UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[ X ]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
        OF 1934

                   For the fiscal year ended December 31, 1997

[   ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

                   For the transition period from _________ to  ____________

                         Commission File Number 0-11808

                             MB SOFTWARE CORPORATION
             (Exact name of Registrant as specified in its charter)

                  COLORADO                                     59-2219994
         (State or other jurisdiction of                    (I.R.S. Employer
         incorporation or organization)                      Identification No.)

                       2225 E. Randol Mill Road Suite 305
                             Arlington, Texas 76011
                                 (817) 633-9400
              (Registrant's telephone number, including area code)

           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) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such 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 if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
                                 [X] Yes [ ] No


Issuer's revenues for its most recent fiscal year:  $5,289,854.



                                       1


<PAGE>

The aggregate market value of the voting stock held by  non-affiliates  computed
by  reference  to the price at which the stock was sold,  or the average bid and
asked price of such stock,  as of a specified  date within the past 60 days. The
Company's  common stock based on the average  selling price on a date within the
past 60 days is $0.20.

         Check whether the issuer has 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,  1997,  68,580,000  shares of the  Issuer's  $.001 par value
common stock were outstanding.

Transitional Small Business Disclosure Format:

                                 Yes [ ] No [X]















                                       2
<PAGE>

<TABLE>
<CAPTION>

                             MB SOFTWARE CORPORATION

                                   Form 10-KSB
                      For the Year Ended December 31, 1997

                                                                                Page of
                                                                                Form 10-KSB
                                                                                -----------
<S>                                                                                  <C>    

 ITEM 1.  BUSINESS..............................................................      4

 ITEM 2.  PROPERTIES............................................................      6

 ITEM 3.  LEGAL PROCEEDINGS.....................................................      7

 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..................      7

 ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED                           
          STOCKHOLDER MATTERS...................................................      7

 ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS.............................................      7

 ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................      9

 ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE..............................................      9

 ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS..........      9

 ITEM 10. EXECUTIVE COMPENSATION................................................     10

 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

          MANAGEMENT............................................................     11

 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................     11

 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K......................................     12



</TABLE>










                                       3

<PAGE>



                                     PART 1

Item 1.  Business

Introduction

         MB Software  Corporation  (the  "Company")  was  incorporated  in 1982.
Historically,  the Company has provided practice and cash management services to
physicians,  dentist,  chiropractors  and medical billing centers.  In 1997, the
Company  began to expand its scope of  operations  by  acquiring  and  operating
healthcare  businesses that use its practice and cash management services.  Also
in 1997, the Company streamlined its practice and cash management business in an
attempt to focus solely upon the  acquisition  and management of Medical Clinics
through its software, technology and management skills.

Healthcare Businesses

         In January 1997,  the Company  acquired a  nurse-practitioner  business
that  operates  three (3) clinic sites in Utah.  In February  1997,  the Company
acquired  two  physical  medicine  and  rehabilitation   facilities  located  in
Jacksonville, Florida. In August 1997, the Company and Imagine Investments, Inc.
announced  formation  of  Healthcare  Innovations  L.L.C.,  a limited  liability
company   formed  for  the  purposes  of  acquiring  and  operating   healthcare
businesses.  Imagine  Inc.  is a  subsidiary  of Stone  Investments.  which is a
subsidiary  of Stone  Capital,  a company  with over $3 billion  in assets.  The
Company  owns  51% of the  outstanding  equity  of  Healthcare  Innovations  and
contributed  its interests in the  Jacksonville  and Utah  facilities to the new
venture.  Healthcare Innovations also acquired, and subsequently divested itself
of, a Utah-based  home health agency.  Shortly after this business was acquired,
the home healthcare industry began receiving  significant negative publicity and
the  industry   became  more  heavily   regulated  and  subject  to  intensified
governmental  scrutiny. As a result, the Company concluded that it was no longer
economically  beneficial  to operate its home  healthcare  business.  Healthcare
Innovations also acquired two chiropractic  clinics located in Arlington,  Texas
and Las Vegas, Nevada in October 1997.

         The Company's healthcare  acquisition strategy is to focus primarily on
physical medicine, pain management,  physical therapy and rehabilitation through
the  use  of  MD's,  DO's,   Physical   Therapist,   Nurse   Practitioners   and
Chiropractors,  although the Company may acquire  other  healthcare  businesses.
Typically,  the  acquisition  targets will be distressed  businesses with strong
medical practice but also cash management (particularly collections) or practice
management   problems.   The  Company  believes  that  its  experience  in  cash
management,  especially its experience in collecting  accounts  receivable  from
providers,  as  well as its  practice  management  software  that it uses in the
operation  of these  businesses,  will  allow  it to  operate  these  businesses
profitably.  The Company  expects that most of its revenue in the future will be
generated by operation of its healthcare businesses.

         In April 1998, the Company acquired an Austin, Texas based primary care
facility  and a sports  medicine  and  rehabilitation  facility  located in Fort
Worth, Texas. These businesses give the Company a strong presence in both Austin
and Fort  Worth.  These  acquisitions  were made  directly by the  Company,  not
through  Healthcare  Innovations  L.L.C.  Stone Capital  loaned the Company $1.4
million pursuant to the terms of a promissory note which Healthcare  Innovations
L.L.C.  has the  option  to  convert  the Note  and 49%  ownership  interest  in
Healthcare Innovations L.L.C. to a Preferred Stock position with the Company.

Practice Management Business

         In  1997,  the  Company  took  significant  steps  to focus on its core
competency in its practice management  business.  The Company divested itself of
all other  products  other than its  OneClaim  Plus  Product,  which is a 32 bit
Windows  95-98  application  based,   practice   management   software  product.
Additionally, the Company sold its business opportunity-marketing program, which
used third parties to sell the OneClaim program. The Company now focuses instead
on direct sales of the OneClaim Plus program.



                                       4

<PAGE>


The OneClaim Plus program is comprehensive practice management software that can
operate on either  DOS-Based  or Windows  95-98  environment.  The  software  is
designed  to  facilitate  nearly all aspect of  practice  management,  including
patient management,  billing,  transaction management,  and basic and customized
reporting,  and information  management.  The Company not only markets  OneClaim
Plus to third  parties,  but also uses the  software  in the  conduct of its own
healthcare  businesses,  thus  providing the Company with a common  program that
offers  stability,  dependability  and  ease-of-  use  in  the  acquisition  and
operation of the acquired businesses. It also allows management to determine the
collectibility  of acquired  account  receivable  in specific  market areas plus
providing users the data needed for growth of the clinics.


Industry Overview

         The United States healthcare industry is highly competitive,  with many
of the Company's  competitors  having  substantially  greater resources than the
Company.  The Health Care  Financing  Administration  (HCFA) has estimated  that
national  health care spending  increased to  approximately  $1.0  trillion,  or
approximately 14% of Gross Domestic Product "GDP," in 1995 and $247 billion,  or
approximately 9% of GDP, in 1980. HCFA projects that annual health care spending
will increase at a compounded annual growth rate of over 8% to $1.5 trillion and
approximately  16% of the GDP by the year  2000.  HCFA also has  estimated  that
approximately  $200  billion,   or  approximately  20%,  of  total  health  care
expenditures  in 1995 were directly  attributable  to physician  services and an
additional amount of approximately $515 billion or 52% of such expenditures were
under physician direction.

         As a result of escalating  health care  expenditures,  governmental and
other payors have adapted cost  containment  initiatives in an effort to control
spending.   These   initiatives  have  resulted  in  a  shift  from  traditional
fee-for-service  provider  reimbursement  to an evolving  array of managed  care
arrangements,  varying from discounted  fee-for-service to fully capitated plans
in which providers assume the financial risks related to service utilization for
a  defined  group  of  covered  members  and  services.  The  industry  has also
experienced  a decrease in  inpatient  occupancies  as payors  have  implemented
incentives  for  providing  care  in a more  cost-effective  setting,  which  is
ambulatory care in often an outpatient surgery center,  in-office  laboratory or
similar outpatient location.

         Cost-containment  initiatives,  including reduced  reimbursement,  have
hindered physician practice  profitability  while demands for increased clinical
documentation;  cost,  quality and utilization  data have increased  physicians'
administrative  duties.  Small and mid-sized practices generally do not have the
market  presence,   expertise  or  sophisticated  cost  accounting  and  quality
management systems required, and may not have the time necessary to evaluate and
enter  into  informed  capitated  risk-sharing  arrangements,   or  to  continue
practicing profitably under reduced reimbursement.  In addition, these practices
often  lack  the  capital  required  to  purchase  new  medical   equipment  and
information system to enhance the efficiency and quality of their practices.  As
a result,  individual  physicians  and small group  practices  are  increasingly
consolidating, either by affiliating with larger group practices and PPM's or by
forming   physician   networks  or   independent   practice   associations.   By
consolidating   into  larger   organizations,   physicians   can  achieve  lower
administrative   costs;   gain  leverage  in   negotiating   with  managed  care
organizations and position themselves to attract needed capital resources.

Business Profile

         Set forth below is a description  of each of the  Company's  healthcare
facilities.

         JACKSONVILLE,   FLORIDA:  The  two  clinic  locations  in  Jacksonville
primarily  provide state of the art pain  management and physical  therapy.  The
clinic is equipped with physical  rehabilitation  equipment including a swimming
pool for added  hydrotherapy.  The clinic has a MD, DO, Physical Therapist and a
staff of 25.

                                       5


<PAGE>

         ST. GEORGE, UTAH:  This group of clinics  primarily  sees  patients who
cannot gain immediate access to see a MD. The Nurse  Practitioners  with a staff
of 5 treat patients for minor  non-invasive  illness and are equipped to perform
lab work ups.

         LAS VEGAS, NEVADA:   This  clinic  sees  patients  for   manipulations,
diagnostic and physical therapy  services.  The staff consists of a Chiropractor
and 3 other employees.

         AUSTIN,  TEXAS:  This is a  seven-day-a-week  clinic providing  primary
care, diagnostic, pain management and physical rehabilitation with 18,000 square
feet of space. They staff 6 MD's - 2 physician assistants - 1 physical therapist
- 1 Chiropractor - 4 message therapists - and an administrative staff of 35.

         ARLINGTON, TEXAS: The  Chiropractor  sees patients for  manipulations 
and diagnostic services. The clinic has a small staff.

         FORT WORTH,  TEXAS:  The Clinic sees patients for physical  therapy and
work hardening  programs with a Physical  Therapist.  The Company has a MD, part
time on staff to expand its overall patient care offering.

Products

         Service Contract - On-line P.C. support is  provided  to  OneClaim Plus
customers by the Company's technical support staff.

         The Company is continually  investigating  the feasibility of enhancing
software  platforms and developing new conventions to meet its clients'  current
and prospective needs.

         All electronic  statement billing is by electronic  transmission an are
invoiced to on-line customers.

         The Company  provides all its customers' with  electronic  media claims
capabilities and continues to expand this product offering.

         With 17 years of  specialized  experience in practice  automation,  the
Company offers its customers  efficient and effective ways of providing  medical
management  services at a very favorable  price.  The Company  believes that its
excellent service gives it an edge over its competitors.


Employees

         The  Company  currently  employs  approximately  140 full and part time
employees.   The  Company  has  no  labor  union   contracts  and  believes  its
relationship with its employees is good.

Item 2.   Properties

         The  Company's  principal  executive  office is leased  and  located in
Arlington, Texas. The lease expires in March 1999. MB Software Solutions, Inc.'s
principal  office is leased and located in Newport  Beach,  California the lease
expires  January 31, 1999.  Victory Medical and Family Clinic is located at 4303
Victory Drive,  Austin, Texas and the lease expires December 31, 1998. Multicare
Plus in Fort Worth,  Texas is located at 6345 Winthrop Avenue. The lease expires
December 31, 1998.  NFPM,  LLC is located at 9143  Philips  Highway-  Suite 495,
Jacksonville,  Florida, the second location is 1950 Miller Street,  Orange Park,
Florida with the third  facility  leased and opening in June 1998 at 233 N. 10th
Street, Jacksonville Beach, Florida. The location in St. George, Utah are 595 S.
Buff- Suite #5, with lease expiring on May 31, 2000.





                                       6

<PAGE>



Item 3.  Legal Proceedings

         On October 15, 1997,  the Company filed a lawsuit in the 342nd Judicial
District  Court of  Tarrant  County,  Texas  against  a former  stockholder  and
employee of the Company for breach of a Severance  Agreement entered into by the
Company of the  stockholder in connection  with the termination of that person's
employment by a subsidiary of the Company.  On January 6, 1998, that stockholder
filed a lawsuit in the United States District Court for the Central  District of
California  against the  Company  and Scott A. Haire,  Chairman of the Board and
President of the Company alleging  violation of the Federal  securities laws and
other causes of action in connection with the purchase of  stockholder's  shares
of Company common stock in connection  with the  termination of his  employment.
The Company believes that the damages sought in this case exceed $1 million. The
Company  believes that the allegations of the former  stockholder in his lawsuit
are without merit. In fact, the stockholder's  lawsuit has been abated until the
Company's lawsuit is resolved.  The Company is of the opinion that both lawsuits
will be resolved within the next 18 to 24 months.


Item 4.  Submission of Matters to a Vote of Security Holders

         No matters  were  submitted  to security  holders for a vote during the
fourth quarter of 1997.


                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
         Matters

         The  Company's  common  stock is  traded  under  the  symbol  "MBSC" on
NASDAQ's OTC Electronic Bulletin Board. The following table sets forth the range
of high and low bid prices of the Company's common stock:
                                                     BID PRICE
BY QUARTER ENDED:                           HIGH                   LOW
----------------                            ----                   ---
Year Ended 12/31/97
March, 1997                                 $ .19                $ .19
June, 1997                                    .36                  .33
September, 1997                               .49                  .49
December, 1997                                .34                  .34


Year Ended 12/31/96
March, 1996                                 $ .27                $ .20
June, 1996                                    .32                  .25
September, 1996                               .29                  .26
December, 1996                                .12                  .10

The Company had  approximately  7722 holders of record of its common stock as of
December  31,  1997.  No  dividends  have been paid on common stock and none are
anticipated in the foreseeable  future.  The Company has determined that it will
utilize any earnings in the expansion of its business.

Item 6.  Management's Discussion and Analysis or Plan of Operation:

         This section  discusses the financial  condition,  changes of financial
condition and results of operations of the Company and its  subsidiaries for the
period  from  January 1, 1997 to December  31, 1997 as compared  with the period
from January 1, 1996 to December 31, 1996. This Annual Report  contains  certain
forward-looking statements and information relating to the Company that is based



                                       7


<PAGE>


on the beliefs of the  Company's  management.  When used in this  document,  the
words "anticipate,"  "believe,"  "estimate" and "expect" and similar expressions
as they relate to the  Company or  management  of the  Company  are  intended to
identify forward-looking  statements.  Such statements reflect the current views
of the Company with respect to future  events and are subject to certain  risks,
uncertainties  and  assumptions,  including  the risk  factors  described in the
Annual Report.  Should one or more of these risks or uncertainties  materialize,
or should  underlying  assumptions  prove  incorrect,  actual  results  may vary
materially from those described  herein as anticipated,  believed,  estimated or
expected.   The  Company  does  not  intend  to  update  these   forward-looking
statements.  The nature of business and various business development  activities
of the Company during 1997 are described in "Item 1, Business."
                                            -------------------

         Total  Revenues in 1997 totaled  $5,289,854,  a 77% increase  over 1996
revenues of $2,986,908.  Revenue sources centered on medical  clinics,  sales of
medical,   dental  and  chiropractic   software   systems,   electronic   claims
transmissions, electronic statement generation and maintenance contracts.

         Cost of Revenues in 1997  escalated  with  $3,406,555,  a 317% increase
over 1996 totals of $816,026. Management believes Cost of Revenue margins are an
area where further  improvement may be effected.  In the medical clinics we will
be able to reduce  the cost due to the fact  that we will be using  our  medical
software and staff for 1998.

         Operating Expenses were $2,624,893 in 1997, a 34% increase for the same
period in 1996,  which totaled  $1,947,488.  Greater focus on every  cost-center
operation  arrested any upward cost and kept cost containment in the operational
forefront.

         Net Income  during 1997  declined to  ($407,438),  a 203% decrease over
1996,  which was Net Income of  $395,330.  The  deterioration  in Net Income was
realized through implementation of strategic realignment, depreciation and asset
write-downs.

         The  Company is unable to predict the  positive  or negative  impact of
prospective  healthcare insurance legislation on its core business.  Conversely,
management  believes that product and service  flexibility and adaptability must
be designed  into their  delivery in order to protect  clients  from  legislated
changes in healthcare.

         
Liquidity and Capital Resources

         As of December 31, 1997,  the Company had Current  Assets of $2,868,614
and Other Assets of $1,937,184.  Current  Liabilities at December 31, 1997, were
$3,442,315 of which $1,298,808. were notes and advances loaned to the Company by
certain  of  its  senior  officers,   directors  and  shareholders.   Long  Term
Liabilities at December 31, 1997 were $580,596.

         The Company utilized net cash of $579,783 from investing  activities in
1997 as compared to cash used by investing  activities  of $499,612 in 1996.  In
1997 cash used in  investing  activities  related  primarily  for  purchases  of
property and equipment of $313,790,  software  development costs of $193,160 and
organizational cost of $72,833.

During  1997  and  1996  cash  provided  by  financing  activities  amounted  to
$2,135,355  and  $687,518,  respectively.  In 1997  payments on notes payable of
$1,330,812  was  offset  by  proceeds  from  notes  payable  of  $1,457,669  and
$2,000,000 from Minority Investments in subsidiaries

The Company  anticipates  that future  operations will generate  sufficient cash
flow to fund its normal ongoing development operations and administrative costs.
The Company remains  absolute in its resolve to increase  profitability  through
its medical software  business and medical  clinics.  The Company may attempt to
sell capital stock through a private  placement and/or obtain loans as necessary
to fund the expansion  needs of the Company.  There can be no assurance that the
Company will be successful in these endeavors.



                                       8

<PAGE>

<TABLE>
<CAPTION>

Item 7.   Financial Statements

          Filed as exhibits  hereto are the following  statements of the Company
and its subsidiaries:
                                                                                  Page
<S>                                                                               <C>    
                                           

          Report of Independent Certified Public Accounts
              Killman, Murrell & Company, P.C.                                    F-2
              King Griffin & Adamson P.C.                                         F-3

          Financial Statements

                  Consolidated Balance Sheets as of December 31, 1997 and 1996    F- 4

                  Consolidated Statements of Operations for the years ended
                  December 31, 1997 and 1996                                      F- 6

                  Consolidated Statements of Shareholder's Deficit for the
                  years ended December 31, 1997 and 1996                          F- 8

                  Consolidated Statements of Cash Flows for the
                  years ended December 31, 1997 and 1996                          F- 9

                  Notes to Consolidated Financial Statements                      F- 11

Item 8.   Changes in and Disagreements with Accountants on Accounting and 
          Financial Disclosure.  See 8-K dated December 4, 1997 and 8-K dated 
          March 23, 1998.

                                    

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons; Compliance
          with Section 16(a) of the Exchange Act.

         The  following  table  sets  forth-certain  information  regarding  the
directors and executive officers of the Company:
                                                                                    Year First
Name                                Age                       Position                Elected
----                                ---                       --------                -------

Scott A. Haire                      33               President, Director                  1993

Gilbert A. Valdez                   54               Chief Operating Officer              1996

Araldo A. Cossutta                  73               Director                             1994

Steven W. Evans                     47               Director                             1994

Robert E. Gross                     53               Director                             1994

Thomas J. Kirchhofer                57               Director                             1994

Lucy J. Singleton                   60               Secretary                            1995

</TABLE>


         Executive  Officers of the  Company are elected on an annual  basis and
serve at the discretion of the Board of Directors.  Directors of the Company are
elected on an annual basis.

Scott A. Haire  Chairman,  President and Director.  Mr. Haire is Chief Executive
Officer  of MB  Software  Corporation  and has been with the  Company  since its
inception in 1992.


                                       9

<PAGE>


Gilbert A. Valdez   Chief  Operating  Officer  and  Director.  Mr.  Valdez is  a
former  president  and  Chief  Executive  Officer  of  the  National  Electronic
Information  Corporation,  Medaphis Corporation,  Datix Corporation and Hospital
Billing and Collection  Services  Corporation  and has been with the Company for
one year.

Araldo  A. Cossutta   Director.  Mr.  Cossutta  is  president  of  Cossutta  and
Associates,  an architectural firm based in New York City. He is also a director
of Computer Integration Corporation of Boca Raton, Florida.

Steven W.  Evans  Director.  Mr.  Evans is a  certified  public  accountant  and
president of Evans Phillips & Co., PSC, an accounting  firm. He is a founder and
active in PTRL which operates contract research laboratories in Kentucky,  North
Carolina,  California and Germany. He is active in environmental  management and
financial and hotel corporations in Kentucky and Tennessee.

Robert E. Gross  Director.  Mr. Gross is president of R. E. Gross &  Associates,
which provides  consulting and system projects for clients in the multi-location
service, banking and healthcare industries.

Thomas J. Kirchhofer  Director.  Mr. Kirchhofer is president of Synergy Wellness
Centers of Georgia,  Inc.,  and a past  president  of the  Georgia  Chiropractic
Association.

Lucy Singleton  Secretary.  Ms. Singleton has been secretary since 1995.

Item 10.   Executive Compensation

         The Company  provides  health benefits to its employees and may provide
additional  benefits  in the  future,  as  may be  authorized  by the  Board  of
Directors.  No retirement,  pension, profit sharing or other similar program has
been adopted by the Company.

         The Company may offer stock bonuses,  stock options,  profit sharing or
pension  plans to key  employees  or  executive  officers of the Company in such
amounts  and upon such  conditions  as the Board of  Directors  may, in its sole
discretion, determine.

Summary Compensation Table

The  following  sets  forth  information  concerning  the  compensation  of  the
Company's Chief Executive  Officer for the fiscal years shown No other Executive
Officer was paid a salary in excess of $100,00 during such period.
<TABLE>

----------------------------------------------------------------------------------------------------
      Name and                                                            Long Term Compensation
                                                                          ----------------------
       Principal                  Annual Compensation                Restricted    Options    All
       Position                   -------------------                  Stock        /SARS    Other
                          Year      Salary($)     Bonus    Other      Awards      #shares(2) Comp.($)  
----------------------------------------------------------------------------------------------------
<S>                                                                                    <C>      <C>     
     Scott A. Haire      1997      120,000        -0-       -0-          -0-           -0-      -0-
      President          1996      120,000        -0-       -0-          -0-           -0-      -0-
                         1995        -0-          -0-       -0-          -0-           -0-      -0-

----------------------------------------------------------------------------------------------------

</TABLE>


              Aggregated Options/SAR Exercises in Last Fiscal Year
                          and FY-End Options/SAR Values

The following table provides  information  concerning option exercises in fiscal
1997 and the value of  unexercised  options held by each of the named  Executive
Officers at December 31, 1997.




                                       10


<PAGE>

<TABLE>

---------------------------------------------------------------------------------------------------------------------
         Name            Shares Acquired          Value            No. of unexercised        Value of unexercised
                         on Exercise (#)       Realized ($)         options /SARs at        in-the-money options/
                                                                     at FY-End (#)            SARs at FY-end($)
                                                                 exercisable/unexercisable  exercisable/unexercisable

---------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>     
    Scott A. Haire             -0-                 N/A                 1,800,000                  $180,000.00
---------------------------------------------------------------------------------------------------------------------

</TABLE>




Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The  following  table sets forth  information  as of December 31, 1997,
regarding the beneficial  ownership of capital stock of the Company by; (i) each
person known by the Company to beneficially  own more than 5% of the outstanding
shares of Common Stock;  (ii) each director of the Company;  (iii) the Company's
Chief Executive  Officer;  and (iv) the directors and executive  officers of the
Company  as a group.  The  persons  named in the  table  have  sole  voting  and
investment  power with  respect to all  shares of capital  stock  owned by them,
unless otherwise noted.

                                             Amount and Nature
Name of Beneficial                             of Beneficial         Percent
Owner of Group(1)                               Ownership            of Class
------------------                           -----------------       --------
Scott A. Haire                                 29,121,297 (2)           42.0%

Araldo A. Cossutta                              2,982,025                4.0%

Steven W. Evans                                 1,500,000                2.0%

Thomas J. Kirchhofer                                 -                     *

Robert E. Gross                                   200,000 (3)              *

R-M-S Investments, LTD.                        11,000,000               16.0%

Cazenove                                        7,500,000               10.0%

All Directors and Executive Officers           41,303,332               60.8%
as a group (five in number)
----------
*        Less than 1%.

(1)      The address for each person or entity listed above is 2225 E. Randol 
         Mill Road, Suite 305, Arlington, Texas, 76011.
(2)      Includes 1,800,000 shares and 600,000 shares subject to options and a 
         warrant, respectively, that are presently exercisable.
(3)      Consists of shares subject to options that are presently exercisable
         by Mr. Gross.


Item 12.   Certain Relationships and Related Transactions -
           None.



                                       11


<PAGE>



Item 13.  Exhibits Reports on Form 8-K

                  1.  Reports on Form 8-K --None.

                  2.  Exhibits - 10.1 - Promissory  Note Dated April 1, 1998, by
and  between MB  Software  Corporation  and  Imagine  Investments,  Inc.  in the
principal amount of $1,400,000.

All other  exhibits  incorporated  by  reference  from  prior  filings  with the
Commission.


                                    SIGNATURE
         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                  MB SOFTWARE CORPORATION


                                  By:  /s/ Scott A. Haire
                                       ------------------
                                       Scott A. Haire, Chairman of the Board,
                                       Chief Executive Officer and President
                                       (Principal Financial Officer)

Date:  June 8, 1998



 













                                       12



<PAGE>
                                                                          
                                                                           Page
                                                                           ----
Reports of Independent Certified Public Accountants
     Killman, Murrell & Company, P.C.                                       F-2
     King Griffin & Adamson P.C.                                            F-3

Financial Statements

    Consolidated Balance Sheets as of December 31, 1997 and 1996            F-4

    Consolidated Statements of Operations for the
        years ended December 31, 1997 and 1996                              F-6

    Consolidated Statements of Shareholders' Deficit for the
        years ended December 31, 1997 and 1996                              F-8

    Consolidated Statements of Cash Flows for the
        years ended December 31, 1997 and 1996                              F-9

    Notes to Consolidated Financial Statements                             F-11




















                                       F-1


<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Shareholders
MB Software Corporation and Subsidiaries
2225 E. Randol Mill Road, Suite 305
Arlington, Texas  76011


We have  audited the  accompanying  consolidated  balance  sheets of MB Software
Corporation  and   Subsidiaries  as  of  December  31,  1997,  and  the  related
consolidated statements of operations, shareholders' deficit, and cash flows for
the  year  then  ended.   These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion, the consolidated financial statements referred to above presents
fairly,  in all material  respects,  the consolidated  financial  position of MB
Software  Corporation and  Subsidiaries as of December 31, 1997, and the results
of their  operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.



/s/Killman, Murrell & Company, P.C.
-----------------------------------
KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
May 7, 1998












                                       F-2


<PAGE>




               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
MB Software Corporation (formerly INAV Travel Corporation and Subsidiaries

We have  audited  the  accompanying  consolidated  balance  sheet of MB Software
Corporation and subsidiaries (Formerly INAV Travel Corporation and Subsidiaries)
as of December 31, 1996 and the related  consolidated  statements of operations,
shareholders'  deficit,  and cash flows for the year then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated  financial statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the consolidated  financial  position of MB
Software Corporation and subsidiaries as of December 31, 1996 and the results of
their  operations  and their cash flows for the year then ended,  in  conformity
with generally accepted accounting principles.



                                                 /s/King Griffin & Adamson P.C.
                                                 ------------------------------
                                                    KING GRIFFIN & ADAMSON P.C.

Dallas, Texas
February 21, 1997














                                       F-3


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1997 AND 1996


                                     ASSETS

                                                         1997         1996
                                                      ----------   ----------

CURRENT ASSETS
    Cash                                              $  776,079   $  196,653
    Accounts Receivable -
        Medical receivables, net of allowance
           for doubtful accounts of $390,562           1,632,742         --
        Trade accounts receivable, net of allowance
           for doubtful accounts of $11,108 and
           $33,487, respectively                         330,634      311,965
    Notes Receivable - Current Portion                   108,178       10,000
    Prepaid Expenses and Other                            20,981       19,883
                                                      ----------   ----------

              TOTAL CURRENT ASSETS                     2,868,614      538,501
                                                      ----------   ----------

PROPERTY AND EQUIPMENT, NET - Note 2                     500,215       63,349
                                                      ----------   ----------

OTHER ASSETS
    Goodwill, net of accumulated amortization of
        $312,654 and $209,255                          1,244,022      850,109
    Software Development Costs, net of accumulated
        amortization of $282,808 and $101,374            405,966      394,240
    Note Receivable, net of current portion              203,569         --
    Deposits and Other Assets                             83,627       18,488
                                                      ----------   ----------

              TOTAL OTHER ASSETS                       1,937,184    1,262,837
                                                      ----------   ----------

                                                      $5,306,013   $1,864,687
                                                      ==========   ==========










                                   (Continued)

                                       F-4


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


                      LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                                   1997          1996
                                                              -----------    -----------
<S>                                                                             <C>   

CURRENT LIABILITIES
    Notes payable - Note 3                                    $   791,410    $   209,123
    Current maturities of long-term debt - Note 4               1,383,711         32,906
    Accounts payable                                              710,446        149,741
    Accrued liabilities                                           359,090        101,382
    Other liabilities - Note 5                                     89,000        179,000
    Deferred revenues                                             108,658        159,026
                                                              -----------    -----------

           TOTAL CURRENT LIABILITIES                            3,442,315        831,178

LONG-TERM LIABILITIES
    Long-term debt, net of current maturities - Note 4            580,596      1,283,808
    Other liabilities - Note 5                                       --           40,000
                                                              -----------    -----------

           TOTAL LIABILITIES                                    4,022,911      2,154,986
                                                              -----------    -----------

MINORITY INTEREST IN CONSOLIDATED
    SUBSIDIARIES - Note                                         1,754,841           --
                                                              -----------    -----------

COMMITMENTS AND CONTINGENCIES
    (NOTES 4, 5, 9, 10 and 11)                                       --             --

SHAREHOLDERS' DEFICIT
    Common stock; $.001 par value; 100,000,000 shares
        authorized; 68,580,000 and 67,885,000 shares issued        68,580         67,885
    Additional paid-in capital                                  1,035,625        810,322
    Accumulated deficit                                        (1,563,905)    (1,156,467)
    Treasury stock, at cost; 409,577 shares                       (12,039)       (12,039)
                                                              -----------    -----------

           TOTAL SHAREHOLDERS' DEFICIT                           (471,739)      (290,299)
                                                              -----------    -----------

                                                              $ 5,306,013    $ 1,864,687
                                                              ===========    ===========


</TABLE>







                          The accompanying notes are an
            integral part of these consolidated financial statements

                                       F-5


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 1997 AND 1996


                                                           1997           1996
                                                       -----------    -----------
<S>                                                                   <C>     
REVENUES
    Medical clinic fees                                $ 3,597,864    $      --
    Software and maintenance sales                       1,502,445      2,461,562
    Consulting fee income                                     --          299,000
    Service fees and broker income                         174,622        211,864
    Other                                                   14,923         14,482
                                                       -----------    -----------
           TOTAL REVENUES                                5,289,854      2,986,908
                                                       -----------    -----------

COST OF REVENUES
    Cost of medical clinic fees                          2,940,797           --
    Cost of software and maintenance sales                 465,758        813,477
    Cost of service fees and broker income                    --            2,549
                                                       -----------    -----------
           TOTAL COST OF REVENUES                        3,406,555        816,026
                                                       -----------    -----------

              GROSS PROFIT                               1,883,299      2,170,882
                                                       -----------    -----------

OPERATING EXPENSES
    Selling, general & administrative                    2,226,810      1,733,810
    Depreciation and amortization                          398,083        213,678
                                                       -----------    -----------
           TOTAL OPERATING EXPENSES                      2,624,893      1,947,488
                                                       -----------    -----------

              INCOME (LOSS) FROM OPERATIONS               (741,594)       223,394
                                                       -----------    -----------

OTHER INCOME (EXPENSE)
    Gain on sale of assets                                 269,724           --
    Interest expense                                      (256,837)       (72,817)
    Gain from reduction of liabilities                        --          140,000
    Interest income and other, net                          76,110         18,619
                                                       -----------    -----------
           TOTAL OTHER INCOME                               88,997         85,802
                                                       -----------    -----------

              INCOME (LOSS) FROM CONTINUING
                 OPERATIONS BEFORE EXTRAORDINARY
                 ITEM AND MINORITY INTEREST               (652,597)       309,196

EXTRAORDINARY ITEM
    Gain on debt extinguishment, net of income taxes          --           86,134
                                                       -----------    -----------

              INCOME (LOSS) BEFORE MINORITY
                 INTEREST                                 (652,597)       395,330

MINORITY INTEREST IN (LOSS)                                245,159           --
                                                       -----------    -----------

              NET INCOME (LOSS)                        $  (407,438)   $   395,330
                                                       ===========    ===========

</TABLE>

                                   (Continued)

                                       F-6


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 1997 AND 1996


                                                        1997         1996
                                                     ----------   -----------


INCOME (LOSS) PER WEIGHTED-AVERAGE
    COMMON SHARE                                     $     (.01)  $       .01
                                                     ==========   ===========


WEIGHTED-AVERAGE COMMON SHARES
    OUTSTANDING                                      68,205,769    69,791,096
                                                     ==========   ===========





















                          The accompanying notes are an
            integral part of these consolidated financial statements.

                                       F-7


<PAGE>

<TABLE>
<CAPTION>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT

                     YEARS ENDED DECEMBER 31, 1997 AND 1996

                                                                             
                                                                                             Retained                
                                                       Common Stock          Additional      Earnings                
                                                ------------------------      Paid In     (Accumulated      Treasury  
                                                  Shares          Amount      Capital       Deficit)         Stock          Total
                                                ----------   -----------   -----------    -------------  ------------   ------------
<S>                                                                             <C>       <C>            <C>            <C>  
Balances at December 31, 1995                   49,485,000   $    49,485   $   518,722    $(1,551,797)   $  (147,039)   $(1,130,629)

   Common stock issued for cash                  1,600,000         1,600       398,400           --             --          400,000

   Treasury stock issued in
       settlement of a note payable
       (Note 4)                                       --            --         (90,000)          --          135,000         45,000

   Issuance of shares related to
       acquisition of Santiago
       (Note 6)                                  1,800,000         1,800        (1,800)          --             --             --

   Issuance of shares in connection
       with 1993 merger (Note 6)                15,000,000        15,000       (15,000)          --             --             --

   Net income                                         --            --            --          395,330           --          395,330
                                               -----------   -----------   -----------    -----------    -----------    -----------

Balances at December 31, 1996                   67,885,000        67,885       810,322     (1,156,467)       (12,039)      (290,299)

   Stock options exercised                          70,000            70         3,428           --             --            3,498

   Stockholder contributions                          --            --           5,000           --             --            5,000

   Issuance of shares related to acquisition 
       of Nevada Multicare                         525,000           525       209,475           --             --          210,000

   Issuance of shares for legal fees               100,000           100         7,400           --             --            7,500

   Net (loss)                                         --            --            --         (407,438)          --         (407,438)
                                               -----------   -----------   -----------    -----------    -----------    -----------

   Balances at December 31, 1997                68,580,000   $    68,580   $ 1,035,625    $(1,563,905)   $   (12,039)   $  (471,739)
                                               ===========   ===========   ===========    ===========    ===========    ===========

</TABLE>

                          The accompanying notes are an
            integral part of these consolidated financial statements
                                       F-8


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 1997 AND 1996


                                                                  1997           1996
                                                             ------------   -----------
<S>                                                                             <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Income (Loss)                                         $  (407,438)   $   395,330
   Adjustments to reconcile net income (loss) to net
       cash used by operating activities
          Depreciation and amortization                          398,084        213,678
          Gain on sale of assets                                (269,724)          --
          Common stock issued in payment of legal services         7,500           --
          Minority interest in loss                             (245,159)          --
          Gain on debt extinguishment                               --          (86,134)
          Gain from reduction of liabilities                        --         (140,000)
          Change in allowance for doubtful accounts              368,183         33,487
   Changes in assets and liabilities
          Accounts receivable                                   (585,071)      (285,664)
          Notes receivable                                        35,065           --
          Prepaid expenses and other                              (1,098)       (19,883)
          Deposits                                                  (346)          (700)
          Accounts payable and accrued liabilities               (95,773)        (7,700)
          Other liabilities                                     (130,000)      (128,350)
          Deferred revenues                                      (50,369)        (1,852)
                                                             -----------    -----------

                  NET CASH USED BY
                     OPERATING ACTIVITIES                       (976,146)       (27,788)
                                                             -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                          (313,790)       (49,748)
   Software development costs capitalized                       (193,160)      (439,864)
   Organizational costs                                          (72,833)          --
   Advances on notes receivable                                     --          (10,000)
                                                             -----------    -----------

                  NET CASH USED BY
                     INVESTING ACTIVITIES                       (579,783)      (499,612)
                                                             -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Principal payments on notes payable                        (1,330,812)      (554,707)
   Proceeds from notes payable                                 1,457,669      1,041,841
   Minority investment in subsidiaries                         2,000,000           --
   Net payments on other liabilities                                --         (170,000)
   Change in cash overdraft                                         --          (29,616)
   Proceeds from common stock issuance                             8,498        400,000
                                                             -----------    -----------

                  NET CASH PROVIDED BY
                     FINANCING ACTIVITIES                      2,135,355        687,518
                                                             -----------    -----------
</TABLE>

                                   (Continued)
                          The accompanying notes are an
            integral part of these consolidated financial statements

                                       F-9


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1997 AND 1996


                                                                   1997           1996
                                                              -----------    -----------
<S>                                                                          <C>     

INCREASE IN CASH                                              $   579,426    $   160,118

CASH AT BEGINNING OF PERIOD                                       196,653         36,535
                                                              -----------    -----------

CASH AT END OF PERIOD                                         $   776,079    $   196,653
                                                              ===========    ===========

SUPPLEMENTAL INFORMATION
   Cash paid during the period for interest                   $   256,306    $    74,166
                                                              ===========    ===========

SUPPLEMENTAL SCHEDULE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES
   Note payable                                               $      --      $   (45,000)
   Issuance of treasury stock in settlement of note payable          --           45,000
   Purchase of medical clinics
       Medical assets acquired                                 (2,558,962)          --
       Goodwill acquired                                         (578,247)          --
       Common stock issued                                        210,000           --
       Accounts payable and accrued liabilities assumed           914,185           --
       Note payable                                             2,003,024           --
       Note receivable reduction                                   10,000           --
   Reduction in note payable                                     (900,000)          --
   Reduction in accounts receivable                               900,000           --
   Note receivable                                               (346,811)          --
   Proceeds from sale of assets                                   346,811           --
                                                              -----------    -----------
                                                              $      --      $      --
                                                              ===========    ===========

</TABLE>









                          The accompanying notes are an
            integral part of these consolidated financial statements.

                                      F-10


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1997 AND 1996


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company
-----------

MB Software Corporation (the "Company") was incorporated in 1982.  Historically,
the Company has provided  practice and cash  management  services to physicians,
dentists,  chiropractors and medical billing centers. In 1997, the Company began
to  expand  its  scope of  operations  by  acquiring  and  operating  healthcare
businesses that use its practice and cash management services. Also in 1997, the
Company  streamlined its practice and cash management  business in an attempt to
focus solely upon the  provision of practice  and cash  managements  services of
healthcare businesses operated directly by the Company.

In January  1997,  the  Company  acquired  a  nurse-practitioner  business  that
operates three (3) clinic sites in Utah. In February 1997, the Company  acquired
two (2) physical medicine and rehabilitation facilities located in Jacksonville,
Florida.  In August 1997, the Company and Imagine  Investments,  Inc.  announced
formation of Healthcare Innovations, LLC, a limited liability company formed for
the  purposes  of  acquiring  and  operating  healthcare   businesses.   Imagine
Investments, Inc. is a subsidiary of Stone Investments, which is a subsidiary of
Stone Capital, a company with over $3 billion in assets. The Company owns 51% of
the outstanding  equity of Healthcare  Innovations and contributed its interests
in  the  Jacksonville  and  Utah  facilities  to  the  new  venture.  Healthcare
Innovations acquired a home nursing operation located in Utah in August 1997 and
two (2) chiropractic clinics located in Arlington, Texas, and Las Vegas, Nevada,
in October 1997.

In 1997, the Company took  significant  steps to focus on its core competency in
its  practice  management  business.  The Company  divested  itself of all other
products  other  than its  OneClaim  Plus  product,  which is a Windows 95 based
practice  management  software  product.  Additionally,  the  Company  sold  its
business opportunity marketing program in January 1998, which used third parties
to sell the OneClaim  Plus  program.  The Company now focuses  instead on direct
sales of the OneClaim Plus program.

The OneClaim Plus program is comprehensive practice management software that can
operate on either a DOS-based or Windows 95 system.  The software is designed to
cover nearly every aspect of practice management,  including marketing,  patient
management, billing, transaction management, basic and customized reporting, and
information  management.  The Company not only  markets  OneClaim  Plus to third
parties,  but also  uses  the  software  in the  conduct  of its own  healthcare
businesses,  thus  providing  the  Company  with a common  program  that  offers
stability, dependability and ease of use in the acquisition and operation of the
acquired healthcare businesses.

Consolidation Policy
--------------------

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiaries and Healthcare  Innovations,  LCC which is managed
by the Company.  All material  intercompany  accounts and transactions have been
eliminated in consolidation.






                                   (Continued)

                                      F-11


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Use of Estimates and Assumptions
--------------------------------

Management uses estimates and assumptions in preparing  financial  statements in
accordance with generally accepted  accounting  principles.  Those estimates and
assumptions  affect  the  reported  amounts  of  assets  and  liabilities,   the
disclosure of contingent  assets and liabilities,  and the reported revenues and
expenses. Actual results could vary from the estimates that were used.

Revenue Recognition
-------------------

Revenue  consists  primarily  of sales  of the  Company's  healthcare  services,
software  products,  maintenance  and  customer  support and related  consulting
services.

       Medical  Clinic Fees - Fees are  recognized at the time medical  services
are rendered.

       Software  Sales - Sales of  software  are  recognized  at shipment of the
       product and fulfillment of acceptance terms, if any.

       Consulting  Fees -  Consulting  fees are  recognized  as the  service  is
delivered.

       Services Revenue - Maintenance revenue is deferred and recognized ratably
       over the term of the  maintenance  agreement,  which is typically  twelve
       months.

Property and Equipment
----------------------

Property and equipment are stated at cost.  Depreciation for financial statement
purposes is computed  principally on the straight-line method over the estimated
useful lives of the related assets ranging from three to ten years.  Maintenance
and  repairs  are  expensed  as  incurred.   Replacements  and  betterments  are
capitalized.

Goodwill
--------

Goodwill is the  difference  between  the  purchase  price paid and  liabilities
assumed over the  estimated  fair market value of assets  acquired in connection
with the  acquisition  of  subsidiaries.  Goodwill  amounted to  $1,556,676  and
$1,059,364  in 1997 and 1996,  respectively,  and is being  amortized  using the
straight-line  method  over 10  years.  Amortization  expense  for 1997 and 1996
amounted  to  $132,247  and  $105,936,   respectively.  On  an  on-going  basis,
management reviews  recoverability,  the valuation and amortization of goodwill.
As a part of this  review,  the Company  considers  the  undiscounted  projected
future net earnings in  evaluating  the value of goodwill.  If the  undiscounted
future net earnings is less than the stated value, the goodwill would be written
down to fair value.




                                   (Continued)

                                      F-12


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Earnings Per Common Share and Common Share Equivalents
------------------------------------------------------

Earnings per share is based on the weighted  average  number of shares of common
stock and  common  equivalent  shares  outstanding  during  the  period.  Common
equivalent  shares are comprised of dilutive stock options.  In 1997, the common
stock  equivalent  shares  were  considered  anti-dilutive  due to the loss from
operations.

Cash and Cash Equivalents
-------------------------

The Company  considers all cash on hand and in banks,  demand and time deposits,
certificates  of deposit,  and all other  highly  liquid debt  investments  with
maturities  of  three  months  or  less  when  purchased,  to be cash  and  cash
equivalents. There were $660,042 of cash equivalents at December 31, 1997.

Business and Credit Risk Concentrations
---------------------------------------

The  Company's  medical  clinics  provide  services to the  patients  located in
Florida,  Texas, Nevada and Utah. These patients are billed at the time services
are performed. None of the patients are individually significant.

The Company  extends  unsecured  credit to some of its  customers  in the normal
course of the software sales and consulting  business.  A significant portion of
the customers pay for the software in cash.  Service  maintenance  contracts are
paid for in advance and amortized  over the period of the  contract.  Consulting
fees are billed as the services are provided.  Customers are located  throughout
the United States and none of these customers are individually significant.

The  majority  of  service  fee  and  broker  income  with  respect  to  medical
receivables  are  received in cash at time of  completion  of each  transaction.
Clients are located throughout the United States.

During the year ended December 31, 1996, one customer accounted for 14% of total
revenues, or approximately $420,000.

Management  evaluates  accounts  receivable  balances  on an  ongoing  basis and
provides  allowances  as necessary for amounts  estimated to  eventually  become
uncollectible  or amounts  that are not subject to payment by third party payors
such as  insurance  companies  and  federal  government  payment  programs.  The
allowance for  uncollectible  accounts  receivable at December 31, 1997 and 1996
was $401,670 and $33,487, respectively. In the event of complete non-performance
of  accounts  receivable,  the maximum  exposure to the Company is the  recorded
amount on the financial statements at the date of non-performance.

The  Company  maintains  its  cash  in bank  deposit  accounts  at high  quality
financial  institutions.  The balances at times,  may exceed  Federally  insured
limits.  At December  31,  1997,  the  Company  exceeded  the  insured  limit by
approximately $561,098.



                                   (Continued)

                                      F-13


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Income Taxes
------------

The Company accounts for income taxes in accordance with the asset and liability
method.  Deferred income tax assets and  liabilities  are computed  annually for
differences  between  he  financial  statement  and  tax  bases  of  assets  and
liabilities  that will  result in  taxable or  deductible  amounts in the future
based on  enacted  tax laws and rates  applicable  to the  periods  in which the
differences  are expected to affect  taxable  income.  Valuation  allowances are
established  when necessary to reduce deferred tax assets to the amount expected
to be  realized.  Income tax  expense is the tax payable or  refundable  for the
period  plus or minus the change  during the period in  deferred  tax assets and
liabilities.

Software Development
--------------------

The Company  was  previously  involved  in  developing  frequency  software  and
hardware to be sold as an integrated  system.  After the acquisition of Santiago
assets and  liabilities  in 1995,  the Company  became  involved  in  developing
software related to the medical profession as described previously.  The Company
capitalizes software development costs after technological  feasibility has been
established in accordance  with Financial  Accounting  Standards Board Statement
Number 86,  "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise  Marketed".  Software costs are amortized over the estimated  economic
life of the software from the time that a particular product is completed.

Software  development  costs incurred in development of medical billing software
of  $193,160  and  $439,864  were  capitalized  in 1997 and 1996,  respectively.
Amortization  of these costs  amounted to $181,434  and $97,503  during 1997 and
1996, respectively.

Reclassification
----------------

Certain  prior year  amounts  have been  reclassified  to conform  with the 1997
presentation.

NOTE 2:  PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1997 and 1996:

                                                            1997         1996
                                                         ---------    ---------
     Clinic and office equipment                         $ 474,456    $    --
     Computer equipment                                     62,134       87,217
     Furniture and fixtures                                 37,322        1,056
     Vehicles and other                                     48,500         --
                                                         ---------    ---------

                                                           622,412       88,273
   Less accumulated depreciation and amortization         (122,197)     (24,924)
                                                         ---------    ---------

                                                         $ 500,215    $  63,349
                                                         =========    =========

Depreciation  expense was $76,364 and $10,239 for the years ended  December  31,
1997 and 1996, respectively.
                                      F-14


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996



NOTE 3:  NOTE PAYABLE

Notes payable consist of the following as of December 31, 1997 and 1996:

                                                             1997        1996
                                                           ----------   --------
8% Note payable to a shareholder, due on
    December 31, 1997, unsecured                           $300,000     $   --

Non-interest bearing note payable to third parties
    assumed in connection with the Santiago purchase,
    due on demand                                           105,205      150,994

Non-interest bearing note payable to a shareholder of
    Santiago assumed during purchase of Santiago,
    due on demand                                              --          8,129

Prime plus 1% note payable to a bank, due June 30, 1998,
    secured by accounts receivable                          117,885       50,000

Non-interest bearing note payable to a corporation,
    due on demand, unsecured                                 24,000         --

12% note payable to a bank, due October 1998,
    secured by Company assets                               200,000         --

10% note payable to an individual, due April 1, 1998,
    unsecured                                                44,320         --
                                                           --------     --------

                                                           $791,410     $209,123
                                                           ========     ========















                                      F-15


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996

NOTE 4 - LONG-TERM DEBT

Long term debt consisted of the following at December 31, 1997 and 1996:

                                                                                  1997      1996
                                                                                --------   --------
<S>                                                                             <C>        <C>     

8% note payable to a shareholder ($455,000
    due December 22, 1998 and $300,000 due
    June 19, 1998), unsecured                                                   $755,000   $755,000

8% note payable to an employee, shareholder,
    and officer, due December 31, 1998, unsecured                                434,808    434,808

8% note payable to a shareholder, due on demand,
    unsecured                                                                      2,000     12,000

8% note payable to a shareholder, due on demand,
    unsecured                                                                     25,000     25,000

8% note payable to a shareholder, due in 1998, unsecured                          45,000     45,000

8% note payable to a shareholder, due on demand,
    unsecured                                                                       --        7,906

8% note payable to a shareholder due July 16, 1998,
    unsecured                                                                     25,000     25,000

8% note payable to a shareholder, due December 31, 1998,
    unsecured                                                                     12,000     12,000

10% note payable to an investor, due August 1, 2000                              500,000       --

13.5% notes payable to a financing  company,  monthly  principal and interest
    payments of $654, due
    June 20, 2000, secured by equipment                                            9,042       --

8.6%note  payable to a financing  company,  monthly  principal  and  interest
    payments of $426, due
    September 15, 1999, secured by equipment                                      17,039       --

Non-interest bearing note (imputed at 10%); note
    payable to a company, monthly payments of
    $2,481, due March 22, 1999, unsecured                                         33,477       --

9.5% note payable to an employee, due December 31, 1997,
    unsecured                                                                     31,400       --

10.25% note payable to a bank, monthly payments of
    $236, due June 2000, secured by vehicle                                       15,095       --


                                   (Continued)
                                      F-16


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996

NOTE 4 - LONG-TERM DEBT (CONTINUED)
                                                                                     1997          1996
                                                                                -----------    ----------
14% note  payable to a financing  company,  monthly  payments of $1,355,  due
    April 9, 2001, secured
    by equipment                                                                     45,544           --

13.5% note payable to a bank, with monthly principal and interest payments of
    $549, due
    September 2000, secured by Company assets                                        13,902           --
                                                                                -----------    -----------

                                                                                  1,964,307      1,316,714
Less current portion                                                             (1,383,711)       (32,906)
                                                                                -----------    -----------

                                                                                $   580,596    $ 1,283,808
                                                                                ===========    ===========

The following is a schedule of maturities of notes payable at December 31,1997:

          1998                                                                  $ 1,383,711
          1999                                                                       42,870
          2000                                                                      525,816
          2001                                                                       11,910
                                                                                -----------

                                                                                $ 1,964,307
                                                                                ===========
</TABLE>

NOTE 5 - OTHER LIABILITIES

Other  current  and  long-term  liabilities  at December  31,  1995  include the
liability of $529,000 in connection  with the  acquisition of assets and certain
liabilities  of  Santiago.  In early  1996,  the  amount due was  discounted  to
$389,000 to reflect  revised terms and an accelerated  payment plan.  Under this
revised  agreement,  $100,000 was paid  immediately.  Of the  remaining  amount,
$230,000 was due in 23 monthly  installments of $10,000 beginning in March 1996.
Seven  payments were made during 1996,  totaling  $70,000,  leaving a balance of
$160,000  due in monthly  installments  at December  31,1996 of the balance due,
$59,000  will be paid on behalf of  Santiago  to the  State of  California  upon
settlement of a tax dispute with the State;  provided that if the amount of such
settlement  is less than  $59,000,  the amount to be paid by the Company will be
reduced  accordingly.  In  accordance  with its  payment  terms,  $40,000 of the
$219,000 is classified as long term. All amounts due are non-interest bearing.


NOTE 6 - SHAREHOLDERS' EQUITY (DEFICIT)

During  1996,  the  Company  issued  4,500,000  common  shares  of  treasury  in
settlement of a note payable of $45,000.

During 1996,  the Company  recorded the issuance of 15,000,000  shares of common
stock relating to the 1993 merger with Medbanc Data Corporation ("Medbanc").  In
addition,  the Company recorded the issuance of 1,800,000 shares of common stock
relating to the 1995  acquisition  of  Santiago.  As a result of this merger and
acquisition,  the Company was obligated to issue these additional shares as soon
as the  Company's  shareholders  approved  the  filing of  amended  articles  of
incorporation  increasing the authorized  shares form 50,000,000 to 100,000,000.
The shareholders approved this change on June 18, 1996.
                                      F-17


<PAGE>


<TABLE>

<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 7 - INCOME TAXES

A reconciliation  of the expected federal income tax expense  (benefit) based on
the U.S.  Corporate income tax rate of 34% to actual expense  (benefit) for 1997
and 1996 is as follows:

                                                                                       1997           1996
                                                                                   -----------    -----------
<S>                                                                                <C>            <C>     

       Expected federal income tax provision (benefit)                             $  (138,529)   $   134,412
       State income taxes                                                                 --           17,790
       Valuation allowance and other                                                   138,529       (152,202)
                                                                                   -----------    -----------

                                                                                   $      --      $      --
                                                                                   ===========    ===========

Deferred  tax assets and  liabilities  as of  December  31, 1997 and 1996 are as
follows:

                                                                                       1997           1996
                                                                                   -----------    -----------
       Current deferred tax asset                                                  $   155,779    $    71,171
       Current deferred tax liability                                                     --             --
       Valuation allowance for current deferred tax asset                              155,779        (71,171)
                                                                                   -----------    -----------

       Net current deferred tax asset                                              $      --      $      --
                                                                                   ===========    ===========

       Non-current deferred tax asset                                              $ 1,180,948    $ 1,101,361
       Non-current deferred tax liability                                             (148,506)      (183,228)
       Valuation allowance for non-current deferred tax asset                       (1,032,442)      (918,133)
                                                                                   -----------    -----------

       Net non-current deferred tax asset                                          $      --      $      --
                                                                                   ===========    ===========
</TABLE>

The current  deferred tax asset  results  from  reserve for accounts  receivable
which is not  deductible  for tax  purposes  until  actually  written  off,  and
deferred  revenues an service  contracts  which are  recognized for tax purposes
upon  receipt.  The  non-current  deferred tax  liability  results from software
development  charges  capitalized for financial  reporting purposes and deducted
for federal income tax purposes. The non-current deferred tax asset results from
differences  in  amortization  of goodwill for financial and federal  income tax
reporting purposes and the deferred tax benefit of net operating losses. The net
current and non-current deferred tax assets have a 100% valuation allowance,  as
the ability of the Company to generate  sufficient  taxable income in the future
is not certain.

MB generated net operating losses for financial reporting and Federal income tax
reporting prior to its  reorganization in 1993. As of December 31, 1997, subject
to limitations  under Internal  Revenue Code ss.382,  approximately  $469,000 of
these net operating losses are available for use after the reorganization. These
net  operating  losses expire in 2008 if not  utilized.  The net operating  loss
carry  forward at December  31,  1997  amounts to  $3,267,000  and will begin to
expire in 2008 if not utilized.


NOTE 8 - RELATED PARTY TRANSACTIONS

Prior to and during the year ended December 31, 1996,  the Company  received and
repaid portions of advances from shareholders and officers.

                                      F-18


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 9 - LEASE COMMITMENTS

The Company has  non-cancelable  leases for office space and  equipment.  Future
minimum  payments under these leases and other  equipment  operating  leases are
payable as follows:

              Year Ended
             December 31,                               Amount
             ------------                               ------
                  1998                               $ 295,003
                  1999                                 143,466
                  2000                                  82,041
                  2001                                  42,138
                  2002                                   9,000
                                                     ---------

                                                     $ 571,648
                                                     =========

Lease and rent expense under  non-cancelable  operating leases for 1997 and 1996
are $222,579 and $109,859, respectively.


NOTE 10 - LEGAL PROCEEDINGS

On October 15, 1997, the Company filed a lawsuit in the 342nd Judicial  District
Court of Tarrant County,  Texas against a former stockholder and employee of the
Company for breach of a Severance  Agreement  entered into by the Company of the
stockholder in connection with the termination of that person's  employment by a
subsidiary of the Company.  On January 6, 1998, that stockholder filed a lawsuit
in the United  States  District  Court for the Central  District  of  California
against the Company and Scott A. Haire,  Chairman of the Board and  President of
the Company alleging  violation of the Federal  securities laws and other causes
of action in  connection  with the purchase of  stockholder's  shares of Company
common stock in connection with the  termination of his employment.  The Company
believes  that the damages  sought in this case  exceed $1 million.  The Company
believes  that the  allegations  of the former  stockholder  in his  lawsuit are
without merit and intends to vigorously defend itself in this lawsuit.


NOTE 11 - STOCK OPTIONS AND WARRANTS

Stock Options
-------------

Effective May 5, 1994, the Board of Directors approved an Incentive Stock Option
Plan ("Plan") for key executives and employees.  The Plan provides for 1,045,000
shares.






                                   (Continued)

                                      F-19


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 11 - STOCK OPTIONS AND WARRANTS (CONTINUED)

A summary of changes in the Company's  incentive  stock options issued under the
Plan and other compensatory options follows:

                                                          Other
                                Plan Options         Compensatory Options   Combined Total
                          -----------------------    --------------------   --------------
                                         Weighted                Weighted
                                          Average                 Average
                                         Exercise                Exercise
                             Options      Price      Options      Price           Options
                          ----------     --------    ----------  --------       ----------
<S>                                                                              <C>    

Outstanding at 12/31/95      390,000         $.04     1,800,000      $.03        2,190,000  

Granted                      475,000          .06       600,000       .15        1,075,000
Exercised                       --             --          --          --             --
Forfeited                       --             --          --          --             --
                          ----------         ----    ----------      ----       ----------

Outstanding at 12/31/96      865,000         $.05     2,400,000      $.06        3,265,000

Granted                         --             --     2,100,000       .22        2,100,000
Exercised                    (70,000)         .05          --          --          (70,000)
Forfeited                       --             --          --          --             --
                          ----------         ----     ---------      ----        ---------

Outstanding at 12/31/97      795,000         $.05     4,500,000      $.13        5,295,000
                          ==========         ====     =========      ====        =========
</TABLE>


The fair value of plan options issued during 1996 was approximately $63,435. 
There were no plan options issued during 1997.

The following table summarizes information about options outstanding at December
31, 1997 under the Plan:

<TABLE>

                                       Options Outstanding                                  Options Exercisable
                                       -------------------                            ---------------------------------
                                         Weighted Average
   Range of            Number              Remaining          Weighted Avg.              Number         Weighted Avg.
Exercise Prices     Outstanding         Contractual Life     Exercise Price           Exercisable     Exercisable Price
---------------     -----------        -------------------   --------------           -----------     -----------------
<S>                                                                                      <C>                <C>       

   $.02-$.65          795,000               2.9                  $.05                    795,000            $.05


</TABLE>






                                   (Continued)

                                      F-20


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996

NOTE 11 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Stock Options (Continued)
-------------------------

The following table summarized  information about the other  compensatory  stock
options outstanding at December 31, 1997:

                                       Options Outstanding                                  Options Exercisable
                                       -------------------                            ---------------------------------
                                         Weighted Average
   Range of            Number              Remaining          Weighted Avg.              Number         Weighted Avg.
Exercise Prices     Outstanding         Contractual Life     Exercise Price           Exercisable     Exercisable Price
---------------     -----------        -------------------   --------------           -----------     -----------------
<S>                                                                                     <C>                  <C>    

   $.03-$.65         4,500,000              4.1                  $.13                   2,700,000            $.07


The  company  applies  APB  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees"  ("APB25"),  in accounting for its compensatory  stock options plans.
The options granted during 1997 and 1996 have exercise prices which  approximate
fair value,  and accordingly,  no compensation  cost has been recognized for its
incentive or other  compensatory  stock  options in the  consolidated  financial
statements.   Had  compensation  cost  for  the  Company's  stock  options  been
determined  consistent with FASB statement No. 123,  "Accounting for Stock Based
Compensation",  the  Company's net income (loss) and net income (loss) per share
would have been changed to the pro forma amounts indicated below:

                                                                        Years ended December 31,
                                                                   -------------------------------
                                                                       1997                  1996
                                                                   ----------             --------
Net Income (Loss)                            As reported           $(407,438)             $395,330
                                             Pro forma             $(407,438)             $331,895

Net Income (Loss) per share                  As reported               $(.01)                $0.01
                                             Pro forma                 $(.01)                $0.01

</TABLE>

Of the  5,295,000  outstanding  incentive  stock  options at December  31, 1997,
3,795,000  options are fully vested at December 31, 1997 and  1,500,000  options
vest in 1998.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  option  pricing  model with the  following  assumptions  used for
grants in both 1997 and  1996:  dividend  yield of 0%,  expected  volatility  of
29.55%,  risk free  interest  rates  ranging  from  5.77% to 6.41% over a 5 year
period, and an expected life of 3 years.








                                      F-21


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 11 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Stock Warrants

In connection  with  issuance of common  shares for cash during 1996,  1,000,000
warrants to purchase  common  shares were issued.  The warrants have an exercise
price of $.35 per  share and  expire  December  31,  2001 if not  exercised.  No
warrants were issued in 1997.

NOTE 12:  FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial  Accounting  Standards  No. 107,  "Disclosure  About Fair
Value of Financial Instruments", requires disclosure about the fair value of all
financial assets and liabilities for which it is practicable to estimate.  Cash,
accounts  receivable,  notes receivable,  accounts payable,  notes payable,  and
other liabilities are carried at amounts that reasonably  approximate their fair
values.


NOTE 13:  BUSINESS SEGMENT INFORMATION

The  Company's  operations  have been  classified  into two  principal  business
segments:  medical  receivables and software and maintenance  sales.  Summarized
financial  information by significant  business segments as of and for the years
ended December 31, 1997 and 1996 is as follows:

                                                 1997           1996
                                             -----------    -----------
Revenues:
     Medical fees                            $ 3,597,864    $   211,864
     Software and maintenance sales            1,502,445      2,461,562
     Other                                       189,545        313,482
                                             -----------    -----------

                                             $ 5,289,854    $ 2,986,908
                                             ===========    ===========

Operating income (loss):
     Medical fees                            $   183,385    $    30,312
     Software and maintenance sales             (578,787)       194,458
     Corporate                                  (346,192)        (1,376)
                                             -----------    -----------

                                             $  (741,594)   $   223,394
                                             ===========    ===========

Total assets:
     Medical fees                            $ 3,203,952    $      --
     Software and maintenance sales            1,604,693      1,505,624
     Corporate                                   497,368        359,063
                                             -----------    -----------

                                             $ 5,306,013    $ 1,864,687
                                             ===========    ===========




                                   (Continued)
                                      F-22


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 13:  BUSINESS SEGMENT INFORMATION (CONTINUED)

                                               1997           1996
                                             --------       --------

Depreciation and amortization:
     Medical fees                            $ 93,786       $   --
     Software and maintenance sales           295,089        205,768
     Corporate                                  9,208          7,910
                                             --------       --------

                                             $398,083       $213,678
                                             ========       ========

Capital expenditures:
     Medical fees                            $534,139       $   --
     Software and maintenance sales           193,160        484,304
     Corporate                                   --            5,308
                                             --------       --------

                                             $727,299       $489,612
                                             ========       ========


NOTE 14:  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS (UNAUDITED)

Significant fourth quarter adjustments were recorded as follows:

     Depreciation and amortization expense                  $112,000
     Accounts receivable adjustment for bad debts            530,000
     Reduction in gain or sale of assets                     130,000
                                                            --------
                                                             772,000
     Less:  Income tax effect                                   --
                                                            --------           
         Fourth quarter adjustments, net                    $772,000
                                                            ========

NOTE 15:  SUBSEQUENT EVENTS

On April 30, 1998,  the Company  entered into an agreement to sell its ownership
in Sandy Home  Health,  Inc.  (a Utah  Corporation).  The total  sales price was
$200,000  payable  pursuant to the terms of a promissory note dated May 1, 1998.
The promissory note is due May 1, 2001 with monthly interest  payments  starting
June 1,  1998.  The  interest  rate is the prime rate as  published  in the Wall
Street Journal, plus 2% per annum.










                                      F-23


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 15:  SUBSEQUENT EVENTS (CONTINUED)

On April  1,  1998,  the  Company  purchased  the  assets  and  assumed  certain
liabilities of Med-Sport Therapy & Rehabilitation  Center,  Inc. and compensated
the previous owners as follows:

                                                        Amount Due
               Date                                  Previous Owners
         -------------                               ---------------
         April 1, 1998                                 $  38,000
           May 1, 1998                                    33,000
          July 1, 1998                                   167,000
                                                       ---------
                                                        $238,000
                                                       =========

On April 1, 1998,  the Company  entered  into a physician  coverage  and service
agreement with Toth Enterprises II, P.A., a Texas professional association doing
business as Victory  Medical and Family Care and Dr.  William G.  Franklin.  The
Company through a subsidiary will provide administrative and management services
for the clinic.  The assets of Victory Medical and Family Care were purchased by
the Company with issuance of 400,000 shares of the Company's common stock.

In April 1998, the Company  borrowed $1.4 million from Stone Capital pursuant to
the terms of a  promissory  note which  gives  Healthcare  Innovations,  LLC the
option to convert the note and its 49% ownership interest to preferred stock.


NOTE 16:  IMPACT OF YEAR 2000 (UNAUDITED)

The Year 2000 Issue is the result of computer  programs  being written using two
digits  rather than four to define the  applicable  year.  Any of the  Company's
computer programs that have  time-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could  result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process  transactions,  send invoices, or
engage in similar normal business activities.

Based  on a  recent  assessment,  the  Company  determined  that it will  not be
required to modify or replace  significant  portions of its software so that its
computer  systems will function  properly with respect to dates in the year 2000
and  thereafter.  The  Company  believes  that the Year 2000 Issue will not pose
significant operational problems for its computer systems.

The Company has  initiated  formal  communications  with all of its  significant
suppliers  and large  customers to determine  the extent to which the  Company's
interface  systems are vulnerable to those third  parties'  failure to remediate
their own Year 2000 Issues.  However, there can be no guarantee that the systems
of other companies on which the Company's  systems rely will be timely converted
and would not have an adverse effect on the Company's  systems.  The Company has
determined  it has no exposure to  contingencies  related to the Year 2000 Issue
for the products it has sold.

The total cost of the Year 2000 project is not expected to be significant.




                                      F-24


<PAGE>


<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996

NOTE 17:  ACQUISITIONS

In 1997, the Company acquired several medical clinics,  with multiple locations.
This  summarizes the total  proforma  balance sheets of the clinics prior to the
purchases and the assets purchased, liabilities assumed and the purchase prices:

                                                                                Proforma Balance Sheets
                                                                   --------------------------------------------
                                                Balance Sheets      Summary of      The Company
                                                of Clinics Prior    Net Assets      December 31,
                                                to Acquisitions      Purchased          1996           Total
                                                ----------------   -----------    --------------    -----------
                                                   (Unaudited)
<S>                                                                                  <C>            <C>         

Assets:
    Current assets                              $ 3,976,755        $ 2,334,523       $   538,501    $ 2,873,024
    Clinic equipment                                   --              434,439              --          434,439
    Property and equipment                          508,256               --              63,349         63,349
    Other assets                                  1,322,561               --           1,262,837      1,262,837
    Goodwill                                           --              603,247              --          603,247
                                                -----------        -----------       -----------    -----------

             Total Assets                       $ 5,807,572        $ 3,372,209       $ 1,864,687    $ 5,236,896
                                                ===========        ===========       ===========    ===========

Liabilities and Stockholders' Deficit:
    Accounts payable and assumed
         liabilities                            $ 2,104,937        $   789,185       $   831,178    $ 1,620,363
    Notes payable and other long-term
         liabilities                              1,284,240          1,958,024         1,323,808      3,281,832
                                                -----------        -----------       -----------    -----------

             Total Liabilities                    3,389,177          2,747,209         2,154,986      4,902,195
                                                -----------        -----------       -----------    -----------

Common stock                                         45,292               --              67,885         67,885
Additional paid-in-capital                        4,388,452               --             810,322        810,322
Accumulated deficit                              (2,015,349)              --          (1,156,467)    (1,156,467)
Treasury stock                                         --                 --             (12,039)       (12,039)
                                                -----------        -----------       -----------    -----------

             Total Stockholders' Deficit          2,418,395               --            (290,299)      (290,299)

Purchase Price
    Cash                                               --              235,000              --             --
    Purchase notes payable                             --              180,000              --             --
    Common stock issued                                --              210,000              --             --
                                                -----------        -----------       -----------    -----------

             Total Purchase Price                      --              625,000              --             --
                                                -----------        -----------       -----------    -----------

             Total Liabilities, Stockholders'
               Deficit and Parent Company
               Investment                       $ 5,807,572        $ 3,372,209       $ 1,864,687    $ 5,236,896
                                                ===========        ===========       ===========    ===========

</TABLE>




                                   (Continued)

                                      F-25


<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1997 AND 1996


NOTE 17:  ACQUISITIONS (CONTINUED)

The following  schedule  represents a proforma  statement of operations  for the
twelve months preceding the acquisitions as if they were made January 1, 1996:

                               The Company    Acquisitions      Total
                               -----------    ------------   ------------  
                                               (Unaudited)

Statement of Operations
-----------------------

Revenues                      $  2,986,908   $  8,091,823    $ 11,078,731
Cost of Revenues                   816,026      2,198,627       3,014,653
                              ------------   ------------    ------------

Gross Profit                     2,170,882      5,893,196       8,064,078
Operating Expenses               1,947,488      4,882,285       6,829,773
                              ------------   ------------    ------------

Income From Operations             223,394      1,010,911       1,234,305

Other Income (Expense)              85,802              8          85,810
Income Tax                            --         (374,918)       (374,918)
                              ------------   ------------    ------------

Income From Operations             309,196        636,001         945,197

Gain on Debt Extinguishment         86,134        170,298         256,432
                              ------------   ------------    ------------

Net Income                    $    395,330   $    806,299    $  1,201,629
                              ============   ============    ============
















                                      F-26