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 April 30, 2002
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
-------
MULTI SOLUTIONS, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2418056
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3535 Quakerbridge Road, Hamilton, New Jersey 08619
--------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (609) 631-7401
--------------
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 April 30, 2002
- ----------------------- -----------------------------
Common Stock, par value 21,096,969
$.001 per share
Transitional Small Business Format (check one); Yes No X
--- ---
1
PART I. FINANCIAL INFORMATION
- -------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
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 three months ended April 30, 2002.
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, 2002.
The results for the three months ended April 30, 2002 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
- ------------------ --------------------
Multi Soft, Inc. 51.3%
FreeTrek, Inc. 45.8%
NetCast, Inc. 75%.
Our financial statements are consolidated with our subsidiaries. In January
2000, we decided to discontinue any further operations of NetCast.
2
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, 2002 and January 31, 2002
(Unaudited)
April 30, January 31,
2002 2002
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 31,889 $ 3,511
Accounts Receivable (net of allowance
of $37,486 and $37,486 respectively) 30,639 22,991
Prepaid expenses and other current assets 22,269 23,824
------------ ------------
84,797 50,326
FURNITURE AND EQUIPMENT
Research and Development Equipment 24,982 24,982
Office furniture and other equipment 89,225 89,225
------------ ------------
114,207 114,207
Less: Accumulated Depreciation (68,817) (64,102)
------------ ------------
45,390 50,105
Organizational costs 11,126 11,126
Less: Accumulated Amortization (7,589) (7,254)
------------ ------------
3,537 3,872
OTHER ASSETS
Capitalized software development costs 2,257,573 2,250,915
Less accumulated amortization (1,085,668) (1,047,052)
Less valuation allowance (210,000) (210,000)
------------ ------------
961,905 993,863
$ 1,095,629 $ 1,098,166
============ ============
3
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, 2002 and January 31, 2002
(Unaudited)
April 30, January 31,
2002 2002
------------ ------------
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accrued payroll $ 45,034 $ 81,817
Payroll and other taxes payable 30,893 28,589
Accounts Payable, Accrued expenses and
other Current Liabilities 222,598 226,788
Accrued officer compensation 178,668 178,668
Due to officer 19,646 52,847
Deferred Revenues 64,423 72,552
------------ ------------
561,262 641,261
Deferred compensation due officer /shareholders 586,605 586,605
Minority interest in subsidiaries 792,240 633,992
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 40,000,000 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 (10,085,108) (10,004,322)
------------ ------------
(844,478) (763,692)
$ 1,095,629 $ 1,098,166
============ ============
4
MULTI SOLUTIONS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
April 30, 2002 and April 30, 2001
(Unaudited)
Three Months Ended
April 30,
2002 2002
------------ ------------
REVENUES
License fees $ 4,696 $ --
Maintenance fees 39,350 27,720
Consulting and Other fees 7,329 9,002
------------ ------------
Total revenues 51,375 36,722
EXPENSES
Software development and technical support 37,787 47,092
Selling and administrative 114,126 159,669
------------ ------------
Total expenses 151,913 206,761
------------ ------------
(Loss) from operations (100,538) (170,039)
OTHER INCOME (EXPENSE)
Interest/capital gain income (loss) -- (16,412)
Minority share of consolidated subsidiary's loss 19,752 31,116
------------ ------------
Total other income 19,752 14,704
Net (loss) $ (80,786) $ (155,335)
============ ============
Weighted average shares outstanding 21,096,969 21,096,969
============ ============
Income (Loss) per share (a) (a)
============ ============
(a) less than $.01 per share
5
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
April 30, 2002 and April 30, 2001
(Unaudited)
Three Months Ended
April 30,
2002 2002
------------ ------------
Cash flows from operating activities
Net (loss) $ (80,786) $ (155,335)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 43,666 44,076
Changes in assets and liabilities
Accounts receivable (7,648) 60,544
Prepaid expenses and other current assets 1,555 5,195
Accrued payroll (36,783) --
Payroll and other taxes payable 2,304 (957)
Accounts payable and accrued expenses (4,190) 56,521
Due to officer (33,201)
Deferred revenues (8,129) 28,028
------------ ------------
Net cash provided (used) by
operating activities (123,212) 38,072
Cash flows from investing activities
Capital expenditures -- (4,636)
Capitalized software development costs (6,658) (83,383)
Sales of marketable securities -- 62,352
------------ ------------
Net cash used in investing activities (6,658) (25,667)
Cash flows from financing activities
Minority interest and loss in excess
of investments 158,248 (31,116)
------------ ------------
Net cash provided (used) by
financing activities 158,248 (31,116)
------------ ------------
NET INCREASE (DECREASE) IN CASH 28,378 (18,711)
Cash at beginning of year 3,511 22,846
------------ ------------
Cash at end of period $ 31,889 $ 4,135
============ ============
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
CAUTIONARY STATEMENT
- --------------------
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
- ---------------------
Three months ended April 30, 2002 compared to Three months ended April 30, 2001
- -------------------------------------------------------------------------------
We generated revenues during the three months ended April 30, 2002, the first
three months of our fiscal year ending January 31, 2003 of $51,375 compared to
revenues of $36,722 during the three months of fiscal 2002. The revenues during
all these periods were generated by our subsidiary, Multi Soft. We believe that
the increase in revenues of $14,653 or approximately 39.9% was due primarily to
an increase in Multi Soft's primary sources of revenues - license, and
maintenance fees, offset by a decrease in consulting fees. License fee revenue
increased 1 from $0 in the first quarter of fiscal 2002 to $4,696 during the
first quarter of fiscal 2003. Maintenance fees increased $11,630, or
approximately 42.0%, and
7
consulting and other fees decreased $1,673, or approximately 1.9%. Multi Soft's
consulting fees relate to consulting services that it provided to our other
subsidiary, FreeTrek, Inc.
Multi Soft's two traditional principal sources of revenues have been license
fees and maintenance fees which represented approximately 85.7% or $44,046 of
revenues for the three months ended April 30, 2002, and 75.4% or $27,720 of
revenues for the three months ended April 30, 2001. However, our principal
sources of revenues during the first quarter ended April 30, 2002 were
maintenance fees and consulting fees. Maintenance fees represented approximately
$39,350 or 76.6% of revenues for the three months ended April 30, 2002 and
approximately $27,720 or 75.5% of revenues for the three months ended April 30,
2001. Consulting fees represented approximately $7,329 or 14.3% of revenues for
the three months ended April 30, 2002 and approximately $9,002 or 24.5% of
revenues for the three months ended April 30, 2001.
We believe Multi Soft's increase in licensing fees was due to increased software
sales. We believe that the increase in maintenance fees was due to the renewal
of maintenance contracts by customers.
Our operating expenses were $151,913 for the three months ended April 30, 2002
compared to $206,761 for the comparable three month period in fiscal 2002, a
decrease of $54,848 or approximately 26.5%. We believe that the decrease was a
result of lower levels of software development costs expended by Multi Soft in
providing consulting services to Freetrek and lower levels of selling and
administrative costs charged to operations.
We had other income of $19,752 during the first three months of fiscal 2003
compared to $14,704 of other income during the first three months of fiscal
2002. We believe that the decrease in other income during the first three months
was primarily due to a decrease in the minority share of consolidated
subsidiaries losses during the first three months of fiscal 2003, compared to
the first three months of fiscal 2002.
As a result of all of the foregoing, we incurred a net loss for the first three
months of fiscal 2003 of $80,786 compared to a net loss of $155,335 for the
first three months of fiscal 2002, a decrease of $74,549 or approximately 48.0%.
Major Customers
- ---------------
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.
8
Although Multi Soft has supplemented its revenues with services provided to
FreeTrek, these revenues are eliminated as a result of the consolidation of the
financial statements.
Liquidity and Capital Resources
- -------------------------------
At April 30, 2002, we had a negative working capital position of ($476,465),
compared to negative working capital of ($590,935) at January 31, 2002 and we
continue to experience cash flow problems.
Working Capital and Current Ratios were:
- ----------------------------------------
Descriptions April 30, 2002 January 31, 2002
----------------------------------------------------------------
Working capital ($476,465) ($590,935)
Current ratios .183:1 .079:1
Cash increased $28,378 for the Quarter ended April 30, 2002 compared to a
decrease of $18,711 for the comparable period of the prior year. During the
Quarter ended April 30, 2002 we used $123,212 of cash for operating activities
compared to $38,072 of cash provided by operating activities in the Quarter
ended April 30, 2001. This contrasts with the improvements in results of
operations discussed previously. We believe that the reason for the decrease in
cash flow from operations was due primarily to using the proceeds of private
placements to payoff some of our liabilities which were outstanding at the end
of the last fiscal year.
Dividend Policy
- ---------------
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
- -------------------
We believe that inflation has not had a material effect on our operations
for the periods presented.
9
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
During the quarter ended April 30, 2002 we and Freetrek sold
units consisting of Freetrek common stock and warrants to purchase our
common stock at a purchase price of .$0.05 per unit. An aggregate of
$178,000 was raised in this offering. No commissions were paid. The
offering was conducted pursuant to the exemption from registration
provided by Section 4 (2) of the Securities Act of 1933, and rule 506
thereunder.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
10
SIGNATURES
----------
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 June 17, 2002 By: /s/ Charles J. Lombardo
----------------------------------------------
Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
11