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, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
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
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 633-9400
Securities registered pursuant to Section 12(b) of the Act:
Common Stock $.001 par value
----------------------------
(Title of Class)
Name of each Exchange
Title of Each Class on Which Registered
------------------- ---------------------------
Common NASDAQ - OTC BULLETIN BOARD
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 December 31, 1999, 69,200,000 shares of the Issuer's $.001 par value
common stock were outstanding.
Transitional Small Business Disclosure Format
Yes [ ] No [ X ]
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MB SOFTWARE CORPORATION
Form 10-QSB
Quarter Ended March 31, 2000
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
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Item 1 - Financial Statements
Consolidated Balance Sheet
March 31, 2000 (Unaudited) and December 31, 1999 (Audited) F-1-F-2
Consolidated Statements of Operations -
for the Three Months ended March 31, 2000 (Unaudited) and
March 31, 1999 (Unaudited) F-3
Consolidated Statements of Cash Flows
for the Three Months ended March 31, 2000 (Unaudited)
March 31, 1999 (Unaudited)
Notes to Consolidated Financial Statements 5
Item 2 - Management's Discussion
and Analysis of Financial Condition and
Results of Operations 5
PART II - OTHER INFORMATION
Item 5 - Other Information 6
Item 6 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 6
SIGNATURES 7
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
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March 31, December 31,
2000 1999
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(Unaudited) (Audited)
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CURRENT ASSETS
Cash $ - $ 26,078
Medical receivables, net of allowance 860,594 713,625
for doubtful accounts and contactual
allowances of $847,408 and $822,692 in 2000 and
1999, respectively
Notes receivable 167,634 177,721
Prepaid expenses 4,132 4,131
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Total current assets 1,032,360 921,555
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PROPERTY AND EQUIPMENT, NET 164,819 178,525
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Note receivable - shareholder 350,000 350,000
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Total assets $ 1,547,179 $ 1,450,080
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' DEFICIT
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March 31, December 31,
2000 1999
---------------- --------------
(Unaudited) (Audited)
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CURRENT LIABILITIES
Outstanding checks in excess of bank balances $ 101,860 $ -
Current maturities of notes payable 1,181,925 1,057,925
Current maturities of capital leases 6,636 17,434
Accounts payable 325,546 402,410
Accrued liabilities 334,603 346,639
---------------- --------------
Total current liabilities 1,950,570 1,824,408
LONG TERM DEBTS
Capital leases - 3,050
---------------- --------------
Total long term liabilities - 3,050
---------------- --------------
TOTAL LIABILITIES 1,950,570 1,827,458
SHAREHOLDERS' DEFICIT
Series A senior cumulative convertible particpating preferred
stock; $10 par value; 340,000 shares issued and outstanding
in 2000 and 1999; dividends in arrears 2000 $470,644, and 3,400,000 3,400,000
1999, $385,644
Undesignated preferred stock; $10 par value; 660,000 shares
authorized; none issued - -
Common stock .001 par value;150,000,000 shares
authorized; 69,200,000 shares issued in 2000 and 1999 69,200 69,200
Additional paid-in capital 1,103,005 1,103,005
Accumulated deficit (4,963,557) (4,937,544)
Treasury stock, at cost; 408,029 shares (12,039) (12,039)
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Total shareholders' deficit (403,391) (377,378)
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$ 1,547,179 $ 1,450,080
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31, 2000 March 31, 1999
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REVENUES
Medical income - net of contractual
Adjustments of $361,822 and $310,614
in 2000 and 1999, respectively $ 688,926 $ 507,462
Service fees 136 81,239
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Total revenues 689,062 588,701
COST OF REVENUES
Cost of medical services 392,692 488,217
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Total cost of revenues 392,692 488,217
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GROSS PROFIT 296,370 100,484
OPERATING EXPENSES
Selling, general & administrative 287,402 368,860
Depreciation and amortization 13,705 13,848
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Total operating expenses 301,107 382,708
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LOSS FROM OPERATIONS (4,737) (282,224)
OTHER INCOME (EXPENSE)
Interest income and other - 208,360
Other expense 9,644 -
Interest Expense (30,920) (43,943)
---------------------- ----------------------
Total other income (expense) (21,276) 164,417
---------------------- ----------------------
LOSS FROM CONTINUING OPERATIONS (26,013) (117,808)
DISCONTINUTED OPERATIONS
Income from operations of discontinued subsidiary - (17,257)
---------------------- ----------------------
NET LOSS $ (26,013) $ (135,065)
====================== ======================
Loss from continuing operations $ (26,013) $ (117,808)
---------------------- ----------------------
Plus: Cumulative preferred stock dividends (85,000) -
---------------------- ----------------------
Loss available to common shareholders $ (111,013) $ (117,808)
====================== ======================
BASIC AND DILUTED EARNINGS (L0SS) PER SHARE
Continuing Operations $ - $ -
Discontinued Operations - -
---------------------- ----------------------
Weighted-average common shares outstanding 69,200,000 69,100,000
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED 03/31/00 ENDED 03/31/99
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (26,013) $ (117,808)
Adjustments to reconcile net loss from continuing
operations to cash used by operating activities:
Depreciation 13,706 18,097
Gain on sale of assets (1,338)
Change in allowance for doubtfull accounts 24,716 (340,081)
Changes in assets and liabilities:
Accounts receivable (171,684) 434,243
Accounts payable (76,864) (23,509)
Accrued liabilities (12,038) (4,278)
Outstanding checks in excess of bank balances 101,860
Other liabilities 38,057
Prepaid expenses - (200)
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Net cash used in continuing operations (146,317) 3,183
Net cash used in discontinued operations - (25,684)
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Net cash used in operating activities (146,317) (22,501)
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets - 28,817
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Net cash provided by investing activities - 28,817
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital leases (13,848) (56,383)
Payments on notes payable - (31,612)
Borrowing (payments) on note receivables 10,087 (31,945)
Proceeds from new borrowings 79,000 21,500
Proceeds from notes payable related parties 45,000 -
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Net cash provided by (used in) financing activities 120,239 (98,440)
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NET DECREASE IN CASH (26,078) (92,124)
Cash at beginning of period 26,078 203,977
--------------------- --------------------
Cash at end of period $ - $ 111,853
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SUPPLEMENTAL INFORMATION
Cash paid during the period for interest to related party $ - $ 24,225
Cash paid during the period for interest to others 30,920 49,427
--------------------- --------------------
$ 30,920 $ 73,652
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NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles 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 principles 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, 1999. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included in the Operating results for the three month
period ended March 31, 2000, and are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000.
NOTE 2: ORGANIZATION AND NATURE OF OPERATIONS
The financial statements have been prepared on a going concern basis, which
contemplates realization of assets and liquidation of liabilities in the
ordinary course of business. The Company has continuously incurred losses from
operations and has a working capital deficit. The appropriateness of using the
going concern basis is dependent upon the Company's ability to obtain additional
financing or equity capital and, ultimately, to achieve profitable operations.
These conditions raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Management plans to raise capital by obtaining financing through debt private
placement or conversion of Series A preferred stock. The Company believes that
these actions will enable the Company to continue until its operations become
profitable.
NOTE 3: RELATED PARTIES
Included in notes payable is related party payables of $224,000 and $889,000 for
2000 and 1999, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
In the first quarter of 2000, the Company continued to focus on the operations
of its healthcare clinics. The Company's clinics include four Company-owned
physician practices in Florida. Florida law, as opposed to the law of many other
states, permits the corporate practice of medicine of the type engaged in by the
Company. These Florida practices primarily focus on pain management.
Additionally, the Company has developed a healthcare Internet site,
HealthcareInnovations.net, which is dedicated to pain management and pain
management programs for patients.
In the year ending December 31, 1999, MB Software Corporation (the "Company")
divested itself of MB Software Solutions, Inc. ("MBSSI"), the software division.
Traditionally, the healthcare clinics have generated approximately ninety
percent of the Company revenues. In the year ending December 31, 1999, the
Company also sold Mr. Mulligan, L.L.C. d/b/a Nevada Multicare ("Nevada
Multicare").
There were no changes in the legal proceedings from the status set forth in the
Form 10 - KSB for the year ending December 31, 1999.
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Net medical revenues increased to $688,926 for the three months ended March 31,
2000 as compared to $507,462 for the three months ended March 31,1999. This
increase is primarily attributable to an increase in patient volumes at the
Jacksonville, Florida clinics. The Lauderhill, Florida clinic also experienced
an increase in patient volume, albeit not as significant as the increase at the
Jacksonville, Florida clinics.
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The contractual allowance adjustment increased to $361,822 for the first quarter
of 2000 compared with $310,614 for the three months ended March 31, 1999. The
contractual allowance adjustment reflects a reduction in revenue resulting from
uncollectible accounts together with contractual allowances for reductions, due
to the source of payments. The increase in the contractual allowance adjustment
reflects, and is directly related to, the increase in gross medical revenues.
The cost of medical revenues decreased to $392,692 for the three months ended
March 31, 2000 compared to $488,217 for the three months ended March 31, 1999.
The gross profit from medical activities increased to $296,370 for the three
months ended March 31, 2000 as compared to $192,245 for the three months ended
March 31, 1999. The increase in gross profit from medical activities directly
reflects the increase in gross medical revenues. In addition, the gross profit
increase correlates with the decreased cost of revenue for medical activities
for the three months ended March 31, 2000.
It is noteworthy that the quarter ending March 31, 1999 reflects the termination
of all practice management agreements. As a result, the service fees associated
with the agreements have been discontinued.
The Company's gross profit for the first quarter ending March 31, 2000 increased
to $296,370 from $100,484 for the first quarter ending March 31, 1999. As set
forth above, the increase in gross profit reflects the decrease in the total
cost of revenue for the quarter ending March 31, 2000. The total cost of revenue
for the three months ended March 31, 2000 was $392,692 compared to $488,217 for
the same quarter of 1999.
The selling, general and administrative expenses decreased by 20% to $287,402
for the three-month period ended March 31, 2000 as compared to $368,860 for the
three-month period ended March 31, 1999.
The net loss from continuing operations decreased to $4,737 for the three-month
period ended March 31, 2000, as compared to a loss from continuing operations of
$282,224 for the three months ended March 31, 1999. The reduction in loss is
commensurate with the Company's increase in total revenues.
Liquidity and Capital Resources
The Company's operations used $146,317 of cash during the three months ended
March 31, 2000 compared to cash provided by operations of $3,183 for the quarter
ended March 31,1999.
As of March 31, 2000, the Company had working capital deficits of $918,210. The
working capital as of March 31, 1999 was $902,853. At March 31, 2000, the
Company had outstanding checks in excess of bank balances of $101,860. The
increase in the working capital deficit is directly related to the
reclassification in the fourth quarter of 1999, of certain debt from long-term
to classification as a current liability. To increase working capital, the
Company is concentrating its efforts to increase patient volume in the Florida
clinics. The Company will continue to stream line its operations and increase
revenue as the volume at each clinic continues to grow.
In the three months ended March 31, 2000, the Company had no expenditures for
the purchase of equipment. The Company does not anticipate any major purchase of
equipment for the remaining nine (9) months of 2000.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
None
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.
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Financial Statements - See Item 1 for financial statements filed with this
report.
Reports on Form 8-K - Change in Independent Auditors - Filed February 25, 2000
SIGNATURES
In accordance with the requirements of the Securities 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 19, 2000 /s/ Scott A. Haire
--------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
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