Sanara MedTech Inc. — Interim / Quarterly Report 2000

May 19, 2000

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, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 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 (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: Common Stock $.001 par value ---------------------------- (Title of Class) Name of each Exchange Title of Each Class on Which Registered ------------------- --------------------------- Common NASDAQ - OTC BULLETIN 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 December 31, 1999, 69,200,000 shares of the Issuer's $.001 par value common stock were outstanding. Transitional Small Business Disclosure Format Yes [ ] No [ X ]

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F4 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 for the year ended December 31, 1999. 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, 2000, and are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 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 $224,000 and $889,000 for 2000 and 1999, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General In the first quarter of 2000, the Company continued to focus on the operations of its healthcare clinics. The Company's clinics include four Company-owned physician practices in Florida. Florida law, as opposed to the law of many other states, permits the corporate practice of medicine of the type engaged in by the Company. These Florida practices primarily focus on pain management. Additionally, the Company has developed a healthcare Internet site, HealthcareInnovations.net, which is dedicated to pain management and pain management programs for patients. In the year ending December 31, 1999, MB Software Corporation (the "Company") divested itself of MB Software Solutions, Inc. ("MBSSI"), the software division. Traditionally, the healthcare clinics have generated approximately ninety percent of the Company revenues. In the year ending December 31, 1999, the Company also sold Mr. Mulligan, L.L.C. d/b/a Nevada Multicare ("Nevada Multicare"). There were no changes in the legal proceedings from the status set forth in the Form 10 - KSB for the year ending December 31, 1999. Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999 Net medical revenues increased to $688,926 for the three months ended March 31, 2000 as compared to $507,462 for the three months ended March 31,1999. This increase is primarily attributable to an increase in patient volumes at the Jacksonville, Florida clinics. The Lauderhill, Florida clinic also experienced an increase in patient volume, albeit not as significant as the increase at the Jacksonville, Florida clinics. 5 The contractual allowance adjustment increased to $361,822 for the first quarter of 2000 compared with $310,614 for the three months ended March 31, 1999. 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. The increase in the contractual allowance adjustment reflects, and is directly related to, the increase in gross medical revenues. The cost of medical revenues decreased to $392,692 for the three months ended March 31, 2000 compared to $488,217 for the three months ended March 31, 1999. The gross profit from medical activities increased to $296,370 for the three months ended March 31, 2000 as compared to $192,245 for the three months ended March 31, 1999. The increase in gross profit from medical activities directly reflects the increase in gross medical revenues. In addition, the gross profit increase correlates with the decreased cost of revenue for medical activities for the three months ended March 31, 2000. It is noteworthy that the quarter ending March 31, 1999 reflects the termination of all practice management agreements. As a result, the service fees associated with the agreements have been discontinued. The Company's gross profit for the first quarter ending March 31, 2000 increased to $296,370 from $100,484 for the first quarter ending March 31, 1999. As set forth above, the increase in gross profit reflects the decrease in the total cost of revenue for the quarter ending March 31, 2000. The total cost of revenue for the three months ended March 31, 2000 was $392,692 compared to $488,217 for the same quarter of 1999. The selling, general and administrative expenses decreased by 20% to $287,402 for the three-month period ended March 31, 2000 as compared to $368,860 for the three-month period ended March 31, 1999. The net loss from continuing operations decreased to $4,737 for the three-month period ended March 31, 2000, as compared to a loss from continuing operations of $282,224 for the three months ended March 31, 1999. The reduction in loss is commensurate with the Company's increase in total revenues. Liquidity and Capital Resources The Company's operations used $146,317 of cash during the three months ended March 31, 2000 compared to cash provided by operations of $3,183 for the quarter ended March 31,1999. As of March 31, 2000, the Company had working capital deficits of $918,210. The working capital as of March 31, 1999 was $902,853. At March 31, 2000, the Company had outstanding checks in excess of bank balances of $101,860. The increase in the working capital deficit is directly related to the reclassification in the fourth quarter of 1999, of certain debt from long-term to classification as a current liability. To increase working capital, the Company is concentrating its efforts to increase patient volume in the Florida clinics. The Company will continue to stream line its operations and increase revenue as the volume at each clinic continues to grow. In the three months ended March 31, 2000, the Company had no expenditures for the purchase of equipment. The Company does not anticipate any major purchase of equipment for the remaining nine (9) months of 2000. 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. 6 Financial Statements - See Item 1 for financial statements filed with this report. Reports on Form 8-K - Change in Independent Auditors - Filed February 25, 2000 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 19, 2000 /s/ Scott A. Haire -------------- Scott A. Haire, Chairman of the Board, Chief Executive Officer and President (Principal Financial Officer) 7