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, 1998
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
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MULTI SOLUTIONS, INC
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(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2418056
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4262 US Route 1, Monmouth Junction, New
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Jersey 08852 (Address of principal executive offices)
Issuer's telephone number, including area code: (732) 329-9200
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at October 31, 1998
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Common Stock, par value 18,548,398
$.001 per share
<PAGE>
PART I. FINANCIAL INFORMATION
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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, 1998.
The financial statements are presented on a consolidated basis, with Multi
Soft, Inc a 53.6% 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, 1998.
The results reflected for the three and nine months ended October 31, 1998
are not necessarily indicative of the results for the entire fiscal year.
1
<PAGE>
MULTI SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
October 31, January 31,
1998 1998
(Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 2,302 $ 29,524
Accounts receivable (net of allowance
of $19,058 and $20,086 respectively) 109,736 58,635
Prepaid expenses and other current assets 56,999 20,799
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169,037 108,958
FURNITURE AND EQUIPMENT
Research and development equipment 63,526 63,526
Office furniture and other equipment 20,474 20,474
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84,000 84,000
Less: Accumulated Depreciation (15,460) (10,952)
----------- -----------
68,540 73,048
Capitalized Organizational costs
Less: Accumulated Amortization 2415.25 2,415
(847) (484)
----------- -----------
1,568 1,931
OTHER ASSETS
Capitalized software development costs 1,543,938 1,716,121
Less accumulated amortization (717,782) (939,942)
----------- -----------
826,156 776,179
Intangibles 200 200
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$ 1,065,501 $ 960,316
=========== ===========
2
<PAGE>
MULTI SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
October 31, January 31,
1998 1998
(Unaudited)
----------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Loan payable to bank $ 5,174 $ 16,338
Note Payable 6,565 11,339
Accrued payroll 71,579 20,080
Payroll and other taxes payable 21,583 32,755
Accounts Payable 174,435 167,269
Accrued officer compensation 240,555 153,057
Deferred Revenues 125,833 191,820
----------- -----------
645,724 592,658
Deferred compensation due officer/shareholders 631,605 631,605
STOCKHOLDERS' DEFICIENCY
Common stock,$.001 par value authorized
40,000,000 issued and outstanding:
18,548,398 and 18,266,898 respectivley 18,548 18,267
Additional paid-in capital net of
deferred compensation, 8,649,159 8,643,517
Minority interest 88,340 87,821
Accumulated deficit (8,967,875) (9,013,552)
----------- -----------
(211,828) (263,947)
$ 1,065,501 960,316
=========== ===========
3
<PAGE>
MULTI SOLUTIONS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
October 31, October 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
REVENUES
<S> <C> <C> <C> <C>
License fees $ 213,865 $ 162,409 $ 120,226 $ 77,495
Maintenance fees 425,230 525,781 130,652 151,448
Consulting and other fees 6,336 83,629 1,096 33,784
------------ ------------ ------------ ------------
Total revenues 645,431 771,819 251,974 262,727
EXPENSES
Software development and technical support 147,661 236,670 55,351 80,123
Selling and administrative 476,613 540,843 138,564 168,700
------------ ------------ ------------ ------------
Total expenses 624,274 777,513 193,915 248,823
------------ ------------ ------------ ------------
Income (Loss) from operations 21,157 (5,694) 58,059 13,904
OTHER EXPENSE
Other Revenue 16,349 11,112
Interest Expense (1,022) (1,923) (133) (632)
------------ ------------ ------------ ------------
Total other revenue 15,327 (1,923) 10,979 (632)
NET INCOME (LOSS) $ 36,484 $ (7,617) $ 69,038 $ 13,272
============ ============ ============ ============
Weighted average shares outstanding 18,454,556 18,072,451 18,548,398 18,266,898
============ ============ ============ ============
Loss per share NIL NIL NIL NIL
============ ============ ============ ============
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MULTI-SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Nine Months Ended
October, 31
1998 1997
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Cash flows from operating activities
<S> <C> <C>
Net loss $ 36,484 $ (7,617)
Adjustments to reconcile net Income (loss) to net cash
provided by operating activities
Depreciation and amortization 152,532 245,846
Changes in assets and liabilities
(Increase) decrease in accounts receivable (51,101) (66,916)
Increase in prepaid expenses and other current assets (36,200) (24,954)
Increase (decrease) in accrued payroll 51,499 51,656
(Decrease) in payroll and other taxes payable (11,172) (10,020)
Decrease in Note Payable (4,774) (3,479)
Increase (decrease) in accounts payable and accrued expenses 7,166 14,155
(Decrease) increase in accrued officer compensation 87,498 108,872
Increase (decrease) in deferred revenues (65,987) (44,787)
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Net cash provided by operating activities 165,945 262,756
Cash flows from investing activities
Capitalized Research & Developement -- (50,000)
Capitalized software development costs (197,638) (206,904)
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Net cash used in investing activities (197,638) (256,904)
Cash flows from financing activities
Net repayments under loan and line of credit ageements (11,164) (4,521)
( Decrease) increase in Minority interest 9,712 (17,756)
Issuance of Common Stock 5,923 51,000
--------- ---------
Net cash provided by In financing activities 4,471 28,723
NET INCREASE (DECREASE) IN CASH (27,222) 34,575
Cash at beginning of year 29,524 13,575
Cash at end of year $ 2,302 $ 48,150
========= =========
</TABLE>
5
<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, 1998 compared to nine and three months
- --------------------------------------------------------------------------------
ended October 31, 1997
- ----------------------
Revenues of $645,431 for the current nine months of fiscal year 1998
decreased $126,388 or 16.4% compared with the comparable period of the prior
year. Revenues of $251,974 for the three month period ending October 31, 1998
decreased $10,753 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
97% compared with 101% for the comparable nine month period of the prior year.
Operating expense as a percent of revenues for the current three month period
was 77% compared with 95% for the prior year. The decrease in operating expenses
as a percent of revenues for the current three months was primarily attributable
to a curtailment of legal, accounting and outside consulting fees.
Operating income , before other income (expense) of $21,157 for the current
nine month period increased $26,851 compared with the comparable period of the
prior year. For the current three month period operating income, before other
expense increased $44,155.
For the current nine month period , a net income of $36,484 was incurred
compared with a net loss of $7,617 an increase of $44,101. For the current three
month period a net income of $69,038 compared with net income from the prior
period of $13,272 represents an increase of $55,766.
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 1998, IBM accounted for 20.9% of total
revenues. In the first nine months of 1997, IBM accounted for 26.24% of total
revenues.
Liquidity and Capital Resources
- -------------------------------
6
<PAGE>
At October 31, 1998, the Company had a negative working capital position of
$476,687 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 53.6% owned subsidiary, Multi Soft
Inc. broadened its product base into the Windows NT environment and has made its
Windows based products easier to learn and use.
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. As of November 1996, the contract
with IBM was extended for two more years and IBM is paying Multi Soft monthly
maintenance and royalties. The above contract,as of November 1, 1998 has been
canceled. But, Multi Soft is in the process of negotiating an extension to the
contract, however , no assurance can be made.
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.
7
<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.
Year 2000
- ---------
Many companies systems experience problems handling dates beyond the year
1999. The companies products are not directly impacted by this problem.
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 product have built in support
for the Year 2000. Any date functions that use 2 positions for the year, the
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.
8
<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
9
<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 08,1998
By:______________________________
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-31-1999
<PERIOD-END> OCT-31-1998
<CASH> 2,302
<SECURITIES> 0
<RECEIVABLES> 109,736
<ALLOWANCES> 19,058
<INVENTORY> 0
<CURRENT-ASSETS> 169,037
<PP&E> 84,000
<DEPRECIATION> (15,460)
<TOTAL-ASSETS> 1,065,501
<CURRENT-LIABILITIES> 645,724
<BONDS> 0
<COMMON> 18,548
0
0
<OTHER-SE> (211,828)
<TOTAL-LIABILITY-AND-EQUITY> 1,065,501
<SALES> 213,865
<TOTAL-REVENUES> 645,431
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,022
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,022
<INCOME-PRETAX> 36,484
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,484
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
