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, 1999 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.) 4262 US Route 1, Monmouth Junction, New Jersey 08852 ---------------------------------------------------- (Address of principal executive offices) Issuer's telephone number, including area code: (732) 329-9200 -------------- 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 October 31, 1999 - ----------------------- ------------------------------- Common Stock, par value 18,813,398 $.001 per share 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 management considers necessary for the fair presentation of results for the nine months ended October 31, 1999. 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 the Company's audited consolidated financial statements at, and for the fiscal year ended January 31, 1999. FreeTrek.Com is a newly formed subsidiary of Multi Solutions Inc. Multi Solutions, Inc. retains approximately a 65% interest in FreeTrek.Com, Inc. The remaining approximately 35% interest in FreeTrek.com Inc. obtained by private investors for services and cash to fund initial software development and other startup activities. The company has developed a powerful new software-based tool and promotion program for tapping into the marketing communication potential of the Internet. Unlike many "broadcast" model Internet marketing concepts, FreeTrek.com offers major marketers the opportunity to communicate one-on-one with carefully defined private networks of their most valuable consumers. The results for the nine months ended October 31, 1999 are not necessarily indicative of the results for the entire fiscal year. Multi Solutions, Inc. ( the "company") owns 52% of Multi Soft, Inc's common stock. The companies financial statements are consolidated with Multi soft and its other subsidiaries, NetCast, Inc. (currently inactive), and FreeTrek.Com, Inc. which is currently in the development stage. The financial statements include the operational results of FreeTrek.Com, Inc. for the period ending October 31, 1999. FreeTrek did not have a material impact on the consolidated results of operations for Multi Solutions. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ---------------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- Results of Operations - --------------------- Nine and three months ended October 31, 1999 compared to nine and three months - -------------------------------------------------------------------------------- ended October 31, 1998 - ---------------------- Revenues for the current nine months of fiscal year 1999 decreased $94,284 or 15% compared with the comparable period of the prior year. The decrease in revenues for the nine-month period is primarily attributable to a decrease in maintenance revenues of $67,329 or 10%. This is attributable to cancellations of maintenance agreements with customers of Multi Soft whom have been paying for monthly maintenance and support. The decrease is partially offset by an increase in Consulting and Other Fees. Operating expenses as a percent of revenues for the nine-month period was 115% compared with 97% for the comparable period of the prior year. The higher level of expenses in the current nine month period, in addition to the lower level of revenues for the current nine month period accounts for the percentage increase. The operating income loss, before other income expense of $(83,217) for the current nine-month period decreased $104,374 compared with the comparable period of the prior year. For the current three month period, operating income of $21,157 was incurred, compared with an operating income of $58,059 of a decrease of $36,902. Major Customers - --------------- In the first nine months of 1999, IBM accounted for 16.24% of total revenues. In the first nine months of 1998, IBM accounted for 19.75% of total revenues. Liquidity and Capital Resources - ------------------------------- At October 31, 1999, the Company had a negative working capital position of ($33,370) and has been experiencing cash flow problems. The cash flow deficiency derives from certain outstanding receivable that remain uncollected coupled with normal fluctuations in sales. Management of the company has taken various steps to correct this situation. Overhead costs have been cut drastically as a result of staff reductions and curtailment of all outside marketing and advertising costs. In addition, senior staff salaries were reduced and executive officers' salaries were partly deferred. Secondly, the company's 52.% owned subsidiary, Multi Soft Inc. broadened its product base into the Windows environment and has made its Windows based products easier to learn and use. During the summer Multi Soft plans to introduce a new product which extends its present product line into the internet. It is the company's intent to remain a technology provider and search out multiple distribution channels, rather than to try and grow via an expensive direct sales force. This allows the focus to stay on technology, with a low overhead cost for each distribution channel used. However, if Multi Soft obtains additional funds from operations or otherwise, it plans to expand in-house marketing activities by advertising in trade publications and by conducting targeted mailing. Dividend Policy - --------------- The Company has not declared or paid any dividends on its common stock since its inception and does not anticipate the declaration or payment of cash dividends in the foreseeable future. The Company intends to retain earnings, if any, to finance the development and expansion of its business. Future dividend policy will be subject to the discretion of the Board of Directors and will be contingent upon future earnings, if any, the Company's financial condition, capital requirements, general business conditions and other factors. Therefore, there can be no assurance that dividends of any kind will ever be paid. Year 2000 - --------- Many companies systems experience problems handling dates beyond the year 1999. The companies products are not directly impacted by this problem. In particular, year 2000 issues are transparent to COMRAD and WCL. WCL and COMRAD simply transports data between the 3270/5250 presentation space and the client application. WCL and COMRAD do no formatting of any data, including dates. This is handled by the client development tool such as VB, PB and VC++. Therefore, Year 2000 issues must be addressed by these development tools, not WCL. In addition, The Company's INFRONT and QuickFRONT product have built in support for the Year 2000. Any date functions that use 2 positions for the year, the SETUPSL command can be used to handle the year 2000. Effect of Inflation - ------------------- Management believes that inflation has not had a material effect on its operations for the periods presented. Cautionary Statement - -------------------- This Form 10-KSB contains certain forward-looking statements regarding, among other things, the anticipated financial and operating results of the company. For this purpose, forward-looking statements are any statements contained herein that are not statements of historical fact and include, but are not limited to, those preceded by or that include the words, "believes," "expects," "anticipated," or similar expressions. In connection with the safe harbor provisions of the Private Securities Litigation Reform act of 1995, the Company is including this cautionary statement identifying important factors that could cause the company's actual results to differ materially from those projected in forward looking statements made by, or on behalf of, the company. These factors, many of which are beyond the control of the company and include the Company's ability to, (I) continue as a going concern, (ii) continue to receive royalties from its existing licensing and consulting arrangements (iii) develop additional marketable software and technology, (iv) compete with larger, better capitalized competitors, and reverse ongoing liquidity and cash flow problems. PART II - OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K None 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 December 18, 1999 By:______________________________ Charles J. Lombardo, Chief Executive Officer, Chief Financial Officer and Treasurer MULTI SOLUTIONS, INC. BALANCE SHEETS OCTOBER 31, 1999 and JANUARY 31, 1999 31-Oct 31-Jan 1999 1999 ------------ ------------ ASSETS CURRENT ASSETS Cash $ 345,360 $ 18,420 Accounts Receivable (net of allowance of $43,783 and $43,783 respectively) 220,318 132,316 Prepaid expenses and other current assets 15,675 13,385 ------------ ------------ 581,353 164,121 FURNITURE AND EQUIPMENT Research and Development Equipment 15,518 63,526 Office furniture and other equipment 50,581 20,474 ------------ ------------ 66,099 84,000 Less: Accumulated Depreciation (19,052) (16,780) ------------ ------------ 47,047 67,220 Organizational costs 9,126 2,415 Less: Accumulated Amorization (968) (968) ------------ ------------ 8,158 1,447 OTHER ASSETS Capitalized software development costs 1,614,044 1,607,505 Less accumulated amortization (655,986) (809,915) ------------ ------------ 958,058 797,590 Intangibles 200 200 $ 1,594,816 $ 1,030,578 ============ ============ MULTI SOLUTIONS, INC. BALANCE SHEETS OCTOBER 31 , 1999 and JANUARY 31, 1999 31-Oct 31-Jan LIABILITIES AND STOCKHOLDERS' 1999 1999 ------------ ------------ DEFICIENCY CURRENT LIABILITIES Loan payable to bank $ -- $ 796 Note Payable 6,565 6,565 Accrued payroll 18,359 -- Payroll and other taxes payable 12,292 19,480 Accounts Payable, Accrued expenses and other Current Liabilities 167,264 196,416 Accrued officer compensation 241,390 198,057 Deferred Revenues 168,853 187,648 ------------ ------------ 614,723 608,962 Deferred compensation due officer /shareholders 631,605 586,605 STOCKHOLDERS' DEFICIENCY Common stock, authorized 30,000,000 shares $.001 par value, issued and outstanding 18,813,398 (1999) and 18,813,398 (1999) 18,814 18,814 Additional paid-in capital, net of deferred compensation $22,819 (1999) and $41,365(1999) 8,673,416 8,661,197 Accumulated deficit (8,891,742) (8,845,000) ------------ ------------ (199,512) (164,989) Minority Inerest 548,000 $ 1,594,816 $ 1,030,578 ============ ============ MULTI SOLUTIONS, INC STATEMENTS OF OPERATIONS OCTOBER 31, 1999 and OCTOBER 31, 1998 Nine Months Ended Three Months Ended 31-Oct 31-Oct 1999 1998 1999 1998 ------------ ------------ ------------ ------------ REVENUES License fees $ 94,284 $ 213,865 $ 18,185 $ 120,226 Maintenance fees 357,901 425,230 126,292 130,652 Consulting and Other fees 94,614 6,336 44,310 1,096 ------------ ------------ ------------ ------------ Total revenues 546,799 645,431 188,787# 251,974 EXPENSES Software development and technical support 171,178 147,661 56,793 55,351 Selling and administrative 458,838 476,613 152,416 138,564 ------------ ------------ ------------ ------------ Total expenses 630,016 624,274 209,209 193,915 ------------ ------------ ------------ ------------ Income (Loss) from operations (83,217) 21,157 (20,422)# 58,059 OTHER INCOME (EXPENSE) Other Revenues 16,288 16,349 16,288 11,112 Interest Expense -- (1,022) -- (133) ------------ ------------ ------------ ------------ Total other income 16,288 15,327 16,288 10,979 Net Income (Loss) $ (66,929) $ 36,484 $ (4,134) $ 69,038 ============ ============ ============ ============ Weighted average shares outstanding 18,813,398 18,454,556 18,813,398 18,548,398 ============ ============ ============ ============ Income (Loss) per share $ -- $ -- $ -- $ -- ============ ============ ============ ============ MULTI -SOLUTIONS, INC. 52 % owned subsidiary of Multi Solutions, Inc. STATEMENTS OF CASH FLOWS October 31 , 1999 and 31 October 31, 1998 31-Oct 31-Oct 1999 1998 ------------ ------------ Cash flows from operating activities Net Income $ (66,929) $ 36,484 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 172,656 152,532 Changes in assets and liabilities Accounts receivable (88,002) (51,101) Prepaid expenses and other current assets (2,290) (36,200) Accrued payroll 18,359 51,499 Note Payable -- (11,172) Payroll and other taxes payable (7,188) (4,774) Accounts payable and accrued expenses (29,152) 7,166 Accrued officer compensation 43,333 87,498 Deferred revenues (18,795) (65,987) ------------ ------------ Net cash provided by operating activities 21,992 165,945 Cash flows from investing activities Capitalized Organizational Cost Capitalized software development costs (206,784) (197,638) ------------ ------------ Net cash used in investing activities (206,784) (197,638) Cash flows from financing activities Net repayments under loan and line of credit ageements (796) (11,164) Amortization of Stock Grants -- Issuances of Capital Stock 18,546 5,923 Increase (Decrease) in Minority Interest 493,982 9,712 ------------ ------------ Net cash provided (used) by financing activities 511,732 4,471 ------------ ------------ NET INCREASE (DECREASE) IN CASH 326,940 (27,222) Cash at beginning of year 18,420 29,524 ------------ ------------ Cash at end of period $ 345,360 $ 2,302 ============ ============