U.S. SECURITIES AND EXCHANGE COMMISSION
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: March 31, 1997
--------------
[ ] 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 March 31, 1997, 67,885,000 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 March 31, 1997
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
Item 1 - Financial Statements
Consolidated Balance Sheet
March 31, 1997 (Unaudited) 3-4
Consolidated Statements of Operations -
for the Three Months ended March 31, 1997
(Unaudited) 5
Consolidated Statements of Cash Flows
for the Three Months ended March 31, 1997
(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 5 - Other Information 9
Item 6 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 9
SIGNATURES 9
2
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 1997
ASSETS
MARCH, 31 DECEMBER,31
1997 1996
------------- --------------
CURRENT ASSETS
Cash $ 297,607 $ 196,653
Trade accounts receivable 2,751,930 345,452
Less Allowance for Bad Debt (104,775) (33,487)
Notes receivable 266,552 10,000
Commissions Receivable 6,000 -
Deposits 18,645 18,488
Prepaid Expenses 19,833 19,883
------------- --------------
Total current assets 3,255,792 556,989
------------- --------------
PROPERTY AND EQUIPMENT, NET 182,335 63,349
------------- --------------
OTHER ASSETS
Goodwill 823,625 850,109
Software development costs 428,979 394,240
------------- --------------
Total other assets 1,434,939 1,307,698
------------- --------------
$ 4,690,731 $ 1,864,687
============= ==============
- Continued -
3
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (continued)
March 31, 1997
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<CAPTION>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
1997 1996
--------------- ---------------
CURRENT LIABILITIES
Notes Payable $ 661,699 $ 242,029
Accounts payable 187,162 149,741
Accrued liabilities 157,812 101,382
Advance on medical receivables 2,069,113 -
Other liabilities 157,999 179,000
Other 3,872 -
Deferred revenue 122,983 159,026
--------------- ---------------
Total current liabilities 3,360,641 831,178
LONG TERM LIABILITIES
Note Payable 1,348,932 1,283,808
Other Liabilities 40,000 40,000
--------------- ---------------
Total long term liabilities 1,388,932 1,323,808
SHAREHOLDERS' EQUITY
Common stock .001 par value;100,000,000 shares
authorized; 67,885,000 shares issued 67,885 67,885
Additional paid-in capital 810,320 810,322
Retained Earnings (deficit) (1,156,467) (1,156,467)
Treasury stock, at cost;409,577shares (12,039) (12,039)
Net Earnings 231,459 -
--------------- ---------------
Total shareholders' equity (deficit) (58,842) (290,299)
--------------- ---------------
$ 4,690,731 $ 1,864,687
=============== ===============
</TABLE>
4
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Three Months
Ended 3/31/97 Ended 3/31/96
REVENUES
Service fee & broker income 7,518 $ 1,816
Consulting Fees 23,610 -
Software & maintenance sales 425,826 603,099
Other income 4,514 30,008
Medical income 705,852 -
------------- --------------
Total revenues 1,167,320 634,923
COST OF REVENUES
Cost of service & broker fees - -
Cost of software & maintenance 136,416 102,839
Cost of services 8,706
------------- --------------
Total cost of revenues 145,122 102,839
------------- --------------
GROSS PROFIT 1,022,198 532,084
------------- --------------
OPERATING EXPENSES
Selling, general & administrative 708,331 429,839
Depreciation and amortization 56,981 5,616
------------- --------------
Total operating expenses 765,312 435,455
------------- --------------
INCOME FROM OPERATIONS 256,886 96,629
OTHER INCOME (EXPENSES)
Interest income(expense), net 25,181 (1,038)
Other, net 246 (2,211)
------------- --------------
Total other income
(expense), net 25,427 (3,249)
------------- --------------
NET INCOME BEFORE TAXES 231,459 93,379
------------- --------------
PROVISION FOR INCOME TAXES - -
NET PROFIT $ 231,459 $ 93,379
============= ==============
Income per weighted-average
common share 0 0
============= ==============
Weighted-average common
shares outstanding 67,885 49,815
============= ==============
5
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
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<S> <C> <C>
Three Months Three Months
ended Mar. 31, ended Mar. 31,
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income(Loss) for the period $ 231,459 $ 93,379
Adjustments to reconcile net income(loss) to net
cash used by operating activities:
Depreciation 56,981 5,616
Gain on debt extinguishment
Gain from reduction of liabilities (8,579)
Change in allowance for doubtful accounts (71,288)
Changes in assets and liabilities, net of
effects of acquisition and disposition
Trade accounts receivable (2,439,965) (61,793)
Advances on medical receivable l2,069,113
Commission receivable 6,000
Prepaid expenses and other (50)
Deposits 157 (700)
Accounts payable and accrued liabities (85,821) (72,345)
Other liabilities -related parties (21,001) 350,033
Deferred revenues (36,043) 48,722
Other 3,872 1,034
------------ -----------
Net cash used by operating activities (295,165) 363,946
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (118,986) (4,725)
Software development costs capitalized (45,792) (38,279)
Collections on notes receivable 26,631 (9,000)
Advances on notes receivable (212,038)
------------
Net cash provided (used) by investing activities (350,185) (52,004)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable (18,845) (159,246)
Proceeds from notes payable 425,000 454,000
Payment on other liabilities - related parties
Change in cash overdraft (14,277)
Proceeds from common stock issuance 45,000
Treasury Stock (1,152,459)
------------ -----------
Net cash provided by financing activities (746,304) 325,477
------------ -----------
INCREASE / (DECREASE) IN CASH 100,954 (13,535)
------------
Cash at beginning of period 196,653 36,535
Cash at end of period $ 297,607 $ 23,000
============ ===========
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest $ 25,181 $ 1,038
============ ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of treassury stock in settlement of note payable 45000
</TABLE>
6
<PAGE>
MB SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
(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, 1996.
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 three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
MB Software Corporation has begun to strengthen its position in healthcare
through application of a strategy to augment and leverage its core business. In
the quarter ended March 31, 1997, the Company maintained its market-share with
its current customer install base of 3,500 users comprised of physicians,
dentists and chiropractors, with over 2,350 physical installs.
The Company has embarked on its 1997 Strategic Plan, which calls for even
greater concentration and quality of customer service within its core business,
Santiago SDS, Inc., building Santiago's revenue stream in two untapped areas -
Electronic Media Claims (EMC) and electronically prepared physician billing
statements. Combined, those elements of business represent significant upside
revenue potential, which could add revenues without a corresponding offset in
operating expense. While introduction of the Company's Windows-95 version of
OneClaim Plus continues to prove its ease of use and efficacy in multiple
disciplines of physician, dental and chiropractic practice management in the
healthcare marketplace, the Company also recognizes that incremental growth must
be achieved through acquisition of compatible and complementary companies. Such
growth strategy was successfully implemented during the quarter ended March 31,
1997, wherein two acquisitions were accomplished. Both going concerns were
transitioned into the Company's Strategic Plan without major capitalization or
restructuring. Both acquisitions, Color Country Health Express, Inc. and North
Florida Physical Medicine Associates remain ahead of plan in terms of financial
and operational improvement.
7
<PAGE>
Results of Operations
This section discusses the operational results of the Company and its
subsidiaries for the quarterly period ended March 31, 1997. Since January 1,
1997, the Company has been able to exceed its goals in terms of acquisitions,
operating improvement and overall profitability. During the quarterly period, MB
Software acquired the assets and specific liabilities of two (2) going concerns:
o Color Country Health Express, Inc., a Utah-based medical facility
comprised of three (3) locations. This acquisition occurred in January.
o North Florida Physical Medicine Associates, formerly First Coast Physical
Medicine, a Florida-based physical medicine and medical facility with two
locations.
In the quarterly period ended March 31, 1997, revenues from the consolidated
entities improved to $1,167,320, an increase of 84% over the $634,922 reported
for the same period in 1996. Revenues were generated from software sales,
medical and physical medicine services, and claim servicing fees. This was the
fifth consecutive quarter of increased revenues for the Company.
Operating expenses again increased at a decreasing rate when measured against
the revenue growth for the quarter. Actual operating expenses for the March 31,
1997 quarter were $765,312, 65% of revenues, compared to $435,455, which were
69% of revenues for the quarter ended March 31, 1996. This cost containment and
decrease were noteworthy when measured against a higher than normal
non-recurring administrative costs associated with the acquisition of the two
target entities.
Total current liabilities for the period ended March 31, 1997 reflected
$3,360,641. For the same period in 1996, total current liabilities were
$935,672.
The Company's Management continues to fulfill its Strategic Plan which calls for
profitability in all operating arms of the Company, acquisition of carefully
measured medical targets that are complimentary to its core software business
and aggressive cost containment. The Company demonstrated continued
profitability through strong operational results and exceeded its revenue
targets. Additionally, Management has developed a focus to contain debt and
quickly move to reduce financial obligations associated with the consolidations.
The company continues to pursue its strategy of forming alliances with major
healthcare entities that share common strategies. One such alliance was effected
with Envoy-NEIC in March, 1997. The company plans to leverage distribution of
software through existing channels and build critical mass of claim volume
through the combined efforts of allianced companies, thereby creating a win-win
situation that benefits the healthcare industry as a whole.
Liquidity and Capital Resources
As of March 31, 1997, the Company had total assets of $4,690,731, an increase of
278% over the quarter ended March 31, 1996 which reflected total assets of
$1,238,319. Net working capital improved to ($104,849) for the quarter ended
March 31, 1997 over ($782,091) for the same period March 31, 1996.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
Exhibits - All exhibits are incorporated by reference from prior filings with
the Commission.
Financial Statements - See Item 1 for financial statements filed with this
- --------------------
report.
Reports on Form 8-K - Original 8-K was filed Feb. 6, 1997 and an Amendment
- -------------------
No.1 was filed April 4, 1997
- --------------------------------------------------------------------------------
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: May 14, 1997 /s/ Scott A. Haire
----------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
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