SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended January 31, 1998 Commission File No. 0-12162
New Jersey 22-2418056
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
MULTI SOLUTIONS, INC
(Name of Small business issuer in its charter)
4262 US Route 1, Monmouth Junction, New Jersey 08852
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (732) 329-9200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 |_|
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.[X]
Issuer consolidated revenue for the fiscal year: $901,450.
The aggregate market value of the voting stock held by non-affiliates (1) of the
registrant based on the average ask ($.36) and ($.33) bid price of such stock,
as of April 21, 1998 is $4,120,418 based upon $.345 multiplied by the 11,943,241
Shares of Registrant's Common Stock held by non-affiliates.
The number of shares outstanding of each of the registrant's classes of common
stock, as of April 21, 1998, is 18,266,898 shares, all of one class of $.001 par
value Common Stock.
(1) Affiliates for purposes of this item refers to those persons who, during the
preceding 3 months, were officers, directors and/or owners of 5% or more of the
Company's outstanding stock.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
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MULTI SOLUTIONS, INC.
Form 10-KSB
Year Ended January 31, 1998
Table of Contents
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Page
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PART I....................................................................................................................3
Item 1. Business.........................................................................................................3
Item 2. Properties.......................................................................................................8
Item 3. Legal Proceedings................................................................................................8
Item 4. Submission of Matters to a Vote of Security Holders..............................................................8
PART II...................................................................................................................9
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters...........................................9
Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations..........................10
Item 7. Financial Statements............................................................................................12
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures...........................12
PART III.................................................................................................................13
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...............................................................13
Item 10. Executive Compensation..........................................................................................15
Item 11. Security Ownership of Certain Beneficial Owners and Management..................................................17
Item 12. Certain Relationships and Related Transactions..................................................................18
PART IV..................................................................................................................19
Item 13. Exhibits and Reports on Form 8-K................................................................................19
SIGNATURES...............................................................................................................21
Financial Statements.....................................................................................................F1
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PART I
Item 1. Business.
General
During the fiscal year ended January 31, 1998, Multi Solutions, Inc. (the
"Company" or "Multi Solutions") was relatively inactive, its primary activity
being the support of its subsidiary, Multi Soft, Inc. ("Multi Soft"). The
business of Multi Soft is discussed below.
BUSINESS OF MULTI SOFT
Multi Soft, Inc. (or "Multi Soft") was incorporated in January 1985 as a
wholly owned subsidiary of Multi Solutions, Inc. ("MSI") and, as of the date
hereof, is a 55.4% owned subsidiary of the Company. Multi Soft engages in the
production, marketing and maintenance of communications front-ending,
client-server and cooperative processing technologies called The Windows
Communications Library(TM) (WCL(TM)) for Windows and INFRONT and QuickFRONT For
DOS.
The Technology
The Multi Soft product line consists of tools for the development of
client-server applications using the mainframe as the Enterprise Server. There
are four key elements to the real world development, delivery and production
maintenance of these applications, and all are supported by the Multi Soft
product line. These include screen-based access to mainframe data and processes;
message-based access to mainframe data and processes; integration of
screen-based and message-based access to the mainframe in the same application;
and control and distribution management.
Screen-based access to Mainframe Data and Processes (which includes
front-ending) allows the user to enhance existing mainframe applications through
the integration of client technologies such as GUIs (graphical user interfaces),
imaging and local data, without changing any mainframe code. This allows
companies to leverage their PC capabilities to streamline user processes and for
presenting mainframe data to users in a way that is intuitive, easy to use and
productive. Screen-based access to the mainframe is supported by WCL, QuickFRONT
and INFRONT.
Message-based access to Mainframe Data and Processes allows companies to
create client-server applications, where the PC is used for the client portion
of the application (i.e., all user interaction, dialogue flow and access to
local data) and the mainframe is used for the server portion of the application
(i.e., management of database interaction, data integrity and security). In this
architecture, only data and messages are passed between the PC and host, which
results in a streamlined and optimized production application. Message-based
access to the mainframe is supported by WCL's WCL/Enterprise Server Option
("WCL/ESO"), and by INFRONT's and QuickFRONT's Host Processing Option ("HPO").
Integrity Control and Distribution Management allows companies to use the
mainframe system to centrally manage the integrity of the work station logic and
distribute new version releases. In production client-server applications it is
important to ensure that the programs, files and data residing on the PC are
correct before the user starts the application. When changes are made to the
work station logic, the host can also be used to manage the distribution of
these changes. Integrity control and distribution management is supported by
WCL's WCL/Software Distribution Option ("WCL/SDO") and by INFRONT's and
QuickFRONT's Software Distribution Facility ("SDF").
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The Multi Soft Product Line
The Multi Soft Product line consists of two product sets: the WCL product
set and the INFRONT/QuickFRONT product set. The WCL product set is an open
environment that runs under Windows and includes WCL, WCL/ESO and WCL/SDO. The
INFRONT and QuickFRONT product set is an integrated environment that runs under
DOS and Windows. It includes INFRONT, QuickFRONT, HPO and SDF.
WCL/COM(TM), is a new component based development tool slated for
production release in July 1998. It takes advantage of Microsoft's COM/DCOM
technology and will generate both components and complete applications, not just
applications as currently done by WCL. WCL/COM will allow you to build client
server applications today and use the same code for your Internet/Intranet
applications tomorrow. The components generated by WCL/COM that interface with
the mainframe can be used both by Visual Basic and the your Internet browsers,
on individual workstations or Windows NT servers, depending on the needs of your
application. Persistence and security are achieved through the use of
Microsoft's Internet Information Server (IIS) and Active Server Pages (ASP).
WCL is a toolkit and a set of DLLs (Dynamic Linked Libraries) that work in
conjunction with Windows 3270 emulation products to provide easy integration of
data and processing between PC/LANs (local area networks) and the mainframe.
Because WCL is open, any of the standard Windows development tools such as
PowerBuilder, Visual Basic, and C++, can be used with WCL to create the client
application. It supports the development of GUI front-ends, client-server
applications that use the mainframe as a server and integrity control and
distribution management. The WCL toolkit provides an automated development
environment that includes, among other things, a screen capture mechanism, a
screen maintenance and a screen matching facility. In addition, it provides code
generation to remove the complexity and development effort associated with
building GUI front-end applications. Multi Soft also has a 32 bit version of its
WCL product for Windows 95 and Windows NT.
DynaGUI is an automted sub product of WCL which can be sold as a
stand-alone application tool. DynaGUI (Dynamic Graphical User Interface
generation) is a fully automatic runtime utility which dynamically converts 3270
or 5250 legacy emulation screens into Windows GUI screens, with absolutely no
programming or maintenance. It uses advanced pattern recognition to interpret
host attributes and automatically converts them into Windows controls. And, it
allows a non-programmer to quickly and easily add screen & field-level help in
minutes.
WCL/ESO is the host component to WCL and provides a message-based transport
layer between client PC/LANs and the mainframe. The client application is
created using any of the standard Windows tools and products, and the server
application is created using a standard language, such as COBOL. Any mainframe
file structure or database, such as VSAM, DB2, or IMS, can be accessed using
WCL/ESO through CICS (an IBM mainframe operating environment). Client-server
applications developed using WCL/ESO have the added advantage of using a
company's existing mainframe skills and infrastructure, including security, data
integrity, backup and recovery and disaster recovery.
WCL/SDO is a WCL/ESO application created for the centralized control and
management of application code, data and software for distributed client-server
applications. It allows companies to control, audit and distribute from central
host-based master libraries to distributed PCs. These PCs can be clients and/or
servers. WCL/SDO is used as a verification mechanism to ensure all files, and
appropriate versions of files are present on a PC or in a host library. It will
automatically update the PC or Host with correct versions of files if any are
found to be missing or invalid. This facility is important for the successful
production management of large-scale distributed applications.
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QuickFRONT is a powerful, but easy to use, tool which offers the ability to
rapidly improve existing mainframe applications by creating new PC-based
interfaces for them. This can be accomplished without programming, without
training, without any significant learning curve and without any changes to the
mainframe code. If the user needs special functions that are not generated
automatically through QuickFRONT's dialogues, the user also has access to a
powerful 4GL (fourth generation language) called CPL/1. QuickFRONT is designed
to give the user the maximum benefit from front-ending with maximum investment
from both a development resource and software expenditure standpoint.
INFRONT is a comprehensive and integrated development environment for
building PC front-ends and client-server applications with the mainframe. The
development environment includes: an intelligent forms subsystem with screen
capture, screen painting, editing and validation assignment facilities, data
dictionary; a 4GL; an intelligent editor with language templates and reusable
code library; a PC-resident database, including database maintenance facilities
such as sorting and reorganizing; sophisticated debugging facilities, including
a source-level language debugger, and other utilities such as code libraries and
forms libraries.
HPO (Host Processing Option) is the host component to QuickFRONT and
INFRONT that supports the development of client-server applications using the
mainframe as a server. HPO is also used to incrementally migrate legacy systems
into a client-server architecture. It uses a message-based protocol for
peer-to-peer interaction between PC/LANs and host systems. HPO delivers the
capabilities of APPC and LU6.2 (communications protocols) over the user's
existing LU2 and asynchronous networks without requiring any upgrades. HPO
allows the user to offload 60% to 80% of an application's logic to the client,
thereby reducing the mainframe to the role of a server.
SDF (Software Distribution Facility) is a client-server application based
on HPO. It is a utility for the centralized, host-based management of work
station integrity and the automated distribution of updates and new versions of
PC software, files and data. With SDF a master production library of all PC
programs, files and data is stored on the host. As a user logs on to the system,
SDF can automatically check to see if the programs, files and data on the work
station are correct according to the master library on the host. If they are not
correct, SDF will automatically download the correct versions before the
application is started. If they are correct, the application proceeds
immediately.
Key Services
Multi Soft offers training and consulting services designed to help its new
customers get a fast start in client\server development and to help existing
customers with additional resources to facilitate successful production
application roll-outs.
Training Services include basic and advanced product training, as well as
courses such as "Design and Development Methodologies," which covers the major
issues companies need to understand for successfully developing applications
running on distributed platforms.
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Consulting Services range from human factors design and project management
to assisting licensees with application development and/or the development of
complete applications.
Technical Support Services include a telephone hotline, fax, email, and
Internet support, staffed by knowledgeable personnel trained and experienced
with the Multi Soft product line. Amortization of software over the last two
years were $258,582 in fiscal 1998 and $344,588 in 1997.
Clients
Multi Soft's past and current client base spans over 40,000 users
throughout approximately 125 Fortune 500 companies. Customers that have licensed
Multi Soft's products include: American Cyanamid, Bell Atlantic, ITT Hartford,
Honda, Con Edison, Hoescht, American International Group, Ciba Geigy, Comdisco,
EDS, Exxon, General Electric, Hilton, Lever Brothers, Teachers Insurance,
Chicago Northwestern and US West Business.
In-House Marketing and Sales
In addition to their management responsibilities, Charles Lombardo and
Miriam Jarney also are active in sales and marketing. At present, in-house sales
are generally made through telemarketing. If Multi Soft obtains additional funds
from operations or otherwise, it plans to further market its products through
advertisements in trade publications and targeted mailings. No assurance can be
given that Multi Soft will have sufficient funds to increase its in-house sales
and marketing activities.
Distributors
To supplement its domestic sales and marketing efforts, Multi Soft has
built an international distribution network. Business arrangements have been
established with software distributors in European markets. These organizations
include: SEE Software Engineering (Switzerland) and Software Engineering
(Holland, Germany, UK).
Strategic Alliances
Multi Soft has established strategic relationships with complementary
hardware and software vendors. Most notable among these are the relationships
with IBM (see "IBM" below) and Computer Data Systems, Inc. ("CDSI"). CDSI, a
supplier of financial systems and consulting services to the government market
place, licenses Multi Soft products into its existing customer base and to new
clients.
IBM
In October 1993, Multi Soft entered into a Software Licensing Agreement
("SLA") and other ancillary agreements with IBM Corporation ("IBM") providing
IBM with certain exclusive marketing rights for Multi Soft's flagship product,
WCL (runtime version) with IBM IMS Extensions. This IBM EXTENDED VERSION of
Multi Soft's WCL is named IMS Client Server(TM) for Windows. Specifically
modified for use with IBM mainframe systems, IMS Client Server(TM) for Windows
provides remote presentation support for IMS.
The IBM agreement, effective for a term of seven years with automatic
renewals for two more one year periods, provides for the payment of percentage
royalties and unit royalties as specified in the agreement. The Agreement is
terminable by IBM upon 90 days notice. Multi Soft has been receiving monthly
maintenance from the above contract.
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Multi Soft and IBM also have entered into International Marketing
Agreements to market Multi Soft's WCL Toolkit under the name IMS Client Server
Toolkit(TM) for Windows in the United States, Puerto Rico, the Asian Pacific
Region, Europe, the Middle East, Africa and Canada. IMS Client Server
Toolkit(TM) facilitates the generation of client application which run with IMS
Client Server(TM) for Windows.
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 WCL. Pursuant to this
agreement, Multi Soft will receive a minimum of $75,000 per quarter over a two
year period representing minimum advances against royalties. This IBM agreement
is effective for a term of two years and is renewable by IBM for two more one
year periods. The Agreement is terminable by Multi Soft or IBM upon 90 days
notice in the event of a default by the other party. The contract has been
renewed for two years paying Multi Soft a minimum monthly maintenance and
royalty fees. As of the date of this filing, the above contract remains in
effect.
Management believes, but cannot assure, that these marketing and
distribution agreements will provide Multi Soft with a significant presence in
the marketplace, enhance the visibility and credibility of Multi Soft, and
result in increased sales of Multi Soft's products by Multi Soft and its
existing distributors.
Since fiscal 1994, IBM has represented a significant percentage of Multi Soft's
revenues See "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations".
Bellcore
In 1995 Multi Soft, 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 to the Sun Solaris Unix environment. Also, it
provides for a joint marketing agreement in which both companies will share
marketing royalties. Multi Soft received maintenance for the above contract
during fiscal 1997. During fiscal 1998, Multi Soft did not receive maintenance
fees from this contract.
Employees
The Company only has two employees, its officers: Charles J. Lombardo and
Miriam Jarney. Employees of Multi Soft devote such time as is necessary to the
Company's business. Multi Soft has twelve employees and consultants, including
two officers, three support personnel, four technical and engineering, and three
administrative/secretarial personnel.
Competition
Multi Soft operates in a business composed of strong competitors, many of
whom have substantially greater resources, are better established, and have a
longer history of operations than Multi Soft. In addition, many competitors have
more extensive facilities than those which now or in the foreseeable future will
become available to Multi Soft.
Multi Soft competes directly with computer manufacturers, large computer
service companies and independent software suppliers. Multi Soft believes that
hundreds of firms that manufacture software applications products are
significant competitors, and Multi Soft is one of the smaller entities in the
field.
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Multi Soft's products provide front-ending, client-server and cooperative
processing technologies which Multi Soft believes represent a advance over other
products being marketed.
NetCast, Inc. is a subsidiary company and was incorporated in April of
1996. It is in the business of developing new Internet technologies to create a
series of products and businesses that will extend the power of advertising on
the Internet. The Company currently owns 75% of NetCast. Multi Soft provides
services and office space to NetCast at cost for which it has billed
approximately $155,251. The Board of Directors consists of two officers, Charles
Lombardo and Miriam Jarney. NetCast is in the process of raising private funding
for its operations. However, no assurance can be made that it will obtain the
funding necessary to bring its software to the marketplace.
Item 2. Properties
The Company uses Multi Soft's facilities, at no charge, consisting of
approximately 3,300 square feet of office space at 4262 US Route 1, Monmouth
Junction, New Jersey 08852, which Multi Soft leases from C&S Consulting, Inc., a
company owned by Multi Soft's Chairman and his wife. C&S Consulting, Inc. leases
the space from an unaffiliated party. The lease commenced on December 1, 1993
and is terminable at any time on three months notice. Monthly rent is $3,750
during the first year, $4,250 during the second year, $4,750 during the third
year and $4,950 during the fourth year, and $5,200 during the fifth year. Multi
Soft is responsible for all utilities.
Item 3. Legal Proceedings.
The Company is not presently a party to any material litigation. However,
The Company and Multi Soft have been, from time to time, parties to legal
actions arising in the normal course of their business. In the opinion of
management, the disposition of these actions will not have a material effect on
the financial position or results of operations of The Company taken as a whole.
In May 1997, a lawsuit was commenced against NetCast in the Superior Court
of New Jersey by former consultants for approximately $113,000 for services
rendered. The Company has accrued $24,000 for services rendered prior to
commencement of the action. The Company contests the claim and contends that no
services were rendered nor product delivered. Also, The Company intends to
vigorously defend the lawsuit and has made counterclaims.
Tax Liens
Certain State taxes, interest, and penalties aggregating $33,000 remained
unpaid at January 31, 1998. In March 1998, approximately $21,000 of the unpaid
amount was paid in connection with a settlement agreement leaving approximately
$12,000 unpaid.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Security Holders in the last quarter
of the Company's fiscal year ended January 31, 1998.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) Market Information -- The Company's Common Stock, Class A Warrants (for
one share of Common Stock and one Class B Warrant), Class B Warrants (for one
share of Common Stock), and Class C Redeemable Warrants (for one share of Common
Stock) are traded in the over-the-counter market, and are quoted on The OTC
Bulletin Board (symbol: "MULT").
The following tables set forth the range of high and low bid prices for the
Company's Common Stock on a quarterly basis for the past two fiscal years as
reported by the National Quotation Bureau (which reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not necessarily
represent actual transactions). The Warrants are unpriced.
Bid Prices
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Period - Fiscal Year 1997 High Low
-------------------------------------------- ------------------------
First Quarter ending April 30, 1996 .38 .35
Second Quarter ending July 31, 1996 .39 .27
Third Quarter ending October 31, 1996 .26 .25
Fourth Quarter ending January 31, 1997 .18 .15
Period - Fiscal Year 1997 High Low
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First Quarter ending April 30, 1997 .245 .10
Second Quarter ending July 31, 1997 .35 .10
Third Quarter ending October 31, 1997 .35 .13
Fourth Quarter ending January 31, 1998 .13 .055
(b) Holders -- There were approximately 823 holders of record of the
Company's Common Stock, 186 holders of record of the Class A Warrants, 1 holder
of record of the Class B Warrants and 50 holders of record of the Class C
Warrants as of March 9, 1998, inclusive of those brokerage firms and/or clearing
houses holding the Company's securities for their clientele (with each such
brokerage house and/or clearing house being considered as one holder).
(c) Dividends -- The Company has not paid or declared any dividends upon
its Common Stock since its inception and, by reason of its present financial
status and its contemplated financial requirements, does not contemplate or
anticipate paying any dividends upon its Common Stock in the foreseeable future.
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Issuances of Common Stock
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Name Date Number
of Securities Issued
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Charles J. Lombardo 1/16/96 1,000,000
- -------------------------------- ----------------------------- -----------------------------
Miriam G. Jarney 1/16/96 1,000,000
- -------------------------------- ----------------------------- -----------------------------
Michael Zindler 4/2/96 25,000
- -------------------------------- ----------------------------- -----------------------------
John Lowy 4/2/96 75,000
- -------------------------------- ----------------------------- -----------------------------
Linda Dorrian 5/6/96 20,000
- -------------------------------- ----------------------------- -----------------------------
Kip R. Marshall 9/9/97 50,000
- -------------------------------- ----------------------------- -----------------------------
Scott F. Orton 9/9/97 50,000
- -------------------------------- ----------------------------- -----------------------------
Bernard M. Deutsch 9/9/97 50,000
- -------------------------------- ----------------------------- -----------------------------
Jerome Feldman 9/9/97 100,000
- -------------------------------- ----------------------------- -----------------------------
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Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Fiscal Year Ended January 31, 1998 Compared to Fiscal Year Ended January
31, 1997
Revenues for the fiscal year ended January 31, 1998 were $901,450 as
compared to $1,065,135 in fiscal year 1997, a decrease of $163,645 (15%). This
decrease is primarily due to a 47% decrease in revenues from license fees from
$356,494 to $243,146, much of which come from the companies largest customers.
Primary reason for this decrease is that there were no royalty advances paid to
Multi Soft during this fiscal year.
In fiscal 1998 and 1997, Multi Soft's two principal sources of revenues
were license fees and maintenance fees which represented approximately 98.5%
($888,411) and 98.1% ($1,045,186) percent of revenues, respectively.
Management believes that the decrease in maintenance fees during the year
ended January 31, 1998 is due to the cancellation of maintenance contracts with
customers. Also, since November, 1996 the minimum maintenance has been $15,000
per month from IBM.
Operating expenses decreased 22% from fiscal 1997 ($1,162,470) to fiscal
1998 ($895,749) primarily as a result of a decrease in software development
costs. The decrease in software development costs is principally due to a new
product that was capitalized in fiscal 1998 but remained unamortized because it
was not ready for sale.
Other income (expenses) changed from $101,244 in fiscal 1997 to ($804) in
fiscal 1998. Also, for fiscal 1997, $30,000 included in other income consists of
forgone deferred compensation by an officer of the company. Also, $55,349 of
other income in fiscal 1997 consists of rent revenue and consulting fees.
As a result of the foregoing, Multi Solution's earned net income in fiscal
1998 of $4,897 compared to its net income in 1997 of $3,909.
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Major Customers
In fiscal 1998, IBM accounted for 29% of total revenues. In fiscal 1997,
IBM accounted for 29% of total revenues.
Liquidity and Capital Resources
At January 31, 1998, the Company had a working capital deficiency of
($483,700) and has experienced cash flow problems.
Management of Multi Soft continues to take 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, Multi Soft broadened its product base into the
Windows environment and has made its Windows based products easier to learn and
use.
It is Multi Soft's intent to remain a technology provider and search out
multiple distribution channels, with increasing focus on the use of the
Internet, 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 Multi Soft 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. (See "Item
1. Business - In-House Marketing and Sales").
Working Capital and Current Ratios were:
Descriptions January 31, 1998 January 31, 1997
-----------------------------------------------------------------------
Working capital (deficiency) ($483,700) ($470,055)
Current ratios .18:1 .088:1
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.
Year 2000
Many companies systems experience problems handling dates beyond the year
1999. The Company's products are not directly impacted by this problem.
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In particular, Year 2000 issues are transparent to WCL. WCL simply transports
data between the 3270/5250 presentation space and the client application. WCL
does no formatting of any data, including dates. This is handled by the client
development tool, such as VB, PB, and VC++. Therefore, Year 2000 issues must be
addressed by these development tools, not WCL.
In addition, The Company's INFRONT and QuickFRONT products have built in support
for Year 2000. Any date functions in use within an INFRONT or QuickFRONT
application that use 4 positions for the year will automatically handle Year
2000 with no changes.
For date functions that use 2 positions for the year, SETUPSL command can be
used to handle the Year 2000.
Effect of Inflation
Management believes that inflation has not had a material effect on its
operations for the periods presented.
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Cautionary Statement
This Form 10-KSB contains certain forward-looking statements regarding,
among other things, the anticipated financial and operating results of the
Company and it's subsidiaries. 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 or its subsidiaries 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 its subsidiaries, include Multi Soft'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 (v) reverse ongoing liquidity and cash flow
problems.
Item 7. Financial Statements.
The following financial statements have been prepared in accordance with
the requirements of Item 310(a) of Regulation S-B.
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEAR ENDED January 31, 1998
INDEX
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Page #
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Report of Independent Certified Public Accountant F1
Consolidated Balance Sheets - January 31, 1998 and 1997 F2, F3
Consolidated Statements of Operations for Each of the Years in the Period Ended
January 31, 1998 F4
Consolidated Statements of Changes in Stockholders' Deficiency for Each of the Two
Years in the Period Ended January 31, 1998 F5
Consolidated Statements of Cash Flows for Each of the Two Years in the Period Ended
January 31, 1998 F6
Notes to Financial Statements F7 - F14
</TABLE>
Schedules
All schedules of the Company have been omitted because they are
inapplicable or not required, or the information is included elsewhere in the
financial statements or notes thereto.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None
13
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
<TABLE>
<CAPTION>
Name Position(s) Held
- ---- ----------------
<S> <C>
Charles J. Lombardo Chairman of the Board of Directors, Chief Executive Officer,
Chief Financial Officer and Treasurer
Miriam G. Jarney Executive Vice President, Secretary and Director
Larry Spatz Director
George Mansur Jr. Director
James J. Kaput, PhD. Director
</TABLE>
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and have qualified.
A summary of the business experience for each officer and director of the
Company is as follows:
CHARLES J. LOMBARDO, age 55, has been the Company's Chairman of the Board
of Directors since January 1985 and has been the Company's Chief Executive
Officer, Chief Financial Officer and Secretary-Treasurer since December 1988. He
has been Multi Soft's Chief Executive Officer, Chief Financial Officer and
Treasurer since August 1982. From 1972 to 1993, Mr. Lombardo also served as the
President of Petro-Art, Ltd., an inactive publicly owned company and its wholly
owned subsidiary JCT Enterprises, Inc. Mr. Lombardo was President of Hopewell
Graphic Industries from 1969 through 1971 and from 1967 to 1969 was associated
with Keystone Computer Associates as a staff member in the Physics Section of
the Systems Analysis Department. From 1965 to 1967, Mr. Lombardo served as a
scientist in the Plasma Physics Department of Raytheon Space and Information
Systems Division. Mr. Lombardo has a Bachelor of Science degree in Physics from
Worcester Polytechnic Institute (1964), a Master of Science degree in Physics
from Northeastern University (1966) and has continued studies toward a Ph.D. in
Theoretical Physics. Mr. Lombardo is a Member of the American Physical Society,
The American Mathematical Society, The Society for Industrial and Applied
Mathematics, The American Association of Physics Teachers, and the Philosophy of
Science Association.
MIRIAM G. JARNEY, age 57, has been a Director of the Company since January
1985, Executive Vice President of the Company since 1986 of the Company since
December 1988. She has been Executive Vice President, Secretary and a Director
of MSI since January 1982. From 1973 to February 1982, Ms. Jarney was a
marketing representative for National CSS, Inc., a computer services company
that has since been acquired by Dun & Cst, Inc. From 1972 through 1973, Ms.
Jarney was associated with Mathematica, Inc., which originated a Data Base
Management System called RAMIS, for which National CSS has exclusive marketing
rights. Ms. Jarney has also worked as a computer systems analyst for Western
Electric Company and Exxon Corporation. She graduated from the Hebrew University
in Jerusalem with a degree in Economics and Statistics and has a Master's degree
in Computer Science from Stevens Institute of Technology. In February 1982, Ms.
Jarney started her own company, Dedicated
14
<PAGE>
Systems, Inc., for the purpose of packaging computer software for the
microprocessor market, which company is inactive.
LARRY SPATZ, age 54, as been a director of the Company since May 12, 1986,
and a director of Multi Solutions since July 14, 1989. He has been Chief
Executive Officer and Chairman of the Board of Heartthrob Enterprises, Inc., a
restaurant and night club management and development company since September
1985. From 1982 to 1984, Mr. Spatz was President of Universal Petroleum, Inc.
From 1979 to 1982, he was Vice President and a director of Mercantile Trading
Company. Mr. Spatz is also a director of Centrex Communications Systems, Inc.
and Ultramed, Inc.
GEORGE MANSUR, JR., age 68, has been a Director of the Company since March
1982. Since March, 1984, Mr. Mansur has also been Chairman of ALG Corp. and
Chairman of Auto Loan Guarantee Company, as well as President of National
Benefit Services Corp. and Executive Vice President of Benefit Services Group,
Ltd. Since January 1981, Mr. Mansur has been an officer of Petro-Art Ltd., an
inactive publicly owned New Jersey corporation. From 1971 to 1976, he was
President of Benefit Communications, Corp. From 1977 to 1978, he was marketing
director of Commercial Credit Corp., and in 1979 and 1980, he was an officer of
Coronet Graphics, Ltd. and Agri Parogram, Ltd. Mr. Mansur is a Charter Member of
the International Association of Financial Planners.
DR. JAMES J. KAPUT, age 57, a Director of the Company since July 14, 1989,
has been a Professor of Mathematics at Southern Massachusetts University since
1968. Since 1986, he has also been a Research Associate at Harvard University.
Dr. Kaput received a B.S. Degree in Mathematics from Worcester Polytechnice
Institute in 1964 and a Ph.D in Mathematics from Clark University in 1968.
Section 16(a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on a review of such materials as
are required by the Securities and Exchange Commission, no officer, director or
beneficial holder of more than ten percent of the Company's issued and
outstanding shares of Common Stock failed to timely file with the Securities and
Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year
ended January 31, 1998.
15
<PAGE>
Item 10. Executive Compensation.
The following table shows all the cash compensation paid or to be paid by
the Company and Multi Soft, as well as certain other compensation paid or
accrued, during the fiscal years indicated, to the Chief Executive Officer and
Executive Vice President (collectively, "Principal Officers") for such period in
all capacities in which they served. No other Executive Officer received total
annual salary and bonus in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
============================================================================================================================
Annual Compensation Long Term Compensation
- ------------------------------------------------------------------- --------------------------------------------------------
Awards Payouts
=================================================================== ========================================================
Name & Fiscal Salary ($) Bonus ($) Other Annual Restricted Options SARs LTIP All Other
Principle Year Compensation Stock Award Payouts ($) Compensation
Position ($) ($) ($)
- --------------- --------- -------------- ---------- --------------- -------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles J. 1998 (A)$ 60,000 $0 (C)$40,493 $0 $0 $0 $0
Lombardo CEO 1997 $ 80,000 $0 $20,000 $0 $0 $0 $0
1996 $129,505 $0 $36,750 $0 $0 $0 $0
1994 $128,470 $0 $0 $0 $0 $0 $0
1993 $145,354 $0 $43,937 $0 $0 $0 $0
- --------------- --------- -------------- ---------- --------------- -------------- ------------- ------------ --------------
- --------------- --------- -------------- ---------- --------------- -------------- ------------- ------------ --------------
Miriam Jarney 1998 (B)$ 60,000 $0 $0 $0 $0 $0 $0
Exec. V.P. 1997 $ 80,000 $0 $0 $0 $0 $0 $0
1996 $98,491 $0 $0 $0 $0 $0 $0
1994 $98,559 $0 $0 $0 $0 $0 $0
1993 $107,247 $0 $4,991 $0 $0 $0 $0
============== ========== ============== ========== =============== ============== ============= ============ ==============
(A) Accrued and unpaid to Charles Lombardo $39,167 for 1998 and $60,548 for prior year.
(B) Accrued and unpaid to Miriam Jarney $10,000 for 1998 and $43,342 for prior year.
(C) Consulting Fees
</TABLE>
The following table sets forth information with respect to the Principal
Officers concerning the grants of options and Stock Appreciation Rights ("SAR")
during the past fiscal year:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
=============================== ==================== ================================== ================= ===============
Name Options/SARs Percent of Total Options/SARs Exercise or Expiration
Granted Granted to Employees in Fiscal Base Price Date
Year ($/Sh)
=============================== ==================== ================================== ================= ===============
<S> <C> <C> <C> <C>
Charles J. Lombardo -0- - - -
- ------------------------------- -------------------- ---------------------------------- ----------------- ---------------
Miriam Jarney -0- - - -
=============================== ==================== ================================== ================= ===============
</TABLE>
16
<PAGE>
The following table sets forth information with respect to the Principal
Officers concerning exercise of options during the last fiscal year and
unexercised options and SARs held as of the end of the fiscal year:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Values
=============================== ================ ========================= ======================== =====================
Number of Securities Value of
Underlying Unexercised
Shares Unexercised In-The-Money
Acquired on Options/SARs at Options/SARs at
Name Exercise (#) Value Realized ($) FY-End (#) FY-End ($)
=============================== ================ ========================= ======================== =====================
<S> <C> <C> <C> <C>
Charles J. Lombardo -0- -0- -0- -0-
- ------------------------------- ---------------- ------------------------- ------------------------ ---------------------
Miriam Jarney -0- -0- -0- -0-
=============================== ================ ========================= ======================== =====================
</TABLE>
Directors' Compensation
Directors are not compensated for acting in their capacity as Directors.
Directors are reimbursed for their accountable expenses incurred in attending
meetings and conducting their duties.
Employment Agreements
On July 14, 1989, Multi Soft entered into a five-year employment agreement
with its Chairman of the Board and Chief Executive Officer, Charles J. Lombardo,
which may be renewed for successive periods unless terminated by Multi Soft on
twelve months notice or by Mr. Lombardo on six months notice. Mr. Lombardo is
the Chairman of the Board, Chief Executive Officer, Chief Financial Officer and
Treasurer of the Company. The agreement contains non-disclosure provisions and a
one year restrictive covenant preventing Mr. Lombardo from becoming employed by
a similar company in any state or country in which Multi Soft does business, or
engaging in a competitive business for his own account. Mr. Lombardo is entitled
to annual salary increases of at least 10%, plus additional annual compensation
equal to 2% of Multi Soft's after tax profits. The employment agreement has been
renewed for an additional year on an annual basis.
Mr. Lombardo also is entitled to a salary from the Company of $25,000 per
year, which he agreed to forego for fiscal 1997 and 1998. Through the end of the
company's fiscal year ended January 31, 1994, the company owed Mr. Lombardo
$98,946 in accrued salary. In July 1994 the company authorized the issuance of
549,700 shares of common stock to Mr. Lombardo in lieu of foregoing accrued
salary.
On August 1, 1989, Multi Soft entered into a five-year employment agreement
with Miriam Jarney, Executive Vice-President and a Director of both Multi Soft
and the Company, which may be renewed for additional periods, unless terminated
by Multi Soft on twelve months notice or Ms. Jarney on six months notice. Ms.
Jarney is entitled to annual salary increases of at least 10%, plus additional
annual compensation equal to 1.5% of Multi Soft 's after tax profits. The
agreement also contains non-disclosure provisions and a one year restrictive
covenant preventing Ms. Jarney from becoming employed by a similar company in
any state or country in which Multi Soft does business, or engaging in any
competitive business for her own account. The employment agreement has been
renewed for an additional year on an annual basis.
In January of 1996, the Company issued 1,000,000 shares of common stock to
Mrs. Jarney for accrued salary of Multi Soft.
17
<PAGE>
During fiscal 1997 and fiscal 1998, Mr. Lombardo and Ms. Jarney accrued a
portion of their salaries. The balance due between both officers as of January
31, 1998 is $784,660 including deferred increases of $631,605.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Management -- The number and percentage of Shares of
Common Stock of the Company owned of record and beneficially by each owner of 5%
or more of the common stock, officer and director of the Company and by all
officers and directors of the Company as a group are set forth on the chart
below.
<TABLE>
<CAPTION>
================================================================ ============================= =============================
Name and Address of Beneficial Owner Amount and Nature of Percent of Class (1)
Beneficial
Ownership
================================================================ ============================= =============================
<S> <C> <C>
Charles J. Lombardo 4,212,414(2) 23.06%
Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, & Treasurer
1511 Laurie Lane, Yardley, PA 19067
- ---------------------------------------------------------------- ----------------------------- -----------------------------
Miriam G. Jarney 2,094,100(3) 11.46%
Executive Vice President, Secretary, Director
21 Doering Way, Cranford, NJ 07106
- ---------------------------------------------------------------- ----------------------------- -----------------------------
Larry Spatz 0 (4) 0.0%
Director
3175 Commercial Ave., Suite 222
Northbrook, IL 60062
- ---------------------------------------------------------------- ----------------------------- -----------------------------
James J. Kaput, PhD. 10,000 **
Director
473 Chase Road, N. Dartmouth, MA 02747
- ---------------------------------------------------------------- ----------------------------- -----------------------------
George E. Mansur, Jr. 7,143 **
Director
1413 State Rd., Phoenixville, PA 19460
- ---------------------------------------------------------------- ----------------------------- -----------------------------
All Executive Officers and Directors as a group 6,323,657(4) 34.61%
(5 persons)
================================================================ ============================= =============================
</TABLE>
** Less than one percent.
(1) Based upon 18,266,898 shares of common stock outstanding on April 29, 1998.
(2) Includes shares held by Mr. Lombardo's wife and shares owned jointly with
his wife. Also includes 1,000,000 shares issued to Mr. Lombardo in 1996
(See "Item 10. Executive Compensation").
(3) Includes 19,100 shares owned by Ms. Jarney's husband.
(4) Excludes shares owned beneficially by a family trust of which Mr. Spatz'
wife is one of the beneficiaries. Mr. Spatz has confirmed to the Company
that neither he nor his wife has any voting or dispositive power with
regard to the shares owned by the trust.
18
<PAGE>
Item 12. Certain Relationships and Related Transactions.
Multi Soft has a demand loan with a commercial bank. Borrowings are
collateralized Multi Soft`s accounts receivable and bear interest at the bank's
prime rate plus 2% (10.50% at January 31, 1998). The Company was in default on
this loan. Multi Soft obtained a forbearance from the bank in November 1993
requiring an initial $20,000 payment and monthly payments of $1,500 of principal
and interest and the personal guarantee of the Company's Chairman. As of
February 11, 1998 Multi Soft obtained a new loan in order to pay the existing
loan. As a result, the loan is no longer in default. As of this date, Multi Soft
is in compliance with the terms of the new loan and owes approximately $16,338.
During 1998 and 1997, the maximum amount of borrowings outstanding were $25,500
and $41,000, respectively.
Although there is no written agreement between Multi Solutions, and Multi
Soft granting Multi Solutions preemptive rights with regard to Multi Solutions
majority ownership of Multi Soft common stock, in practice, MSI has and plans to
continue to acquire sufficient shares of Multi Soft's common stock to assure its
majority ownership in Multi Soft.
In January 1996, Multi Soft issued 1,500,000 shares of its common stock to the
Company. The transaction was valued at $.22 per share ($330,000) for which Multi
Solutions issued a note. In connection with this transaction, Multi Soft paid
for the acquisition of 1,000,000 each of the Company's common shares (valued at
$0.08 per share) to the chairman and vice president by allowing the indebtedness
of the Company to Multi Soft to be reduced by $160,000 which thereby reduced the
debt of Multi Soft to the two officers by the same amount. After completion of
this series of transactions, the net debt due to Multi Soft in connection with
the common stock sale was reduced to $170,000.
During fiscal 1996, the company issued 1,000,000 shares to each Charles
Lombardo and Miriam Jarney, to pay accrued salary of Multi Soft and reducing
debts of the company to Multi Soft. The balance due for accrued salaries between
both officers as of January 31, 1998 is $784,660 including deferred increases of
$631,605.
Multi Soft subleases its office space from C&S Consulting, Inc., a company
owned by the Company's Chairman and his wife (see "Item 2. Properties").
19
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
Exhibits
- --------
3.a Certificate of Incorporation of the Company(1)
3.b By-Laws of the Company(1)
4.a Specimen Common Stock of the Company (1)
4.b Class A Warrant(1)
4.c Class B Warrant(1)
4.d Class C Warrant(4)
10.a Company Employment Agreement with Charles J. Lombardo(5)*
10.b Multi Soft Employment Agreement with Charles J. Lombardo(5)*
10.c Multi Soft Employment Agreement with Miriam G. Jarney(5)*
10.d Licensing Agreement with Widow, Inc.(6)
10.e Agreements with IBM(2)
10.f Copy of MSI's Non-Qualified Stock Option Plan, Stock Grant
Program and Employee Incentive Stock Option Plan(3)
10.g Amendments to MSI's Non-Qualified Stock Option and Stock
Grant Program(4)
21. List of Subsidiaries
27. Financial data schedule (electronic format only)
- ----------
* Management contracts or compensatory plan or arrangement required to be
filed as an exhibit.
(1) Previously filed as an Exhibit to the Company's Form S-18 Registration
Statement, File No. 2-85710-NY filed with the Commission on July 14, 1983,
and incorporated herein by reference.
(2) Previously filed as an Exhibit to the Company's Form 10-K for the fiscal
year ended January 31, 1993 as filed with the Commission on or about Nov.
18, 1993, and incorporated herein by reference.
(3) Previously filed as part of the Company's proxy materials for the Annual
Meeting of Stockholders held on July 9, 1985, as filed with the Commission
on or about May 24, 1985, and incorporated herein by reference.
(4) Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1, SEC File No. 33-3133, filed with the Commission on February 4,
1986, and incorporated herein by reference.
(5) Previously filed as an Exhibit to Multi Soft's Form 10-K for the fiscal
year ended January 31, 1990 as filed with the Commission on or about April
29, 1990 under SEC File No. 33-3133-NY, and incorporated herein by
reference.
20
<PAGE>
(6) Previously filed as an Exhibit to the Company's Form 10-K for the fiscal
year ended January 31, 1990 as filed with the Commission on or about April
29, 1990, under SEC File No. 33-3133-NY, and incorporated herein by
reference.
Reports of Form 8-K
No reports on Form 8-K were filed during the last quarter of the fiscal
year ended January 31, 1998.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MULTI SOLUTIONS, INC.
Dated: April 29, 1998 By: ----------------------
Charles J. Lombardo,
Chief Executive Officer,
Chief Financial Officer
and Secretary-Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
- ---------------------- April 29, 1998
Charles J. Lombardo Chairman of the Board of Directors,
Chief Executive Officer, Financial
Officer, and Secretary-Treasurer
- ---------------------- April 29, 1998
Miriam Jarney Executive Vice President, and Di-
rector
- ---------------------- April 29, 1998
Larry Spatz Director
- ---------------------- April 29, 1998
James Kaput, PhD. Director
- ---------------------- April 29, 1998
George E. Mansur, Jr. Director
22
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES
Multi Soft, Inc. incorporated in the State of New Jersey in January 1985 doing
business only under the name of Multi Soft, Inc.
NetCast, Inc. incorporated in the State of New Jersey in May 1996 doing business
only under the name of NetCast, Inc.
23
<PAGE>
Albinder Altman & Block, LLP
Certified Public Accountants
462 Seventh Avenue, Suite 1600
New York, NY 10018
Tel: (212) 279-8430
Fax: (212) 279-8459
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Multi Solutions, Inc.
We have audited the accompanying balance sheets of Multi Solutions, Inc. and
Subsidiaries as of January 31, 1998 and 1997 and the related statements of
operations, changes in stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Multi Solutions, Inc. and
Subsidiaries as of January 31, 1998 and 1997 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has suffered recurring losses from operations
and has a working capital deficiency, raising substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note A. The financial statements do not include
any adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that might
result should the Company be unable to continue as a going concern.
Albinder Altman & Block, LLP
New York, New York
April 22, 1998
F-1
<PAGE>
MULTI SOLUTIONS,INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31 ,1998 and 1997
1998 1997
----------- ------------
ASSETS
CURRENT ASSETS
Cash $ 29,524 $ 13,575
Accounts Receivable (net of allowance
of $29,086 and $32,880 respectively) 58,635 18,571
Prepaid expenses and other current assets 20,799 13,532
----------- -----------
108,958 45,678
FURNITURE AND EQUIPMENT
Research and Development Equipment and Software 63,526 14,603
Office furniture and other equipment 20,474 22,476
----------- -----------
84,000 37,079
Less: Accumulated Depreciation (10,952) (9,119)
----------- -----------
73,048 27,960
Organizational costs 2,415 2,415
Less accumulated amortization (484)
----------- -----------
1,931
OTHER ASSETS
Capitalized software development costs 1,716,121 1,852,822
Less accumulated amortization (939,942) (1,110,741)
----------- -----------
776,179 742,081
Intangibles 200 200
----------- -----------
$ 960,316 $ 818,334
=========== ===========
SEE NOTES TO FINANCIAL STATEMENTS F-2
<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, 1998 and 1997
LIABILITIES AND STOCKHOLDERS' 1998 1997
----------- ------------
DEFICIENCY
CURRENT LIABILITIES
Loan payable to bank $ 16,338 $ 25,497
Note Payable 11,339 15,504
Accrued payroll 20,080 --
Payroll and other taxes payable 32,755 38,070
Accounts Payable 167,269 164,902
Accrued officer compensation 153,057 103,349
Deferred Revenues 191,820 168,411
----------- -----------
592,658 515,733
Deferred compensation due officer /shareholders 631,605 631,605
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 40,000,000 shares
$.001 par value, issued and outstanding 18,267 18,017
18,266,898 (1998) and 18,016,898 (1997)
Additional paid-in capital, 8,643,517 8,592,434
Minority Interest 87,821 87,092
Accumulated deficit (9,013,552) (9,026,547)
----------- -----------
(263,947) (329,004)
$ 960,316 $ 818,334
=========== ===========
SEE NOTES TO FINANCIAL STATEMENTS F-3
<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended January 31, 1998 and 1997
1998 1997
------------- -------------
REVENUES
License fees $ 243,146 $ 356,494
Maintenance fees 645,265 688,692
Consulting and Other fees 13,039 19,949
------------ ------------
Total revenues 901,450 1,065,135
EXPENSES
Software development and technical support 258,584 344,588
Selling and administrative 637,165 817,882
------------ ------------
Total expenses 895,749 1,162,470
------------ ------------
(Loss) from operations 5,701 (97,335)
OTHER INCOME (EXPENSE)
Other Revenues - 109,102
Interest Expense (804) (7,858)
------------ ------------
Total other income (804) 101,244
Net Income $ 4,897 $ 3,909
============ ============
Weighted average shares outstanding 18,121,062 17,986,898
============ ============
Income per share a a
============ ============
(a) less then $.01 per share
SEE NOTES TO FINANCIAL F-4
STATEMENTS
<PAGE>
MULTI SOLUTIONS,INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFECIENCY
<TABLE>
<CAPTION>
Years ended January 31, 1998 and 1997 Total Total
Common Stock paid in Accumulated Minority Deferred stockholders
Shares Amount capital deficit Interest Compensation deficiency
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 31, 1996 17,806,898 17,807 8,578,537 (9,092,304) (495,960)
Issuance of restricted common stock 210,000 210 16,564 (4,000) 12,774
Addition to Minority Interest used to 61,848 61,848
reduce loss absorbed at %100
Addition of Minority Interest 87,092 87,092
Deferred Compensation 1,333 1,333
Net Income 3,909 3,909
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at January 31, 1997 18,016,898 18,017 8,595,101 (9,026,547) 87,092 (2,667) (329,004)
Issuance of restricted common stock 250,000 250 49,750 50,000
Addition to Minority Interest used to
reduce loss absorbed at %100 8,098 8,098
Addition of Minority Interest 729 729
Deferred Compensation 1,333 1,333
Net Income 4,897 4,897
----------- ----------- ----------- ----------- ----------- ----------- -----------
18,266,898 $ 18,267 $ 8,644,851 $(9,013,552) $ 87,821 $ (1,334) $ (263,947)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL F-5
STATEMENTS
<PAGE>
MULTI -SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended January 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
Cash flows from operating activities
<S> <C> <C>
Net Income (Loss) $ 4,897 $ 3,909
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Prior period adjustment
Depreciation and amortization 290,999 347,548
Common stock issued to Solutions
Changes in assets and liabilities
Accounts receivable (40,064) 81,857
Prepaid expenses and other current assets (7,267) -
Accrued payroll 20,080 (30,285)
Payroll and other taxes payable (5,315) (36,923)
Note Payable (4,165) 15,504
Accounts payable and accrued expenses 2,369 (51,652)
Accrued officer compensation 49,706 (6,667)
Deferred officer compensation - (5,000)
Deferred revenues 23,409 (141,381)
Long term deferred revenues (8,022)
--------- ---------
Net cash provided by operating activities 334,649 168,888
Cash flows from investing activities
Capital expenditures (50,915) (29,641)
Capitalized software development costs (318,786) (362,692)
--------- ---------
Net cash used in investing activities (369,701) (392,333)
Cash flows from financing activities
Net repayments under loan and line of credit ageements (9,159) (15,602)
Loan from officer
Increase in Minority Interest 8,826 148,940
Restricted Common stock issued to Solutions
Issuance of capital stock 51,333 14,107
--------- ---------
Net cash provided by financing activities 51,000 147,445
--------- ---------
NET INCREASE (DECREASE) IN CASH 15,948 (76,000)
Cash at beginning of year 13,575 89,575
--------- ---------
Cash at end of year $ 29,523 $ 13,575
========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-6
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
NOTE A - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Multi Solutions, Inc. (the Company) was incorporated under the laws of the
State of New Jersey on July 26, 1982. The Company is presently a holding
company for its ownership of its subsidiaries, Multi Soft, Inc. ("Multi
Soft") and NetCast, Inc. ("NetCast"). As of January 31, 1998, the Company
owns 55.4% of "Multi Soft" and 75% of NetCast.
The Company's consolidated financial statements have been presented on a
going concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The liquidity
of the Company has been adversely affected in recent years by significant
losses from operations. The Company had net income of of $4,897 in 1998 and
$3,909 in 1997. In addition, at January 31, 1998, the Company's current
liabilities exceeded current assets by $483,700 and total liabilities
exceeded total assets by $263,947.
The Company intends to aggressively market its new products (see note I),
control operating costs and broaden its product base through enhancements
of products for use by non-technical computer personnel.
The Company believes that these measures will provide sufficient liquidity
for it to continue as a going concern in its present form. Accordingly, the
consolidated financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or the
amount and classification of liabilities or any other adjustments that
might be necessary should the Company be unable to continue as a going
concern in its present form.
NetCast acquired the assets of the Discovery Publishing Group in September
1996 for 200,000 shares of its restricted common stock valued at par.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, Multi Soft, Inc. ("Multi Soft") and
NetCast, Inc. ("NetCast"). All significant intercompany balances and
transactions have been eliminated in consolidation. None of Multi Soft's
net income was allocated to minority shareholders because the company
absorbed the minority interest of accumulated losses allocated up to
January 31, 1995.
2. Furniture and Equipment
Furniture and equipment are stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives of the assets which
range from three to seven years.
Depreciation expense was $6,308 and $5,060 for the years ended January 31,
1998 and 1997 respectively.
F-7
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
3. Capitalization of Computer Software
Capitalized software development costs relating to products for which
technological feasibility has been established qualify for capitalization
under Statement of Financial Accounting Standards No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed."
Research and development costs associated with the creation of computer
software prior to reaching technological feasibility are expensed as
incurred, except for related computer equipment expenditures such as
personal computers and other hardware components, which are capitalized and
depreciated over their useful lives if the equipment is deemed to have
alternative future use.
Capitalized software development costs are amortized to operations when the
product is available for general release to customers. Amortization is
calculated using (a) the ratio of current gross revenues for the product to
the total of current and anticipated gross revenues for that product or (b)
the straight-line method over the remaining useful life of the product,
whichever is greater.
Multi Soft is amortizing, over a sixty month period, the capitalized
software costs for its Windows-based products. The period is based on sales
forecasts for the seven year agreement between Multi Soft, Inc. and IBM
which began in October 1993. Multi Soft's Windows products are compatible
with Windows 95 and further modifications are continually made,
specifically for 32 bit environments (Windows 95 and Windows NT).
Unamortized costs relating to Windows products at January 31, 1998 and 1997
are $776,179 and $739,641, respectively.
As of January 31, 1998, there no longer are any unamortized capital
salaries for any DOS products. The unamortized costs relating to DOS
products at January 31, 1997 were $2,440.
Amortization expense for all products at January 31, 1998 and 1997 was
$258,584 and $344,588 respectively.
4. Revenue Recognition
In accordance with Statement of Position 91-1, "Software Revenue
Recognition" (SOP 91-1), the Company's policy is to recognize license and
maintenance fees when earned and consulting fee income when services are
rendered. License fees are recognized upon shipment of the software while
maintenance fees are recorded over the period covered by the related
contract. Consulting is performed on a time and material basis.
5. Deferred Compensation
Deferred compensation arising from the issuance of stock grants is
amortized over the term of the related grant or employment agreements (one
to five years). The amount of compensation attributable to stock grants is
determined by the market price of the Company's stock on the date of the
grant.
F-8
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
6. Income (Loss) Per Share
Income (loss) per share is computed using the weighted average number of
common shares outstanding during the period. Common stock equivalents are
antidilutive and, therefore, are not considered in the computation of loss
per share.
7. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from thoses estimates.
8. Income Taxes
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes," which significantly changes the accounting for deferred income
taxes. The standard provides for a liability approach under which deferred
income taxes are provided for based upon enacted tax laws and rates
applicable to the periods in which the taxes become payable. The Company
adopted the new standard for its year ended January 31, 1994. The
cumulative effect of the change in accounting principles was not
significant.
NOTE C - NOTES PAYABLE
1. Demand Loan - Bank
Multi Soft has a demand loan payable to a commercial bank ($16,338 and
$25,497 at January 31, 1998 and 1997 respectively). Borrowings are
collateralized by Multi Soft's accounts receivable and bear interest at the
bank's prime rate plus 2% (10.5% and 10.5% at January 31, 1998 and 1997
respectively). Multi Soft obtained a forbearance from the bank in November
1993 requiring a $20,000 payment upon execution, monthly payments of $1,500
principal and interest and the personal guarantee of the Company's
chairman. As of February 11, 1998, Multi Soft paid the outstanding loan
balance by obtaining a new loan. As a result, the loan is no longer in
default. As of January 31, 1997, the Company is in compliance with the
terms of the agreement.
During 1998 and 1997, the maximum amount of borrowings outstanding was
$25,497 and $41,099, respectively, the average borrowing were $20,918 and
$33,248, respectively, and the weighted average interest rates were 10.5%.
2. Note Payable
In June 1996, $18,700 due to a vendor was converted to a note at the rate
of $597 per month for 36 months with interest at 9%.
F-9
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
NOTE D - INCOME TAXES
As a result of losses incurred in recent years, the Company and its
subsidiaries separately have net operating loss carryforwards available to
offset future federal taxable income of approximately $5.5 million. These
losses expire at various dates through 2012.
The Company adopted, effective February 1, 1993, SFAS No. 109, "Accounting
for Income Taxes." Under the liability method specified by SFAS No. 109,
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax basis of assets and liabilities are
determined based on the difference between the financial statement and tax
basis of assets and liabilities as measured by the enacted tax rates which
will be in effect when these differences reverse. Deferred tax expense is
the result of changes in deferred tax assets and liabilities. The principal
types of differences between assets and liabilities for financial statement
and tax return purposes are capitalized software development costs,
deferred compensation, deferred revenues and allowance for uncollectible
accounts.
The deferred method, used in years prior to 1993, required the Company to
provide for deferred tax expense based on certain items of income and
expense which were reported in different years in the financial statements
and the tax returns as measured by the tax rate in effect for the year the
difference occurred.
Deferred tax (liabilities) assets consist of the following at January 31,
1998 and 1997:
1998 1997
---- ----
Capitalized software ($ 248,000) $ (242,000)
Allowance for bad debts 11,000 3,000
Deferred compensation 234,000 234,000
Deferred revenue royalties 77,000 92,000
Loss carryforwards 4,088,000 4,088,000
----------- -----------
Gross deferred tax assets 4,162,000 4,175,000
Deferred tax assets valuation allowance (4,162,000) (4,175,000)
$ -0- $ -0-
=========== ============
NOTE E - STOCKHOLDERS' DEFICIENCY
1. Warrants
The expiration dates of the Company's Class A, Class B and Class C Warrants
have been extended to June 1, 1998. There are presently outstanding a total
of 723,793 Class A Warrants, 600 Class B Warrants and 714,012 Class C
Warrants.
F-10
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
2. Stock Option Plan
In June 1993, the Company adopted an Employee, Consultant and Advisory
Stock and Option Compensation Plan (the Plan). Pursuant to the terms of the
Plan, an aggregate of up to 2,500,000 shares of common stock, $0.01 par
value per share (the common stock), and/or options to purchase common stock
may be granted to persons who are, at the time of issuance or grant,
employees or officers of, or consultants or advisors to, the Company. To
date, an aggregate of 145,880 shares has been issued pursuant to the Plan.
3. Common Stock Issued to Officers
In January 1996, Multi Soft issued 1,500,000 shares of its common stock to
the Company. The transaction was valued at $.22 per share ($330,000) for
which Multi Solutions was to issue a note.
In connection with this transaction, Multi Soft paid for the acquisition of
1,000,000 each of the Company's common shares (valued at $0.08 per share)
to the chairman and vice president by allowing the indebtedness of the
Company to Multi Soft to be reduced by $160,000 which thereby reduced the
debt of Multi Soft to the two officers by the same amount.
After completion of this series of transactions, the net debt due to Multi
Soft in connection with the common stock sale was reduced to $170,000.
NOTE F - COMMITMENTS AND CONTINGENCIES
1. Leases
Multi Soft is a subtenant in office space leased by an entity substantially
owned by the Company's chairman and his wife. At present Multi Soft has a
quarter-by-quarter term lease with a base rent of $4,950 per month. Rental
expense under the lease aggregated approximately $59,450 and $57,200 for
the years ended January 31, 1998 and 1997, respectively.
In June 1995 the Company entered into a three year noncancellable operating
lease for a color laser copier with monthly payments of $606 plus tax and
per copy charges through May 1998.
Future minimum lease payments under the noncancellable equipment operating
lease are as follows:
Year Ending
January 31,
1999 $3,000
F-11
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
In November, 1997 the company entered into a operating lease for a laser
copier with monthly payments of $365 including tax and copy charges through
2002.
Year Ending
January 31,
-----------
1999 $4,380
2000 4,380
2001 4,380
2002 4,380
-----
$17,520
=======
2. Employment Agreements
Multi Soft has employment agreements with two officers which provide
minimum annual compensation of $200,000 through July 1998. Upon execution
of these agreements, an aggregate of 91,667 shares of Multi Soft's common
stock was issued to the employees.
In addition, the employment agreements entitle the two employees to 2% and
1.5%, respectively, of each fiscal year's after tax profits of Multi Soft.
3. Payroll Taxes
Certain Federal and state taxes, interest, and penalties aggregating
approximately $33,000 remain unpaid at January 31, 1998. In March 1998
$21,000 was paid toward the liability in connection with a settlement
agreement leaving $12,000 unpaid.
4. Litigation
The Company and Multi Soft have been, from time to time, parties to legal
actions arising in the normal course of their business. In the opinion of
management, the disposition of these actions will not have a material
effect on the financial position or results of operations of the Company
taken as a whole.
In May 1997, a lawsuit was commenced against NetCast by former consultants
for approximately $113,000. The Company has accrued $24,000 prior to
commencement of the action. The Company intends to vigorously defend the
lawsuit and has made counterclaims.
NOTE G - MAJOR CUSTOMERS
In fiscal 1998 one customer accounted for 29%. In fiscal 1997, one customer
accounted for 29% of total revenue.
NOTE H - SUPPLEMENTAL INFORMATION
Supplemental disclosures of cash flow information for years ended January
31, 1998 and 1997 are as follows:
F-12
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
1998 1997
---- ----
Cash paid during the year for Interest $3,304 $7,858
===== =====
NOTE I - SOFTWARE LICENSING AGREEMENT
1. Software Licensing Agreement
On October 8, 1993, Multi Soft entered into a Software Licensing Agreement
(SLA) and other ancillary agreements with IBM Corporation (IBM) providing
for certain exclusive marketing rights for Multi Soft's principal product:
Windows Communications Library (WCL) with IBM IMS Extensions. This is a
software product specifically modified for use with IBM mainframe systems.
The agreements, effective for a term of seven years with automatic renewals
for two additional one year periods, provide for the payment of percentage
royalties and unit royalties as specified in the agreement. IBM may
terminate the agreement after the first year upon 90 days notice. The
agreement further provides for minimum non-refundable royalty advances to
Multi Soft aggregating $300,000 through June 1996.
The agreements create certain obligations by Multi Soft, including future
maintenance, staffing, response and software source code custody. Future
enhancements may be provided by Multi Soft for additional fees. As of July
1995 Multi Soft has been receiving monthly maintenance from IBM regarding
the above license agreement.
The $300,000 royalty advance has been recorded as deferred revenue in
fiscal year 1994 and is being recognized as income over the longer of:
o The 21 month period of maintenance included in the agreement without
additional fees; or
o The period in which the royalty is earned through IBM sales throughout
the seven year term of the agreement.
Effective June 1, 1995 Multi Soft and IBM amended their Software License
Agreement number: STL93199 and its related worldwide marketing agreements,
such that, $150,000 dollars of the $300,000 advance amount deferred as of
January 31, 1994 shall, as of June 1, 1995 no longer be subject to offset
against royalties accrued.
For the years ended January 31, 1998 and 1997, Muli Soft recognized as
income $8,022 and $42,864 of the $300,000 advance respectively.
The contract with IBM's Network Software Division provides that Multi Soft
will receive prepaid royalties of $600,000 in quarterly installments over a
two year period. As a result, IBM receives non exclusive and non
transferable license to market certain Multi Soft products. The product is
marketed under IBM's logo as `Personal Communications Toolkit for Visual
Basic. Multi Soft had been receiving maintenance fees from the above
contract.
F-13
<PAGE>
Multi Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998 and 1997
2. Marketing Agreements with IBM
The Company entered into marketing agreements with IBM Corporation (IBM)
providing for the marketing rights of the Windows Communications Library
(WCL) software with IBM IMS Extensions in the United States, Puerto Rico,
the Asia Pacific Region, Europe, the Middle East and Africa.
The agreements are for three year terms and provide for the payment of
percentage royalties as specified in the agreement.
3. Joint Development and Marketing Agreement with Bellcore
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 to the Sun Solaris Unix
environment. Additionally, Bellcore shall pay a specified monthly
maintenance fee for a period of one year. Also, it provides for a joint
marketing agreement in which both companies will share marketing royalties.
During fiscal 1997, Multi Soft had been receiving maintenance fees from the
above contract. During fiscal 1998, Multi Soft no longer had been receiving
maintenance from this contract.
NOTE J - RELATED PARTY TRANSACTIONS
Multi Soft, from time to time, pays incidental expenses of the Company and
allocates its share of certain expenses. These items are credited to
intercompany payable and no payments have been made during the fiscal year.
The balance due to Multi Soft at January 31, 1998 and 1997 was $422,239 and
$422,951.
Multi Soft provides certain services and office space to NetCast. The
balance due from NetCast, Inc. at January 31, 1998 was $155,251. The
Company has guaranteed this debt to Multi Soft.
NOTE K - NEW SUBSIDIARY
NetCast, Inc. is a subsidiary company and was incorporated in April of
1996. It is in the business of developing new Internet technologies to
create a series of products and businesses that will extend the power of
advertising on the Internet. The Company currently owns 75% of NetCast. The
Board of Directors consists of two officers, Charles Lombardo and Miriam
Jarney. NetCast is in the process of raising private funding for its
operations. However, we can make no assurance it will obtain the funding
necessary to bring its software to the marketplace.
F-14
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<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 29,524
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<RECEIVABLES> 58,635
<ALLOWANCES> 29,086
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<CURRENT-ASSETS> 108,958
<PP&E> 73,048
<DEPRECIATION> (10,952)
<TOTAL-ASSETS> 960,316
<CURRENT-LIABILITIES> 592,658
<BONDS> 0
18,267
0
<COMMON> 0
<OTHER-SE> 263,947
<TOTAL-LIABILITY-AND-EQUITY> 960,316
<SALES> 243,146
<TOTAL-REVENUES> 901,450
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