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, 2000
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 Jersey 08852
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(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, 2000
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Common Stock, par value 21,096,969
$.001 per share
Transitional Small Business Format (check one); Yes [ ] No [X]
1
<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 we consider necessary for the fair presentation of results for
the nine months and three months ended October 31, 2000.
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 our audited consolidated financial
statements at, and for the fiscal year ended January 31, 2000.
The results for the nine and three months ended October 31, 2000 are not
necessarily indicative of the results for the entire fiscal year.
We operate primarily through our subsidiaries:
Our Approximate
Name of Subsidiary Percentage Ownership
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Multi Soft, Inc. 51.3%
FreeTrek.Com, Inc. 52.9%
NetCast, Inc. 75%
Our financial statements are consolidated with our subsidiaries. In January
2000, we decided to discontinue any further operations of NetCast.
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<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 2000 and January 31, 2000
(Unaudited)
October 31, January 31,
2000 2000
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 84,297 $ 342,207
Accounts Receivable (net of allowance
of $37,486 and $37,486 respectively) 60,344 140,484
Prepaid expenses and other current assets 57,202 44,992
Subscriptions receivable -- 100,000
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201,843 627,683
FURNITURE AND EQUIPMENT
Research and Development Equipment 74,982 74,982
Office furniture and other equipment 80,883 61,874
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155,865 136,856
Less: Accumulated Depreciation (40,312) (27,515)
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115,553 109,341
Organizational costs 11,126 11,126
Less: Accumulated Amortization (5,576) (4,569)
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5,550 6,557
OTHER ASSETS
Capitalized software development costs 1,706,913 1,554,869
Less accumulated amortization (847,971) (712,776)
------------ ------------
858,942 842,093
$ 1,181,888 $ 1,585,674
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<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 31, 2000 and January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
October 31, January 31,
2000 2000
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
<S> <C> <C>
Accrued payroll $ 14,783 $ 14,783
Payroll and other taxes payable 18,018 19,048
Accounts Payable, Accrued expenses and
other Current Liabilities 80,294 95,692
Accrued officer compensation 187,842 206,192
Deferred Revenues 64,800 127,532
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365,737 463,247
Deferred compensation due officer / shareholders 586,605 586,605
Minority interest in subsidiaries 535,426 556,604
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
21,096,969 and 20,505,541 respectively 21,098 20,170
Additional paid-in capital, net of deferred
compensation $21,613 and $41,491 respectively 9,210,614 8,886,456
Accumulated deficit (9,537,592) (8,927,408)
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(305,880) (20,782)
$ 1,181,888 $ 1,585,674
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</TABLE>
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<PAGE>
MULTI SOLUTIONS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine and Three months ended October 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
October 31, October 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
REVENUES
<S> <C> <C> <C> <C>
License fees $ 34,337 $ 94,284 $ 19,855 $ 18,185
Maintenance fees 120,101 357,901 2,547 126,292
Consulting and Other fees 38,780 110,902 29,268 60,598
------------ ------------ ------------ ------------
Total revenues 193,218 563,087 51,670 205,075
EXPENSES
Software development and technical support 315,712 171,178 100,855 56,793
Selling and administrative 619,077 458,838 251,893 152,416
------------ ------------ ------------ ------------
Total expenses 934,789 630,016 352,748 209,209
------------ ------------ ------------ ------------
(Loss) from operations (741,571) (66,929) (301,078) (4,134)
OTHER INCOME (EXPENSE)
Interest income 9,718 2,495
Minority share of consolidated subsidiary's loss 121,669 43,410
------------ ------------ ------------ ------------
Total other income 131,387 45,905
Net (loss) $ (610,184) $ (66,929) $ (255,173) $ (4,134)
============ ============ ============ ============
Weighted average shares outstanding 20,786,006 18,813,398 21,096,969 18,813,398
============ ============ ============ ============
Income (Loss) per share (a) (a) (a) (a)
============ ============ ============ ============
</TABLE>
(a) less than $.01 per share
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<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended October 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
October 31,
2000 1999
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Cash flows from operating activities
<S> <C> <C>
Net (loss) $ (610,184) $ (66,929)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 148,999 172,656
Changes in assets and liabilities
Accounts receivable 80,140 (88,002)
Prepaid expenses and other current assets (12,210) (2,290)
Accrued payroll -- 18,359
Payroll and other taxes payable (1,030) (7,188)
Accounts payable and accrued expenses (15,398) (29,152)
Accrued officer compensation (18,350) 43,333
Deferred revenues (62,732) (18,795)
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Net cash provided (used) by operating activities (496,796) 21,992
Cash flows from investing activities
Capital expenditures (19,009)
Capitalized software development costs (152,044) (206,784)
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Net cash used in investing activities (171,053) (206,784)
Cash flows from financing activities
Net repayments under loan and line of credit ageements -- (796)
Amortization of stock grants 24,836 --
Minority interest and loss in excess of investments 74,044 493,982
Collection of subscription receivables 100,000
Issuances of capital stock 205,028 18,546
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Net cash provided by financing activities 409,939 511,732
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NET INCREASE (DECREASE) IN CASH (257,910) 326,940
Cash at beginning of year 342,207 18,420
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Cash at end of period $ 84,297 $ 345,360
============ ============
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
----------------------------------------------------------------------
RESULTS OF OPERATIONS
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CAUTIONARY STATEMENT
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This quarterly report on form 10-QSB contains certain forward-looking statements
regarding, among other things, our anticipated financial and operating results
and those of our subsidiaries. For this purpose, forward-looking statements are
any statements contained in this report that are not statements of historical
fact and include, but are not limited to, those preceded by or that include the
words, "believes," " expects," or similar expressions. In connection with the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995,
we are including this cautionary statement identifying important factors that
could cause our or our subsidiaries' actual results to differ materially from
those projected in forward looking statements made by, or on behalf of, us.
These factors, many of which are beyond our control or the control of our
subsidiaries, include:
o Multi Soft's ability to:
o continue to receive royalties from its existing licensing and
consulting arrangements,
o develop additional marketable software and technology,
o compete with larger, better capitalized competitors and
o reverse ongoing liquidity and cash flow problems;
o FreeTrek's ability to:
o support ongoing development and future product enhancements along
with requisite testing;
o raise sufficient additional funds if needed;
o enlist and sustain a sufficient number of sponsors;
o sell and sustain sales of a significant amount of advertising; and
o operate profitably.
Results of Operations
---------------------
Nine months ended October 31, 2000 compared to Nine months ended October 31,
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1999 and Three months ended October 31, 2000 compared to Three months ended
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October 31, 1999
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We generated revenues during the nine months ended October 31, 2000, the first
nine months of our fiscal year ending January 31, 2001, of $193,218 compared to
revenues of $563,087 during the first nine months of fiscal 2000. The revenues
during all these periods were generated by our subsidiary, Multi Soft. We
believe that the significant decrease in revenues of $369,869 or approximately
65.7% was due primarily to a decrease in Multi Soft's three sources of revenues-
license fees, maintenance fees and consulting fees. License fee revenue
decreased $59,947, or approximately 63.6%, maintenance fees decreased $237,800,
or approximately 66.4%, and consulting and other fees decreased $72,122, or
approximately 65.0%.
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<PAGE>
We generated revenues during the three months ended October 31, 2000, of $51,670
compared to revenues of $205,075 during the third quarter of fiscal 2000. We
believe that the decrease of $153,405 or approximately 74.8%, was due primarily
to a decrease in Multi Soft's revenues from maintenance fees and consulting
fees, offset in part by an increase in license fees. License fee revenues
increased $1,670, or approximately 9.2%, maintenance fees decreased $123,745, or
approximately 98.0%, consulting fees decreased $31,330 or approximately 51.7%.
Multi Soft's two traditional principal sources of revenues were license fees and
maintenance fees which represented approximately 80.0% or $154,438 of revenues
for the nine months ended October 31, 2000 and 80.0% or $452,185 of revenues for
the nine months ended October 31, 1999. License fees and maintenance fees
represented approximately 43.4% or $22,402 of revenues for the three months
ended October 31, 2000 and 70.5% or $144,477 for the three months ended October
31, 1999.
We believe that the overall decrease in licensing fees was due primarily to a
reduction in software sales. We believe that the decrease in maintenance fees
was due to the non-renewal of older maintenance contracts by customers. We
believe that the decrease in consulting and other fees was due to a reduction in
consulting projects for non-affiliate customers.
See the discussion below under "Major Customers."
Our operating expenses were $934,789 for the nine months ended October 31, 2000
compared to $630,016 for the comparable nine month period in fiscal 2000, an
increase of $304,773 or approximately 48.4%. Our operating expenses were
$352,748 for the three months ended October 31, 2000 compared to $209,209 for
the comparable three month period in fiscal 2000, an increase of $143,539 or
approximately 68.6%. We believe that the increase was a result of higher levels
of software development costs related to Multi Soft's consulting and new product
development as well as higher levels of selling and administrative costs charged
to operations.
We had other income of $131,387 during the first nine months of fiscal 2001
compared to no other income during the first nine months of fiscal 2000. We had
other income of $45,905 during the three months ended October 31, 2000 compared
to no other income during the comparable three months of fiscal 2000. We believe
that the increase in other income during the first nine months and the current
three month period was primarily due to the addition of minority share of
consolidated subsidiaries' losses during the first nine months and current three
month period of fiscal 2001, but not during the first nine months and comparable
three month period of fiscal 2000.
As a result of all of the foregoing, we incurred a net loss for the first nine
months of fiscal 2001 of $610,184 compared to a net loss of $66,929 for the
first nine months of fiscal 2000, an increase of $543,255. We incurred a net
loss for the current three month period ended October 31, 2000 of $255,173
compared to a net loss of $4,134 for the three months ended October 31, 1999 an
increase of $251,039.
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<PAGE>
Major Customers
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In the first nine months of fiscal 2000, IBM accounted for 16.2% of total
consolidated revenues. During fiscal 2001, IBM has not accounted for any
revenues. The loss of revenues from IBM has had a materially adverse effect on
our financial condition. Multi Soft has offset the loss of revenues from IBM
with revenues generated from our subsidiary, FreeTrek, for work related to the
prior and ongoing development, maintenance and enhancement of FreeTrek's
products, rent and administrative services. However, FreeTrek is a development
stage company and, although it is marketing its products and services, it has
yet to make its first sale. Fees paid by FreeTrek have come from the proceeds of
private placements of FreeTrek's securities and of our securities. If FreeTrek
is unable to generate substantial revenues or continue to raise funds, revenues
received by Multi Soft from FreeTrek most likely will decrease and eventually
cease.
Although Multi Soft has supplemented its revenues with services provided to
FreeTrek , these revenues are eliminated as a result of the consolidation of the
financial statements.
Liquidity and Capital Resources
-------------------------------
At October 31, 2000, we had a negative working capital position of ($163,894),
compared to working capital of $164,436 at January 31, 2000. While we have
experienced cash flow problems, this situation has been partially alleviated by:
o proceeds from the issuance of stock by our subsidiary, FreeTrek during
fiscal 2000 and fiscal 2001;
o proceeds from a private placement of our common stock during fiscal
2000; and
o proceeds from the exercise of an option issued in conjunction with the
private placement during fiscal 2000 and the first six months of fiscal
2001.
Working Capital and Current Ratios were:
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Descriptions October 31, 2000 January 31, 2000
------------------------------------------------------------------
Working capital ($163,894) $164,436
Current ratios .55:1 1.36:1
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Dividend Policy
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We have not declared or paid any dividends on our common stock since
inception and we do not anticipate that we will be declaring or paying cash
dividends in the foreseeable future. We intend to retain earnings, if any, to
finance the development and expansion of our business. Future dividend policy
will be subject to the discretion of our board of directors and will be
contingent upon future earnings, if any, our financial condition, capital
requirements, general business conditions and other factors. Therefore, we
cannot assure that dividends of any kind will ever be paid.
Effect of Inflation
-------------------
We believe that inflation has not had a material effect on our operations
for the periods presented.
10
<PAGE>
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
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None.
Item 2. Changes in Securities and Use of Proceeds
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Subsequent to the end of our third quarter, we issued to an investor
two year common stock purchase options to purchase an aggregate of
250,000 shares of common stock at $.40 per share and to purchase an
additional 250,000 shares of common stock at $.60 per share. These
Options were issued to the investor in conjunction with the investor's
investment in our subsidiary, FreeTrek. The options were issued
pursuant to the exemption from registration provided by section 4(2)
of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities
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None.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
Item 5. Other Information
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None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
11
<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.
Date December 11, 2000 By: /s/ Charles J. Lombardo
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Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
