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, 1996
                                             -----------------

[   ]    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.
                                 [X] Yes [ ] 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


                                       1
<PAGE>

Issuer's revenues for its most recent fiscal year:  $2,986,908.
                                                    ----------

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,  1996,  67,885,000  shares of the  Issuer's  $.001 par value
common stock were outstanding.

Transitional Small Business Disclosure Format:

                                 Yes [  ]    No  [ X ]




                                       2
<PAGE>
                        

                             MB SOFTWARE CORPORATION

                                   Form 10-KSB
                      For the Year Ended December 31, 1996

                                                                       Page of
                                                                    Form 10-KSB
 ITEM 1.  BUSINESS............................................................4

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

 ITEM 3.  LEGAL PROCEEDINGS...................................................6

 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................6

 ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS.............................................................6

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

 ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..........................8

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....................................11




                                       3
<PAGE>


                                     PART 1

Item 1.  Business

         MB Software  Corporation  (the "Company") was incorporated in 1982. The
Company  is  a  leading  provider  of  practice  management  services  and  cash
management resources to physicians,  dentists, chiropractors and medical billing
centers.  As of December  31, 1996,  the Company  provided  practice  management
services to approximately  3,500  physicians,  dentists,  chiropractors  and 700
billing  centers.  The Company has an  established  base of over 2,500  physical
locations  with  at  least  one  installation  in all 50  states.  The  business
management  services  offered by the  Company  include  (i)  general  management
services,  (ii)  strategic  management  services,   (iii)  financial  management
services and (iv) billing and accounts receivable  management  services.  (For a
History of the Company, see Notes to Consolidated  Financial Statements,  Note A
"The Company").

         The Company's  core  business  strategy  centers on  structured  growth
through  expansion  of its  software  products  and  acquisition  of emerging or
struggling  entities which evidence  opportunity for reciprocal benefit in terms
of product  distribution and optimization of operations.  Management  believes a
nucleus of revitalized  companies,  properly  managed and equipped,  can provide
more  valuable  and  cost  effective  services  to its  client  base.  Moreover,
healthcare's  continuing  challenge  of how to address the  demands  placed upon
healthcare  delivery  represent strong  opportunities  through  consolidation of
operation,  thereby  promoting  a  cost  benefit  unavailable  with  stand-alone
companies.

         While the  Company  historically  marketed  its  product in  physician,
dental,  chiropractic,  HMO and PPO structures, more recently the focus has been
narrowed to reflect  greater  concentration  upon services and products  aligned
with healthcare's  directional shift. More specifically,  products evaluated and
deemed to lack long-term or strong margins have been identified for divestiture,
allowing  for more focus  upon  bottom-line  results,  improved  performance  in
operations and maximum economies of scale. Traditionally, the Company engaged in
medical receivable  servicing,  consulting  business,  development of smart card
technology and software development.  However, through reassessment of corporate
strategic direction and a redistribution of skillsets necessary for the emerging
migration in healthcare,  new narrow-focused  directions were activated based on
analysis of:

         o        shifts away from in-patient care;
         o        high-dollar, labor-intensive services;
         o        greater opportunity in home-oriented healthcare;  and
         o        leverage its developed software products through industry 
                  alliances.

         Accordingly,  Santiago  SDS,  Inc.,  acquired  in 1995,  has  undergone
virtually a total  revitalization  and repositioning  which resulted in improved
services and profits. Santiago SDS, Inc. now enjoys profitability after a period
of retrofitting and reassessment of priorities.  Moreover,  in 1996,  Santiago's
OneClaim  Plus  software  was  redesigned  to be Windows 95  compliant,  thereby
offering users greater ease of use and beating  competitors to this prerequisite
positioning.  Additionally,  the  creation  of  Client-Server  technology  as an
application  protocol  engendered  upside potential not available in healthcare.
The  Client-Server  product  represents a  break-through  in capacity,  cost and
allows for a full practice management capability, total portability at a nominal
price.

Acquisitions

         The  Company  opted  to defer  acquisitions  during  1996  and  instead
strengthen  its  product  line and bottom  line  margins.  Monies  targeted  for
acquisitions  were used to  underwrite  the  upgrade  and total  redesign of the
Windows  95  and  Client-Server  products.  Development  of  said  products  was
performed without outside  capitalization  and financed with operating  revenues
which prevented incursion of additional debt service.


                                       4
<PAGE>


Indusrty Overview

         The U.S. healthcare industry continues to await congressional  mandated
restructuring,  yet given the political  imbroglio  surrounding special interest
groups within  healthcare,  changes are likely to emerge piecemeal and at a more
defined pace. While everyone generally agrees and accepts the need for wholesale
healthcare  reform,  there is little  political  appetite  for  massive  change,
particularly with entitlement programs and their volatile social overtones.

         Clearly,  healthcare's burdensome costs represent a significant portion
of the national debt and absent material cutbacks in entitlements, there becomes
increasing  demand  for  economies  in  every  aspect  of  healthcare  delivery.
Retrospectively,  DRG's,  HMO's,  PPO's, Risk contracts and other less prominent
healthcare  initiatives,  represent cost  containment  efforts enacted to arrest
spiraling  healthcare  costs.  However,  these  efforts  proved  to be  stop-gap
measures of unquantifiable impact. Conversely, healthcare's continued outcry and
expectation for improved performance,  economies,  and lower operating costs has
fostered fresh opportunities.  Healthcare users, providers, supplies and vendors
can likely expert to see mandatory  electronic  billing,  increased  emphasis on
cost   containment  in  every  sector,   greater   stimulation  of  competition,
outsourcing of traditionally  in-house  services,  improved  cost-to-performance
ratios for software demanded by buyers,  more  integratability of products,  and
faster, more-capacity, easy-to-use technology.

         Consistent  with these  divergent  healthcare  directions,  the Company
recognized that its positioning of products and services as critical  strategies
for  providing  tomorrow's  healthcare  solutions  ahead of  competitors  and at
improved cost margins.

Products

         OneClaim Plus consistent  with market place  feedback,  is available to
handle and  facilitate a physician's  practice,  regardless of size.  Offered in
single or multi-user versions,  one-site or multi-site  configuration,  OneClaim
Plus performs  complex  tasks with "mouse click" speed and ease.  Versions in MS
DOS,  Windows  95 and  Client-Server  provide  users  with  virtually  unlimited
flexibility  in  application.  The software  affords users with a high degree of
customization   from   table-driven   options   selected  by  the  user,   to  a
report-generator  feature which gives  requesters  total control over how stored
data is arrayed, displayed or printed.

         Electronic  Statements  Through  communication  links  established with
users,  physician offices are able to down-load their accounts receivable files,
that are in turn, electronically formatted,  printed, folded and mailed at 5% of
the cost associated with non-automated processes. An electronic data interchange
vehicle  capable of  electronic  transmission/receipt,  formatting,  editing and
routing  of  physician  claims  to  the  appropriate   payor  for  adjudication.
Electronic  links are  established  with all payors capable of receiving  claims
electronically.

         Electronic  Claims Processing  Electronic data interchange  whereby the
Company's  computer system  reformats a paper insurance claim into an electronic
document and transmits said  electronic  document to major  insurance  companies
including Medicare, Medicaid, Blue Shield, Aetna, Travelers and Metropolitan.

         CodeReview A comprehensive report, prepared by Santiago, which contains
the status and a current short description of each CPT Code (Current  Procedural
Terminology)  submitted  by  a  physician's  office.  The  report  provides  the
physician  with a quick and easy  interpretation  of the codes  used  along with
their monthly frequency and associated fees.

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

                                       5
<PAGE>

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

All product is shipped C.O.D. and/or payment is received by credit card, thereby
eliminating a large accounts  receivable.  All electronic billing is received in
the  Company's  office  by  electronic  transmission  and  invoiced  to  on-line
customers.

The practice  management  service  industry is highly  competitive.  The Company
considers  itself to be one of the  leading  providers  of  practice  management
services to physicians,  dentist,  chiropractors  and billing  centers.  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.

OneClaim Plus and Procedure Code Review are trademarks of Santiago.

The  Company  has spent  approximately  $100,000 to $150,000 in each of the past
three  years in  research  and  development  of new  product  which the  Company
released late in 1996.

Employees

         The  Company  currently  employs  approximately  30 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. Santiago's principal office
is leased and located in Newport  Beach,  California.  The lease expires on June
30, 1999.

Item 3.  Legal Proceedings  None

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 1996.


                                     PART II

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

         At the  Company's  Annual  Meeting on June 18,  1996, a name change was
approved.  The approved name is MB Software Corporation and 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 12/31/96
March, 1996                                $ .27                      $ .20
June, 1996                                   .32                        .25
September, 1996                              .29                        .26
December, 1996                               .12                        .10


                                       6
<PAGE>

Year Ended 12/31/95
March, 1995                                $ .05                      $ .03
June, 1995                                   .03                        .01
September, 1995                              .03                        .01
December, 1995                               .08                        .03

The Company had  approximately  7830 holders of record of its common stock as of
December  31,  1996.  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, 1996 to December  31, 1996 as compared  with the period
from January 1, 1995 to December 31, 1995. (See Notes to Consolidated  Financial
Statements,   Note  A  "The  Company".)  This  Annual  Report  contains  certain
forward-looking  statements  and  information  relating to the Company  that are
based 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 1996 are  described  in "Item 1,
                                                                         -------
Business."
---------

         Total  Revenues in 1996 totaled  $2,986,908,  a 296% increase over 1995
revenues of $754,152.  Revenue sources centered on sales of medical,  dental and
chiropractic  software  systems,  electronic  claims  transmissions,  electronic
statement  generation and  maintenance  contracts.  Said increases were a direct
result of new  marketing  strategies  for medical  systems  sales,  plus greater
emphasis on electronic claims and statements.

         Cost of Revenues in 1996 remained proportionate with $2,170,882, a 278%
increase  over 1995  totals of  $573,552.  Management  believes  Cost of Revenue
margins are an area where further  improvement may be effected.  New programs in
marketing and sales were actuated and expensed,  thereby  precluding  additional
ramp-up costs or new major development costs.

         Operating Expenses were $1,947,488 in 1996, a 42% increase for the same
period in 1995,  which totaled  $1,367,196.  Greater focus on every  cost-center
operation  arrested any upward cost and kept cost containment in the operational
forefront.

         Net Income during 1996 improved to $395,330,  a 157% increase over 1995
which was Net Loss of  ($690,487).  The profit  margins  were  realized  through
implementation   of  new  marketing,   budgetary,   results-planning   and  cost
containment disciplines.

         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.

         The  Company  recorded  gains of  $86,134  and  $140,000  based on debt
extinguishment.

                                       7
<PAGE>

Liquidity and Capital Resources

         As of December 31, 1996, the Company had Current Assets of $538,501 and
Other Assets of  $1,262,837.  Current  Liabilities  at December  31, 1996,  were
$831,178  of which  $41,035  were notes and  advances  loaned to the  Company by
certain of its senior  officers,  directors and  shareholders.  Included in Long
Term Liabilities at December 31, 1996 were $1,283,808 of notes and cash advances
loaned  to  the  Company  by  certain  of its  senior  officers,  directors  and
shareholders.

         The Company  utilized net cash of $499,612 from  investing activities 
in 1996 as compared to cash  generated  from  investing activities of $308,955 
in 1995.

         In 1995  cash  used  in  investing  activities  related  primarily  for
purchases of property and equipment of $3,227 and software  development costs of
$55,750.  Cash provided from investing  activities  results from  collections in
notes receivable of $75,000 and proceeds from sale of assets of $295,512.

         During 1996 and 1995 cash provided by financing  activities amounted to
$687,518  and  $12,277,  respectively.  In 1996  payments  on notes  payable  of
$554,707  was offset by  proceeds  from notes  payable  of  $1,041,842.  In 1995
payments  and  proceeds  on notes  payable  amounted to  $556,854  and  $561,538
respectively.  The Company issued  4,500,000 shares of treasury stock in 1996 to
pay off a $45,000 note payable.

         The Company generates  sufficient cash flow from operations 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 long term  strategies.  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.

         The  Company  introduced  two new  products  late in 1996.  The Company
anticipates  that these products will receive  favorable  response in the market
and will  generate  appreciable  revenues.  There can be no  assurances  to that
effect or that the introduction of the two new products will be successful.

Item 7.  Financial Statements

          Filed as exhibits  hereto are the following  statements of the Company
and its subsidiaries:

<TABLE>
<CAPTION>
<S>                                                                                     <C>  
                                                                                        Page
         Report of Independent Certified Public Accounts                                F- 3

         Financial Statements

                  Consolidated Balance Sheets as of December 31, 1996 and 1995          F- 4

                  Consolidated Statements of Operations for the years ended
                  December 31, 1996 and 1995                                            F- 5

                  Consolidated Statements of  Shareholder's Deficit for the
                  years ended December 31, 1996 and 1995                                F- 6

                  Consolidated Statements of Cash Flows for the
                  years ended December 31, 1996 and 1995                                F- 7

                  Notes to Consolidated Financial Statements                            F- 9

</TABLE>

                                       8
<PAGE>

Item 8.   Changes in and Disagreements with Accountants on Accounting and 
          Financial Disclosure.

                                      None


                                    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               32        President, Director               1993

Gilbert A. Valdez            52        Chief Operating Officer           1996

Araldo A. Cossutta           72        Director                          1994

Steven W. Evans              45        Director                          1994

Robert E. Gross              51        Director                          1994

Thomas J. Kirchhofer         55        Director                          1994

Lucy J. Singleton            59        Secretary                         1995

         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.

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 account 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.

                                       9
<PAGE>

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>
<CAPTION>

    Name and                                                          Long Term Compensation   
    Principal                Annual Compensation                Restricted        Options       All
                             -------------------                -----------------------------------
                            
<S>                                                                            <C>           <C>

    Position                                                       Stock           /SARS       Other
                       Year    Salary($)   Bonus    Other          Awards        # shares(2)   Comp.($)


  Scott A. Haire      1996      120,000     -0-      -0-            -0-             -0-          -0-
   President          1995        -0-       -0-      -0-            -0-             -0-          -0-
                      1994       58,750     -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
1996 and the value of  unexercised  options held by each of the named  Executive
Officers at December 31, 1996.

<TABLE>
<CAPTION>
<S>                                                                           <C>      <C>
 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

Scott A. Haire          -0-                   N/A                  1,800,000                  $180,000.00

</TABLE>
                                       10
<PAGE>

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The  following  table sets forth  information  as of December 31, 1996,
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 as        41,303,332              60.8%
     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

         Loans have been made to the Company by certain of its senior  officers,
directors,  and shareholders.  See "Item 6. Management's Discussion and Analysis
or Plan of Operation - Liquidity and Capital Resources." Scott A. Haire has made
loans to the Company in the amount of $434,808.08 at 8 percent interest.

Item 13.  Exhibits Reports on Form 8-K

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

                  2. Exhibits -- All exhibits incorporated by reference from 
                     prior filings with the Commission.



                                       11
<PAGE>


                                    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:  March 31, 1997



<PAGE>



                      CONSOLIDATED FINANCIAL STATEMENTS AND
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


                             MB SOFTWARE CORPORATION
                                AND SUBSIDIARIES
               (FORMERLY INAV TRAVEL CORPORATION AND SUBSIDIARIES)


                           DECEMBER 31, 1996 AND 1995

<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

              (Formerly INAV Travel Corporation and Subsidiaries)

                                    CONTENTS

                                                                           Page
                                                                           ----
Report of Independent Certified Public Accountants                          F-3

Financial Statements

  Consolidated Balance Sheets as of December 31, 1996 and 1995              F-4

  Consolidated Statements of Operations for the
    years ended December 31, 1996 and 1995                                  F-5

  Consolidated Statements of Shareholders' Deficit for the
    years ended December 31, 1996 and 1995                                  F-6

  Consolidated Statements of Cash Flows for the
    years ended December 31, 1996 and 1995                                  F-7

  Notes to Consolidated Financial Statements                                F-9



<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  sheets of MB Software
Corporation and subsidiaries (Formerly INAV Travel Corporation and Subsidiaries)
as of December 31, 1996 and 1995,  and the related  consolidated  statements  of
operations, shareholders' deficit and cash flows for the years 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 audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 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 audits provide 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 1995, and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with generally accepted accounting principles.


                                           KING GRIFFIN & ADAMSON P.C.

Dallas, Texas
February 21, 1997


<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1996 and 1995


                                     ASSETS
                                     ------
                       
<TABLE>
<CAPTION>                              
<S>                                                                                         <C>               <C>        
                                                                                                1996                1995
                                                                                              ----------          ---------
CURRENT ASSETS
    Cash                                                                                      $  196,653        $    36,535
    Trade accounts receivable, net of allowance for doubtful
     accounts of $33,487 and $0                                                                  311,965             59,788
    Note receivable                                                                               10,000                -
    Prepaid expenses and other                                                                    19,883                -
                                                                                              ----------          ---------
             Total current assets                                                                538,501             96,323
                                                                                              ----------          ---------

PROPERTY AND EQUIPMENT, NET                                                                       63,349             23,839
                                                                                              ----------          ---------

OTHER ASSETS
    Goodwill, net of accumulated amortization of $209,255 and $103,319                           850,109            956,045
    Software development costs, net of accumulated amortization of $101,374 
       and $3,871                                                                                394,240             51,879
    Deposits                                                                                      18,488             17,788
                                                                                              ----------          ---------
             Total other assets                                                                1,262,837          1,025,712
                                                                                              ----------          ---------
                                                                                             $ 1,864,687         $1,145,874
                                                                                              ==========          =========

                     LIABILITIES AND SHAREHOLDERS' DEFICIT
                     -------------------------------------

CURRENT LIABILITIES
    Cash overdraft                                                                           $         -         $   29,616
    Notes payable, including $41,035 and $130,172
       due to related parties                                                                    242,029            397,741
    Accounts payable                                                                             149,741            177,266
    Accrued liabilities                                                                          101,382            142,754
    Other liabilities - related party                                                            179,000            527,350
    Deferred revenues                                                                            159,026            160,878
                                                                                              ----------          ---------
                Total current liabilities                                                        831,178          1,435,605
                                                                                              ----------          ---------

LONG-TERM LIABILITIES
    Notes payable less current maturities, all to related parties                              1,283,808            710,898
    Other liabilities - related party                                                             40,000            130,000
                                                                                              ----------          --------- 
                 Total liabilities                                                             2,154,986          2,276,503
                                                                                              ----------          ---------
COMMITMENTS AND CONTINGENCIES (Notes D, E, I, J, K and O)

SHAREHOLDERS' DEFICIT
    Common stock; $.001 par value; 100,000,000 shares
       authorized; 67,885,000 and 49,485,000 shares issued                                        67,885             49,485
    Additional paid-in capital                                                                   810,322            518,722
    Accumulated deficit                                                                       (1,156,467)        (1,551,797)
    Treasury stock, at cost; 409,577 and 4,909,577 shares, respectively                          (12,039)          (147,039)
                                                                                              ----------          ---------
                Total shareholders' deficit                                                     (290,299)        (1,130,629)
                                                                                              ----------          ---------

                                                                                             $ 1,864,687         $1,145,874
                                                                                              ==========          =========
</TABLE>

The accompanying notes are an integral part of these financial statements.
                                      F-6
<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>                              
<S>                                                                                        <C>                  <C>
                                                                                               1996                  1995
                                                                                           -------------          ----------
REVENUES
    Service fee and broker income                                                           $    211,864        $    100,064
    Software and maintenance sales                                                             2,461,562             639,644
    Consulting fee income                                                                        299,000               -
    Other                                                                                         14,482              14,444
                                                                                              ----------          ----------
       Total revenues                                                                          2,986,908             754,152
                                                                                              ----------          ----------

COST OF REVENUES
    Cost of service fees and broker income                                                         2,549              13,583
    Cost of software and maintenance sales                                                       813,477             167,017
                                                                                              ----------          ----------
       Total cost of revenues                                                                    816,026             180,600
                                                                                              ----------          ----------

GROSS PROFIT                                                                                   2,170,882             573,552
                                                                                              ----------          ----------

OPERATING EXPENSES
    Selling, general & administrative                                                          1,733,810             990,872
    Depreciation and amortization                                                                213,678             129,467
    Loss on write down of assets held for sale                                                     -                 135,000
    Loss on disposition of fixed assets and assets
        held for sale and related notes receivable                                                 -                 111,857
                                                                                              ----------          ----------
       Total operating expenses                                                                1,947,488           1,367,196
                                                                                              ----------          ----------

INCOME (LOSS) FROM OPERATIONS                                                                    223,394            (793,644)
                                                                                              ----------          ----------

OTHER INCOME (EXPENSE)
    Interest expense                                                                             (72,817)            (83,104)
    Gain from reduction of liabilities                                                           140,000             153,856
    Other, net                                                                                    18,619               1,978
                                                                                              ----------          ----------
       Total other income (expense)                                                               85,802              72,730
                                                                                              ----------          ----------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
   EXTRAORDINARY ITEM                                                                            309,196            (720,914)
DISCONTINUED OPERATIONS
    Loss from operations of discontinued smart card products segment                                -                (61,911)
    Gain on sale of discontinued segment                                                            -                 17,944
                                                                                              ----------          ----------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                                                          309,196            (764,881)

Gain on debt extinguishment, net of income taxes of $0                                            86,134              74,394
                                                                                              ----------          ----------
NET INCOME (LOSS)                                                                            $   395,330         $  (690,487)
                                                                                              ==========          ==========

Loss per weighted-average common share:
    Income (loss) from continuing operations before extraordinary item                       $       .00         $     (0.01)
                                                                                              ==========          ==========
    Extraordinary item                                                                       $      0.00         $      0.00
                                                                                              ==========          ==========
    Net income (loss)                                                                        $       .01         $     (0.01)
                                                                                              ==========          ==========

Weighted-average common shares outstanding                                                    69,791,096          49,485,000
                                                                                              ==========          ==========

</TABLE>

The accompanying notes are an integral part of these financial statements.
                                      F-5
<PAGE>

                         
                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                     Years ended December 31, 1996 and 1995


<TABLE>
<CAPTION>
                                                                            Retained
                                                             Additional     Earnings
                                           Common Stock       Paid-in      (Accumulated        Treasury
                                         Shares     Amount    Capital        Deficit)            Stock             Total
<S>                                  <C>          <C>        <C>           <C>                <C>             <C>   
                                         ------     ------    -------       -----------        --------           --------
Balances at December 31, 1994         49,485,000   $49,485    $518,722     $  (861,310)       $(147,039)      $   (440,142)

Net loss                                       -         -           -        (690,487)               -           (690,487)
                                      ----------  --------   ---------      ----------        ---------           --------

Balances at December 31, 1995         49,485,000    49,485     518,722      (1,551,797)        (147,039)        (1,130,629)

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

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

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

Issuance of shares in connection
   with 1993 merger (Note F)          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)
                                      ==========    ======      =======     ==========        =========        ===========


</TABLE>

The accompanying notes are an integral part of these financial statements.
                                      F-6
<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
              (Formerly INAV Travel Corporation and Subsidiaries)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
<S>                                                                             <C>           <C>
                                                                                     1996          1995
                                                                                    ------        ------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss) for the year                                              $ 395,330     $(690,487)
    Adjustments to reconcile net income (loss) to net cash
       used by operating activities
          Depreciation and amortization                                           213,678       129,467
          Loss on disposal of fixed assets                                              -        77,885
          Loss on disposition and write down  of assets held for
             sale and related notes receivable                                          -       168,972
          Gain on disposition of PC3 assets and certain liabilities                     -       (17,944)
          Gain on debt extinguishment                                             (86,134)      (74,394)
          Gain from reduction of liabilities                                     (140,000)     (153,856)
          Change in allowance for doubtful accounts                                33,487             -
          Changes in assets and liabilities, net of effects of
                acquisition and disposition
             Trade accounts receivable                                           (285,664)       (3,420)
             Inventories                                                                -        18,732
             Prepaid expenses and other                                           (19,883)       22,479
             Deposits                                                                (700)        1,500
             Accounts payable and accrued liabilities                              (7,700)       56,807
             Other liabilities - related party                                   (128,350)       12,456
             Deferred revenues                                                     (1,852)      160,878
                                                                               ----------     ---------

Net cash used by operating activities                                             (27,788)     (290,925)
                                                                              -----------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchases of property and equipment                                           (49,748)       (3,227)
    Software development costs capitalized                                       (439,864)      (55,750)
    Cash paid in connection with sale of PC3                                            -        (2,580)
    Proceeds from sale of asset held for sale
       and related notes receivable                                                     -       295,512
    Collections on notes receivable                                                     -        75,000
    Advances on notes receivable                                                  (10,000)            -
                                                                              -----------      --------

Net cash provided (used) by investing activities                                 (499,612)      308,955
                                                                               ----------      --------

</TABLE>
                                                           - Continued -

The accompanying notes are an integral part of these financial statements.
                                      F-7
<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
                      Years ended December 31,1996 and 1995

<TABLE>
<CAPTION>
<S>                                                                                   <C>              <C>     
                                                                                            1996          1995
                                                                                          -------       --------

CASH FLOWS FROM FINANCING ACTIVITIES
    Principal payments on notes payable                                               $  (554,707)     $(556,854)
    Proceeds from notes payable                                                         1,041,841        561,538
    Net payments on other liabilities - related party                                    (170,000)             -
    Change in cash overdraft                                                              (29,616)         7,593
    Proceeds from common stock issuance                                                   400,000              -
                                                                                       ----------      ---------

Net cash provided by financing activities                                                 687,518         12,277
                                                                                       ----------      ---------

INCREASE IN CASH                                                                          160,118         30,307

Cash at beginning of period                                                                36,535          6,228
                                                                                       ----------      ---------

Cash at end of period                                                                 $   196,653     $   36,535
                                                                                       ==========      =========

SUPPLEMENTAL INFORMATION
    Cash paid during the period for interest                                          $    74,166     $   87,427
                                                                                       ==========      =========

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
    FINANCING ACTIVITIES

    Issuance of note payable for acquisition of assets and certain
       liabilities of Santiago                                                        $         -     $  529,000
                                                                                       ==========      =========


   Issuance of treasury stock in settlement of note payable                           $    45,000     $        -
                                                                                       ==========      =========

</TABLE>

The accompanying notes are an integral part of these financial statements.
                                      F-8
<PAGE>

                                     
                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
              (Formerly INAV Travel Corporation and Subsidiaries)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.     The Company
       -----------
       MB Software  Corporation  ("MB" or the  "Company")  (formerly INAV Travel
       Corporation)  was  incorporated  in 1982 and is a  provider  of  practice
       management services and cash management resources.  The Company's primary
       markets are physicians, dentists, chiropractic groups, select HMO and PPO
       organizations   throughout  the  United  States.  The  Company's  revenue
       consists  of sales of  software  and related  maintenance  contracts  and
       related consulting services, and service fee and broker income.

       During  1994 and 1995,  the Company  engaged in the  medical  receivables
       servicing and consulting  business and the  development  and marketing of
       smart card hardware and software  products  including  computer  security
       systems.  During 1994, the Company  developed a frequent  shopper product
       that  utilized  a  central   computer  host  to  record  retail  customer
       transactions  for Company  clients.  On-site  testing of the product at a
       retail site was completed in 1994,  but further  investment in aggressive
       marketing  and  full  scale  electronic  host   infrastructure   was  not
       undertaken  due to the decline in Company  revenues  in 1994.  In October
       1995,  this smart card product  business was sold and the entity  through
       which  the  Company  conducted  this  business,  Personal  Computer  Card
       Corporation ("PC3") was dissolved.

       On May 18,  1994,  Santiago  SDS,  Inc.  ("SDS")  was  formed as a Nevada
       Corporation   for  the  purpose  of  selling   software  and  maintenance
       contracts.  Through this subsidiary,  in 1995 the Company acquired all of
       the assets and certain related liabilities of Santiago Data Systems, Inc.
       ("Santiago")  for $529,000 and 1,800,000  common shares (issued in 1996 -
       see Note F). Santiago develops,  supports and licenses medical and dental
       software  through the  comprehensive  nationwide  program called OneClaim
       Plus.  Procedure Code Review ensures accurate procedure coding for a well
       managed  practice.  STAT Access  provides  physicians  and hospitals with
       immediate access to vital  information  regarding  patients'  medical and
       health history (Note B).

2.     Consolidation Policy
       --------------------
       The consolidated  financial statements include the accounts of MB and its
       wholly  owned  subsidiaries.   All  material  intercompany  accounts  and
       transactions have been eliminated in consolidation.

3.     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.

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

              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.

                                      F-9
<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5.     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 seven  years.  Maintenance  and  repairs  are  expensed  as  incurred.
       Replacements and betterments are capitalized.

6.     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 Santiago. Goodwill amounted to $1,059,364 and
       is  being  amortized  using  the  straight-line  method  over  10  years.
       Effective January 1, 1996, the Company revised the estimated life used to
       compute amortization for goodwill from 4 years to 10 years. This revision
       was made to more properly reflect management's current expectation of the
       true period of future  benefit of the acquired  goodwill.  The change had
       the effect of increasing  net income for the year ended December 31, 1996
       by  $158,905  and  increasing  net income  per share by $0.  Amortization
       expense  for  1996  and  1995   amounted  to   $105,936   and   $103,319,
       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.

7.     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.

8.     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 no cash equivalents at December 31,
       1996 and 1995.

9.     Business and Credit Risk Concentrations
       ---------------------------------------
       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.  No one customer  
       accounted for greater than 10% of revenues during 1995.


                                      F-10

<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
              (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

9.     Business and Credit Risk Concentrations - Continued
       ---------------------------------------
       Management evaluates accounts receivable balances on an ongoing basis and
       provides  allowances  as necessary  for amounts  estimated to  eventually
       become uncollectible. The allowance for uncollectible accounts receivable
       at December  31, 1996 and 1995 was $33,487 and $0,  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, 1996, the Company  exceeded the insured
       limit by approximately $76,125.

10.    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 the 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.

11.    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.

       No amortization on frequency related software has been recorded during
       1996 and 1995 as the asset was being held for sale and was written off
       in 1995.

       Software  development costs incurred in development of medical billing
       software of $439,864  and $55,750 were  capitalized  in 1996 and 1995,
       respectively.  Amortization  of these  costs  amounted  to $97,503 and
       $3,871 during 1996 and 1995, respectively.

12.   Reclassifications
      -----------------
      Certain prior year amounts have been reclassified to conform with the 1996
      presentation.


                                      F-11
<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE B - ACQUISITION AND DISPOSITION

Acquisition
-----------
As discussed in Note A1, MB acquired the assets and certain  liabilities  of 
Santiago in August 1995 for  $529,000  and the issuance of 1,800,000  common 
shares  (issued in 1996).

A summary of the fair value of assets  acquired  and  liabilities  assumed is as
follows:

      Accounts receivable                                          $     40,567
      Property and equipment                                             17,788
      Goodwill                                                        1,059,364
      Amount due by Santiago to MB                                     (183,486)
      Current liabilities                                               (54,763)
      Other liabilities                                                (350,470)
                                                                     ----------
                                                                    $   529,000
                                                                     ==========

Unaudited pro forma  financial  information for the year ended December 31, 1995
as though the acquisition had occurred on January 1, 1994 is as follows:

      Revenues                                                       $1,573,000
      Loss from continuing operations before
          extraordinary item                                          $(927,000)
      Net loss                                                      $(1,001,000)
      Net loss per share                                                 $(0.02)

Disposition
-----------
Effective in October  1995,  the Company  disposed of  substantially  all of the
assets and liabilities of PC3 (Note A1), and dissolved this entity.  The Company
recorded a gain on disposition of $17,944 in 1995. Revenues for PC3 for the year
ended December 31, 1995 amounted to $42,896.


NOTE C -  PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1996 and 1995:

                                                       1996               1995
                                                   ---------            -------
          Computer equipment                       $ 87,217            $ 37,468
          Furniture and fixtures                      1,056               1,056
                                                    -------             -------
                                                     88,273              38,524
 Less accumulated depreciation and amortization     (24,924)            (14,685)
                                                    -------             -------
                                                   $ 63,349           $  23,839
                                                    =======             =======


                                      F-12


<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE D - NOTES PAYABLE

Notes payable consist of the following as of December 31, 1996 and 1995:

<TABLE>
<CAPTION>
<S>                                                                            <C>              <C>
                                                                                       1996          1995
                                                                                   ----------       -------
   Unsecured note to a shareholder due on
      December 31, 1997, settled in 1996.                                       $         -     $   276,090

   Unsecured note to an employee, officer and shareholder
      due December 31, 1998, bearing interest at 8%.                                434,808         434,808

   Note to a shareholder due on demand, bearing interest at 9%.                           -          40,000

   Note payable  to an  individual  settled  in 1996  through  the  
      issuance of 4,500,000 shares of common stock held
      in treasury.                                                                        -          45,000

   Note payable to shareholder of Santiago assumed during
      purchase of Santiago assets and assumption of certain
      liabilities, due on demand, bearing no interest.                                8,129          62,741

   Note payable to third parties assumed in connection with
      Santiago purchase, due on demand, bearing no interest.                        150,994         222,569

   Note payable to shareholder of Santiago assumed during Santiago
      purchase, due on demand bearing no interest.                                        -          27,431

   Unsecured notes payable to a shareholder  ($455,000 due 
      December 22, 1998 and $300,000 due June 19, 1998), bearing
      interest at 8%.                                                               755,000               -

   Unsecured note to a shareholder due on demand, bearing interest at 8%.            25,000               -

   Unsecured note to a shareholder due in 1998, bearing interest at 8%.              45,000               -

   Unsecured note to a shareholder due on demand, bearing interest at 8%.             7,906               -

   Unsecured note to a shareholder due December 31, 1998, bearing
      interest at 8%.                                                                12,000               -

   Unsecured note to a shareholder due July 16, 1998, bearing
      interest at 8%.                                                                25,000               -

   Unsecured note to a shareholder due December 31, 1998, bearing
      interest at 8%.                                                                12,000               -

   Note payable to a bank due February 23, 1997, bearing interest
      at prime (8.5% at December 31, 1996).                                          50,000               -
                                                                                 ----------      ----------
                                                                                  1,525,837       1,108,639
   Less current portion                                                            (242,029)       (397,741)
                                                                                 ----------      ----------
   Long-term portion                                                            $ 1,283,808     $   710,898
                                                                                 ==========      ==========


</TABLE>

                                      F-14
<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE D - NOTES PAYABLE - Continued

The following is a schedule of maturities of notes payable at December 31, 1996:

                1997                                                $   242,029
                1998                                                  1,283,808
                                                                      ---------
                                                                     $1,525,837


NOTE E - 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 F - SHAREHOLDERS' EQUITY (DEFICIT)

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

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 from 50,000,000 to 100,000,000.
The shareholders approved this change on June 18, 1996.


NOTE G - 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 
1996 and 1995 is as follows:
                                                     1996               1995
                                                   ---------           ------
  Expected federal income tax provision (benefit) $ 134,412           $(234,889)
  State income taxes                                 17,790                   -
  Valuation allowance and other                    (152,202)            234,889
                                                   --------            --------
                                                  $       -           $       -
                                                   ========            ========

Deferred  tax assets and  liabilities  as of  December  31, 1996 and 1995 are as
follows:

                                                       1996              1995
                                                     --------           -------
  Current deferred tax asset                          71,171         $        -
  Current deferred tax liability                           -                  -
  Valuation allowance for current deferred tax asset (71,171)                 -
                                                     -------         ----------
             Net current deferred tax asset         $      -        $         -
                                                     =======         ==========
                                     
                                      F-14
<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE G - INCOME TAXES - Continued
                                                     1996                1995
                                                  ----------           -------

  Non-current deferred tax asset                 $1,101,361           $ 703,799
  Non-current deferred tax liability               (183,228)            (17,639)
  Valuation allowance for non-current
    deferred tax asset                             (918,133)           (686,160)
                                                  ---------            --------

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

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 on 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 and PC3 generated net  operating  losses for financial  reporting and Federal
income tax reporting prior to their reorganization in 1993. (see Note A1). As of
December 31, 1996,  subject to  limitations  under  Internal  Revenue Code '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, 1996 amounts to $2,700,000
and will begin to expire in 2008 if not utilized.


NOTE H - RELATED PARTY TRANSACTIONS

Prior to and during the years  ended  December  31,  1996 and 1995,  the Company
received and repaid portions of advances from  shareholders and officers.  (Note
D)

During 1995, in order raise cash,  notes  receivable  amounting to $104,484 were
sold to a shareholder at a discount of approximately $29,000.


NOTE I - LEASE COMMITMENTS

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

       Year Ended
      December 31,                                               Amount

          1997                                                   $121,973
          1998                                                    125,441
          1999                                                     56,672
                                                                  -------
                                                                 $304,086


Lease and rent expense under  non-cancelable  operating leases for 1996 and 1995
was $109,859 and $85,066, respectively.


                                      F-15
<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE J - COMMITMENTS AND CONTINGENCIES

The Company does not carry general liability or workman's compensation liability
insurance for the corporate office in Arlington, Texas.

A claim has been made  against SDS  relating to alleged  sexual  harassment  and
unpaid overtime pay. As of the date of these financial statements, the potential
amount of exposure to the Company should the claim have an  unfavorable  outcome
cannot  be  estimated.  If the  outcome  is  unfavorable,  the  effect  could be
significant  to the  financial  condition,  operations  and  cash  flows  of the
Company. The Company intends to vigorously defend itself in this matter.


NOTE K - STOCK OPTIONS AND WARRANTS

Non-qualified Stock Options
---------------------------
In March 1991, MB granted non-qualified stock options to purchase 515,000 shares
of common stock to an officer,  director,  and  shareholder of the Company.  The
options were  exercisable  at any time up to March,  1997. In October 1992,  the
Board of Directors of MB repriced these options to $.05 per share to reflect the
current market value of the shares.  Subsequent to December 31, 1996, options to
purchase the 515,000 shares lapsed.

Other 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.

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


                                                   Other
                          Plan Options    Compensatory Option     Combined Total
                          ------------    -------------------     --------------
                                             Weighted                Weighted
                                              Average                 Average
                                             Exercise                Exercise
                          Options   Price    Options    Price         Options
                          -------   -----    -------   ------      -----------
Outstanding at 12/31/94   370,000   $.04    1,800,000   $.03        2,170,000
                          -------           ---------               ---------

Granted                    20,000   $.05            -      -           20,000
Exercised                       -      -            -      -                -
Forfeited                       -      -            -      -                -
                          -------          ----------    ---        ---------

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
                          =======    ===   ==========    ===        =========


                                      F-16

<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE K - STOCK OPTIONS AND WARRANTS - Continued

Other Stock Options - Continued

The fair value of  options  issued  during  1996 and 1995 was  $63,435  and $37,
respectively.

The following table summarizes information about options outstanding at December
31, 1996 under the Plan:

<TABLE>
<CAPTION>

                                        Options Outstanding                                     Options Exercisable
<S>                                                                                    <C>               <C>    
                                           Weighted Avg.
   Range of             Number               Remaining           Weighted Avg.             Number            Weighted Avg.
Exercise Prices       Outstanding        Contractual Life       Exercise Price           Exercisable       Exercisable Price
---------------       -----------        ----------------       --------------           -----------       ----------------- 
$.02 - $.10             865,000                    3.9                 $.05               697,500                   $.05

</TABLE>

The following table summarized  information about the other  compensatory  stock
options outstanding at December 31, 1996:

<TABLE>
<CAPTION>

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

$.03 - $.15           2,400,000                    3.7                 $.06               1,800,000                 $.03

</TABLE>

A summary of changes in the Company's non-compensatory options follows:
                                                 
                   
                                   Non-Compensatory           Weighted Average
                                    Options                    Exercise Price

Outstanding at 12/31/94                          -             $         -
                                      -------------             ----------

Granted                                          -             $         -
Exercised                                        -             $         -
Forfeited                                        -             $         -
                                      -------------             ----------
Outstanding at 12/31/95                          -             $         -

Granted                                    600,000             $       .42
Exercised                                        -             $         -
Forfeited                                        -             $         -
                                      -------------             ----------
Outstanding at 12/31/96                    600,000             $       .42
                                      ============              ==========






                                      F-17

<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE K - STOCK OPTIONS AND WARRANTS - Continued

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 1996 and 1995 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,
                                                    -----------------------
                                                      1996            1995
                                                      ----            ----
Net Income (Loss)                  As reported      $395,330      $(690,487)
                                   Pro forma        $331,895      $(690,524)

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

Of the  3,265,000  outstanding  incentive  stock  options at December  31, 1996,
2,497,500 options are fully vested at December 31, 1996 and 767,500 options vest
in 1997.

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 1996 and  1995;  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.

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.


NOTE L - 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.


                                      F-18

<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE M - 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, 1996 and 1995 is as follows:

                                                1996                    1995
                                             ----------               --------
Revenues:
  Medical receivables                           211,864            $    100,064
  Software and maintenance sales              2,461,562                 639,644
  Other                                         313,482                  14,444
                                              ---------             ------------
                                             $2,986,908            $    754,152
                                              =========              ===========

Operating income (loss):
  Medical receivables                        $   30,312            $   (531,262)
  Software and maintenance sales                194,458                (262,382)
  Corporate                                      (1,376)                      -
                                              ---------             -----------
                                             $  223,394            $   (793,644)
                                              =========             ===========

Total assets:
  Software and maintenance sales            $ 1,505,624            $  1,098,732
  Corporate                                     359,063                  47,142
                                             ----------             -----------
                                            $ 1,864,687            $  1,145,874
                                             ==========             ===========

Depreciation and amortization:
  Software and maintenance sales           $    205,768            $    107,191
  Corporate                                       7,910                  22,276
                                            -----------             -----------
                                           $    213,678            $    129,467
                                            ===========             ===========

Capital expenditures:
  Software and maintenance sales           $    484,304            $     55,750
  Corporate                                       5,308                   3,227
                                            -----------             -----------
                                           $    489,612            $     58,977
                                            ===========             ===========







                                      F-19
<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
               (Formerly INAV Travel Corporation and Subsidiaries)
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued


NOTE N - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS (UNAUDITED)

Significant fourth quarter adjustments amounting to $16,480 (net of income taxes
of $0) were recorded as follows:

     Depreciation expense                                            $   80,688
     Amortization expense                                               105,936
     Capitalized software development costs                            (203,104)
                                                                        --------
                                                                        (16,480)
     Less: Income tax effect                                                   -
         Fourth quarter adjustments, net                              $ (16,480)
                                                                        ========


NOTE O - SUBSEQUENT EVENTS

Effective  February 1, the Company acquired  substantially all of the assets and
assumed certain liabilities of Color Country Express,  Inc. for a total purchase
price of $25,000 plus liabilities assumed.

Effective February 6, 1997, the Company acquired all of the outstanding stock of
Oak Tree Receivables,  Inc., a Florida corporation,  and certain assets of Acorn
CORF I, Inc. ("Acorn") and Riverside CORF, Inc. ("Riverside").  The Company also
assumed certain liabilities of Acorn and Riverside. The total purchase price for
the stock and assets was $200,000 plus liabilities assumed.

The Company issued 600,000 warrants to purchase common shares in connection with
financing  obtained  from a third party in 1997.  The warrants  have an exercise
price of $.20 and expire January 28, 1999 if not exercised.





<PAGE>