-----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, MTq6KZzUtYhWVSzFzJkPkfcVjP4sZLLjMq88qRKiFLtFgzTN9kyL5ndFxUwiq/Bc 20znSwpvui/6AjKfExJObA== 0001010549-99-000424.txt : 19991115 0001010549-99-000424.hdr.sgml : 19991115 ACCESSION NUMBER: 0001010549-99-000424 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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 SEC ACT: SEC FILE NUMBER: 000-11808 FILM NUMBER: 99748656 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 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: September 30, 1999 ------------------ [ ] 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 Securities registered pursuant to Section 12(b) of the Act: Name of each Exchange Title of Each Class on Which Registered ------------------- --------------------- Common NASDAQ - OTC BULLENTIN 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 September 30, 1999, 68,691,971 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, 1999 INDEX PART I - FINANCIAL INFORMATION PAGE NUMBER Item 1 - Financial Statements Consolidated Balance Sheet September 30, 1999 (Unaudited) and December 31, 1998 (Audited) 3-4 Consolidated Statements of Operations - for the Three and Nine Months ended September 30, 1999 (Unaudited) and December 31, 1998 (Audited) 5-6 Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1999 (Unaudited) and December 31, 1998 (Audited) 7-8 Notes to Consolidated Financial Statements 9 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 9-10-11 PART II - OTHER INFORMATION Item 5 - Other Information 11 Item 6 - Exhibits, Financial Statement Schedules and Reports on Form 8-K 11 SIGNATURES 11 2
MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 1999 1998 ------------- ------------- (Unaudited) CURRENT ASSETS Cash $ 1,804 $ 188,797 Accounts receivable - Medical receivables, net of allowance for doubtful accounts and contractual adjustments of $505,181 and $1,810,887 in 1999 and 1998, respectively 798,909 1,003,126 Notes receivable 279,325 51,288 Prepaid expenses 4,200 ------------- ------------- TOTAL CURRENT ASSETS 1,080,038 1,247,411 ------------- ------------- PROPERTY AND EQUIPMENT, NET 253,695 396,022 ------------- ------------- OTHER ASSETS Goodwill, net of accumulated amortization 207,701 316,806 Software development costs, net of accumulated 104,386 169,376 amortization Deposits and other assets 9,769 73,036 ------------- ------------- TOTAL OTHER ASSETS 321,856 559,218 ------------- ------------- TOTAL ASSETS $ 1,655,589 $ 2,202,651 ============= =============
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' DEFICIT September 30, December 31, 1999 1998 ------------- ------------- (Unaudited) CURRENT LIABILITIES Notes payable Related parties $ -- $ -- Other 203,651 303,946 Current maturities of long-term debt Related parties -- -- Other 4,523 54,965 Accounts payable 372,341 483,074 Accrued liabilities 244,281 400,004 Other liabilities 21,500 -- Deferred revenues 34,232 57,423 ------------- ------------- TOTAL CURRENT LIABILITIES 880,528 1,299,412 LONG-TERM DEBT, NET OF CURRENT MATURITIES Related parties 889,808 933,808 Other 814,000 741,392 PREFERRED STOCK DIVIDENDS PAYABLE 300,644 85,000 ------------- ------------- TOTAL LONG TERM LIABILITIES 2,004,452 1,760,200 ------------- ------------- SHAREHOLDERS' EQUITY (DEFICIT) Series A senior cumulative convertible participating preferred stock; $10 par value; 340,000 shares issued and outstanding in 1998 3,400,000 3,400,000 Common stock; $.001 par value; 100,000,000 shares authorized; 69,100,000 shares issued 69,100 69,100 Additional paid-in capital 1,101,105 1,101,105 Accumulated deficit (5,415,127) (5,415,127) Current period earnings (372,430) Treasury stock, at cost; 408,029 shares (12,039) (12,039) ------------- ------------- TOTAL SHAREHOLDERS' EQUITY (1,229,391) (856,961) ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDER EQUITY (DEFICIT) $ 1,655,589 $ 2,202,651 ============= =============
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLITATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 30 September 30 ----------------------------- ----------------------------- 1999 1998 1999 1998 ----------------------------- ----------------------------- Medical Activities: Revenue $ 863,585 $ 1,231,213 $ 2,577,503 $ 3,532,648 Contractual Allowance 122,783 443,114 745,369 1,091,345 ----------- ----------- ----------- ----------- Net Revenues 740,802 788,099 1,832,134 2,441,303 Cost of Revenue 338,180 546,769 984,061 1,857,200 ----------- ----------- ----------- ----------- Gross Profit 402,622 241,330 848,073 584,103 Service Fees 9,002 112,994 100,798 455,661 ----------- ----------- ----------- ----------- Software Activities: Gross Revenue 73,810 35,849 205,969 296,053 Cost of Revenue 17,933 7,440 36,591 21,867 ----------- ----------- ----------- ----------- Gross Profit 55,878 28,409 169,377 274,186 Gross Profit 467,502 382,733 1,118,248 1,313,950 ----------- ----------- ----------- ----------- Operating Expenses: Selling, General and Administrative Bad Debt Expense, Other General and Administrative 487,776 1,363,271 1,212,091 2,309,550 Depreciation and Amortization 40,263 306,048 148,993 488,305 ----------- ----------- ----------- ----------- TOTAL OPERATING EXPENSE 528,039 1,669,319 1,361,084 2,797,855 INCOME (LOSS) FROM OPERATIONS (60,537) (1,286,586) (242,836) (1,483,905) ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSES) Other income - 2,231 - 77,870 Forgiveness of indebtedness 92,611 - 92,612 - Interest Expense, Net Income (20,613) (93,740) (72,887) (225,815) Other expense (728) (728) ----------- ----------- ----------- ----------- OTHER INCOME ( EXPENSE) 71,270 (91,509) 18,996 (147,945) INCOME TAX EXPENSE - - - - ----------- ----------- ----------- ----------- NET GAIN (LOSS) FROM CONTINUNING OPERATIONS BEFORE MINORITY INTEREST 10,733 (1,378,095) (223,840) (1,631,850) MINORITY INTEREST IN LOSS - 139,665 - 309,219 ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE PREFERRED STOCK DIVIDENDS AND DISCONTINUED OPERATIONS $ 10,733 $(1,238,430) $ (223,840) $(1,322,631)
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLITATED STATEMENTS OF OPERATIONS (UNAUDITED) CONTINUED Three Months Ended Nine Months Ended September 30 September 30 ----------------------------- ----------------------------- 1999 1998 1999 1998 ----------------------------- ----------------------------- INCOME (LOSS) BEFORE PREFERRED STOCK DIVIDENDS AND DISCONTINUED OPERATIONS $ 10,733 $(1,238,430) $ (223,840) $(1,322,631) PREFERRED STOCK DIVIDENDS (85,000) - (255,000) - ----------- ----------- ----------- ----------- LOSS BEFORE DISCONTINUED OPERATIONS (74,267) (1,238,430) (478,840) (1,322,631) DISCONTINUED OPERATIONS Loss from discontinued operations -- (233,541) (28,226) (283,027) Gain from sale of subsidiary -- -- 134,636 -- ----------- ----------- ----------- ----------- NET LOSS $ (74,267) $(1,471,971) $ (372,430) $(1,605,658) =========== =========== =========== =========== LOSS PER WEIGHTED AVERAGE COMMON SHARE Continuing operations $ 0.00 $ (0.02) $ (0.02) $ (0.02) Loss from discontinued operations $ 0.00 $ 0.00 $ 0.00 $ 0.00 Gain from sale of subsidiary $ 0.00 $ 0.00 $ 0.00 $ 0.00 TOTAL $ .000 $ .000 $ .000 $ .(002) =========== =========== =========== =========== WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 68,580,000 68,670,000 68,580,000 68,631,428 =========== =========== =========== ===========
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended Year Ended September 30, December 31, ----------------- ------------ 1999 1998 ----------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss before discontinued operations $ (478,840) $(3,723,057) Adjustments to reconcile net (loss) to net cash used by operating activities: Depreciation and amortization 148,993 1,502,083 (Gain) loss on sale of assets 18,073 43,994 Decrease in deferred revenues (23,189) (51,233) Common stock issued for services -- 60,000 Minority interest in loss -- (548,623) Forgiveness of indebtedness (92,611) 1,950,626 Provision for allowance for doubtful accounts (1,305,707) 1,950,626 Changes in assets and liabilities: (Increase) decrease in accounts receivable 1,230,598 (866,118) Decrease in notes receivable 51,288 8,040 Decrease in prepaid expenses and other 4,200 4,348 Increase in deposits (9,766) (4,132) Increase in accounts payable/accrued liabilities 60,150 109,783 ----------- ----------- Net Cash Used by Continuing Operations (396,811) (1,514,289) ----------- ----------- Net Cash Provided (Used) by Discontinued Operations (28,226) 67,755 ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES (425,037) (1,446,534) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIE Purchases of property and equipment (4,691) (111,945) Organizational costs (1,224) -- Proceeds from sale of business segment 300,000 Proceeds from sale of equipment -- 750 ----------- ----------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 294,085 (111,195) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on related party notes payable $ -- $ (895,000 Principal payments on other notes payable (99,687) (220,035) Proceeds from related party notes payable 10,000 1,900,000 Proceeds from other notes payable 33,646 238,826 Proceeds from common stock issuance -- 6,000 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (56,041) 1,029,791 ----------- ----------- INCREASE (DECREASE) IN CASH (186,992) (527,938) Cash balance at beginning of period 188,797 716,735 ----------- ----------- CASH BALANCE AT END OF PERIOD $ 1,805 $ 188,797 =========== ===========
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MB SOFTWARE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) Nine Months Year Ended September 30, December 31, ------------- ------------ 1999 1998 ------------- ------------ SUPPLEMENTAL INFORMATION Cash paid during the period for interest $ 79,873 $ 260,516 =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Preferred stock issued for minority interest $ -- $ 2,000,000 Minority interest acquired -- (1,083,079) Preferred stock issued to satisfy note payable -- 1,400,000 Conversion of note payable to preferred stock - related party -- (1,400,000 Goodwill on acquisition of minority interest -- (916,921) Sale of software for note receivable -- 230,982 Note receivable from software sale -- (230,982) Note payable forgiven by related party 92,611 Income recognized from discharge of indebtedness (92,611 ----------- ----------- $ -- $ -- =========== ===========
7 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 Regulation 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, 1998. 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, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General - ------- During the third quarter of 1999, MB Software Corporation (the "Company") continued operations of its Florida health care clinics, promoted sales of its medical practice management software and pursued development of online financial services for health care providers. The health care division of the Company continued to focus on Company-owned physician practices in Florida. Florida law permits the corporate management practice of medicine of the type engaged in by the Company. In July 1999, the Company opened a new clinic in Lauderhill, Florida. The Company now owns four clinics, each located in Florida. The following summarizes the results of operations for the three-month and the nine-month period ended September 30, 1999 and 1998. Three Months Ended September 30, 1999 Compared to Three Months Ended September 30, 1998 - --------------------------------------------------------------------- Revenue from medical activities decreased 42.5% to $863,585 for the three-months ended September 30, 1999, compared to $1,231,213 for the three-months ended September 30, 1998. This decrease is substantially attributable to the termination of the Nevada and Utah clinics and a focus upon generating revenue that does not require substantial contractual adjustments. As evidence of management's intent to produce collectible revenue, the contractual allowance amount decreased significantly based on the verification system inaugurated at the clinic's front desk. A contractual allowance adjustment was made in the amount of $122,783 for the third quarter of 1999, as compared to $443,114 for the third quarter of 1998. The cost of medical revenues decreased 38.14% to $338,180 for the three months ended September 30, 1999, compared to $546,769 for the three months ended September 30, 1998. The decrease in the cost of medical revenues is evidence of reduced costs resulting from the sale of the Utah and Nevada clinics and the termination of many practice management arrangements. The decrease is further attributable to increased efficiencies in the operation of the clinics. In the third quarter ending September 30, 1998, the cost of revenue was 44.40% of the gross medical revenue whereas in the third quarter ending September 30, 1999, the cost of revenue was 39.15% of the gross medical revenue. The gross profits from medical activities increased 66.8% to $402,623 for the three months ended September 30, 1999, as compared to $241,330 for the three months ended September 30, 1998. This 66.8% increase in gross profits is in accordance with the reduced amount of contractual allowances and the decreased cost of revenue. 9 The service fees for the third quarter of 1999, decreased to $9,002 from $112,994 for the third quarter ending September 1998. Service fees are earned in connection with practice management agreements. The reduction in the service fee amount reflects the Company's decision to eliminate future practice management arrangements in favor of Company-owned practices. The modest service fees earned in the third quarter ending September 1999 represent earnings of a Company subsidiary, MB Practice Solutions, Inc., in connection with its practice management agreement with Advanced Healthcare Integration, a former Austin based clinic. In the quarter ending September 30, 1999, gross profit from software activities increased 96.3% to $55,878 from $28,409 for the third quarter ending September 1998. The revenue increase is applicable to the revised technical support fees and increased software sales. The Company's gross profit for the third quarter increased 22.14% to $467,502 for the third quarter ended September 30, 1999 from $382,733 for the third quarter ending September 1998. The gross profit increase is substantially related to the Company's efforts to streamline operations, the reduced percentage of contractual allowances, reduced costs of revenue and the increase in gross profits on software activities. The Company's selling, general and administrative expenses decreased to $487,776 for the three months ended September 30, 1999 as compared to $1,363,271 for the third quarter ending September 30, 1998. This decrease reflects savings resulting primarily from the termination of many health care operations as well as reductions in administrative expenses associated with software activities. The net gain on operations was $10,733 for the three month period ended September 30, 1999 as compared to a loss of $1,378,095 for the three months ended September 30, 1998. The elimination of the loss is attributable to the following reduced amounts for the three months ended September 30, 1999: Contractual allowances; selling, general and administrative expenses; and depreciation and amortization. Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30, 1998 - ------------------------------------------------------------------ The gross medical revenues decreased 27.71% to $2,577,503 for the nine-month period ended September 30, 1999, compared to $3,532,648 for the nine-month period ended September 30, 1998. The decrease is substantially attributable to the divestment of the Nevada and Utah clinics. The cost of medical revenue decreased 47.01% to $984,061 for the nine-month period ended September 30, 1999, as compared to $1,857,200 for the nine-month period ended September 30, 1998. The decrease is applicable to the divestment of the Nevada and Utah clinics as well as the termination of many practice management arrangements. It is interesting to note that for the nine-month period ended September 30, 1999, while the cost of medical revenue decreased 47.01% the resulting revenue reduction was only 27.71%. This evidence of management's intent to maximize profits is repeated in the comparison of the same period for gross profits. Gross profit for medical activities increased 45.19% to $848,072 for the third quarter ended September 30, 1999, compared to $584,103 for the third quarter ended September 30, 1998. The increase in gross profit is attributable to the 47.01% cost of medical revenue reduction. Gross profit decreased 61.87% for the software division from $274,186 for the quarter ended September 30, 1998 as compared to $169,377 for the nine months period ending September 30, 1999. The decrease is due to the Company's continued dedication of available resources to research and development for new products as opposed to sales and marketing of existing software. The Company's selling, general and administrative expenses decreased to $1,212,091 for the third quarter ending September 30, 1999 as compared to $2,309,550 for the third quarter ending September 30, 1998. This decrease reflects savings resulting primarily from the termination of many health care operations as well as reductions in administrative expenses associated with software activities. Net operating loss decreased to $242,836 for the nine-month period ended September 30, 1999, as compared to $1,483,905 for the nine month period ended September 30, 1998. This reduction in loss reflects other reduced amounts for the nine-month period ending September 30, 1999. These amounts include the reduced cost of medical revenue; reduced amount of selling, general and administrative expenses; and the reduction in depreciation and amortization. The gain on sale of subsidiary was $134,636 from the sale of the chiropractic clinic in Nevada. 10 Liquidity and Capital Resources - ------------------------------- The Company's operations used $425,037 of cash during the three months ended September 30, 1999 compared to a use of cash of $1,514,289 for the quarter ended September 30, 1998. As of September 30, 1999, the Company had working capital of $199,510, compared to the September 30, 1998 working capital of ($1,437,970). At September 30, 1999, the Company had cash of $1,804. PART II - OTHER INFORMATION MB Software Corporation sold its subsidiary, MB Software Solutions, Inc., ("MBSSI"), its medical software and internet company, through a newly formed subsidiary, MedEWay.com, Inc. to Consolidated National Corp. and Scott A. Haire, both of whom are shareholders. Mr. Haire is also an officer and director of the Company. The Company had tried to raise capital to fund its software and internet businesses and had attempted to sell the software company to third parties to generate cash for its continued growth in Florida, but had been unsuccessful in each case. The Company had received one offer to sell MBSSI for a lesser amount than received from Consolidated National Corp. and Mr. Haire. Consolidated National Corporation and Scott A. Haire paid $1,500,000, $250,00 of which is cash and $1,250.000 of which is contribution of debt owed by the Company to Consolidated National Corporation and Scott A. Haire. MBSC also received a warrant for 5% of the new company. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K Exhibits - -------- 10.1 Exchange Agreement between the Company, Consolidated National Corp. and Scott A. Haire. 10.2 Warrant issued by MedEWay.com, Inc. in favor of MB Software Corporation. Financial Statements - -------------------- See Item 1 for financial statements filed with this report. Reports on Form 8-K - ------------------- None - -------------------------------------------------------------------------------- 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: Novwember 12, 1999 /s/ Scott A. Haire ---------------------- Scott A. Haire, Chairman of the Board, Chief Executive Officer and President (Principal Financial Officer) 11 EX-10.1 2 EXCHANGE AGREEMENT EXCHANGE AGREEMENT This Exchange Agreement (this "Agreement") is entered into as of the 11th day of November, 1999, to be effective as of the 1st day of November, 1999 (the "Effective Date"), and is by and among MB Software Corporation, a Colorado corporation ("MB"), and Consolidated National Corp. and Scott A. Haire (collectively, the "Debtholders"). W I T N E S S E T H: WHEREAS, MB owes the Debtholders an aggregate of $1,250,000 as of the Effective Date (the "Debt"); and WHEREAS, MB has contributed all of the stock of its wholly owned subsidiary, MB Software Solutions, Inc. ("MBSSI") to MedEWay.com, Inc. ("MedEWay"), in exchange for 552,900 validly issued, duly authorized, fully paid, and non-assessable shares of common stock, $.001 par value per share, of MedEWay (the "MedEWay Shares"); and WHEREAS, the parties hereto wish to evidence their agreement pursuant to which, among other things, the Debtholders will purchase the MedEWay Shares in exchange for the Debt and cash, all upon the terms set forth herein; and NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I EXCHANGE 1.1 Exchange. Effective as of the Effective Date, MB shall assign, transfer and convey to the Debtholders, and the Debtholders shall purchase, free and clear of all liens, pledges, security interests, restrictions, claims, charges and other encumbrances, the MedEWay Shares. 1.2 Payment. As consideration for the MedEWay Shares to be sold hereunder, the Debtholders shall (i) pay to MB an amount equal to $250,000 (the "Cash") and (ii) contribute the Debt to MB. Additionally, concurrently with the closing of the transactions contemplated herein, MedEWay shall issue to MB a warrant to purchase 5% of the outstanding common stock of MedEWay at a purchase price equal to $.001 per share (the "Warrant"), with the Warrant being exercisable only upon the initial public offering or sale of MedEWay. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1 Representations and Warranties of MB. MB hereby represents and warrants to the Debtholders as follows: (a) Incorporation. Each of MB, MBSSI and MedEWay is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. MB has all requisite corporate power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. (b) Capitalization. The authorized capital stock of MedEWay consists of 40,000,000 shares of common stock, $.001 par value per share, of which 552,900 shares are issued and outstanding and 100,000 shares of Preferred Stock, $.001 par value per share, of which no shares are issued and outstanding. All of the issued and outstanding MedEWay Shares have been duly authorized and validly issued, are fully paid and nonassessable and are owned by MB. (c) Execution, Delivery, Binding Effect. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the board of directors of MB. This Agreement is a valid and binding obligation of MB enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy and similar laws and general principles of equity. (d) MedEWay Shares. The MedEWay Shares are being transferred to the Debtholders free and clear of all liens, pledges, security interests, restrictions, claims, charges and other encumbrances. 2.2 Representations and Warranties of Debtholders. The Debtholders hereby represent and warrant to MB that this Agreement is a valid and binding obligation of the Debtholders enforceable against the Debtholders in accordance with its terms, except as may be limited by applicable bankruptcy and similar laws and general principles of equity. ARTICLE III CLOSING 3.1 Closing. At the closing of the transactions contemplated herein, the Debtholders shall deliver to MB (i) the Cash, in immediately available funds, and (ii) all written evidences of the Debt, marked "canceled", MB shall deliver to the Debtholders certificates representing the MedEWay Shares, properly registered and issued in the names of the Debtholders as directed by the Debtholders, and MedEWay shall deliver to MB the Warrant. 2 ARTICLE IV INDEMNIFICATION 4.1 Indemnification by MB. MB will indemnify the Debtholders for any loss, liability, claims, damages, expenses, including reasonable attorneys fees ("Damages"), suffered by the Debtholders as a result of any breach by MB of any of its representations and warranties or covenants hereunder. 4.2 Indemnification by Debtholders. The Debtholders shall indemnify MB for any Damages suffered by MB as a result of any breach by the Debtholders of any of the Debtholders' representations and warranties or covenants hereunder. 4.3 Indemnification Procedures. Any party claiming indemnification hereunder shall give written notice thereof to the party against whom indemnification is sought. If such claim involves a third party claim, such notice shall be given timely in order to allow the indemnifying party the opportunity to participate in the defense of such claim, to the extent such party wishes; provided, however, that no failure of an indemnified party to give such notice timely shall relieve the indemnifying party of any obligation hereunder except to the extent, if any, that such failure materially prejudices the ability of the indemnifying party to defend such third-party claim. ARTICLE V MISCELLANEOUS MATTERS 5.1 Notices. All notices, requests, demands, payments and other communications under this Agreement shall be in writing and shall be duly given if delivered personally to the person to whom it is authorized to be given, or it is sent by mail or overnight courier service or similar service at such person's address set forth below, or at such other address as such person may from time to time specify by written notice pursuant to this Section VI. Any such notice shall be deemed to be given as of the date so delivered, if delivered personally, or upon confirmation of the telecopy, or as of the date the same was deposited in the United States mail, or delivered to an overnight courier service, in each case with all applicable charges prepaid, addressed as set forth below. If to MB: 2225 East Randol Mill Road Suite 305 Arlington, Texas 76011 Attn: Scott Haire If to the Debtholders: 2225 East Randol Mill Road Suite 305 Arlington, Texas 76011 Attn: Scott Haire 5.2 Binding Agreement. This Agreement shall be binding upon and shall inure to the benefit of MB, its successors and assigns, and to the Debtholders and their heirs, personal representatives, successors and assigns. 5.3 Expenses. The Debtholders shall reimburse MB for up to $20,000 of expenses for professional fees incurred by MB in connection with the transactions contemplated by this Agreement. 5.4 Interim Operations. It is anticipated that MedEWay and MBSSI will use facilities and other resources of MB during a transition period. MedEWay and MBSSI shall reimburse MB for the actual costs of such facilities and other resources used by them. 5.5 Entire Agreement. This Agreement constitutes the entire agreement between MB and the Debtholders relating to the subject matter hereof; there are no terms other than those contained herein and therein and this Agreement may not be modified or amended except in a writing signed by the parties hereto. 5.6 Governing Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Texas, without giving effect to principles of conflicts of law thereof. 5.7 Counterparts. This Agreement may be executed in counterparts and by each party hereto on separate counterparts, each of which shall be deemed an original, but which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date set forth above. MB SOFTWARE CORPORATION, INC. By: ______________________________ Its: ______________________________ CONSOLIDATED NATIONAL CORP. By: ______________________________ Its: ______________________________ ------------------------------ SCOTT A. HAIRE EX-10.2 3 WARRANT TO PURCHASE THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER APPLICABLE SECURITIES LAWS. WARRANT To Purchase Common Stock of MEDEWAY.COM, INC. 1. Grant of Warrant. MedEWay.com, Inc., a Texas corporation (the "Company") hereby grants to MB Software Corporation ("Holder"), the right to purchase from the Company such number of shares of Common Stock as shall result in Holder owning 5% of the outstanding Common Stock of the Company, on a fully diluted basis as of the date of exercise. The Common Stock issuable upon the exercise of this Warrant is sometimes referred to herein as the "Securities." 2. Exercise Price. The exercise price per share of Common Stock shall be $.001 (the "Exercise Price"). 3. Term; Exercise. The term of this Warrant shall be for a period of ten years, beginning on November 11, 1999 (the "Term"). This Warrant may only be exercised (i) at any time on or after the initial public offering of the Company or (ii) immediately following the sale of all or substantially all of the assets of the Company or (iii) immediately before (x) the sale of all of the outstanding shares of Common Stock of the Company by the holders thereof or (y) the merger of the Company or similar business combination with another entity in which the Company is not the survivor. In order to exercise this Warrant, Holder shall deliver to the Company at its principal office shall be designated from time to time by the Company: (i) a written notice of Holder's election to exercise this Warrant, which notice shall specify the number of Securities to be purchased pursuant to such exercise; (ii) cash or cash equivalent payable to the order of the Company in an amount equal to the aggregate Exercise Price for all Securities to be purchased pursuant to such exercise; and (iii) a subscription for the Securities to be purchased, in the form of the Subscription appearing at the end of this Warrant. Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within ten (10) days thereafter, execute or cause to be executed and deliver to such Holder certificates representing the aggregate number of full Securities issuable upon such exercise, or if the Company has a transfer agent for any of the Securities, to cause such transfer agent to do the same. The stock certificates so delivered shall be registered in the name of Holder, or such other name as shall be designated in said notice, in which case, Holder shall be responsible for any applicable issue or transfer taxes. This Warrant shall be deemed to have been exercised and such certificates shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date that said notice, together with said payment and Subscription are received by the Company as aforesaid (the "Record Date"). The Holder of this Warrant shall not, by virtue of its ownership of this Warrant, be entitled to any rights of a shareholder in the Company, either at law or in equity; provided, however, Holder shall, for all purposes, be deemed to have become the holder of record of such shares on the Record Date. This Warrant shall remain issued and outstanding until the expiration of the Term. 4. Taxes. The issuance of any Securities or other certificate upon the exercise of this Warrant shall be made without charge to the registered Holder hereof, or for any tax (other than income tax) in respect of the issuance of such certificate. 5. Transfer; Replacement. Subject to the provisions of the legend on the face of this Warrant, this Warrant and all options and rights hereunder are transferable, as to all or any part of the number of Securities purchasable upon its exercise, by the Holder hereof in person or by duly authorized attorney on the books of the Company upon surrender of this Warrant at the principal offices of the Company, together with the form of transfer authorization attached hereto duly executed. The Company shall deem and treat the registered Holder of this Warrant at any time as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary. If this Warrant is transferred in part, the Company shall at the time of surrender of this Warrant, issue to the transferee a Warrant covering the portion of this Warrant so transferred, and issue to the transferor a Warrant covering the portion of this Warrant not transferred. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, the Company shall issue a new Warrant of like tenor. Any such transfer shall be made in compliance with all applicable Federal and state securities laws, and the transferring Holder agrees to indemnify and hold harmless the Company from any violations thereof. 6. Cash in Lieu of Fractional Shares. The Company shall not be required to issue fractional Securities upon the exercise of this Warrant. If the Holder of this Warrant would be entitled, upon the exercise of any rights evidenced hereby, to receive a fractional interest in any Security, the Company shall pay a cash adjustment for such fraction equal to the equivalent market price for such fractional share (as determined in the manner prescribed by the Board of Directors) at the close of business on the exercise date. 7. No Dilution or Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary act, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of Holder of this Warrant against impairment. 2 8. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to the principles of choice of law thereof. 9. Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the Holder hereof and shall be enforceable by any such Holder. 10. Reservation of Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Warrant, such number of Securities as shall from time to time be sufficient to effect the exercise of this Warrant. If at any time the number of authorized but unissued Securities shall not be sufficient to effect the exercise of all or any portion of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Securities to such number of shares as shall be sufficient for such purpose. 11. Headings. Headings of the paragraphs in this Warrant are for convenience and reference only and shall not, for any purpose, be deemed a part of this Warrant. IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed. Dated as of November 11, 1999. MEDEWAY.COM, INC. By: Its: SUBSCRIPTION FORM (To be executed only upon exercise of Warrant) The undersigned registered owner of that certain Warrant of the Company (the "Warrant") irrevocably exercises the Warrant for and purchases ___________ shares of Common Stock of MedEWay.com, Inc. purchasable with this Warrant, and herewith makes payment therefor, all at the price and on the terms and conditions specified in the Warrant and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _________________________ whose address is _______________________________. Dated:_________________________ By:____________________________________ Its:___________________________________ Address:_______________________________ ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all the rights of the undersigned under this Warrant with respect to the number of shares of Common Stock set forth below: Number of Shares Name & Address of Assignee of Common Stock -------------------------- ------------------------- and does hereby irrevocably constitute and appoint as Attorney _________________ to register such transfer on the books of MedEWay.com, Inc. maintained for the purpose, with full power of substitution in the premises. Dated:_________________________ By:________________________________ Its:_______________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatever. The Assignee named above, by acceptance of this assignment, agrees to be bound by the terms of this Warrant with the same force and effect as if a signatory thereto. (signature) Address:_______________________________ Dated:______________________ EX-27 4 FDS --
5 (Replace this text with the legend) 0000714256 MB Software Corporation 1 US DOLLARS 3-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 1 1,804 0 1,583,415 505,181 0 1,080,038 565,782 148,993 1,655,589 880,528 0 0 300,644 69,100,000 5,787,557 1,655,589 169,377 2,884,270 36,591 1,766,021 1,231,087 0 72,887 (372,430) 0 (223,840) 106,410 0 0 (372,430) 0 0
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