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, 2001
                                                               -----------------

[ ]   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                                   59-2220004
         (State or other jurisdiction of                     (I.R.S. Employer
         incorporation or organization)                      Identification No.)

2225 E. Randol Mill Road Suite 305                           76011-6306
Arlington, Texas                                             (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (817) 633-9400

           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

Indicate by check mark if disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
                                 [X] Yes [ ] No

Issuer's revenues for its most recent fiscal year: $20,959. The aggregate market
value of the voting stock held by  non-affiliates  of the registrant as of March
31, 2001 was approximately $1,784,833.

<PAGE>


         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,  2001,  73,400,000  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, 2001

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

 ITEM 2.  PROPERTIES...........................................................5

 ITEM 3.  LEGAL PROCEEDINGS....................................................5

 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................5

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

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

 ITEM 7.  FINANCIAL STATEMENTS ................................................7

 ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE...........................................7

 ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS........8

 ITEM 10. EXECUTIVE  COMPENSATION..............................................9

 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT..........................................................9

 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................10

 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................10


                                       3
<PAGE>

                                     PART 1

Item 1. Business


         Until  recently,  MB Software  Corporation  (the  "Company"  or "MBSC")
business  was focused  exclusively  on the  healthcare  marketplace;  owning and
managing  healthcare  clinics  and  medical  receivables.  While the Company has
overseen  numerous  changes in healthcare  over the last 10 years, it has always
remained  focused  on  transactional  revenue  and  residual  income  streams of
revenue. During the 2001, the Company began evaluating how it could leverage its
experiences  within  healthcare  into the healthcare  transaction  market.  This
strategy would involve the divestiture of all healthcare facility-based lines of
business, and a focus shifted entirely to the transaction market.

         In July of 2001,  the  Company  acquired  certain  assets  and  assumed
certain  liabilities of Portalook,  a California based company,  which developed
proprietary  technology for use in enabling Internet  transaction devices (ITDs)
to be used as  transaction  processing  devices in the field.  The devices  were
identified as potential  transaction  devices for physician  practices,  and the
technology developed for servers and the devices themselves,  by Portalook, will
serve as the starting  point for a transaction  services  platform  designed for
healthcare.

         In an effort to pursue  the  strategy  shift from  owning and  managing
healthcare  clinics  and  receivables,  the  Company  moved to  restructure  its
relationship  with its  preferred  shareholders.  In  November  2001 the Company
entered into a Restructure  and Settlement  Agreement with Imagine  Investments,
Inc.  ("Imagine") and XHI(2),  Inc.,  ("Imagine Sub"),  which will alleviate the
Company of Imagine and Imagine Sub's  preferred  stock positions in the Company,
and eliminate a significant part of the Company's  liabilities in return for the
Company's Jacksonville clinic facility.


         The acquisition of the Portalook assets, along with the changes made to
the Company's capitalization through the pending divestiture of the Jacksonville
clinic were the significant events of 2001 for the Company.

Transaction Services

         The Company  acquired the  Portalook  assets with the intent to provide
transaction  services,  ranging  from  credit  card  transactions  to  insurance
eligibility  transactions,  to physicians'  practices.  The Internet Transaction
Device (ITD)  technology  that was acquired will serve as the key technology for
processing  transactions.  Additional  capital  will  be  required  for  further
development  of this product and service  offering,  but the  acquisition of the
technology from Portalook will provide the first prototype or "beta" offering of
transaction services involving Internet connectivity via low-cost appliance.

         As of the writing of this  document,  the Company was pursuing  several
healthcare  customers  with the intent of leveraging  this platform to connect a
variety of healthcare-related businesses to the Internet to conduct transactions
relevant  to  their  respective  businesses.  The  transactions  seen as  viable
candidates for this platform include:  insurance verification,  pharmacy orders,
email, and potentially credit card transactions.

Healthcare / Practice Management Business

         The Company owned a total of three  clinics in 2001,  all of which were
located in  Florida.  Florida law permits  corporations  to own medical  clinics
unlike  several  other  states in which a  corporation  cannot own a clinic that
employs medical doctors.


                                       4
<PAGE>

         During 2001, the Company elected to consolidate  its clinic  operations
into a single facility in Jacksonville Florida. In addition, the Company planned
to  divest  of the  Jacksonville  Clinic  as it  transitioned  to a  transaction
services company. The Restructure and Settlement Agreement (previously mentioned
above) entered into among and between MBSC, Imagine, and Imagine Sub in November
of 2001  established  the timeframe and manner by which the Company would divest
of the Jacksonville Clinic.

         Management  believes that recent healthcare trends in reimbursement and
managed  care   policies   created   significant   challenges   in   maintaining
profitability  within  healthcare  clinics.  For this  reason,  the  Company has
elected  to  exit  from  this  healthcare  sector.  Management  recognizes  that
historically  approximately  90% of  revenue  has been  derived  from the clinic
business, but foresees more significant profits and longevity in the business of
transaction  processing,  where the majority of revenue is of a recurring nature
on a monthly business.  In addition,  the transaction  processing  business will
yield strong opportunities outside of the healthcare market, which MBSC has seen
as volatile.




Employees-

         The Company  currently  employs a total of  approximately  fifteen full
time  employees.  The Company  has no labor union  contracts  and  believes  its
relationship with its employees is good.

Healthcare Facilities

         JACKSONVILLE,  FLORIDA:  Formerly  three  separate  clinics  have  been
consolidated  into a  single  facility  which  provides  state  of the art  pain
management,  physical therapy, and related medical services.  The clinic is also
equipped with physical rehabilitation  equipment.  This clinic is to be divested
under the terms of the Restructure and Settlement Agreement mentioned above.


Item 2. Properties

         All premises  occupied by the Company and subsidiaries are leased.  The
Company's principal  executive office is located at Arlington,  Texas at 2225 E.
Randol  Mill  Road,  Suite  305,  Arlington,  TX 76011.  NFPM is located at 9143
Philips Highway, Suite 495, Jacksonville, Florida

Item 3. Legal Proceedings

         None

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

         For the year 2001, the Company did not conduct an annual  shareholder's
meeting.

                                     PART II

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

         The Company's common stock is traded under the symbol "MBSC" on
NASDAQ's OTC Electronic Bulletin Board. The following table sets forth the range
of high and low bid prices of the Company's common stock:


                                       5
<PAGE>
<TABLE>
<CAPTION>

BID PRICE
BY QUARTER ENDED:                           HIGH                       LOW
----------------                            ----                       ---
Year Ended 12/31/01
March, 2001                                 $.16                       $.11
June, 2001                                   .22                        .05
September, 2001                              .13                        .05
December, 2001                               .05                        .03


Year Ended 12/31/00
March, 2000                                 $.37                       $.12
June, 2000                                   .20                        .10
September, 2000                              .25                        .15
December, 2000                               .25                        .15


The Company had approximately  7,564 holders of record of its common stock as of
December  31,  2001.  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 of Financial Condition and Results
        of Operations

         The  following  is a  listing  of the  Company  and its  operating  and
discontinued subsidiaries as of December 31, 2001:

                                                Operating at                 Discontinued
                                    -------------------------------------------------------
Name of Company/Subsidiary               Location       December 31, 2001      in 2001
--------------------------          -----------------   -----------------   ---------------
<S>                                 <C>                 <C>                 <C>
MB Software Corporation (Parent)    Arlington, TX              Yes                No

Healthcare Innovations, LLC         Arlington, TX              Yes                No

N.F.P.M., LLC                       Jacksonville, FL           Yes                Yes


MB Practice Solutions, Inc.         Arlington, TX              Yes                No

eAppliance Innovations, LLC         Arlington, TX              Yes                No
</TABLE>


         The  Company   through  the   Restructure   and  Settlement   Agreement
(previously  mentioned above) has divested its self of the Jacksonville  Clinic.
Therefore,  the results of operation  summarized  below will reflect the audited
discontinued operations results.

         The  Company  will  focus  all  of  its  activity  on  the  transaction
processing  business  that the  Company  believes  to be the  market  for future
growth.

         The  following  summarizes  the  results of  operations  for the twelve
months  ended  December  31,  2001 and  December  31,  2000 of the  discontinued
operations  of  the  clinic  as  outlined  in  the  Restructure  and  Settlement
Agreement.

Medical  Activities:                              2001                   2000
--------------------------------------------------------------------------------

Income (Loss) Discontinued Operations Clinics   $143,911              ($187,586)

The  following  compares the results of  operations  for the twelve months ended
December 31, 2001 and December 31, 2000 without the clinic operations.

         The  selling,   general  and   administrative   expenses  increased  to
$1,387,964 for the twelve months ended December 31, 2001 as compared to $815,336
for the twelve months ended December 31, 2000.


                                       6
<PAGE>

         The net loss from continuing  operations  increased to ($1,643,782) for
the  twelve-month  period ended December 31, 2001, as compared to ($914,033) for
the  twelve  months  ended  December  31,  2000.  The  increase  is due to costs
associated with Portalook's transcactions.

         The Company decided after the third quarter of 2001 to move the Company
into the transaction field and committed its self to that end.

Liquidity and Capital Resources

         The Company's  continuing  operations  used cash of $723,860 during the
twelve  months ended  December 31, 2001 and  $559,614  during the twelve  months
ended  December 31,  2000.  In 2001,  the net cash amount  provided by financing
activities was $757,419.

         At December 31, 2001 and  December  31,  2000,  the Company had working
capital deficits of $2,999,606.  and $2,301,073,  respectively.  The Company has
been  working to raise  capital in an attempt to decrease  the  working  capital
through  financing  activities.  At December 31, 2001, the Company had checks in
excess  of bank  balance  of  ($23,572.00).  The  net  cash  used  in  investing
activities for 2001 was $71,011.

         The Independent  Auditor's Report for the year ending December 31, 2001
("Report"), states that the uncertainty of certain conditions raises substantial
doubt  about the  ability of the  Company to  continue  as a going  concern.  In
raising the going  concern  issue,  the Report  cites past  losses,  the working
capital  deficit  and whether  the  Company  will be able to achieve  profitable
operations. The Company believes with the additional capital it plans on raising
along with the settlement of preferred stock and restructure of debt will enable
the Company to continue until its sales and transaction  services operations are
profitable.

         The Company does not anticipate any major  equipment  purchases for the
twelve months of 2002.

         The Company did not have an annual stockholder' meeting for 2001.

Item 7. Financial Statements

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

                                                                            Page
                                                                            ----
         Report of Independent Certified Public Accounts
              Weaver and Tidwell, L.L.P.                                    F-1

         Financial Statements

                Consolidated Balance Sheets as of December 31,
                2001 and 2000                                               F-2

                Consolidated Statements of Operations for the years
                ended December 31, 2001 and 2000                            F-4

                Consolidated Statements of Changes in Shareholders' Deficit
                for theyears ended December 31, 2001 and 2000               F-6

                Consolidated Statements of Cash Flows for the
                years ended December 31, 2001 and 2000                      F-8

                Notes to Consolidated Financial Statements                  F-10

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

None.


                                       7
<PAGE>

                                    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               37          President, Director              1993

Gilbert A. Valdez            58          Chief Operating Officer          1996

Araldo A. Cossutta           77          Director                         1994

Steven W. Evans              51          Director                         1994

Robert E. Gross              57          Director                         1994

Thomas J. Kirchhofer         61          Director                         1994

Lucy J. Singleton            64          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. All directors agreed to remain until the 2002 annual
meeting.

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

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.


                                       8
<PAGE>
<TABLE>
<CAPTION>

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

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

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

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




Item 10. Executive Compensation

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

         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.



------------------------------------------------------------------------------------------
                                                                Long Term Compensation
   Name and                Annual Compensation                  ----------------------
   Principal               -------------------          Restricted   Options      All
   Position                                             Stock       /SARS         Other
                  Year    Salary($)    Bonus   Other    Awards      # shares (2)  Comp.($)
------------------------------------------------------------------------------------------
<S>               <C>     <C>          <C>     <C>      <C>         <C>           <C>

Scott A. Haire    2001    120,000       -0-     -0-       -0-           -0-         -0-
  President       2000    120,500       -0-     -0-       -0-           -0-         -0-
                  1999    140,500       -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  2001 and the  value of  unexercised  options  held by each of the  named
Executive Officers at December 31, 2001.


                                       9
<PAGE>
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------
     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/unexercisabl  exercisable/unexercisable
-------------------------------------------------------------------------------------------------------
<S>              <C>                <C>             <C>                       <C>
Scott A. Haire        -0-              N/A                3,300,000                   -0-
--------------------------------------------------------------------------------------------------------
</TABLE>



Item 11. Security Ownership of Certain Beneficial Owners and Management

         The  following  table sets forth  information  as of December 31, 2001,
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                               30,021,297 (2)                61.0%

Araldo A. Cossutta                            3,082,025                     6.0%

Steven W. Evans                               1,700,000 (3)                 3.0%

Gilbert Valdez                                  300,000 (4)                   *

Robert E. Gross                                 200,000 (5)                   *

Thomas J. Kirchhofer                            150,000 (6)                   *

R-M-S Investments, LTD.                      11,000,000                    22.0%

All Directors and Executive Officers         49,453,322                      98%
as a group(six 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 3,300,000 shares, respectively, that are presently exercisable
         by Mr. Haire.
(3)      Consists  of  200,000  shares  subject to  options  that are  presently
         exercisable by Mr. Evans.
(4)      Consists  of  300,000  shares  subject to  options  that are  presently
         exercisable by Mr. Valdez.
(5)      Consists  of  200,000  shares  subject to  options  that are  presently
         exercisable by Mr. Gross.
(6)      Consists  of  150,000  shares  subject to  options  that are  presently
         exercisable by Mr.  Kirchhofer.  . Item 12. Certain  Relationships  and
         Related Transactions


                                       10
<PAGE>

Item 13. Exhibits Reports on Form 8-K

         1.       Reports on Form 8-K - None.

         2.       Exhibits - None.

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

                                    SIGNATURE

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

                                      MB SOFTWARE CORPORATION

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

Date:  April 15, 2002



                                       11

<PAGE>

                             MB SOFTWARE CORPORATION
                                AND SUBSIDIARIES

                                FINANCIAL REPORT

                                DECEMBER 31, 2001


<PAGE>

                                 C O N T E N T S


                                                                            Page
                                                                            ----


INDEPENDENT AUDITOR'S REPORT.................................................F-1


FINANCIAL STATEMENTS

     Consolidated Balance Sheets.............................................F-2


     Consolidated Statements of Operations...................................F-4


     Consolidated Statements of
         Changes in Shareholders' Deficit....................................F-6


     Consolidated Statements of Cash Flows...................................F-8


     Notes to Consolidated Financial Statements.............................F-10



<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


Board of Directors and Shareholders
MB Software Corporation and Subsidiaries


We have  audited the  accompanying  consolidated  balance  sheets of MB Software
Corporation  and  Subsidiaries as of December 31, 2001 and 2000, and the related
consolidated  statements of operations,  changes in shareholders'  deficit,  and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
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, 2001 and 2000, and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial  statements,  the Company has  continuously  incurred losses and has a
working  capital  deficit,  all of  which  raise  substantial  doubt  about  the
company's ability to continue as a going concern.  Management's  plans in regard
to these matters are also  discussed in Note 1. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.



WEAVER AND TIDWELL, L.L.P.

Fort Worth, Texas

March 15, 2002 except as to the  information  presented in Note 14 for which the
               date is April 15, 2002




                                      F-1

<PAGE>
<TABLE>
<CAPTION>

                             MB SOFTWARE CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000



                                                           2001          2000
                                                        -----------    -----------
<S>                                                     <C>            <C>
         ASSETS

CURRENT ASSETS
     Cash                                               $      --      $    37,452
     Accounts receivables, net of allowance
        for doubtful accounts of $0 for
        both years                                            7,250          1,162
     Inventory                                              131,740           --
     Note receivable                                          2,000           --
     Prepaid expenses and other                              33,941         20,917
                                                        -----------    -----------

           Total current assets                             174,931         59,531

PROPERTY AND EQUIPMENT, NET                                  83,654          7,852

OTHER ASSETS
     Software license, net                                  368,780           --
     Notes receivable - related parties                     361,789        350,000
     Employee advances                                         --           90,000
                                                        -----------    -----------

                                                            730,569        440,000
ASSETS OF DISCONTINUED
     OPERATIONS                                             474,574        628,968
                                                        -----------    -----------

TOTAL ASSETS                                            $ 1,463,728    $ 1,136,351
                                                        ===========    ===========

The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-2

<PAGE>


                             MB SOFTWARE CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000



                                                            2001           2000
                                                        -----------    -----------
         LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
     Notes payable                                      $ 2,099,035    $ 1,658,870
     Current maturities of capital leases                      --            1,494
     Checks in excess of bank balance                        23,572           --
     Accounts payable                                       326,112        270,081
     Accrued liabilities                                    725,818        430,159
                                                        -----------    -----------

           Total current liabilities                      3,174,537      2,360,604

LIABILITIES OF DISCONTINUED OPERATIONS                      385,472        154,683
                                                        -----------    -----------

           Total liabilities                              3,560,009      2,515,287

SHAREHOLDERS' DEFICIT
     Series A senior cumulative convertible
        participating preferred stock; $10 par value;
        340,000 shares issued and outstanding in
        2001 and 2000; dividends in arrears
        2001 $1,065,644, 2000 $725,644                    3,400,000      3,400,000
     Undesignated preferred stock; $10 par value;
        660,000 shares authorized; none issued                 --             --
     Common stock;  $.001 par value; 150,000,000
        shares authorized; 73,400,000 and 70,300,000
        shares issued in 2001 and 2000, respectively         73,400         70,300
     Additional paid-in capital                           2,011,391      1,434,431
     Accumulated deficit                                 (7,569,033)    (6,039,162)
     Deferred license and consulting cost, net                 --         (232,466)
                                                        -----------    -----------

                                                         (2,084,242)    (1,366,897)
     Treasury stock, at cost; 407,446 shares                (12,039)       (12,039)
                                                        -----------    -----------

           Total shareholders' deficit                   (2,096,281)    (1,378,936)
                                                        -----------    -----------

TOTAL LIABILITIES AND
     SHAREHOLDERS' DEFICIT                              $ 1,463,728    $ 1,136,351
                                                        ===========    ===========
</TABLE>

The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-3

<PAGE>

                             MB SOFTWARE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000



                                                         2001           2000
                                                     -----------    -----------
REVENUES
     Product sales                                   $    20,959    $      --
     Other                                                  --            4,589
                                                     -----------    -----------

           Total revenues                                 20,959          4,589

COST OF REVENUES
     Cost of product sales                                19,949           --
     Other                                                  --           13,736
                                                     -----------    -----------

           Gross profit (loss)                             1,010         (9,147)
                                                     -----------    -----------

OPERATING EXPENSES
     Selling, general & administrative                 1,387,964        815,336
     Depreciation and amortization                        61,120          2,212
                                                     -----------    -----------

           Total operating expenses                    1,449,084        817,548
                                                     -----------    -----------
           Loss from operations                       (1,448,074)      (826,695)

OTHER INCOME (EXPENSE)
     Interest expense                                   (328,330)      (131,695)
     Interest income                                      28,486         44,357
                                                     -----------    -----------

           Total other income (expense)                 (299,844)       (87,338)

           Loss before benefit for income taxes       (1,747,918)      (914,033)

BENEFIT FOR INCOME TAXES                                 (74,136)          --
                                                     -----------    -----------

           Loss from continuing operations            (1,673,782)      (914,033)

The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-4

<PAGE>

                             MB SOFTWARE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (continued)



                                                        2001            2000
                                                   ------------    ------------
DISCONTINUED OPERATIONS
        Income (loss) from operations, net of tax
           effect in 2001 of $74,136 and
           in 2000 of $0                                143,911        (187,586)
                                                   ------------    ------------

        Net loss                                   ($ 1,529,871)   ($ 1,101,619)
                                                   ============    ============


Loss from continuing operations                    ($ 1,673,782)   ($   914,033)

Plus cumulative preferred stock dividends              (340,000)       (340,000)
                                                   ------------    ------------

        Loss available to common shareholders      ($ 2,013,782)   ($ 1,254,033)
                                                   ============    ============

BASIC AND DILUTED LOSS
     PER SHARE
        Continuing operations                      ($      0.03)   ($      0.01)
        Discontinued operations                           (0.00)          (0.00)
                                                   ------------    ------------

                                                   ($      0.03)   ($      0.01)
                                                   ============    ============

WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING                              71,234,246      69,275,833
                                                   ============    ============

The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-4

<PAGE>
<TABLE>
<CAPTION>

                             MB SOFTWARE CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
                     YEARS ENDED DECEMBER 31, 2001 AND 2000



                                      Series A
                                    Preferred Stock              Common Stock
                                -------------------------   -------------------------
                                   Shares        Amount        Shares       Amount
                                -----------   -----------   -----------   -----------
<S>                             <C>           <C>           <C>           <C>
BALANCE,
    DECEMBER 31, 1999               340,000   $ 3,400,000    69,200,000   $    69,200
      Stock issued for
        license and con-
        sulting agreement              --            --       1,100,000         1,100
      Realization of deferred
        license and
        consulting cost                --            --            --            --
      Capital contribution
        from sale of
        subsidiary                     --            --            --            --
      Net loss                         --            --            --            --
                                -----------   -----------   -----------   -----------

BALANCE,
    DECEMBER 31, 2000               340,000     3,400,000    70,300,000        70,300
      Stock issued for
        consulting agreement           --            --         100,000           100
      Stock issued for assets          --            --       3,000,000         3,000
      Impairment of deferred
        license and
        consulting cost                --            --            --            --
      Warrants attached to
        issuance of debt            127,310
      Warrants issued
        for compensation             44,000
      Net loss                         --            --            --            --
                                -----------   -----------   -----------   -----------

BALANCE,
    DECEMBER 31, 2001               340,000   $ 3,400,000    73,400,000   $    73,400
                                ===========   ===========   ===========   ===========

The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-6
<PAGE>

                            MB SOFTWARE CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                                  (continued)


                                Additional
                                  Paid-in     Accumulated    Deferred      Treasury
                                  Capital       Deficit       Service        Stock
                                -----------   -----------   -----------   -----------
BALANCE,
    DECEMBER 31, 1999           $ 1,103,005   ($4,937,543)  $      --     ($   12,039)
      Stock issued for
        license and con-
        sulting agreement           252,050          --        (253,150)         --
      Realization of deferred
        license and
        consulting cost                --            --          20,684          --
      Capital contribution
        from sale of
        subsidiary                   79,376          --            --            --
      Net loss                         --      (1,101,619)         --            --
                                -----------   -----------   -----------   -----------

BALANCE,
    DECEMBER 31, 2000             1,434,431    (6,039,162)     (232,466)      (12,039)
      Stock issued for
        consulting agreement         18,650          --            --            --
      Stock issued for assets       387,000          --            --            --
      Impairment of deferred
        license and
        consulting cost                --            --         232,466          --
      Warrants attached to
        issuance of debt
      Warrants issued
        for compensation
      Net loss                         --      (1,529,871)         --            --
                                -----------   -----------   -----------   -----------

BALANCE,
    DECEMBER 31, 2001           $ 2,011,391   ($7,569,033)  $      --     ($   12,039)
                                ===========   ===========   ===========   ===========
</TABLE>


The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-7

<PAGE>
<TABLE>
<CAPTION>

                             MB SOFTWARE CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000



                                                           2001           2000
                                                       -----------    -----------
<S>                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Loss from continuing operations                   ($1,673,782)   ($  914,033)

     Adjustments to reconcile loss
        from continuing operations to net cash
        used in operating activities:

        Accretion of debt                                   58,562           --
        Impairment allowance                                  --          192,771
        Depreciation and amortization                       61,120          3,181
        Deferred license and
           consulting costs recognized                     232,466         20,684
        Stock issued for consulting                         18,750           --
        Warrants issued for compensation                    44,000           --
        Changes in assets and liabilities:
           Accounts receivable                              (6,088)        38,910
           Inventory                                         8,266           --
           Prepaid expenses and other                      (13,024)       (21,850)
           Checks in excess of bank balance                 23,572           --
           Accounts payable and accrued liabilities        137,690        153,597
           Employee advances                                90,000        (90,000)
                                                       -----------    -----------

              Net cash used in continuing operations    (1,018,468)      (616,740)

              Net cash provided by
                 discontinued operations                   294,608         57,126
                                                       -----------    -----------

              Net cash used in operating activities       (723,860)      (559,614)


CASH FLOWS FROM INVESTING ACTIVITIES
     Loans made on notes
        receivable to related party                        (22,789)       (15,050)
     Capital expenditures                                  (48,222)          --
                                                       -----------    -----------

              Net cash used in investing activities        (71,011)       (15,050)


The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                      F-8
<PAGE>


                             MB SOFTWARE CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                                   (continued)



                                                            2001         2000
                                                       -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Principal payments on borrowings                     (239,337)      (300,400)
     Principal payments on capital leases                   (1,494)       (16,559)
     Proceeds from loans and warrants                      998,250        905,200
                                                       -----------    -----------
           Net cash provided by financing activities       757,419        588,241
                                                       -----------    -----------

           Net increase (decrease) in cash                 (37,452)        13,577

CASH AND CASH EQUIVALENTS,
     beginning of year                                      37,452         23,875
                                                       -----------    -----------

CASH AND CASH EQUIVALENTS,
     end of year                                       $      --      $    37,452
                                                       ===========    ===========


SUPPLEMENTAL DISCLOSURES
     OF CASH FLOWS INFORMATION
        Cash paid during the year for:
           Interest                                    $   169,996    $    58,998
                                                       ===========    ===========

           Taxes                                       $      --      $       472
                                                       ===========    ===========


SUPPLEMENTAL SCHEDULE OF NONCASH
     INVESTING AND FINANCING ACTIVITIES
        Assets disposed in settlement of debt          $      --      $    26,434
        Debt settled by disposal of assets                    --         (105,811)
        Stock issued for license
           agreement and consulting                           --          253,150
        Note receivable, impaired                             --          177,721
        Stock issued for assets                            390,000           --
        Accounts payable and accrued liabilities
           assumed in assets acquistion                    214,000           --
</TABLE>

The Notes to Consolidated Financial Statements
are an intergral part of these statements.
                                       F-9

<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1.  ORGANIZATION AND SUMMARY OF
         SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation and Presentation

          The  consolidated  financial  statements  include the  accounts of the
          Company and its wholly-owned subsidiaries, Healthcare Innovations, LLC
          (HI),  North  Florida  Physical  Medicine,  LLC  (NFPM),  MB  Practice
          Solutions, LLC. (MBPS) and eAppliance Innovations, LLC.

          All  intercompany  transactions and balances have been eliminated upon
          consolidation.

     Nature of Operations

          MB Software  Corporation (the "Company") was incorporated in 1982. The
          focus of the Company has been to provide  practice and cash management
          services to physicians, dentists and chiropractors.

          Effective  September  1,  2000,  the  Company  sold its South  Florida
          Medical Center Clinic to a company wholly owned by two shareholders of
          the  Company.  The  sale  was  accomplished  by an  assumption  of net
          liabilities by the related company of approximately  $79,000.  The net
          gain on the transaction was recorded as a contribution to capital.

          In July of 2001,  the  Company  acquired  certain  assets and  assumed
          certain  liabilities of Portalook,  a California based company,  which
          developed   proprietary   technology  for  use  in  enabling  Internet
          Transaction  Devices  (ITD's)  to be  used as  transaction  processing
          devices in the field.

          On  November 5, 2001,  the  Company  entered  into a  restructure  and
          settlement  agreement  with  Imagine   Investments,   Inc.  (Imagine).
          Pursuant to the agreement,  which was approved by the  shareholders on
          February 11, 2002,  the Company will transfer its interest in NFPM and
          give common stock in exchange  for  settlement  of debt and  preferred
          stock. As a result of this agreement,  certain assets, liabilities and
          operations of NFPM are presented as discontinued.

          The  Company  will  now  focus  on the  sale  and  development  of the
          Company's  internet   transaction   devices  (ITD's)  and  transaction
          services  which  range from  credit  card  transactions  to  insurance
          eligibility   transactions  for  the  medical  and  potentially  other
          professions.

     Going Concern Basis

          The financial  statements have been prepared on a going concern basis,
          which   contemplates   realization   of  assets  and   liquidation  of
          liabilities  in the  ordinary  course of  business.  The  Company  has
          continuously incurred losses from operations and has a working capital
          deficit.  The  appropriateness  of using  the going  concern  basis is
          dependent upon the Company's ability to obtain additional financing or
          equity  capital and,  ultimately,  to achieve  profitable  operations.
          These conditions raise substantial doubt about its ability to continue
          as a going  concern.  The  financial  statements  do not  include  any
          adjustments that might result from the outcome of this uncertainty.

                                      F-10

<PAGE>

NOTE 1.   ORGANIZATION AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES - continued

     Going Concern Basis - continued

          Management plans to raise capital through debt private  placement with
          attached equity  instruments.  Management believes that the additional
          capital coupled with the settlement of preferred stock and restructure
          of debt will enable the  Company to  continue  until the ITD sales and
          transaction services operations become profitable.

     Use of Estimates and Assumptions

          Management  uses  estimates  and  assumptions  in preparing  financial
          statements in accordance with accounting principles generally accepted
          in the United  States of  America.  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.

     Inventory

          Inventory  consists  of ITD's  hardware  recorded  at cost,  first-in,
          first-out basis.

     Revenue Recognition

          The Company's  operating revenue currently consists of ITD sales which
          are recognized upon shipment to customers.  Revenues from discontinued
          operations consist of sales of the Company's medical clinic fees which
          are recognized at the time the medical services are rendered (see Note
          11 Discontinued Operations).

     Contractual Adjustments and Contractual Allowances

          Medical  clinic  fees are  reported  net of  contractual  adjustments.
          Contractual  adjustments are adjustments  made to gross medical clinic
          fees for the amounts  contractually not billable to third party payors
          and/or adjustments for uncollectible charges.  Management periodically
          analyzes  these  adjustments  and adjusts the  allowances for doubtful
          accounts  and   contractual   allowances   accordingly.   Management's
          adjustments  for  allowance  for  doubtful  accounts  and  contractual
          adjustments  require   significant   estimates  and  it  is  at  least
          reasonably  possible  that these  estimates  could "change in the near
          term" (see Note 11).

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

                                      F-11


<PAGE>


NOTE 1.   ORGANIZATION AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES - continued

     Earnings (Loss) Per Common Share and Common Share Equivalents

          Basic  earnings  (loss)  per  share is based on the  weighted  average
          number of  shares  of common  stock  outstanding  during  the  period.
          Potential  common stock  consists of convertible  preferred  stock and
          stock  options.  In 2001 and  2000,  the  potential  common  stock was
          considered anti-dilutive due to the loss from continuing operations.

     Cash and Cash Equivalents

          The Company  considers all cash on hand and in banks,  demand and time
          deposits,  and all other  highly  liquid  investments  purchased  with
          maturities of three months or less to be cash equivalents.

     Stock Based Compensation

          The  Company  has  elected  under  the  provisions  of FASB  No.  123,
          Accounting  for Stock  Compensation  to account  for its  compensatory
          stock  option plan using the  intrinsic  method as  prescribed  by APB
          Opinion No. 25, Accounting for Stock Issued to Employees.

     Business and Credit Risk Concentrations

          The  Company's  ITD sales are to  customers  in the  United  States of
          America.  The Company's  medical clinics provide  services to patients
          located in Florida. None of the patients receivables were individually
          significant.

          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 from continuing  operations for December 31, 2001
          and 2000 was $0. See Note 13 for discontinued operations.

          The  Company  maintains  its  cash in bank  deposit  accounts  at high
          quality  financial  institutions.  The  balances at times,  may exceed
          Federally insured limits.

     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.

                                      F-12

<PAGE>

NOTE 1.   ORGANIZATION AND SUMMARY OF
          SIGNIFICANT ACCOUNTING POLICIES - continued

     Software Development

          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  greater  of the  ratio  that
          current gross  revenues bear to the current and future gross  revenues
          or amortized using the straight line basis over the estimated economic
          life of the software.

          Included  in  other  assets  is  a  software  license  purchased  from
          Portalook of $420,000, net of accumulated amortization of $51,220.

          Software development costs incurred by the Company for the development
          of the PatentMed 2000 internet  appliance of $243,963 were expensed in
          2001. No software development costs were incurred in 2000.

     Long-lived Assets

          Long-lived assets and certain identifiable  intangibles to be held and
          used by the Company are reviewed  for  impairment  whenever  events or
          changes in circumstances indicate that the carrying amount of an asset
          may  not  be  recoverable.  The  Company  continuously  evaluates  the
          recoverability of its long-lived assets based on estimated future cash
          flows and the estimated  liquidation value of such long-lived  assets,
          and  provides  for  impairment  if such  undiscounted  cash  flows are
          insufficient to recover the carrying amount of the long-lived assets.

     Financial Instruments

          Financial  instruments  of  the  Company  consist  of  cash,  accounts
          receivable,  notes receivable,  accounts payable,  notes payable,  and
          other liabilities.  Recorded values of cash,  receivables and payables
          are carried at amounts that approximate fair values.

     Recently Issued Accounting Standards

          In June  2001,  the FASB  issued  SFAS No.  142,  Goodwill  and  Other
          Intangible  Assets.  SFAS  142  addresses  financial   accounting  and
          reporting  for  acquired  goodwill  and other  intangible  assets  and
          supersedes  Accounting  Principles  Board  Opinion  No.17,  Intangible
          Assets.  This  statement  addresses  how  intangible  assets  that are
          acquired  individually  or with a group of other assets (but not those
          acquired  in a  business  combination)  should  be  accounted  for  in
          financial  statements upon their acquisition.  SFAS 142 also addresses
          how goodwill and other intangible assets should be accounted for after
          they have been initially recognized in the financial statements.  SFAS
          142  discontinues  the practice of amortizing  goodwill and indefinite
          lived intangible assets and initiates an annual review for impairment.
          Impairment  would be examined more  frequently  if certain  indicators
          were  encountered.   The  Company  is  currently  in  the  process  of
          finalizing   the   determination   of  the  impact  of  the  new  FASB

                                      F-13

<PAGE>


NOTE 1.   ORGANIZATION AND SUMMARY OF
              SIGNIFICANT ACCOUNTING POLICIES - continued

     Recently Issued Accounting Standards - continued

          pronouncement  concerning  goodwill and other intangible  assets.  The
          provisions of this statement are required to be applied  starting with
          fiscal years beginning after December 15, 2001.


          SFAS No. 143,  Accounting for Asset  Retirement  Obligations  was also
          issued in June 2001. This statement addresses financial accounting and
          reporting for  obligations  associated with the retirement of tangible
          long-lived  assets and the associated asset retirement costs. SFAS 143
          is  effective  for  financial   statements  issued  for  fiscal  years
          beginning  after June 15,  2002.  Adoption  of this  statement  is not
          expected  to have a  material  effect  on the  consolidated  financial
          statements.

          In August  2001,  the FASB  issued SFAS No.  144,  Accounting  for the
          Impairment  or  Disposal  of  Long-Lived  Assets.  SFAS 144  addresses
          financial  accounting  and reporting for the impairment or disposal of
          long-lived assets. This statement  supersedes SFAS No. 121, Accounting
          for the Impairment of Long-Lived  Assets and for Long-Lived  Assets to
          be Disposed of, and the  accounting  and  reporting  provisions of APB
          Opinion  No. 30,  Reporting  the Results of  Operations-Reporting  the
          Effects of  Disposal of a Segment of a  Business,  and  Extraordinary,
          Unusual and Infrequently  Occurring Events and  Transactions,  for the
          Disposal  of a Segment of a  Business.  The Company as opted for early
          adoption of this statement effective January 1, 2001. Adoption of this
          statement did not have a material effect on the consolidated financial
          statements for the year ended December 31, 2001.


NOTE 2.   PROPERTY AND EQUIPMENT

     Property and  equipment  consists of the following at December 31, 2001 and
     2000:

                                                              2001       2000
                                                             --------   --------

      Office equipment                                       $ 15,342   $ 13,618
      Computer equipment                                       92,618      8,641
      Furniture and fixtures                                      747        747
                                                             --------   --------

                                                              108,707     23,006
      Less accumulated depreciation and amortization           25,053     15,154
                                                             --------   --------

                                                             $ 83,654   $  7,852
                                                             ========   ========

     Depreciation expense was $9,900 and $3,181 for the years ended December 31,
     2001 and 2000, respectively. See Note 13 for discontinued operations.


                                      F-14

<PAGE>
<TABLE>
<CAPTION>


NOTE 3.   NOTES PAYABLE

     Notes payable consist of the following as of December 31:

                                                                2001         2000
                                                             ----------   ----------
<S>                                                          <C>          <C>
     Prime plus 1% line of credit with a bank,
     due on demand,  secured  by accounts receivable         $     --     $  140,070

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

     10% note payable to a company  related  through
     dcommon  ownership, ue on demand, unsecured                113,500      100,000

     8% note payable to a  shareholder,  due July 1, 2001,
     unsecured - related party                                  300,000      300,000

     8% note payable to a shareholder, due July 1, 2001,
     unsecured                                                   12,000       12,000


     10% note payable to an investor, due July 1, 2001,
     related party                                              500,000      500,000


     10% note payable to a shareholder, due
     December 31, 2001, unsecured - related party               695,282      454,800

     15% note payable to a financing entity, due
     December 15, 2000, unsecured                               150,000      150,000

     10% notes payable to shareholders  or companies
     related by common ownership, due on demand,
     unsecured                                                   85,000         --

     12% to 10% notes  payable to  shareholders,  due from
     December 1, 2001 to February 26, 2002, unsecured           205,253         --

     12% notes payable to companies  related by common
     ownership,  due on demand, unsecured                        36,000         --
                                                             ----------   ----------

                                                             $2,099,035   $1,658,870
                                                             ==========   ==========
</TABLE>


     See Note 13 for discontinued operations.


NOTE 4.   PREFERRED STOCK

     The Series A Senior Cumulative  Convertible  Participating  Preferred Stock
     ("Series A Stock") is entitled to receive  cash  dividends  of $1 per share
     per annum accruing from the date of issuance. Such dividends are cumulative
     and must be paid before any dividends can be paid on the common stock.  The


                                      F-15

<PAGE>

NOTE 4.   PREFERRED STOCK - continued

     Series A Stock is  convertible  into  common  stock,  at the  option of the
     holders,  into a maximum of 29,267,324 shares of common stock upon: (a) the
     sale of  substantially  all of the assets of the  Company;  (b) a change in
     control of the Company;  (c) the dissolution of the Company; or (d) October
     1, 2000.  If the Series A Stock is not  converted  into  common  stock,  it
     becomes  redeemable  at the option of the holder any time after  October 1,
     2000 at a  redemption  price of $10 per share.  Should the Company  fail to
     redeem  any share of the Series A Stock  after a  redemption  request,  the
     Series A  stockholders  shall  have the  right to elect a  majority  of the
     Company's  board of  directors  and the Company  shall pay  interest on the
     redemption price at the rate of prime plus 5% until actually  redeemed.  At
     December 31, 2001 and 2000,  dividends  in arrears on  preferred  stock was
     $1,065,644 and $725,644,  respectively. See Note 13 Discontinued Operations
     for description of restructure and settlement agreement.


NOTE 5.   INCOME TAXES

     The components of tax expense (benefit) are as follows:
                                                            2001         2000
                                                        ----------   ----------

     Current                                            ($  74,136)  $     --
     Deferred                                                 --     (     --  )
                                                        ----------   ----------

                                                        ($  74,136)  ($    --  )
                                                        ==========   ==========

     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 2001 and 2000 is as follows:

                                                           2001         2000
                                                        ----------   ----------

     Expected federal income tax benefit                ($ 520,156)  ($ 374,550)
     State income taxes                                       --           --
     Valuation allowance and other                         446,020      374,550
     Utilization of net operating loss                  (     --  )  (     --  )
                                                        ----------   ----------

                                                        ($  74,136)  ($    --  )
                                                        ==========   ==========

     Deferred tax assets and liabilities as of December 31, 2001 and 2000 are as
     follows:

                                                          2001         2000
                                                        ----------   ----------

     Current deferred tax asset                         $  452,651   $  380,334
     Valuation allowance for
          current deferred tax asset                      (452,651)    (380,334)
                                                        ----------   ----------

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

     Non-current deferred tax asset                     $2,521,426   $2,276,255
     Valuation allowance for
          non-current deferred tax asset                (2,521,426)  (2,276,255)
                                                        ----------   ----------

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

                                      F-16
<PAGE>


NOTE 5.   INCOME TAXES - continued

     At December 31, 2001,  the current  deferred tax asset results from reserve
     for accounts  receivable  which is not  deductible  for tax purposes  until
     actually  written off. The non-current  deferred tax asset results from 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. The net change in the valuation allowance for 2001 and 2000
     was $317,488 and $867,558, respectively.

     MB generated  net  operating  losses for  financial  reporting  and Federal
     income tax reporting  prior to its  reorganization  in 1993. As of December
     31,  2001,  subject to  limitations  under  Internal  Revenue  Code ss.382,
     approximately  $469,000 of these net operating losses are available for use
     after the reorganization.  These net operating losses expire in 2008 if not
     previously  utilized.  The net operating loss carry forward at December 31,
     2001 is  approximately  $7,416,000 and will begin to expire in 2008, if not
     previously utilized.


NOTE 6.   COMMITMENTS

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

            Year Ended
           December 31,
           ------------

              2002                                                   $   228,119
              2003                                                        61,004
                                                                     -----------
                                                                     $   289,123
                                                                     ===========

     Lease and rent expense under  non-cancelable  operating leases for 2001 and
     2000 were $299,818 and $394,449, respectively.


NOTE   7.   LEGAL PROCEEDINGS

     Effective April 2, 2000, the Company settled  litigation  pertaining to the
     Company,  Scott A. Haire and MB Healthcare  Management,  Inc.  ("MBHM"),  a
     former  Company  subsidiary.  MBHM  merged  with  a  corporation,   and  in
     connection  with the  transaction,  MBHM filed suit against the corporation
     and related  individuals.  The corporation and related  individuals filed a
     counterclaim  against MBHM, the Company, and Scott A. Haire. As part of the
     settlement,  all  outstanding  shares of MBHM were  conveyed  to one of the
     related individuals.  In exchange,  the Company received a cash payment and
     return of  Company  stock that was  transferred  in  settlement  of related
     liabilities.

     In addition, the Company is involved in various lawsuits and claims arising
     in the normal course of business. Management believes it has valid defenses
     in these  cases and is  defending  them  vigorously.  While the  results of
     litigation cannot be predicted with certainty, management believes adequate
     reserves  have been  provided  for claims  that have at least a  reasonable
     possibility  for loss and has not  provided a reserve on those for which an
     adverse outcome is remote.

                                      F-17
<PAGE>
<TABLE>
<CAPTION>

NOTE 8.   STOCK OPTIONS

     Effective May 5, 1994, the Board of Directors  approved an Incentive  Stock
     Option Plan ("Plan") for key executives and employees. A summary of changes
     in the Company's  incentive  stock options  issued under the Plan and other
     compensatory options follows:

                                                                           Other                Combined
                                      Plan Options                 Compensatory Options           Total
                               ----------------------------    ----------------------------    ------------
                                                 Weighted                        Weighted
                                                 Average                         Average
                                                 Exercise                        Exercise
                                  Options          Price          Options          Price          Options
                               ------------    ------------    ------------    ------------    ------------
<S>                            <C>             <C>             <C>             <C>             <C>
     Outstanding at 12/31/99      1,550,000    $        .09       3,450,000    $        .22      5,000,000

     Granted                           --               --             --               --            --
     Exercised                         --               --             --               --            --
     Forfeited                     (500,000)            .09    (  3,450,000)            .22   (  3,950,000)
                               ------------                    ------------                   ------------

     Outstanding at 12/31/00      1,050,000             .09            --               --       1,050,000

     Granted                           --               --        5,200,000             .05      5,200,000
     Exercised                         --               --             --               --            --
     Forfeited                     (900,000)            .09            --               --        (900,000)
                               ------------                    ------------                   ------------

     Outstanding at 12/31/01        150,000    $        .15       5,200,000    $        .05      5,350,000
                               ============                    ============                   ============
</TABLE>


     There were no options granted during 2000. All of the 5,350,000 outstanding
     stock options are fully vested at December 31, 2001.  The weighted  average
     contractual life is 2.9 years.

     The fair value of options  granted during the year is estimated on the date
     of grant  using a  Black-Sholes  option  pricing  model  and the  following
     assumptions:  a  risk-free  rate of  return of 2.76%;  a  weighted  average
     expected life of 2.25 years; expected volatility of 228%; and no dividends.
     The  weighted  average  fair  value  of  options  granted  during  2001 was
     $237,932.

     Options  granted  during 2001 were to  employees  and  directors  and, as a
     result,  no  compensation  cost  was  recognized.   Had  compensation  been
     determined  based on the fair value at the grant date,  the  Company's  net
     income would have been reduced as follows:

     Net loss
          As reported                          $   1,529,871
                                               =============

          Pro forma                            $   1,767,803
                                               =============

     Basic loss per share
          As reported                          ($       0.03)
                                               =============

          Pro forma                            ($       0.03)
                                               =============

                                      F-18

<PAGE>
<TABLE>
<CAPTION>

NOTE 9.   STOCK WARRANTS

     During 2001, the Company  issued  warrants to several  stockholders  of the
     Company.  Of the total  warrants  issued,  warrants to  purchase  2,500,000
     shares of common stock were attached to debt,  while the other 400,000 were
     compensatory.

     A summary of the Company's warrants issued and other compensatory warrants
follows:

                                     Warrants                 Other            Combined
                                  Attached to Debt     Compensatory Warrants     Total
                               ---------------------   ---------------------   ---------
                                            Weighted                Weighted
                                            Average                 Average
                                            Exercise                Exercise
                                Warrants     Price      Warrants     Price      Warrants
                               ---------   ---------   ---------   ---------   ---------
<S>                            <C>         <C>         <C>         <C>         <C>
     Outstanding at 12/31/00        --     $     --         --     $      --        --
          Granted              2,500,000         .01     400,000         .01   2,900,000
          Exercised                 --           --         --           --         --
          Forfeited                 --           --         --           --         --
                               ---------               ---------               ---------

     Outstanding at 12/31/01   2,500,000   $     .01     400,000   $     .01   2,900,000
                               =========               =========               =========
</TABLE>


     All of the  2,900,000  outstanding  stock  warrants  are  fully  vested  at
     December 31, 2001. The weighted average  remaining  contractual life is 2.4
     years.

     The fair value of warrants  granted  during the year was  estimated  on the
     date of grant using a  Black-Sholes  option pricing model and the following
     assumptions:  a  risk-free  rate of  return of 3.28%;  a  weighted  average
     expected life of 2.04 years; expected volatility of 227%; and no dividends.
     The  weighted  average  fair  value  of  options  granted  during  2001 was
     $306,568.

     Warrants granted during 2001 were to employees and directors.  Compensation
     of $44,000 was recognized for the  compensatory  warrants.  No compensation
     was recognized for the warrants  attached to debt.  Had  compensation  been
     determined  based on the fair value at the grant  date,  there  would be no
     material impact on net loss or loss per share.


NOTE 10.   BUSINESS SEGMENT INFORMATION

     As  a  result  of  the  discontinued  operations  of  NFPM,  the  Company's
     continuing operations are in one business segment.


NOTE 11.   RELATED PARTY TRANSACTIONS

     Notes  receivable from related parties consist of two notes. The first note
     is due  from  Scott A.  Haire  dated  November  1,  1999  for the  original
     principal  sum of  $350,000.  Interest  accrues  at an  annual  rate of 8%.
     Accrued interest at December 31, 2001 and 2000 was $33,455 and $19,513, and
     interest  income for each of the years then ended was  $28,000.  The second
     note is due from a company owned by Scott A. Haire dated  December 31, 2001
     for the  original  principal  sum of $11,789 with  interest  accruing at an

                                      F-19

<PAGE>

NOTE 11.   RELATED PARTY TRANSACTIONS - continued

     annual rate of 12%.  Included in employee  advance at December  31, 2000 is
     $90,000,  due directly or indirectly from an employee of the Company. As of
     December 31, 2001,  it became  apparent  the  advance,  including  interest
     accrued during 2001 of $2,667,  were impaired and, as a result,  management
     has provided an impairment allowance of $92,667.


     The Company has various  notes  payable to  shareholders  and other related
     parties.  The notes and  various  terms  are  identified  in Note 3 - Notes
     Payable.  Interest  expense  incurred under related party notes payable for
     the years ended  December  31, 2001 and 2000 were  $266,298  and  $109,444,
     respectively.  Accrued  interest at December 31, 2001 and 2000 was $386,263
     and $248,813, respectively.

     The Company  provides  limited  administrative  services to other companies
     affiliated through common ownership of Company shareholders.


NOTE 12.   ACQUISTIONS

     On July 31, 2001 the Company purchased certain assets including:  inventory
     valued at $140,000, property and equipment valued at $84,000 and a software
     license  valued at $420,000  from  Portalook,  Inc. The purchase  price was
     allocated to the assets acquired based on their relative fair values on the
     purchase date. Purchase price for the assets was cash of $40,000, a payable
     of $184,000,  assumed  liability of $30,000 and 3,000,000  shares of common
     stock  valued  at  $390,000,  based on fair  value of  common  stock on the
     purchase date.  The purchase of the Portalook  assets allows the Company to
     sell internet transaction devices and to develop supporting services.


NOTE 13.   DISCONTINUED OPERATIONS

     On November 5, 2001, the Company  entered into a restructure and settlement
     agreement  with  Imagine  Investments,  Inc.  (Imagine).  Pursuant  to  the
     agreement, which was approved by the shareholders on February 11, 2002, the
     Company is transferring  its interest in North Florida  Physical  Medicine,
     LLC (NFPM) to Imagine and Imagine is converting the  convertible  preferred
     stock and  convertible  debt to common stock and,  accordingly,  no gain or
     loss will be recorded on the  transaction.  The expected  disposal  date is
     April 1, 2002. Accordingly,  the assets,  liabilities and operating results
     of NFPM have been  segregated  from  continuing  operations and reported as
     separate line items on the balance sheets and statements of operations.

     Condensed balance sheets and operating results from discontinued operations
     are as follows:

                                                              2001       2000
                                                             --------   --------
                               Balance Sheets
     Assets:
          Accounts receivable, net and other current assets  $405,119   $520,693
          Property and equipment, net                          69,455    108,275
                                                             --------   --------

     Total assets                                            $474,574   $628,968
                                                             ========   ========

                                      F-20

<PAGE>

NOTE 13.   DISCONTINUED OPERATIONS - continued

         Liabilities
              Current maturities of long-term debt   $   250,000    $      --
              Other current liabilities                  135,472        154,683
                                                     -----------    -----------

         Total Liabilities                           $   385,472    $   154,683
                                                     ===========    ===========


                                                            2001           2000
                                                     -----------    -----------
                           Statements of Operations
         Revenues:
              Medical fees                           $ 1,914,952    $ 2,300,142
         Expenses:
              Cost of medical                           (940,568)    (1,499,250)
              Selling, general and administrative       (711,018)      (932,392)
              Depreciation                               (45,339)       (55,783)
                                                     -----------    -----------

              Income (loss) from operations              218,027       (187,283)
              Other income (expenses)                         20           (303)
                                                     -----------    -----------

         Income (loss) before taxes                      218,047       (187,586)

              Income tax provision                        74,136           --
                                                     -----------    -----------

         Income (loss) from discontinued operations  $   143,911    ($  187,586)
                                                     ===========    ===========

     The allowance for uncollectible  accounts receivable associated with NFPM's
     trade accounts  receivable at December 31, 2001 and 2000 was $1,296,284 and
     $1,338,059, respectively. Included in accounts receivable and other current
     assets is  $9,000  due from a  related  party at  December  31,  2001.  The
     accumulated  depreciation  associated with NFPM's property and equipment at
     December  31, 2001 and 2000 was $242,042 and  $196,702,  respectively.  The
     note  payable at December 31, 2001 is due to a  shareholder  on May 5, 2002
     with interest at 10%, and it is unsecured.


NOTE 14.   SUBSEQUENT EVENT

     On April 11, 2002, the Company agreed in principle to the  Restructure  and
     Settlement  Agreement with Imagine  Investments,  Inc. (Imagine)  effective
     April 1, 2002. In accordance  with the agreement,  the Company will convert
     340,000  shares of  Series A  Convertible  Preferred  Stock,  dividends  in
     arrears,  convertible  debt and accrued  interest on the debt,  all held by
     Imagine,  into 4,500,000 shares of common stock and the Company will convey
     to Imagine its ownership in NFPM. The  difference  between the par value of
     the common stock issued in the  conversion  plus the carrying value of NFPM
     and the preferred stock plus the debt will be added to paid-in capital.  No
     gain or loss on the  transaction  with the  preferred  stockholder  will be
     recognized.

                                      F-21