U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[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 [ ] No [ X ]
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 December 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, 1996 (Unaudited) F-1
Consolidated Statements of Operations -
for the Three Months ended March 31, 1997
(Unaudited) F-3
Consolidated Statements of Cash Flows
for the Three Months ended March 31, 1997
(Unaudited) F-4
Notes to Consolidated Financial Statements F-6
Item 2 - Management's Discussion
and Analysis of Financial Condition and
Results of Operations F-7
PART II - OTHER INFORMATION
Item 5 - Other Information 3
Item 6 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 3
SIGNATURES 3
2
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
----------- ----------
(Unaudited)
CURRENT ASSETS
Cash $ 297,212 $ 196,653
Accounts receivable -
Medical receivables, net of
allowance for doubtful accounts of
$103,725 in 1997 483,018 --
Trade accounts receivable, net of
allowance for doubtful accounts of
$33,487 and $33,487, respectively 1,694,750 311,965
Notes receivable - current portion 5,000 10,000
Prepaid expenses and other 20,133 19,883
---------- ----------
TOTAL CURRENT ASSETS 2,500,113 538,501
---------- ----------
PROPERTY AND EQUIPMENT, NET 299,250 63,349
---------- ----------
OTHER ASSETS
Goodwill, net of accumulated amortization 856,972 850,109
Software development costs, net of accumulated
amortization 428,161 394,240
Deposits and other assets 18,645 18,488
---------- ----------
TOTAL OTHER ASSETS 1,303,778 1,262,837
---------- ----------
$4,103,141 $1,864,687
========== ==========
The accompanying notes are an
integral part of these consolidated financial statements.
(Continued)
F-1
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' DEFICIT
March 31, December 31,
1997 1996
----------- ------------
(Unaudited)
CURRENT LIABILITIES
Notes payable $ 2,323,592 $ 209,123
Current maturities of long-term debt 31,208 32,906
Accounts payable 250,899 149,741
Accrued liabilities 134,742 101,382
Other liabilities - related party 149,000 179,000
Deferred revenues 122,983 159,026
----------- -----------
TOTAL CURRENT LIABILITIES 3,012,424 831,178
LONG-TERM LIABILITIES
Long-term debt, net of current maturities 1,348,932 1,283,808
Other liabilities 40,000 40,000
----------- -----------
TOTAL LIABILITIES 4,401,356 2,154,986
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' DEFICIT
Common stock; $.001 par value; 100,000,000 shares
authorized; 67,885,000 shares issued 67,885 67,885
Additional paid-in capital 810,322 810,322
Accumulated deficit (1,164,383) (1,156,467)
Treasury stock, at cost; 409,577 shares (12,039) (12,039)
----------- -----------
TOTAL SHAREHOLDERS' DEFICIT (298,215) (290,299)
----------- -----------
$ 4,103,141 $ 1,864,687
=========== ===========
The accompanying notes are an
integral part of these consolidated financial statements.
F-2
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
----------------------------
March 31, March 31,
1997 1996
------------ ------------
REVENUES
Medical income $ 532,647 $ --
Service fee and broker income -- 1,816
Software & maintenance sales 416,264 603,099
Other income 17,853 30,008
------------ ------------
TOTAL REVENUES 966,764 634,923
------------ ------------
COST OF REVENUES
Cost of software and maintenance 96,788 102,839
Cost of medical services 307,466 --
------------ ------------
TOTAL COST OF REVENUES 404,254 102,839
------------ ------------
GROSS PROFIT 562,510 532,084
------------ ------------
OPERATING EXPENSES
Selling, general and administrative 446,801 429,839
Depreciation and amortization 72,119 5,616
------------ ------------
TOTAL OPERATING EXPENSES 518,920 435,455
------------ ------------
INCOME FROM OPERATIONS 43,590 96,629
OTHER INCOME (EXPENSES)
Interest expense (51,508) (1,038)
Other -- (2,211)
------------ ------------
NET (LOSS) INCOME $ (7,918) $ 93,379
============ ============
INCOME PER WEIGHTED AVERAGE
COMMON SHARE $ -- $ --
============ ============
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 67,885,000 49,815,000
============ ============
The accompanying notes are an
integral part of these consolidated financial statements.
F-3
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31, March 31,
1997 1996
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (7,918) $ 93,379
Adjustments to reconcile net (loss) income to net
cash used by operating activities:
Depreciation and amortization 72,119 5,616
Changes in assets and liabilities:
Trade accounts receivable (59,300) (61,793)
Notes receivable 5,000 --
Prepaid expenses and other (250) --
Deposits (154) (700)
Accounts payable and accrued liabilities (88,498) (72,345)
Other liabilities (30,000) 350,033
Deferred revenues (36,045) 48,722
Other -- 1,034
--------- ---------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (145,046) 363,946
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (125,955) (4,725)
Software development costs capitalized (61,725) (38,279)
Change in notes receivable -- (9,000)
--------- ---------
NET CASH (USED) BY
INVESTING ACTIVITIES (187,680) (52,004)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable (443,113) (159,246)
Proceeds from notes payable 876,398 454,000
Change in cash overdraft -- (14,277)
Proceeds from common stock issuance -- 45,000
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 433,285 325,477
--------- ---------
The accompanying notes are an
integral part of these consolidated financial statements.
(Continued)
F-4
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
----------- -----------
INCREASE (DECREASE) IN CASH $ 100,559 $ (13,535)
CASH AT BEGINNING OF PERIOD 196,653 36,535
----------- -----------
CASH AT END OF PERIOD $ 297,212 $ 23,000
=========== ===========
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest $ 25,181 $ 1,038
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Purchase of medical clinics (1,933,381) --
Goodwill (34,247) --
Accounts payable assumed 223,018 --
Notes payable 1,744,610 --
----------- -----------
$ -- $ --
=========== ===========
The accompanying notes are an
integral part of these consolidated financial statements.
F-5
<PAGE>
MB SOFTWARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulations S-X. They do not include all information and notes required by
generally accepted accounting principals for complete financial statements.
However, except as disclosed, there has been no material change in the
information disclosed in the notes to consolidated financial statements included
in the Annual Report on Form 10-KSB of MB Software Corporation for the year
ended December 31, 1996. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1997, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997.
NOTE 2: ACQUISITION
In February 1997, the Company acquired two medical clinics, one in Utah and one
in Florida. The Utah clinic, Color Country Health Express, Inc., has three (3)
locations; and the Florida clinic, North Florida Physical Medicine Associates,
has two (2) locations.
F-6
<PAGE>
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
Software Corporation has begun to strengthen its position in healthcare through
application of 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 embarked on its 1997 Strategic Plan which called for even greater
concentration and the quality of customer service within its core business,
Santiago SDS, Inc. and build 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, to the point of adding materially to profitability 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, dentists and chiropractic
practice management in the healthcare market place, the Company also recognizes
that incremental growth consistent with projected revenue and profitability
targets must be achieved through acquisition of compatible and complementary
companies. Such strategies were successfully impacted (?) during the quarter
ended March 31, 1997 wherein two acquisitions were accomplished. Both going
concerns were transitioned into the Company's Strategic Plan which called for
near-term and long-term profitability, without major capitalization or total
rebuild. Both acquisitions, Color Country Health Express, Inc. and North Florida
Physical Medicine Associates remain ahead of plan in terms of financial and
operational improvement.
2. The Company remains focused on its Plan to position all its operating
entities so as to benefit from federal and state healthcare legislation.
Inflation rates for 1997 continue in check and pose no threat to the Company's
operations or strategies.
Results of Operations
This section discusses the results of operations 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 $966,764, an increase of 52% over $634,922 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 continued to increase at a decreasing rate when
measured against the revenue growth for the quarter. Actual operating expenses
for the March 31, 1997 quarter were $518,920, 54% of revenues, compared to
$435,455, which were 69% of revenues for the quarter ended March 31, 1996. This
cost containment and decrease included a higher than normal non-recurring
administrative cost associated with the acquisition of the two target entities.
Total current liabilities for the period ended March 31, 1997 reflected
$3,012,424. For the same period in 1996, total current liabilities were
$935,672.
The Company's Management continues to fulfill a strategic plan which called for
profitability in all operating arms of the Company acquisition of carefully
measured medical targets, that would be complimentary to its core software
business and aggressive cost containment, despite acquisition costs which
traditionally elevate administrative costs. The Company demonstrated continued
profitability through strong operational results and exceeded revenue targets.
Additionally, Management has developed a focus to contain debt and quickly move
to reduce financial obligations associated with the consolidations. (?)
Additionally, the company continues to pursue its strategy of forming an
alliance 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.
Liquidity and Capital Resources
As of March 31, 1997, the Company had total assets of $4,103,141, and increase
of 231% over the quarter ended March 31, 1996 which reflected total assets of
$1,238,319. Net working capital improved to ($512,311) for the quarter ended
March 31, 1997 over ($782,091) for the same period March 31, 1996.
F-7
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On January 5th, 1996, in connection with the restructuring of the Company's
liabilities, Robert T. Shaw was issued an unsecured Promissory Note in the
amount of $455,000 at 8% interest maturing in December 1997. Mr. Shaw also
purchased 4,500,000 shares of treasury stock for $45,000. The proceeds were used
to restructure short term liabilities and enhance the Company's current software
developments.
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 - No reports were filed on Form 8K during this period.
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: ______, 1997 /s/ Scott A. Haire
----------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
3
