-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AeNTFWpfJ4GcDdSiXL8VgHHtiA2/XKqeGoKYiF6mpfHrYOjz2UUDOyB7ULDOfpIB Acy+N9oFTBDy3VZuaOvdxQ== 0001010549-97-000270.txt : 19971119 0001010549-97-000270.hdr.sgml : 19971119 ACCESSION NUMBER: 0001010549-97-000270 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971118 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MB SOFTWARE CORP CENTRAL INDEX KEY: 0000714256 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 592219994 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-11808 FILM NUMBER: 97723342 BUSINESS ADDRESS: STREET 1: 2225 E RANDOL MILL RD STREET 2: STE 305 CITY: ARLINGTON STATE: TX ZIP: 76011 BUSINESS PHONE: 8177928872 MAIL ADDRESS: STREET 1: 2225 EAST RANDOL MILL RD STREET 2: SUITE 305 CITY: ARLINGTON STATE: TX ZIP: 76011 FORMER COMPANY: FORMER CONFORMED NAME: INAV TRAVEL CORPORATION DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: TWISTEE TREAT CORP DATE OF NAME CHANGE: 19910220 FORMER COMPANY: FORMER CONFORMED NAME: TWISTEE FREEZ CORP DATE OF NAME CHANGE: 19840917 10QSB 1 QUARTERLY REPORT 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: September 30, 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 September 30, 1997, 68,033,000 shares of the Issuer's $.001 par value common stock were outstanding. Transitional Small Business Disclosure Format Yes [ ] No [X] MB SOFTWARE CORPORATION Form 10-QSB Quarter Ended September 30, 1997 INDEX PART I - FINANCIAL INFORMATION PAGE NUMBER Item 1 - Financial Statements Consolidated Balance Sheet September 30, 1997 (Unaudited) and December 31, 1996 (Audited) 3-4 Consolidated Statements of Cash Flow for the Nine Months ended September 30, 1997 (Unaudited and December 31,1996 (Audited) 5 Consolidated Statements of Operations for the Nine Months and Three Months ended September 30, 1997) and September 1996 (Unaudited) 6 Notes to Consolidated Financial Statements 7 Item 2 - Management's Discussion and Analysis of Financial Condition or Plan of Operation 7-9 PART II - OTHER INFORMATION Item 6 - Exhibits, Financial Statement Schedules 9 and Reports on Form 8-K SIGNATURES 10
2 MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET September 30, 1997 ASSETS September 30, December 31, 1997 1996 ----------- ----------- CURRENT ASSETS Cash $ 855,307 $ 196,653 Trade accounts receivable 2,823,954 345,452 Less allowance for bad debt (54,999) (33,487) Notes receivable 533,333 10,000 Commissions receivable 62,546 -- Deposits 29,413 18,488 Prepaid Expenses 164,575 19,883 ----------- ----------- Total current assets 4,414,129 556,989 ----------- ----------- PROPERTY AND EQUIPMENT, NET 627,690 63,349 ----------- ----------- OTHER ASSETS Goodwill 845,866 850,109 Software development costs 439,326 394,240 ----------- ----------- Total other assets 1,285,192 1,244,349 ----------- ----------- $ 6,327,011 $ 1,864,687 =========== =========== Continued 3
MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (continued) September 30, 1997 LIABILITIES September 30, December 31, 1997 1996 ----------- ----------- CURRENT LIABILITIES Notes Payable 1,154,051 242,029 Accounts payable 704,590 149,741 Accrued liabilities 314,303 101,382 Other liabilities 246,297 179,000 Deferred revenues 73,500 159,026 ----------- ----------- Total current liabilities 2,492,741 831,178 ----------- ----------- LONG TERM LIABILITIES Note Payable 1,830,249 1,283,808 Other liabilities 40,000 40,000 ----------- ----------- Total long term liabilities 1,870,249 1,323,808 ----------- ----------- TOTAL LIABILITIES 4,362,990 2,154,986 ----------- ----------- MINORITY INTEREST IN SUBSIDIARY (5,016) -- ----------- ----------- SHAREHOLDERS' EQUITY Common stock .001 par value; 100,000,000 shares authorized; 68,033,000 shares issued 68,033 67,885 Additional paid-in capital 2,825,047 810,322 Retained Earnings (deficit) (1,356,752) (1,156,467) Treasury stock, at cost; and 409,577 shares (12,039) (12,039) Net Earnings 444,748 ----------- ----------- Total shareholders' equity (deficit) 1,969,037 (290,299) ----------- ----------- $ 6,327,011 $ 1,864,687 =========== ===========
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS September 30, 1997 September 30, September 30, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES ------------ ------------ Net Income(Loss) for the period $ 444,748 $ 460,017 Adjustments to reconcile net income(loss) to net cash used by operating activities: Depreciation 222,076 13,163 Gain on debt extinguishment (118,192) Bad debt expense 28,040 Changes in assets and liabilities Trade accounts receivable (2,478,502) (150,876) Change in allowance for doubtfull accounts 21,512 -- Advances (44,652) Commissions Receivable (62,546) -- Prepaid expenses and other (144,693) (16,064) Deposits (10,925) (700) Accounts payable 554,849 8,180 Accrued Liabilities 212,921 32,370 Other Liabilities 67,296 408,081 Deferred revenues (85,526) 28,103 Increase (decrease) in minority interest (5,016) -- Other (131,924) -- ----------- ----------- Net cash used by operating activities (1,485,882) 737,622 CASH FLOWS FROM INVESTING ACTIVITIES Disposal (Purchase) of property and equipment (560,097) (20,466) Software development costs capitalized (45,086) (177,042) Advances on notes receivable (523,333) -- ----------- ----------- Net cash provided (used) by investing activities (1,128,516) (197,508) CASH FLOWS FROM FINANCING ACTIVITIES Principle payments on notes payable (2,012,104) 790,949 Increase in notes payable 3,470,567 (350,446) Increase (decrease) in cash overdraft -- 29,616 Common Stock 148 (17,400) Paid in Capital 2,014,726 17,402 (200,285) Purchase of treasury stock -- (45,000) ----------- ----------- Net cash provided by financing activities 3,273,052 425,121 INCREASE / (DECREASE) IN CASH 658,654 114,993 ----------- ----------- Cash at beginning of period 196,653 36,535 Cash at end of period $ 855,307 $ 151,529 =========== =========== SUPPLEMENTAL INFORMATION Cash paid during the period for interest $ 153,580 $ -- =========== ===========
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS September 30, 1997 THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED 9-30-97 ENDED 9-30-96 ENDED 9-30-97 ENDED 9-30-96 ------------- ------------- ------------- ------------- REVENUES Service fee & broker income $- 119,190 - 404,026 Commission Income 2,421 - 68,533 - Softwaree & maintenance sales 757,366 558,344 1,568,237 1,845,042 Other income 146,719 - 146,746 1,008 Medical income 1,183,405 - 2,727,518 - ------------ ------------- ------------- ------------- Total revenues 2,089,911 677,534 4,511,034 2,250,076 ------------- ------------- ------------- ------------- COST OF REVENUES Cost of service & broker fees 2,000 - 2,000 2,548 Cost of software & maintenance 192,990 140,769 495,032 326,226 Cost of services medical 37,181 - 74,530 - ------------- ------------- ------------- ------------- Total cost of revenues 232,171 140,769 571,562 328,774 GROSS PROFIT 1,857,740 536,765 3,939,472 1,921,302 ------------- ------------- ------------- ------------- OPERATING EXPENSES Selling, general & administrative 1,614,415 433,944 3,226,354 1,429,299 Depreciation and amortization 82,149 - 222,076 10,262 ------------- ------------- ------------- ------------- Total operating expenses 1,696,564 433,944 3,448,430 1,439,561 ------------- ------------- ------------- ------------- INCOME FROM OPERATIONS 161,176 102,821 491,042 481,741 ------------- ------------- ------------- ------------- OTHER INCOME (EXPENSES) Interest (income) expense, net 44,184 (792) 153,580 (797) Other 66,222 (1,883) (102,270) 22,521 Fines and settlements 5,000 - - - ------------- ------------- ------------- ------------- Total other (income) expense, net 115,406 (2,675) 51,310 21,724 ------------- ------------- ------------- ------------- MINORITY INTEREST (INCOME) 5,016 - 5,016 - LOSS OF SUBSIDIARY NET INCOME BEFORE TAXES 50,786 105,496 444,748 460,017 Penalties-Non Deductible PROVISION FOR INCOME TAXES - - - - NOET PROFIT (LOSS) 50,786 105,496 444,748 460,017 ============= ============= ============= ============= Income per weighted-average common shares 0 0 0.01 0.01 ============= ============= ============= ============= Weighted-average common shares outstanding 68,033,000 67,885,000 68,033,000 67,885,000 ============= ============= ============= =============
6 MB SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 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 more 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 representation, results of operations and cash flows for the interim period. The results of operations for the nine months and three months ended September 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, contingent upon market factors and economic volatility. Causal factors that could impact actual results of the Company to differ materially 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, through its wholly owned subsidiary, Santiago SDS, Inc., ("Santiago"), remains a leader in the development of state-of-the-art physician practice management software and provides incidental cash management resources to physicians, chiropractors and medical billing centers. The Company continues to maintain a leadership role in this industry with introduction of innovative software products ahead of competitors and remains one of a limited number of software developers with practice management conventions available in a Windows 95 platform. In order to leverage its existing market share and extend penetration into the healthcare industry, the Company embarked in 1996 on a strategy which called for expansion through mergers and acquisition of complementary healthcare entities. This strategy allows for incremental rollout of its software products and permits accelerated operational economies of scale in the acquired companies through uniformity of a software platform and application of standardized operational procedures of proven efficacy. In each acquired entity, application of these operational disciplines forms a solid base from which to effect timely positive operational realignment along with financial consistency that is necessary for going forward profitability. 7 On August 5, 1997, the Company and Imagine Investments, Inc. announced formation of Healthcare Innovations, LLC, a limited liability company, for the purposes of acquiring and operating healthcare businesses. Imagine, Inc. is a subsidiary of Stone Investments, which is a subsidiary of Stone Capital, a company with over $3 billion in assets. The Company will own 51% equity interest in Healthcare Innovations and contributed its existing healthcare operating businesses to the new entity. Additionally, Healthcare Innovations acquired all of the outstanding stock of Sandy Home Health effective August 1, 1997. The Company previously owned another healthcare company in St. George, Utah, Color Country Health Express, LLC, which provides nurse-practitioner services at three clinic sites in southwest Utah. The acquisition of Sandy Home Health brings the total complement of acquired companies by Healthcare Innovations to four, situated at seven operational sites. The Company has successfully established an Internet Web Site in 1997. Through Santiago, the Company utilizes Site to launch marketing initiatives, supply customer information about existing and intended software releases, and provide an interchange forum for current and prospective buyer information. Strategic plans developed by Management call for continued refinement of its operational focus and acquisition of additional targets to form a larger revenue base that maximizes the potential for greater profit margins. Management continues to discharge its strategic obligation through effectuation of actions consistent with these short and long range initiatives. In accord with its strategic intent, Management further refined the Company's operational focus through divestiture of Santiago's dental customer install base. Since this facet of the business represented a minority of users, Management believed support and development efforts associated with its software products should be based on its centerpiece medical product, OneClaim Plus. Maximum improvement of products at an accelerated delivery pace should keep the Company's products ahead of competitors, while allowing for reduced costs and increased profit margins. Passage by Congress of the Health Insurance Portability and Accountability Act (H.I.P.A.A.) in 1996 requires, in part, development and ultimately the use of electronic data interchange (EDI) for health claims or equivalent encounter information. These federal mandates bode well for the Company, given its on-going positioning which has remained consistent with these anticipated developments. The Company's customer base is being migrated toward this requirement and should achieve successful conversion long before anticipated cut-off dates. Moreover, the strong national economy has kept inflation at its lowest level in decades, thereby fostering both buyer confidence and robust demand. Results of Operations This section discusses the results of operations of the Company and its subsidiaries for the quarterly period ended September 30, 1997. Since January 1, 1997, the Company has been able to remain profitable, despite extraordinary expense demands associated with the acquisition and assimilation of three additional targets during the last 18 months. In the quarter ended September 30, 1997, revenues improved to $2,089,911, a 200% increase from the $677,534 revenues reported for the same period, 1996. Over the nine month period ended September 30, 1997, revenues improved to $4,511,034, an increase of 100% compared with $2,250,076, in revenues posted for the same period in 1996. Net income remained profitable for the third quarter ended September 30, 1997, and for the seventh consecutive quarter; although net income reflected a 52% decrease from the same period in 1996. The Company demonstrated strong results 8 and exceeded profit targets in the first and second quarters of 1997, and while still profitable, the margin of profitability narrowed in the third quarter ended September 30, 1997. For the nine month period ended September 30, 1997, net income sustained profitability yet showed a slight downturn by .03% to $444,748 from $460,017 for the same period in 1996. Operating expenses for the quarter ended September 30, 1997 increased given the Company's comprehensive efforts to maximize profit margins through on-going emphasis of its acquisitions programs. Actual operating expenses for the third quarter grew 290% to $1,696,564 and were directly the result of migrating acquired companies into the Company's operational and corporate culture. Operating expenses also included the non-recurring costs associated with further enhancement and refinement of the Windows 95 product. The Company's ability to fund said development from operating revenues evidences management's commitment to a policy of fiscal prudence and incremental revenue growth financed primarily by containment of operating costs. For the nine month period ended September 30, 1997, operating expenses increased 139% to $3,448,430 from $1,439,561 for the same period in 1996. Total current liabilities for the quarter ended September 30, 1997 evidenced an upswing of 256% to $2,493,741. Management maintains a core strategy to reduce debt and current liabilities in order to grow the company with minimal debt obligations. This strategy gave way to financial pressures associated with operational consolidations and the need to maintain high levels of service, which is reflected, in higher total current liabilities. While the Company moves to minimize debt, management recognizes that its alliance with Healthcare Innovations forms a strong base of stability, which long term outcomes should prove mutually beneficial for each party. Liquidity and Capital Resources As of September 30, 1997, the Company recorded total assets of $6,327,011 with current assets of $4,414,129 and property, equipment and other assets of $1,912,882. Total current liabilities reported September 30, 1997 were $2,493,741. Net working capital during the period ended September 30, 1997 was $1,920,388. PART II - OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders. Exhibits - All Exhibits were filed as exhibits to the reports on Form 8-K set forth below. ITEM 6. Exhibits and reports on form 8-K. Reports of Form 8-K - Original 8-K was filed on February 6, 1997 and an Amendment No.1 was filed April 4, 1997. An original 8-K was filed on August 7, 1997. 9 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 Dated: November 17, 1997 /s/ Scott A. Haire --------------------------- Scott A. Haire, Chairman of the Board, Chief Executive Officer and President (Principal Financial Officer) EX-27 2 FDS --
5 0000714256 MB SOFTWARE CORPORATION 1 US Dollars 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 855,307 0 2,823,954 (54,999) 0 4,414,129 627,690 222,076 6,327,011 2,492,741 0 0 0 68,033 1,969,037 6,327,011 3,939,472 4,511,034 571,562 571,562 3,448,430 0 153,580 0 0 0 0 0 0 444,748 0.01 0
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