-----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, KRGZUaUKF7C0lGzhClGNbH+/BpZGy9SllaN4XFM5g8SODbeGoboGZ4dN5W2uqMco 1yi5qU5s9hYHf1LXR7z5uA== 0001010549-98-000244.txt : 19980817 0001010549-98-000244.hdr.sgml : 19980817 ACCESSION NUMBER: 0001010549-98-000244 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MB SOFTWARE CORP CENTRAL INDEX KEY: 0000714256 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 592219994 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-11808 FILM NUMBER: 98688334 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/A 1 AMENDED QUARTERLY REPORT 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: 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, 68,032,000 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/A Quarter Ended September 30, 1997 INDEX PART I - FINANCIAL INFORMATION PAGE Item 1 - Financial Statements Consolidated Balance Sheet September 30, 1997 (Unaudited) and December 31, 1996 (Audited) F-1,F-2 Consolidated Statements of Operations for the Nine Months ended September 30, 1997 (Unaudited and December 31, 1996 (Audited) F-3 Consolidated Statements of Cash Flow for the Nine Months and Three Months ended September 30, 1997 and September 1996 (Unaudited) F-5 Notes to Consolidated Financial Statements F-7 Item 2 - Management's Discussion and Analysis of Financial Condition or Plan of Operation 3-4 PART II - OTHER INFORMATION Item 6 - Exhibits, Financial Statement Schedules and Reports on Form 8-K 5 SIGNATURES 5 2 MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 1997 1996 ------------ ----------- (Unaudited) CURRENT ASSETS Cash $ 855,060 $ 196,653 Accounts receivable - Medical receivables, net of allowance for doubtful accounts of $397,677 in 1997 1,536,241 -- Trade accounts receivable, net of allowance for doubtful accounts of $33,487 and $33,487, respectively 379,059 311,965 Notes receivable - current portion 171,315 10,000 Prepaid expenses and other 39,390 19,883 ---------- ---------- TOTAL CURRENT ASSETS 2,981,065 538,501 ---------- ---------- PROPERTY AND EQUIPMENT, NET 430,566 63,349 ---------- ---------- OTHER ASSETS Goodwill, net of accumulated amortization 1,179,357 850,109 Software development costs, net of accumulated amortization 434,845 394,240 Note receivable, net of current portion 208,658 -- Deposits and other assets 85,765 18,488 ---------- ---------- TOTAL OTHER ASSETS 1,908,625 1,262,837 ---------- ---------- $5,320,256 $1,864,687 ========== ========== (Continued) F-1 MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' DEFICIT September 30, December 31, 1997 1996 ------------- ------------ (Unaudited) CURRENT LIABILITIES Notes payable $ 516,238 $ 209,123 Current maturities of long-term debt 1,397,550 32,906 Accounts payable 876,832 149,741 Accrued liabilities 304,899 101,382 Other liabilities - related party 79,000 179,000 Deferred revenues 79,500 159,026 ----------- ----------- TOTAL CURRENT LIABILITIES 3,254,019 831,178 LONG-TERM LIABILITIES Long-term debt, net of current maturities 594,433 1,283,808 Other liabilities 40,000 40,000 ----------- ----------- TOTAL LIABILITIES 3,888,452 2,154,986 ----------- ----------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 1,826,452 -- COMMITMENTS AND CONTINGENCIES -- -- SHAREHOLDERS' DEFICIT Common stock; $.001 par value; 100,000,000 shares authorized; 68,032,000 and 67,885,000 shares issued, respectively 68,032 67,885 Additional paid-in capital 825,047 810,322 Accumulated deficit (1,275,688) (1,156,467) Treasury stock, at cost; 409,577 shares (12,039) (12,039) ----------- ----------- TOTAL SHAREHOLDERS' DEFICIT (394,648) (290,299) ----------- ----------- $ 5,320,256 $ 1,864,687 =========== =========== The accompanying notes are an integral part of these condolidated financial statements F-2
MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- REVENUES Medical income $ 1,195,781 $ -- $ 2,719,685 $ -- Service fee and broker income 71,906 119,190 71,906 404,026 Software & maintenance sales 344,058 558,344 1,154,722 1,845,042 Other income -- -- 31,713 1,008 ----------- ----------- ----------- ----------- TOTAL REVENUES 1,611,745 677,534 3,978,026 2,250,076 ----------- ----------- ----------- ----------- COST OF REVENUES Cost of services and broker fees -- -- -- 2,548 Cost of software and maintenance 159,312 140,769 371,585 326,226 Cost of medical services 1,093,666 -- 2,168,113 -- ----------- ----------- ----------- ----------- TOTAL COST OF REVENUES 1,252,978 140,769 2,539,698 328,774 ----------- ----------- ----------- ----------- GROSS PROFIT 358,767 536,765 1,438,328 1,921,302 ----------- ----------- ----------- ----------- OPERATING EXPENSES Selling, general and administrative 574,011 433,944 1,486,327 1,429,299 Depreciation and amortization 98,736 -- 273,708 10,262 ----------- ----------- ----------- ----------- TOTAL OPERATING EXPENSES 672,747 433,944 1,760,035 1,439,561 ----------- ----------- ----------- ----------- INCOME (LOSS) FROM OPERATIONS (313,980) 102,821 (321,707) 481,741 ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSE) Gain on sale of assets 269,724 -- 269,724 -- Interest expense (129,462) -- (272,446) -- Other 31,660 2,675 31,660 (21,724) ----------- ----------- ----------- ----------- TOTAL OTHER INCOME (EXPENSE) 171,922 2,675 28,938 (21,724) ----------- ----------- ----------- ----------- NET (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST $ (142,058) $ 105,496 $ (292,769) $ 460,017
(Continued) The accompanying notes are an integral part of these consolidated financial statements F-3
MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED) Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1997 1996 1997 1996 ---- ---- ---- ---- MINORITY INTEREST IN (LOSS) $ 173,548 $ -- $ 173,548 $ -- ------------ -------------- ------------ ------------ NET INCOME (LOSS) $ 31,490 $ 105,496 $ (119,221) $ 460,017 ============ ============== ============ ============ INCOME PER WEIGHTED AVERAGE COMMON SHARE $ .00 $ .00 $ (.00) $ .01 ============ ============== ============ ============ WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 67,921,750 67,885,000 67,899,700 67,885,000 ============ ============== ============ ============
The accompanying notes are an integral part of these consolidated financial statements F-4
MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September30, ------------------------------ 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (119,221) $ 460,017 Adjustments to reconcile net (loss) income to net cash used by operating activities: Depreciation and amortization 273,708 13,163 Change in allowance for doubtful accounts 397,677 -- Minority interest in loss (173,548) -- Gain on sale of assets (269,724) -- Changes in assets and liabilities: Trade accounts receivable 138,921 (150,876) Advances -- (44,652) Notes receivable (23,162) -- Prepaid expenses and other (19,507) (16,064) Deposits 1,159 (700) Accounts payable and accrued liabilities 97,119 40,550 Other liabilities (100,000) 408,081 Deferred revenues (79,526) 28,103 ----------- ----------- NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES 123,896 737,622 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (299,135) (20,466) Software development costs capitalized (175,925) (177,042) Organizational costs (72,832) -- ----------- ----------- NET CASH (USED) BY INVESTING ACTIVITIES (547,892) (197,508) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on notes payable 1,545,840 790,949 Proceeds from notes payable (2,478,309) (350,446) Minority investment in subsidiaries 2,000,000 -- Change in cash overdraft -- 29,616 Proceeds from common stock issuance 14,872 (17,400) Paid-in capital -- 17,402 Purchase of treasury stock -- (45,000) ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,082,403 425,121 ----------- -----------
The accompanying notes are an integral part of these financial statements (Continued) F-5
MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED) Nine Months Ended September 30, ------------------------------ 1997 1996 ----------- ----------- INCREASE (DECREASE) IN CASH $ 658,407 $ 114,993 CASH AT BEGINNING OF PERIOD 196,653 36,535 ----------- ----------- CASH AT END OF PERIOD $ 855,060 $ 151,529 =========== =========== SUPPLEMENTAL INFORMATION Cash paid during the period for interest $ 153,580 $ -- =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Purchase of medical clinics Medical assets acquired $(2,260,028) $ -- Goodwill acquired (477,665) -- Accounts payable and accrued liabilities assumed 833,489 -- Note payable 1,894,204 -- Note receivable reduction 10,000 -- Note receivable (346,811) -- Proceeds from sale of assets 346,811 -- ----------- ----------- $ -- $ -- =========== ===========
The accompanying notes are an integral part of these consolidated financial statements F-6 MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 nine month period ended September 30, 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-7 MB SOFTWARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (Unaudited) 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. 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. 3 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 $1,611,745, a 137% increase from the $677,534 revenues reported for the same period, 1996. Over the nine month period ended September 30, 1997, revenues improved to $3,978,026, an increase of 77% 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 700% decrease from the same period in 1996. The Company demonstrated strong results 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, the Company suffered a substantial downturn due to increased cost of revenues, administrative expenses and interest expense over for the same period in 1996. Cost of revenues and 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 costs of revenue and operating expenses for the third quarter grew 235% to $1,925,725 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, costs of revenue and operating expenses increased 143% to $4,299,733 from $1,768,335 for the same period in 1996. Total current liabilities for the quarter ended September 30, 1997 evidenced an upswing of 256% to $3,254,019. 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. 4 Liquidity and Capital Resources As of September 30, 1997, the Company recorded total assets of $5,320,256 with current assets of $2,981,065 and property, equipment and other assets of $2,339,191. Total current liabilities reported September 30, 1997 were $3,254,019. Net working capital during the period ended September 30, 1997 was ($272,954). 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. 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: June 30, 1998 /s/ Scott A. Haire --------------------------- Scott A. Haire, Chairman of the Board, Chief Executive Officer and President (Principal Financial Officer) 5 -----END PRIVACY-ENHANCED MESSAGE-----