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: 0-15976
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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 July 31, 2001
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Common Stock, par value 13,709,477
$.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 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 six and
three months ended July 31, 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 six and three months ended July 31, 2001 are not
necessarily indicative of the results for the entire fiscal year.
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MULTI SOFT, INC.
a 51.3% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
July 31, 2001 and January 31, 2001
(Unaudited)
July 31, January 31,
2001 2001
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ASSETS
CURRENT ASSETS
Cash $ 403 --
Accounts Receivable (net of allowance
of $49,212 and $49,212 respectively 40,014 110,224
Prepaid expenses and other current assets 16,346 21,675
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56,763 131,899
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,868 8,868
Office furniture and other equipment 31,209 26,575
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40,077 35,443
Less: Accumulated Depreciation (23,019) (19,999)
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17,058 15,444
OTHER ASSETS
Capitalized software development costs 1,617,613 1,512,489
Less accumulated amortization (969,820) (892,588)
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647,793 619,901
Due from Multi Solutions, Inc 347,328 335,559
Due from Freetrek, Inc. 16,562 7,227
Due from NetCast, Inc. 234,592 234,592
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$ 1,320,096 $ 1,344,622
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MULTI SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
Ju;y 31, 2001 and 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 158,849 66,295
Accrued officer compensation 143,042 143,042
Deferred Revenues 95,241 105,214
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451,326 347,831
Deferred compensation due officer/shareholders 586,605 586,605
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
13,709,477respectively 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 (5,770,765) (5,642,744)
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282,165 410,186
$ 1,320,096 $ 1,344,622
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MULTI SOFT, INC
a 51.3% owned subsidiary of Multi Solutions, Inc.
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 168,871 257,269 102,429 111,070
------------ ------------ ------------ ------------
Total revenues 252,270 389,305 158,108 164,801
EXPENSES
Software development and technical support 160,005 214,857 76,627 126,229
Selling and administrative 220,286 251,459 96,192 98,408
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Total expenses 380,291 466,316 172,819 224,637
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Net income (loss) ($ 128,021) ($ 77,011) ($ 14,711) ($ 59,836)
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Weighted average shares outstanding 13,709,477 13,709,477 13,709,477 13,709,477
============ ============ ============ ============
Income (Loss) per share (a) (a) (a) (a)
============ ============ ============ ============
(a) less than $.01 per share
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MULTI -SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
July 31, 2001 and July 31, 2000
(Unaudited)
Six Months Ended
July 31,
2001 2000
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Cash flows from operating activities
Net (loss) ($ 128,021) $ (77,011)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 80,252 92,603
Changes in assets and liabilities
Due to / from Multi Solutions (11,769) 43,416
Due to/ from Freetrek (9,335) (21,158)
Accounts receivable 70,210 85,175
Prepaid expenses and other current assets 5,329 7,702
Accrued payroll 16,687 --
Payroll and other taxes payable 4,227 (865)
Accounts payable and accrued expenses 92,554 (29,969)
Accrued officer compensation -- (9,174)
Deferred revenues (9,973) (47,159)
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Net cash provided by operating activities 110,161 43,560
Cash flows from investing activities
Capital expenditures (4,634) (6,123)
Capitalized software development costs (105,124) (48,395)
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Net cash used in investing activities (109,758) (54,518)
Cash flows from financing activities
Amortization of Stock Grants -- 14,350
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Net cash provided by financing activities -- 14,350
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NET INCREASE IN CASH 403 3,392
Cash at beginning of year -- 13,205
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Cash at end of period $ 403 $ 16,597
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MULTI SOFT, INC.
NOTE TO FINANCIAL STATEMENTS
July 31, 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 six
and three months ended July 31, 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 six
and three months ended July 31, 2000 have been restated accordingly.
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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. 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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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 $252,270 compared to
revenues of $389,305 during the first six months of fiscal 2001. We believe that
the decrease of $137,035, or approximately 35.2% 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 33.0% from $14,482 in the
first six months of fiscal 2001 to $9,698 during the first six months of fiscal
2002. Maintenance fees decreased $43,853 or approximately 37.3% and consulting
and other fees, primarily to our affiliate Freetrek, Inc., decreased $88,398, or
approximately 34.4%.
We generated revenues during the three months ended July 31, 2001, of $158,108
compared to revenues of $164,801 during the second quarter of fiscal 2001. We
believe that the decrease in revenues of $6,693, or approximately 4.1%, was due
primarily to a decrease in revenue from maintenance fees and consulting fees,
primarily to our affiliate Freetrek, Inc., offset in part by an increase in
license 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, primarily to our affiliate Freetrek, Inc., decreased $8,641,or
approximately 7.8%.
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 six and three months ended July 31,
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2000. Previously this income was reported as "Other Income" in the Income
Statement. We have restated our Statement of Operations for the six and three
months ended July 31, 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 six and
three months ended July 31, 2000.
Our principal sources of revenues were maintenance fees and consulting fees
which represented approximately 96.2% or $242,572 of revenues for the six months
ended July 31, 2001 and approximately 96.3% or $374,823 of revenues for the six
months ended July 31, 2000. Maintenance fees and consulting fees represented
approximately 93.9% or $148,410 of revenues for the three months ended July 31,
2001 and approximately 98.8% or $162,804 for the three months ended July 31,
2000.
The decrease in licensing fees for the six month periods 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 $380,291 for the six months ended July 31, 2001
compared to $466,316 for the comparable six month period of fiscal 2001, a
decrease of $86,025 or approximately 18.5%. Our operating expenses for the three
months ended July 31, 2001 were $172,819 compared to $224,637 for the comparable
three months ended July 31, 2000, a decrease of $51,818 or approximately 23.1%.
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 costs
charged to operations for the six and three month period ending July 31, 2001
compared to the period ending July 31, 2000.
As a result of all of the foregoing, we incurred a net loss for the first six
months of fiscal 2002 of $128,021 compared to a net loss of $77,011 for the
first six months of fiscal 2001, an increase of $51,010. We incurred a net loss
of $14,711 for the three months ended July 31, 2001 compared to a net loss of
$59,836, a decrease of $45,125.
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
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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.
Liquidity and Capital Resources
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At July 31, 2001, we had a negative working capital position of ($394,563)
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 July 31, 2001 January 31, 2001
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Working capital
(deficiency) ($394,563) ($215,932)
Current ratios 0.13:1 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.
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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 SOFT, INC.
Dated: 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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