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, 1997
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, 1997
----------------------- --------------------------------
Common Stock, par value 18,266,898
$.001 per share
<PAGE>
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, 1997.
The financial statements are presented on a consolidated basis, with Multi
Soft, Inc a 55.4% owned subsidiary and NetCast, Inc a 75% owned subsidiary.
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 the Company's audited financial statements
at, and for the fiscal year ended, January 31, 1997.
The results reflected for the three and nine months ended October 31, 1997
are not necessarily indicative of the results for the entire fiscal year.
<PAGE>
MULTI SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
October 31, January 31,
1997 1997
(Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 48,150 $ 13,575
Accounts receivable (net of allowance
of $26,854 and $6,854 respectively) 85,487 18,571
Prepaid expenses and other current assets 38,486 13,532
----------- -----------
172,123 45,678
FURNITURE AND EQUIPMENT
Research and development equipment 62,611 14,603
Office furniture and other equipment 24,468 22,476
----------- -----------
87,079 37,079
Less: Accumulated Depreciation (13,499) (9,119)
----------- -----------
73,580 27,960
Capitalized Organizational costs 2,415 2,415
Less: Accumulated Amortization (363)
----------- -----------
2,052
OTHER ASSETS
Capitalized software development costs 2,059,726 1,852,822
Less accumulated amortization (1,351,844) (1,110,741)
----------- -----------
707,882 742,081
Intangibles 200 200
$ 955,837 $ 818,334
=========== ===========
<PAGE>
MULTI SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, January 31,
1997 1997
(Unaudited)
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Loan payable to bank $ 20,976 $ 25,497
Note Payable 12,026 15,504
Accrued payroll 51,656 --
Payroll and other taxes payable 28,050 38,070
Accounts Payable 179,057 164,902
Accrued officer compensation 212,221 103,349
Deferred Revenues 123,624 168,411
----------- -----------
627,610 515,733
Deferred compensation due officer/shareholders 631,605 631,605
STOCKHOLDERS' DEFICIENCY
Common stock,$.001 par value authorized
40,000,000 issued and outstanding:
18,266,898 and 18,016,898 respectivley 18,267 18,017
Additional paid-in capital net of deferred compensation, 8,643,184 8,592,434
Minority interest 63,358 87,092
Accumulated deficit (9,028,187) (9,026,547)
----------- -----------
(303,378) (329,004)
$ 955,837 $ 818,334
=========== ===========
</TABLE>
<PAGE>
MULTI SOLUTIONS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
October 31, October 31,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
License fees $ 162,409 $ 328,693 $ 77,495 $ 74,627
Maintenance fees 525,781 487,491 151,448 175,107
Consulting and other fees 83,629 48,204 33,784 30,446
------------ ------------ ------------ ------------
Total revenues 771,819 864,388 262,727 280,180
EXPENSES
Software development and technical support 236,670 256,866 80,123 85,622
Selling and administrative 540,843 627,173 168,700 214,079
------------ ------------ ------------ ------------
Total expenses 777,513 884,039 248,823 299,701
------------ ------------ ------------ ------------
Inome (Loss) from operations (5,694) (19,651) 13,904 (19,521)
OTHER EXPENSE
Interest Expense (1,923) (7,119) (632) (2,313)
Total other expense (7,119) (2,313)
NET INCOME (LOSS) $ (7,617) $ (26,770) $ 13,272 $ (21,834)
============ ============ ============ ============
Weighted average shares outstanding 18,072,451 17,844,398 18,266,898 17,844,398
============ ============ ============ ============
Loss per share NIL NIL NIL NIL
============ ============ ============ ============
</TABLE>
<PAGE>
MULTI -SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
-----------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (7,617) $ (26,770)
Adjustments to reconcile net Income (loss) to net cash
provided by operating activities
Depreciation and amortization 245,846 258,443
Changes in assets and liabilities
(Increase) decrease in accounts receivable (66,916) 14,705
Increase in prepaid expenses and other current assets (24,954) (3,500)
Increase (decrease) in accrued payroll 51,656 (30,285)
(Decrease) in payroll and other taxes payable (10,020) (24,592)
Decrease in Note Payable (3,479)
Increase (decrease) in accounts payable and accrued expenses 14,155 (27,669)
(Decrease) increase in accrued officer compensation 108,872 24,946
Increase in Deferred Compensation -- 18,750
Increase (decrease) in deferred revenues (44,787) (105,753)
Increase (decrease) in long term deferred revenues -- (8,022)
--------- ---------
Net cash provided by operating activities 262,756 90,253
Cash flows from investing activities
Capitalized Research & Developement (50,000) (220,304)
Capitalized software development costs (206,904) (270,400)
--------- ---------
Net cash used in investing activities (256,904) (490,704)
Cash flows from financing activities
Net repayments under loan and line of credit ageements (4,521) (11,840)
Decrease in Minority interest (17,756) 350,954
Issuance of Common Stock 51,000 3,750
--------- ---------
Net cash provided by (used ) In financing activities 28,723 342,864
NET INCREASE (DECREASE) IN CASH 34,575 (57,587)
Cash at beginning of year 13,575 89,575
Cash at end of year $ 48,150 $ 31,988
========= =========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Nine and three months ended October 31, 1997 compared to nine and three months
ended October 31, 1996
Revenues of $771,819 for the current nine months of fiscal year 1997
decreased $92,569 or 10.7% compared with the comparable period of the prior
year. Revenues of $262,727 for the three month period ending October 31, 1997
increased $17,453 compared with the comparable period of the prior year. The
decrease in revenues for the current nine month period is attributable to
advance royalty payments from a major customer that occured in the prior period
and did not reoccur in the current period.
Operating expenses as a percent of revenues for the nine month period was
101% compared with 102% for the comparable nine month period. Operating expense
as a percent of revenues for the current three month period was 95% compared
with 107% for the prior year. The decrease in operating expenses as a percent of
revenues over the current three months was primarily attributable to a
curtailment of legal, accounting and outside consulting fees.
Operating loss, before other income expense of $5,694 for the current nine
month period decreased $13,957 compared with the comparable period of the prior
year. For the current three month period operating income, before other expense
increased $33,425.
For the current nine month period, a net loss of $7,617 was incurred
compared with a net loss of $26,770 a decrease of $19,153. For the current three
month period a net income of $13,272 compared with net loss from the prior
period of $21,834 represents an increase of $35,106.
Multi Solutions issued 75,000 shares of common stock to certain parties in
lieu of indebtedness in the amount of $3,750. On August 18, 1997, Multi
Solutions sold 250,000 shares of its common stock to investors, all of whom were
accredited investors within the meaning of Rule 501 of Regulation D, for
$50,000. Based upon the limited nature of the offering and the accredited status
of the offerees, the offering qualifies for an exemption from registration under
section 4(2) of the Securities Act of 1933, as amended.
Major Customers
In the first nine months of 1997, IBM accounted for 26.5% of total
revenues. In the first nine months of 1996, IBM accounted
for 29.5% of total revenues.
<PAGE>
Liquidity and Capital Resources
At October 31, 1997, the Company had a negative working capital position of
$455,487 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 55.4% 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.
Multi Soft has entered into an International Software Licensing Agreement
with IBM which grants IBM the non-exclusive rights and license to market an
extended runtime version of Multi Soft's WCL product as an IBM logo product.
This IBM EXTENDED VERSION of Multi Soft's WCL is named IMS Client ServerTM for
Windows. It provides remote presentation support for IMS. Multi Soft and IBM
also have entered into International Marketing Agreements to market Multi Soft's
WCL Toolkit under the name IMS Client Server ToolkitTM for Windows in the United
States, Puerto Rico, the Asian Pacific Region, Europe, the Middle East Africa
and Canada.
In addition, in September 1994, Multi Soft entered into an International
Software Licensing Agreement with IBM's Personal Communications 3270 division
("P-Comm"). This agreement allows IBM to logo and market a P-Comm specific
version of both the Toolkit and Runtime of Multi Soft's WCLTM. Pursuant to this
agreement, the Company will receive a minimum maintenance of $15,000 per month
plus royalties.
In 1995 Multi Soft, Inc. entered a joint development and marketing
agreement with Bellcore to develop and Market a Sun Solaris Unix version of its
WCL product. The agreement provides that Bellcore pay Multi Soft for developing
an extension of its WCL product for the Sun Solaris Unix environment. Also, it
provides for a joint marketing agreement in which both companies will share
marketing royalties.
In 1997 Multi Soft, Inc. entered into a distribution agreement with
Bellcore to distribute licensed software for use by Bellcore licensees as part
of a Bellcore developed application called FEPS/TIRKS. The agreement provides
for three years of Software Upgrade fees to ensure version compatibility and
three years of maintenance and support.
It is Multi Soft'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 the Company
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.
<PAGE>
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.
Effect of Inflation
Management believes that inflation has not had a material effect on its
operations for the periods presented.
<PAGE>
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
<PAGE>
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.
Dated: December 12, 1996
By: /s/ Charles J. Lombardo
--------------------------------------------
Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> OCT-31-1997
<CASH> 48,150
<SECURITIES> 0
<RECEIVABLES> 112,341
<ALLOWANCES> 28,932
<INVENTORY> 0
<CURRENT-ASSETS> 172,123
<PP&E> 87,079
<DEPRECIATION> 13,499
<TOTAL-ASSETS> 955,837
<CURRENT-LIABILITIES> 627,610
<BONDS> 0
0
0
<COMMON> 18,267
<OTHER-SE> (303,378)
<TOTAL-LIABILITY-AND-EQUITY> 955,837
<SALES> 162,409
<TOTAL-REVENUES> 771,819
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 777,513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,923
<INCOME-PRETAX> (7,617)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,617)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
