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, 2004
[_] 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 [X] No [ ]
As of March 31, 2004, 5,822,810 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, 2004
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet as of March 31, 2004 (Unaudited)..................F-1
Consolidated Statements of Operations for the three months ended
March 31, 2004 and 2003 (Unaudited)..................................F-2
Consolidated Statements of Cash Flows for the three months ended
March 31, 2004 and 2003 (Unaudited)..................................F-3
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31,
2004
-----------
(Unaudited)
CURRENT ASSETS
Cash $ --
Notes receivable 376,006
-----------
Total current assets 376,006
-----------
PROPERTY AND EQUIPMENT, NET 13,626
-----------
OTHER ASSETS 113,333
Software license, net 113,333
TOTAL ASSETS $ 502,965
===========
See Condensed Notes To Financials
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
March 31,
2004
-----------
(Unaudited)
CURRENT LIABILITIES
Notes payable $ 482,500
Checks in excess of bank balance 1,049
Accounts payable 84,897
Accrued liabilities 43,566
-----------
Total current liabilities 612,012
Total liabilities 762,919
SHAREHOLDERS' 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 5,822,810 5,823
Additional paid-in capital 9,032,385
Accumulated deficit (9,135,216)
(97,008)
Treasury stock, at cost; 407,446shares (12,039)
-----------
Total shareholders' deficit (109,047)
-----------
$ 502,965
===========
See Condensed Notes To Financials
MB SOFTWARE CORPORAITON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Ended
--------------------------------
March 31, 2004 March 31, 2003
-------------- --------------
REVENUES
Veriscrip Testing $ 10,717 $ --
-------------- --------------
Total revenues 10,717 --
COST OF REVENUES -- --
-------------- --------------
Total cost of revenues -- --
-------------- --------------
GROSS PROFIT 10,717 --
OPERATING EXPENSES
Selling, general & administrative 80,099 33,664
Depreciation and amortization 5,000 5,000
-------------- --------------
Total operating expenses 85,099 38,664
-------------- --------------
LOSS FROM OPERATIONS (74,382) (38,664)
OTHER INCOME (EXPENSE)
Interest income and other -- --
Interest Expense 11,766 --
-------------- --------------
Total other income (expense) 11,766 --
-------------- --------------
LOSS FROM CONTINUING OPERATIONS (86,148) (38,664)
DISCONTINUTED OPERATIONS
Income (loss) from operations
of discontinued subsidiary -- --
-------------- --------------
NET LOSS $ (86,148) $ (38,664)
============== ==============
Loss from continuing operations $ (86,148) $ (38,664)
Plus: Cumulative preferred stock dividends -- --
-------------- --------------
Loss available to common shareholders $ (86,148) $ (38,664)
============== ==============
BASIC AND DILUTED EARNINGS (L0SS) PER SHARE
Continuing Operations $ (0.01) $ (0.05)
Discontinued Operations -- --
-------------- --------------
Weighted-average common shares outstanding 5,822,810 822,810
============== ==============
See Condensed Notes To Financials
MB SOFTWARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
03/31/04 03/31/03
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (86,148) (38,664)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization 5,000 5,000
Changes in assets and liabilities:
Accrued other liabilities (1,588) --
Accounts payable 28,174 (15,762)
----------------------------
Net cash used in operating activities (54,562) (49,426)
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (13,626) --
Payment for intangible assets (50,000) --
----------------------------
Net cash used in investing activities (63,626) --
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable -- --
Proceeds from new borrowings 25,000 --
Cash overdraft 1,049 --
Proceeds from notes payable related parties 91,754 49,460
----------------------------
Net cash provided by financing activities 117,803 49,460
----------------------------
NET INCREASE (DECREASE) IN CASH (385) 34
Cash at beginning of period 385 169
----------------------------
Cash at end of period $ -- 203
============================
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest to related party -- --
Cash paid during the period for interest to others $ 13,354 --
============================
MB SOFTWARE CORPORATION AND SUBSIDIARIES
QUARTER ENDED MARCH 31, 2004
NOTES TO 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 Regulation 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, 2003,
as amended. 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,
2004, and are not necessarily indicative of the results that may be expected for
the year ending December 31, 2004.
The Company's financial statements include the combined statements of financial
position, results of operations and cash flows for the entities merged as a
result of certain merger agreements completed during 2003. The Company remains
as the reporting entity and its balance sheet and other financial information
have been updated as of the beginning of the period as though the assets and
liabilities had been transferred at that date. Financial statements and
financial information presented for the prior period have been restated to
furnish comparative information. All restated financial statements reflect the
combined results of operations and cash flows of the previously separate
entities.
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.
It is the Company's belief that it will continue to incur losses for at least
the next twelve months, and as a result will require additional funds from debt
or equity investments to meet such needs. To meet these objectives, management's
plans are to (i) raise capital by obtaining financing from debt financing and /
or equity financing through private placement efforts, (ii) issue common stock
for services rendered in lieu of cash payments and (iii) obtain loans from
shareholders as necessary. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. The Company
anticipates that its shareholders will contribute sufficient funds to satisfy
the cash needs of the Company for the next twelve months. However, there can be
no assurances to that effect, as the Company has no revenues and the Company's
need for capital may change dramatically if it is successful in expanding its
current business or acquiring a new business. If the Company cannot obtain
needed funds, it may be forced to curtail or cease its activities.
Management believes that actions presently taken to revise the Company's
operating and financial requirements provide the opportunity for the Company to
continue as a going concern. The Company's future ability to achieve these
objectives cannot be determined at this time. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
NOTE 3: NOTES PAYABLE
Substantially all of the Company's notes payable are in default.
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.
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 currently has limited business operations, maintaining leased
offices in Arlington, Texas, and Lexington, Kentucky. Business activities
currently include sales and marketing activities to state organizations, and the
implementation and management of the Kentucky pilot program.
Through its informal pre-marketing and marketing activities, and its pilot
program, the Company continues to refine its strategy to secure a strong
position in the online healthcare transactions market. Management intends to
draft this strategy into a formal business plan, internally fund operations, and
may consider raising external funds.
Pursuant to its strategy, the Company secured a license for an additional
prescription transaction system that it intends to incorporate into its
Veriscrip offering. The Company's primary expenses are expected to be marketing
and development/customization for state by state projects.
During the first quarter of 2004, the Company conducted marketing activities
within multiple states in an effort to generate awareness of the Veriscrip
system's features and capabilities, and begin the sales process. The Company has
closely monitored local and national media sources covering prescription drug
related issues in several states. Management feels confident that market demand
for its services continues to grow as awareness of the social and economic
challenges surrounding the administration of prescription drugs grows.
The Company anticipates hiring a number of management, marketing, and technical
staff to during the remainder of fiscal 2004 to secure contracts and further
increase our product offering.
Liquidity and Capital Resources
- -------------------------------
As of March 31, 2004, 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
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
31 Certification pursuant to Rule 13a-14(a)/15d-14(a)
32 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
- --------------
(b) 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: May 13, 2004 /s/ Scott A. Haire
--------------------------------------
Scott A. Haire, Chairman of the Board,
Chief Executive Officer and President
(Principal Financial Officer)