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 April 30, 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 April 30, 2000
----------------------- -----------------------------
Common Stock, par value 20,791,255
$.001 per share
Transitional Small Business Format (check one); Yes [ ] No [X]
<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 three months ended April 30, 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 three months ended April 30, 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
------------------ --------------------
Multi Soft, Inc. 51.3%
FreeTrek.Com, Inc. 54.7%
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
April 30, 2000 and January 31, 2000
(Unaudited)
April 30, January 31,
2000 2000
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ASSETS
CURRENT ASSETS
Cash $ 394,103 $ 342,207
Accounts Receivable (net of allowance
of $37,486 and $37,486 respectively) 103,167 140,484
Prepaid expenses and other current assets 45,892 44,992
Subscriptions receivable 50,000 100,000
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593,162 627,683
FURNITURE AND EQUIPMENT
Research and Development Equipment 75,517 74,982
Office furniture and other equipment 70,982 61,874
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146,499 136,856
Less: Accumulated Depreciation (30,365) (27,515)
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116,134 109,341
Organizational costs 11,126 11,126
Less: Accumulated Amortization (4,904) (4,569)
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6,222 6,557
OTHER ASSETS
Capitalized software development costs 1,661,023 1,554,869
Less accumulated amortization (759,283) (712,776)
----------- -----------
901,740 842,093
$ 1,617,258 $ 1,585,674
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<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
April 30, 2000 and January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
April 30, January 31,
LIABILITIES AND STOCKHOLDERS' 2000 2000
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DEFICIENCY
CURRENT LIABILITIES
<S> <C> <C>
Accrued payroll $ 14,783 $ 14,783
Payroll and other taxes payable 18,910 19,048
Accounts Payable, Accrued expenses and
other Current Liabilities 57,522 95,692
Accrued officer compensation 206,190 206,192
Deferred Revenues 65,558 127,532
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362,963 463,247
Deferred compensation due officer /shareholders 586,605 586,605
Minority interest in subsidiary 581,487 556,604
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
20,791,255 (2000) and 20,505,541 (2000) 20,792 20,170
Additional paid-in capital, net of deferred
compensation $41,491 (1999) and $46,449 (2000) 9,090,842 8,886,456
Accumulated deficit (9,025,431) (8,927,408)
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86,203 (20,782)
$ 1,617,258 $ 1,585,674
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</TABLE>
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<PAGE>
MULTI SOLUTIONS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
April 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30,
2000 1999
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REVENUES
<S> <C> <C>
License fees $ 12,485 $ 59,724
Maintenance fees 65,820 113,537
Consulting and Other fees 6,699 15,518
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Total revenues 85,004 188,779
EXPENSES
Software development and technical support 88,628 57,192
Selling and administrative 155,447 164,598
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Total expenses 244,075 221,790
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Income (loss) from operations (159,071) (33,011)
OTHER INCOME (EXPENSE)
Other Revenues -- --
Interest income 3,242 --
Minority share of consolidated subsidiary's loss 41,858
------------ ------------
Total other income 45,100 --
Net (loss) $ (113,971) $ (33,011)
============ ============
Weighted average shares outstanding 20,409,113 18,813,398
============ ============
Income (Loss) per share (a) (a)
============ ============
(a) less than $.01 per share
</TABLE>
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<PAGE>
MULTI SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
April 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
April 30,
2000 1999
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Cash flows from operating activities
<S> <C> <C>
Net (loss) $ (113,971) $ (33,011)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 49,692 57,596
Changes in assets and liabilities
Accounts receivable 37,317 7,611
Prepaid expenses and other current assets (900) 3,709
Accrued payroll -- 19,265
Payroll and other taxes payable (138) 8,616
Accounts payable and accrued expenses (38,170) (14,986)
Accrued officer compensation -- 33,333
Deferred revenues (61,974) (27,321)
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Net cash provided (used) by operating activities (128,144) 54,812
Cash flows from investing activities
Capital expenditures (9,643)
Capitalized software development costs (106,154) (60,928)
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Net cash used in investing activities (115,797) (60,928)
Cash flows from financing activities
Net repayments under loan and line of credit ageements -- (796)
Amortization of stock grants 4,958 2,043
Minority interest and loss in excess of investments 40,829 6,725
Colelction of subscription receivables 50,000
Issuances of capital stock 200,050 --
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Net cash provided by financing activities 295,837 7,972
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NET INCREASE (DECREASE) IN CASH 51,896 1,856
Cash at beginning of year 342,207 18,420
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Cash at end of period $ 394,103 $ 20,276
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</TABLE>
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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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
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Three months ended April 30, 2000 compared to three months ended April 30, 1999
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We generated revenues during the three months ended April 30, 2000, the first
quarter of our fiscal year ending January 31, 2001, of $85,004 compared to
revenues of $188,779 during the first quarter of fiscal 2000. The revenues were
generated by our subsidiary, Multi Soft. We believe that this decrease of
$103,775, or approximately 55%, was due primarily to a decrease in Multi Soft's
revenues from license and maintenance fees. License fee revenues decreased
$47,239, or approximately 79.1%, and maintenance fees decreased $47,717, or
approximately 42.0%.
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<PAGE>
Multi Soft's two traditional principal sources of revenues were license fees and
maintenance fees which represented approximately 92.1% or $78,305 of revenues
for the three months ended April 30, 2000 and 91.8% or $173,261 of revenues for
the three months ended April 30, 1999.
We believe that the 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.
Our operating expenses were $244,075 for the three months ended April 30, 2000
compared to $221,790 for the comparable three month period of fiscal 2000, an
increase of $22,28 or approximately 10%. We believe that the increase was a
result of higher levels of software development costs, offset in part by lower
levels of selling and administrative costs charged to operations.
We had other income of $45,100 during the first quarter of fiscal 2001 compared
to no other income during the first quarter of fiscal 2000. We believe that the
increase in other income during the current three month period was primarily due
to the addition of minority share of consolidated subsidiary's loss during the
first quarter of fiscal 2001, but not during the first quarter of fiscal 2000.
As a result of all of the foregoing, we incurred a net loss for the first
quarter of fiscal 2001year of $113,971 compared to a net loss of $33,011 for the
first quarter of fiscal 2000, a decrease of $80,960 or approximately 245.3%.
Major Customers
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In the first quarter of fiscal 2000, IBM accounted for 11% of total consolidated
revenues. In the first quarter of fiscal 2001, IBM did not account for any
revenues. IBM extended its contract with Multi Soft through December 31, 1999;
however, IBM has not renewed the contract. The loss of revenues from IBM will
have 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 in as a result of the consolidation of
the financial statements.
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<PAGE>
Liquidity and Capital Resources
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At April 30, 2000, we had working capital of $230,199, compared to working
capital of $164,436 at January 31, 2000. While we have experienced cash flow
problems, this situation has been alleviated by:
o proceeds from the issuance of stock by our new subsidiary, FreeTrek
during fiscal 2000;
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 quarter of fiscal
2001.
Working Capital and Current Ratios were:
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Descriptions April 30, 2000 January 31, 2000
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Working capital $230,199 $164,436
Current ratios 1.63:1 1.36:1
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.
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<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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Our class A, class B and class C common stock purchase warrants
expired on June 1, 2000.
During the quarter ended April 30, 2000, we issued an aggregate of
571,428 shares of common stock to Noga Investments In Technologies,
Ltd., for an aggregate of $200,000 pursuant to the exercise of an
option. This option is for the purchase of an aggregate of 857,142
shares of our common stock at the rate of 142,857 shares per month at
an exercise price of $0.35 per share. As of June 15, 2000, Noga has
exercised an aggregate of 857,142 shares for an aggregate of $300,000.
All of these shares 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.
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<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 June 16, 2000 By: /s/ Charles J. Lombardo
---------------------------------------------
Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
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