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, 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: 0-15976
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MULTI SOFT, INC
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2588030
- ------------------------------- -------------------
(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 July 31, 1998
- ----------------------- ----------------------------
Common Stock, par value 12,167,806
$.001 per share
<PAGE>
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
--------------------
The accompanying 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, 1998.
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 six and three months ended July 31, 1998 are
not necessarily indicative of the results for the entire fiscal year.
<PAGE>
MULTI SOFT, INC.
a 53.6% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
31-Jul 31-Jan
1998 1998
(Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 3,087 $ 29,093
Accounts Receivable (net of allowance
of $20,086 and $26,854 respectively) 101,452 57,025
Prepaid expenses and other current assets 44,724 20,799
----------- -----------
149,263 106,917
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,869 8,869
Office furniture and other equipment 13,824 13,824
----------- -----------
22,693 22,693
Less: Accumulated Depreciation (10,574) (8,688)
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12,119 14,005
OTHER ASSETS
Capitalized software development costs 1,344,981 1,568,794
Less accumulated amortization (662,431) (939,942)
----------- -----------
682,550 628,852
Due from Multi Solutions 422,839 422,239
Due from NetCast 195,593 155,251
----------- -----------
$ 1,462,364 $ 1,327,264
=========== ===========
<PAGE>
MULTI SOFT, INC.
a 53.6% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
<TABLE>
<CAPTION>
31-Jul 31-Jan
1998 1998
(Unaudited)
----------- -----------
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
<S> <C> <C>
Loan payable to bank $ 9,441 $ 16,338
Note Payable 8,356 11,339
Accrued payroll 71,579 20,080
Payroll and other taxes payable 25,457 32,755
Accounts Payable 72,153 58,291
Accrued officer compensation 240,555 153,057
Deferred Revenues 170,795 191,820
----------- -----------
598,336 483,680
Deferred compensation due officer/shareholders 586,605 586,605
----------- -----------
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
12,167,806 and 11,780,306 respectively 12,168 11,780
Additional paid-in capital, net of deferred
compensation $22,968 and $9,964 respectively 5,937,711 5,931,876
Accumulated deficit (5,672,456) (5,686,677)
----------- -----------
277,423 256,979
$ 1,462,364 $ 1,327,264
=========== ===========
</TABLE>
<PAGE>
MULTI SOFT, INC
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
July 31, July 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
REVENUES
<S> <C> <C> <C> <C>
License fees $ 93,639 $ 84,914 $ 16,527 $ 54,545
Maintenance fees 294,578 374,333 142,314 170,673
Consulting and Other fees 5,000 -- 5,000 --
------------ ------------ ------------ ------------
Total revenues 393,217 459,247 163,841 250,273
EXPENSES
Software development and technical support 92,310 143,085 46,155 78,439
Selling and administrative 330,034 332,362 174,227 151,797
------------ ------------ ------------ ------------
Total expenses 422,344 475,447 220,382 230,236
------------ ------------ ------------ ------------
Income (loss) from operations (29,127) (16,200) (56,541) 20,037
OTHER INCOME (EXPENSE)
Other Revenue 44,237 49,845 24,680 25,055
Interest Expense (889) (1,291) (269) (637)
------------ ------------ ------------ ------------
Total other Income (expense) 43,348 48,554 24,411 24,418
NET INCOME (LOSS) $ 14,221 $ 32,354 $ (32,130) $ 19,400
============ ============ ============ ============
Weighted average shares outstanding 11,974,056 11,780,306 12,167,806 11,780,306
============ ============ ============ ============
Income (Loss) per share $ -- $ -- $ -- $ --
============ ============ ============ ============
</TABLE>
<PAGE>
MULTI -SOFT, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended
July 31 July 31
1998 1997
--------- ---------
Cash flows from operating activities
<S> <C> <C>
Net Income $ 14,221 $ 32,354
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and amortization 94,196 144,873
Changes in assets and liabilities
Due from Multi Solutions (600) 2,099
Due from NetCast (40,342) (48,007)
Increase in accounts receivable (44,427) (101,772)
Increase in prepaid expenses and other current assets (23,925) (19,404)
Increase in accrued payroll 51,499 51,654
Decrease in payroll and other taxes payable (7,298) (7,203)
Dcrease in note payable (2,983) # (1,998)
Increase in accounts payable and accrued expenses 13,862 9,236
Increase in accrued officer compensation 87,498 71,378
Increase (decrease) in deferred revenues (21,025) 2,643
--------- ---------
Net cash provided by operating activities 123,659 135,853
Cash flows from investing activities
Capitalized software development costs (146,008) (137,935)
--------- ---------
Net cash used in investing activities (146,008) (137,935)
Cash flows from financing activities
Net repayments under loan and line of credit ageements (6,897) (5,154)
Amortization of Stock Grants 5,835 3,984
Issued Common Stock 388 --
--------- ---------
Net cash used in financing activities (3,657) (1,170)
NET DECREASE IN CASH (26,006) (3,252)
Cash at beginning of period 29,093 9,148
Cash at end of period $ 3,087 $ 5,896
========= =========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
----------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
- ---------------------
Six months ended July 31, 1998 compared to six months ended July 31, 1997 and
- --------------------------------------------------------------------------------
three months ended July 31, 1998 compared to three months ended July, 31 1997
- -----------------------------------------------------------------------------
Revenues for the six months period ended July 31, of fiscal year 1998
decreased $66,030 or 14.38% compared with the comparable period of the prior
year. Revenues for the three month period ending July 31, 1998 decreased $86,432
or 34.53% compared with the comparable period of the prior year. The decrease in
revenues for the current six and three month period is attributable to a
cancellation of maintenance agreements in the current six month period. The
decrease in maintenance fees is partially offset by an increase in license fees
in the amount of $8,725.
Operating expenses for the six month period decreased $53,103 or 11.17%
compared with the comparable period of the prior year. Operating expense for the
three month period ending July 31, 1998 decreased $9,854 or 4.27% 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
outside consulting. Also, the six and three month software development expense
has decreased $50,775 and $32,284 respectively. The reason for this decrease is
that Multi Soft has been developing a new product that is not ready for release.
As a result , the company has not yet incurred amortization of capitalized
salaries For this product.
Operating loss of 29,127 for the current six month period increased $12,927
compared with the comparable period of the prior year. Operating loss, of
$56,541 for the current three month period increased $76,578 compared with
comparable period of the prior year. The reason for this decrease in operating
operating income is that Multi Soft has continued to have cancellations of
maintenance agreements.
Other Revenues for the current six month period was 43,348 as compared with
$48,554 for the comparable period of the prior year. The decrease is
attributable to revenue from expenses that were written off in the prior period
that that did not reoccur in the current period.
For the current six month period , net income of $14,221 cents per share
was incurred compared with a net income of $32,354 or ($.00) cents per share a
decrease of $18,133. For the current three month period, a net loss of ($32,130)
or .00 cents per share was incurred compared with net income of $19,400 in the
comparable period for the prior year a decrease of $51,530. As previously
stated, the reason for this decrease is cancellations of maintenance agreements.
Major Customers
- ---------------
In the first six months of 1998, IBM accounted for 22.89% of total
revenues. In the first six months of 1997, IBM accounted for 29.46%.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At July 31, 1998, the Company had a negative working capital position of
($449,073); and has been experiencing cash flow problems.
Management of Multi Soft has taken various steps to correct this situation.
Multi Soft, Inc. has shifted its marketing focus to the internet, which is very
cost effective, thereby allowing it to reduce staff, overhead, and selling
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 NT environment and has made it's Windows based products easier
to learn and use. In addition to other distributors and VARs Multi Soft and IBM
have Marketing Agreements to market Multi Soft's WCL Toolkit.
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.
It is Multi Soft's intent to remain a technology provider and search out
multiple distribution channels, and expand it's Internet activity both in
marketing and new product extensions to 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 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. The company believes but can
not assure that these measures will provide sufficient liquidity for it to
continue as a going concern.
Dividend Policy
- ---------------
Multi Soft 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.
<PAGE>
Year 2000
- ---------
Many companies systems experience problems handling dates beyond the year
1999. Multi Soft 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++. Therefor, 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
The risks inherent with the year 2000 issue are not significant to the
company except to the extent that some customers may not be year 2000 compliant.
Should this occur Multi Soft's operations could be materially affected. Also,
the company has no contingency plan regarding this issue.
Effect of Inflation
- -------------------
Management believes that inflation has not had a material effect on its
operations for the periods presented.
<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
<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 SOFT, INC.
Dated: August 27, 1998
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-31-1998
<CASH> 3,087
<SECURITIES> 0
<RECEIVABLES> 121,538
<ALLOWANCES> 20,086
<INVENTORY> 0
<CURRENT-ASSETS> 149,263
<PP&E> 22,693
<DEPRECIATION> 10,574
<TOTAL-ASSETS> 1,462,364
<CURRENT-LIABILITIES> 598,336
<BONDS> 0
<COMMON> 12,168
0
0
<OTHER-SE> 277,423
<TOTAL-LIABILITY-AND-EQUITY> 1,462,364
<SALES> 93,639
<TOTAL-REVENUES> 393,217
<CGS> 0
<TOTAL-COSTS> 422,344
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 889
<INCOME-PRETAX> 14,221
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,221
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
