10QSB 1 x10qsb-602.txt MULTI SOLTUIONS, INC. 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, 2002 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 ------- MULTI SOLUTIONS, INC. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) NEW JERSEY 22-2418056 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3535 Quakerbridge Road, Hamilton, New Jersey 08619 -------------------------------------------------- (Address of principal executive offices) Issuer's telephone number, including area code: (609) 631-7401 -------------- 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, 2002 ----------------------- ----------------------------- Common Stock, par value 21,096,969 $.001 per share Transitional Small Business Format (check one); Yes No X --- --- 1 PART I. FINANCIAL INFORMATION ------------------------------- ITEM 1. FINANCIAL STATEMENTS -------------------- 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, 2002. 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, 2002. The results for the three months ended April 30, 2002 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, Inc. 45.8% NetCast, Inc. 75%. Our financial statements are consolidated with our subsidiaries. In January 2000, we decided to discontinue any further operations of NetCast. 2 MULTI SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 30, 2002 and January 31, 2002 (Unaudited)
April 30, January 31, 2002 2002 ------------ ------------ ASSETS CURRENT ASSETS Cash $ 31,889 $ 3,511 Accounts Receivable (net of allowance of $37,486 and $37,486 respectively) 30,639 22,991 Prepaid expenses and other current assets 22,269 23,824 ------------ ------------ 84,797 50,326 FURNITURE AND EQUIPMENT Research and Development Equipment 24,982 24,982 Office furniture and other equipment 89,225 89,225 ------------ ------------ 114,207 114,207 Less: Accumulated Depreciation (68,817) (64,102) ------------ ------------ 45,390 50,105 Organizational costs 11,126 11,126 Less: Accumulated Amortization (7,589) (7,254) ------------ ------------ 3,537 3,872 OTHER ASSETS Capitalized software development costs 2,257,573 2,250,915 Less accumulated amortization (1,085,668) (1,047,052) Less valuation allowance (210,000) (210,000) ------------ ------------ 961,905 993,863 $ 1,095,629 $ 1,098,166 ============ ============
3 MULTI SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 30, 2002 and January 31, 2002 (Unaudited)
April 30, January 31, 2002 2002 ------------ ------------ LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Accrued payroll $ 45,034 $ 81,817 Payroll and other taxes payable 30,893 28,589 Accounts Payable, Accrued expenses and other Current Liabilities 222,598 226,788 Accrued officer compensation 178,668 178,668 Due to officer 19,646 52,847 Deferred Revenues 64,423 72,552 ------------ ------------ 561,262 641,261 Deferred compensation due officer /shareholders 586,605 586,605 Minority interest in subsidiaries 792,240 633,992 STOCKHOLDERS' DEFICIENCY Common stock, authorized 40,000,000 shares $.001 par value, issued and outstanding 21,096,969 and 21,096,969 respectively 21,098 21,098 Additional paid-in capital 9,219,532 9,219,532 Accumulated deficit (10,085,108) (10,004,322) ------------ ------------ (844,478) (763,692) $ 1,095,629 $ 1,098,166 ============ ============
4 MULTI SOLUTIONS, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS April 30, 2002 and April 30, 2001 (Unaudited)
Three Months Ended April 30, 2002 2002 ------------ ------------ REVENUES License fees $ 4,696 $ -- Maintenance fees 39,350 27,720 Consulting and Other fees 7,329 9,002 ------------ ------------ Total revenues 51,375 36,722 EXPENSES Software development and technical support 37,787 47,092 Selling and administrative 114,126 159,669 ------------ ------------ Total expenses 151,913 206,761 ------------ ------------ (Loss) from operations (100,538) (170,039) OTHER INCOME (EXPENSE) Interest/capital gain income (loss) -- (16,412) Minority share of consolidated subsidiary's loss 19,752 31,116 ------------ ------------ Total other income 19,752 14,704 Net (loss) $ (80,786) $ (155,335) ============ ============ Weighted average shares outstanding 21,096,969 21,096,969 ============ ============ Income (Loss) per share (a) (a) ============ ============
(a) less than $.01 per share 5 MULTI SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS April 30, 2002 and April 30, 2001 (Unaudited)
Three Months Ended April 30, 2002 2002 ------------ ------------ Cash flows from operating activities Net (loss) $ (80,786) $ (155,335) Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 43,666 44,076 Changes in assets and liabilities Accounts receivable (7,648) 60,544 Prepaid expenses and other current assets 1,555 5,195 Accrued payroll (36,783) -- Payroll and other taxes payable 2,304 (957) Accounts payable and accrued expenses (4,190) 56,521 Due to officer (33,201) Deferred revenues (8,129) 28,028 ------------ ------------ Net cash provided (used) by operating activities (123,212) 38,072 Cash flows from investing activities Capital expenditures -- (4,636) Capitalized software development costs (6,658) (83,383) Sales of marketable securities -- 62,352 ------------ ------------ Net cash used in investing activities (6,658) (25,667) Cash flows from financing activities Minority interest and loss in excess of investments 158,248 (31,116) ------------ ------------ Net cash provided (used) by financing activities 158,248 (31,116) ------------ ------------ NET INCREASE (DECREASE) IN CASH 28,378 (18,711) Cash at beginning of year 3,511 22,846 ------------ ------------ Cash at end of period $ 31,889 $ 4,135 ============ ============
6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- CAUTIONARY STATEMENT -------------------- 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 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 --------------------- Three months ended April 30, 2002 compared to Three months ended April 30, 2001 ------------------------------------------------------------------------------- We generated revenues during the three months ended April 30, 2002, the first three months of our fiscal year ending January 31, 2003 of $51,375 compared to revenues of $36,722 during the three months of fiscal 2002. The revenues during all these periods were generated by our subsidiary, Multi Soft. We believe that the increase in revenues of $14,653 or approximately 39.9% was due primarily to an increase in Multi Soft's primary sources of revenues - license, and maintenance fees, offset by a decrease in consulting fees. License fee revenue increased 1 from $0 in the first quarter of fiscal 2002 to $4,696 during the first quarter of fiscal 2003. Maintenance fees increased $11,630, or approximately 42.0%, and 7 consulting and other fees decreased $1,673, or approximately 1.9%. Multi Soft's consulting fees relate to consulting services that it provided to our other subsidiary, FreeTrek, Inc. Multi Soft's two traditional principal sources of revenues have been license fees and maintenance fees which represented approximately 85.7% or $44,046 of revenues for the three months ended April 30, 2002, and 75.4% or $27,720 of revenues for the three months ended April 30, 2001. However, our principal sources of revenues during the first quarter ended April 30, 2002 were maintenance fees and consulting fees. Maintenance fees represented approximately $39,350 or 76.6% of revenues for the three months ended April 30, 2002 and approximately $27,720 or 75.5% of revenues for the three months ended April 30, 2001. Consulting fees represented approximately $7,329 or 14.3% of revenues for the three months ended April 30, 2002 and approximately $9,002 or 24.5% of revenues for the three months ended April 30, 2001. We believe Multi Soft's increase in licensing fees was due to increased software sales. We believe that the increase in maintenance fees was due to the renewal of maintenance contracts by customers. Our operating expenses were $151,913 for the three months ended April 30, 2002 compared to $206,761 for the comparable three month period in fiscal 2002, a decrease of $54,848 or approximately 26.5%. We believe that the decrease was a result of lower levels of software development costs expended by Multi Soft in providing consulting services to Freetrek and lower levels of selling and administrative costs charged to operations. We had other income of $19,752 during the first three months of fiscal 2003 compared to $14,704 of other income during the first three months of fiscal 2002. We believe that the decrease in other income during the first three months was primarily due to a decrease in the minority share of consolidated subsidiaries losses during the first three months of fiscal 2003, compared to the first three months of fiscal 2002. As a result of all of the foregoing, we incurred a net loss for the first three months of fiscal 2003 of $80,786 compared to a net loss of $155,335 for the first three months of fiscal 2002, a decrease of $74,549 or approximately 48.0%. Major Customers --------------- No individual customer accounted for a significant portion of revenues. Multi Soft has generated revenues 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. 8 Although Multi Soft has supplemented its revenues with services provided to FreeTrek, these revenues are eliminated as a result of the consolidation of the financial statements. Liquidity and Capital Resources ------------------------------- At April 30, 2002, we had a negative working capital position of ($476,465), compared to negative working capital of ($590,935) at January 31, 2002 and we continue to experience cash flow problems. Working Capital and Current Ratios were: ---------------------------------------- Descriptions April 30, 2002 January 31, 2002 ---------------------------------------------------------------- Working capital ($476,465) ($590,935) Current ratios .183:1 .079:1 Cash increased $28,378 for the Quarter ended April 30, 2002 compared to a decrease of $18,711 for the comparable period of the prior year. During the Quarter ended April 30, 2002 we used $123,212 of cash for operating activities compared to $38,072 of cash provided by operating activities in the Quarter ended April 30, 2001. This contrasts with the improvements in results of operations discussed previously. We believe that the reason for the decrease in cash flow from operations was due primarily to using the proceeds of private placements to payoff some of our liabilities which were outstanding at the end of the last fiscal year. Dividend Policy --------------- 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. 9 PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings ----------------- None. Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- During the quarter ended April 30, 2002 we and Freetrek sold units consisting of Freetrek common stock and warrants to purchase our common stock at a purchase price of .$0.05 per unit. An aggregate of $178,000 was raised in this offering. No commissions were paid. The offering was conducted pursuant to the exemption from registration provided by Section 4 (2) of the Securities Act of 1933, and rule 506 thereunder. Item 3. Defaults Upon Senior Securities ------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None. Item 5. Other Information ----------------- None. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits None. (b) Reports on Form 8-K None. 10 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 SOLUTIONS, INC. Date June 17, 2002 By: /s/ Charles J. Lombardo ---------------------------------------------- Charles J. Lombardo, Chief Executive Officer, Chief Financial Officer and Treasurer 11