Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File No. 0-11808
MB SOFTWARE CORPORATION
Colorado 59-2219994
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2225 E. Randol Mill Road - Suite 305
Arlington, Texas 76011-6306
(817) 633-9400
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for 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 [ ]
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [X] No [ ]
As of June 30, 1996, 49,485,000 shares of the Issuer's $.001 par value common
stock were outstanding.
Transitional Small Business Disclosure Format
Yes [ ] No [X]
<PAGE>
MB SOFTWARE CORPORATION
Form 10-QSB
Quarter Ended June 30, 1996
<TABLE>
<CAPTION>
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
<S> <C>
Item 1 - Financial Statements
Consolidated Balance Sheet
June 30, 1996 (Unaudited) 3-4
Consolidated Statements of Operations -
for the Six Months and Three Months ended June 30, 1996 and 1995
(Unaudited) 5
Consolidated Statements of Cash Flows
for the Six Months and Three Months ended June 30, 1996 and 1995
(Unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion
and Analysis of Financial Condition and
Results of Operations 7-8
PART II - OTHER INFORMATION
Item 2 - Changes in Securities 9
Item 4 - Submission of Matters to Vote by Security Holders
9
Item 6 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K
SIGNATURES 10
</TABLE>
2
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 1996
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ 118,610 $ 36,535
Trade accounts receivable 204,070 59,788
Notes receivable 21,052 -
Advance 1,125
Prepaid Expenses 4,500
------------- -----------
Total current assets 349,357 96,323
PROPERTY AND EQUIPMENT, NET 32,404 23,839
------------- -----------
OTHER ASSETS
Goodwill 942,882 956,045
Software development costs 122,911 51,879
Deposits 18,488 17,788
Total other assets 1,084,281 1,025,712
------------- -----------
$ 1,466,042 $ 1,145,874
============== ===========
</TABLE>
Continued
3
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - (Continued)
June 30, 1996
(Unaudited)
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Bank Overdraft $ - $ 29,616
Notes Payable, including $38,214 and $130,172
respectively, due to related parties 255,639 397,741
Accounts payable 104,180 177,266
Accrued liabilities 198,125 142,754
Other liabilities 163,084 527,350
Other 6,813
---------------- ---------------
Total current liabilities 727,841 1,274,727
---------------- ---------------
LONG TERM LIABILITIES
Note Payable 1,257,714 710,898
Other liabilities 130,000 130,000
Deferred Revenue 81,595 160,878
---------------- ---------------
Total long term liabilities 1,469,309 1,001,776
SHAREHOLDERS' EQUITY
Common stock .001 par value; 100,000,000 shares
authorized; 49,485,000 shares issued 49,485 49,485
Additional paid-in capital 518,720 518,720
Retained Earnings (deficit) (1,197,274) (1,551,797)
Treasury stock, at cost; 4,909,577 and 57,518 shares,
respectively (102,039) (147,039)
Total shareholders' equity (deficit) (731,108) (1,130,631)
---------------- ---------------
$ 1,466,042 $ 1,145,874
================ ===============
</TABLE>
4
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED 6-30/96 ENDED 6/30/95 ENDED 6/30/96 ENDED 6/30/95
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES
Service fee & broker income $ 34,027 $ 45,131 $ 35,843 $ 63,561
Smart card product sales - 13,747 - 27,744
Software & maintenance sales 683,599 34,103 1,286,698 88,701
Other income 219,992 41,241 250,000 46,570
------- ------ ------- ------
Total revenues 937,618 134,223 1,572,541 226,577
------- ------- --------- -------
COST OF REVENUES
Cost of service & broker fees 2,548 11,985 2,548 15,189
Cost of smart card product sales - 7,238 - 14,136
Cost of software & maintenance 82,617 23,241 185,456 67,080
------ ------ ------- ------
Total cost of revenues 85,165 42,465 188,004 96,405
------ ------ ------- ------
GROSS PROFIT 852,453 91,757 1,384,537 130,171
------- ------ --------- -------
OPERATING EXPENSES
Selling, general & administrative 565,515 140,206 995,354 285,563
Depreciation and amortization 4,646 10,042 10,262 20,083
Gain on disposition of assets held
for resale and related note receivable - - - 28,417
------- ------- --------- ------
Total operating expenses 570,161 150,248 1,005,616 334,062
------- ------- --------- -------
INCOME FROM OPERATIONS 282,292 (58,489) 378,921 (203,890)
------- ------- ------- --------
OTHER INCOME (EXPENSES)
Interest income, net (7,407) 4,905 8,445 5,827
Other, net (13,743) 2,424 15,954 3,060
------- ----- ------ -----
Total other income, net (21,150) 7,329 24,399 8,887
------- ----- ------ -----
NET INCOME BEFORE TAXES $ 261,142 $ (65,819) $ 354,522 $ (212,778)
PROVISION FOR INCOME TAXES
NET INCOME $ 261,142 $ (65,819) $ 354,522 $ (212,778)
---------- ---------- ------------ ----------
Income per weighted-average common shares $ 0.01 $ (0.00) $ 0.01 $ (0.00)
========== ========== ============ ==========
Weighted-average common shares outstanding 49,485,000 49,485,000 49,485,000 49,485,000
========== ========== ============ ==========
</TABLE>
5
<PAGE>
MB SOFTWARE CORPORAITON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss) for the period $ 354,522 $ (212,778)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation 13,163 10,042
Changes in assets and liabilities
Trade accounts receivable (144,283) 3,396
Advances (1,125) -
Inventories 9,964
Notes receivable 26,520
Prepaid expenses and other (4,500) 3,309
Deposits (700)
Accounts payable 73,086 (22,499)
Accrued Liabilities (55,371) (127,888)
Other Liabilities 364,266 -
Deferred revenues 79,283 -
Other (6,812) (38,632)
------ -------
Net cash used by operating activities 671,529 (348,566)
CASH FLOW FROM INVESTING ACTIVITIES
Disposal (Purchase) of property and equipment (8,565) 7,314
Software development costs capitalized (71,032) -
Proceeds from sale of Assets held for Sale - 377,964
Advances on notes receivable (21,052) (18,000)
------- -------
Net cash provided (used) by investing activities (100,649) 367,278
CASH FLOW FROM FINANCING ACTIVITIES
Receipts on notes payable 764,600 310,845
Principle payments on notes payable (350,411) (325,145)
Increase (decrease) in cash overdraft 29,616 -
Purchase of treasury stock 45,000 -
------ -------
Net cash provided by financing activities 488,805 (14,300)
INCREASE / (DECREASE) IN CASH 82,075 4,412
------ -----
Cash at beginning of period 36,535 (15,795)
Cash at end of period 118,610 (11,383)
======= =======
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest $ 8,451 $ 11,076
============ ==============
</TABLE>
6
<PAGE>
MB SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
1. BASIS OF PRESENTATION
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although management believes the disclosures
herein are adequate to make the information presented not misleading. These
interim financial statements should be read in conjunction with the most recent
financial statements of MB Software Corporation included in the Company's report
on Form 10-KSB for the year ended December 31, 1995.
The interim financial information included herein is unaudited; however it
reflects all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
financial position, results of operations and cash flows for the interim period.
The results of operations for the six months and three months ended June 30,
1996 are not necessarily indicative of the results to be expected for the full
year.
This Quarterly Report on Form 10-QSB contains forward looking statements about
the business, operations and financial condition of the Company, including
various statements contained in "Management's Discussions and Analysis of
Financial Condition and Results of Operations." The actual results of the
Company could differ materially from those forward looking statements. Certain
factors that could cause the actual results of the Company to differ from those
contained in the forward looking statements are discussed in connection with
those statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company
- -----------
MB Software Corporation, formerly known as INAV Travel Corporation, (the
"Company"), is a leading provider of practice management software and cash
management resources to physicians, dentists, chiropractors and medical billing
centers. As of June 30, 1996, the Company provided business management services
to approximately 3,400 physicians, dentists and chiropractors, with over 2,300
physical locations supporting these services.
The Company's objective is to increase the number of physician customers using
its practice management software products and, through the use of a common
software platform, become an important link for the electronic exchange of
information between physician practices and connecting service providers.
Currently over 250 clients are on-line to process information for financial
services through the Company's OneClaim Plus (TM) practice management system.
In the future, the Company also plans to establish Internet connections with
customers through an Internet hub set up to work in conjunction with the
Company's practice management software. The Company's strategy for achieving
this objective is to move the Company's 3,400 existing practice management
customers to the SDS Health Network Information System, acquire new practice
management systems under the SDS Health Network Platform and provide new and
enhanced services along with related service products.
7
<PAGE>
Results of Operations
- ---------------------
This section discusses the results of operations of the Company and its
subsidiaries for the quarterly period ended June 30, 1996. Since January 1,
1996, the Company has been able to achieve several of its goals following the
acquisition of Santiago SDS, Inc.
In the quarterly period ended June 30, 1996, revenues of $937,618 were generated
by claims servicing fees, consulting and software and maintenance sales. In the
comparable quarter in 1995, revenues were $134,223.
Operating Expenses for the quarterly period ended June 30, 1996 consisted of
$85,165 for cost of revenues and $570,161 for general and administrative
expenses. In comparison, cost of revenues were $42,465 and general and
administrative expenses were $150,248 for the comparable quarter in 1995. These
expenses include costs associated with the processing and servicing of medical
claims, personnel, building occupancy lease, new business and product
development activities, as well as corporate, administrative, accounting and
legal expenses. Net income for the quarterly period ended June 30, 1996 was
$261,142 as compared to net loss of $(65,819) for the second quarter 1995.
The Company is unable to measure the impact of future healthcare insurance
legislation, if any, on its medical receivables business. The short and medium
range impact of inflation on MB Software Corporation's businesses is expected to
be minimal.
Liquidity and Capital Resources
- -------------------------------
As of June 30, 1996, the Company had total assets of $1,466,042 with current
assets of $349,357 and property, equipment and other assets of $32,404. Total
current liabilities at June 30, 1996 were $727,841. Total long term liabilities
were $1,469,309 of which $1,257,714 consisted of loans to the Company by certain
of its officers, directors and shareholders. Net working capital at the end of
the period was ($378,484).
The Company made a profit in the first and second quarter of 1996. The Company
is actively engaging in capital expenditure programs for its product systems,
software and hardware products. It is management's belief that the Company will
need additional cash to launch it's two new products. If the Company's new
products are unsuccessful in the marketplace, the Company could be adversely
affected because of the significant expenses incurred in developing those
products.
Beginning in the third quarter of 1996, the Company intends to introduce two new
products. First, the Company plans to release version 1.0 of its Windows
product. Additionally, the Company will be coming out with K.I.D.(TM), (KID),
which stands for Kid Identity Defense Program. KID is a nationwide child
identification system that facilitates the collection, safeguarding and
disseminations of a child's physical, medical and demographic information in a
secured database. The information is available to parents and authorized
guardians 24 hours a day, 365 days a year, by way of the KID toll-free hot line.
With permission from the child's parent/guardian, law enforcement officials or
emergency medical practitioners, a KID operator can distribute the information
via telecopy or the Internet to appropriate local, state and federal agencies
within minutes.
The KID program has generated substantial media attention. The Los Angeles Times
recently wrote an article on KID, which was published in the "Cyber News"
Section of that paper. Additionally, an Orange County television station
recently interviewed Company personnel regarding KID.
8
<PAGE>
The Company hopes to introduce the KID program in the third quarter of 1996,
with an all-out product launch in the first quarter of 1997. The Company
believes that both of its new products have the potential to result in
significant additional revenues for the Company. However, there can be no
guarantee that such revenues will be generated, or if generated, that such
revenues will be significant.
The impact of the new products on the Company's financial position could be
affected by a number of factors, including the Company's ability to bring the
products to market, the timing of the introduction to the marketplace, the
acceptance of the products by the marketplace, and competition. It is impossible
to predict what impact, if any, these new products will have on the operating
results of the Company. The Company will attempt to enhance cash flows from
operations through sales efforts and operating efficiencies and in addition, may
attempt to sell stock or other securities through private placement or to obtain
loans in 1996 as necessary to fund the continued development of the Company, its
programs and strategic acquisitions. However, there can be no assurance that the
Company will be successful in this regard. The Company intends to continue its
growth by adding customers and catering to existing customers as well as
aggressively marketing new products.
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities
See Item 4, Submission of Matters to a Vote of Security Holders.
ITEM 4. Submission of Matters to a Vote of Security Holders
On June 18, 1996, the Company held its annual meeting of stockholders. At that
meeting, Robert E. Gross, Araldo A. Cossutta, Steven W. Evans, Thomas J.
Kirchhofer and Scott A. Haire were elected as directors of the Company for the
upcoming year. Additionally, the stockholders approved an amendment to the
Company's articles of incorporation that (i) changed the name of the Company
from INAV Travel Corporation to MB Software Corporation and (ii) increased the
number of authorized shares of common stock of the Company from 50,000,000
shares to 100,000,000 shares. The stockholders also ratified the appointment of
King, Burns & Company, P.C. as auditors for the Company. Each director and the
proposals to amend the articles of incorporation and to ratify the selection of
the auditors received the vote of the holders of 23,343,659 shares of common
stock, or 51.98% of the total outstanding shares entitled to be voted at the
meeting. There were no votes against, any abstentions, or any broker non-votes
with respect to any of the directors or the proposals.
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Exhibits - All other exhibits are incorporated by reference from prior filings
with the Commission on Form 8-K during the period.
Financial Statements - See Item 1 for financial statements filed with this
report.
Reports on Form 8-K - The Company filed the following Reports. Report on Form
8-K dated June 25, 1996.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
MB SOFTWARE CORPORATION
Date: ______, 1996 /s/ Scott A. Haire
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 118,610
<SECURITIES> 0
<RECEIVABLES> 225,122
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 349,357
<PP&E> 32,404
<DEPRECIATION> 13,163
<TOTAL-ASSETS> 1,466,042
<CURRENT-LIABILITIES> 727,841
<BONDS> 0
0
0
<COMMON> 49,485
<OTHER-SE> 1,197,274
<TOTAL-LIABILITY-AND-EQUITY> 1,466,042
<SALES> 1,286,698
<TOTAL-REVENUES> 1,572,541
<CGS> 188,004
<TOTAL-COSTS> 188,004
<OTHER-EXPENSES> 1,005,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,445
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 378,921
<DISCONTINUED> 0
<EXTRAORDINARY> 15,954
<CHANGES> 0
<NET-INCOME> 354,522
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
