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, 2003
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File No. 0-11808
MB SOFTWARE CORPORATION
Texas 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
(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 [_] No [X]
As of August 12, 2003, 822,810 of the Issuer's $.001 par value common stock were
outstanding.
Transitional Small Business Disclosure Format
Yes [_] No [X ]
MB SOFTWARE CORPORATION AND SUBSIDIARIES
Form 10-QSB
Quarter Ended March 31, 2002
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet as of March 31, 2003 (Unaudited).................. 1
Consolidated Statements of Operations for the three months ended
March 31, 2003 and 2002 (Unaudited).................................. 2
Consolidated Statements of Cash Flows for the three months ended
March 31, 2003 and 2002 (Unaudited).................................. 3
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (unaudited)
MARCH 31, 2003
ASSETS
- ------
Current Assets
Cash $ 170
-----------
Total Assets $ 170
===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
Current Liabilities
Advances from related parties $ 450
-----------
Stockholders' Deficiency
Preferred stock, $10 par value, 5,000,000 shares authorized;
issued and outstanding - none --
Common stock: $0.001 par value; 20,000,000 shares authorized;
issued and outstanding - 822,810 shares 823
Additional paid-in capital 8,632,456
Accumulated deficit (8,621,520)
-----------
11,759
Less, treasury stock, at cost; 4,089 shares (12,039)
-----------
Total stockholders' deficiency (280)
-----------
-----------
Total liabilities and stockholders' deficiency $ 170
===========
See condensed notes to consolidated financial statements.
3
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Three months Three months
ended ended
March 31, 2003 March 31, 2002
--------------------------------
Revenues $ -- $ --
Cost of revenues -- --
--------------------------------
Gross profit -- --
Operating Expenses
Selling, general and administrative 431 303,485
--------------------------------
Loss from operations (431) (303,485)
Other Income (Expense)
Interest expense -- (164,140)
Interest income -- 7,911
--------------------------------
Total other income (expense) -- (156,229)
--------------------------------
Loss before benefit for income taxes (431) (459,714)
Benefit for income taxes -- 8,051
--------------------------------
Loss from continuing operations (431) (451,663)
Discontinued operations, net of tax effect -- 15,628
--------------------------------
Net loss $ (431) $ (436,035)
================================
Loss from continuing operations $ (431) $ (451,663)
Plus cumulative preferred stock dividends -- (85,000)
--------------------------------
Loss available to common stockholders $ (431) $ (536,663)
================================
Basic and Diluted Loss Per Share:
Continuing operations $ -- $ (0.73)
Discontinued operations -- --
--------------------------------
$ -- $ (0.73)
================================
Weighted average common shares outstanding 822,810 734,278
================================
See condensed notes to consolidated financial statements.
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
2003 2002
----------------------
Cash Flows From Operating Activities
- ------------------------------------
Loss from continuing operations $ (431) $(451,663)
Adjustments to reconcile loss from continuing operations to net cash used in
operating activities:
Depreciation and amortization -- 35,740
Accretion of debt -- 68,747
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and other -- (7,447)
Increase (decrease) in accounts payable and accrued liabilities -- 28,155
----------------------
Net cash used in continuing operations (431) (326,468)
Net cash from discontinued operations -- (102,591)
----------------------
Net cash used in operating activities (431) (429,059)
----------------------
Cash Flows From Investing Activities
- ------------------------------------
Payments received on notes receivable -- 23,289
Loans made on notes receivable -- (17,939)
Capital expenditures -- (160)
----------------------
Net cash provided by investing activities -- 5,190
Cash Flows From Financing Activities
- ------------------------------------
Bank overdraft -- (16,831)
Common stock issued for cash -- 1,000
Proceeds from loans and warrants 450 472,800
Principal payments on borrowings -- (33,100)
----------------------
Net cash provided by financing activities 450 423,869
----------------------
Increase (decrease) in cash 19 $ --
Cash and cash equivalents, beginning of period 151 --
----------------------
Cash and cash equivalents, end of period $ 170 $ --
======================
Cash paid during the period for interest -- $ 39,180
======================
See condensed notes to consolidated financial statements.
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MB SOFTWARE CORPORATION AND SUBSIDIARIES
MB SOFTWARE CORPORATION
QUARTER ENDED MARCH 31, 2003
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States
of America 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 in the United
States of America 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,
2002. 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,
2003, and are not necessarily indicative of the results that may be expected for
the year ending December 31, 2003.
NOTE 2: GOING CONCERN
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 significant accumulated 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.
The Company does not currently have any business operations. The Company has
explored the possibility of selling or merging with another Company. Although
the Company has not entered into any binding agreement to effect such a
transaction, the board of directors of the Company does consider such offers and
would consider all of the terms of any such offer as part of its fiduciary duty
to determine whether any such transaction is in the best interest of the
Company's stockholders. If the board of directors does determine that a sale or
merger of the Company is in the best interests of the Company's stockholders,
the board of directors may determine to pursue such a transaction and the
consideration to be paid in connection with such transaction would be used to
expand our business and fund future operations. There is no assurance the
Company can raise funds through a sale or equity transaction, or if such funding
is available, that it will be on favorable terms.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Caution Concerning Forward-Looking Statements/Risk Factors
- ----------------------------------------------------------
The following discussion should be read in conjunction with the Company's
financial statements and the notes thereto and the other financial information
appearing elsewhere in this document. In addition to historical information, the
following discussion and other parts of this document contain certain
forward-looking information. When used in this discussion, the words "believes,"
"anticipates," "expects," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected due to a number of factors beyond our control. The Company does not
undertake to publicly update or revise any of its forward-looking statements
even if experience or future changes show that the indicated results or events
will not be realized. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. You are also
urged to carefully review and consider our discussions regarding the various
factors, which affect our business, included in this section and elsewhere in
this report.
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Factors that might cause actual results, performance or achievements to differ
materially from those projected or implied in such forward-looking statements
include, among other things: (i) the impact of competitive products; (ii)
changes in law and regulations; (iii) adequacy and availability of insurance
coverage; (iv) limitations on future financing; (v) increases in the cost of
borrowings and unavailability of debt or equity capital; (vi) the effect of
adverse publicity regarding our products; (vii) the inability of the Company to
gain and/or hold market share; (viii) exposure to and expense of resolving and
defending product liability claims and other litigation; (ix) consumer
acceptance of the Company's products; (x) managing and maintaining growth; (xi)
customer demands; (xii) market and industry conditions including pricing and
demand for products, (xiii) the success of product development and new product
introductions into the marketplace; (xiv) the departure of key members of
management; (xv) the ability of the Company to efficiently market its products;
as well as other risks and uncertainties that are described from time to time in
the Company's filings with the Securities and Exchange Commission.
Plan of Operation
- -----------------
The Company does not currently have any business operations. The Company has
explored the possibility of selling or merging with another Company. Although
the Company has not entered into any binding agreement to effect such a
transaction, the board of directors of the Company does consider such offers and
would consider all of the terms of any such offer as part of its fiduciary duty
to determine whether any such transaction is in the best interest of the
Company's stockholders. If the board of directors does determine that a sale or
merger of the Company is in the best interests of the Company's stockholders,
the board of directors may determine to pursue such a transaction and the
consideration to be paid in connection with such transaction would be used to
expand our business and fund future operations. There is not assurance the
Company can raise funds through a sale or equity transaction, or if such funding
is available, that it will be on favorable terms.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 2003, we did not have any significant assets.
Our future funding requirements will depend on numerous factors, some of which
are beyond the Company's control. These factors include our ability to operate
profitably, recruit and train management and personnel, and to compete with
other, better-capitalized and more established competitors.
We believe that the Company can satisfy its cash requirements over the next
twelve months by advances from shareholders and/or through debt or equity
offerings and private placements in order to expand the range and scope of our
business operations. There is no assurance that such additional funds will be
available for the Company to finance its operations on acceptable terms, if at
all. Furthermore, there is no assurance the net proceeds from any successful
financing arrangement will be sufficient to cover cash requirements during the
initial stages of the Company's operations, once a suitable business opportunity
has been identified.
The Company does not anticipate incurring significant research and development
costs, the purchase of any major equipment, or any significant changes in the
number of its employees over the next twelve months.
ITEM 3. CONTROLS AND PROCEDURES
The President, who is also the chief executive officer and the chief financial
officer of the Company, has concluded based on his evaluation as of a date
within 90 days prior to the date of the filing of this Report, that the
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Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in the reports filed or
submitted by it under the Securities Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Company in such reports is accumulated and communicated to the Registrant's
management, including the president, as appropriate to allow timely decisions
regarding required disclosure.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Certification of Principal Executive Officer and Principal
Financial Officer in accordance with 18 U.S.C. Section 1350,
as adopted by Section 302 of the Sarbanes-Oxley Act of 2002*
32.1 Certification of Principal Executive Officer and Principal
Financial Officer in accordance with 18 U.S.C. Section 1350,
as adopted by Section 906 of the Sarbanes-Oxley Act of 2002*
- ------------------------
* Filed herewith
(b) Reports on Form 8-K - The Company filed a Form 8-K during the quarter
ended March 31, 2003 under Item 4 "Change in Registrant's Certifying
Accountant" to disclose the resignation of its former auditors, Weaver
and Tidwell, L.L.P. as of February 10, 2003.
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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: Aug. 29, 2003 /s/ Scott A. Haire
---------------------------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)
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