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, 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: 0-15976
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MULTI SOFT, INC.
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(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2588030
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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 July 31, 2000
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Common Stock, par value 13,709,477
$.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 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 our results for the six and
three months ended July 31, 2000.
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 our audited financial statements at, and for
the fiscal year ended January 31, 2000.
The results reflected for the six and three months ended July 31, 2000 are not
necessarily indicative of the results for the entire fiscal year.
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<PAGE>
MULTI SOFT, INC.
a 51.3% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
July 31, 2000 and January 31, 2000
(Unaudited)
July 31, January 31,
2000 2000
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ASSETS
CURRENT ASSETS
Cash $ 16,597 $ 13,205
Accounts Receivable (net of allowance
of $37,486 and $37,486 respectively) 54,435 139,610
Prepaid expenses and other current assets 37,289 44,991
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108,321 197,806
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,869 8,868
Office furniture and other equipment 19,946 13,824
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28,815 22,692
Less: Accumulated Depreciation (17,191) (15,439)
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11,624 7,253
OTHER ASSETS
Capitalized software development costs 1,419,782 1,371,387
Less accumulated amortization (803,627) (712,776)
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616,155 658,611
Due from Multi Solutions, Inc 404,623 448,039
Due from Freetrek, Inc. 21,158
Due from NetCast, Inc. 234,592 234,592
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$ 1,396,473 $ 1,546,301
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<PAGE>
MULTI SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
July 31, 2000 and January 31, 2000
(Unaudited)
July 31, January 31,
2000 2000
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LIABILITIES AND STOCKHOLDERS'
DEFICIENCY
CURRENT LIABILITIES
Accrued payroll $ 14,783 $ 14,783
Payroll and other taxes payable 18,183 19,048
Accounts Payable, Accrued expenses and
other Current Liabilities 18,695 50,215
Accrued officer compensation 152,216 161,390
Deferred Revenues 80,373 127,532
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284,250 372,968
Deferred compensation due officer /shareholders 586,605 586,605
STOCKHOLDERS' DEFICIENCY
Common stock, authorized 30,000,000 shares
$.001 par value, issued and outstanding
13,709,477respectively 13,709 13,709
Additional paid-in capital, net of deferred
compensation $10,906 and $25,257 respectively 6,028,315 6,013,964
Accumulated deficit (5,516,406) (5,440,945)
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525,618 586,728
$ 1,396,473 $ 1,546,301
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<TABLE>
<CAPTION>
MULTI SOFT, INC
a 51.3% owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF OPERATIONS
Six and Three months ended July 31,2000 and 1999
(Unaudited)
Six Months Ended Three Months Ended
July 31, July 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
REVENUES
<S> <C> <C> <C> <C>
License fees $ 14,482 $ 76,099 $ 1,997 $ 16,375
Maintenance fees 117,554 231,609 51,734 118,072
Consulting and Other fees 257,269 110,896 111,070 95,378
---------- ---------- ---------- ----------
Total revenues 389,305 418,604 164,801 229,825
EXPENSES
Software development and technical support 214,857 114,385 126,229 57,193
Selling and administrative 251,459 299,067 98,408 136,512
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Total expenses 466,316 413,452 224,637 193,705
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Net (loss) ($ 77,011) $ 5,152 ($ 59,836) $ 36,120
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Weighted average shares outstanding 13,709,477 13,509,473 13,709,477 13,509,473
========== ========== ========== ==========
Income (Loss) per share (a) (a) (a) (a)
========== ========== ========== ==========
(a) less than $.01 per share
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
MULTI -SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
Six Months ended July 31, 2000 and July 31, 1999
(Unaudited)
July 31,
2000 1999
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Cash flows from operating activities
<S> <C> <C>
Net (loss) $ (77,011) $ 5,152
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 92,603 115,127
Changes in assets and liabilities
Due to / from Multi Solutions 43,416 4,745
Due to / from Freetrek (21,158) --
Accounts receivable 85,175 (76,179)
Prepaid expenses and other current assets 7,702 3,710
Accrued payroll -- 23,284
Payroll and other taxes payable (865) (695)
Accounts payable and accrued expenses (29,969) (30,604)
Accrued officer compensation (9,174) 38,333
Deferred revenues (47,159) 8,187
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Net cash provided by operating activities 43,560 91,060
Cash flows from investing activities
Capital expenditures (6,123)
Capitalized software development costs (48,395) (121,856)
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Net cash used in investing activities (54,518) (121,856)
Cash flows from financing activities
Net repayments under loan and line of credit ageements -- (796)
Amortization of Stock Grants 14,350 13,458
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Net cash provided by financing activities 14,350 12,662
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NET INCREASE (DECREASE) IN CASH 3,392 (18,134)
Cash at beginning of year 13,205 18,134
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Cash at end of period $ 16,597 $ --
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</TABLE>
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<PAGE>
MULTI SOFT, INC.
NOTE TO FINANCIAL STATEMENTS
July 31, 2000
(Unaudited)
RECLASSIFICATION OF OTHER INCOME TO REVENUE FROM CONSULTING AND OTHER FEES
Consulting, rent and administrative fees charged to FreeTrek.Com, Inc., an
affiliate, were reflected on prior financial statements as "Other Income" in the
category "Other Income (Expense)" on the Statement of Operations. During the six
and three months ended July 31, 2000, these fees have been included in
"Consulting and Other Fees" in the "Revenues" category on the Statements of
Operations. For purposes of comparison, the Statements of Operations for the six
and three months ended July 31, 1999 have been restated accordingly.
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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.
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
affiliates' 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 affiliates, include our ability to:
o continue to receive royalties from our 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.
Results of Operations
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Six months ended July 31, 2000 compared to Six months ended July 31, 1999 and
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Three months ended July 31, 2000 compared to Three months ended July 31, 1999
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We generated revenues during the six months ended July 31, 2000, the first six
months of our fiscal year ending January 31, 2001, of $389,305 compared to
revenues of $418,604 during the first six months of fiscal 2000. We believe that
the decrease of $29,299, or approximately 7.0%, was due primarily to a decrease
in our license and maintenance fees offset in part by increases in consulting
fees, primarily to our affiliate Freetrek.Com. License fee revenue decreased
$61,617, or approximately 81.0%, and maintenance fees decreased $114,055, or
approximately 49.2%. Consulting and other fees, primarily to our affiliate
Freetrek. Com increased $146,373, or approximately 132%.
We generated revenues during the three months ended July 31, 2000, of $164,801
compared to revenues of $229,825 during the second quarter of fiscal 2000. We
believe that the overall decrease in revenues of $65,024, or approximately
28.3%, was due primarily to a decrease in revenues from license and maintenance
fees, offset in part by an increase in consulting and other fees, primarily to
our affiliate Freetrek.Com. License fee revenues decreased $14,378, or
approximately 87.8%, maintenance fees decreased $66,338, or approximately 56.2%,
consulting and other fees increased $15,692 or approximately 16.5%.
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<PAGE>
Please note that we have included income derived from consulting and
administrative charges to our affiliate Freetrek.Com in the amount of $247,757
and $108,257 in revenues for the six and three months ended July 31, 2000
respectively. Previously this income was reported as Other Income in the Income
Statement. We have restated our Statement of Operations for the six and three
months ended July 31, 1999 to reflect this change. As a result of this
restatement, income derived from consulting and administrative charges to
Freetrek. Com in the amount of $60,592 is included in revenues for the six and
three months ended July 31, 1999.
Our principal sources of revenues were maintenance fees and consulting fees
which represented approximately 96.3% or $374,823 of revenues for the six months
ended July 31, 2000 and approximately 81.8% or $342,505 of revenues for the six
months ended July 31, 1999. Maintenance fees and consulting fees represented
approximately 98.8% or $162,804 of revenues for the three months ended July 31,
2000 and approximately 92.9% or $213,450 for the three months ended July 31,
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. We believe that the
increase in consulting and other fees was due to charges for consulting and
administrative fees to our affiliate Freetrek.Com.
See the discussion below under "Major Customers."
Our operating expenses were $466,316 for the six months ended July 31, 2000
compared to $413,452 for the comparable six month period of fiscal 2000, an
increase of $52,864 or approximately 12.8%. Our operating expenses for the three
months ended July 31, 2000 were $224,637 compared to $193,705 for the comparable
three months ended July 31, 1999, an increase of $30,932 or approximately 16.0%.
We believe that the increase was a result of higher levels of software
development costs offset in part by a reduction in selling and administrative
costs charged to operations for the six month and three month period ending July
31, 2000 compared to the period ending July 31, 1999.
As a result of all of the foregoing, we incurred a net loss for the first six
months of fiscal 2001 of $77,011 compared to net income of $5,152 for the first
six months of fiscal 2000, an decrease of $82,163. We incurred a net loss of
$59,836 for three months ended July 31, 2000 compared to net income of $36,120
for the three months ended July 31, 1999, a decrease of $95,956.
Major Customers
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In the first six months of fiscal 2000, IBM accounted for 17% of total revenues.
In the first six months of fiscal 2001, IBM did not account for any revenues.
IBM extended its contract with us 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. We have offset the loss of revenues
from IBM with revenues generated from our affiliate, FreeTrek, for work related
to the prior and ongoing development, maintenance and enhancement of FreeTrek's
products. 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 Multi
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<PAGE>
Solutions' securities. If FreeTrek is unable to generate substantial revenues or
continue to raise funds, revenues received by us from FreeTrek most likely will
decrease and eventually cease.
Liquidity and Capital Resources
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At July 31, 2000, we had a negative working capital position of ($175,929)
compared to a negative working capital position of ($175,162) on January 31,
2000. We continue to experience significant cash flow problems.
We have taken various step to correct this situation, including:
o significantly cutting overhead costs through staff reduction;
o extending our product line to operate within the internet environment;
o performing work for our affiliate, FreeTrek, related to the prior and
ongoing development, maintenance and enhancement of FreeTrek's
products: and
o performing contract consulting services for others.
We intend to remain a technology provider of products and services and search
out multiple distribution channels, with increasing emphasis on the use of the
Internet for marketing, 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 we obtain additional funds
from operations or otherwise, we plan to expand in-house marketing activities by
advertising in trade publications and by conducting targeted mailing.
Working Capital and Current Ratios:
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Descriptions July 31, 2000 January 31, 2000
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Working capital
(deficiency) ($175,929) ($175,162)
Current ratios 0.38:1 0.53:1
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 declare or pay 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 the 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
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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 common stock purchase warrants expired on June 1, 2000.
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 SOFT, INC.
Dated: September 11, 2000 By: /s/ Charles J. Lombardo
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Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
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