SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1999
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
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4262 US Route 1, Monmouth Junction, New Jersey 08852
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(Address of principal executive offices)
Issuer's telephone number, including area code: (908) 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 July 31, 1999
- ----------------------- ----------------------------
Common Stock, par value 18,813,398
$.001 per share
<PAGE>
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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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 six and three months ended July 31, 1999.
Moreover, these consolidated 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, 1999.
FreeTrek.Com is a newly formed subsidiary of Multi Solutions, Inc. Multi
Solutions, Inc retains approximately a 65% interest in FreeTrek.Com, Inc. The
remaining approximately 35% interest in FreeTrek.Com, Inc. obtained by private
investors for services and cash to fund initial software development and other
startup activities.
The results reflected for the six and three months ended July 31, 1999 are
not necessarily indicative of the results for the entire fiscal year. Multi
Solutions, Inc. owns 52% of Multi Soft, Inc.'s common stock. Multi Solutions
Inc. financial statements are consolidated with its subsidiaries: Multi Soft,
Inc., NetCast, Inc. (currently inactive), and FreeTrek.Com, Inc. which is
currently in the development stage. The financial statements include the
operation results of FreeTrek.Com, Inc. for the period ending July 31, 1999.
FreeTrek did not have a material impact on the consolidated results of
operations for Multi Solutions, Inc.
FreeTrek.Com, Inc. is a provider of business system and internet software,
solutions and support. The company has developed a powerful new software-based
tool and promotion program for tapping into the marketing communication
potential of the internet. Unlike many "broadcast" model internet marketing
concepts, FreeTrek.Com offers major marketers the opportunity to communicate
one-on-one with carefully defined private networks of their most valuable
consumers.
<PAGE>
MULTI SOLUTIONS, INC.
BALANCE SHEETS
JULY 31, 1999 and JANUARY 31, 1999
31-Jul 31-Jan
1999 1999
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 325,233 $ 18,420
Accounts Receivable (net of allowance
of $43,783 and $43,783 respectively) 208,445 132,316
Prepaid expenses and other current assets 15,675 13,385
----------- -----------
549,353 164,121
FURNITURE AND EQUIPMENT
Research and Development Equipment 15,518 63,526
Office furniture and other equipment 31,781 20,474
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47,299 84,000
Less: Accumulated Depreciation (18,315) (16,780)
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28,984 67,220
Organizational costs 8,526 2,415
Less: Accumulated Amorization (968) (968)
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7,558 1,447
OTHER ASSETS
Capitalized software development costs 1,496,350 1,607,505
Less accumulated amortization (599,192) (809,915)
----------- -----------
897,158 797,590
Intangibles 200 200
$ 1,483,253 $ 1,030,578
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<PAGE>
MULTI SOLUTIONS, INC.
BALANCE SHEETS
JULY 31 , 1999 and JANUARY 31, 1999
<TABLE>
<CAPTION>
31-Jul 31-Jan
LIABILITIES AND STOCKHOLDERS' 1999 1999
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DEFICIENCY
CURRENT LIABILITIES
<S> <C> <C>
Loan payable to bank $ -- $ 796
Note Payable 6,565 6,565
Accrued payroll 23,284 --
Payroll and other taxes payable 18,785 19,480
Accounts Payable, Accrued expenses and
other Current Liabilities 165,813 196,416
Accrued officer compensation 236,590 198,057
Deferred Revenues 195,835 187,648
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646,872 608,962
Deferred compensation due officer /shareholders 586,605 586,605
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
13,509,473 (1999) and 13,509,473 (1999) 18,814 18,814
Additional paid-in capital, net of deferred
compensation $27,907 (1999) and $41,365(1999) 8,668,328 8,661,197
Accumulated deficit (8,894,366) (8,845,000)
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(207,224) (164,989)
MINORITY INTEREST 457,000
$ 1,483,253 $ 1,030,578
=========== ===========
</TABLE>
<PAGE>
MULTI SOLUTIONS, INC
STATEMENTS OF OPERATIONS
JULY 31, 1999 and JULY 31, 1998
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
31-Jul 31-Jul
1999 1998 1999 1998
------------ ------------ ------------ ------------
REVENUES
<S> <C> <C> <C> <C>
License fees $ 76,099 $ 93,639 $ 16,375 $ 16,527
Maintenance fees 231,609 294,578 118,072 142,314
Consulting and Other fees 50,304 5,240 34,786 5,240
------------ ------------ ------------ ------------
Total revenues 358,012 393,457 169,233 164,081
EXPENSES
Software development and technical support 114,385 92,310 57,193 46,155
Selling and administrative 306,422 338,049 141,824 177,713
------------ ------------ ------------ ------------
Total expenses 420,807 430,359 199,017 223,868
------------ ------------ ------------ ------------
Income (Loss) from operations (62,795) (36,902) (29,784) (59,787)
OTHER INCOME (EXPENSE)
Other Revenues -- 5,237 -- 5,237
Interest Expense -- (889) -- (269)
------------ ------------ ------------ ------------
Total other income -- 4,348 -- 4,968
Net Income (Loss) $ (62,795) $ (32,554) $ (29,784) $ (54,819)
============ ============ ============ ============
Weighted average shares outstanding 18,813,398 18,407,648 18,813,398 18,548,398
============ ============ ============ ============
Income (Loss) per share $ -- $ -- $ -- $ --
============ ============ ============ ============
</TABLE>
<PAGE>
MULTI - SOLUTIONS, INC.
52 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
JULY 31 , 1999 and July 31 , 1998
<TABLE>
<CAPTION>
31-Jul 31-Jul
1999 1998
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Cash flows from operating activities
<S> <C> <C>
Net Income $ (62,795) $ (32,554)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 115,253 95,569
Changes in assets and liabilities
Accounts receivable (76,129) (44,477)
Prepaid expenses and other current assets (2,290) (23,925)
Accrued payroll 23,284 51,499
Note Payable -- (7,298)
Payroll and other taxes payable (695) (2,983)
Accounts payable and accrued expenses (30,603) 14,580
Accrued officer compensation 38,533 87,498
Deferred revenues 8,187 (21,025)
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Net cash provided by operating activities 12,745 116,884
Cash flows from investing activities
Capitalized Organizational Cost (6,111)
Capitalized software development costs (163,156) (146,007)
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Net cash used in investing activities (169,267) (146,007)
Cash flows from financing activities
Net repayments under loan and line of credit ageements (796) (6,897)
Amortization of Stock Grants 7,131 2,847
Issuances of Capital Stock 282
Increase (Decrease) in Minority Interest 457,000 6,739
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Net cash provided (used) by financing activities 463,335 2,971
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NET INCREASE (DECREASE) IN CASH 306,813 (26,152)
Cash at beginning of year 18,420 29,524
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Cash at end of period $ 325,233 $ 3,372
=========== ===========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
---------------------
Results of Operations
- ---------------------
Six months ended July 31, 1999 compared to six months ended July 31, 1998 and
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three months ended July 31, 1999 compared to three months ended July, 31 1998
- -----------------------------------------------------------------------------
Revenues for the current six months of fiscal year 1999 decreased $35,205
or 9.8% compared with the comparable period of the prior year. Revenues for the
three month period ending July 31, 1999 increased $5,392 or 3.2% compared with
the comparable period of the prior year. The overall decrease in revenues for
the current six month period is attributable a decrease in maintenance revenue
during the current six month period.
Operating expenses for the six month period decreased $9,552 or 22.7%
compared with the comparable period of the prior year. Operating expense for the
three month period ending July 31, 1999 decreased $24,851 or 12.5% compared with
the prior year. The decrease in the six month and three month period was due to
the reduction of certain expenses such as legal fees, outside marketing and a
reduction in staff. Also, the software development expense has increased,
$22,075. The reason for this increase in Software Development is that Multi Soft
is amortizing capitalized development that was not being amortized in the prior
period.
Operating loss, before other Income (expense) of $62,795 for the current
six month period increased $25,893 compared with the comparable period of the
prior year. Operating loss, before other income (expense) was $29,784 for the
current three month decreased $30,003 compared with the operating income from
the comparable period of the prior year. The reason for this increase in the six
month period operating loss is cancellations in maintenance coupled with a
decrease in sales for the current six month period.
Other Income (expense) for the current six month period was 0 as compared
with 4,348 for the comparable period of the prior year. The decrease is
attributable to a miscellaneous revenue in the comparable period that did not
reoccur in the current period.
For the current six month period , net loss of $62,795 or ($.00) cents per
share was incurred compared with a net loss of $32,554 or ($.00) cents per share
an decrease of $31,241. For the current three month period, a net loss of
$29,784 was incurred compared with $54,819 in the comparable period for the
prior year a decrease of $25,035.
Major Customers
- ---------------
In the first six months of 1999, IBM accounted for 17.25% of total
revenues. In the first six months of 1998, IBM accounted for 24.3%.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At July 31, 1999, the Company had a negative working capital position of
($97,519); and has been experiencing cash flow problems.
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 subsidiary Multi Soft broadened
its product base into the Windows environment and has made its Windows based
products easier to learn and use.
It is the company'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.
Dividend Policy
- ---------------
The Company has not declared or paid any dividends on its common stock
since its inception and does not anticipate the declaration or payment of cash
dividends in the foreseeable future. The Company intends to retain earnings, if
any, to finance the development and expansion of its business. Future dividend
policy will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors. Therefore,
there can be no assurance that dividends of any kind will ever be paid.
Effect of Inflation
- -------------------
Management believes that inflation has not had a material effect on its
operations for the periods presented.
<PAGE>
Cautionary Statement
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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
<PAGE>
SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MULTI SOLUTIONS, INC.
Dated: September 15, 1999
By:______________________________
Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JUL-31-1999
<CASH> 325,233
<SECURITIES> 0
<RECEIVABLES> 208,445
<ALLOWANCES> 43,783
<INVENTORY> 0
<CURRENT-ASSETS> 533,678
<PP&E> 47,299
<DEPRECIATION> 13,787
<TOTAL-ASSETS> 1,467,578
<CURRENT-LIABILITIES> 646,872
<BONDS> 0
<COMMON> 18,814
0
0
<OTHER-SE> (207,224)
<TOTAL-LIABILITY-AND-EQUITY> 1,483,253
<SALES> 76,099
<TOTAL-REVENUES> 358,012
<CGS> 114,385
<TOTAL-COSTS> 420,807
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (62,795)
<INCOME-TAX> 0
<INCOME-CONTINUING> (62,795)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,795)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
