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, 2001
---------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
Commission File No. 0-11808
MB SOFTWARE CORPORATION
Colorado 59-2220004
(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:
Name of each Exchange
Title of Each Class on Which Registered
------------------- -----------------
Common NASDAQ - OTC BULLETIN BOARD
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock $.001 par value
----------------------------
(Title of Class)
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, 2000, 70,300,000 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 March 31, 2001
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBER
Item 1 - Financial Statements
Consolidated Balance Sheets
March 31, 2001(Unaudited) and December 31, 2000 (Audited) 3-4
Consolidated Statements of Operations -
for the Three Months ended March 31, 2001(Unaudited) and
March 31, 2000 (Unaudited) 5
Consolidated Statements of Cash Flows
for the Three Months ended March 31, 2001(Unaudited)
and March 31, 2000 (Unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion
and Analysis of Financial Condition and
Results of Operations 7-8
PART II - OTHER INFORMATION
Item 5 - Other Information 9
Item 6 - Exhibits, Financial Statement Schedules
and Reports on Form 8-K 9
SIGNATURES 9
2
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2001 2000
----------- ----------
(Unaudited) (Audited)
CURRENT ASSETS
Cash $ -- $ 29,910
Medical receivables, net allowance 681,339 525,265
for doubtful accounts and contactual
allowances of $1,118,630 and $1,118,630 in 2001 and
2000, respectively
Notes receivable 15,722 --
Prepaid expenses 7,788 25,049
---------- ----------
Total Current Assets 704,849 580,224
---------- ----------
PROPERTY AND EQUIPMENT, NET 106,414 116,127
---------- ----------
Note receivable - shareholder 350,000 350,000
Employee advances 90,000 90,000
---------- ----------
Total Assets $1,251,263 $1,136,351
========== ==========
The Notes to the Consolidated Financial Statements are an integral part of these
statements.
3
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' DEFICIT
March 31, December 31,
2001 2000
---------- ---------
(Unaudited) (Audited)
CURRENT LIABILITIES
Outstanding check in excess of bank balances $ 14,083 $ --
Notes payable 1,766,820 1,658,870
Current maturities of capital leases -- 1,494
Accounts payable 363,527 354,803
Accrued liabilities 490,402 500,120
--------- ---------
Total current liabilities 2,634,832 2,515,287
--------- ---------
Total long term liabilities -- --
--------- ---------
TOTAL LIABILITIES 2,634,832 2,515,287
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 $810,644, 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; 70,400,000 and 70,300,000 shares 70,400 70,300
issued in 2001 and 2000, respectively
Additional paid-in capital 1,453,082 1,434,431
Accumulated deficit (6,068,405) (6,039,162)
Deferred license and consulting cost, net (226,607) (232,466)
--------- ---------
(1,371,530) (1,366,897)
Treasury stock, at cost; 408,029 shares (12,039) (12,039)
--------- ---------
Total shareholders' deficit (1,383,569) (1,378,936)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $1,251,263 $1,136,351
========= =========
The Notes to the Consolidated Financial Statements are an integral part of these
statements.
4
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31, 2001 March 31, 2000
REVENUES
Medical income - net of contractual
Adjustments of $353,063 and $361,822
in 2001 and 2000, respectively $ 681,946 $ 688,926
Service fees 136
------------ ------------
Total revenues 681,946 689,062
COST OF REVENUES
Cost of medical services 293,882 392,692
------------ ------------
Total cost of revenues 293,882 392,692
------------ ------------
GROSS PROFIT 388,064 296,370
OPERATING EXPENSES
Selling, general & administrative 368,571 287,402
Depreciation and amortization 20,509 13,705
------------ ------------
Total operating expenses 389,080 301,107
OTHER INCOME (EXPENSE)
Interest income and other 7,011 --
Other expense -- 9,644
Interest Expense (35,237) (30,920)
------------ ------------
Total other income (expense) (28,226) (21,276)
------------ ------------
NET LOSS $ (29,243) $ (26,013)
============ ============
Plus: Cumulative preferred stock dividends 85,000 85,000
------------ ------------
Income (loss) available to common shareholders $ (114,243) $ (111,013)
============ ============
BASIC AND DILUTED EARNINGS (L0SS) PER SHARE (0.00) (0.00)
============ ============
Weighted-average common shares outstanding 70,400,000 69,200,000
============ ============
Cumulative preferred dividends per share $ -- $ --
============ ============
The Notes to the Consolidated Financial Statements are an integral part of these
statements.
5
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS THREE MONTHS
ENDED 03/31/01 ENDED 03/31/00
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (29,243) $ (26,013)
Adjustments to reconcile net loss from continuing
operations to cash used by operating activities:
Depreciation 14,650 13,706
Consulting costs recognized 24,610
Change in allowance for doubtfull accounts -- 24,716
Changes in assets and liabilities:
Accounts receivable (156,074) (171,684)
Accounts payable 8,724 (76,864)
Accrued liabilities (9,718) (12,038)
Outstanding checks in excess of bank balances 14,083 101,860
Prepaid expenses 17,261
--------- ---------
Net cash used in operating activities (115,707) (146,317)
CASH FLOWS FROM INVESTING ACTIVITIES
Borrowing (payments) on note receivables (15,722) 10,087
Purchase of fixed assets (4,938) --
--------- ---------
Net cash provided by investing activities (20,660) 10,087
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on capital leases (1,493) (13,848)
Payments on notes payable -- --
Proceeds from new borrowings 107,950 79,000
Proceeds from notes payable related parties -- 45,000
--------- ---------
Net cash provided by financing activities 106,457 110,152
--------- ---------
NET DECREASE IN CASH (29,910) (26,078)
Cash at beginning of period 29,910 26,078
--------- ---------
Cash at end of period $ -- $ --
========= =========
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest to related party -- --
Cash paid during the period for interest to others $ 44,955 $ 30,920
--------- ---------
$ 44,955 $ 30,920
========= =========
The Notes to the Consolidated Financial Statements are an integral part of these
statements.
6
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 ( the Company)
for the year ended December 31, 2000 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, 2001 and are not necessarily indicative of the
results that may be expected for the year ending December 31, 2001.
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 $1,766,820 and $1,181,925
for 2001 and 2000, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In the first quarter of 2001, the Company continued to focus on the development
and distribution of PatientMed 2000, an Internet appliance. The Company has also
continued operations of its healthcare clinics. These clinics include three
Company-owned physician practices in Florida that focus primarily on pain
management and the sale of nutritional supplements. To unify the clinics and the
Internet appliance, the Company has developed a healthcare Internet site,
HealthcareInnovations.net. The site is dedicated to pain management programs for
patients and the sale of the nutritional supplements.
There were no changes in the legal proceedings from the status set forth in the
Form 10 - KSB for the year ending December 31, 2000.
7
Three Months Ended March 31,2001 Compared to Three Months Ended March 31, 2000
- ------------------------------------------------------------------------------
Net medical revenues decreased .010% to $681,946 for the three months ended
March 31, 2001 as compared to $688,926 for the three months ended March 31,
2000. This relative stability reflects, in part, the success of administrative
changes instituted in the prior year.
The contractual allowance adjustment decreased 2.4 % to $353,053 for the first
quarter of 2001 compared with $361,822 for the three months ended March 31,
2000. 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. Again, this relative stability
reflects the success of the administrative restructuring commenced during year
2000.
The cost of medical revenues decreased 25% to $293,882 for the three months
ended March 31, 2001 compared to $392,692 for the three months ended March 31,
2000. The decrease in cost is attributable, in part, to increased purchasing
efficiency as well as the reduction of costs associated with the elimination of
the Lauderhill clinic during the year 2000.
The gross profit from medical activities increased 31% to $388,064 for the three
months ended March 31, 2001 as compared to $296,370 for the three months ended
March 31, 2000. This increase in gross profit from medical activities directly
reflects increased operating efficiency in accordance with the Company's overall
strategy for the clinics.
The selling, general and administrative expenses increased by 28% to $368,571
for the three-month period ended March 31, 2001 as compared to $287,402 for the
three-month period ended March 31, 2001. This increase reflects the costs
attendant to the start-up expenses for PatientMed2000(TM).
The net loss from continuing operations increased to ($29,243) for the
three-month period ended March 31, 2001, as compared to a loss from continuing
operations of ($26, 013) for the three months ended March 31, 2000. This figure
additionally reflects the relative success of the Company in stabilizing and
streamlining Company operations.
Liquidity and Capital Resources
- -------------------------------
The Company's operations used $115,707 of cash during the three months ended
March 31, 2001 compared to a use of cash of $146,317 for the quarter ended March
31,2000.
As of March 31, 2001, the Company had working capital deficits of $1,929,983.
The working capital as of March 31, 2000 was $1,935,063. At March 31, 2001, the
Company had outstanding checks in excess of bank balances of $14,083. To
increase working capital, the Company is concentrating its efforts to distribute
volume units of PatientMed2000(TM) while contemporaneously increasing patient
revenue at the Florida clinics. The Internet site is expected to unify these
twin goals by providing Internet advertising for the clinics and the Internet.
In the three months ended March 31, 2001, the Company had no expenditures for
the purchase of equipment of $4,938. The Company does not anticipate any major
purchase of equipment for the remaining nine (9) months of 2001.
8
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.
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 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 11,2001 /s/ Scott A. Haire
------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
9