during the three month period was due not due
to any specific trend.
Multi Soft continues to work on developing products that extend its line to work
on Microsoft's new ".NET" and XML Web services platform; however, progress is
slow due to financial constraints.
Our operating expenses were $515,787 for the nine months ended October 31, 2001
compared to $934,789 for the comparable nine month period in fiscal 2001, a
decrease of $419,002 or approximately 44.8%. Our operating expenses for the
three months ended October 31, 2001 were $161,802 compared to $352,748 for the
comparable three months ended October 31, 2000, a decrease of $190,946 or
approximately 54.1%. 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, primarily a decrease in compensation to officers,
charged to operations for the nine and three month period ending October 31,
2001 compared to the period ending October 31, 2000.
We had other income of $50,795 during the first nine months of fiscal 2002
compared to $131,387 of other income during the first nine months of fiscal
2001. We had other income of $20,580 during the three months ended October 31,
2001 compared to $45,905 during the comparable three months of fiscal 2000. We
believe that the decrease in other income during the first nine 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.
8
As a result of all of the foregoing, we incurred a net loss for the first nine
months of fiscal 2002 of $266,227 compared to a net loss of $610,184 for the
first nine months of fiscal 2001, a decrease of $343,957 or approximately 56.4%.
We incurred a net loss for the three month period ended October 31, 2001 of
$48,637 compared to a net loss of $255,173 for the three months ended October
31, 2000 a decrease of $206,536 or approximately 80.9%.
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 October 31, 2001, we had a negative working capital position of ($617,093),
compared to negative working capital of ($121,670) at January 31, 2001 and we
continue to experience significant cash flow problems.
Working Capital and Current Ratios were:
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Descriptions October 31, 2001 January 31, 2001
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Working capital ($617,093) ($121,670)
Current ratios .23:1 .73:1
Marketable securities dropped from $168,000 at January 31, 2001 to $0 at October
31, 2001, a decrease of $168,000 or 100.0%. This decrease is the result of our
sale of the stock during the 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.
Accounts payable increased from $119,920 at January 31, 2001 to $361,386 at
October 31, 2001, an increase of $241,466 or approximately 201.4%. We believe
that this increase is due to the application of our lower levels of cash flow
available for payments to vendors.
9
We need to obtain significantly additional funds from operations and/or from
financing activities. Absent such additional funds, we will be forced to further
reduce our operating expenses and our business will be further materially
adversely affected. We cannot assure that we will be able to obtain the
requisite funds.
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.
10
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.
11
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 December 20, 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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