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, 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: 0-15976
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MULTI SOFT, INC.
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(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2588030
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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 April 30, 2001
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Common Stock, par value 13,709,477
$.001 per share
Transitional Small Business Format (check one); Yes [ ] No [X]
1
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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The accompanying 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 our results for the three months
ended April 30, 2001.
Moreover, these 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 financial statements at, and for
the fiscal year ended January 31, 2001.
The results reflected for the three months ended April 30, 2001 are not
necessarily indicative of the results for the entire fiscal year.
2
MULTI SOFT, INC.
a 51.3% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
April 30, 2001 and January 31, 2001
(Unaudited)
April 30, January 31,
2001 2001
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ASSETS
CURRENT ASSETS
Cash $ -- --
Accounts Receivable (net of allowance
of $49,212 and $49,212 respectively 49,681 110,224
Prepaid expenses and other current assets 16,095 21,675
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65,776 131,899
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,869 8,868
Office furniture and other equipment 31,209 26,575
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40,078 35,443
Less: Accumulated Depreciation (21,600) (19,999)
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18,478 15,444
OTHER ASSETS
Capitalized software development costs 1,559,586 1,512,489
Less accumulated amortization (931,204) (892,588)
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628,382 619,901
Due from Multi Solutions, Inc 337,265 335,559
Due from Freetrek, Inc. 10,329 7,227
Due from NetCast, Inc. 234,592 234,592
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$ 1,294,822 $ 1,344,622
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3
MULTI SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
April 30, 2001 and January 31, 2001
(Unaudited)
April 30, January 31,
2001 2001
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accrued payroll $ 14,783 $ 14,783
Payroll and other taxes payable 17,540 18,497
Accounts Payable, Accrued expenses and
other Current Liabilities 102,734 66,295
Accrued officer compensation 143,042 143,042
Deferred Revenues 133,242 105,214
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411,341 347,831
Deferred compensation due officer /shareholders 586,605 586,605
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
13,709,477 respectively 13,709 13,709
Additional paid-in capital, net of deferred
compensation $0 and $25,257 respectively 6,039,221 6,039,221
Accumulated deficit (5,756,054) (5,642,744)
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296,876 410,186
$ 1,294,822 $ 1,344,622
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4
MULTI SOFT, INC
a 51.3% owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF OPERATIONS
April 30, 2001 and April 30, 2000
(Unaudited)
Three Months Ended
April 30,
2001 2000
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REVENUES
License fees $ -- $ 12,485
Maintenance fees 27,720 65,820
Consulting and Other fees 66,442 146,199
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Total revenues 94,162 224,504
EXPENSES
Software development and technical support 83,378 88,628
Selling and administrative 124,094 153,051
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Total expenses 207,472 241,679
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Net income (loss) ($ 113,310) ($ 17,175)
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Weighted average shares outstanding 13,709,477 13,709,477
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Income (Loss) per share (a) (a)
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(a) less than $.01 per share
5
MULTI -SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
April 30, 2001 and April 30, 2000
(Unaudited)
Three Months Ended
April 30,
2001 2000
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Cash flows from operating activities
Net income (loss) ($ 113,310) $ (17,175)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 40,217 47,286
Changes in assets and liabilities
Due to / from Multi Solutions (1,706) 18,378
Due to / from Freetrek (3,102) --
Accounts receivable 60,543 37,617
Prepaid expenses and other current assets 5,580 (302)
Accrued payroll -- --
Payroll and other taxes payable (957) (1,242)
Accounts payable and accrued expenses 36,439 (28,425)
Accrued officer compensation -- --
Deferred revenues 28,028 (61,974)
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Net cash provided by operating activities 51,732 (5,837)
Cash flows from investing activities
Capital expenditures (4,635) --
Capitalized software development costs (47,097) (19,636)
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Net cash used in investing activities (51,732) (19,636)
Cash flows from financing activities
Amortization of Stock Grants -- 6,354
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Net cash provided by financing activities -- 6,354
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NET (DECREASE) IN CASH -- (19,119)
Cash at beginning of year -- 13,205
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Cash at end of period $ -- $ (5,914)
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6
MULTI SOFT, INC.
NOTE TO FINANCIAL STATEMENTS
April 30, 2001
(Unaudited)
RECLASSIFICATION OF OTHER INCOME TO REVENUE FROM CONSULTING AND OTHER FEES
Consulting, rent and administrative fees charged to Freetrek, Inc., an
affiliate, were reflected on prior financial statements as "Other Income" in the
category "Other Income (Expense)" on the Statement of Operations. During the
three months ended April 30, 2001, these fees have been included in "Consulting
and Other Fees" in the "Revenues" category on the Statements of Operations. For
purposes of comparison, the Statements of Operations for the three months ended
April 30, 2000 have been restated accordingly.
7
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. 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 ours or our affiliates' 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
affiliates, include our ability to:
o receive royalties from our 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.
Results of Operations
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Three months ended April 30, 2001 compared to Three months ended April 30, 2000
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We generated revenues during the three months ended April 30, 2001, the first
three months of our fiscal year ending January 31, 2002, of $94,162 compared to
revenues of $224,504 during the first three months of fiscal 2001. We believe
that the decrease of $130,342, or approximately 58.1%, was due primarily to a
decrease in our license and maintenance fees and consulting fees, primarily to
our affiliate Freetrek, Inc. License fee revenue decreased 100% from $12,485 in
the first quarter of fiscal 2001 to -0- during the first quarter of fiscal 2002.
Maintenance fees decreased $38,100, or approximately 57.9% and consulting and
other fees, primarily to our affiliate Freetrek, Inc., decreased $79,757,or
approximately 54.6%.
Please note that we have included income derived from consulting and
administrative charges to our affiliate Freetrek, Inc. in the amount of $57,440
in revenues for the three months ended April 30, 2000. Previously this income
was reported as "Other Income" in the Income Statement. We have restated our
Statement of Operations for the three months ended April 30, 2000 to reflect
this change. As a result of this restatement, income derived from consulting and
administrative charges to Freetrek, Inc. in the amount of $146,199 is included
in revenues for the three months ended April 30, 2000.
8
Our principal sources of revenues were maintenance fees and consulting fees.
Maintenance fees represented approximately $27,720 or 29.4% of revenues for the
three months ended April 30, 2001 and approximately $65,820 or 29.3% of revenues
for the three months ended April 30, 2000. Consulting fees represented
approximately $66,442 or 70.6% of revenues for the three months ended April 30,
2001 and approximately $146,199 or 65.1% of revenues for the three months ended
April 30, 2000.
The decrease in licensing fees was due to reduced software sales. We believe
that reduced sales resulted from a decline in market acceptance of our existing
products due to a shift from mainframe/PC access towards internet access. We
have been working on developing products that extend our 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. We believe that the decrease in
consulting and other fees was due to a reduction in charges for consulting and
administrative fees to our affiliate Freetrek, Inc. This reduction in consulting
and administrative fees from Freetrek resulted from a decrease in funds
available to Freetrek from its financing activities. See the discussion below
under "Major Customers."
Our operating expenses were $207,472 for the three months ended April 30, 2001
compared to $241,679 for the comparable three month period of fiscal 2000, a
decrease of $34,207 or approximately 14.2%. 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 costs charged to operations for the three month
period ending April 30, 2001 compared to the period ending April 30, 2000.
As a result of all of the foregoing, we incurred a net loss for the first three
months of fiscal 2002 of $113,110 compared to a net loss of $17,175 for the
first three months of fiscal 2001, an increase of $96,135.
Major Customers
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No individual customer accounted for a significant portion of revenues. We have
generated revenues from our affiliate, Freetrek, for work related to the prior
and ongoing development, maintenance and enhancement of Freetrek's products.
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 Multi Solutions' securities. If Freetrek is unable to generate
substantial revenues or continue to raise funds, revenues received by us from
Freetrek most likely will decrease and eventually cease.
9
Liquidity and Capital Resources
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At April 30, 2001, we had a negative working capital position of ($345,565)
compared to a negative working capital position of ($215,932) on January 31,
2001. We continue to experience significant cash flow problems.
We have taken various step to correct this situation, including:
o significantly cutting overhead costs through staff reduction;
o extending our product line to operate within the internet environment;
o performing work for our affiliate, Freetrek, related to the prior and
ongoing development, maintenance and enhancement of Freetrek's
products: and
o performing contract consulting services for others.
We intend to remain a technology provider of products and services and search
out multiple distribution channels, with increasing emphasis on the use of the
Internet for marketing, 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 we obtain additional funds
from operations or otherwise, we plan to expand in-house marketing activities by
advertising in trade publications and by conducting targeted mailing.
Working Capital and Current Ratios:
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Descriptions April 30, 2001 January 31, 2001
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Working capital
(deficiency) ($345,565) ($215,932)
Current ratios 0.16:1 0.38:1
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 declare or pay 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 the 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 SOFT, INC.
Dated: June 19, 2001 By: /s/ Charles J. Lombardo
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Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer