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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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.)
3535 Quakerbridge Road, Hamilton New Jersey 08619
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(Address of principal executive offices)
Issuer's telephone number, including area code: (609) 631-7401
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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
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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, 2002
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Common Stock, par value 13,709,477
$.001 per share
Transitional Small Business Format (check one); Yes No X
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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 six and
three months ended July 31, 2002.
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, 2002.
The results reflected for the six and three months ended July 31, 2002 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
July 31, 2002 and January 31, 2002
(Unaudited)
July 31, January 31,
2002 2002
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ASSETS
CURRENT ASSETS
Cash $ -- $ 3,207
Accounts Receivable (net of allowance
of $49,212 and $49,212 respectively 35,210 22,117
Prepaid expenses and other current assets 40,566 22,636
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75,776 47,960
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,868 8,868
Office furniture and other equipment 31,209 31,209
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40,077 40,077
Less: Accumulated Depreciation (27,300) (24,837)
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12,777 15,240
OTHER ASSETS
Capitalized software development costs 1,708,549 1,702,582
Less accumulated amortization (1,124,284) (1,047,052)
Less valuation allowance (210,000) (210,000)
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374,265 445,530
Due from Multi Solutions, Inc 359,477 351,926
Due from Freetrek, Inc. 139,014 215,730
Due from NetCast, Inc. 234,592 234,592
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733,083 802,248
Less valuation allowance (200,000) (200,000)
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533,083 602,248
$ 995,901 $ 1,110,978
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3
MULTI SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
July 31, 2002 and January 31, 2002
(Unaudited)
July 31, January 31,
2002 2002
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accrued payroll $ 67,034 $ 81,817
Payroll and other taxes payable 30,899 28,589
Accounts Payable, Accrued expenses and
other Current Liabilities 164,746 169,933
Accrued officer compensation 133,868 133,868
Due to officer 31,146 52,847
Deferred Revenues 49,431 72,552
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477,124 539,606
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 for 2002 respectively 13,709 13,709
Additional paid-in capital 6,039,221 6,039,221
Accumulated deficit (6,120,758) (6,068,163)
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(67,828) (15,233)
$ 995,901 $ 1,110,978
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4
MULTI SOFT, INC
a 51.3% owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF OPERATIONS
Six and Three months ended July 31, 2002 and 2001
(Unaudited)
Six Months Ended Three Months Ended
July 31, July 31,
2002 2001 2002 2001
------------ ------------ ------------ ------------
REVENUES
License fees $ 16,252 $ 9,698 $ 11,556 $ 9,698
Maintenance fees 74,791 73,701 35,441 45,981
Consulting and Other fees 17,890 22,781 10,561 13,779
Consulting fees from Freetrek affiliate 42,000 87,750 21,000 50,250
------------ ------------ ------------ ------------
Total revenues 150,933 193,930 78,558 119,708
EXPENSES
Software development and technical support 78,141 160,005 39,022 76,627
Selling and administrative 164,437 220,286 64,430 96,192
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Total expenses 242,578 380,291 103,452 172,819
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(Loss) income from operations (91,645) (186,361) (24,894) (53,111)
OTHER INCOME
Administrative charges to Freetrek 39,050 58,340 16,050 38,400
------------ ------------ ------------ ------------
Net income (loss) ($ 52,595) ($ 128,021) ($ 8,844) ($ 14,711)
============ ============ ============ ============
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 $.01 per share
5
MULTI -SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
Six Months ended July 31, 2002 and July 31, 2001
(Unaudited)
July 31,
2002 2001
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Cash flows from operating activities
Net income (loss) ($ 52,595) $ (128,021)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 79,695 80,252
Changes in assets and liabilities
Due to / from Multi Solutions (7,551) (11,769)
Due to/ from Freetrek 76,716 (9,335)
Accounts receivable (13,093) 70,210
Prepaid expenses and other current assets (17,930) 5,329
Accrued payroll (14,783) 16,687
Payroll and other taxes payable 2,310 4,227
Accounts payable and accrued expenses (5,187) 92,554
Due to officer (21,701) --
Deferred revenues (23,121) (9,973)
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Net cash provided by operating
activities 2,760 110,161
Cash flows from investing activities
Capital expenditures -- (4,634)
Capitalized software development costs (5,967) (105,124)
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Net cash used in investing
activities (5,967) (109,758)
NET INCREASE (DECREASE) IN CASH (3,207) 403
Cash at beginning of year 3,207 --
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Cash at end of period $ -- $ 403
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6
6
MULTI SOFT, INC.
NOTE TO FINANCIAL STATEMENTS
July 31, 2002
(Unaudited)
RECLASSIFICATION OF REVENUE TO OTHER INCOME FROM ADMINISTRATIVE CHARGES
Rent and administrative fees charged to Freetrek, Inc., an affiliate, were
reflected on prior financial statements as "Revenue" on the Statement of
Operations. During the six and three months ended July 31, 2002, these fees have
been included in "Other Income" in the category "Other Income" on the Statement
of Operations. For purposes of comparison, the Statements of Operations for the
six and three months ended July 31, 2001 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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Six months ended July 31, 2002 compared to Six months ended July 31, 2001 and
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Three Months ended July 31, 2002 compared to Three months ended July 31, 2001
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We generated revenues during the six months ended July 31,2002, the first six
months of our fiscal year ending January 31, 2003, of $150,933 compared to
revenues of $193,930 during the first six months of fiscal 2002. We believe that
the decrease of $42,997, or approximately 22.2%, was due primarily to a decrease
in our consulting fees, primarily to our affiliate Freetrek, Inc., offset in
part by increases in license and maintenance fees. License fee revenue increased
from $9,698 in the first six months of fiscal 2002 to $16,252 during the first
six months of fiscal 2003. Maintenance fees increased $1,090, or approximately
1.5% and consulting and other fees, primarily to our affiliate Freetrek, Inc.,
decreased $50,641,or approximately 45.8%.
We generated revenues during the three months ended July 31, 2002, of $78,558
compared to revenues of $119,708 during the second quarter of fiscal 2002. We
believe that the decrease in revenues of $41,150, or approximately 34.4%, was
due primarily to a decrease in revenue from consulting fees, primarily to our
affiliate Freetrek, Inc, and maintenance fees, offset in part by an increase in
license fees.
Please note that we have included income derived from consulting and
administrative charges to our affiliate Freetrek, Inc. in the amount of $39,050
in "Other Income" for the six and three months ended July 31, 2002. Previously
this income was reported as "Revenues" in the Income Statement. We have restated
our Statement of Operations for the six and three months ended July 31, 2001 to
reflect this change.
8
Our principal sources of revenues were license fees and maintenance fees.
License and maintenance fees represented approximately $91,043 or 60.3% of
revenues for the six months ended July 31, 2002 and approximately $83,399 or
57.04% of revenues for the six months ended July 31, 2001. Consulting fees
represented approximately $31,561 or 40.2% of revenues for the three months
ended July 31, 2002 and approximately $64,029 or 53.4% of revenues for the three
months ended July 31, 2001.
We believe that the increase in licensing fees was due to increased software
sales within the quarter ended July 31, 2002. We believe that the increase in
maintenance fees was due to renewal of maintenance contracts by customers. We
believe that the decrease in consulting and other fees was due to a reduction in
charges for consulting fees to our affiliate Freetrek, Inc. This reduction in
consulting 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 $242,578 for the six months ended July 31, 2002
compared to $380,291 for the comparable six month period of fiscal 2002, a
decrease of $137,713 or approximately 36.2%. Our operating expenses for the
three months ended July 31, 2002 were $103,452 compared to $172,819 for the
comparable three months ended July 31, 2001, a decrease of $69,367 or
approximately 40.1%. We believe that the decrease was a result of both lower
levels of software development costs (principally related to development
services provided to Freetrek) as well as a reduction in selling and
administrative costs charged to operations for the six and three month period
ending July 31, 2002 compared to the period ending July 31, 2001. The reduction
in selling and administrative expenses were a direct result of our cost cutting
initiative. We moved our operations to smaller, less expensive premises saving
approximately $24,000 in rent for six months and $12,000 for three months. Our
utility bills in the new smaller space were substantially reduced. We cut our
staff, thereby reducing payrolls by approximately $23,000 for six months and
$11,000 for three months. Other overhead reductions aggregating $18,000 for the
six months and $9,000 for the three months resulted from cutbacks in marketing
expenditures and changes in our internet service provider.
As a result of all of the foregoing, we incurred a net loss for the first six
months of fiscal 2003 of $52,595 compared to a net loss of $128,021 for the
first six months of fiscal 2002, a decrease of $75,426. We incurred a net loss
of $8,844 for the three months ended July 31, 2002 compared to a net loss of
$14,711 for the three months ended July 31, 2001, a decrease of $5,867.
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 July 31, 2002, we had a negative working capital position of ($401,348)
compared to a negative working capital position of ($491,646) on January 31,
2002. 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, 2002 January 31, 2002
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Working capital
(deficiency) ($401,348) ($491,646)
Current ratios 0.16:1 0.09:1
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.
Date September 19, 2002 By: /s/ Charles J. Lombardo
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Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
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CERTIFICATIONS
Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section
302 of Sarbanes-Oxley Act of 2002:
I, Charles Lombardo, Chairman of the Board of Directors, Chief Executive
Officer, Chief Financial Officer and Treasurer of Multi Soft, Inc. (the
"Company") certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of Multi
Soft, Inc.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the Company as of, and for, the periods presented in this quarterly report.
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Charles Lombardo
Chief Executive Officer and
Chief Financial Officer
September 19, 2002
18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002:
In connection with the Quarterly Report of Multi Soft, Inc. (the "Company")
on Form 10-QSB for the period ending July 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Charles Lombardo,
Chief Executive Officer of the Company and Chief Financial Officer of the
Company, in both capacities, certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
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Charles Lombardo
Chief Executive Officer and
Chief Financial Officer
September 19, 2002
13