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: 0-15976
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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 October 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]
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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 nine and
three months ended October 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 nine and three months ended October 31, 2000 are
not necessarily indicative of the results for the entire fiscal year.
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MULTI SOFT, INC.
a 51.3% owned subsidiary of Multi Solutions, Inc.
BALANCE SHEETS
October 31, 2000 and January 31, 2000
(Unaudited)
October 31, January 31,
2000 2000
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 5,967 $ 13,205
Accounts Receivable (net of allowance
of $37,486 and $37,486 respectively 59,470 139,610
Prepaid expenses and other current assets 22,338 44,991
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87,775 197,806
FURNITURE AND EQUIPMENT
Research and Development Equipment 8,869 8,868
Office furniture and other equipment 22,867 13,824
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31,736 22,692
Less: Accumulated Depreciation (18,423) (15,439)
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13,313 7,253
OTHER ASSETS
Capitalized software development costs 1,458,403 1,371,387
Less accumulated amortization (847,971) (712,776)
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610,432 658,611
Due from Multi Solutions, Inc 365,255 448,039
Due from Freetrek, Inc. 1,446
Due from NetCast, Inc. 234,592 234,592
------------ ------------
$ 1,312,813 $ 1,546,301
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MULTI SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
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 17,623 19,048
Accounts Payable, Accrued expenses and
other Current Liabilities 32,372 50,215
Accrued officer compensation 143,042 161,390
Deferred Revenues 64,800 127,532
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272,620 372,968
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 $18,750 and $25,257 respectively 6,036,158 6,013,964
Accumulated deficit (5,596,279) (5,440,945)
------------ ------------
453,588 586,728
$ 1,312,813 $ 1,546,301
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</TABLE>
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MULTI SOFT, INC
a 51.3% owned subsidiary of Multi Solutions, Inc.
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 384,213 191,353 126,944 80,457
------------ ------------ ------------ ------------
Total revenues 538,651 643,538 149,346 224,934
EXPENSES
Software development and technical support 315,712 171,178 100,855 56,793
Selling and administrative 379,824 446,395 128,365 147,328
------------ ------------ ------------ ------------
Total expenses 695,536 617,573 229,220 204,121
------------ ------------ ------------ ------------
Net income (loss) ($ 156,885) $ 25,965 ($ 79,874) $ 20,813
============ ============ ============ ============
Weighted average shares outstanding 13,709,477 13,509,473 13,709,477 13,509,473
============ ============ ============ ============
Income (Loss) per share (a) (a) (a) (a)
============ ============ ============ ============
</TABLE>
(a) less than $.01 per share
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MULTI -SOFT, INC.
a 51.3 % owned subsidiary of Multi Solutions, Inc.
STATEMENTS OF CASH FLOWS
Nine Months ended October 31, 2000 and October 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
October 31,
2000 1999
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Cash flows from operating activities
<S> <C> <C>
Net income (loss) ($ 156,885) $ 25,965
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 138,179 172,656
Changes in assets and liabilities
Due to / from Multi Solutions 82,784 --
Due to / from Freetrek (1,446) --
Accounts receivable 80,140 (88,052)
Prepaid expenses and other current assets 22,653 3,710
Accrued payroll -- 18,359
Payroll and other taxes payable (1,425) (7,188)
Accounts payable and accrued expenses (16,292) (29,152)
Accrued officer compensation (18,348) 88,333
Deferred revenues (62,732) (18,795)
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Net cash provided by operating activities 66,628 165,836
Cash flows from investing activities
Capital expenditures (9,044)
Capitalized software development costs (87,016) (182,784)
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Net cash used in investing activities (96,060) (182,784)
Cash flows from financing activities
Net repayments under loan and line of credit ageements -- (796)
Amortization of Stock Grants 22,194 20,187
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Net cash provided by financing activities 22,194 19,391
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NET INCREASE (DECREASE) IN CASH (7,238) 2,443
Cash at beginning of year 13,205 18,134
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Cash at end of period $ 5,967 $ 20,577
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</TABLE>
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MULTI SOFT, INC.
NOTE TO FINANCIAL STATEMENTS
October 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
nine and three months ended October 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
nine and three months ended October 31, 1999 have been restated accordingly.
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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
---------------------
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 $538,651 compared to
revenues of $643,538 during the first nine months of fiscal 2000. We believe
that the decrease of $104,887, or approximately 16.3%, 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 $59,947, or approximately 63.6%, and maintenance fees decreased
$237,800, or approximately 66.4%. Consulting and other fees, primarily to our
affiliate, Freetrek. Com, increased $192,860, or approximately 100.8%.
We generated revenues during the three months ended October 31, 2000 of $149,346
compared to revenues of $224,934 during the third quarter of fiscal 2000. We
believe that the overall decrease in revenues of $75,588, or approximately
33.6%, was primarily due to a decrease in revenues from maintenance fees, offset
in part by an increase in license fees and an increase in consulting and other
fees, primarily to our affiliate Freetrek.Com. License fee revenues increased
$1,670, or approximately
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9.2%, maintenance fees decreased $123,745, or approximately 98.0%, and
consulting and other fees increased $46,487 or approximately 57.8%.
Please note that we have included income derived from consulting and
administrative charges to our affiliate Freetrek.Com in the amount of $345,433
and $113,509 in revenues for the nine and three months ended October 31, 2000,
respectively. Previously this income was reported as Other Income in the Income
Statement. We have restated our Statement of Operations for the nine and three
months ended October 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 $96,739 and $36,147 are included in revenues for
the nine and three months ended October 31, 1999, respectively.
Our principal sources of revenues were maintenance fees and consulting fees
which represented approximately 93.6% or $504,314 of revenues for the nine
months ended October 31, 2000 and approximately 85.4% or $549,254 of revenues
for the nine months ended October 31, 1999. Maintenance fees and consulting fees
represented approximately 86.7% or $129,491 of revenues for the three months
ended October 31, 2000 and approximately 91.9% or $206,749 for the nine 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 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 $695,536 for the nine months ended October 31, 2000
compared to $617,573 for the comparable nine month period of fiscal 2000, an
increase of $77,963 or approximately 12.6%. Our operating expenses for the three
months ended October 31, 2000 were $229,220 compared to $204,121 for the
comparable three months ended October 31, 1999, an increase of $25,099 or
approximately 12.3%. We believe that the increase was a result of higher levels
of software development costs related to both consulting and new product
development offset in part by a reduction in selling and administrative costs
charged to operations for the nine month and three month periods ending October
31, 2000 compared to the nine month and three month periods ending October 31,
1999.
As a result of all of the foregoing, we incurred a net loss for the first nine
months of fiscal 2001 of $156,885 compared to net income of $25,965 for the
first nine months of fiscal 2000, a decrease of $182,850. We incurred a net loss
of $79,874 for three months ended October 31, 2000 compared to net income of
$20,813 for the three months ended October 31, 1999, a decrease of $100,687.
Major Customers
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In the first nine months of fiscal 2000, IBM accounted for 16.2% of total
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. We have offset the loss of revenues from IBM with revenues
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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 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 October 31, 2000, we had a negative working capital position of ($184,845)
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 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 October 31, 2000 January 31, 2000
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Working capital
(deficiency) ($184,845) ($175,162)
Current ratios 0.32:1 0.53:1
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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 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
-------------------
We believe that inflation has not had a material effect on our operations for
the periods presented.
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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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None.
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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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: December 11, 2000 By: /s/ Charles J. Lombardo
---------------------------------------------
Charles J. Lombardo, Chief Executive Officer,
Chief Financial Officer and Treasurer
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