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: 0-15976
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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 October 31, 1998
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Common Stock, par value 12,084,806
$.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 nine and three months ended October 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 nine and three months ended October 31, 1998
are not necessarily indicative of the results for the entire fiscal year.
1
<PAGE>
MULTI SOFT, INC.
a 53.6% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
31-Oct 31-Jan
1998 1998
(unaudited) (audited)
---------------------------
ASSETS
CURRENT ASSETS
Cash $ 2,017 $ 29,093
Accounts Receivable (net of allowance
of $19,058and $20,086 respectively) 108,076 57,025
Prepaid expenses and other current assets 56,998 20,799
---------------------------
167,091 106,917
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 (11,498) (8,688)
---------------------------
11,195 14,005
OTHER ASSETS
Capitalized software development costs 1,396,611 1,568,794
Less accumulated amortization (717,782) (939,942)
---------------------------
678,829 628,852
Due from Multi Solutions 423,039 422,239
Due from NetCast 215,093 155,251
---------------------------
$ 1,495,247 $ 1,327,264
===========================
2
<PAGE>
MULTI SOFT, INC.
a 53.6% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
<TABLE>
<CAPTION>
31-Oct 31-Jan
1998 1998
(Unaudited) (audited)
---------------------------
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
<S> <C> <C>
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 64,936 58,291
Accrued officer compensation 240,555 153,057
Deferred Revenues 125,834 191,820
---------------------------
536,226 483,680
Deferred compensation due officer/shareholders 586,605 586,605
---------------------------
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
12,084,806 and 11,780,306 respectively 12,084 11,780
Additional paid-in capital, net of deferred
compensation $14,997and $ 21,562 respectively 5,940,765 5,931,876
Accumulated deficit (5,580,433) (5,686,677)
---------------------------
372,416 256,979
$ 1,495,247 $ 1,327,264
===========================
</TABLE>
3
<PAGE>
MULTI SOFT, INC
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 $ 213,866 $ 162,409 $ 120,226 $ 77,495
Maintenance fees 425,230 525,781 130,652 151,448
Consulting and Other fees 6,096 83,629 1,096 33,784
---------------------------- -----------------------------
Total revenues 645,192 771,819 251,974 262,727
EXPENSES
Software development and technical support 147,661 221,525 55,351 78,440
Selling and administrative 465,115 476,874 135,081 144,512
---------------------------- -----------------------------
Total expenses 612,776 698,399 190,432 222,952
---------------------------- -----------------------------
Income from operations 32,416 73,420 61,542 39,775
OTHER REVENUE (EXPENSE)
Other Revenue 74,849 -- 30,612
Interest Expense 1,021 1,923 (133) 632
---------------------------- -----------------------------
Total other expense 73,828 1,923 30,479 --
NET INCOME(LOSS) $ 106,244 $ 71,497 $ 92,021 $ 39,143
============================ =============================
Weighted average shares outstanding 12,020,106 11,780,306 12,112,206 11,780,306
============================ =============================
Income (Loss) per share $ 0.01 $ -- $ -0.01 $ --
============================ ============ ============
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MULTI -SOFT, INC.
STATEMENTS OF CASH FLOWS Nine Months Ended
(Unaudited) October 31
1998 1997
-----------------------
Cash flows from operating activities
<S> <C> <C>
Net Income $ 106,244 $ 71,497
Adjustments to reconcile net income( loss) to net cash
provided by operating activities
Depreciation and amortization 150,471 224,207
Changes in assets and liabilities
Due from NetCast (59,842) (74,964)
Due from Multi Solutions (800) 1,699
(Increase) decease in accounts receivable (51,051) (66,916)
Decrease in prepaid expenses and other current assets (36,200) (24,955)
Increase (decrease) in accrued payroll 51,499 51,656
Decrease in payroll and other taxes payable (11,172) (10,022)
Increase (decrease) in accounts payable and accrued expenses 6,646 10,780
Decrease in Note payable (4,774) (3,478)
(Decrease) increase in accrued officer compensation 87,498 108,874
Decrease in deferred revenues (65,987) (44,787)
-----------------------
Net cash provided by operating activities 172,532 243,591
Cash flows from investing activities
Capitalized Research and developement --
Capitalized software development costs (197,637) (206,904)
-----------------------
Net cash used in investing activities (197,637) (206,904)
Cash flows from financing activities
Net repayments under loan and line of credit ageements (11,164) (4,521)
Amortization of Stock Grants 8,889 5,979
Issued Common Stock 304 --
-----------------------
Net cash provided by financing activities (1,971) 1,458
NET INCREASE (DECREASE) IN CASH (27,076) 38,145
Cash at beginning of period 29,093 9,148
-----------------------
Cash at end of period $ 2,017 $ 47,293
=======================
</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 $645,192 for the current nine months of the year 1998 decreased
$126,627 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 or 4.1% 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 occurred 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
94.97% compared with 90.50% for the comparable period of the prior year.
Operating expense ending October 31, 1998 as a percent of revenues for the
current three month period was 75.6 % compared with 84.9% for the prior year.
The increase in the nine month period is a result of a decrease in total
operating revenue. The decrease in the three month period is a result of a
decrease in operating costs. For example, legal , accounting and consulting fees
have been substantially reduced.
Operating income, before other expense of $32,415 for the current nine
month period decreased $41,005 compared with the comparable period of the prior
year. Operating income , before other expense of $61,542 for the current three
month period increased $21,767 compared with comparable period of the prior
year.
Interest expense for the current nine month period was $1,022 as compared
with $1,923 for the comparable period of the prior year. The decrease is
attributable to monthly payments that have significantly decreased the
outstanding loan payable.
For the current nine month period , net income of $106,244 was incurred
compared with a net income of $71,497 for the prior period an increase of
$34,747. For the current three month period, a net income of $92,021 was
incurred compared with income of $39,143 in the comparable period for the prior
year, which results in an increase of $52,878.
Major Customers
- ---------------
In the first nine months of 1998, IBM accounted for 20.92 % of total
revenues. In the first nine months of 1997, IBM accounted for %.26.24 of total
revenues.
6
<PAGE>
Liquidity and Capital Resources
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At October 31, 1998, the Company had a negative working capital position of
$369,134 ; 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, Multi Soft broadened its product base into the
Windows NT environment and has made its 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 addition, 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
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 SOFT, INC.
Dated: December 8, 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-31-1998
<PERIOD-END> OCT-31-1998
<CASH> 2,017
<SECURITIES> 0
<RECEIVABLES> 110,731
<ALLOWANCES> 26,854
<INVENTORY> 0
<CURRENT-ASSETS> 167,092
<PP&E> 22,692
<DEPRECIATION> 11,498
<TOTAL-ASSETS> 1,495,248
<CURRENT-LIABILITIES> 536,226
<BONDS> 0
<COMMON> 12,085
0
0
<OTHER-SE> 372,417
<TOTAL-LIABILITY-AND-EQUITY> 1,495,248
<SALES> 213,865
<TOTAL-REVENUES> 645,191
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,022
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,022
<INCOME-PRETAX> 106,242
<INCOME-TAX> 0
<INCOME-CONTINUING> 106,242
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,242
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
