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: 0-15976
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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
------------------------------- -------------------
(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 October 31, 2001
----------------------- -------------------------------
Common Stock, par value 13,709,477
$.001 per share
Transitional Small Business Format (check one); Yes No X
--- ---
1
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
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 nine and
three months ended October 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 nine and three months ended October 31, 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
October 31, 2001 and January 31, 2001
(Unaudited)
October 31, January 31,
2001 2001
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 1,103 --
Accounts Receivable (net of allowance
of $49,212 and $49,212 respectively 156,755 110,224
Prepaid expenses and other current assets 25,038 21,675
----------- -----------
182,896 131,899
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,868 8,868
Office furniture and other equipment 31,209 26,575
----------- -----------
40,077 35,443
Less: Accumulated Depreciation (24,337) (19,999)
----------- -----------
15,740 15,444
OTHER ASSETS
Capitalized software development costs 1,677,768 1,512,489
Less accumulated amortization (1,008,436) (892,588)
----------- -----------
669,332 619,901
Due from Multi Solutions, Inc 349,736 335,559
Due from Freetrek, Inc. 20,761 7,227
Due from NetCast, Inc. 234,592 234,592
----------- -----------
$ 1,473,057 $ 1,344,622
=========== ===========
3
MULTI SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
October 31, 2001 and January 31, 2001
(Unaudited)
October 31, January 31,
2001 2001
----------- -----------
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 170,466 66,295
Accrued officer compensation 168,042 143,042
Deferred Revenues 148,606 105,214
----------- -----------
566,655 347,831
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 (5,733,133) (5,642,744)
----------- -----------
319,797 410,186
$ 1,473,057 $ 1,344,622
=========== ===========
4
MULTI SOFT, INC
a 51.3% owned subsidiary of Multi Solutions, Inc.
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
------------ ------------ ------------ ------------
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 290,296 384,213 121,425 126,944
------------ ------------ ------------ ------------
Total revenues 451,405 538,651 199,135 149,346
EXPENSES
Software development and technical support 232,848 315,712 72,843 100,855
Selling and administrative 308,946 379,824 88,660 128,365
------------ ------------ ------------ ------------
Total expenses 541,794 695,536 161,503 229,220
------------ ------------ ------------ ------------
Net income (loss) ($ 90,389) ($ 156,885) $ 37,632 ($ 79,874)
============ ============ ============ ============
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 $.01 per share
5
MULTI -SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
October 31, 2001 and October 31, 2000
(Unaudited)
Nine Months Ended
October 31,
2001 2000
--------- ---------
Cash flows from operating activities
Net (loss) ($ 90,389) $(156,885)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 120,186 138,179
Changes in assets and liabilities
Due to / from Multi Solutions (14,177) 82,784
Due to / from Freetrek (13,534) (1,446)
Accounts receivable (46,531) 80,140
Prepaid expenses and other current assets (3,363) 22,653
Accrued payroll 45,747 --
Payroll and other taxes payable 514 (1,425)
Accounts payable and accrued expenses 104,171 (16,292)
Accrued officer compensation 25,000 (18,348)
Deferred revenues 43,392 (62,732)
--------- ---------
Net cash provided by operating activities 171,016 66,628
Cash flows from investing activities
Capital expenditures (4,634) (9,044)
Capitalized software development costs (165,279) (87,016)
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Net cash used in investing activities (169,913) (96,060)
Cash flows from financing activities
Amortization of Stock Grants -- 22,194
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Net cash provided by financing activities -- 22,194
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NET INCREASE IN CASH 1,103 (7,238)
Cash at beginning of year -- 13,205
--------- ---------
Cash at end of period $ 1,103 $ 5,967
========= =========
6
MULTI SOFT, INC.
NOTE TO FINANCIAL STATEMENTS
October 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
nine and three months ended October 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
nine and three months ended October 31, 2000 have been restated accordingly.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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CAUTIONARY STATEMENT
--------------------
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
---------------------
NINE MONTHS ENDED OCTOBER 31, 2001 COMPARED TO NINE MONTHS ENDED OCTOBER 31,
--------------------------------------------------------------------------------
2000 AND THREE MONTHS ENDED OCTOBER 31, 2001 COMPARED TO THREE MONTHS ENDED
--------------------------------------------------------------------------------
OCTOBER 31, 2000
----------------
We generated revenues during the nine months ended October 31, 2001, the first
nine months of our fiscal year ending January 31, 2002, of $451,405 compared to
revenues of $538,651 during the first nine months of fiscal 2001. We believe
that the decrease of $87,246, or approximately 16.2% was due primarily to a
decrease in our consulting fees, primarily to our affiliate Freetrek, Inc.,
offset in part by an increase in license 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 2002. Maintenance fees decreased $1,060 or
approximately 0.9% and consulting and other fees, primarily to our affiliate
Freetrek, Inc., decreased $93,917, or approximately 24.5%.
We generated revenues during the three months ended October 31, 2001, of
$199,135 compared to revenues of $149,346 during the third quarter of fiscal
2001. We believe that the increase in revenues of $49,789, or approximately
33.3%, was due primarily to a increase in revenue from license and maintenance
fees, offset in part by a decrease in consulting fees, primarily to our
affiliate Freetrek, Inc. License fee revenue increased $12,515, or approximately
63.0%, maintenance fees increased $42,793, or approximately 1780.0% and
consulting and other fees, primarily to our affiliate Freetrek, Inc., decreased
$5,519,or approximately 4.4%.
8
Please note that we have included income derived from consulting and
administrative charges to our affiliate Freetrek, Inc. in the amount of $139,500
in revenues for the nine and three months ended October 31, 2000. Previously
this income was reported as "Other Income" in the Income Statement. We have
restated our Statement of Operations for the nine and three months ended October
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
$139,500 is included in revenues for the nine and three months ended October 31,
2000.
Our principal sources of revenues were maintenance fees and consulting fees
which represented approximately 90.6% or $409,337 of revenues for the nine
months ended October 31, 2001 and approximately 93.6% or $504,314 of revenues
for the nine months ended October 31, 2000. Maintenance fees and consulting fees
represented approximately 83.7% or $166,765 of revenues for the three months
ended October 31, 2001 and approximately 86.7% or $129,491 for the three months
ended October 31, 2000.
The increase in licensing fees was due to increased software sales within the
quarter ended October 31, 2001.
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 not due to
any specific trend. 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."
We continue to work on developing products that extend our 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 $541,794 for the nine months ended October 31, 2001
compared to $695,536 for the comparable nine month period of fiscal 2001, a
decrease of $153,742 or approximately 22.1%. Our operating expenses for the
three months ended October 31, 2001 were $161,503 compared to $229,220 for the
comparable three months ended October 31, 2000, a decrease of $67,717 or
approximately 29.5%. 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, primarily a decrease in compensation to officers and
administrative staff, charged to operations for the nine and three month period
ending October 31, 2001 compared to the period ending October 31, 2000.
As a result of all of the foregoing, we incurred a net loss for the first nine
months of fiscal 2002 of $90,389 compared to a net loss of $156,885 for the
first nine months of fiscal 2001, a decrease of $66,496. We incurred a net
profit of $37,632 for the three months ended October 31, 2001 compared to a net
loss of $79,874, a decrease of $117,506.
9
Major Customers
---------------
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.
Liquidity and Capital Resources
-------------------------------
At October 31, 2001, we had a negative working capital position of ($383,759)
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.
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.
Working Capital and Current Ratios:
-----------------------------------
Descriptions October 31, 2001 January 31, 2001
--------------------------------------------------------
Working capital
(deficiency) ($383,759) ($215,932)
Current ratios 0.32:1 0.38:1
10
Dividend Policy
---------------
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
-------------------
We believe that inflation has not had a material effect on our operations for
the periods presented.
11
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
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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.
12
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 SOFT, INC.
Dated: December 20, 2001 By: /s/ Charles J. Lombardo
---------------------------------------------
Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
13