U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 For the fiscal year ended October 31, 1999

                                       OR

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


                              M.B.A. HOLDINGS, INC.
           (Exact name of business issuer as specified in its charter)

             Nevada                                              87-0522680
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


                         9419 E. San Salvador, Suite 105
                            Scottsdale, AZ 85258-5510
                                 (480)-860-2288
      (Address of principal executive offices, including telephone number)

      Securities registered under Section 12(b) of the Exchange Act: None.

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $.001 par value
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 [ ] No [X].

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-K 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-K or any
amendment to this Form 10-K. Yes [ ] No [X]

The  issuer's  revenues for its most recent  fiscal year ended  October 31, 1999
were  $3,147,982.  The  aggregate  market  value  of the  voting  stock  held by
non-affiliates  of the issuer,  based on the average high and low prices of such
stock on January 15, 1999, as reported on NASDAQ,  was  $9,053,042 As of October
31, 1999,  there were 2,011,787  shares of the issuer's  common stock issued and
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents, in whole or in part, are specifically incorporated by
reference in the indicated part of this Annual Report on Form 10: None
<PAGE>
                                     PART I

ITEM 1. BUSINESS

MBA Holdings, Inc. (the "Company"), through its wholly-owned subsidiary,
Mechanical Breakdown Administrators, Inc., markets and administers mechanical
breakdown insurance ("MBI") policies and sells and services vehicle service
contracts ("VSCs"). The MBI policies and VSCs relate to automobiles, light
trucks, recreational vehicles and automotive components.

On May 9, 1989, the principals of the Company organized under the name
Mechanical Breakdown Administrators, Inc. ("MBA"). During November 1995, MBA and
Brixen Enterprises, Inc. ("Brixen") merged in a stock exchange with the MBA
shareholders retaining control of the merged company. Brixen had been an
inactive publicly-held shell corporation prior to the November 1995 transaction.
Subsequent to the merger, Brixen changed its name to M.B.A. Holdings, Inc. and
its legal domicile from Utah to Nevada.

MECHANICAL BREAKDOWN INSURANCE

The Company contracts with insurance companies to act as an agent to sell MBI
policies issued by the insurance companies. The Company provides marketing
services, arranges for sub-agents to also sell the policies and subsequently
provides independent third-party administrative claims services (claims
adjudication, cancellation processing, call center services and technical
computer services) on MBI policies sold by the Company or its sub-agents. The
MBI policies are between the insurance companies and the consumer (purchaser).
The insurance company is responsible for the costs of claims submitted under the
terms of the insurance policy. The Company acts only as a sales agent and a
third party administrator. The Company currently has agency and servicing
agreements with American Bankers Insurance Group of Florida and American Modern
Home Insurance Company. In prior years, the Company also contracted with New
Hampshire Insurance Company and with other American International Group, Inc.
("AIG") members.

The sales of MBI policies are primarily accomplished through sub-agents, such as
financial institutions, and by the Company through direct mail solicitations,
magazine advertisements and phone solicitations. The terms of the MBI policies
range from twelve (12) to eighty-four (84) months and also may have mileage
limitations. Actual repairs or replacements covered by the policies are
performed by independent third party authorized repair facilities. The costs of
such repairs remain the responsibility of the insurance company that provided
the MBI policy.

For MBI policies, the policy premium has been established by the insurance
companies and agreed to by the Company and insurance regulators. In general,
when an MBI policy is sold, approximately 51% of the premium is retained by the
insurance company, approximately 20%-36% of the premium is paid to the sub-agent
(if applicable), and the remainder is paid to the Company as sales commission
and for providing administrative claims services.

For the years ended October 31, 1999, 1998 and 1997, the revenues related to
sales and servicing of MBI policies represented approximately 96%, 99% and 100%,
respectively, of the Company's net commission income.

VEHICLE SERVICE CONTRACTS

The Company markets and administers VSC programs which enhance the profitability
of the sale of automobiles, light trucks, recreational vehicles and automotive
components. These products are sold principally through franchised and
independent automobile dealers. The VSC is a contract between the Company and
the consumer (purchaser) that offers coverage ranging from twelve (12) to
eighty-four (84) months and or mileage limitations ranging from 1,000 to
100,000. The coverage is for a broad range of possible failures of mechanical
components that may occur during the term of the VSC, exclusive of failures
covered by a manufacturers warranty. The Company is primarily responsible for
the administration of the contract and related claims during the life of the
contract.

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<PAGE>
Before a VSC is issued, the Company has contracted with insurance companies to
assume the liability in return for the payment of the agreed-upon premium. This
coverage provides indemnification to the Company against loss resulting from
service contract claims. The insurance protection is provided by highly rated
independent insurance companies. This includes American Bankers Insurance Group
and American Modern Home Insurance Co which are rated A - (Excellent) by A.M.
Best Company. Other programs are insured by New Hampshire Insurance Company, and
other AIG member companies which is rated A++ (Superior) by the A.M. Best
Company.

For the years ended October 31, 1999, 1998 and 1997, the revenues related to
sales and servicing of VSCs represented approximately 4%, 1% and 0%,
respectively, of the Company's net commission income.

MBIs AND VSCs

The number of financial institutions, automobile dealers, and recreational
vehicle and travel trailer dealers offering the Company's MBI or VSC programs
has grown from 1997 through 1999 to approximately 600 as of October 31, 1999.

Essential to the success of the Company is its ability to capture, maintain,
track and analyze all relevant data regarding an MBI policy or VSC. To support
this function, the Company operates proprietary software developed internally
that consists of custom designed relational databases with interactive
capabilities. This system provides ample capacity and processing speed for
current requirements as well as the ability to support significant future growth
in this area.

SIGNIFICANT CUSTOMERS

The Company does not have any significant customers. The loss of any single
customer would not have a material impact on operating results.

COMPETITION

M.B.A. Holdings, Inc. competes with a number of independent administrators,
divisions of distributors and manufacturers, financial institutions and
insurance companies. While the Company believes that it occupies a strong
position among competitors in its field, it is not the largest marketer and
administrator of MBIs and VSCs. Some competitors have greater operating
experience, more employees and/or greater financial resources. Further, many
manufacturers of motor vehicles market and administer their own VSC programs for
and through their dealers.

SALES AND MARKETING

The Company maintains its own sales and marketing personnel. Sales training and
motivational programs are a primary form of specialized assistance provided by
the Company to retailers/dealers and financial institutions, to assist them in
increasing the effectiveness and profitability of their MBI and VSC program
sales efforts. The Company develops materials and conducts educational seminars.
These seminars are conducted either at the client's place of business or an
offsite facility.

The Company also direct markets to the consumer through direct mail campaigns.
The direct marketing campaigns generate sales by obtaining a list of recent car
sales through various list services. This list is uploaded into the Company's
state-of-the-art direct mailing computer system. This system generates different
policy and premium options for the car purchased. The potential customer can
send in the premium via the U.S. mail or call the MBA sales support staff on a
toll free number and pay by a major credit card.

The MBI program is an insurance product between the insurance company and the
customer. The Company acts as an independent sales agent and administrator of
the MBI policies. From inception of the policy, the obligation to perform under
the policy is the obligation of the insurance company.

In accordance with the insurance arrangements with these insurers, a fixed
amount is remitted for each MBI or VSC sold. The amount is set by the insurance
companies and is based upon actuarial analysis of data collected and maintained
for each type of coverage and contract term. The insurer is obligated to pay all
the claims which fall under the policy even if the claims exceed the premium.

                                       3
<PAGE>
Some contracts between the Company and the insurer contain agreements that allow
the Company to share in the profits earned by the programs. The Company did not
accrue or receive any profit sharing amounts for years ended October 31, 1999,
1998 and 1997.

The number of policies and contracts sold for the last three fiscal years are
noted below:

                                                            Number of
Time Period                                            Policies & Contracts
-----------                                            --------------------
For the twelve months ended October 31, 1999                  34,858
For the twelve months ended October 31, 1998                  36,477
For the twelve months ended October 31, 1997                  27,000

This increase from 1997 to 1998 is reflected in the increase in gross revenue
and net income. The majority of the increase was due to additional sales from
the Company's concerted effort to expand into the VSC and MBI policy credit
union niche. The Company will continue to look for ways to increase sales.
Currently, the Company is in the process of exploring strategic relations with
other highly rated insurance companies regarding different motorized machinery;
such as boats and motorcycles.

FEDERAL AND STATE REGULATION

The MBI and VSC programs developed and marketed by the Company, are regulated by
federal law and the statutes of a significant number of states. VSCs are
contracts sold from car dealerships and the like and are considered to be part
of the car buying process instead of an insurance product. MBIs are insurance
policies sold by independent agents through non-auto dealer entities, such as
credit unions or by direct mail through the Company. The Company continually
reviews all existing and proposed statutes and regulations to ascertain their
applicability to its existing operations, as well as new programs that are
developed by the Company. Generally speaking, these statutes concern the scope
of the MBI and VSC coverage and content of the MBI or VSC document. In such
instances, the state statute will require that specific wording be included in
the MBI or VSC expressly stating the consumer's rights in the event of a claim,
and how the service contract may be canceled. Also, on the MBI policy is the
name of the insurance company that issues the policy and on a VSC is the name of
the insurance company that underwrites the policy. This identification on the
policy and contract identifies the insurance company that indemnifies the
customer, dealers, financial institution, or the Company against loss for
performance under the terms of the contract.

Insurance departments in some states have sought to interpret the VSC or certain
items covered under the contract as a form of insurance, requiring that the
issuer be a duly licensed and chartered insurance company. These efforts to
interpret VSCs as a form of insurance have not been successful in any state at
this time. Currently, all MBI products are considered insurance and either the
Company or its principals are duly licensed in all states in which the Company
operates.

The Company or its principals are licensed in the following states: Alabama,
Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New
Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon,
Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont,
Washington, West Virginia, Wisconsin, and Wyoming.

Since all the MBI policies and VSCs are issued or assumed, respectively, by
highly rated insurance companies according to A.M. Best, the Company does not
believe that they are insurers and have no intention of filing the documents and
meeting the capital and surplus requirements that are necessary to obtain such a
license. There are instances where the applicability of statutes and regulations
to programs marketed and administered by the Company and compliance therewith,
involve issues of interpretation. The Company uses its best efforts to comply
with applicable statutes and regulations but it cannot assure that its
interpretations, if challenged, would be upheld by a court or regulatory body.
In any situation in which the Company has been specifically notified by any

                                       4
<PAGE>
regulatory bodies that its methods of doing business were not in compliance with
state regulation, the Company has taken the steps necessary to comply. If the
Company's right to operate in any state is challenged successfully, the Company
may be required to cease operations in the state and the state might also impose
financial sanctions against the Company. These actions, should they occur, could
have materially adverse consequences and could affect the Company's ability to
continue operating. However, within the framework of currently known statutes,
the Company does not believe that this is a present concern.

EMPLOYEES

The Company and its subsidiary employ approximately fifty individuals at October
31, 1999, an increase of approximately ten over the year ended October 31, 1998.
The increase is due to the expansion of customer service and claims
representatives to meet the needs of the Company's expanding business. Total
number of external sales force equals three. These people train the insurance
agent or representative at the financial institution, dealership, or other sales
venue. Internally, there are approximately eight people who handle product
inquiries that may result in sales. The rest of the staff is located in the
following departments: claims, customer service, data entry, information
systems, finance, administration. None of the Company's employees are covered by
a collective bargaining agreement. The Company considers its relations with its
employees to be good.

ITEM 2. PROPERTIES

The Company's executive offices are located in leased premises at 9419 E. San
Salvador, Suite 105, Scottsdale, Arizona. The premises, pursuant to a lease
agreement (the "Lease"), consist of approximately 16,750 square feet. The lease
expired on December 31, 1998. The Company has signed a new lease (the "New
Lease") in the same office space with total square footage equal to 19,750. The
New Lease, which commenced on January 1, 1999 and expires on December 31, 2003,
provides for annual base rent payments ranging from $212,000 to $276,000.

The premises are owned by an affiliated entity named Cactus Partnership. The
partners in Cactus Partnership are Gaylen Brotherson, the CEO of the Company,
and Judy Brotherson, the Vice-President of the Company. All lease negotiations
are made at fair market value between Cactus Partnership and the Company based
on leases with other occupants of the building (See Item 7 Certain Relationships
and Related Transactions).

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to claims and lawsuits that arise in the ordinary course
of business, consisting principally of alleged errors and omissions in
connection with the sale of insurance and personnel matters. On the basis of
information presently available, management does not believe the settlement of
any such claims or lawsuits will have a material adverse effect on the financial
position, results of operations or cash flows of the Company.

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

There were no matters submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.

                                       5
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock has been reported in NASDAQ, and currently is
reported on NASDAQ's OTC: BB under the trading symbol "MBAI". The number of
shareholders of record of the Company's common stock as of October 31, 1999 was
186. As of October 31, 1999 there were 2,011,787 common shares outstanding. On
that date, the closing bid price for the Company's common stock, as reported by
NASDAQ was $2.75. The following is a summary of the price range of the Company's
common stock during its 1999 and 1998 fiscal years:

Common Stock                    High Low Bid
------------                    ------------
Quarter of Fiscal 1999
First                         $ 2.00    $ 1.88
Second                          2.75      1.75
Third                           2.50      2.00
Fourth                          3.50      2.50

Quarter of Fiscal 1998
First                           5.00      3.00
Second                          5.00      1.25
Third                           3.25      1.25
Fourth                          2.75      1.25

The Company has never paid cash dividends on any shares of its common stock, and
the Company's Board of Directors intends to continue this policy for the
foreseeable future. Earnings, if any, will be used to finance the development
and expansion of the Company's business. Future dividend policy will depend upon
the Company's earnings, capital requirements, financial condition and other
factors considered relevant by the Company's Board of Directors.

During the fourth quarter of 1999, the Company did not issue any unregistered
securities.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
Fiscal Year ended                               1999        1998(A)       1997         1996        1995
-----------------                               ----        -------       ----         ----        ----
<S>                                          <C>          <C>          <C>          <C>          <C>
Net Sales                                    $3,147,982   $2,971,464   $1,978,621   $  675,553   $338,982
Income from continuing operations               221,612      220,825      263,377       49,752    348,673
Income per common share                             .11         0.11         0.13         0.02        N/A
Total Assets                                  5,459,210    3,239,557    2,176,874    1,588,897    693,373
L-T Obligation and redeemable preferred stock        --           --           --           --     73,880
Cash Dividends declared per common share             --           --           --           --         --
</TABLE>

(A)  Subsequent to the issuance of the Company's consolidated financial
     statements for the year ended October 31, 1998, management determined that
     revenue from VSCs, and the portion of revenue from MBI policies associated
     with administering future claims, should be deferred and recognized in
     income on a straight-line basis over the estimated life of the contract or
     policy; that costs directly related to the acquisition of the contract or
     policy that would not have been incurred but for the acquisition of that
     contract or policy (incremental direct acquisition costs) should be
     deferred and charged to expense in proportion to the revenue recognized;
     and that all other costs should be charged to expense as incurred.
     Previously, the Company recognized revenue on MBI policies and VSCs at the
     time of sale and accrued the estimated future costs associated with
     administering claims. As a result, the Company's 1998 financial statements
     have been restated from amounts previously reported to correct the
     accounting for these items. The effect on the 1997 financial statements was
     not considered significant.

                                       6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION.

The following discussion should be read in conjunction with the financial
statements and footnotes that appear elsewhere in this report.

RESULTS OF OPERATIONS

COMPARISON OF FISCAL YEAR 1999 AND FISCAL YEAR 1998

Net commission income, which consists of gross income less premiums to insurers,
agent commissions, and cancellations, for the year ended October 31, 1999
totaled $3,148,000, an increase of $177,000 from net revenues of $2,971,000 for
the year ended October 31, 1998. The number of contracts sold of 34,858 for the
year ended October 31, 1999 decreased from the number of contracts sold of
36,477 for the year ended October 31, 1998. The increase in net commission
income is due to an increase of approximately 30% in premiums charged by the
insurance companies that occurred in April 1998.

Operating income decreased by $99,000 to $247,000 for the year ended October 31,
1999, from $346,000 for the year ended October 31, 1998. The decrease is
primarily due to additional mailings and postage associated with the direct mail
program performed by the Company. These costs totaled $441,000, or 14.0 percent
of net commission income, for the year ended October 31, 1999. This is an
increase from $282,000, or 9.5 percent of net revenues, for the comparable
period ended October 31, 1998. The Company purchased additional printers which
increased its capacity to produce direct mailing materials. The new printers
were not available for all of the year ended October 31, 1998 while they were
being used for the entire year ended October 31, 1999. In addition, the increase
in mailings and the increase in policies sold over the last couple of years has
increased telephone usage as policy holders and potential customers use the
Company's toll free line for inquiries.

Total operating expenses including mailings and postage were $2,902,000 for the
year ended October 31, 1999, compared to $2,626,000 for the year ended October
31, 1998. As a percentage of net commission income, operating expenses were 92.2
percent for the year ended October 31, 1999, compared to 88.4 percent for the
year ended October 31, 1998. The increase in expenses is due to additional
direct mailing materials, as noted above. Also, the increase in policies sold
over the last three years has increased the number of phone calls received by
the Company. Telephone expense increased from $81,000 in 1998 to $149,000 in
1999. These items have accounted for the increase in general and administrative
expense.

Net income for the year ended October 31, 1999 was $222,000, compared to net
income for the year ended October 31, 1998 of $221,000, which is a result of the
foregoing factors. Although operating income was higher for fiscal 1998, the
Company better utilized cash in the bank to earn interest income in fiscal 1999.

                                       7
<PAGE>
COMPARISON OF FISCAL YEAR 1998 AND FISCAL YEAR 1997

Net commission income, which consists of gross income less premiums to insurers,
agent commissions, and cancellations, for the fiscal year ended October 31, 1998
totaled $2,971,000, an increase of $992,000 from net revenues of $1,979,000 for
the fiscal year ended October 31, 1997. This increase is consistent with the
increase in the number of policies sold in fiscal 1998 versus fiscal 1997. In
1998 and 1997, there were 36,477 and 27,000 policies sold, respectively. The
increase is due to an increase in the credit union and direct mail number of
policies sold.

Operating income increased by $82,000 to $346,000 for the fiscal year ended
October 31, 1998, from $264,000 for the fiscal year ended October 31, 1997. As a
percentage of net commission income, operating income decreased by 1.7
percentage points to 11.6% for the fiscal year ended October 31, 1998 from 13.3%
for the fiscal year ended October 31, 1997. This decrease is due to the VSC
program generating sales in 1998 as opposed to no sales in 1997. According to
FTB 90-1 Accounting for Separately Priced Extended Warranty and Product
Maintenance Contracts, the VSC revenue is being recognized in income over the
estimated life of the contract.

Mailings and postage associated with the direct mail product totaled $282,000,
or 9.5 percent of net commission income, for the fiscal year ended October 31,
1998, an increase from $249,000, or 12.6 percent of net commission income, for
the comparable period ended October 31, 1997. This $33,000 increase was
attributable primarily to an increase in mailings during 1998 as the Company
purchased additional printers which increased its capacity to produce direct
mailing materials.

Total operating expenses including selling expenses were $2,626,000 for the
fiscal year ended October 31, 1998, compared to $1,714,000 for the fiscal year
ended October 31, 1997. As a percentage of net commission income, operating
expenses were 88.4 percent for the fiscal year ended October 31, 1998, compared
to 86.6 percent for the fiscal year ended October 31, 1997. The increase in
expenses is due to additional customer service and claims personnel. This
increase was considered necessary given the increase in sales.

In 1997, MBA pursued a lawsuit against a competitor for possible copyright
infringement on MBA's proprietary software. Ultimately, the Company settled the
lawsuit and received a cash settlement. The Company recorded $168,383 in other
income during 1997 which represented the cash received net of legal and other
fees associated with the lawsuit. The Company retained the copyrights to the
software and the competitor ceased using the software. There was no
corresponding lawsuit settlement in 1998.

As a result of the foregoing factors, the net income for the fiscal year ended
October 31, 1998 was $221,000, compared to a net income for the fiscal year
ended October 31, 1997 of $263,000.

                                       8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

COMPARISON OF FISCAL YEAR 1999 AND FISCAL YEAR 1998

As of October 31, 1999, the Company's cash position increased to $4,350,000,
from $2,365,000 at October 31, 1998. Of the $4,350,000, $925,000 is classified
as restricted cash; there was $451,000 of restricted cash at October 31, 1998.
The largest component of the restricted cash was claims payment advances
provided by insurance companies. This enables the Company to make claims
payments on behalf of the insurance companies.

The Company collects funds throughout the year and remits a portion of the funds
to the insurance companies. As of October 31, 1999, the amount owed to the
insurance companies increased to $2,894,000, from $1,509,000 at October 31,
1998, which is primarily because gross sales were accelerating.

The Company is not operating with a working capital line of credit from any
facility or any other debt instrument. The Company's ability to fund its
operations over the short-term is not hindered by lack of short-term financing.
The Company uses premiums received to pay agent commissions and fund operations
and claims payment advances provided by insurance companies to administer and
pay claims. The Company believes its current working capital plus future cash
flows from operations will be sufficient to meet cash requirements on a
long-term basis.

COMPARISON OF FISCAL YEAR 1998 AND FISCAL YEAR 1997

As of October 31, 1998, the Company's cash position increased to $2,365,000,
from $1,553,000 at October 31, 1997. Of the $2,365,000, $451,000 is classified
as restricted cash; there was also $211,000 of restricted cash at October 31,
1997. The largest component of the restricted cash was funds provided by
insurance companies for claims payment advances. This enables the Company to
make claims payments on behalf of the insurance companies.

The Company collects funds throughout the year and remits a portion of the funds
to the insurance companies. The Company will receive cash for a policy and
deposit it into a bank account for the appropriate insurance company. Then the
Company will remit the amount due to the insurance company on a timely basis.
Due to the timing of when cash is deposited into the Company's bank accounts and
when a check is issued to the insurance companies, there will be a liability
owed to the insurance companies. This liability has constant turnover as money
is paid to the insurance companies and additional money is received for
premiums. As of October 31, 1998, the amount owed to the insurance companies
increased to $1,509,000, from $1,057,000 at October 31, 1997. An increase in the
amount owed to insurance companies is due to an increase in gross sales for the
year ended October 31, 1998 from the year ended October 31, 1997.

During 1998, the Company repaid a note payable to a related party. The balance
on the note as of October 31, 1997 was $73,189. The funds used to repay the note
were from operations. This payment did not have an adverse effect on the
Company's cash flow.

                                       9
<PAGE>
ITEM 7A. QUALITATIVE INFORMATION ABOUT MARKET RISK

Since the Company does not underwrite its own policies, a change in the current
rates of inflation or hyperinflation is not expected to have a material effect
on the Company. However, the precise effect of inflation on operations can not
be determined.

The Company does not have any outstanding debt or long-term receivables.
Therefore, it is not subject to significant interest rate risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                              FINANCIAL STATEMENTS

Index to Consolidated Financial Statements for the years
  ended October 31, 1999, 1998 and 1997:

     Independent Auditors' Report .............................. F-1
     Consolidated Balance Sheets ............................... F-2
     Consolidated Statements of Income ......................... F-4
     Consolidated Statements of Stockholders' Equity ........... F-5
     Consolidated Statements of Cash Flows ..................... F-6
     Notes to Consolidated Financial Statements ................ F-7


                                       10
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
M.B.A. Holdings, Inc.
Scottsdale, Arizona

We have audited the accompanying consolidated balance sheets of M.B.A. Holdings,
Inc. and  subsidiary  (the  "Company") as of October 31, 1999 and 1998,  and the
related consolidated statements of income,  stockholders' equity, and cash flows
for  each of the  three  years in the  period  ended  October  31,  1999.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of the Company as of October 31, 1999
and 1998,  and the results of its  operations and its cash flows for each of the
three years in the period ended  October 31, 1999 in conformity  with  generally
accepted accounting principles.

As discussed in Note 7, the accompanying 1998 consolidated  financial statements
have been restated.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Phoenix, Arizona
January 5, 2000

                                      F-1
<PAGE>
M.B.A. HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

ASSETS                                                    1999          1998
                                                     -----------    -----------
                                                                    As Restated,
                                                                     See Note 7

CURRENT ASSETS:
  Cash and cash equivalents                          $ 3,424,934    $ 1,914,001
  Restricted cash                                        924,698        450,988
  Receivables:
    Accounts receivable, net of allowance
      for doubtful accounts of $19,025 (1999)
      and $10,000 (1998)                                 336,805        256,173
    Receivable from affiliated entities (Note 2)                         29,770
  Prepaid expenses and other assets                      109,888        136,752
  Deferred income tax asset (Note 3)                     194,902         89,261
                                                     -----------    -----------
           Total current assets                        4,991,227      2,876,945
                                                     -----------    -----------
PROPERTY AND EQUIPMENT:
  Computer equipment                                     174,381        148,493
  Office equipment and furniture                         149,309        136,929
  Vehicle                                                 16,400         16,400
  Leasehold improvements                                  69,053         61,153
  Capitalized software costs                              17,500
                                                     -----------    -----------
           Total property and equipment                  426,643        362,975
  Accumulated depreciation and amortization             (154,267)      (101,236)
                                                     -----------    -----------
           Property and equipment - net                  272,376        261,739
DEFERRED INCOME TAX ASSET (Note 3)                       195,607        100,873
                                                     -----------    -----------

TOTAL                                                $ 5,459,210    $ 3,239,557
                                                     ===========    ===========


                                                                     (Continued)

See notes to consolidated financial statements.

                                      F-2
<PAGE>
M.B.A. HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY                       1999         1998
                                                        ----------  ------------
                                                                    AS RESTATED,
                                                                     SEE NOTE 7
CURRENT LIABILITIES:
  Net premiums payable to insurance companies           $2,893,591    $1,508,537
  Accounts payable and accrued expenses                    547,443       406,778
  Accounts payable to affiliated entity (Note 2)                          33,287
  Deferred revenues                                        457,593       208,362
  Income taxes payable (Note 3)                             94,159        75,529
                                                        ----------    ----------
           Total current liabilities                     3,992,786     2,232,493
DEFERRED RENT                                               32,104
DEFERRED REVENUES                                          475,891       290,248
                                                        ----------    ----------
           Total liabilities                             4,500,781     2,522,741
                                                        ----------    ----------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 6)
STOCKHOLDERS' EQUITY (Note 4):
  Preferred stock, $.001 par value;
    20,000,000 shares authorized;
    none issued and outstanding
  Common stock, $.001 par value;
    80,000,000 shares authorized;
    2,011,787 (1999) and 2,005,121 (1998)
    shares issued and outstanding                            2,012         2,005
  Additional paid-in-capital                               200,851       180,857
  Retained earnings                                        755,566       533,954
                                                        ----------    ----------
        Total stockholders' equity                         958,429       716,816
                                                        ----------    ----------

TOTAL                                                   $5,459,210    $3,239,557
                                                        ==========    ==========

See notes to consolidated financial statements.

                                      F-3
<PAGE>
M.B.A. HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED OCTOBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------

                                          1999           1998          1997
                                      -----------    -----------    -----------
                                                     AS RESTATED,
                                                      SEE NOTE 7

NET COMMISSION INCOME                 $ 3,147,982    $ 2,971,464    $ 1,978,621
                                      -----------    -----------    -----------

OPERATING EXPENSES:
  Salaries and employee benefits        1,544,793      1,552,347        877,031
  Mailings and postage                    441,332        282,018        249,105
  Rent and lease expense                  286,785        248,418        153,421
  Professional fees                       159,105        193,259        174,197
  Telephone                               149,282         80,905         64,530
  Depreciation and amortization            57,873         52,770         42,190
  Merchant and bank charges                18,111         22,992         15,503
  Insurance                                29,029         42,717         35,841
  Supplies                                 46,353         30,676         34,701
  License and fees                         12,756          9,180          3,521
  Other operating expenses                156,082        110,672         64,242
                                      -----------    -----------    -----------
         Total operating expenses       2,901,501      2,625,954      1,714,282
                                      -----------    -----------    -----------
OPERATING INCOME                          246,481        345,510        264,339
                                      -----------    -----------    -----------
OTHER INCOME (EXPENSE):
  Proceeds from settlement
   of lawsuit                                                           168,383
  Finance fee income                       50,567         14,210         10,937
  Interest income                         122,829         62,880         30,191
  Interest expense                         (5,996)        (8,103)       (13,313)
  Other expense                              (531)       (39,480)       (28,123)
                                      -----------    -----------    -----------
      Total other income                  166,869         29,507        168,075
                                      -----------    -----------    -----------
INCOME BEFORE INCOME TAXES                413,350        375,017        432,414
INCOME TAXES (Note 3)                     191,738        154,192        169,037
                                      -----------    -----------    -----------
NET INCOME                            $   221,612    $   220,825    $   263,377
                                      ===========    ===========    ===========
BASIC AND DILUTED
 NET INCOME PER SHARE                 $      0.11    $      0.11    $      0.13
                                      ===========    ===========    ===========
AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING - BASIC                   2,005,158      2,005,121      2,002,343
                                      ===========    ===========    ===========
AVERAGE NUMBER OF COMMON AND
  DILUTIVE SHARES OUTSTANDING           2,086,505      2,046,813      2,006,777
                                      ===========    ===========    ===========

See notes to consolidated financial statements.

                                      F-4
<PAGE>
M.B.A. HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED OCTOBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                             COMMON STOCK                                        TOTAL
                                        -----------------------    ADDITIONAL     RETAINED   STOCKHOLDERS'
                                          SHARES       AMOUNT    PAID-IN-CAPITAL  EARNINGS      EQUITY
                                          ------       ------    ---------------  --------      ------
<S>                                     <C>          <C>         <C>              <C>        <C>
BALANCE, NOVEMBER 1, 1996                1,998,453   $   1,998     $ 108,692     $  49,752    $ 160,442
  Stock compensation expense                 6,668           7        21,665                     21,672
  Net income                                                                       263,377      263,377
                                         ---------   ---------     ---------     ---------    ---------

BALANCE, OCTOBER 31, 1997                2,005,121       2,005       130,357       313,129      445,491
  Stock compensation expense                                          50,500                     50,500
  Net income (As restated, see Note 7)                                             220,825      220,825
                                         ---------   ---------     ---------     ---------    ---------
BALANCE, OCTOBER 31, 1998
  (As restated, see Note 7)              2,005,121       2,005       180,857       533,954      716,816
  Stock compensation expense                 6,666           7        19,994                     20,001
  Net income                                                                       221,612      221,612
                                         ---------   ---------     ---------     ---------    ---------

BALANCE, OCTOBER 31, 1999                2,011,787   $   2,012     $ 200,851     $ 755,566    $ 958,429
                                         =========   =========     =========     =========    =========

</TABLE>
See notes to consolidated financial statements.

                                      F-5
<PAGE>
M.B.A. HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           1999          1998           1997
                                                       -----------    -----------    -----------
                                                                      AS RESTATED,
                                                                       SEE NOTE 7
<S>                                                   <C>             <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                           $   221,612    $   220,825    $   263,377
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization                            57,873         52,770         42,190
  Gain on sale of equipment                                (4,343)
  Deferred income taxes                                  (200,375)      (100,695)       (63,846)
  Stock-based compensation                                 20,001         50,500         21,672
  Changes in assets and liabilities:
   Restricted cash                                       (473,710)      (240,241)      (210,747)
   Accounts receivable                                    (80,632)      (111,937)        41,353
   Receivable from affiliated entities                     29,770         (3,876)       (25,894)
   Prepaid expenses and other assets                       26,864       (135,465)         2,572
   Net premiums payable to insurance companies          1,385,054        451,917         46,524
   Accounts payable and accrued expenses                  140,665        306,240         32,252
   Accounts payable to affiliated entities                (33,287)        15,914        (85,375)
   Income taxes payable                                    18,630       (134,113)       180,682
   Deferred rent                                           32,104
   Deferred revenues                                      434,874        279,329        146,723
                                                      -----------    -----------    -----------
      Net cash provided by operating activities         1,575,100        651,168        391,483
                                                      -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment                        (71,167)      (167,148)      (117,131)
 Proceeds from sale of equipment                             7,000
 Net decrease in certificates of deposit                                  120,000         22,264
                                                       -----------    -----------    -----------
      Net cash used in investing activities                (64,167)       (47,148)       (94,867)
                                                       -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Payments on notes payable to affiliated entity                           (73,189)        (2,998)
 Payments on payables to Company stockholder                              (54,740)       (14,880)
 Payment (issuance) of note receivable
  from stockholder                                                        115,586       (115,586)
                                                       -----------    -----------    -----------
      Net cash used in financing activities                               (12,343)      (133,464)
                                                       -----------    -----------    -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                1,510,933        591,677        163,152
CASH AND CASH EQUIVALENTS, BEGINNING OF
 YEAR                                                    1,914,001      1,322,324      1,159,172
                                                       -----------    -----------    -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                 $ 3,424,934    $ 1,914,001    $ 1,322,324
                                                       ===========    ===========    ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid for interest                               $     1,911    $     8,100    $     7,500
                                                       ===========    ===========    ===========
  Cash paid for income taxes                           $   373,483    $   389,000    $    52,000
                                                       ===========    ===========    ===========
</TABLE>

See notes to consolidated financial statements

                                      F-6
<PAGE>
M.B.A. HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 1999, 1998 AND 1997
--------------------------------------------------------------------------------


1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS - M.B.A.  Holdings,  Inc. and subsidiary (the "Company")
are  located  in  Scottsdale,  Arizona  and are  principally  engaged in selling
mechanical  breakdown  insurance  policies  ("MBIs") (as an agent for  insurance
companies),  selling vehicle  service  contracts  ("VSCs") for new  automobiles,
trucks,  recreational  vehicles,  and  travel  trailers,  and  providing  claims
administrative services for the mechanical breakdown insurance policies and VSCs
sold.  The  consolidated  financial  statements  include the  accounts of M.B.A.
Holdings,   Inc.  and  its   wholly-owned   subsidiary,   Mechanical   Breakdown
Administrators, Inc. All significant intercompany balances and transactions have
been eliminated.

SIGNIFICANT ACCOUNTING POLICIES are as follows:

     a.   CASH AND CASH EQUIVALENTS - The Company  considers all cash and highly
          liquid  investments  with original  maturities of three months or less
          when purchased to be cash equivalents.

     b.   RESTRICTED CASH  represents  claims payment  advances  provided by the
          insurance companies,  to enable the Company to make claims payments on
          behalf of the insurance companies.

     c.   PROPERTY AND EQUIPMENT - The  historical  cost of computer  equipment,
          office  equipment  and furniture is  depreciated  by  accelerated  and
          straight-line  methods over their  estimated  useful lives which range
          from three to seven years.  Leasehold  improvements are amortized over
          the  shorter of the life of the asset or the related  lease term.  The
          Company  reviews its  long-lived  assets for  possible  impairment  in
          accordance with Statement of Financial  Accounting  Standards ("SFAS")
          No. 121. If the sum of the  expected  future cash flows  (undiscounted
          and without interest  charges) is less than the carrying amount of the
          asset,  the Company will recognize an impairment loss. The Company has
          concluded that no impairment charge is necessary during 1999, 1998, or
          1997.  If the Company  found an instance  where there is an impairment
          loss,  the Company  would  measure the loss as the amount by which the
          carrying amount of the asset exceeds the fair value of the asset based
          on estimated discounted cash flows.

          In March 1998, the American  Institute of Certified Public Accountants
          issued  Statement  of  Position  98-1,  Accounting  for the  Costs  of
          Computer Software Developed or Obtained for Internal Use ("SOP 98-1").
          SOP 98-1 provides guidance on the accounting for the costs of computer
          software  developed or obtained for internal use and is effective  for
          financial  statements  for fiscal years  beginning  after December 15,
          1998.  Under the  guidelines  established in SOP 98-1, the Company has
          capitalized  $17,500  of such costs in the  accompanying  consolidated
          balance sheet at October 31, 1999.

     d.   BENEFIT  PLAN  -  The  Company  has  a  profit-sharing  plan  covering
          substantially  all  employees who have attained the age of 21 and have
          completed one year of service. Participation commences on the earliest
          plan entry date after an employee meets eligibility requirements.  The
          only  contributions  made  to  the  plan  are  discretionary  employer
          contributions.  No  discretionary  contributions  were made during the
          years ended October 31, 1999, 1998 and 1997.

     e.   NET  PREMIUMS  PAYABLE  TO  INSURANCE   COMPANIES  represent  premiums
          collected from the policyholders on behalf of the insurance companies.
          Amounts  collected  are  periodically   remitted  to  the  appropriate
          insurance company.

                                      F-7
<PAGE>
     f.   REVENUE  RECOGNITION - Net commission  income includes the commissions
          earned  on sales of MBIs,  fees for  providing  administrative  claims
          services  related to the MBIs sold and  revenues  related to the sales
          and servicing of VSCs.

          The Company receives one fee (commission)  related to the sale of MBIs
          which  covers both the  revenue  earned for selling the policy and the
          fee  for  providing   administrative  claims  services.   The  Company
          apportions the revenue consistent with the values associated with each
          service provided.  The revenues for commissions earned on policy sales
          are recorded when the policy  information  is received and approved by
          the   Company.   The   revenues  for  the  fee  related  to  providing
          administrative claims services is deferred and recognized in income on
          a straight-line basis over the estimated life of the related contract,
          generally  three  years.  Policy  cancellations  are  recorded as they
          occur. All of the MBIs sold represent  insurance  policies between the
          insurance  companies and the purchaser.  The insurance company retains
          responsibility  for the cost of any claims made in accordance with the
          policies.   The  Company  only  acts  as  a  sales  agent  and  claims
          administrator  and does not  assume  the role of  obligor  at any time
          during the life of the policies.

          VSCs  represents  contracts  between the Company and the purchaser for
          which the Company  obtains an insurance  policy which  guarantees  the
          Company's obligations under the contract. In accordance with Financial
          Accounting  Standards  Board  Technical  Bulletin 90-1  ACCOUNTING FOR
          SEPARATELY PRICED EXTENDED WARRANTY AND PRODUCT MAINTENANCE CONTRACTS,
          revenues  associated  with the sales and servicing of these  contracts
          are deferred and  recognized in income on a  straight-line  basis over
          the estimated life of the contracts, generally three years.

          The  consolidated  financial  statements  for the  fiscal  year  ended
          October  31,  1998 have been  restated  to  retroactively  reflect the
          adoption of a change in accounting for revenues  associated  with MBIs
          and VSCs. (See Note 7.)

     g.   INCOME TAXES - Deferred income taxes are recorded based on differences
          between  the   financial   statement  and  tax  basis  of  assets  and
          liabilities based on income tax rates currently in effect.

     h.   NET  INCOME  PER  SHARE  - Net  income  per  share  is  calculated  in
          accordance  with SFAS No. 128,  EARNINGS PER SHARE which requires dual
          presentation of BASIC and DILUTED EPS on the face of the statements of
          income and requires a reconciliation  of the numerator and denominator
          of basic and diluted EPS  calculations.  Basic income per common share
          is computed on the weighted  average  number of shares of common stock
          outstanding  during  each  period.  Income per common  share  assuming
          dilution  is  computed  on the  weighted  average  number of shares of
          common stock  outstanding  plus  additional  shares  representing  the
          exercise of outstanding  common stock options using the treasury stock
          method. Below is the reconciliation required by SFAS No. 128.

NUMBER OF SHARES USED IN COMPUTING INCOME PER SHARE

                                                 1999        1998         1997
                                                 ----        ----         ----
Average number of common shares outstanding -
  Basic                                        2,005,158   2,005,121   2,002,343
Dilutive shares from common stock options
 calculated using the treasury stock method       81,347      41,692       4,434
                                               ---------   ---------   ---------
Average number of common and dilutive
 shares outstanding                            2,086,505   2,046,813   2,006,777
                                               =========   =========   =========

                                      F-8
<PAGE>
     i.   STOCK-BASED  COMPENSATION  -The  Company  adopted  SFAS No. 123 during
          1997.  SFAS No.  123  requires  expanded  disclosures  of  stock-based
          compensation arrangements with employees and encourages,  but does not
          require,  compensation costs to be measured based on the fair value of
          the equity instrument awarded.  The Company has elected to measure its
          stock-based  compensation  awards to employees based on the provisions
          of APB Opinion No. 25. APB No. 25 allows  recognition of  compensation
          cost based on the  intrinsic  value of the equity  instrument  awarded
          rather than fair value.

     j.   USE  OF  ESTIMATES  -  The  preparation  of  financial  statements  in
          conformity  with generally  accepted  accounting  principles  requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and liabilities, 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.  Actual
          results could differ from those estimates.

     k.   FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  - The  carrying  value of the
          Company's financial instruments approximate fair value as the rates in
          effect approximate current rates obtainable in an open market.

     l.   NEW ACCOUNTING  PRONOUNCEMENT - In June 1998, the FASB issued SFAS No.
          133,  ACCOUNTING FOR DERIVATIVE  INSTRUMENTS  AND HEDGING  ACTIVITIES.
          SFAS No. 133 requires that an enterprise  recognize all derivatives as
          either assets or  liabilities  in the statement of financial  position
          and  measure  those  instruments  at  fair  value.  The  statement  is
          effective for the Company's  fiscal year ending  October 31, 2001. The
          Company has not completed  evaluating the impact of  implementing  the
          provisions of SFAS No. 133.

     m.   RECLASSIFICATIONS  - Certain  reclassifications  have been made to the
          1998  and  1997   financial   statements   to   conform  to  the  1999
          presentation.

2. RELATED PARTY TRANSACTIONS

RECEIVABLE FROM AFFILIATED ENTITIES

This amount  represents  advances by the Company to other  entities owned by the
Company's  majority  stockholder for certain salary  expenses  incurred by these
other entities. The amounts due from the affiliates at October 31, 1999 and 1998
equaled $0 and $29,770, respectively. During 1999, all the amounts were repaid.

NOTE RECEIVABLE FROM STOCKHOLDER

In 1997, the Company advanced  $115,586 to the Company's  majority  stockholder.
The note had an interest rate of 8% and was repaid in fiscal 1998.

ACCOUNTS PAYABLE TO AFFILIATED ENTITY

The Company  leases it's office space from an affiliated  entity.  Total amounts
payable at October 31, 1999 and 1998 equaled $0 and $33,287,  respectively.  See
Note 5.

NOTE PAYABLE TO AFFILIATED ENTITY

The Company's note payable to an affiliated entity at October 31, 1997 consisted
of  $73,189 of  borrowings  at a variable  interest  rate (6% as of October  31,
1997).  The interest rate was determined  annually based on the Internal Revenue
Service imputed interest rate. The balance was repaid in full during 1998.

ACCOUNTS PAYABLE TO COMPANY STOCKHOLDER

The Company had a payable to the majority  stockholder at October 31, 1997 which
was repaid in 1998.

                                      F-10
<PAGE>
3. INCOME TAXES

Income taxes were as follows for the years ended October 31:

                                         1999            1998            1997
                                         ----            ----            ----
Current                               $ 392,114       $ 254,887       $ 235,642
Deferred                               (200,376)       (100,695)        (66,605)
                                      ---------       ---------       ---------
Total income tax expense              $ 191,738       $ 154,192       $ 169,037
                                      =========       =========       =========

The tax effects of temporary  differences that give rise to significant portions
of deferred income tax assets at October 31 were as follows:

                                                        1999             1998
                                                        ----             ----
Deferred revenue                                     $ 314,559        $ 202,646
Allowance for doubtful accounts                        (10,000)           4,100
Accrued compensation                                   120,258            8,886
Depreciation                                           (48,619)         (25,498)
Other                                                   14,311
                                                     ---------        ---------
Net deferred income tax assets                       $ 390,509        $ 190,134
                                                     =========        =========

The effective income tax rate differs from the federal statutory income tax rate
in effect each year as a result of the following items:

                                               1999     1998    1997
                                               ----     ----    ----
Federal statutory income tax rate               34 %     34 %    34 %
State taxes                                      6        6       6
Other                                            5        1      (1)
                                               ---      ---     ---
Effective income tax rate                       46 %     41 %    39 %
                                               ===      ===     ===

4. STOCK OPTIONS AND STOCK AWARDS

During the year ended  October 31, 1998,  the Company  issued  stock  options to
certain  employees.   The  Company  applies  APB  Opinion  No.  25  and  related
interpretations in measuring compensation expense for its stock options.  During
the years ended  October 31, 1999,  1998 and 1997,  compensation  expense of $0,
$50,500 and $0,  respectively,  was recognized  for the  difference  between the
option  exercise  price and the estimated  fair value of the common stock at the
date of grant.  Had  compensation  cost for the  Company's  stock  options  been
determined  based  on the  fair  value  of the  options  at the  date  of  grant
consistent  with SFAS No. 123, the Company's net income and net income per share
would have been adjusted as presented below.  Using the Black-Scholes  model for
common stock option valuation,  the Company estimated  volatility of 84.7%, risk
free  interest  rate at 6%, and a dividend  yield of 0%. All stock  options  are
vested and exercisable when granted.

A summary  of the  Company's  outstanding  options  as of  October  31,  1999 is
presented below along with pro-forma  income  statement  information  consistent
with SFAS No. 123.

                         Exercise          Expiration
           Options        Price               Date
           -------        -----               ----
            33,334       $ 2.25         February 15, 2006
            25,000         1.20         September 30, 2008
             1,667         1.20         October 31, 2008
           100,000         0.94         June 1, 2008
            20,000         1.05         September 30, 2008
             5,000         1.05         October 31, 2008
            ------
           185,001
           =======

                                      F-11
<PAGE>
                                            1999         1998        1997
                                            ----         ----        ----
Net income           As reported          $221,612     $220,825    $263,377
                     Pro forma            $221,612      $22,230    $263,377
Basic and Diluted
  Net Income         As reported             $0.11        $0.11       $0.13
Per Share            Pro forma               $0.11        $0.01       $0.13

A summary of the activity  regarding the Company's  outstanding  options for the
years ended October 31 is presented below:

<TABLE>
<CAPTION>
                                           1999                1998                  1997
                                     -----------------   -----------------    -----------------
                                              Weighted             Weighted            Weighted
                                              Average              Average             Average
                                              Exercise             Exercise            Exercise
                                      Shares   Price     Shares     Price      Shares   Price
                                      ------   -----     ------     -----      ------   -----
<S>                                  <C>       <C>        <C>       <C>        <C>      <C>
Options outstanding at
 beginning of year                   185,001   $1.23      39,834    $2.32      33,334   $2.25
Options granted                           --      --     160,167     1.13       6,500    2.67
Options exercised                         --      --          --       --          --      --
Options cancelled                         --      --     (15,000)    3.06          --      --
                                     -------   -----     -------    -----     -------   -----
Options outstanding at end of year   185,001   $1.23     185,001    $1.23      39,834   $2.32
                                     =======   =====     =======    =====     =======   =====
Fair value of options granted
 during the year                                                    $ .79               $1.36
                                                                    =====               =====
</TABLE>

During  1999,  the Company  accrued for the  issuance of 6,666  shares of common
stock to an employee. In connection  therewith,  the Company recorded $20,001 of
compensation expense. During 1997, the Company accrued for the issuance of 6,668
shares of common  stock to an employee.  In  connection  therewith,  the Company
recorded $21,672 of compensation expense.

In addition to the options and shares  issued during the years ended October 31,
1998 and 1997,  discussed  above,  the Company also has reserved,  for issuance,
various  options and shares to employees  which are based on the  occurrence  of
future events  including  the Company  reaching  certain sales levels.  Under an
arrangement  approved by the Board of Directors,  the CEO and President  will be
granted  options if sales  growth  goals are met.  For every $5 million in sales
growth,  the CEO will  receive  options to purchase  1,667 shares at an exercise
price of 80  percent  of  market  price at the date  sales  goals  are met.  The
President will receive  options to purchase 5,000 shares at an exercise price of
70  percent of the market  price at the date sales  goals are met,  for every $5
million in sales growth.

5. OPERATING LEASES

The Company has operating  leases for office space and equipment which expire on
various dates through the year ending October 31, 2004. Total rental expense was
approximately  $287,000,  $248,000 and $153,000 for the years ended  October 31,
1999,  1998  and  1997,  respectively.   Future  minimum  lease  payments  under
noncancelable operating leases at October 31, 1999 are as follows:

                                      F-12
<PAGE>
          2000                      $ 293,359
          2001                        290,800
          2002                        277,332
          2003                        279,716
          2004                         46,828
                                      -------
          Total                    $1,188,036
                                   ==========

The Company leases its office space from an affiliate of the Company's  majority
stockholder.  Rent  expense for this office  space was  $206,500,  $187,067  and
$114,000 for the years ended October 31, 1999,  1998 and 1997,  respectively.  A
new lease was signed  with the  affiliate  on  January 1, 1999 which  expires on
December 31, 2003.

6. COMMITMENTS AND CONTINGENCIES

The Company is subject to claims and lawsuits that arise in the ordinary  course
of  business,   consisting  principally  of  alleged  errors  and  omissions  in
connection  with the sale of insurance  and personnel  matters.  On the basis of
information  presently available,  management does not believe the settlement of
any such claims or lawsuits will have a material adverse effect on the financial
position, results of operations or cash flows of the Company.

In 1997,  MBA pursued a lawsuit  against a  competitor  for  possible  copyright
infringement on MBA's proprietary software.  Ultimately, the Company settled the
lawsuit and received a cash settlement.  The Company recorded  $168,383 in other
income  which  represented  the  cash  received  net of  legal  and  other  fees
associated with the lawsuit. The Company retained the copyrights to the software
and the competitor ceased using the software.

7. RESTATEMENT

Subsequent to the issuance of the Company's  consolidated  financial  statements
for the year ended  October 31, 1998,  management  determined  that revenue from
VSCs, and the portion of revenue from MBI policies associated with administering
future claims,  should be deferred and  recognized in income on a  straight-line
basis over the  estimated  life of the contract or policy;  that costs  directly
related to the  acquisition  of the  contract or policy that would not have been
incurred but for the acquisition of that contract or policy  (incremental direct
acquisition  costs)  should be deferred and charged to expense in  proportion to
the revenue recognized; and that all other costs should be charged to expense as
incurred. Previously, the Company recognized revenue on MBI policies and VSCs at
the  time of sale  and  accrued  the  estimated  future  costs  associated  with
administering  claims. As a result, the Company's 1998 financial statements have
been restated from amounts  previously  reported to correct the  accounting  for
these items.  The effect on the 1997  financial  statements  was not  considered
significant.  A summary  of the  significant  effects of the  restatement  is as
follows:

                                                               1998
                                                 -------------------------------
                                                 As Previously             As
                                                   Reported             Restated
                                                   --------             --------
At October 31, 1998:
  Deferred Revenue                                 $320,205             $498,610
  Retained Earnings                                 640,997              533,954

For the year ended October 31, 1998:
  Net Commission Income                           3,149,869            2,971,464
  Income Before Income Taxes                        553,422              375,017
  Net Income                                        327,868              220,825
  Net Income Per Share-Basic and Diluted               0.16                 0.11

                                 * * * * * *

                                      F-13
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR ACCOUNTING AND
        FINANCIAL DISCLOSURE.

The  Company  has not had  disagreements  with  its  accountants  on any  matter
regarding accounting principles or financial statement disclosures.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company's  Board of Directors  consists of three people.  All Directors hold
offices  until the next annual  meeting at which time there is an  election  for
their successors.

                                                 Position With
Name                      Age                       Company
----                      ---                       -------
Gaylen M. Brotherson       60    President, CEO, Chairman of the Board, Director
Judy K. Brotherson         53    Vice-President, Director
Edward E. Wilczewski       59    Director

Gaylen and Judy  Brotherson  are husband and wife. No other family  relationship
exists between the Directors or the executive officers.

THE BUSINESS EXPERIENCE OF EACH OF THE COMPANY'S DIRECTORS IS AS FOLLOWS:

Gaylen  Brotherson,  60,  became  President,  CEO,  Chairman  of the Board,  and
Director  of the  Company in November  1995.  He was the  founder of  Mechanical
Breakdown Administrators,  Inc. Mr. Brotherson served in the United States Navy.
In 1960,  he  received  his life,  health and  accident  licenses as well as his
property and casualty license.  Presently,  he is licensed as an insurance agent
in 27  states.  Since  1989 he has  been  actively  involved  in  marketing  and
administering  Mechanical Breakdown insurance policies and VSCs under Mechanical
Breakdown Administrators, Inc.

Judy Brotherson,  53, has been  Vice-President and Director of the Company since
November  1995.  Mrs.  Brotherson is a graduate of Creighton  University.  Since
1975, she has worked primarily in family owned  businesses.  She holds insurance
licenses in approximately  32 states.  She was one of the chief designers of the
MBA software management system. She has been working at MBA since 1989 primarily
involved in overseeing the finance and data-entry departments.

Edward  Wilczewski,  59, has been a Director of the Company since June 1998. Mr.
Wilczewski served in the Navy for six years. Mr. Wilczewski is a graduate of the
University of Omaha.  Primarily for the past thirty years  including the present
time,  he has owned and  operated  The Charter  Group of Arizona,  a real estate
development  company.  His company has  developed  various real estate  projects
ranging from single family homes to apartment complexes.

OTHER EXECUTIVE OFFICERS AND KEY EMPLOYEES

Michael Zimmerman,  29, is the Chief Financial Officer. He joined the Company in
September  of 1999.  Prior to  joining  the  Company,  Mr.  Zimmerman  worked at
PacifiCare,  Inc. from  November of 1997 to September of 1999 as the  accounting
supervisor  in charge of the day to day  accounting  for the  Nevada HMO and the
Nevada and Arizona life insurance products.  Prior to joining PacifiCare,  Inc.,
Mr.  Zimmerman  was an employee  from  September  1993 to  November  1997 at the
international accounting and consulting firm KPMG Peat Marwick LLP.

Shelly Beesley,  34, is the Corporate  Secretary and Assistant to the President.
She has been employed by the Company since January 1993. She  originally  served
as the  Executive  Assistant  for  the  President  and  Vice  President.  At the
beginning of 1996, Mrs.  Beesley became the corporate  secretary.  Also, in 1996
Mrs. Beesley served as a Director to the company.  Prior to joining the Company,
Mrs.  Beesley  worked in the  automotive  industry  as a Systems  Administrator,
Customer Service Manager and Assistant Sales Manager.

                                       11
<PAGE>
Michael Gannon,  43, is the  Information  Systems  Manager.  He is a graduate of
Devry  Technical  Institute.  Mr.  Gannon has been employed by the Company since
January,  1995. He has helped develop MBA's integrated  computer system to serve
all  customer  service,  claims,  data entry,  and sales  functions  for all the
different products MBA offers.

ITEM 11. EXECUTIVE COMPENSATION

The  following  table  provides the annual and other  compensation  of the Chief
Executive  Officer and any other  employee who qualifies  under  Regulation  S-K
section 229.402 for the years ended October 31, 1997, 1998 and 1999.

<TABLE>
<CAPTION>

                                                           Annual Compensation         Long-Term Compensation
                                                      ------------------------------- ------------------------
                                                                                      Restricted    Stock
                                                                                        Stock       Option
                                                                                       (shares)    (Shares)
Name of Principal      Position                 Year    Salary      Bonus   Other(1)    awards      awards
-----------------      --------                 ----    ------      -----   --------    ------      ------
<S>                    <C>                      <C>     <C>        <C>       <C>        <C>         <C>
Gaylen M. Brotherson   Chairman of Board        1997    $47,885    $60,000   $17,248
                       Chief Executive Officer  1998    165,497    150,000    20,522                $26,667
                                                1999    150,797               24,672

Judy K. Brotherson     Vice-President           1997     47,885     40,000    12,145
                                                1998     50,000               10,910                125,000
                                                1999     50,000

Richard John, Jr. (2)  Vice President - Sales   1997    290,431                         $13,334
                                                1998    303,732
                                                1999    272,836                          18,337
</TABLE>
----------
(1)  Included  in Other  Annual  Compensation  are an auto lease paid for Gaylen
     Brotherson  in fiscal  1997,  1998 and 1999,  an auto  lease  paid for Judy
     Brotherson in fiscal 1997 and 1998, auto insurance for Gaylen Brotherson in
     fiscal 1997,  1998 and 1999,  auto insurance for Judy  Brotherson in fiscal
     1997, 1998 and 1999, and life insurance  premiums for Gaylen Brotherson and
     Judy Brotherson in years 1997, 1998 and 1999.
(2)  Richard John's employment at the Company ended October of 1999.

OPTION GRANTS IN LAST FISCAL YEAR
None

OTHER INCENTIVES AND COMPENSATION

The Company does not have a formal stock option plan.  Currently,  stock options
are granted by the Board of Directors.  At October 31, 1998, there were only two
employees,  Gaylen Brotherson and Judy Brotherson,  that had stock options.  All
options are exercisable. Below is a summary of existing options.

                                   Number of        Strike        Expiration
Name                                Shares           Price           Date
----                                ------           -----           ----

Gaylen Brotherson                    33,334         $ 2.25          2/15/06
                                     25,000         $ 1.20         10/31/08
                                      1,667         $ 1.20         10/31/08

Judy Brotherson                     100,000         $ 0.94           6/1/08
                                     20,000         $ 1.05          9/30/08
                                      5,000         $ 1.05         10/31/08

                                       12
<PAGE>
In addition  per the Board of  Directors  resolution  dated  February  15, 1996,
Gaylen  Brotherson  receives  an option to  purchase  1,667  shares @ 80% of the
stock's  fair  market  value  for  each  $5,000,000   increase  in  sales  after
$25,000,000 on the date the sales goals are reached.  Per the Board of Directors
resolution  dated June 1, 1998, Judy  Brotherson  receives an option to purchase
5,000 shares @ 70% of the stock's fair market value for each $5,000,000 increase
in sales  after  $25,000,000  on the date the  sales  goals are  reached.  These
options will expire ten years from the grant date.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following  table sets forth  information  as of October 31, 1999  concerning
shares of  Common  Stock  with  $.001  par  value,  the  Company's  only  voting
securities.  This table includes all  beneficial  owners who own more than 5% of
the  outstanding  voting  securities,  each of the  Company's  directors by each
person  who is known by the  Company  to own  beneficially  more  than 5% of the
outstanding  voting  securities of the Company,  and by the Company's  executive
officers and directors as a group.

                  Name and Address        Amount and Nature
Title of Class  of Beneficial Owner     of Beneficial Owner    Percent of Class
--------------  -------------------     -------------------    ----------------
Common Stock    Gaylen Brotherson         830,955 shares(1)          41.3%
                9419 E. San Salvador
                Suite 105
                Scottsdale, AZ 85258

Common Stock    Judy Brotherson           811,701 shares(1)          40.3%
                9419 E. San Salvador
                Suite 105
                Scottsdale, AZ 85258

Common Stock    CEDE & Co                 171,062 shares              8.5%
                Box 220
                Bowling Green Station
                New York, NY 10274

Common Stock    Shelly Beesley                334 shares              0.0%
                9419 E. San Salvador
                Suite 105
                Scottsdale, AZ 85258

Common Stock    All Directors and       1,642,990 shares             81.7%
                Executive Officers as
                a Group (three people)
----------
(1)  This amount  represents  shares owned and  excludes  the 60,001  options to
     purchase  common  stock for Gaylen  Brotherson  and the 125,000  options to
     purchase common stock for Judy Brotherson.  If these options were exercised
     by  Gaylen  Brotherson  and  Judy  Brotherson,  then  their  percentage  of
     ownership  would  change  to 40.6%  and  42.6%,  respectively  (see Item 6.
     Executive Compensation).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  Company had a note  payable  with Gaylen  Brotherson,  the Chief  Executive
Officer. As of October 31, 1997 the unpaid balance equaled $73,189. The note was
unsecured  and paid per  annum  with a  variable  interest  rate.  The  variable
interest rate was equal to the imputed IRS rate for non-interest  bearing loans.
During 1998,  the Company  repaid the note in full. At the time of repayment the
interest rate was 6%.

                                       13
<PAGE>
The  Company  leases its office  space from  Cactus  Partnership.  The  managing
partner of Cactus Partnership is Gaylen Brotherson, the Chief Executive Officer.
Rent expense for this office space was  $206,500,  $187,067 and $114,000 for the
years ended October 31, 1999, 1998 and 1997, respectively.  The Company signed a
new lease with the affiliated  entity on January 1, 1999. This new lease expires
on December 31, 2003.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

The following documents are filed as part of this report under Part II Item 8:

Reference is made to the Index to Financial  Statements and Financial  Statement
Schedules included in Item 8 of Part II hereof, where such documents are listed.

Exhibits  as  required  by  Item  601 of  Regulation  S-K:

3(i) - Articles of  Incorporation  (incorporated by reference to Exhibit 3(i) to
the Registrant's Registration Statement on Form 10 (file number 000-28221) filed
with the Commission on November 19, 1999).

3(ii) - Bylaws of the Company (incorporated by reference to Exhibit 3(ii) to the
Registrant's  Registration  Statement on Form 10 (file number  000-28221)  filed
with the Commission on November 19, 1999).

10(a) - General Agency Agreement  between  American  International  Group,  Inc.
under its subsidiaries,  National Union Fire Insurance Company and New Hampshire
Insurance Company, and Mechanical Breakdown  Administrators,  Inc. (incorporated
by reference to Exhibit 10(a) to the Registrant's Registration Statement on Form
10 (file number 000-28221) filed with the Commission on November 19, 1999).

     (b) - Agency  Agreement  between  American  Bankers  Insurance  Company  of
Florida and Mechanical Breakdown Administrators, Inc. (incorporated by reference
to Exhibit  10(b) to the  Registrant's  Registration  Statement on Form 10 (file
number 000-28221) filed with the Commission on November 19, 1999).

     (c) - Claims Service  Agreement  between American Bankers Insurance Company
of Florida  and  Mechanical  Breakdown  Administrators,  Inc.  (incorporated  by
reference to Exhibit 10(c) to the Registrant's Registration Statement on Form 10
(file number 000-28221) filed with the Commission on November 19, 1999).

     (d) - Contractual  Liability Insurance Policy for Extended Service Contract
and  Administration/Agency  Agreement  between  American  Modern Home  Insurance
Company and Mechanical Breakdown Administrators, Inc. (incorporated by reference
to Exhibit  10(d) to the  Registrant's  Registration  Statement on Form 10 (file
number 000-28221) filed with the Commission on November 19, 1999).

     (e) - Board of  Directors  resolution  dated  February  15, 1996  regarding
Gaylen M. Brotherson's stock options (incorporated by reference to Exhibit 10(e)
to the Registrant's  Registration  Statement on Form 10 (file number  000-28221)
filed with the Commission on November 19, 1999).

     (f) - Board of Directors  resolution  dated June 1, 1998  regarding Judy K.
Brotherson's  stock options  (incorporated  by reference to Exhibit 10(f) to the
Registrant's  Registration  Statement on Form 10 (file number  000-28221)  filed
with the Commission on November 19, 1999).

     (g) - Office  Lease  (incorporated  by  reference  to Exhibit  10(g) to the
Registrant's  Registration  Statement on Form 10 (file number  000-28221)  filed
with the Commission on November 19, 1999).

11. - Statement re computation of per share earnings

21. - Subsidiary of the Company

27. - Financial Data Schedule.

                                       14
<PAGE>
                                   SIGNATURES

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


                               MBA Holdings, Inc.



/s/ Gaylen Brotherson          Chairman of the Board            January 31, 2000
---------------------------    and Chief Executive Officer
Gaylen Brotherson



/s/ Michael J. Zimmerman       Chief Financial Officer          January 31, 2000
---------------------------
Michael J. Zimmerman


                                       15