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, 1998

[ ] 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

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:  $3,415,925



<PAGE>


The aggregate market value of the voting stock held by  non-affiliates  computed
by  reference  to the price at which the stock was sold,  or the average bid and
asked price of such stock,  as of a specified  date within the past 60 days. The
aggregate  market value of the voting stock held by  non-affiliates  computed by
reference to the average bid and asked price of such stock, as of April 9, 1999,
is $2,551,702 based upon a per share price of $0.19.

         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,  1998,  68,691,971  shares of the  Issuer's  $.001 par value
common stock were outstanding.

Transitional Small Business Disclosure Format:

                                 Yes [ ]    No  [X]











                                       2

<PAGE>

<TABLE>

<CAPTION>


                             MB SOFTWARE CORPORATION

                                   Form 10-KSB
                      For the Year Ended December 31, 1998

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

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

ITEM 2.  PROPERTIES...........................................................................7

ITEM 3.  LEGAL PROCEEDINGS....................................................................8

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................8

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND REALATED SHAREHOLDER MATTERS...........9

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS............................................................9

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY  DATA........................................13

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE............................................................13

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS........................13

ITEM 10. EXECUTIVE COMPENSATION..............................................................14

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT..........................................................................15

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TANSACTIONS.......................................16

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................................16



</TABLE>




                                       3

<PAGE>



                                     PART 1

Item 1.  Business

         MB Software  Corporation  (the  "Company")  was  incorporated  in 1982.
During the last five years, the focus of the Company has been twofold: First, to
provide  practice  and  cash  management   services  to  physicians,   dentists,
chiropractors  and medical  billing  centers;  and  second,  to develop and sell
medical software.  In 1997, the Company began expanding its' scope of operations
by acquiring  and managing  additional  healthcare  facilities  and utilizing in
those facilities the software  products  developed by the Company.  In 1998, the
Company  continued  to  acquire  medical  clinics,  expand the  revenue  base of
existing  clinics,  advance its' medical software to comply with all regulations
and  industry  standards  and  integrate  the  software  with new  products  and
services.

Healthcare/Practice Management Business

         The Company  acquired a primary  care  facility in Austin,  Texas and a
sports  medicine  and  rehabilitation   facility  in  Fort  Worth,   Texas.  The
acquisitions were made by the Company directly through its' subsidiaries.

         On April 1,  1998,  a Company  subsidiary  acquired  the  assets of and
assumed certain  liabilities  from Med-Sport  Physical  Therapy & Rehabilitation
Center,  Inc. The Company  planned to expand its Austin  presence  into the Fort
Worth area and therefore  renamed the  rehabilitation  center Victory  Medical &
Family Care of Fort Worth.  However,  primarily as a result of  litigation  with
Victory (as defined  below),  the Company closed the Fort Worth clinic and wrote
off the investment as set forth in the December 31, 1998 financial statements.

         Also in April 1998,  the Company sold Sandy Home  Health,  Inc., a home
healthcare  facility  located  in  Utah.  The  Company  determined  that  recent
significant  changes in  governmental  reimbursement  programs  could  adversely
affect the revenue of the Utah  facility.  As a result,  the  December  31, 1998
financial  statements  reflect a $200,000 loss  pertaining to the Utah sale. The
Company is unaware of any residual Medicare  liability  pertaining to Sandy Home
Health, Inc.

         Effective   June  3,  1998,   MB  Healthcare   Management,   Inc.  ("MB
Healthcare"),  a wholly-owned Company subsidiary,  acquired by merger all of the
assets of Toth Enterprises, Inc. d/b/a Victory Medical & Family Care ("Toth I").
At the time of the merger, the common stock of Toth I was converted into 400,000
shares of the Company's common stock. As part of the transaction,  MB Healthcare
and Toth  Enterprises II, P.A. d/b/a Victory  Medical & Family Care  ("Victory")
entered into a Management  Services  Agreement  providing for the  management of
Victory by MB Healthcare.

         As of  September  1998,  the Company was  involved in  litigation  with
Victory  and  its'  principals.  Pending  the  outcome  of the  litigation,  the
investment  in Victory and unpaid  fees  earned by the  Company  pursuant to the
Management Services Agreement have been written off as reflected in the December
31, 1998 financial statements.

         Healthcare  Innovations,  LLC ("HI"), a Company subsidiary,  executed a
promissory  note  ("Note")  in the  amount of $1.4  million  in favor of Imagine
Investments,  L.L.C. ("Imagine"). Prior to the time of the transaction,  Imagine
owned 49% of the stock of HI. As part of the transaction,  Imagine,  in November
1998,  converted its ownership interest in HI and the debt evidenced by the Note
to 340,000 shares of preferred stock of the Company.

         Effective  January 30,  1999,  the Company  sold Color  Country  Health
Express,   Inc.   ("Color   Country"),   a   subsidiary   in  Utah  and  a  sole


                                       4

<PAGE>

nurse-practitioner  arrangement.  The  Company  determined  that  the  corporate
expense  associated  with Color  Country was not  justified  given the amount of
revenue generated and seasonal fluctuations in revenue.

         Nevada  Multicare,  a Company  subsidiary  consisting of a chiropractic
facility,  is continuing to expand as a result of its current marketing program.
Nevada Multicare has secured a license agreement with the Culinary Union, one of
the largest insurers in Nevada.

         The Company's  Florida  operations are expanding.  The revenue  derived
from those operations has doubled from 1997 to 1998. A third location was opened
in Jacksonville,  Florida in 1998. The Company continues to focus on the Florida
market where it is has been  successful and believes that  continued  growth and
expansion will likely continue in 1999. The Company intends to increase revenue,
reduce cost where applicable and maximize collections by utilizing the Company's
employee base in Florida.

         The Company's healthcare acquisition strategy is to target for purchase
those clinics that specialize in physical  medicine,  pain management,  physical
therapy and rehabilitation  through the use of MD's, DO's,  physical  therapists
and  chiropractors.  Typically,  acquisition  targets are distressed  businesses
having  a  strong  medical  practice  but also  having  concurrent  difficulties
associated   with  cash  management   (particularly   collections)  or  practice
management  problems.   The  Company  believes  that  it's  experience  in  cash
management,  particularly  collecting receivables from providers,  together with
utilization of the Company's software, will enable the Company to operate target
acquisitions more efficiently and therefore more profitably.

The Software Division

         The Company's  software  strategy is to refine  OneClaim(R)  Plus,  the
Company's primary software product, and integrate the software with new products
and services.

         OneClaim(R) Plus 32 bit Windows  95/98/NT  Medical Practice  Management
Software  Package was  developed  for the  healthcare  industry and is fully Y2K
compliant.  The software  offers billing and accounting  features and customized
reporting  capability  and  information  management  functions to accelerate and
monitor the growth of a practice. While maintaining and streamlining billing and
accounting  functions,  OneClaim(R)  Plus  utilizes  an  integrated  approach to
electronic claims filing and electronic statement processing.  The Company plans
to heavily  promote these features in the wake of recent  mandates by the Health
Care Financing  Administration  ("HCFA") for the  standardization  of electronic
claims processing for all insurance companies.

         Prior  to   January   1998,   the   Company   maintained   a   business
opportunity-marketing  program  with  a  distribution  base  of  resellers  that
marketed  and  sold  the  Company's   OneClaim(R)  Plus  product.  The  business
opportunity-marketing  program was sold in January 1998. The Company now engages
in direct  sales of the  OneClaim(R)  Plus  practice  management  software via a
network of strategic alliances with professional organizations.

         In July 1998,  the  Company's  technology  division  was  relocated  to
corporate headquarters in Arlington, Texas. The technology division is comprised
of both the development and customer support departments.  This move enabled the
Company  to  further  strengthen  its  relationship  with  and  control  of  the
day-to-day operations of these two crucial areas.

         Perhaps the most important aspect of the Company's software division is
the  Company's  plan to promote two new  products  that the  Company  intends to
integrate with  OneClaim(R)  Plus.  The Company  believes that  integrating  the
existing  software  with those  products  will  afford new  alternatives  to the
healthcare industry (see below for New Product Development).

                                       5

<PAGE>

       

Relationship  between  the  Software  Division  and the  Healthcare/Practice
Management Business

         The Company  utilizes its own practice  management  software in its own
practice management  businesses.  This means that the Company's  development and
support  departments  have  direct  access to their own user base for  immediate
feedback on enhancements  and for beta testing.  Implementing  OneClaim(R)  Plus
software in each of the clinic locations has provided valuable  information that
has contributed greatly to the foundation for new products.

Industry Overview

         The Health Care Financing  Administration (HCFA) has estimated that the
nation's  total  spending  for health care is  projected  to increase  from $1.0
trillion in 1996 to $2.1  trillion in 2007,  averaging  annual  increases of 6.8
percent.  Over this period, health spending as a share of gross domestic product
(GDP) is estimated to increase from 13.6 percent to 16.6 percent.

         To reduce health care expenditures,  governmental and other payors have
adopted certain cost containment initiatives. The initiatives have resulted in a
shift from traditional  fee-for-service  provider  reimbursement to a variety of
managed care arrangements,  including  prospective  payment systems,  discounted
fees-for-services  and  fully  capitated  plans  whereby  providers  assume  the
financial  risks related to service  utilization  for a defined group of covered
members and services.

         Patterns of growth and reduction  differ  substantially  depending upon
the type of services.  Hospital growth is projected to lag  increasingly  behind
growth in physician  and other  professional  services.  The trend away from the
in-patient  hospital  setting towards  ambulatory care settings is reinforced by
the movement of Medicare  beneficiaries into managed care. Other  cost-effective
settings include outpatient surgery centers,  in-office  laboratory services and
similar outpatient services.

         As a result of the reimbursement reductions,  individual physicians and
small group practices are increasingly consolidating, either by affiliating with
physician  practice  managements or by forming physician networks or independent
practice associations. However, numerous physician practice management companies
have recently experienced significant financial difficulties.

         The  cost-containment  initiatives have resulted in decreased physician
practice profitability while demands for clinical documentation, including cost,
quality and utilization data, have increased physicians'  administrative duties.
Over seven hundred thousand physicians are responsible for filing  approximately
five  billion  insurance  claims  annually  to more than two  hundred  different
insurance companies.  These insurance companies require utilization of more than
forty  different  claim-forms  and  communication  with more  than ten  thousand
different  locations.  Many  physician  practices  currently  lack the  software
necessary to compete in this evolving health care industry.

         However,  because of demands under the healthcare reimbursement system,
physicians are becoming  increasingly  aware of the benefits of  computerization
and  electronic  data  submission.  This has  contributed  to the  creation of a
medical claim processing market with an estimated value of $1.32 billion.

         The advent of computerization in the healthcare industry has opened the
door to additional technological advances. The Internet may prove to be a viable
industry vehicle. Internet connections are typically more rapid than traditional
alternatives  thereby  giving users a competitive  edge.  It is therefore likely
that there  will be a  significant  demand for  Internet  related  products  and
services in the healthcare industry.



                                       6

<PAGE>



Products

OneClaim(R) Plus Practice  Management  Software - Practice  management  software
product to be used in the healthcare  industry and developed for both MS-DOS and
Windows  95/98 NT  operating  systems. 
          o    Electronic  Claims - The electronic  processing of medical claims
               is  a  feature  available  to  the  software  users.   Electronic
               processing  reduces the insurance  payment cycle from four to six
               weeks to as little as seven days.
          o    E-Statements - The  Electronic  Statement  processing  feature of
               OneClaim(R) Plus significantly reduces the cost of processing and
               producing  monthly patient  invoices.  In approximately  the same
               amount  of time it takes  to  produce  and  mail a  single  paper
               statement,  users can gather and transmit  hundreds of electronic
               statements.

Software Support and Training services - Ongoing product support and training is
available  to all  OneClaim(R)  Plus  users. 
          o    Support  services - A user may  purchase  blocks of support  time
               that are sold in a variety of increments.
          o    Training  services  -  At  an  additional  charge,   training  is
               available  at MB's  training  center,  the  user's  office or via
               electronic classroom which is an online training media using PC's
               connected over telephone lines.
New Product Development - The Company anticipates  integrating  OneClaim(R) Plus
with these new software  products: 
          o    Internet Based Connectivity - OneClaim(R) Plus would afford users
               direct access to the World Wide Web.  Integrating Internet access
               through  practice  management  software  has to this  point  been
               extremely limited.
          o    Patient  Verification and Eligibility  Service - By utilizing the
               Internet Based Connectivity, the OneClaim(R) Plus user would then
               be  able  to  access  this  unique  service.  The  service  is  a
               verification   procedure   for  patient   insurance  and  billing
               information.  Use of the  verification  procedure  would increase
               practice  revenue  by  affording  immediate  access  to  accurate
               insurance eligibility and billing information. Employees

         The Company currently employs a total of approximately 45 full and part
time  employees.  The Company  has no labor union  contracts  and  believes  its
relationship with its employees is good.

Healthcare Facilities

         Following  is  a  description  of  each  of  the  Company's  healthcare
facilities:

         JACKSONVILLE,  FLORIDA:  The  three  clinics  located  in  Jacksonville
provide state of the art pain management,  physical therapy, and related medical
services. The clinics are equipped with physical  rehabilitation  equipment with
one clinic  having a swimming  pool  allowing for  hydrotherapy.  Combined,  the
Florida clinics have a MD, DO, physical therapist and a staff of 30.

         LAS VEGAS, NEVADA:  This  clinic  offers  chiropractic   manipulations,
diagnostic and physical therapy  services.  The staff consists of a chiropractor
and three other employees.

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. MB Software Solutions,  Inc.'s
principal office is also at the corporate  office.  NFPM, LLC is located at 9143
Philips Highway,  Suite 495,  Jacksonville,  Florida,  with a second location at
1950 Miller Street,  Orange Park,  Florida and the third location at 233 N. 10th
Street,  Jacksonville  Beach, Florida.   Nevada  Multicare  is located at 500 S.
Rancho Drive, Suite A-1, Las Vegas, Nevada.



                                       7

<PAGE>


Item 3.  Legal Proceedings

         On October 15, 1997,  the Company filed a lawsuit in the District Court
of Tarrant County, Texas against a former Company stockholder and employee.  The
lawsuit  asserted a breach of a Severance  Agreement  entered  into  between the
Company and the employee in connection with the termination of the employee by a
Company  subsidiary.  On January 6, 1998,  the  employee  filed a lawsuit in the
United States District Court for the Central District of California  against the
Company and Scott A. Haire, the Company's Chairman of the Board, Chief Executive
Officer and  President.  The lawsuit  alleged a violation of Federal  securities
laws and other  causes of  action  concerning  the  employee's  termination  and
acquisition  of common  stock of the  Company  at the time of  termination.  The
Company  believes  that the damages  sought in this case exceed $1 million.  The
Company further believes that the allegations in the former  employee's  lawsuit
are without merit. In fact, the former employee's  lawsuit has been abated until
such time as the  Company's  lawsuit is resolved.  The Company is of the opinion
that both lawsuits will be resolved within the next twelve months.

         On July 20, 1998, a  subsidiary  of the Company  filed a lawsuit in the
District Court of Tarrant County, Texas against certain individuals. Pursuant to
an Acquisition  Agreement,  the subsidiary had merged with a corporation,  which
the individuals were associated with and thereafter the subsidiary  entered into
a  Management  Agreement  with an entity  involving  the same  individuals.  The
lawsuit,  which was  amended to  include  the  entity,  asserted a breach of the
Acquisition  Agreement and  Management  Agreement  and other  various  causes of
action.  On July 28, 1998, the individuals filed a lawsuit in the District Court
of Travis County,  Texas against the Company and Scott A. Haire. The individuals
and entity also filed a counterclaim  against the subsidiary.  The Travis County
lawsuit alleged a breach of the Acquisition Agreement,  fraud in connection with
the Acquisition Agreement,  and violation of Texas securities laws. Upon request
filed by the  subsidiary,  the Travis County lawsuit was  consolidated  with the
Company's  Tarrant County lawsuit.  The Company believes that the allegations of
the entity and  individuals  are of limited merit.  The Company  anticipates the
litigation to be resolved within the next eighteen months.

         On November 6, 1998, the Company and its subsidiary  filed a lawsuit in
the District Court of Tarrant County,  Texas against a former employee of one of
the  subsidiaries.  The  lawsuit  asserted  a right to  damages  based  upon the
employee's breach of a Confidentiality Agreement entered into between the former
employee and one of the  subsidiaries.  The Company and subsidiaries  anticipate
entry of a judgment in their favor and against the former employee.  The lawsuit
should be resolved within the next twelve to eighteen months. In January,  1999,
the former  employee  filed an action  against the Company  asserting a right to
unpaid wages. The action was filed with the Department of Industrial  Relations,
Division of Labor Standards Enforcement in Santa Ana, California.

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

         On  November  12,  1998,  at the annual  meeting of  shareholders,  the
Company shareholders approved the following:

          o    Election of  directors,  including:  Robert E.  Gross,  Araldo A.
               Cossutta,  Steven W.  Evans,  Thomas J.  Kirchhofer,  Gilbert  A.
               Valdez and Scott A. Haire;
          o    an  amendment  to  the   Company's   Articles  of   Incorporation
               authorizing preferred stock and additional shares of common stock
               (see Healthcare/  Practice  Management Business for a description
               of the amendment as it pertains to Imagine Investments,  L.L.C.);
               and
          o    ratification  of  the  selection  of  the  Company's  independent
               auditors.

                                     PART II

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


                                       8

<PAGE>

         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 12/31/98
March, 1998                          $.39                      $.34
June, 1998                            .24                       .15
September, 1998                       .17                       .12
December, 1998                        .09                       .07


Year Ended 12/31/97
March, 1997                          $.19                      $.19
June, 1997                            .36                       .33
September, 1997                       .49                       .49
December, 1997                        .34                       .34

The Company had approximately  7,722 holders of record of its common stock as of
December  31,  1998.  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
<TABLE>

<CAPTION>

       The  following  is a  listing  of  the  Company  and  its  operating  and
discontinued subsidiaries as of December 31, 1998:

                                                               Operating at            Discontinued
Name of Company/Subsidiary                  Location           December 31, 1998          in 1998     
--------------------------                --------------       -----------------       ---------------
<S>                                       <C>                      <C>                       <C>

MB Software Corporation (Parent)          Arlington, TX            Yes                       -

   MB Software Solutions, Inc.            Arlington, TX            Yes                       -
       (formerly Santiago SDS, Inc.)

   Multicare Plus, Inc.                   Ft. Worth, TX            No                        Yes 

   MB Healthcare Management, Inc.         Austin, TX               No                        Yes
       (Management company for
           Victory Medical)

   MB Healthcare Corp                     Arlington, TX            No                        Yes

   Healthcare Innovations, LLC
       (100% ownership)                   Arlington, TX            Yes                       -

           N.F.P.M., LLC                  Jacksonville, FL         Yes                       -
           CFHC, LLC                      Arlington, TX            No                        -

           Oak Tree Receivables, LLC      Arlington, TX            No                        Yes
         
           Color Country Health Express   St. George, UT           No                        Yes
           Nevada Multicare, Inc.         Las Vegas, NV            Yes                      

           Sandy Home Health Care, LLC    St. George, UT           No                        Yes 

</TABLE>

                                       9

<PAGE>


       In  the  fourth  quarter  of  1998,  the  Company  focused  primarily  on
operations of its existing healthcare businesses and further  reorganization and
development of its medical practice management and software business.  As stated
in the  third  quarter  of  1998,  the  Company  continued  to  expand  existing
healthcare  clinics,  which had a positive  effect on the annual  results of the
operations of the Company.

       The Company has concluded that it is not profitable to operate healthcare
businesses pursuant to practice management agreements.  Rather, the Company must
own the practice and thus the profits,  and directly  employ the  physicians and
other necessary staff.  However, many state corporate practice of medicine laws,
other than those in Florida,  prohibit  corporations  such as the  Company  from
owning physician  practices and employing  physicians.  As a result, the Company
will in the  future  focus  on  healthcare  businesses  such  as  rehabilitation
clinics,  chiropractic  practices  and  healthcare  businesses  in the  state of
Florida. This will enable the Company to operate its businesses directly, retain
its profits and employee physicians and staff directly.

       In August 1998,  the Company  moved its medical  software  business  from
California to its Corporate office in Arlington.  The Company expects to realize
some cost savings resulting from this relocation.

       The Company did not have any material changes in its Year 2000 compliance
status from that  disclosed in the Form 10Q for the quarter ended June 30, 1998.
However,  the  Company's  OneClaim(R)  Plus  software  has  met  the  compliance
standards for Medicare and as a result,  will meet compliance  standards for the
industry as a whole.

       The Company  discontinued  the  operations  of three  clinics  located in
Texas,  including Austin,  Arlington and Fort Worth. The Company recognized from
discontinued  operations a loss of $81,025 for the 12 months ended  December 31,
1998.

       The Company sold Color Country Health Express, Inc. and Sandy Home Health
Care, LLC and reported an attendant loss of $81,025 for the year ended  December
31, 1998. As of December 31, 1998,  the records  reflect a reserve and charge to
operations of $210,863 that relates to the  Company's  sale of its  wholly-owned
subsidiary  Santiago SDS, Inc. including the subsidiary's name and certain sales
and marketing rights. An additional reserve and charge to operations of $272,538
is applicable to the  receivable  related to the sale of the dental  software in
the same subsidiary. The reserve and charge to operations is the final amount to
be so charged.

       The Company's  financial  records reflect a reversal of $119,289 for fees
and a reserve of  $199,289 of  investment  related to the  previously  disclosed
litigation  concerning Victory in Austin,  Texas. As of the date of this filing,
that litigation is still pending.

       The Company's remaining healthcare businesses consist of three clinics in
and  around  Jacksonville,  Florida,  and a  chiropractic  clinic in Las  Vegas,
Nevada.  The Florida  clinics  account for  approximately  88% of gross  medical
revenues.






                                       10

<PAGE>




 The following  summarizes the results of operations for the twelve months ended
December 31, 1998 and December 31, 1997:


                                             Twelve Months Ended
                                                 December 31
                                --------------------------------------------
Medical Activities:                    1998   %               1997    %
                                --------------------------------------------
   Gross Revenue                $  4,272,597  100.0    $  2,710,909   100.00 
   Contractual Allowance           1,638,844   38.4         564,914    20.8
                                ------------           ------------
       Net Revenues                2,633,753   61.6       2,145,995    79.2

   Cost of Revenue                 2,298,747   87.3       1,570,545    73.1
                                ------------           ------------
       Gross Profit (Loss)      $    335,006   12.7    $    575,450    26.9
                                ------------           ------------

Service Fees and Broker Income       455,661                174,622
Other                                   -                    14,923
                                ------------           ------------
       Gross Profit                  455,661           $    189,545
                                ------------           ------------

Software Activities:
   Gross Revenue                     326,511              1,502,445
   Cost of Revenue                    24,775                465,758
                                ------------           ------------
       Gross Profit                  301,736              1,036,687
                                ------------           ------------
       
       Gross Profit                1,092,403              1,801,682
    

Operating Expenses:
   Selling, General and
       Administrative-             3,551,095              2,226,810
       Bad Debt Expense
       Other General and 
          Administrative

Depreciation and Amoritization     1,502,083               358,502

Interest Expense and Other          (221,267)              (166,750)
       Income and Expenses

Gain (loss) on sale of Assets        (43,994)               269,724

Loss from Continuing Operations
       before Minority Interest $ (4,226,036)          $   (680,656)
                                ------------           ------------



Twelve Months Ended  December 31, 1998 Compared to Twelve Months Ended  December
31, 1997

       Gross medical  revenues  increased  57.61% to  $4,272,549  for the twelve
months ended  December 31, 1998 as compared to $2,710,909  for the twelve months
ended  December  31,  1997.  This  increase  is  primarily  attributable  to the
additional Florida clinic (3 in 1998, 2 in 1997).

       The  Contractual  allowance as a percentage of gross medical  revenue was
38.4% and 20.8% of gross revenue for the twelve months ending  December 31, 1998
and 1997,  respectively.  The Company has  implemented in the Florida  clinics a
comprehensive  receivables plan with the objective  collecting older receivables
and writing off the balances where  necessary.  The 1998 increase in contractual
allowance  is the  result  of  the  twofold  plan  objectives,  i.e.  collecting
receivables and writing off balances where necessary.

       The  Company  experienced  a  decrease  in  gross  profit  from   medical
activities of 41.8% to $335,006 for the twelve months ended December 31, 1998
as compared to a gross profit of $575,450 for the twelve  months ended  December
31, 1997. The decrease is primarily attributable to the cost of additional staff
in the Florida clinics, including the costs for the experienced collections team
and that of the third Florida clinic.



                                       11

<PAGE>

       On July 31,  1997,  the Company  organized  Healthcare  Innovations,  LLC
("HI")  which was  intended  to be the  acquisition  entity for  future  medical
clinics. HI was funded by a $2,000,000 capital  contribution for a 49% ownership
interest.

       In January  1998,  the  Company  sold its  business-opportunity-marketing
program.  This change  in  operations  resulted  in a 78.3%  decline in software
sales  revenue in 1998 as compared to 1997.  Due to the  Company's  reduction in
this aspect of its  software  sales  effort,  the Company  assessed the carrying
value of its  goodwill and software  development  costs  related to the software
subsidiary  and an  additional  one time $200,000  amortization  of goodwill was
recognized in 1998.

       The selling,  general  and  administrative  expenses  increased  39.4% to
$3,551,005  for the  twelve  months  ended  December  31,  1998 as  compared  to
$2,226,810  for the twelve  months  ended  December  31,  1997.  The increase is
primarily  due to the  acquisition  of the  additional  Florida  clinic  and the
attendant costs associated  therewith and bad debt expenses.


       The net loss from continuing operations  increased  to $4,226,036 for the
twelve month period ended  December 31, 1998,  as compared to $783,630  loss for
the twelve months ended  December 31, 1997. The increase in the loss is a result
of increased bad debt expense,  increased  amortization  of goodwill,  legal and
accounting fees and increased  general  operating  expenses  including a onetime
special  charge of $916,921  applicable to the expensing of goodwill  associated
with the acquisitionof the minority interest.

       The 49%  minority  interest  in the net  loss of HI for the  twelve-month
periods   ended   December  31,  1998  and  1997  was  $548,623  and   $258,908,
respectively.

Liquidity and Capital Resources

       The Company's operations used cash of $1,514,289 during the twelve months
ended December 31, 1998 and $656,617 during the twelve months ended December 31,
1997.  The 1998  operating  activities  use of cash was  financed  by  borrowing
approximately $1,700,000 from a related party.

       At  December  31, 1998 and  December  31,  1997,  the Company had working
capital deficits of $52,001 and $416,311,  respectively.  With continued efforts
from the Company the working  capital  deficit should  continue to decrease.  At
December 31, 1998, the Company had cash deposits of $188,797.  The Company plans
on increasing  its cash position by opening a clinic in south Florida that would
generate  sufficient  cash by the end of the second  quarter.  The  Company  has
arranged to lease the premises  for the South  Florida  location  with the first
lease payment being deferred until August, 1999.

       In the twelve months ended  December 31, 1998, the Company spent $111,945
cash to purchase equipment.  The Company does not anticipate any major equipment
purchases for the for the twelve (12) months of 1999.

       At the Company's annual  stockholders'  meeting on November 12, 1998, the
stockholders approved the following actions.

          o    Amendment  of the  Company's  Articles  of  Incorporation  to add
               1,000,000  shares of preferred  stock with a par value of $10 per
               share.

          o    Authorization  of the  issuance  of  340,000  shares  of Series A
               Preferred  Stock with a cumulative  dividend  rate of 10% payable
               quarterly.  The terms of the preferred stock transaction  provide
               that Series A Preferred Stock will be:

               o    Senior to all other  shares of capital  stock of the Company
                    with  respect  to  payment  of  dividends,   redemption  and
                    liquidation preference;


                                       12

<PAGE>


               o    redeemable  at the  option of the  holders at any time after
                    October 1, 2000;  if the Company is unable to redeem  shares
                    at a price of $10 per share, the holder may exercise certain
                    rights concerning management control of the Company; and

               o    convertible  into common  stock in an amount equal to 30% of
                    the total outstanding  common stock on a fully diluted basis
                    if certain triggering events occur.

          o    Amendment  of the  Articles  of  Incorporation  to  increase  the
               authorized shares of common stock of the Company from 100,000,000
               to 150,000,000 shares.

Item 7.  Financial Statements

<TABLE>

<CAPTION>

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

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

         Financial Statements

                  Consolidated Balance Sheets as of December 31, 1998 and 1997          F- 4

                  Consolidated Statements of Operations for the years ended
                  December 31, 1998 and 1997                                            F- 6

                  Consolidated Statements of Shareholder's Deficit for the
                  years ended December 31, 1998 and 1997                                F- 8

                  Consolidated Statements of Cash Flows for the
                  years ended December 31, 1998 and 1997                                F- 9

                  Notes to Consolidated Financial Statements                            F- 11

</TABLE>

Item 8.  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              34         President, Director           1993

Gilbert A. Valdez           55         Chief Operating Officer       1996

Araldo A. Cossutta          74         Director                      1994

Steven W. Evans             48         Director                      1994

Robert E. Gross             54         Director                      1994



                                       13

<PAGE>


Thomas J. Kirchhofer        58         Director                      1994

Lucy J. Singleton           61         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 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.

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.

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.












                                       14

<PAGE>

<TABLE>

<CAPTION>

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

   Scott A. Haire         1998      141,000       -0-   -0-     -0-               -0-              -0-
      President           1997      120,000       -0-   -0-     -0-               -0-              -0-
                          1996      120,000       -0-   -0-     -0-               -0-              -0-

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

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

         The following table provides information concerning option exercises in
fiscal  1998 and the  value of  unexercised  options  held by each of the  named
Executive Officers at December 31, 1998.

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

   Scott A. Haire       -0-              N/A                 2,400,000                    $240,000
-------------------------------------------------------------------------------------------------------------

</TABLE>


Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The  following  table sets forth  information  as of December 31, 1998,
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                        29,321,297 (2)                 42.0%  
                                                                            
Araldo A. Cossutta                     2,982,025                      4.0%  
                                                                            
Steven W. Evans                        1,700,000 (3)                  2.0%  
                                                                            
Gilbert Valdez                           900,000 (4)                   *    
                                                                            
Robert E. Gross                          200,000  (5)                  *    
                                                                            
Thomas J. Kirchhofer                     150,000  (6)                  *    
                                                                 


                                       15

<PAGE>


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

Cazenove                                            7,500,000              10.0%

All Directors and Executive Officers as a group     41,303,332             60.8%
(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  2,400,000  shares and  600,000  shares  subject to options  and a
     warrant, respectively, that are presently exercisable.
(3)  Consists  of  200,000   shares   subject  to  options  that  are  presently
     exercisable by Mr. Evans.
(4)  Consists  of  900,000   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 - None

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 12, 1999




                                       16



<PAGE>


                                                                            Page
                                                                            ----

Report of Independent Certified Public Accountants                           F-2

Financial Statements

    Consolidated Balance Sheets as of December 31, 1998 and 1997             F-3

    Consolidated Statements of Operations for the
        years ended December 31, 1998 and 1997                               F-5

    Consolidated Statements of Shareholders' Deficit for the
        years ended December 31, 1998 and 1997                               F-7

    Consolidated Statements of Cash Flows for the
        years ended December 31, 1998 and 1997                               F-8

    Notes to Consolidated Financial Statements                              F-10



























                                       F-1


<PAGE>




               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


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


We have  audited the  accompanying  consolidated  balance  sheets of MB Software
Corporation (a Colorado  corporation)  and  Subsidiaries as of December 31, 1998
and 1997, and the related consolidated  statements of operations,  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 audit.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  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, 1998 and 1997, and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with generally accepted accounting principles.




/s/Killman, Murrell & Company, P.C.
-----------------------------------
KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
April 9, 1999











                                       F-2


<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1998 AND 1997


                                     ASSETS

                                                       1998         1997   
                                                     ----------   ----------

CURRENT ASSETS
    Cash                                             $  188,797   $  716,735
    Medical receivables, net of allowance
        for doubtful accounts and contractual
        allowances of $1,810,887 and
        $343,662 in 1998 and 1997, respectively       1,003,126    1,604,233
    Notes receivable - current portion                   51,288      108,178
    Prepaid expenses and other                            4,200        8,548
                                                     ----------   ----------

              TOTAL CURRENT ASSETS                    1,247,411    2,437,694
                                                     ----------   ----------

PROPERTY AND EQUIPMENT, NET - Note 2                    396,022      418,934
                                                     ----------   ----------

OTHER ASSETS
    Goodwill, net of accumulated amortization of
        $1,407,055 and $287,326 in 1998 and 1997,
        respectively                                    316,806      791,681
    Software development costs, net of accumulated
        amortization of $389,812 and $282,808 in
        1998 and 1997, respectively                     169,376      405,966
    Note receivable, net of current portion                --        203,569
    Deposits and other assets                            73,036       83,470
                                                     ----------   ----------

              TOTAL OTHER ASSETS                        559,218    1,484,686
                                                     ----------   ----------

NET ASSETS OF DISCONTINUED OPERATIONS                      --        319,059
                                                     ----------   ----------

                                                     $2,202,651   $4,660,373
                                                     ==========   ==========














                                   (Continued)

                                       F-3



<PAGE>

<TABLE>

<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997


                      LIABILITIES AND SHAREHOLDERS' DEFICIT
                                                                    1998            1997    
                                                                 ----------     ------------
<S>                                                              <C>            <C>


CURRENT LIABILITIES
    Notes payable - Note 3
        Related parties                                          $      --      $   300,000
        Other                                                        303,946        291,410
    Current maturities of long-term debt - Note 4
        Related parties                                                 --        1,298,808
        Other                                                         54,965         81,836
    Accounts payable                                                 483,074        445,760
    Accrued liabilities                                              400,004        327,535
    Deferred revenues                                                 57,423        108,656
                                                                 -----------    -----------

           TOTAL CURRENT LIABILITIES                               1,299,412      2,854,005

LONG-TERM DEBT,-
    Net of current maturities - Note 4
        Related parties                                              933,808        500,000
        Other                                                        826,392         23,266
                                                                 -----------    -----------

           TOTAL LIABILITIES                                       3,059,612      3,377,271
                                                                 -----------    -----------

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

COMMITMENTS AND CONTINGENCIES
    (NOTES 4, 8, 9 and 10)                                              --             --

SHAREHOLDERS' DEFICIT
    Series A senior cumulative convertible
        participating preferred stock; $10 par value;
        340,000 shares issued and outstanding in 1998 - Note 5     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; 69,100,000 and 68,580,000 shares issued,
        in 1998 and 1997, respectively                                69,100         68,580
    Additional paid-in capital                                     1,101,105      1,035,625
    Accumulated deficit                                           (5,415,127)    (1,563,905)
    Treasury stock, at cost; 408,029 shares                          (12,039)       (12,039)
                                                                 -----------    -----------

           TOTAL SHAREHOLDERS' DEFICIT                              (856,961)      (471,739)
                                                                 -----------    -----------

                                                                 $ 2,202,651    $ 4,660,373
                                                                 ===========    ===========
</TABLE>


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

                                       F-4


<PAGE>

<TABLE>

<CAPTION>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 1998 AND 1997
                                                                     1998          1997   
                                                                 -----------    -----------
<S>                                                              <C>            <C>

REVENUES
    Medical clinic fees - net of contractual
           adjustments of $1,638,844 and
           $564,914 in 1998 and 1987, respectively               $ 2,633,753    $ 2,145,995
    Software and maintenance sales                                   326,511      1,502,445
    Service fees and broker income                                   455,661        174,622
    Other                                                               --           14,923
                                                                 -----------    -----------

           TOTAL REVENUES                                          3,415,925      3,837,985
                                                                 -----------    -----------

COST OF REVENUES
    Cost of medical clinic fees                                    2,298,747      1,570,545
    Cost of software and maintenance sales                            24,775        465,758
                                                                 -----------    -----------

           TOTAL COST OF REVENUES                                  2,323,522      2,036,303
                                                                 -----------    -----------

              GROSS PROFIT                                         1,092,403      1,801,682
                                                                 -----------    -----------

OPERATING EXPENSES
    Selling, general & administrative                              3,551,095      2,226,810
    Depreciation and amortization                                  1,502,083        358,502
                                                                 -----------    -----------

           TOTAL OPERATING EXPENSES                                5,053,178      2,585,312
                                                                 -----------    -----------

              LOSS FROM OPERATIONS                                (3,960,775)      (783,630)
                                                                 -----------    -----------

OTHER INCOME (EXPENSE)
    Gain (loss) on sale of assets                                    (43,994)       269,724
    Interest expense
        Related parties                                             (280,301)      (219,287)
        Other                                                        (28,165)       (20,645)
    Interest income and other, net                                    87,199         73,182
                                                                 -----------    -----------

           TOTAL OTHER INCOME (EXPENSE)                             (265,261)       102,974
                                                                 -----------    -----------

INCOME TAX EXPENSE                                                      --             --   
                                                                 -----------    -----------

           NET (LOSS) FROM CONTINUING
           OPERATIONS BEFORE MINORITY INTEREST                    (4,226,036)      (680,656)

MINORITY INTEREST IN LOSS                                            548,623        258,908
                                                                 -----------    -----------

           (LOSS) BEFORE PREFERRED STOCK
                 DIVIDENDS AND DISCONTINUED
                 OPERATIONS                                       (3,677,413)      (421,748)

PREFERRED STOCK DIVIDENDS                                            (45,644)          --
                                                                 -----------    -----------

              (LOSS) BEFORE DISCONTINUED
                 OPERATIONS                                      $(3,723,057)   $  (421,748)
                                                                 -----------    -----------
</TABLE>



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



                                       F-5


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                      1998            1997      
                                                 -------------   -------------
DISCONTINUED OPERATIONS
    Income (Loss) from discontinued operations   $    (47,140)   $     14,310
    Loss on sale of subsidiaries                      (81,025)           --
                                                 ------------    ------------

           NET LOSS                              $ (3,851,222)   $   (407,438)
                                                 ============    ============

LOSS PER WEIGHTED AVERAGE COMMON SHARE
    Continuing operations                        $       (.05)   $       (.01)
    Income (loss) from discontinued operations           --              --
    Loss on sale of subsidiaries                         (.01)           --
                                                 ------------    ------------

           TOTAL                                 $       (.06)   $       (.01)
                                                 ============    ============

WEIGHTED-AVERAGE COMMON SHARES
    OUTSTANDING                                    68,470,433      67,797,740
                                                 ============    ============


















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


                                       F-6


<PAGE>

<TABLE>

<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT

                     YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                 Series A                                            Additional
                                              Preferred Stock             Common Stock               Paid In    (Accumulated 
                                            Shares      Amount        Shares        Amount           Capital       Deficit)  
                                         -----------   -----------   -----------   -----------   -----------   -----------   
<S>                                      <C>           <C>           <C>           <C>           <C>           <C>

Balances at December 31, 1996                   --     $      --      67,885,000   $    67,885   $   810,322   $(1,156,467)  

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

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

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

   Issuance of shares for services              --            --         100,000           100         7,400          --     

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

   Balances at December 31, 1997                --            --      68,580,000        68,580     1,035,625    (1,563,905)  

   Stock options exercised                      --            --         120,000           120         5,880          --     

   Common stock issued for services             --            --         400,000           400        59,600          --     

   Conversion of $1,400,000 promissory
       note to preferred stock               140,000     1,400,000          --            --            --            --     

   Issuance of preferred stock in
       connection with acquisition
       of minority interest in
       Healthcare Innovations                200,000     2,000,000          --            --            --            --     

   Net loss                                     --            --            --            --            --      (3,851,222)  
                                         -----------   -----------   -----------   -----------   -----------   -----------   

Balances at December 31, 1998                340,000   $ 3,400,000    69,100,000   $    69,100   $ 1,101,105   $(5,415,127)  
                                         ===========   ===========   ===========   ===========   ===========   ===========   

                                           Treasury                 
                                            Stock        Total      
                                          -----------   ----------- 
Balances at December 31, 1996             $(12,039)$       (290,299 
                                                                    
   Stock options exercised                       --           3,498 
                                                                    
   Stockholder contributions                     --           5,000 
                                                                    
   Issuance of shares related to                                    
       acquisition of                                               
       Nevada Multicare                          --         210,000 
                                                                    
   Issuance of shares for services               --           7,500 
                                                                    
   Net loss                                      --        (407,438)
                                          -----------   ----------- 
                                                                    
   Balances at December 31, 1997              (12,039)     (471,739)
                                                                    
   Stock options exercised                       --           6,000 
                                                                    
   Common stock issued for services              --          60,000 
                                                                    
   Conversion of $1,400,000 promissor                               
       note to preferred stock                   --       1,400,000 
                                                                    
   Issuance of preferred stock in                                   
       connection with acquisition                                  
       of minority interest in                                      
       Healthcare Innovations                    --       2,000,000 
                                                                    
   Net loss                                      --      (3,851,222)
                                          -----------   ----------- 
                                                                    
Balances at December 31, 1998             $   (12,039)  $  (856,961)
                                          ===========   =========== 
</TABLE>
                                         
                          The accompanying notes are an
            integral part of these consolidated financial statements

                                       F-7


<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                        1998            1997   
                                                     -----------    ------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss before discontinued operations           $(3,723,057)   $  (421,748)
   Adjustments to reconcile net (loss) to net
       cash used by operating activities
          Depreciation and amortization                1,502,083        358,502
          Loss (Gain) on sale of assets                   43,994       (269,724)
          Common stock issued for services                60,000          7,500
          Minority interest in loss                     (548,623)      (258,908)
          Change in allowance for doubtful accounts    1,950,626        433,576
   Changes in assets and liabilities
          Accounts receivable                           (866,118)      (605,255)
          Notes receivable                                 8,040         35,065
          Prepaid expenses and other                       4,348         11,335
          Deposits                                        (4,132)          (189)
          Accounts payable and accrued liabilities       109,783        103,598
          Deferred revenues                              (51,233)       (50,369)
                                                     -----------    -----------

                  NET CASH USED BY
                     CONTINUING OPERATIONS            (1,514,289)      (656,617)
                                                     -----------    -----------

                  NET CASH (USED) PROVIDED BY
                     DISCONTINUED OPERATIONS              67,755       (291,000)
                                                     -----------    -----------

                  NET CASH USED BY OPERATING
                     ACTIVITIES                       (1,446,534)      (947,617)
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                  (111,945)      (309,470)
   Software development costs capitalized                   --         (193,160)
   Organizational costs                                     --          (72,832)
   Proceeds from sale of equipment                           750           --   
                                                     -----------    -----------


                  NET CASH USED BY
                     INVESTING ACTIVITIES               (111,195)      (575,462)
                                                     -----------    -----------







                                   (Continued)

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

                                       F-8



<PAGE>

<TABLE>

<CAPTION>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                                       1998           1997     
                                                                   -----------    -----------
<S>                                                                <C>           <C>

CASH FLOWS FROM FINANCING ACTIVITIES
   Principal payments on notes payable
       Related parties                                             $  (895,000)   $  (650,744)
       Other                                                          (220,035)      (533,707)
   Proceeds from notes payable
       Related parties                                               1,900,000      1,000,000
       Other                                                           238,826        219,114
   Minority investment in subsidiaries                                    --        2,000,000
   Proceeds from common stock issuance                                   6,000          8,498
                                                                   -----------    -----------

                  NET CASH PROVIDED BY
                     FINANCING ACTIVITIES                            1,029,791      2,043,161
                                                                   -----------    -----------

(DECREASE) INCREASE IN CASH                                           (527,938)       520,082

CASH AT BEGINNING OF PERIOD                                            716,735        196,653
                                                                   -----------    -----------

CASH AT END OF PERIOD                                              $   188,797    $   716,735
                                                                   ===========    ===========

SUPPLEMENTAL INFORMATION
   Cash paid during the period for interest                        $   260,516    $   256,306
                                                                   ===========    ===========

SUPPLEMENTAL SCHEDULE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES
   Purchase of medical clinics
       Medical assets acquired                                     $      --      $(2,128,812)
       Goodwill acquired                                                  --         (125,582)
       Common stock issued                                                --          210,000
       Accounts payable and accrued liabilities assumed                   --          199,574
       Note payable                                                       --        1,834,820
       Note receivable reduction                                          --           10,000
   Reduction in note payable - Related party                              --         (900,000)
   Reduction in accounts receivable                                       --          900,000
   Note receivable                                                        --         (346,811)
   Proceeds from sale of assets                                           --          346,811
   Preferred stock issued for minority interest                      2,000,000           --
   Minority interest acquired                                       (1,083,079)          --
   Preferred stock issued to satisfy note payable                    1,400,000           --
   Conversion of note payable to preferred stock - Related party    (1,400,000)          --
   Goodwill on acquisition of minority interest                       (916,921)          --
   Sale of software for note receivable                                230,982           --
   Note receivable from software sale                                 (230,982)          --
                                                                   -----------    -----------

                                                                   $      --      $      --
                                                                   ===========    ===========
</TABLE>

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

                                       F-9


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

MB Software  Corporation  (the "Company") was incorporated in 1982. The focus of
the Company is to provide  practice and cash management  services to physicians,
dentists,  chiropractors  and  medical  billing  centers and to develop and sell
medical  software.  In 1997, the Company began expanding its scope of operations
by acquiring and managing healthcare  facilities and utilizing software products
developed by the Company.

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

In April 1998 and February 1999,  the Company sold both of its Utah  facilities.
Net  assets  from  discontinued  operations,  income  (loss)  from  discontinued
operations,  and loss on sale of  subsidiaries  report the  results of these two
sales. The Company closed its chiropractic  clinic in Arlington,  Texas, as well
as the physical medicine and rehabilitation facility located in Ft. Worth. These
closures were  immaterial to the financial  statements  taken as a whole and the
net assets and  results  of  operations  were  absorbed  by its parent  company,
Healthcare Innovations.

On November 12, 1998,  the Company  issued 200,000 shares of its Series A Senior
Cumulative  Convertible  Participating  Preferred  Stock  in  exchange  for  the
minority ownership interest in Healthcare Innovations consisting of 49,000 Class
A units and 151,000 Class B units. The Company also issued 140,000 shares of the
Series A  Preferred  Stock to the  minority  interest  owners as  payment of the
principal of a $1,400,000 note payable.

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

The OneClaim Plus program is a comprehensive  practice  management software that
can operate on either a DOS-based or Windows  95/98/NT  system.  The software is
designed  to  cover  nearly  every  aspect  of  practice  management,  including
marketing,  patient  management,  billing,  transaction  management,  basic  and
customized reporting,  and information management.  The Company not only markets
OneClaim Plus to third parties, but also uses the software in the conduct of its
own healthcare businesses, thus providing the Company with a common program that
offers stability, dependability and ease of use in the acquisition and operation
of the acquired healthcare businesses.

                                   (Continued)

                                      F-10


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

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

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

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

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

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

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

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

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

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

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

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

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. The company periodically  analyzes these adjustments and
adjusts  the  allowances  for  doubtful  accounts  and  contractual   allowances
accordingly.

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

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




                                   (Continued)

                                      F-11


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

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

Goodwill
--------

Goodwill is the  difference  between  the  purchase  price paid and  liabilities
assumed over the  estimated  fair market value of assets  acquired in connection
with the  acquisition  of  subsidiaries.  Goodwill  amounted to  $1,723,861  and
$1,079,007  in 1998 and 1997,  respectively,  and is being  amortized  using the
straight-line  method over 10 years.  Amortization of goodwill for 1998 and 1997
amounted  to  $1,204,315  and  $106,932,  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. The 1998 amortization  includes a special charge of $916,921
applicable to the expensing of goodwill  associalted with the acquisition of the
minority interest.

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

Earnings per share is based on the weighted  average  number of shares of common
stock outstanding  during the period.  Common equivalent shares are comprised of
dilutive stock options.  In 1998 and 1997,  the common stock  equivalent  shares
were considered anti-dilutive due to the loss from operations.

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

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

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

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

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

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

Management  evaluates  accounts  receivable  balances  on an  ongoing  basis and
provides  allowances  as necessary for amounts  estimated to  eventually  become
uncollectible  or amounts  that are not subject to payment by third party payors
such as insurance companies. The allowance for uncollectible accounts receivable
at December 31, 1998 and 1997 was $1,810,887 and $343,662,  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.  Approximately 95% of accounts receivable is subject to payment
by third party payors, predominately insurance companies.

                                   (Continued)

                                      F-12


<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997


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

Goodwill (Continued)
--------------------

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,  1998,  the  Company  exceeded  the  insured  limit by
approximately $212,891.

Accounts Receivable
-------------------

Accounts  receivable  consist  of the amount due on open  customer  and  patient
accounts.  The Company  uses the  allowance  method to account  for  contractual
adjustment and uncollectible  accounts receivable.  Bad debt expense is recorded
in cost of  medical  and  general  and  administrative  expense in the amount of
$1,506,302  and  $119,133  for the  years  ended  December  31,  1998 and  1997,
respectively.

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.

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

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

Software  development  costs incurred in development of medical billing software
of $193,160 were  capitalized in 1997.  Amortization  of these costs amounted to
$174,504  and  $181,434  during  1998  and  1997,  respectively.  There  were no
capitalized costs related to software development in 1998.

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

Certain  prior year  amounts  have been  reclassified  to conform  with the 1998
presentation.



                                   (Continued)

                                      F-13


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

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

New Accounting Standards
------------------------

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130,  "Reporting  Comprehensive  Income" (Statement No. 130).  Statement No. 130
establishes  standards for reporting and display of comprehensive income and its
components  (revenues,  expenses,  gains and  losses)  in a full set of  general
purpose financial statements. Statement No. 130 requires that all items that are
required  to  be  recognized  under   accounting   standards  as  components  of
comprehensive  income to be reported in a financial  statement that is displayed
with the same  prominence as other financial  statements.  It does not require a
specific format for that financial statement. Statement No. 130 is effective for
fiscal years  beginning after December 15, 1997.  Reclassification  of financial
statements for earlier periods  provided for  comparative  purposes is required.
Statement  No.  130 had no impact  on the  financial  condition  or  results  of
operations of the Company.

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
131  (Statement  No. 131),  "Disclosures  About  Segments of an  Enterprise  and
Related  Information".  Statement No. 131 establishes  standards for disclosures
related to business operating  segments.  The Company anticipates that Statement
No.  131 will have no  significant  effect on the  disclosures  set forth in its
consolidated financial statements.

In February 1998, the FASB issued  Statement of Financial  Accounting  Standards
No.  132  (Statement  No.  132),  "Employers'  Disclosures  about  Pensions  and
Postretirement Benefits." Statement No. 132 revises employers' disclosures about
pensions and other  postretirement  benefit plans. The adoption of Statement No.
132 did not have a  material  impact  on the  Company's  consolidated  financial
statements.

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133 (Statement No. 133),  "Accounting  for  Derivative  Instruments  and Hedging
Activities."  Statement No. 133 establishes  accounting and reporting  standards
for  derivative  instruments  embedded  in  other  contracts,  and  for  hedging
activities.  The adoption of Statement No. 133 did not have a material impact on
the Company's consolidated financial statements.

In 1998,  the FASB issued  Emerging  Issues Task Force  Abstract  No. 97-2 (EITF
97-2).   EITF  97-2  addresses  the   application  of  FASB  Statement  No.  94,
"Consolidation  of All  Majority-Owned  Subsidiaries"  and APB  Opinion  No.  16
"Business  Conventions  to Physician  Practice  Management  Entities and Certain
Other Entities with Contractual Management Arrangements."

At  December  31,  1998 and  1997,  the  Company  did not  have any  contractual
management  arrangements  as defined by EITF 97-2;  therefore,  EITF 97-2 is not
applicable to the Company.










                                      F-14


<PAGE>

<TABLE>

<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 2:  PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1998 and 1997:

                                                                                1998                      1997   
                                                                             ---------                 ---------
<S>                                                                          <C>                        <C>

       Clinic and office equipment                                            $505,557                  $421,608
       Computer equipment                                                       60,835                    28,916
       Furniture and fixtures                                                   16,518                    20,442
       Vehicles and other                                                            -                    35,000
                                                                             ---------                 ---------
                                                                               582,910                   505,966
          Less accumulated depreciation and amortization                      (186,888)                  (87,032)
                                                                              --------                  --------

                                                                              $396,022                  $418,934
                                                                              ========                  ========

Depreciation  expense was $108,698 and $76,364 for the years ended  December 31,
1998 and 1997, respectively.

NOTE 3:  NOTES PAYABLE

Notes payable consist of the following as of December 31, 1998 and 1997:

                                                                                1998                      1997   
                                                                             ----------                 ---------
   8% Note payable to a shareholder, due on
       December 31, 1997, unsecured - related party                        $         -                   $300,000

   Non-interest bearing notes payable to third parties
       assumed in connection with the Santiago purchase,
       due on demand                                                             92,611                   105,205

   Prime plus 1% note payable to a bank, due June 30, 1999,
       secured by accounts receivable                                           120,070                   117,885

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

   10% note payable to an individual, due April 1, 1998,
       unsecured                                                                 15,320                    44,320

   7.6%note  payable  to  a  bank,  due  in  monthly  installments 
       of  $11,000, including principal and interest through
       June 25, 1999                                                             75,945                         -
                                                                            -----------                 ---------

                                                                            $   303,946                  $591,410
                                                                            ===========                  ========


</TABLE>




                                      F-15


<PAGE>

<TABLE>

<CAPTION>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 4 - LONG-TERM DEBT

Long term debt consisted of the following at December 31, 1998 and 1997:

                                                                                 1998              1997   
                                                                              ---------          ---------
<S>                                                                            <C>               <C>

   8% note payable to a shareholder due
       August 1, 2000, unsecured - related party                               $455,000           $755,000

   8% note payable to an employee, shareholder,
       and officer, due August 1, 2000, unsecured                               434,808            434,808

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

   8% note payable to a shareholder, due August 1, 2000,
       unsecured - related party                                                300,000                  -

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

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

10.25% note payable to a bank, monthly payments of
       $236 including  interest, due June 2000, secured by
       vehicle                                                                    5,647                  -

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

   8% note payable to a shareholder, due August 1, 2000,
       unsecured                                                                 12,000             12,000

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

 13.5% notes  payable  to a  financing  company,  monthly
       payments  of  $654 including interest, due
       June 20, 2000, secured by equipment                                        4,924              9,042

   8.6%note payable to a financing company, monthly 
       payments of $426 including
       interest, due
       September 15, 1999, secured by equipment                                  12,173             17,039

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


                                   (Continued)

                                      F-16


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997


NOTE 4 - LONG-TERM DEBT (CONTINUED)

                                                                                 1998             1997   
                                                                              ---------         ----------
   12% note payable to a financing company, monthly
       payments of $767 including
       interest, due
       July 31, 2000, secured by equipment                                       13,211                 -

   11.5% note payable to a financing company, monthly
       payments of $921 including interest, due June 16, 2000,
       secured by equipment                                                      19,128                 -

   14% note  payable to a financing  company,  monthly 
       payments of $1,355, due April 9, 2001, secured
       by equipment                                                              35,034             45,544

   12% note payable to a financing company, monthly
       payments of $615 including interest, due
       September 19, 2002, secured by equipment                                  21,240                 -
                                                                             ----------       -----------

                                                                              1,815,165         1,903,910
   Less current portion                                                          54,965        (1,380,644)
                                                                             ----------       -----------

                                                                             $1,760,200       $   523,266
                                                                             ==========       ===========


The following is a schedule of maturities of notes payable at December 31,1998:

          1999                                                              $    54,965
          2000                                                                1,739,656
          2001                                                                   15,369
          2002                                                                    5,175
                                                                            -----------

                                                                            $1,815,165
                                                                            ===========  

</TABLE>








                                      F-17


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997


NOTE 5 - 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 Series A Stock
is convertible  into common stock, at the option of the holders,  into a maximum
of 29,439,000  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.  No
beneficial   conversion   feature  was  recognized  upon  the  issuance  of  the
convertible  participating  preferred stock since,  the conversion price and the
fair value of the Company's Common stock were approximately the same on November
12, 1998.


NOTE 6 - 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 1998
and 1997 is as follows:

<TABLE>


                                                                               1998                       1997   
                                                                           ------------               -----------
<S>                                                                        <C>                        <C>

       Expected federal income tax provision (benefit)                     $ 1,208,545                $ (148,069)
       State income taxes                                                                                      -
       Valuation allowance and other                                        (1,208,545)                  148,069
                                                                            -----------                 --------

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

Deferred  tax assets and  liabilities  as of  December  31, 1998 and 1997 are as
follows:

                                                                               1998                       1997     
                                                                           ------------               -----------
       Current deferred tax asset                                          $   635,225                $  155,779
       Current deferred tax liability                                                -                         -
       Valuation allowance for current deferred tax asset                     (635,225)                 (155,779)
                                                                           ------------               -----------

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

       Non-current deferred tax asset                                      $ 1,831,339                $1,180,948
       Non-current deferred tax liability                                      (93,079)                 (148,506)
       Valuation allowance for non-current deferred tax asset               (1,738,260)               (1,032,442)
                                                                            -----------               ----------

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

</TABLE>




                                   (Continued)

                                      F-18


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 6 - INCOME TAXES (CONTINUED)

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

MB generated net operating losses for financial reporting and Federal income tax
reporting prior to its  reorganization in 1993. As of December 31, 1998, subject
to limitations  under Internal  Revenue Code ss.382,  approximately  $469,000 of
these net operating losses are available for use after the reorganization. These
net  operating  losses expire in 2008 if not  utilized.  The net operating  loss
carry  forward at December  31,  1998  amounts to  $4,051,000  and will begin to
expire in 2008 if not utilized.


NOTE 7 - LEASE COMMITMENTS

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

              Year Ended
             December 31,                            Amount 
                  1999                              $223,637
                  2000                               221,490
                  2001                               228,237
                  2002                               235,416
                  2003                                29,554
                                                    --------
                                                    $938,334
                                                    ========

Lease and rent expense under  non-cancelable  operating leases for 1998 and 1997
are $349,550 and $222,579, respectively.

NOTE  8 - LEGAL PROCEEDINGS

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

                                      F-19


<PAGE>




                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 8 - LEGAL PROCEEDINGS (CONTINUED)

On April 1, 1998,  the Company  entered  into a physician  coverage  and service
agreement with Toth Enterprises II, P.A., a Texas professional association doing
business as Victory  Medical and Family Care and Dr.  William G.  Franklin.  The
Company  through a  subsidiary  was to  provide  administrative  and  management
services  for the  clinic.  The assets of Victory  Medical  and Family Care were
purchased by the Company with the  issuance of 400,000  shares of the  Company's
common stock. Subsequent to the acquisition, the previous management services to
Victory  Medical and Family Care and, as of the date of this  report,  is in the
process of trying to settle the dispute.

On July 20, 1998, a  subsidiary  of the Company  filed a lawsuit in the District
Court of Tarrant County,  Texas, against Toth Enterprises,  II, P.A. Pursuant to
an Acquisition Agreement, the subsidiary had merged with a corporation which the
individuals  were associated  with and thereafter the subsidiary  entered into a
Management  Agreement  with a new entity  involving  the same  individuals.  The
lawsuit,  which  amended  to  include  the  entity,  asserted  a  breach  of the
Acquisition  Agreement and  Management  Agreement  and other  various  causes of
action.  On July 28, 1998, the individuals filed a lawsuit in the District Court
of Travis County, Texas, against the Company and a stockholder and employee. The
individuals  and entity also filed a counterclaim  against the  subsidiary.  The
Travis  County  lawsuit  alleged  a breach  of the  Acquisition  Agreement,  and
violation of Texas  securities  laws. Upon request filed by the subsidiary,  the
Travis  County  lawsuit  was  consolidated  with the  Company's  Tarrant  County
lawsuit. The Company believes that the allegations of the entity and individuals
are meritless.

On November  6, 1998,  the  Company  and its  subsidiary  filed a lawsuit in the
District Court of Tarrant County, Texas, against a former employee of one of the
subsidiaries.  The lawsuit asserted a right to damages based upon the employee's
breach of a  Confidentiality  Agreement entered into between the former employee
and one of the subsidiaries.  The Company and subsidiaries anticipate entry of a
judgment in their favor and against the former employee.





















                                      F-20


<PAGE>

<TABLE>

<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 9 - STOCK OPTIONS

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

Outstanding at 12/31/96              865,000              $.05        2,400,000              $.03            3,265,000

Granted              -                    -         2,100,000                .48       2,100,000
Exercised                           (70,000)               .05                -                 -              (70,000)
Forfeited                                 -                  -                -                 -                    -
                                   ---------              -----       ----------             -----          -----------

Outstanding at 12/31/97             795,000                .05        4,500,000               .24            5,295,000

Granted              1,075,000           .13                -                 -                 -            1,075,000
Exercised                          (120,000)               .05                -                 -             (120,000)
Forfeited                          (200,000)               .05       (1,050,000)              .16           (1,250,000)
                                   --------               ----       ----------              ----           ----------

Outstanding at 12/31/98           1,550,000               $.09        3,450,000              $.22            5,000,000
                                  =========               ====       ==========              ====           ==========


The fair value of plan options issued during 1998 was approximately $137,750.  There were no plan options
issued during 1997.

The following table summarizes information about options outstanding at December
31, 1998 under the Plan:

                                       Options Outstanding                                  Options Exercisable   
                                       -------------------                           ----------------------------------     
                                         Weighted Average
   Range of            Number              Remaining          Weighted Avg.              Number         Weighted Avg.
Exercise Prices     Outstanding         Contractual Life     Exercise Price           Exercisable     Exercisable Price
---------------     -----------        -------------------   --------------           -----------     -----------------
   $.02-$.19        1,550,000               1.2                  $.09                  1,550,000            $.09

</TABLE>


The following table summarized  information about the other  compensatory  stock
options outstanding at December 31, 1998:





                                   (Continued)

                                      F-21


<PAGE>


<TABLE>

<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 9 - STOCK OPTIONS (CONTINUED)

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

   $.03-$.65         3,450,000              1.6                  $.22                   3,450,000            $.22

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 1998 and 1997 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, 
                                                                 -------------------------------------  
                                                                     1998                      1997   
                                                                 ------------               ----------
Net Income (Loss)                            As reported         $(3,851,222)                $(407,438)
                                             Pro forma           $(3,851,222)                $(407,438)

Net Income (Loss) per share                  As reported               $(.06)                    $(.01)
                                             Pro forma                 $(.06)                    $(.01)

</TABLE>

Of the  5,000,000  outstanding  incentive  stock  options at December  31, 1998,
1,075,000  options are fully vested at December 31, 1998 and  3,925,000  options
vested 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 1998 and  1997:  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 1.5 years.

NOTE 10:  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.








                                  (Continued)

                                      F-22


<PAGE>



                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 11:  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, 1998 and 1997 is as follows:

                                         1998            1997     
                                      -----------    -----------
Revenues:
     Medical fees                     $ 2,633,753    $ 2,145,995
     Software and maintenance sales       326,511      1,502,445
     Other                                455,661        189,545
                                      -----------    -----------

                                      $ 3,415,925    $ 3,837,985
                                      ===========    ===========

Operating income (loss):
     Medical fees                     $(2,496,079)   $   141,349
     Software and maintenance sales    (1,144,715)      (578,787)
     Corporate                           (319,981)      (346,192)
                                      -----------    -----------

                                      $(3,960,775)   $  (783,630)
                                      ===========    ===========

Total assets:
     Medical fees                     $   872,630    $ 2,558,312
     Software and maintenance sales       462,873      1,604,693
     Corporate                            867,148        497,368
                                      -----------    -----------

                                      $ 2,202,651    $ 4,660,373
                                      ===========    ===========

Depreciation and amortization:
     Medical fees                     $ 1,034,674    $    54,205
     Software and maintenance sales       457,723        295,089
     Corporate                              9,686          9,208
                                      -----------    -----------

                                      $ 1,502,083    $   358,502
                                      ===========    ===========

Capital expenditures:
     Medical fees                     $   110,706    $   382,302
     Software and maintenance sales          --          193,160
     Corporate                              1,239           --
                                      -----------    -----------

                                      $   111,945    $   575,462
                                      ===========    ===========







                                  (Continued)

                                      F-23


<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 1998 AND 1997

NOTE 12:  DISCONTINUED OPERATIONS

On April 30, 1998 and February 1, 1999, the Company  entered into  agreements to
sell its ownerships in Sandy Home Health,  Inc. ("SHH") (a Utah corporation) and
Color  Country  Health  Express  ("CCHE")  (a Utah  corporation),  respectively.
Accordingly,  the operating  results of SHH and CCHE have been  segregated  from
continuing  operations  and reported as a separate line item on the statement of
operations.

The Company has restated its prior financial statements to present the operating
results of SHH and CCHE as discontinued  operations.  The assets and liabilities
of  such  operations  at  December  31,  1997,  have  been  reflected  as a  net
non-current  asset based  substantially on the original  classification  of such
assets and liabilities.

Operating results from discontinued operations are as follows:

<TABLE>

                                                                    1998                      1997     
                                                               --------------            --------------
<S>                                                            <C>                       <C>

     Medical income                                              $ 1,055,975               $ 1,451,870
     Cost of medical                                              (1,122,809)               (1,370,251)
     Depreciation and amortization                                   (33,871)                  (39,581)
                                                                ------------              ------------

     Income (loss) from operations                                  (100,705)                   42,038
     Other expense                                                     8,274                   (13,979)
     Minority interest                                                45,291                    13,749 
                                                                -------------             -------------

     Income (loss) from discontinued operations                 $    (47,140)             $     14,310
                                                                ============              ============
</TABLE>


NOTE 13:  IMPACT OF YEAR 2000 (UNAUDITED)

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

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

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

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

                                  (Continued)

                                      F-24