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, 2002
                   -------------------------------------------

[_]      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)

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

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

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

           Securities registered pursuant to Section 12(b) of the Act:

   Title of Each Class               Name of Each Exchange on Which Registered
   -------------------               -----------------------------------------
         Common                             OTC BULLETIN BOARD

           Securities registered pursuant to Section 12(g) of the Act:
                 Common Stock $ .001 par value (Title of Class)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. [ ] Yes [X] No

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:  $0. The  aggregate  market
value  of the  voting  stock  held by  non-affiliates  of the  registrant  as of
December 31, 2002 was approximately $ 2,453.01.

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, 2002,  822,810  shares of the Issuer's $.001 par value common
stock were outstanding.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

                             MB SOFTWARE CORPORATION
                                   Form 10-KSB
                      For the Year Ended December 31, 2002

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

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

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

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

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

 ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION       5

 ITEM 7.  FINANCIAL STATEMENTS ......................................     8

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

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

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

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

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

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

ITEM 14.  CONTROLS AND PROCEDURES....................................    12



<PAGE>

                                     PART 1

ITEM 1.  BUSINESS

Until recently,  MB Software  Corporation (the "Company"),  focused its business
exclusively  on the  healthcare  marketplace,  owning  and  managing  healthcare
clinics and medical  receivables.  During 2001, the Company began evaluating how
it  could  leverage  its  experiences  within  healthcare  into  the  healthcare
transaction market.

In July of 2001,  the  Company  acquired  certain  assets  and  assumed  certain
liabilities of Portalook, a California based company, that developed proprietary
technology for use in enabling Internet transaction devices (ITDs) to be used as
transaction  processing devices in the field. The devices were identified by the
Company as  potential  transaction  devices  for  physician  practices,  and the
Company believed that the technology  developed by Portalook for servers and the
devices themselves, could serve as the starting point for a transaction services
platform designed for healthcare. During the second quarter of 2002, the Company
wrote off the net assets  acquired  in the  transaction  and it no longer  sells
ITDs.

In an effort to pursue the  Company's  strategy  shift from owning and  managing
healthcare  clinics and  receivables  to  focusing  on the  medical  transaction
market,  the Company moved to restructure  its  relationship  with its preferred
shareholders.  In November  2001,  the Company  entered into a  Restructure  and
Settlement Agreement with Imagine Investments, Inc., and XHI(2), Inc., which was
structured to eliminate  Imagine's and XHI(2)'s preferred stock positions in the
Company,  and eliminate a significant  portion of the Company's  liabilities  in
exchange for the Company's Jacksonville medical clinic facility.

On May 8, 2002, the Company  completed the sale of its medical clinics  business
under the  Restructure  and  Settlement  Agreement.  In  exchange  for the sale,
Imagine and XHI2  surrendered  the Company's  promissory  notes in the aggregate
principal amount of $2,200,000,  including all interest due under the notes, and
all shares of the  Company's  Series A Preferred  Stock  (340,000  shares in the
aggregate)  held by Imagine and XHI2.  In addition to  receiving  the  Company's
Jacksonville  medical  clinics  business,  Imagine  and XHI2  also  received  an
aggregate of 45,000 (post-reverse split) shares of the Company's common stock.

Effective  August 1, 2002, the Company sold its ninety-nine  percent interest in
e-Appliance Innovations, LLC, a Nevada limited liability company, to e-Appliance
Payment   Solutions,   LLC,  a  Nevada  limited   liability   company  ("Payment
Solutions"),   in  exchange  for  the   assumption   by  Payment   Solutions  of
substantially all the Company's liabilities. E-Appliance Innovations constituted
substantially  all of the assets of the Company,  and held all of the  Company's
rights to the  Company's  proprietary  technology  designed  to enable  Internet
transaction  devices (ITDs) to be used as transaction  processing devices in the
field and the software programs implementing this technology that were developed
or acquired by the Company (the  "Technology").  In  connection  with this sale,
Payment  Solutions  granted the Company a  worldwide,  royalty-free,  perpetual,
non-exclusive license to use the Technology to develop, market, sell and operate
electronic client services to be made available to clients through the Company's
computer network.

Risk Factors of the Business
----------------------------

We have sought to identify what we believe to be the most  significant  risks to
our business. However, we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have  identified all possible
risks that might arise.  Investors  should  carefully  consider all of such risk
factors  before making an investment  decision with respect to our Common Stock.
We provide the  following  cautionary  discussion  of risks,  uncertainties  and
possible inaccurate assumptions relevant to our business. These are factors that
we think  could  cause our actual  results to differ  materially  from  expected
results. Other factors besides those listed here could affect us.



<PAGE>

Lack of Operating History
-------------------------

Because of our operating  history and lack of past  profitability,  you may lose
your  investment  if we are  unable to  successfully  market  our  services  and
implement  our business  plan. We have not been  profitable to date.  Even if we
become profitable in the future,  we cannot accurately  predict the level of, or
our ability to sustain  profitability.  Because we have not yet been  profitable
and cannot  predict  any level of future  profitability,  you bear the risk of a
complete loss of your investment in the event our business plan is unsuccessful.

Inability to Obtain Funding
---------------------------

We may not be able to obtain additional  funding when needed,  which could limit
future  expansion and marketing  opportunities,  as well as result in lower than
anticipated   revenues.   We  may  require   additional   financing   to  pursue
relationships  with other  business  opportunities.  If the market  price of the
common stock declines,  some potential  financiers may either refuse to offer us
any  financing or will offer  financing  at  unacceptable  rates or  unfavorable
terms. If we are unable to obtain  financing on favorable terms, or at all, this
unavailability  could  prevent  us from  expanding  our  business,  which  could
materially impact our future potential revenues.

Continued Control by Existing Management
----------------------------------------

You may lack an effective  vote on corporate  matters and management may be able
to act  contrary  to  your  objectives.  Our  officers  and  board  members  own
approximately  39% of the 822,810  shares of our  outstanding  common stock.  If
management votes together,  it could influence the outcome of corporate  actions
requiring shareholder approval, including the election of directors, mergers and
asset sales.  As a result,  new  stockholders  may lack an  effective  vote with
respect to the election of directors and other corporate matters.  Therefore, it
is possible  that  management  may take actions  with  respect to its  ownership
interest, which may not be consistent with your objectives or desires.

Dividends
---------

We have not paid and do not currently  intend to pay dividends,  which may limit
the  current  return you may  receive on your  investment  in our common  stock.
Future  dividends  on our  common  stock,  if any,  will  depend  on our  future
earnings,  capital  requirements,  financial  condition  and other  factors.  We
currently  intend to retain  earnings,  if any,  to  increase  our net worth and
reserves.  Therefore,  we do not anticipate that any holder of common stock will
receive any cash,  stock or other dividends on his shares of common stock at any
time in the near future.  You should not expect or rely on the potential payment
of dividends as a source of current income.

Applicable SEC rules  governing the trading of "Penny Stocks" limits the trading
--------------------------------------------------------------------------------
and  liquidity of our common  stock,  which may affect the trading  price of our
--------------------------------------------------------------------------------
common stock.
-------------

Our common stock currently  trades on the OTC Bulletin  Board.  Since our common
stock continues to trade below $5.00 per share, our common stock is considered a
"penny  stock"  and is  subject  to SEC  rules  and  regulations,  which  impose
limitations upon the manner in which our shares can be publicly traded.

These  regulations  require the delivery,  prior to any transaction  involving a
penny stock, of a disclosure  schedule explaining the penny stock market and the
associated risks.  Under these  regulations,  certain brokers who recommend such
securities to persons  other than  established  customers or certain  accredited
investors must make a special written suitability determination regarding such a
purchaser and receive such purchaser's  written agreement to a transaction prior
to sale.  These  regulations have the effect of limiting the trading activity of
our common  stock and  reducing the  liquidity  of an  investment  in our common
stock.

Stockholders  should be aware that,  according  to the  Securities  and Exchange
Commission  Release No. 34- 29093,  the market for penny  stocks has suffered in
recent years from patterns of fraud and abuse. These patterns include:


                                       2
<PAGE>

     -    Control of the market for the security by one or a few  broker-dealers
          that are often related to the promoter or issuer;

     -    Manipulation of prices through  prearranged  matching of purchases and
          sales and false and misleading press releases;

     -    "Boiler room"  practices  involving  high  pressure  sales tactics and
          unrealistic price projections by inexperienced sales persons;

     -    Excessive and undisclosed bid-ask differentials and markups by selling
          broker-dealers; and

     -    The  wholesale  dumping  of  the  same  securities  by  promoters  and
          broker-dealers  after prices have been manipulated to a desired level,
          along with the  inevitable  collapse of those  prices with  consequent
          investor losses.

Furthermore,  the "penny stock" designation may adversely affect the development
of any public  market  for the  Company's  shares of common  stock or, if such a
market develops,  its  continuation.  Broker-dealers  are required to personally
determine whether an investment in "penny stock" is suitable for customers.

Penny  stocks  are  securities  (i) with a price of less than five  dollars  per
share; (ii) that are not traded on a "recognized" national exchange; (iii) whose
prices are not quoted on the NASDAQ automated  quotation  system  (NASDAQ-listed
stocks must still meet  requirement  (i)  above);  or (iv) of an issuer with net
tangible  assets  less than  $2,000,000  (if the issuer  has been in  continuous
operation  for at least three years) or $5,000,000  (if in continuous  operation
for less  than  three  years),  or with  average  annual  revenues  of less than
$6,000,000 for the last three years.

Section  15(g) of the  Exchange  Act, and Rule 15g-2 of the  Commission  require
broker-dealers  dealing in penny stocks to provide  potential  investors  with a
document  disclosing  the risks of penny stocks and to obtain a manually  signed
and dated written receipt of the document before  effecting any transaction in a
penny stock for the  investor's  account.  Potential  investors in the Company's
common  stock are urged to obtain  and read  such  disclosure  carefully  before
purchasing any shares that are deemed to be "penny stock."

Rule 15g-9 of the Commission requires  broker-dealers in penny stocks to approve
the account of any investor for  transactions  in such stocks before selling any
penny stock to that investor.  This procedure  requires the broker-dealer to (i)
obtain from the investor information  concerning his or her financial situation,
investment  experience and investment  objectives;  (ii)  reasonably  determine,
based on that  information,  that  transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written  statement  setting forth the basis on which
the  broker-dealer  made the  determination  in (ii) above;  and (iv)  receive a
signed and dated copy of such  statement from the investor,  confirming  that it
accurately reflects the investor's  financial situation,  investment  experience
and investment  objectives.  Compliance with these requirements may make it more
difficult for the Company's stockholders to resell their shares to third parties
or to otherwise dispose of them.

Future sales of large amounts of common stock could adversely  effect the market
--------------------------------------------------------------------------------
price of our common stock and our ability to raise capital.
-----------------------------------------------------------

Future sales of our common stock by existing  stockholders  pursuant to Rule 144
under the  Securities  Act of 1933,  or following  the exercise of future option
grants,  could  adversely  affect the  market  price of our  common  stock.  Our
directors and executive  officers and their family  members are not under lockup
letters or other forms of  restriction  on the sale of their common  stock.  The
issuance of any or all of these additional  shares upon exercise of options will
dilute the voting power of our current stockholders on corporate matters and, as
a result,  may cause the market price of our common stock to decrease.  Further,
sales of a large  number of shares of common  stock in the public  market  could
adversely  affect the  market  price of the  common  stock and could  materially
impair our future  ability to generate  funds  through  sales of common stock or
other equity securities.


                                       3
<PAGE>

Dependence on Executive Officers and Technical Personnel
--------------------------------------------------------

The success of our business plan depends on attracting qualified personnel,  and
failure to retain the necessary  personnel could adversely  affect our business.
Competition for qualified  personnel is intense,  and we may need to pay premium
wages to attract  and  retain  personnel.  Attracting  and  retaining  qualified
personnel  is  critical  to our  business.  Inability  to attract and retain the
qualified  personnel necessary would limit our ability to implement our business
plan successfully.

Adverse Effect of Shares Eligible for Future Sale
-------------------------------------------------

Future sales of large amounts of common stock could adversely  affect the market
price of our common stock and our ability to raise capital.  Future sales of our
common stock by existing  stockholders pursuant to Rule 144 under the Securities
Act, or following the exercise of outstanding  options,  could adversely  affect
the  market  price of our common  stock.  Substantially  all of the  outstanding
shares  of  our  common  stock  are  freely  tradable,  without  restriction  or
registration under the Securities Act, other than the sales volume  restrictions
of Rule 144 applicable to shares held  beneficially by persons who may be deemed
to be affiliates.  Our directors and executive officers and their family members
are not under lockup  letters or other forms of restriction on the sale of their
common  stock.  The  issuance  of any or all of  these  additional  shares  upon
exercise of options will dilute the voting power of our current  stockholders on
corporate  matters  and, as a result,  may cause the market  price of our common
stock to decrease. Further, sales of a large number of shares of common stock in
the public  market could  adversely  affect the market price of the common stock
and could  materially  impair our future ability to generate funds through sales
of common stock or other equity securities.

Potential Fluctuations in Quarterly Results
-------------------------------------------

Significant  variations in our quarterly  operating results may adversely affect
the market price of our common  stock.  Our  operating  results have varied on a
quarterly  basis  during  our  operating  history,  and we expect to  experience
significant   fluctuations  in  future  quarterly   operating   results.   These
fluctuations have been and may in the future be caused by numerous factors, many
of  which  are  outside  of  our  control.  We  believe  that   period-to-period
comparisons of our results of operations  will not necessarily be meaningful and
that you should not rely upon them as an indication of future performance. Also,
it is likely  that our  operating  results  could be below the  expectations  of
public market  analysts and investors.  This could  adversely  affect the market
price of our common stock.

Environmental Matters
---------------------

The  Company   believes  it  conducts  its  business  in  compliance   with  all
environmental laws presently  applicable to its facilities.  To date, there have
been no expenses incurred by the Company related to environmental issues.

Employees
---------

The Company does not currently have any employees.  However, it does utilize the
administrative  services of an employee of an entity controlled by the President
of the Company.

Reports to Security Holders
---------------------------

The Company is required to deliver  period and other  reports to the  Securities
and  Exchange  Commission  ("Commission").  The  public  may  read  and copy any
materials that are filed by the Company with the Commission at the  Commission's
Public  Reference Room at 450 Fifth Street,  N.W.,  Washington,  D.C. 20549. The
public may obtain  information on the operation of the Public  Reference Room by
calling the Commission at 1-800-SEC-0330.  The statements and forms filed by the


                                       4
<PAGE>

Company with the Commission have been filed electronically and are available for
viewing  or  copy on the  Commission  maintained  Internet  site  that  contains
reports,  proxy, and information  statements,  and other  information  regarding
issuers that file electronically  with the Commission.  The Internet address for
this site can be found at: http://www.sec.gov.

ITEM 2. PROERTIES

The Company's principal executive office is located at 2225 E. Randol Mill Road,
Suite  305,  Arlington,  TX  76011.  These  premises  are  leased  by an  entity
controlled by the President of the Company. At present, the Company pays no rent
and the Company does not anticipate requiring any additional office space in the
next twelve months.

ITEM 3. LEGAL PROCEEDINGS

None.

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

No  matter  was  submitted  to a  vote  of the  security  holders,  through  the
solicitation  of proxies or otherwise,  during the fourth quarter ended December
31, 2002.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's  common stock is quoted on the Over the Counter  Bulletin Board, a
service maintained by the National  Association of Securities Dealer, Inc. under
the symbol "MBSB".  Trading in the common stock in the  over-the-counter  market
has been  limited  and  sporadic  and the  quotations  set  forth  below are not
necessarily  indicative  of actual  market  conditions.  Further,  these  prices
reflect  inter-dealer prices without retail mark-up,  mark-down,  or commission,
and may not necessarily reflect actual transactions.

The high and low sales prices are as follows for the periods indicated:

          ----------- ----------------------- ------------ -----------
          YEAR        QUARTER ENDING          HIGH         LOW
          ----------- ----------------------- ------------ -----------
          2001        March 31, 2001*         $0.16        $0.11
          ----------- ----------------------- ------------ -----------
                      June 30, 2001*          $0.22        $0.05
          ----------- ----------------------- ------------ -----------
                      September 30, 2001*     $0.13        $0.05
          ----------- ----------------------- ------------ -----------
                      December 31, 2001*      $0.05        $0.03
          ----------- ----------------------- ------------ -----------
          2002        March 31, 2002*         $0.05        $0.02
          ----------- ----------------------- ------------ -----------
                      June 30, 2002*          $0.01        $0.01
          ----------- ----------------------- ------------ -----------
                      September 30, 2002      $0.01        $0.01
          ----------- ----------------------- ------------ -----------
                      December 31, 2002       $0.01        $0.01
          ----------- ----------------------- ------------ -----------

*does not reflect split adjusted price  resulting from 100:1 reverse stock split
effective June 24, 2002 Record Holders


                                       5
<PAGE>

As of December 31, 2002, there were  approximately  2000  shareholders of record
holding a total of 822,810  shares of common  stock.  The  holders of the common
stock are  entitled  to one vote for each  share  held of record on all  matters
submitted  to a vote  of  stockholders.  Holders  of the  common  stock  have no
preemptive  rights and no right to  convert  their  common  stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock.

Dividends
---------

The Company has not declared any cash  dividends  since  inception  and does not
anticipate  paying any  dividends  in the  foreseeable  future.  The  payment of
dividends is within the  discretion of the board of directors and will depend on
the Company's earnings,  capital  requirements,  financial condition,  and other
relevant  factors.  There are no restrictions that currently limit the Company's
ability to pay dividends on its common stock other than those generally  imposed
by  applicable  state law. The Company has  determined  that it will utilize any
earnings in the expansion of its business.

ITEM 6.  MANAGEMENT'S PLAN OF OPERATION

Plan of Operation
-----------------

The Company does not  currently  have any  business  operations.  The  Company's
current  plan is to  seek,  investigate  and,  if such  investigation  warrants,
acquire an  interest  in business  opportunities  presented  to it by persons or
firms who or which  desire to seek the  perceived  advantages  of a  corporation
which is registered  under the  Securities  Exchange Act of 1934 (the  "Exchange
Act").  The  Company  does not  plan to  limit  its  options  to any  particular
industry, but will evaluate each opportunity on its merits. Although the Company
has not entered  into any binding  agreement to effect such a  transaction,  the
board of directors of the Company does consider  such offers and would  consider
all of the terms of any such offer as part of its  fiduciary  duty to  determine
whether  any  such  transaction  is  in  the  best  interest  of  the  Company's
stockholders.  If the board of directors does determine that a sale or merger of
the Company is in the best interests of the Company's stockholders, the board of
directors may determine to pursue such a transaction and the consideration to be
paid in connection  with such  transaction  would be used to expand our business
and fund future  operations.  There is no assurance  the Company can raise funds
through a sale or equity transaction,  or if such funding is available,  that it
will be on  favorable  terms.  Any  decision to finalize  participation  in this
specific business  opportunity and any other opportunity will be made based upon
a Company analysis of the merits of any business based on objective criteria.

The Company has, and will continue to have, no capital with which to provide the
owners of business  opportunities  with any  significant  cash or other  assets.
However,  management  believes  that the Company will be able to offer owners of
acquisition  candidates  the  opportunity  to  acquire a  controlling  ownership
interest in a publicly  registered  company without  incurring the cost and time
required  to conduct  an initial  public  offering.  The owners of the  business
opportunities  will,  however,  incur  significant legal and accounting costs in
connection with the acquisition of a business opportunity including the costs of
preparing forms 8-K, 10Q, or agreements and related  reports and documents.  The
Exchange Act  specifically  requires  that any merger or  acquisition  candidate
comply with all  applicable  reporting  requirements,  which  include  providing
audited financial statements to be included within the numerous filings relevant
to comply with the Exchange Act. Nevertheless, the officers and directors of the
Company have not conducted market research and are not aware of statistical data
which  would  support  the  perceived   benefits  of  a  merger  or  acquisition
transaction for the owners of a business opportunity.

The analysis of new business  opportunities  will be undertaken by, or under the
supervision  of, the  officers and  directors of the Company,  none of whom is a
professional business analyst.  Management intends to concentrate on identifying
preliminary  prospective  business  opportunities  which may be  brought  to its
attention through present  associations of the Company's officers and directors,
or  by  the   Company's   shareholders.   In  analyzing   prospective   business
opportunities, management will consider such matters as the available technical,
financial  and  managerial  resources;   working  capital  and  other  financial
requirements; history of operations, if any; prospects for the future; nature of
present and  expected  competition;  the quality and  experience  of  management
services which may be available and the depth of that management;  the potential
for further research, development or exploration;  specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed  activities


                                       6
<PAGE>

of the Company; the potential for growth or expansion; the potential for profit;
the perceived public recognition or acceptance of products,  services or trades;
name identification;  and other relevant factors.  Officers and directors of the
Company will meet  personally  with management and key personnel of the business
opportunity as part of their investigation.  To the extent possible, the Company
intends to utilize  written reports and personal  investigation  to evaluate the
above factors.

Management of the Company,  while not especially experienced in matters relating
to the new business of the Company,  shall rely upon their own efforts and, to a
much lesser extent, the efforts of the Company's shareholders,  in accomplishing
the business  purposes of the Company.  It is not  anticipated  that any outside
consultants or advisors, other than the Company's legal counsel and accountants,
will be utilized by the Company to effectuate  its business  purposes  described
herein.  However,  if the  Company  does retain  such an outside  consultant  or
advisor,  any  cash  fee  earned  by  such  party  will  need  to be paid by the
prospective merger/acquisition candidate, as the Company has no cash assets with
which to pay such  obligation.  There have been no contracts or agreements  with
any outside consultants and none are anticipated in the future.

It  is  anticipated  that  the  Company  will  incur  nominal  expenses  in  the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these  anticipated  expenses,  present  management and
shareholders  of the Company may pay these charges with their personal funds, as
loans to the Company.  However,  the only opportunity  which management and such
shareholders  have to have these loans repaid will be from a prospective  merger
or acquisition candidate.

Liquidity and Capital Resources
-------------------------------

As of December  31, 2002,  the Company had no  significant  assets.  The Company
anticipates  that its major  shareholders  will contribute  sufficient  funds to
satisfy the cash needs of the Company through  calendar year ending December 31,
2003. However,  there can be no assurances to that effect, as the Company has no
revenues  and the  Company's  need for  capital  may change  dramatically  if it
acquires an interest in a business  opportunity  during that period. The Company
has no future plans to raise  additional  capital through private  placements or
public registration of its securities until a merger or acquisition candidate is
identified.

The  Company  has no  current  plans  for the  purchase  or sale of any plant or
equipment. The Company has no current plans to make any changes in the number of
employees.

Going Concern
-------------

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

It is the Company's  belief that it will continue to incur nominal losses for at
least the next twelve months, and as a result will require additional funds from
debt or equity investments to meet such needs. Without realization of additional
capital,  it would be unlikely  for the Company to continue as a going  concern.
The Company  anticipates  that its officers  and  shareholders  will  contribute
sufficient  funds to satisfy  the cash needs of the  Company for the next twelve
months.  However,  there can be no assurances to that effect, as the Company has
no revenues and the Company's need for capital may change  dramatically if it is
successful  in acquiring a new  business.  If the Company  cannot  obtain needed
funds,  it may be  forced to  curtail  or cease its  activities.  To meet  these
objectives,  management's plans are to (i) raise capital by obtaining  financing
through private placement efforts, (ii) issue common stock for services rendered
in lieu of cash payments and (iii) obtain loans from  officers and  shareholders
as necessary.



                                       7
<PAGE>

The Company's future ability to achieve these objectives cannot be determined at
this time. The accompanying  financial statements do not include any adjustments
that  might  result  from the  outcome  of this  uncertainty  and  should not be
regarded as typical for normal operating periods.

ITEM 7.     FINANCIAL STATEMENTS

The financial statements of the Company are filed as an exhibit hereto.

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

None.






























                                       8
<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE

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            38        Chairman, Chief Executive
                                    Officer, President and Director     1993
Gilbert A. Valdez         59        Director                            1996
Araldo A. Cossutta        78        Director                            1994
Steven W. Evans           52        Director                            1994
Robert E. Gross           58        Director                            1994
Thomas J. Kirchhofer      62        Director                            1994

Executive  Officers of the  Company are elected on an annual  basis and serve at
the  discretion of the Board of Directors.  Directors of the Company are elected
on an  annual  basis.  All  directors  agreed to  remain  until the 2003  annual
meeting.

Scott A. Haire is Chairman of the Board,  Chief Executive  Officer and President
of the Company.  Prior to founding MedBanc Data Corporation,  he was an employee
of the  Company  from  November  1993 to June 1994.  Previously,  Mr.  Haire was
president of Preferred  Payment  Systems,  a company  specializing in electronic
claims and insurance system related projects.

Gilbert A. Valdez is Chief  Operating  Officer of the Company and past President
and CEO of four major financial and healthcare  corporations.  Most recently, he
served as CEO of Hospital Billing and Collection Services,  Inc., a $550 million
healthcare receivables financing entity located in Wilmington,  Delaware;  Datix
Corporation, an Atlanta-based corporate divestiture from Harris-Lanier; Medaphis
Corporation, an interstate, multi-dimensional healthcare service agency based in
Atlanta;  and NEIC, a national consortium of 40 major insurance companies formed
for development of electronic claim billing  standards.  Mr. Valdez has 30 years
of senior healthcare receivables financing experience.

Araldo A.  Cossutta is President of Cossutta and  Associates,  an  architectural
firm  based  in New  York  City,  with  major  projects  throughout  the  world.
Previously,  he was a partner  with I.M. Pei & Partners and is a graduate of the
Harvard  Graduate  School of Design and the Ecole des Beaux  Arts in Paris.  Mr.
Cossutta was a significant  shareholder  in Personal  Computer Card  Corporation
("PC3") and was chairman of PC3 at the time of its acquisition by the Company in
November  1993.  He is also was a large  shareholder  and  director  of Computer
Integration Corporation of Boca Raton, Florida from 1993 to 2000.

Steven W. Evans is a Certified Public Accountant and President of Evans Phillips
& Co., PSC, an accounting firm which he established in 1976 in Barbourville  and
Middlesboro,  Kentucky.  He is also a founder and active in PTRL, which operates
contract research laboratories located in Kentucky,  North Carolina,  California
and Germany. He is also a founder and active in the management of environmental,
financial and hotel corporations in Kentucky and Tennessee.

Robert E. Gross is President of R. E. Gross & Associates,  providing  consulting
and systems  projects  for clients in the  multi-location  service,  banking and
healthcare  industries.  From 1987 to 1990,  he was vice  president  - technical
operations for Medaphis  Physicians Service Corp.,  Atlanta,  Georgia.  Prior to
that,  he held  executive  positions  with  Chi-Chi's,  Inc.,  Royal  Crown  and
TigerAir. He also spent 13 years as an engineer with IBM.



                                       9
<PAGE>

Thomas J. Kirchhofer is president of Synergy Wellness  Centers of Georgia,  Inc.
He is past president of the Georgia Chiropractic Association.

Compliance with Section 16(a) of the Exchange Act

Based  solely upon a review of Forms 3, 4 and 5 furnished  to the  Company,  the
Company is not aware of any individuals who during the period ended December 31,
2002 were directors,  officers, or beneficial owners of more than ten percent of
the common  stock of the  Company,  and who failed to file,  on a timely  basis,
reports required by Section 16(a) of the Securities Exchange Act of 1934.

ITEM  10.  EXECUTIVE COMPENSATION

Executive Compensation
----------------------

Except as set forth below, no compensation in excess of $100,000 was awarded to,
earned  by, or paid to any  executive  officer of the  Company  during the years
2002,  2001, and 2000. The following  table and the  accompanying  notes provide
summary  information for each of the last three fiscal years concerning cash and
non-cash compensation paid or accrued by the Company's current and past officers
over the past three years.
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

--------------------------- ------------------------------------- -------------------------------------------------------
                                    Annual Compensation                           Long Term Compensation
--------------------------- ------------------------------------- -------------------------------------------------------
                                                                            Awards                      Payouts
----------------------------------------------------------------- ---------------------------- --------------------------
                                                        Other      Restricted    Securities
Name and                                               Annual        Stock       Underlying      LTIP       All Other
Principal              Year    Salary       Bonus    Compensation   Award(s)       Options      payouts    Compensation
Position                        ($)          ($)         ($)          ($)          SARs(#)        ($)          ($)
------------------- -------- ------------ ---------- ------------ ------------- -------------- ---------- ---------------
<S>                 <C>      <C>          <C>        <C>          <C>           <C>            <C>        <C>
Scott A. Haire         2002     60,000        -           -            -              -            -            -
                       2001   $120,000        -           -            -              -            -            -
                       2000   $120,500        -           -            -              -            -            -
------------------- -------- ------------ ---------- ------------ ------------- -------------- ---------- ---------------
</TABLE>

Compensation of Directors
-------------------------

The Company's  directors are not currently  compensated  for their services as a
director of the Company and are not currently reimbursed for out-of-pocket costs
incurred in attending meetings.

Board of Directors Committees
-----------------------------

The  board  of  directors  has not  yet  established  an  audit  committee  or a
compensation  committee.  An  audit  committee  typically  reviews,  acts on and
reports  to the  board  of  directors  with  respect  to  various  auditing  and
accounting matters, including the recommendations and performance of independent
auditors,  the scope of the annual  audits,  fees to be paid to the  independent
auditors, and internal accounting and financial control policies and procedures.
Certain stock exchanges  currently  require  companies to adopt a formal written
charter that establishes an audit committee that specifies the scope of an audit
committee's  responsibilities  and the  means  by  which it  carries  out  those
responsibilities.  In order to be listed on any of these  exchanges,  we will be
required to establish an audit committee.

The board of directors has not yet established a compensation committee.





                                       10
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain  information  concerning the ownership of
the  Company's  common stock as of December 31, 2002,  with respect to: (i) each
person known to the Company to be the beneficial owner of more than five percent
of the  Company's  common stock;  (ii) all  directors;  and (iii)  directors and
executive  officers  of the  Company  as a group.  The  notes  accompanying  the
information in the table below are necessary for a complete understanding of the
figures provided below.

As of December  31, 2002,  there were 822,810  shares of common stock issued and
outstanding.

                                               Amount and Nature
Title    Name of Beneficial                     of Beneficial           Percent
Class    Owner of Group (1)                       Ownership             of Class
-----    ------------------                    -----------------        --------

Common   Scott A. Haire (2)                         300,213                35%

Common   Araldo A. Cossutta (3)                      31,000                 4%

Common   Steven W. Evans (4)                         17,000                 2%

Common   Thomas J. Kirchhofer (5)                     1,500                  *

Common   Robert E. Gross (6)                          2,000                  *

Common   Gilbert Valdez (7)                           6,000                  *

Common   All Directors and Executive Officers
         As a Group (six in number)                 357,713                41%

Common   Robert Shaw (8)                            110,000                13%

Common   Imagine Investments                         45,000                 5%

* Less than 1%

(1)  Unless  otherwise  noted,  the address for each person or entity  listed is
     2225 E. Randol Mill Road, Suite 305, Arlington, Texas, 76011.
(2)  Includes  33,000  shares  subject  to  stock  options  that  are  presently
     exercisable.
(3)  Includes   1,000  shares  subject  to  stock  options  that  are  presently
     exercisable.
(4)  Includes 2,000 shares subject to options that are presently exercisable.
(5)  Consists 1,500 of shares subject to options that are presently exercisable.
(6)  Consists 2,000 of shares subject to options that are presently exercisable.
(7)  Includes 3,000 shares subject to options that are presently exercisable.
(8)  Mr. Shaw has sole voting and dispositive power with respect to 1,506 shares
     and shares voting and dispositive power with respect to 131,494 shares. Mr.
     Shaw is presently principally occupied as an executive officer and director
     of  Consolidated  National  Corporation  ("CNC"),  a privately held company
     organized  under the laws of the State of Florida.  CNC has sole voting and
     dispositive power with respect to 21,494 shares.  The principal business of
     CNC is investment,  management and consulting.  Mr. Shaw is an affiliate of
     RMS Investments,  Ltd., a limited  partnership  organized under the laws of
     the State of Florida  ("RMS").  RMS has sole voting and  dispositive  power
     with respect to 110,000 shares.  The principal business of RMS Investments,
     Ltd. is investment  holdings.  Mr. Shaw is also a director and President of
     Imagine.  Each of Mr. Shaw, CNC and RMS have their  principal  business and
     principal office address at 504 Clubside Circle, Venice, Florida 34293.


                                       11
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective August 1, 2002, the Company sold its 99% equity interest in eAppliance
Innvoations,  LLC to  eAppliance  Payment  Solutions,  LLC in  exchange  for the
assumption by eAppliance  Payment  Solutions,  LLC of  substantially  all of the
Company's  liabilities.  Mr. Scott A. Haire,  the Company's  President and Chief
Executive  Officer  directly owns 0.5%, of the  membership  interests in Payment
Solutions, and beneficially may be deemed to own an additional 57.8% through HEB
LLC and SAH, LLC. Mr. Haire is also the Manager of Payment Solutions.

Mr.  Gilbert  Valdez and Mr.  Araldo  Cossutta,  each a director of the Company,
directly  own 0.5%,  and 16.44%,  respectively,  of the  membership  interest in
Payment Solutions.  Mr. Cossutta may be deemed to beneficially own an additional
8.38%  of the  membership  interests  of  Payment  Solutions  thorough  Patricia
Cossutta, his wife.

Mr.  Richard F. Dahlson,  a partner with the law firm of Jackson  Walker L.L.P.,
the Company's  chief legal  counsel,  owns 7.51% of the  membership  interest in
Payment Solutions.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits.
     --------

     Exhibit No.

     3.1  Articles  of   Incorporation  .  (incorporated  by  reference  to  the
          Company's Form 10-QSB for the fiscal quarter ended June 30, 2002)

     3.2  Bylaws .  (incorporated  by reference to the Company's Form 10-QSB for
          the fiscal quarter ended June 30, 2002)

     10.1 Restructure  and Settlement  Agreement dated as of November 5, 2001 by
          and  among  MB  Software  Corporation,  Healthcare  Innovations,  LLC,
          Imagine Investments, Inc., and XHI(2), Inc. (incorporated by reference
          to the Company's  Form 10-QSB for the fiscal  quarter ended  September
          30, 2001)

     31.1 Certification of Principal  Executive Officer and Principal  Financial
          Officer  in  accordance  with 18 U.S.C.  Section  1350,  as adopted by
          Section 302 of the Sarbanes-Oxley Act of 2002*

     32.1 Certification of Principal  Executive Officer and Principal  Financial
          Officer  in  accordance  with 18 U.S.C.  Section  1350,  as adopted by
          Section 906 of the Sarbanes-Oxley Act of 2002*

*    Filed herewith

(b)  Reports on Form 8-K. None.
     --------------------

ITEM 14.   CONTROLS AND PROCEDURES

The chief executive  officer and the principal  financial officer of the Company
have  concluded  based on their  evaluation as of a date within 90 days prior to
the date of the filing of this Report,  that the Company's  disclosure  controls
and procedures are effective to ensure that information required to be disclosed
by the Company in the reports filed or submitted by it under the  Securities Act
of 1934, as amended, is recorded, processed,  summarized and reported within the


                                       12
<PAGE>

time periods  specified in the  Securities and Exchange  Commission's  rules and
forms, and include  controls and procedures  designed to ensure that information
required to be disclosed by the  Commission in such reports is  accumulated  and
communicated  to  the  Company's   management,   including  the  president,   as
appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 29th day of August 2003.

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

---------------------- --------------------------------------- -----------------
Signature              Title                                    Date
---------              -----                                    ----

/s/ Scott A. Haire     CEO, President, Chairman and Principal
------------------     Financial Officer                        August 29, 2003
Scott A. Haire
---------------------- --------------------------------------- -----------------





                                       13
<PAGE>

                                INDEX TO EXHIBITS


(a)  Exhibits

     31.1 Certification of Principal  Executive Officer and Principal  Financial
          Officer  in  accordance  with 18 U.S.C.  Section  1350,  as adopted by
          Section 302 of the Sarbanes-Oxley Act of 2002

     32.1 Certification of Principal  Executive Officer and Principal  Financial
          Officer  in  accordance  with 18 U.S.C.  Section  1350,  as adopted by
          Section 906 of the Sarbanes-Oxley Act of 2002


































                                       14
<PAGE>

1










                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
                   Index to Consolidated Financial Statements


Independent Auditors' Report ........................................   F-2

Independent Auditors' Report ........................................   F-3

Consolidated Balance Sheet as of December 31, 2002...................   F-4

Consolidated Statements of Operations for the years ended
December 31, 2002 and 2001...........................................   F-5

Consolidated Statements of Changes in Stockholders' Equity for years
ended December 31, 2002 and 2001.....................................   F-6

Consolidated Statements of Cash Flows for the years ended
December 31, 2002 and 2001...........................................   F7 - F8

Notes to the Consolidated Financial Statements.......................   F9 - F19































                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
MB Software Corporation

We have  audited  the  accompanying  consolidated  balance  sheet of MB Software
Corporation,  a  Texas  Corporation,  and  Subsidiaries  (the  "Company")  as of
December 31, 2002, and the related consolidated statement of operations, changes
in  stockholders'  equity,  and cash flows for the year ended December 31, 2002.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of the
Company as of December 31, 2002,  and the results of their  operations and their
cash  flows for the year then  ended,  in  conformity  with  generally  accepted
accounting principles in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial  statements,  the  Company  has  incurred  recurring  losses and has a
significant accumulated deficit. These factors raise substantial doubt about the
Company's ability to continue as a going concern.  Management's  plans in regard
to these matters are also  discussed in Note 2. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


Clancy and Co., P.L.L.C.
Phoenix, Arizona

May 16, 2003










                                      F-2
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


Board of Directors and Shareholders
MB Software Corporation and Subsidiaries


We have audited the accompanying consolidated statements of operations,  changes
in shareholders' deficit, and cash flows for the year ended December 31, 2001 of
MB  Software   Corporation  and  subsidiaries.   These  consolidated   financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the consolidated  results of operations and
cash  flows of MB  Software  Corporation  and  subsidiaries  for the year  ended
December 31, 2001, in conformity with accounting  principles  generally accepted
in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial  statements,  the Company has  continuously  incurred losses and has a
working  capital  deficit,  all of  which  raise  substantial  doubt  about  the
company's ability to continue as a going concern.  Management's  plans in regard
to these matters are also  discussed in Note 2. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.



WEAVER AND TIDWELL, L.L.P.

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















                                      F-3
<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2002

ASSETS
------
Current Assets
   Cash                                                             $       151
                                                                    -----------
Total current assets                                                        151
                                                                    -----------

Total Assets                                                        $       151
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities                                                         $      --

Stockholders' Equity
   Preferred stock, $10 par value, 5,000,000 shares authorized;
      issued and outstanding: none                                         --
   Common stock:  $0.001 par value;  20,000,000 shares authorized;
      issued and outstanding: 822,810                                       823
   Additional paid-in capital                                         8,632,456
   Accumulated deficit                                               (8,621,089)
                                                                    -----------
                                                                         12,190
   Less, treasury stock, at cost;  4,089 shares                         (12,039)
                                                                    -----------
Total Stockholders' Equity                                                  151
                                                                    -----------
Total Liabilities and Stockholders' Equity                          $       151
                                                                    ===========

























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

                                      F-4

<PAGE>


                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                         2002           2001
                                                     --------------------------
Revenues from product sales                          $      --      $    20,959
Cost of product sales                                       --           19,949
                                                     --------------------------
Gross profit                                                --            1,010

Operating Expenses
   Selling, general and administrative                   617,105      1,449,084
                                                     --------------------------

Loss from operations                                    (617,105)    (1,448,074)

Other Income (Expense)
   Net assets related to Portalook written off          (292,347)          --
   Write off of receivables - related party             (397,359)          --
   Forgiveness of debt - unrelated party                 195,986
   Interest expense                                     (187,124)      (328,330)
   Interest income                                        14,497         28,486
                                                     --------------------------
Total other income (expense)                            (666,347)      (299,844)

Loss before benefit for income taxes                  (1,283,452)    (1,747,918)

Benefit for income taxes                                 (78,676)       (74,136)
                                                     --------------------------

Loss from continuing operations                       (1,204,776)    (1,673,782)

Discontinued operations
   Income from operations, net of tax effect
       of $78,676 and $74,136, respectively              152,720        143,911
                                                     --------------------------

Net loss                                             $(1,052,056)   $(1,529,871)
                                                     ==========================


Loss from continuing operations                      $(1,204,776)   $(1,673,782)
Plus cumulative preferred stock dividends               (113,333)      (340,000)
                                                     --------------------------
Loss available to common stockholders                $(1,318,109)   $(2,013,782)
                                                     ==========================

Basic and Diluted Loss Per Share:
   Continuing operations                             $     (1.53)   $     (2.35)
   Discontinued operations                                  0.19           0.20
                                                     --------------------------
                                                     $     (1.34)   $     (2.15)
                                                     ==========================

Weighted Average Common Shares Outstanding               785,676        712,342
                                                     ==========================





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

                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                        YEARS DECEMBER 31, 2002 AND 2001

                                       Series A       Series A
                                      Preferred      Preferred        Common         Common
                                        Stock          Stock           Stock          Stock
                                       Shares         Amount          Shares         Amount
                                     --------------------------------------------------------
<S>                                  <C>            <C>                <C>        <C>
Balance, December 31, 2000               340,000    $ 3,400,000        703,000    $       703
Stock issued for consulting
  agreement                                 --             --            1,000              1
Stock issued for assets                     --             --           30,000             30
Impairment of deferred license and
  consulting cost                           --             --             --             --
Warrants attached to issuance of
  debt                                      --             --             --             --
Warrants issued for compensation            --             --             --             --
Net loss                                    --             --             --             --
                                     --------------------------------------------------------
Balance, December 31, 2001               340,000      3,400,000        734,000            734
Common stock issued for cash                --             --            1,000              1
Restructure and Settlement
  Agreement dated November 5,
  2001 (settled on May 8,
  2002) (Note 4)                        (340,000)    (3,400,000)        45,000             45
Common stock issued for consulting
   services rendered                        --             --           46,000             46
Capital restructuring (Note 5)              --             --             --             --
Fractional shares adjustment                --             --           (3,190)            (3)
Net loss                                    --             --             --             --
                                     --------------------------------------------------------
Balance, December 31, 2002                  --      $      --          822,810    $       823
                                     ========================================================

                                     Additional
                                       Paid-In      Accumulated     Deferred       Treasury
                                       Capital        Deficit        Service         Stock
                                     --------------------------------------------------------
Balance, December 31, 2000           $ 1,504,028    $(6,039,162)   $  (232,466)   $   (12,039)
Stock issued for consulting
  agreement                               18,749           --             --             --
Stock issued for assets                  389,970           --             --             --
Impairment of deferred license and
  consulting cost                           --             --          232,466           --
Warrants attached to issuance of
  debt                                   127,310           --             --             --
Warrants issued for compensation          44,000           --             --             --
Net loss                                    --       (1,529,871)          --             --
                                     --------------------------------------------------------
Balance, December 31, 2001             2,084,057     (7,569,033)          --          (12,039)
Common stock issued for cash                 999           --             --             --
Restructure and Settlement
  Agreement dated November 5,
  2001 (settled on May 8,
  2002) (Note 4)                       4,254,161           --             --             --
Common stock issued for consulting
   services rendered                      45,954           --             --             --
Capital restructuring (Note 5)         2,247,282           --             --             --
Fractional shares adjustment                   3           --             --             --
Net loss                                    --       (1,052,056)          --             --
                                     --------------------------------------------------------
Balance, December 31, 2002           $ 8,632,456    $(8,621,089)   $      --      $   (12,039)
                                     ========================================================
</TABLE>


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 CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                                                   2002           2001
                                                                               --------------------------
<S>                                                                            <C>            <C>
Cash Flows From Operating Activities
------------------------------------
Loss from continuing operations                                                $(1,204,776)   $(1,673,782)
Adjustments to reconcile loss from continuing operations to net cash used in
      operating activities
   Accretion of debt                                                                68,747         58,562
   Depreciation and amortization                                                    71,480         61,120
   Deferred license and consulting costs recognized                                   --          232,466
   Stock issued for consulting services                                             46,000         18,750
   Warrants issued for compensation                                                   --           44,000
   Net assets written off - Portalook                                              292,347           --
   Disposal of fixed assets                                                          5,038
   Write off of receivables - related party                                        397,359           --
   Forgiveness of debt - unrelated party                                          (195,986)          --
   Other noncash items                                                             (12,944)          --
Changes in assets and liabilities:
   (Increase) decrease in accounts receivable                                         --           (6,088)
   (Increase) decrease in inventory                                                   --            8,266
   (Increase) decrease in prepaid expenses and other                               (12,919)       (13,024)
    Increase (decrease) in accounts payable and accrued liabilities                 47,105        137,690
    Increase (decrease) in employee advances                                          --           90,000
                                                                               --------------------------
Net cash used in continuing operations                                            (498,549)    (1,042,040)
Net cash provided by discontinued operations                                      (138,176)       294,608
                                                                               --------------------------
Net cash used in operating activities                                             (636,725)      (747,432)

Cash Flows From Investing Activities
------------------------------------
   Loans made on notes receivable to related party                                    --          (22,789)
   Capital expenditures                                                               --          (48,222)
                                                                               --------------------------
Net cash used in investing activities                                                 --          (71,011)

Cash Flows From Financing Activities
------------------------------------
   Cash overdraft                                                                  (23,652)        23,572
   Common stock issued for cash                                                      1,000           --
   Principal payments on borrowings                                                (68,226)      (239,337)
   Principal payments on capital leases                                               --           (1,494)
   Proceeds from loans and warrants                                                727,754        998,250
                                                                               --------------------------
Net cash provided by financing activities                                          636,876        780,991
                                                                               --------------------------

Increase (decrease) in cash                                                            151        (37,452)

Cash and cash equivalents, beginning of year                                          --           37,452
                                                                               --------------------------

Cash and cash equivalents, end of year                                         $       151    $      --
                                                                               ==========================
</TABLE>



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

                                      F-7
<PAGE>
<TABLE>
<CAPTION>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                                                  2002           2001
                                                                              ---------------------------
Cash paid during the year for:
------------------------------
<S>                                                                           <C>            <C>
   Interest                                                                   $     66,911   $    169,996
                                                                              ===========================
   Income taxes                                                               $       --     $       --
                                                                              ===========================

Supplemental noncash investing and financing activities:
--------------------------------------------------------
   Stock issued for assets                                                    $       --     $    390,000
                                                                              ===========================
   Accounts payable and accrued liabilities assumed in asset acquisition      $       --     $    214,000
                                                                              ===========================
   Fair value of assets exchanged in connection with the Restructure and
    Settlement Agreeement dated November 5, 2001                              $  3,943,928   $       --
                                                                              ===========================
   Liabilities disposed of in connection with capital restructuring           $  2,247,282   $       --
                                                                              ===========================
   Forgiveness of debt - unrelated party notes payable and accrued interest   $    195,986   $       --
                                                                              ===========================
   Notes receivable, impaired                                                 $    397,359   $       --
                                                                              ===========================
</TABLE>

































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

                                      F-8
<PAGE>

                    MB SOFTWARE CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------

Organization and Nature of Operations.  MB Software  Corporation (the "Company")
was  originally  formed on July 14, 1983, in the State of Utah and after several
name changes and a change of domicile,  is now known as MB SOFTWARE CORPORATION,
a Texas  Corporation,  with an authorized capital of 20,000,000 shares of $0.001
par  value  common  stock and $10 par value  preferred  stock.  The focus of the
Company has been to provide practice and cash management services to physicians,
dentists and chiropractors.

In July of 2001,  the  Company  acquired  certain  assets  and  assumed  certain
liabilities  of  Portalook,   a  California   based  company,   which  developed
proprietary   technology  for  use  in  enabling  Internet  Transaction  Devices
("ITD's") to be used as transaction  processing  devices in the field. (See Note
11)

On November 5, 2001,  the Company  entered  into a  Restructure  and  Settlement
Agreement with Imagine Investments, Inc. ("Imagine"). Pursuant to the agreement,
which was  approved  by the  shareholders  on  February  11,  2002,  the Company
transferred  its  interest  in NFPM and  issued  common  stock in  exchange  for
settlement of debt and preferred  stock. As a result of this agreement,  certain
assets,  liabilities and operations of NFPM are presented as discontinued.  (See
Notes 4 and 12)

Effective  June 13,  2002,  the  Company  reincorporated  in the  State of Texas
through a merger of the Company with a newly formed wholly-owned subsidiary.  At
the effective date of the merger each share of the company's  outstanding common
stock was converted into one share of the reincorporated  company's common stock
and all options to purchase  shares of common stock were  converted into options
to purchase shares of the reincorporated common stock at the time of the merger.
All of the company's officers and directors became officers and directors of the
reincorporated company after the merger. The reincorporation was approved at the
Company's Annual Meeting of Shareholders held on February 11, 2002.

Effective  June 24, 2002,  the Company  effected a one-for-one  hundred  reverse
stock split and amended the  Company's  Article of  Incorporation  to reduce the
number  of  authorized  shares  of  common  stock  from  150,000,000  shares  to
20,000,000  shares,  and increased the number of authorized  shares of preferred
stock from 1,000,000 shares to 5,000,000 shares (the  "Amendment").  The reverse
stock  split and  Amendment  were  approved by the Board of  Directors  and by a
majority of the Company's shareholders on June 21, 2002.

The Company does not  currently  have any business  operations.  The Company has
explored the possibility of selling or merging with another  company.  (See Note
2)

Significant Accounting Policies.

Principles  of  Consolidation  and  Presentation  - The  consolidated  financial
statements   include  the   accounts   of  the  Company  and  its   wholly-owned
subsidiaries, Healthcare Innovations, LLC (HI), North Florida Physical Medicine,
LLC (NFPM), MB Practice  Solutions,  LLC (MBPS),  and its  majority-owned  (99%)
subsidiary eAppliance Innovations, LLC. The minority interest (1%) of eAppliance
Innovations,  LLC  is  owned  0.5%  by  the  Company's  president  and  majority
stockholder  and  0.5%  by  a  director  of  the  Company.   The  Company  fully
consolidates   the   assets,   liabilities,   revenues   and   expenses  of  its
majority-owned  subsidiary  because  it  has  control  over  the  operating  and
financing  decisions of this subsidiary,  and the operating results or financial
position would not differ from those that would have been obtained if the entity
was  wholly-owned.   All  intercompany   transactions  and  balances  have  been
eliminated upon consolidation.

Accounting  Basis - The Company's  financial  statements  are prepared using the
accrual basis of accounting.


                                      F-9
<PAGE>

Use of Estimates - The  preparation of financial  statements in conformity  with
generally  accepted  accounting  principles  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses  during the reporting  period.  Management  makes its best
estimate of the ultimate outcome for these items based on historical  trends and
other information available when the financial statements are prepared.  Changes
in estimates  are  recognized in accordance  with the  accounting  rules for the
estimate,  which  is  typically  in the  period  when  new  information  becomes
available to management. Actual results could differ from those estimates.

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

Management  evaluates  accounts  receivable  balances  on an  ongoing  basis and
provides  allowances  as necessary for amounts  estimated to  eventually  become
uncollectible.   The  allowance  for  uncollectible   accounts  receivable  from
continuing   operations  for  December  31,  2001  was  $0.  (See  Note  12  for
discontinued operations)

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

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

Inventory - Inventory is recorded at cost on a first-in, first-out basis.

Property and Equipment - Property and equipment are stated at cost. Depreciation
for financial  statement  purposes is computed  principally on the straight-line
method over the estimated  useful lives of the related  assets ranging from five
to seven years.  Maintenance and repairs are expensed as incurred.  Replacements
and  betterments  are  capitalized.  Depreciation  expense  for the years  ended
December 31, 2002 and 2001 were $10,016 and $9,900, respectively.

Revenue  Recognition - The Company's operating revenue for 2001 consisted of ITD
sales  which  are   recognized   upon  shipment  to  customers.   Revenues  from
discontinued  operations  consist of sales of the Company's  medical clinic fees
which are recognized at the time the medical services are rendered. (See Note 12
for discontinued operations)

Contractual  Adjustments  and  Contractual  Allowances - Medical clinic fees are
reported net of contractual adjustments. Contractual adjustments are adjustments
made to gross medical clinic fees for the amounts  contractually not billable to
third party payors and/or  adjustments  for  uncollectible  charges.  Management
periodically  analyzes these adjustments and adjusts the allowances for doubtful
accounts and contractual allowances  accordingly.  Management's  adjustments for
allowance for doubtful accounts and contractual  adjustments require significant
estimates  and it is at least  reasonably  possible that these  estimates  could
"change in the near term." (See Note 12)

Software  Development - The Company capitalizes software development costs after
technological  feasibility has been  established in accordance with Statement of
Financial  Accounting  Standards  ("SFAS") No. 86,  "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise  Marketed." Software costs are
amortized  over the greater of the ratio that current gross revenues bear to the
current and future  gross  revenues or amortized  using the straight  line basis
over the estimated economic life of the software.


                                      F-10
<PAGE>

Amortization  expense for 2002 and 2001 was $61,464 and  $51,220,  respectively.
Net software license costs purchased from Portalook of $307,316 were written off
during 2002. (See Note 11)

Software  development  costs incurred by the Company for the  development of the
PatentMed 2000 internet  appliance of $243,963 were expensed in 2001 and $70,000
in 2002.

Long-lived Assets - Long-lived assets and certain identifiable intangibles to be
held and used by the Company are  reviewed  for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be recoverable.  The Company  continuously  evaluates the  recoverability of its
long-lived  assets  based on  estimated  future  cash  flows  and the  estimated
liquidation value of such long-lived assets, and provides for impairment if such
undiscounted  cash flows are  insufficient to recover the carrying amount of the
long-lived  assets.  If  impairment  exists,  an adjustment is made to write the
asset down to its fair value,  and a loss is recorded as the difference  between
the carrying value and fair value.  Fair values are  determined  based on quoted
market values,  discounted  cash flows or internal and external  appraisals,  as
applicable.  Assets to be disposed of are carried at the lower of carrying value
or estimated net realizable value.

Income Taxes - The Company  accounts for income  taxes under the  provisions  of
SFAS No. 109, "Accounting for Income Taxes." Under SFAS No. 109, deferred income
tax assets and liabilities  are computed for  differences  between the financial
statements 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  income 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.

Stock-Based  Compensation - The Company  accounts for  stock-based  compensation
using the  intrinsic  value method  prescribed in  Accounting  Principles  Board
Opinion No. 25,  "Accounting for Stock Issued to Employees."  Compensation  cost
for stock options,  if any, is measured as the excess of the quoted market price
of the Company's stock at the date of grant over the amount an employee must pay
to acquire the stock. SFAS No. 123,  "Accounting for Stock-Based  Compensation,"
established  accounting and  disclosure  requirements  using a  fair-value-based
method of accounting for stock-based  employee  compensation  plans. The Company
has elected to remain on its current  method of accounting  as described  above,
and has adopted the pro forma disclosure requirements of SFAS No. 123.

Earnings  Per Share - Basic  earnings or loss per share is based on the weighted
average number of common shares outstanding.  Diluted earnings or loss per share
is based on the  weighted  average  number  of  common  shares  outstanding  and
dilutive common stock equivalents.  Basic earnings/loss per share is computed by
dividing net  income/loss  (numerator) by the weighted  average number of common
shares outstanding  (denominator) for the period. All earnings or loss per share
amounts in the financial  statements  are basic  earnings or loss per share,  as
defined by SFAS No.  128,  "Earnings  Per Share."  Diluted  earnings or loss per
share does not differ  materially  from basic earnings or loss per share for all
periods  presented.  Convertible  securities that could potentially dilute basic
earnings or loss per share in the future, such as options and warrants,  are not
included in the computation of diluted  earnings or loss per share because to do
so would be antidilutive.  All per share and per share  information are adjusted
retroactively to reflect stock splits and changes in par value.

Related Party  Transactions  - A related  party is generally  defined as (i) any
person that holds 10% or more of the Company's  securities  and their  immediate
families,  (ii)  the  Company's  management,  (iii)  someone  that  directly  or
indirectly  controls,  is  controlled  by or is under  common  control  with the
Company,  or (iv)  anyone who can  significantly  influence  the  financial  and
operating  decisions of the Company. A transaction is considered to be a related
party  transaction when there is a transfer of resources or obligations  between
related parties. (See Note 3)


                                      F-11
<PAGE>

Reclassification  - Certain  prior  period  amounts  have been  reclassified  to
conform  to the  current  year  presentation.  These  changes  had no  effect on
previously reported results of operations or total stockholders' equity.

Recent  Accounting  Pronouncements  - The Financial  Accounting  Standards Board
("FASB") has issued the following pronouncements,  none of which are expected to
have a significant affect on the financial statements:

April 2002 - SFAS No. 145 - "Rescission  of FASB  Statements  No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical  Corrections."  Under SFAS No.
4, all  gains  and  losses  from  extinguishment  of debt  were  required  to be
aggregated and, if material, classified as an extraordinary item, net of related
income tax effect. This Statement eliminates SFAS No. 4 and, thus, the exception
to applying  APB No. 30 to all gains and losses  related to  extinguishments  of
debt.  As a result,  gains and  losses  from  extinguishment  of debt  should be
classified as extraordinary  items only if they meet the criteria in APB No. 30.
Applying the  provisions of APB No. 30 will  distinguish  transactions  that are
part of an  entity's  recurring  operations  from  those  that  are  unusual  or
infrequent  or that meet the criteria  for  classification  as an  extraordinary
item.  Under SFAS No. 13, the required  accounting  treatment  of certain  lease
modifications that have economic effects similar to sale-leaseback  transactions
was  inconsistent  with the required  accounting  treatment  for  sale-leaseback
transactions.  This  Statement  amends  SFAS No. 13 to require  that those lease
modifications   be   accounted   for  in  the  same  manner  as   sale-leaseback
transactions.  This  statement  also makes  technical  corrections  to  existing
pronouncements.  While those  corrections are not substantive in nature, in some
instances, they may change accounting practice.

June  2002 - SFAS No.  146 -  "Accounting  for  Costs  Associated  with  Exit or
Disposal   Activities."  This  Statement  addresses  financial   accounting  and
reporting for costs  associated  with exit or disposal  activities and nullifies
Emerging  Issues Task Force (EITF) Issue No. 94-3,  "Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including Certain Costs Incurred in a Restructuring)." The principal difference
between this Statement and EITF 94-3 relates to its requirements for recognition
of a liability for a cost  associated  with an exit or disposal  activity.  This
Statement  requires  that a  liability  for a cost  associated  with  an exit or
disposal activity be recognized when the liability is incurred. Under EITF 94-3,
a liability  was  recognized  at the date of an entity's  commitment  to an exit
plan.  This  Statement is  effective  for exit or disposal  activities  that are
initiated after December 31, 2002.

October 2002 - SFAS No. 147 - "Acquisitions of Certain  Financial  Institutions,
an amendment of FASB Statements No. 72 and 144 and FASB  Interpretation  No. 9,"
which  applies to the  acquisition  of all or part of a  financial  institution,
except for a transaction  between two or more mutual  enterprises.  SFAS No. 147
removes  the  requirement  in SFAS  No.  72 and  Interpretation  9  thereto,  to
recognize and amortize any excess of the fair value of liabilities  assumed over
the fair value of tangible and  identifiable  intangible  assets  acquired as an
unidentifiable intangible asset. This statement requires that those transactions
be accounted for in accordance with SFAS No. 141,  "Business  Combinations," and
SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets."  In  addition,  this
statement  amends SFAS No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived Assets," to include certain financial institution-related  intangible
assets.  This  statement is  effective  for  acquisitions  for which the date of
acquisition  is on or  after  October  1,  2002,  and is not  applicable  to the
Company.

December   2002   -   SFAS   No.   148   -    "Accounting    for   Stock   Based
Compensation-Transition  and  Disclosure."  This statement was issued to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  Statement  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  This  statement  is effective  for  financial
statements for fiscal years ending after December 15, 2002.  This statement does
not  have  any  impact  on the  Company  because  the  Company  does not plan to
implement the fair value method.


                                      F-12
<PAGE>

January 2003 - FASB issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation
of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires
certain variable interest entities to be consolidated by the primary beneficiary
of  the  entity  if  the  equity  investors  in  the  entity  do  not  have  the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial support from other parties.  FIN 46 is effective for all
new variable  interest  entities created or acquired after January 31, 2003. For
variable  interest  entities  created or acquired prior to February 1, 2003, the
provisions  of FIN 46 must be applied  for the first  interim  or annual  period
beginning after June 15, 2003.

April  2003 - SFAS No.  149,  "Accounting  for  Amendment  of  Statement  133 on
Derivative  Instruments  and Hedging  Activities,"  which  amends and  clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under FASB Statement No. 133, Accounting for Derivative  Instruments and Hedging
Activities.  This Statement is generally effective for contracts entered into or
modified   after  June  30,  2003,   and  all   provisions   should  be  applied
prospectively. This statement does not affect the Company.

May 2003 - SFAS No. 150,  "Accounting  for Certain  Financial  Instruments  with
Characteristics of both Liabilities and Equity," which establishes standards for
how an  issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of both  liabilities  and equity.  It  requires  that an issuer
classify a financial  instrument  that is within its scope as a liability (or an
asset  in  some  circumstances).  This  Statement  is  effective  for  financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003. It is to be implemented by reporting the cumulative  effect of a change in
an accounting  principle for financial  instruments  created before the issuance
date of the Statement and still  existing at the beginning of the interim period
of adoption.  Restatement is not  permitted.  This statement does not affect the
Company.

Pending  accounting  pronouncements  - It is  anticipated  that current  pending
accounting  pronouncements  will not have an  adverse  impact  on the  financial
statements of the Company.

NOTE 2 - GOING CONCERN
----------------------

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

It is the  Company's  belief that it will  continue to incur losses for at least
the next twelve months,  and as a result will require additional funds from debt
or equity  investments  to meet such needs.  Without  realization  of additional
capital,  it would be unlikely  for the Company to continue as a going  concern.
The Company  anticipates that its shareholders will contribute  sufficient funds
to satisfy the cash needs of the Company  for the next twelve  months.  However,
there can be no  assurances  to that effect,  as the Company has no revenues and
the Company's  need for capital may change  dramatically  if it is successful in
acquiring a new business.  If the Company cannot obtain needed funds,  it may be
forced  to  curtail  or  cease  its  activities.   To  meet  these   objectives,
management's  plans are to (i) raise  capital  by  obtaining  financing  through
private placement efforts, (ii) issue common stock for services rendered in lieu
of cash payments and (iii) obtain loans from shareholders as necessary.


                                      F-13
<PAGE>

The Company does not  currently  have any business  operations.  The Company has
explored the  possibility of selling or merging with another  Company.  Although
the  Company  has not  entered  into any  binding  agreement  to  effect  such a
transaction, the board of directors of the Company does consider such offers and
would  consider all of the terms of any such offer as part of its fiduciary duty
to  determine  whether  any  such  transaction  is in the best  interest  of the
Company's stockholders.  If the board of directors does determine that a sale or
merger of the Company is in the best  interests of the  Company's  stockholders,
the board of  directors  may  determine  to pursue  such a  transaction  and the
consideration  to be paid in connection with such  transaction  would be used to
expand its  business  and fund  future  operations.  There is no  assurance  the
Company can raise funds through a sale or equity transaction, or if such funding
is available, that it will be on favorable terms.

The Company  faces all the risks  common to  companies  in their early stages of
development,  including  undercapitalization and uncertainty of funding sources,
high initial  expenditure  levels and  uncertain  revenue  streams,  an unproven
business  model,  and  difficulties in managing  growth.  The Company expects to
incur  losses as it expands its business  and will  require  additional  funding
during  the  next  twelve  months.   The  satisfaction  of  the  Company's  cash
requirements  hereafter will depend in large part on its ability to successfully
raise capital from external sources to fund operations. As a result, the Company
expects to aggressively  pursue additional sources of funds,  including debt and
equity  offerings.  The Company  plans to raise  capital by obtaining  financing
through private debt and or equity placements.  Management  believes that if the
Company is successful in those private placement efforts,  then the Company will
have  sufficient  capital to continue its operations  until the Company  becomes
profitable. To date, the Company has not been profitable.

Management  believes  that  actions  presently  taken to  revise  the  Company's
operating and financial  requirements provide the opportunity for the Company to
continue as a going  concern.  The  Company's  future  ability to achieve  these
objectives  cannot  be  determined  at this  time.  The  accompanying  financial
statements do not include any adjustments  that might result from the outcome of
this  uncertainty  and should not be regarded  as typical  for normal  operating
periods.

NOTE 3 - RELATED PARTY TRANSACTIONS

Note  receivable - Notes  receivable  due from Scott A. Haire,  a related party,
dated  November  1, 1999,  bearing  interest at 8% per annum,  for the  original
principal sum of $350,000 and accrued  interest through June 30, 2002 of $47,359
were written off during 2002 as management deemed it impaired.

Notes payable - The Company  converted various notes payable to shareholders and
other related parties during 2002. Interest expense incurred under related party
notes payable for the years ended  December 31, 2002 and 2001 was  approximately
$126,000 and $266,000, respectively. (See Notes 4 and 5)

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

Divestiture of Assets - Effective August 1, 2002, the Company sold substantially
all of its  assets to Payment  Solutions,  in  exchange  for the  assumption  by
Payment Solutions of substantially all of the Company's  liabilities.  Mr. Scott
A. Haire,  the Company's  President and Chief  Executive  Officer  directly owns
0.5%, of the membership interests in Payment Solutions,  and beneficially may be
deemed to own an  additional  57.8%  through HEB LLC and SAH,  LLC. Mr. Haire is
also the Manager of Payment Solutions. (See Note 5)


                                      F-14
<PAGE>

Mr. Gilbert  Valdez,  and Mr. Araldo  Cossutta,  each a director of the Company,
directly  own 0.5%,  and 16.44%,  respectively,  of the  membership  interest in
Payment Solutions.  Mr. Cossutta may be deemed to beneficially own an additional
8.38%  of the  membership  interests  of  Payment  Solutions  thorough  Patricia
Cossutta, his wife.

Mr.  Richard F. Dahlson,  a partner with the law firm of Jackson  Walker L.L.P.,
the Company's  chief legal  counsel,  owns 7.51% of the  membership  interest in
Payment Solutions.

Properties - The Company's headquarters are located at 2255 E. Randol Mill Road,
Suite 305,  Arlington,  Texas, 76011. The Company was obligated for rent expense
under a  noncancelable  lease at the rate of $2,720 per month  until the Company
divested its assets.  (See Note 5) Subsequent to that date,  the Company did not
pay any rent expense. The fair market value of the rent has not been included in
the financial statements because the amount is immaterial.

NOTE 4 - SALE OF BUSINESS
-------------------------

On May 8, 2002, the Company  completed the Restructure and Settlement  Agreement
with Imagine  Investments,  Inc.  (Imagine) for the sale of its medical  clinics
business  (NFPM).  In  accordance  with  the  agreement,  proceeds  ($4,634,203)
represented  the conversion of 340,000 shares of Series A Convertible  Preferred
Stock ($3,400,000),  dividends in arrears ($45,644), convertible debt ($800,000)
and accrued interest on the debt ($388,559), all held by Imagine, into 4,500,000
shares of common  stock and the Company  conveyed to Imagine  its  ownership  in
NFPM. The fair market value of the consideration given was $690,275 representing
the net assets in NFPM  ($629,999)  and the fair market  value of the  4,500,000
shares of common stock  ($60,276).  No gain or loss on the transaction  with the
preferred stockholder was recognized. The transaction resulted in a net increase
in stockholders' equity of approximately  $850,000.  The calculation of the gain
or loss did not include  $1,178,977 of  cumulative  preferred  stock  dividends,
which  were  not  required  to be paid to  Imagine  as part of the  sale.  These
dividends  were  cumulative but have never been declared as a result of past net
losses.  The  exclusion of the  dividends in the  calculation  does not have any
effect on total stockholders' equity. (See Notes 6 and 12)

NOTE 5 - DIVESTITURE OF ASSETS
------------------------------

Effective  August 1, 2002, the Company sold its ninety-nine  percent interest in
e-Appliance Innovations, LLC, a Nevada limited liability company, to e-Appliance
Payment   Solutions,   LLC,  a  Nevada  limited   liability   company  ("Payment
Solutions"),   in  exchange  for  the   assumption   by  Payment   Solutions  of
substantially all the Company's liabilities. E-Appliance Innovations constituted
substantially  all of the assets of the Company,  and held all of the  Company's
rights to the  Company's  proprietary  technology  designed  to enable  Internet
transaction  devices (ITDs) to be used as transaction  processing devices in the
field and the software programs implementing this technology that were developed
or acquired by the Company (the  "Technology").  In  connection  with this sale,
Payment  Solutions  granted the Company a  worldwide,  royalty-free,  perpetual,
non-exclusive license to use the Technology to develop, market, sell and operate
electronic client services to be made available to clients through the Company's
computer network.  The transaction  resulted in a decrease in liabilities and an
increase  in  total  stockholders'  equity  of  approximately  $2,247,000.   The
transaction occurred between entities under common control. (See Note 3)

NOTE 6 - 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 29,267,324  shares of common stock upon: (a) the sale of substantially all of
the  assets of the  Company;  (b) a change in control  of the  Company;  (c) the
dissolution of the Company; or (d) October 1, 2000. If the Series A Stock is not

                                      F-15
<PAGE>

converted into common stock,  it becomes  redeemable at the option of the holder
any time after  October 1, 2000 at a redemption  price of $10 per share.  Should
the Company  fail to redeem any share of the Series A Stock  after a  redemption
request,  the Series A stockholders  shall have the right to elect a majority of
the  Company's  board of  directors  and the Company  shall pay  interest on the
redemption  price at the  rate of prime  plus 5%  until  actually  redeemed.  At
December 31, 2002 and 2001,  dividends in arrears on preferred  stock was $0 and
$1,065,644, respectively. (See Note 4)

NOTE 7 - INCOME TAXES
---------------------

The deferred tax  consequences  of temporary  differences in reporting items for
financial  statement  and income tax purposes are  recognized,  as  appropriate.
Realization  of the future tax  benefits  related to the  deferred tax assets is
dependent on many factors,  including the Company's  ability to generate taxable
income  within  the net  operating  loss  carryforward  period.  Management  has
considered  these  factors  in  reaching  its  conclusion  as to  the  valuation
allowance for financial reporting purposes.

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

                                                       2002            2001
                                                   ------------    ------------
Current                                            $    (78,676)   $    (74,136)
Deferred                                                   --              --
                                                   ------------    ------------
Income tax expense (benefit)                       $    (78,676)   $    (74,136)
                                                   ============    ============

A reconciliation  of expected federal income tax expense  (benefit) based on the
U.S.  Corporate income tax rate of 34% to actual expense  (benefit) for 2002 and
2001 is as follows:

                                                       2002            2001
                                                   ------------    ------------
Expected federal income tax benefit                $   (357,699)   $   (520,156)
Valuation allowance and other                           279,023         446,020
                                                   ------------    ------------
Income tax expense (benefit)                       $    (78,676)   $    (74,136)
                                                   ============    ============

Deferred  tax assets and  liabilities  as of  December  31, 2002 and 2001 are as
follows:

                                                       2002            2001
                                                   ------------    ------------
Current deferred tax asset                         $       --      $    452,651
Valuation allowance                                        --          (452,651)
                                                   ------------    ------------
Net current deferred tax asset                             --              --

Non-current deferred tax asset                     $  2,878,755    $  2,521,426
Valuation allowance                                  (2,878,755)     (2,521,426)
                                                   ------------    ------------
Net non-current deferred tax asset                 $       --      $       --


At December 31, 2001,  the current  deferred tax asset  results from reserve for
accounts  receivable  which is not  deductible  for tax purposes  until actually
written off. The  non-current  deferred tax asset  results from the deferred tax
benefit of net operating  losses.  The net current and non-current  deferred tax
assets  have a 100%  valuation  allowance,  as the  ability  of the  Company  to
generate sufficient taxable income in the future is not certain.  The net change
in the valuation allowance for 2002 was $95,322 (2001: $317,488).

The Company  generated net operating losses for financial  reporting and Federal
income tax  reporting  prior to its  reorganization  in 1993. As of December 31,
2002,   subject  to  limitations   under  Internal  Revenue  Code  Section  382,
approximately $469,000 of these net operating losses are available for use after
the reorganization.  These net operating losses expire in 2008 if not previously
utilized.   The  net  operating  loss  carryforward  at  December  31,  2002  is
approximately  $8,466,000  and will begin to expire in 2008,  if not  previously
utilized.


                                      F-16
<PAGE>

NOTE 8 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

Commitments - The Company was committed under  non-cancelable  leases for office
space and equipment. Lease and rental expense for 2002 and 2001 were $16,320 and
$299,818, respectively. (See Notes 3 and 5)

Contingencies  - From time to time, the Company is involved in various  lawsuits
and claims arising in the normal course of business.  Management believes it has
valid defenses in these cases and defends them vigorously.  While the results of
litigation  cannot be predicted with  certainty,  management  believes  adequate
reserves  have  been  provided  for  claims  that  have at  least  a  reasonable
possibility  for loss and has not  provided  a  reserve  on those  for  which an
adverse outcome is remote. (See Note 11)

NOTE 9 - STOCK OPTIONS
----------------------

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

                                                                                               Combined
                                 Plan        Options          Compensatory       Options        Total
                             ---------------------------   ----------------------------------------------

                                             Weighted                           Weighted
                                             Average                            Average
                                             Exercise                           Exercise
                               Options        Price             Options          Price        Options
                             ---------------------------   ----------------------------------------------
<S>                          <C>           <C>             <C>                <C>           <C>
Outstanding at 12/31/00            10,500       $  9.00                    -             -        10,500
Granted                                 -             -               52,000          5.00        52,000
Exercised                               -             -                    -             -             -
Forfeited                         (9,000)          9.00                    -             -       (9,000)
                             ---------------------------   ----------------------------------------------
Outstanding at 12/31/01             1,500         15.00               52,000          5.00        53,500
Granted                                 -             -                    -             -             -
Exercised                               -             -                    -             -             -
Forfeited                         (1,500)         15.00                    -             -       (1,500)
                             ---------------------------   ----------------------------------------------
Outstanding at 12/31/02                 -             -               52,000       $  5.00        52,000
                             ===========================   ==============================================
</TABLE>


All of the 52,000  outstanding  stock  options are fully  vested at December 31,
2002. The weighted average contractual life is 1.9 years.

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

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


                                      F-17
<PAGE>

Net loss                   2002             2001
                      -------------------------------
     As reported      $    1,052,056   $    1,529,871
     Pro forma        $    1,289,988   $    1,767,803
Basic loss per share
     As reported      $        1.34    $        2.15

     Pro forma        $        1.64    $        2.48


NOTE 10 - STOCK WARRANTS
------------------------

During 2001, the Company issued warrants to several stockholders of the Company.
Of the total warrants issued, warrants to purchase 25,000 shares of common stock
were attached to debt, while the other 4,000 were compensatory. A summary of the
Company's warrants issued and other compensatory warrants follows:
<TABLE>
<CAPTION>

                                            Warrants  Attached                Other                          Combined
                                                  To  Debt                Compensatory        Warrants         Total
                                        ---------------------------      ----------------------------------------------
                                                        Weighted                              Weighted
                                                        Average                               Average
                                                        Exercise                              Exercise
                                          Warrants       Price               Warrants          Price        Warrants
                                        ------------- -------------      ------------------ ------------- -------------
<S>                                     <C>           <C>                <C>                <C>           <C>
Outstanding at 12/31/00                            -             -                       -             -             -
Granted                                       25,000       $  1.00                   4,000       $  1.00        29,000
Exercised                                          -             -                       -             -             -
Forfeited                                          -             -                       -             -             -
                                        ------------- -------------      ------------------ ------------- -------------
Outstanding at 12/31/01                       25,000          1.00                   4,000          1.00        29,000
Granted                                        7,000          1.00                       -             -         7,000
Exercised                                          -             -                       -             -             -
Forfeited                                          -             -                       -             -             -
Canceled                                    (32,000)                               (4,000)                    (36,000)
                                        ------------- -------------      ------------------ ------------- -------------
Outstanding at 12/31/02                            -             -                       -             -             -
                                        ============= =============      ================== ============= =============
</TABLE>

All of the 29,000  outstanding  stock warrants were fully vested at December 31,
2001.  During 2002, the Company granted  additional  warrants in connection with
loans made to the Company and then canceled all of the  outstanding  warrants in
connection with its divestiture of assets. (See Note 5)

The fair value of  warrants  granted  during  2002 and 2001,  respectively,  was
estimated on the date of grant using a Black-Sholes option pricing model and the
following assumptions:  a risk-free rate of return of 3.28% and 2.0%; a weighted
average expected life of 2.04 and 2.92 years;  expected  volatility of 227%; and
no dividends.  The weighted  average fair value of warrants  granted during 2002
and 2001 was $306,568 and $97,668, respectively.

Warrants  granted  during  2002  and  2001  were  to  employees  and  directors.
Compensation cost of $44,000 was recognized for the compensatory warrants issued
in 2001. No compensation  was recognized for the warrants  attached to debt. Had
compensation  been determined  based on the fair value at the grant date,  there
would be no material impact on net loss or loss per share.

NOTE 11 - BUSINESS DISPOSITIONS
-------------------------------

On July 31, 2001 the  Company  purchased  certain  assets  including:  inventory
valued at  $140,000,  property  and  equipment  valued at $84,000 and a software
license valued at $420,000 from Portalook, Inc. The purchase price was allocated
to the assets acquired based on their relative fair values on the purchase date.
The  purchase  price for the assets was cash of $40,000,  a payable of $184,000,

                                      F-18
<PAGE>

assumed  liability  of $30,000 and  3,000,000  shares of common  stock valued at
$390,000,  based on the fair value of the common stock on the purchase date. The
purchase  of  the  Portalook   assets  allowed  the  Company  to  sell  internet
transaction  devices  and to  develop  supporting  services.  During  the second
quarter  of  2002,  the  Company  wrote  off  the  net  assets  acquired  in the
transaction and it no longer sells internet  transaction devices. The net assets
of $292,257  included  accounts  receivable of $7,250,  software license (net of
amortization) of $307,316,  inventory of $131,740,  server (net of depreciation)
of $68,600, deferred revenues of $16,149, payable of $184,000, and the remaining
asssumed liability of $22,500. The Company does not believe any further recourse
will arise as a result of its actions,  however there is a remote possibility it
could be contingently liable for these liabilities.  The financial statements do
not include any reserves for future claims. (See Note 8)

NOTE 12 - DISCONTINUED OPERATIONS

On November 5, 2001,  the Company  entered  into a  Restructure  and  Settlement
Agreement with Imagine Investments,  Inc. (Imagine).  Pursuant to the agreement,
which was  approved  by the  shareholders  on  February  11,  2002,  the Company
transferred  its  interest in North  Florida  Physical  Medicine,  LLC (NFPM) to
Imagine and Imagine  converted its  convertible  preferred stock and convertible
debt to common  stock  and,  accordingly,  no gain or loss was  recorded  on the
transaction.

Results of  operations  included in  discontinued  operations  are as follows at
December 31:

Condensed operating results
---------------------------                                 2002         2001
                                                         ----------   ----------
Revenues:
   Medical fees                                          $  740,619   $1,914,952
Expenses:
   Selling, general and administrative expenses             509,223    1,696,905
                                                         ----------   ----------
Income (loss) before taxes                                  231,396      218,047
   Income tax provision                                      78,676       74,136
                                                         ----------   ----------
Income (loss) from discontinued operations               $  152,720   $  143,911
                                                         ==========   ==========




























                                      F-19