UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                 March 26, 1997


 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: December 31, 1996



                         Commission file number: 0-26322





                                    IAC, Inc.


                              a Nevada corporation

                              IRS Number 88-0303769


                  714 "C" Street, San Rafael, California 94901

                                 (800) 554-1250





             Securities registered under 12(b) of the Exchange Act:

          Title of each class Name of each exchange on which registered

                Common Stock, $.001 par value OTC Bulletin Board





Check whether 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 _X__ No __



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

         State issuer's revenues for its most recent fiscal year:  $157,340.

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days.

         The average bid and asked price at the close of trading on March 25, 
1997 was $.39.  Aggregate market value of common stock held by non-affiliates
on that date was $846,350.



                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  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 the plan confirmed by the court. Yes ____ No ____



                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
                       4,272,578 shares at March 25, 1997



                       DOCUMENTS INCORPORATED BY REFERENCE

         see Item 13.


Transitional Small Business Disclosure Format (Check one):    Yes ___   No _X_


<PAGE>


                                     PART I

Item 1.   Description of Business.

History:
         International  Association Services,  Limited, a British Virgin Islands
corporation,  was formed on November 21, 1990, as an  association of podiatrists
who wanted to meet to discuss and address common  concerns and  interests.  This
group of  podiatrists,  then as now,  has had a  management  agreement  with Dr.
Michael Wener. In 1991, The Academy of Ambulatory Foot Surgery,  Inc.  requested
Dr. Wener to look into  possibilities  of obtaining a group medical  malpractice
insurance  policy for members of The Academy and the  Association.  On April 10,
1992,  the company  filed a DBA  registration  in  California  as  International
Associations' Coalition, Inc. ("Coalition").  On June 25, 1993, Dr. Wener formed
a Nevada corporation,  International  Associations' Coalition,  Inc. and did not
renew the BVI  registration;  the California DBA was therefore  terminated.  The
Nevada corporation continues to operate and provide services to the podiatrists.
         In late 1994, Lease Rite, Inc. a former subsidiary of a SEC registered
company, Trvlsys, Inc., formed a wholly owned subsidiary, IAC, Inc., a Nevada
corporation, and merged with it.  In January, 1995, Dr. Wener assigned his
management contract with International Associations' Coalition, Inc. to IAC,
Inc.
         In past  years,  the group has  attracted  a growing  number of members
because of its insurance program and other association  benefits.  In 1992 there
were approximately 30 members, in 1993, 50 members and since then, the group has
numbered  between  70 and 90  members.  Members  of the  Association  have  been
notified  that IAC,  Inc.  is in the  process of raising  capital to form a Risk
Retention Group ("RRG") for podiatrists.  The intent is to provide a vehicle for
members to share in the  extreme  success of Dr.  Wener's  insurance  management
skills.  The new RRG,  when formed,  would have a management  contract with IAC,
Inc. which would be based on a percentage of collected premium.
         Coalition is a group of Podiatrists who have joined together because of
common  interests  and goals.  One of the major  benefits of membership is group
medical  malpractice  insurance for eligible members. To date, the insurers have
been domiciled  "off-shore" and therefore are increasingly  unacceptable to many
states, hospitals and HMO's. The recent trend has been to accept only "domestic"
carriers and this has hampered  the  expansion of the group.  One of the reasons
for  forming  a Risk  Retention  Group  for the  Podiatrists  is that  RRG's are
authorized by the Federal Risk  Retention Act of 1986,  are  supervised by their
local (domicile) State Insurance  Departments and, under the Act, are acceptable
carriers throughout the United States.  Additionally,  the capital  requirements
for forming a Risk  Retention  Group are  determined by the state which oversees
the company.
         IAC, Inc. is providing management services to International 
Associations' Coalition, Inc. and its successor, Health Professionals Coalition,
Inc. ("Health"), until a RRG is formed.  When the RRG is formed, the members of
Coalition will transfer to the RRG and the Company will provide similar services
to the RRG as well as any management functions necessary to operate the RRG.  
Current services include:
                    Collection and forwarding of applications  for membership
                      in  Health  and  assistance  to  insurer  in  determining,
                      according to insurer guidelines, suitability for inclusion
                      in its group medical malpractice insurance program;
                    Determination  and  collection  of suitable dues and fees
                      for members;
                    Payment of appropriate premiums to insurance
                      carriers;
                    Scheduling  and  conducting  risk  management
                      seminars for members; 
                    Processing claims for forwarding to the insurance carrier; 
                    Analysis of claims as requested by insurance company 
                      attorneys;  
                    Review and dissemination of standards of care and provide
                      liaison  between  members, their insurance company, and
                      their attorneys.

         In late 1995, the Company formed a Nevis reinsurance  company,  Mt. Tam
Re, Inc., for the purpose of providing  reinsurance  for the planned RRG and for
other reinsurance activities.

Business Plan:
         Upon formation of the RRG, IAC, Inc. will increase its  advertising and
public relations  efforts in an effort to acquire more  participants in the RRG.
The company intends to advertise in trade  periodicals and other media. Once the
RRG for podiatrists is  established,  the Company intends to expand its business
by  forming  RRG's  for  other  groups  in need of  insurance  coverage  such as
landscape  architects,   dentists,   accountants,   attorneys,   oral  surgeons,
chiropractors and insurance brokers.
         According  to the American  Podiatric  Medical  Association,  there are
approximately  15,000 podiatrists in the U.S. and approximately one third belong
to  RRG's.  Membership  in  RRG's  is  on  the  rise  because  of  the  changing
requirements for domestic malpractice insurance.
         Regulation is provided by state  insurance  regulators  who oversee the
operation of risk retention groups. The company has excellent relationships with
several state insurance departments.
         At December 31, 1996,  the Company had  approximately  $11,000 in cash.
The negative cash flow in 1996 was the result of increased  compensation  to the
Chairman and an increase in legal fees and  administrative  costs. Net cash used
in operating  activities was $37,854 in 1996,  down  dramatically  from the year
earlier  level of $71,234.  Approximately  89% of the Company's net loss for the
year  was  derived  from  non-cash   promotional   and   insurance   activities.
Nevertheless, the Company must obtain funding for its RRG to be able to maintain
and expand its business (see Note 1 of the Financial Statements). Currently, Dr.
Wener is the only  employee of the company.  Accounting  and legal  services are
contracted for and other employees will be added as needed.

Item 2.   Description of Property
         The Company has no property.

Item 3.   Legal Proceedings.
         See Note 1 of the Financial  Statements regarding the Consent Cease and
Desist Order issued by the Insurance Commissioner of Texas.

Item     4.  Submission  of Matters to a Vote of Security  Holders There were no
         matters submitted to security holders.

Item 5.   Market for Common Equity and Related Stockholder Matters.
         The Company's  common stock began trading on the OTC Bulletin  Board in
the last quarter of 1995.  Therefore,  quotations reflect  inter-dealer  prices,
without retail  mark-up,  mark-down or commission  and may not represent  actual
transactions.  There are approximately 300 holders of the common stock. Although
there are no  restrictions  on the  issuance  of  dividends,  there have been no
dividends issued on the Company's common equity to date.




         Quotations  for the  Company's  common stock from the approval date for
quotations are as follows:

                                         1996

                          Q1               Q2                Q3            Q4
     High              $1.00             $.875            $1.75         $1.375
      Low                .25              .25               .375          .125


                                         1995

                          Q1               Q2                Q3            Q4
     High              NA               NA                NA             $.875
      Low              NA               NA                NA              .375


Item 6.  Management's Discussion and Analysis or Plan of Operation.

The following  discussion  relates to the audited  financial  statements for the
years ended December 31, 1996 and 1995 which are included in Item 7 below.

Management fees in 1996 declined $13,000 or 9% from the preceding year. This was
due to a decrease in premiums written to the podiatrists group under management.
Gross  premiums  collected  declined  from $550,000 in 1995 to $494,000 in 1996.
While  there was a 12%  increase  in  members in 1996,  there was a decrease  in
insurance premiums due to competitive pressures from other insurance carriers.

Revenues in 1996 included a $7,500 gain from the sale of an equity security held
at December 31, 1995 and a $11,250 reinsurance premium received by the Company's
subsidiary,  Mt. Tam Re, Inc. The reinsurance policy was terminated in December,
1996.

During the third quarter,  the Board of Directors  authorized an increase in the
salary of the CEO from $5,000 to $10,000 per month reflecting the increased time
required to conduct the company's affairs.  This resulted in the 37% increase in
compensation expense in 1996.

In 1996, the Company issued 355,000 tradable shares to four unrelated parties to
assist  IAC in its  promotional  activities.  These  shares  were  valued at the
current  fair  market  value  of $1  per  share  at the  time  of  issuance  and
promotional expense of $355,000 was recognized.  (See Note 4 to the consolidated
financial statements.)

Administrative  expenses  increased  largely as a result of an increase in legal
fees of $15,000 and the nonrecurring  cost of $47,500  associated with providing
retroactive  coverage  for  certain  insurance  claims  against  members  of the
podiatrists  group. IAC issued 200,000 shares of restricted stock to Pacific Rim
Insurance  Company as  consideration  for  providing  the  required  retroactive
coverage.  The  restricted  shares were valued at 40% of the current fair market
value at the time of  issuance.  The  increase in legal fees  resulted  from two
proposed  acquisitions which were not consummated and discussions with the Texas
Insurance  Commissioner  which led to the Cease and Desist Order (see discussion
below and Note 1 to the consolidated financial statements).

Liquidity: During the past two years, IAC has used about $110,000 of cash in its
operations  with the result that cash reserves have declined to about $12,000 at
December 31, 1996.  If the Company  does not  increase  revenues or  drastically
reduce expenses, it will fully use its cash resources in 1997.

Moreover, on March 5, 1997, the Company and Health Professionals Coalition, Inc.
Signed a Consent  Cease and Desist Order (Cease and Desist  Order) issued by the
Texas Insurance Commissioner that insurance coverage for podiatrists resident in
Texas must be terminated  effective April 21, 1997. In 1996, Health & Coalition,
in the  aggregate,  collected  insurance  premiums of $95,000  from  podiatrists
residing in Texas. IAC received related management fees of approximately $26,000
in 1996.  The Cease and  Desist  Order  provides  that IAC and Health can in the
future,  accept payment of premiums only if first authorized to conduct business
in  Texas.  Such  authorization  will  be  dependent  upon  formation  of a risk
retention group (RRG), or retention of an insurance  broker and insurer licensed
in Texas.  Pacific Rim is not licensed in Texas.  Management  is  attempting  to
retain a broker licensed in Texas,  who in turn could locate an insurer licensed
in Texas.  There can be no assurance  that these  efforts will be  successful by
April 21, 1997 or at a later date.  If these  efforts  are not  successful,  the
financial impact on IAC's liquidity will be significant.

The Company has been seeking  funding for the initial  capitalization  of a Risk
Retention Group (RRG) for podiatrists.  The Company entered into a contract with
a potential  investor in  October,  1996 to provide  $600,000 in capital for the
RRG. However, as of March 26, 1997, such funding has not been received.  Without
a  RRG,  IAC  is  unable  to  substantially  expand  its  marketing  efforts  to
podiatrists around the country and reduce its dependence upon the limited number
of members of Health.








<PAGE>


Item 7.   Financial Statements




March 26, 1997

To the Board of Directors of IAC, Inc.

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

         In  our  opinion,  the  accompanying  consolidated balance  sheet  and
the  related consolidated statements of operations and accumulated deficit, 
changes in stockholders' equity and of cash flows present fairly, in all 
material respects,  the financial position of IAC, Inc. at December 31, 1996 and
1995 and the results of its operations and its cash flows for the years then 
ended, in conformity with generally accepted  accounting principles.  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 audit.  We conducted our audits of these  statements in accordance with 
generally accepted auditing standards which 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,
assessing the accounting  principles used and significant estimates made by 
management, and evaluating the overall financial statement presentation.  We 
believe that our audit provides a reasonable basis for the opinion  expressed 
above.

         The accompanying  financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
consolidated  financial  statements,  the Company has incurred  operating losses
during the past two years, and its revenues in 1997 may be significantly reduced
due to receipt of nonrecurring  revenue in 1996 and the Consent Cease and Desist
Order entered into with the Texas Insurance  Commissioner.  As described in Note
1, the  prospective  impact of this  Order  depends on  management's  successful
efforts  to  make  alternative  arrangements  including  the  funding  of a Risk
Retention  Group.  The foregoing  raises  substantial  doubt about the Company's
ability to continue as a going concern.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


/s/ Odenberg, Ullakko, Muranishi & Co.





<PAGE>


                                    IAC, Inc.
                           Consolidated Balance Sheet


                                                           December 31
                                                     1996               1995
                                                -------------------------------
                           ASSETS
CURRENT ASSETS
Cash in bank                                       $11,713            $37,967
Prepaid expense                                     14,480
Refundable payroll taxes                                                3,973
Receivable from related party                                          22,809
                                                -------------------------------
TOTAL CURRENT ASSETS                                26,193             64,749
                                                -------------------------------

OTHER ASSETS
Investment in equity security                                          10,000
Organizational costs, net of amortization            2,149              2,869
                                                ------------- -----------------

TOTAL ASSETS                                        $28,342            $77,618
                                                ===============================


            LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                     $5,845             $3,470
Accrued liabilities                                     377                317
                                                  -----------------------------
                                                     $6,222             $3,787
                                                  -----------------------------


STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares
    authorized; 630,000 shares outstanding             2,500              2,500
Capital stock, $.001 par value, 25,000,000 shares
    authorized; 4,272,578 and 3,693,578
    shares outstanding respectively                    4,273              3,694
Additional paid in capital                           695,125            283,604
Accumulated deficit                                 (679,778)          (215,967)
                                                   ----------------------------
                                                      22,120             73,831
                                                   ----------------------------

                                                     $28,342            $77,618
                                                   ============================

          See accompanying notes to consolidated financial statements.


<PAGE>


                                    IAC, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                             AND ACCUMULATED DEFICIT


                                                      Year Ended December 31
                                                     1996               1995

REVENUES
Management Fees                                     $135,346           $148,348
Other income                                          21,994              2,018
                                                   ----------------------------
                                                    $157,340           $150,366
                                                   ----------------------------

OPERATING AND GENERAL EXPENSES
Compensation and employee benefits                    94,036             68,392
Promotion and trade shows                            363,417             26,561
Administrative expenses                              162,098            101,283
                                                    ---------------------------
                                                     619,551            196,236
                                                    ---------------------------
                                                    ---------------------------
LOSS FROM OPERATIONS                                (462,211)           (45,870)
                                                    ---------------------------

INCOME TAXES                                         (1,600)              (800)
                                                    ---------------------------

NET LOSS                                            (463,811)           (46,670)

DEFICIT-beginning of period                         (215,967)          (169,297)

DEFICIT- end of period                             ($679,778)         ($215,967)
                                                   =============================

Loss Per Share                                       ($0.11)            ($0.01)
Weighted average number of
common shares outstanding                          4,039,912          3,663,193
                                                   ============================


          See accompanying notes to consolidated financial statements.



<PAGE>



                                    IAC, Inc.
                             STATEMENT OF CHANGES IN
                              STOCKHOLDERS' EQUITY
                 For the Years Ended December 31, 1995 and 1996


<TABLE>

                            Preferred Stock            Capital Stock
                                                                                 Paid-in    Accumulated
                            Shares        Amount       Shares       Amount       Capital      Deficit        Total

<S>                          <C>           <C>        <C>             <C>        <C>         <C>             <C>
           
Balances at
   December 31, 1994         1,050,000       $5,000    3,611,043        $3,611     $215,688   ($169,297)      $55,002
Recission of
preferred shares             (420,000)      (2,500)                                   2,500
Sale of common stock
(net of offering)                                         69,535            70       63,929                     63,999
Other stock issued                                        13,000            13        1,487                      1,500
Net loss for year                                                                               (46,670)      (46,670)
                         ----------------------------------------------------------------------------------------------
Balances at
   December 31, 1995           630,000        2,500    3,693,578         3,694      283,604    (215,967)        73,831

Sale of common stock
                                                                                      1,600                      1,600
Stock issued for
services
   Legal fees                                             20,000            20        7,980                      8,000
   Corporate
     communications                                      305,000           305      304,695                    305,000
   Insurance coverage                                    200,000           200       47,300                     47,500
   Consulting                                             50,000            50       49,950                     50,000

Other stock issued                                         4,000             4          (4)

Net loss for year                                                                              (463,811)     (463,811)
                         ----------------------------------------------------------------------------------------------

Balances at
December 31, 1996              630,000       $2,500    4,272,578        $4,273     $695,125   ($679,778)       $22,120

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

</TABLE>

          See accompanying notes to consolidated financial statements.




<PAGE>


                                    IAC, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                         Year Ended December 31

                                                         1996          1995
                                                         ----          ----

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                 ($463,811)   ($46,670)
Adjustment to reconcile net loss to net cash (used  in)
operating activities:
   Decrease (increase) in receivable from related party     22,809     (22,809)
   Decrease (increase) in refundable payroll taxes           3,973      (3,973)
   Increase in organizational expense                                   (2,589)
   Increase in accounts payable and other liabilities        2,435       2,587
   Increase in prepaid expenses                            (14,480)
  Common stock issued for services                         410,500       1,500
   Amortization                                                720         720
                                                           --------------------
Net Cash Used In Operating Activities                      (37,854)    (71,234)
                                                           --------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Sale of (investment in) equity securities                10,000     (10,000)
                                                            --------------------
Net Cash Provided for (Used In) Investing Activities        10,000     (10,000)
                                                            -------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock, net of expenses                     1,600       63,999
                                                            -------------------
Net Cash Provided By Financing Activities                    1,600       63,999
                                                            -------------------

Net (Decrease) In Cash                                      (26,254)   (17,235)
                                                            -------------------

Cash At Beginning Of Period                                  37,967      55,202
                                                            -------------------

Cash At End Of Period                                       $11,713     $37,967
                                                            ===================

Cash paid during the year for:
   Interest                                                  $6,741     $   -
                                                            ===================
   Taxes                                                     $1,600        $800
                                                            ===================

          See accompanying notes to consolidated financial statements.




<PAGE>


                                    IAC, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


Note  1  -  Organization,  operations  and  summary  of  significant  accounting
policies:

Organization:
         IAC, Inc. ("IAC") is a Nevada corporation engaged in the business of 
managing a malpractice insurance contract between International Associations' 
Coalition, Inc. ("Coalitions"), a related party, and an unrelated insurance 
company, United International, Inc. ("United").  Effective October 1, 1995, the
insurance contract was assumed by Pacific Rim Insurance Company ("Pacific Rim"),
a minority stockholder of IAC.  The members of Coalitions and its successor, 
Health Professionals Coalitions, Inc. ("Health") are podiatrists seeking 
affordable malpractice insurance.  Under the management contract, IAC is 
entitled to receive 27.5% of the premiums paid by the podiatrists to United and
Pacific Rim each month.

         The term of the  insurance  contract  between  the  Coalitions  and the
insurance  carrier is one year and is  generally  renewable if both parties have
performed satisfactorily. The management contract between IAC and Coalition also
has a term concurrent with the insurance contract.

         Coalition is wholly-owned  by IAC's Chairman and majority  shareholder.
In September,  1996,  the business of  Coalitions'  was  transferred  to a newly
created  company,  Health  Professionals  Coalition,  Inc., which is also wholly
owned by IAC's Chairman.

         On December 8, 1995,  IAC formed a  subsidiary,  Mt. Tam Re, Inc. in 
Nevis (in the West  Indies)  with initial capital of $25,000 which is on deposit
in the Channel Islands.  Mt. Tam Re was formed to provide reinsurance coverage
for other insurance companies (See Note 5).

Basis of Presentation

         The consolidated  financial  statements have been prepared on the going
concern basis.  IAC has reported a net loss during the past two years.  On March
5, 1997, the Company and Health  Professionals,  Inc. signed a Consent Cease and
Desist Order (Cease and Desist Order) issued by the Texas Insurance Commissioner
that  insurance  coverage for  podiatrists  resident in Texas must be terminated
effective April 21, 1997. In 1996, Health, in the aggregate, collected insurance
premiums of $95,000 from  podiatrists  residing in Texas.  IAC received  related
management  fees of  approximately  $26,000 in 1996.  The Cease and Desist Order
also requires payment of a $10,000 fine.

         The Cease and Desist  Order  provides  that IAC and Health  can, in the
future,  accept payment of premiums only if first authorized to conduct business
in  Texas.  Such  authorization  will  be  dependent  upon  formation  of a risk
retention group (RRG), or retention of an insurance  broker and insurer licensed
in Texas.  Pacific Rim is not licensed in Texas.  Management  is  attempting  to
retain a broker licensed in Texas, who in turn, could locate an insurer licensed
in Texas.  There can be no assurance  that these  efforts will be  successful by
April 21, 1997 or at a later date.

         In 1996, the Company received  revenues of  approximately  $19,000 from
Mt. Tam Re  reinsurance  premiums  and a gain from the sale of a security  which
will not recur in 1997.
         In  addition,  the  Company  has been  seeking  funding for the initial
capitalization of a RRG for podiatrists.  The Company entered into a contract in
October,  1996 to provide  $600,000 but such funding has not yet been  received.
This  agreement,  as amended,  provides that upon funding by the  investor,  the
Company must pledge 500,000 shares of convertible preferred stock. The agreement
provides  for a  success  fee of  $47,500.  Without  a RRG,  IAC  is  unable  to
substantially expand its marketing efforts to podiatrists around the country and
reduce its dependence upon the limited number of members in Health.

Note 2 - Summary of significant accounting policies:

         The  process of  preparing  financial  statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  regarding  certain types of assets,  liabilities,  revenues and
expenses.  Such estimates primarily relate to unsettled  transactions and events
as of the date of the financial statements. Accordingly, upon settlement, actual
results may differ from the estimated amounts.

         Revenues are recorded by IAC when  insurance  premiums are collected by
Coalitions or Health.

         Expenses are recorded on the accrual basis of accounting.

         The  carrying  value  of  cash,  marketable  equity  securities,   note
receivable, accounts payable and accrued liabilities is a reasonable estimate of
fair value of these financial instruments.

Note 3 - Receivable from related party:

         At December 31, 1995,  Coalition was obligated to IAC for $22,809.  The
Company accepted a note from Coalition which was payable in full by December 31,
1996.  The unsecured  note bore interest at the rate of 10%. The note was repaid
in full in 1996 in accordance with its terms.

Note 4 - Issuance and sales of  stock:

         On November  8, 1994,  the Company  initiated  a private  placement  of
common  stock at a price of $1 per share.  During the years ended  December  31,
1995 and 1996,  proceeds of $66,999 and $1,600,  respectively were received from
the sale of stock.  The proceeds in 1995  included the sale of 28,500  shares of
common stock at $1 per share to the IAC Risk Retention Group, Inc.

         In  March,  1995,  the  issuance  of  420,000  preferred  shares  to  a
shareholder in 1994 was rescinded and the balances in the  stockholders'  equity
have been appropriately adjusted.

         Each share of preferred  stock is entitled to one vote per share and is
convertible  into 10 shares of common stock; the preferred stock has no dividend
rights nor preference in liquidation.

         On January 2, 1996,  IAC entered  into a one year  consulting  contract
with North American  Corporate  Consultants  (NACC). As consideration,  NACC was
issued  250,000 shares of IAC's free trading common stock at a fair market value
of $1 per share.  The cost of this contract  ($250,000) was  recognized  ratably
throughout 1996.

         Other  consultants  were also issued an aggregate  of 55,000  shares of
free trading  stock for their  services.  These  services  were valued at $1 per
share and recognized as expense during 1996.

         In May, 1996, the Company issued 100,000  restricted  shares to Pacific
Rim in exchange for Pacific Rim  providing  retroactive  insurance  coverage for
members of Coalitions'.  Such  restricted  shares were valued at $.375 per share
and were recorded as expense during 1996.

         In November,  1996,  the Company's  board of directors  authorized  the
issuance of an additional 100,000 restricted shares to Pacific Rim as additional
consideration for Pacific Rim providing insurance coverage for certain insurance
claims.  Such restricted  shares were valued at $.10 per share and were recorded
as expense during 1996.

         In addition 20,000 restricted shares were issued to the Company's legal
counsel for services  which were valued at $.40 per share and the legal  expense
was recorded in 1996.

         During 1996,  IAC entered  into an  agreement  with an affiliate of RMJ
Associates to provide certain consulting  services.  This agreement required the
issuance of 50,000 shares of free trading  stock.  These services were valued at
$1 per share and recognized as expense in 1996.


Note 5 - Mt. Tam Re Trust:

         In December,  1995, a shareholder  of IAC deposited  common stock of an
OTC Bulletin  Board company in a trust account which is held by a domestic stock
brokerage  firm.  These  securities  are to serve  as  additional  capital,  for
reinsurance  underwriting  purposes,  for Mt. Tam Re, Inc. At December 31, 1996,
the value of the securities held by the trust was $73,500.

         Under the terms of the trust  agreement,  the trustee can require  this
shareholder to add  sufficient  securities to the trust to maintain an aggregate
value of  $500,000 as of each  quarter.  In March of 1997,  the  Company  made a
demand upon the  stockholder to add additional  securities to the trust to bring
its value to $500,000.  During 1996, the  shareholder  received  compensation of
$6,250 under this trust agreement.  Until the trust account is supplemented with
additional capital, Mt. Tam is not able to underwrite reinsurance contracts.

         Effective August 1, 1996, Mt. Tam Re, Inc. entered into a reinsurance 
contract with another reinsurance company indirectly owned by IAC's Chairman to
provide insurance coverage to Coalitions' members.  This reinsurance contract 
was canceled effective December 6, 1996.  Mt. Tam received premiums of $11,250.
The insurance coverage was made on a made claims basis and no claims were filed
with the carriers while this reinsurance contract was in force.

Note 6 - Income taxes:

         At December 31,  1996,  IAC's  consolidated  net  operating  loss carry
forwards (NOL's)  amounted to approximately  $$516,000 for federal tax purposes.
These NOL's will expire from 1999 through  2011.  For  California  franchise tax
purposes, the NOL is approximately $$258,000 and expires in 2001.



Item 8.     Changes In and Disagreements With Accountants on Accounting and 
Financial Disclosure.
         There were no disagreements with accountants.

                                    PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons;  
Compliance With Section 16(a) of the Exchange Act.

Name                 Age  Position, Office     Term                 Served
----                 ---  ----------------     ----                 ------
Dr. Michael Wener    53   Director, President  Until replaced       Inception
Kathryn Turnham      35   Director, Treas      Until replaced       Inception
Dr. Mark R. Weiss    50   Director             Until replaced       1996
Harry Walsh          72   Director             Until replaced       1996
Sally A. Geer        51   Director             Until replaced       1996

         There  are  no  other  significant  employees.   There  are  no  family
relationships  between the above listed persons, nor is there any involvement in
certain  legal  proceedings.  None of the above serve as  directors in any other
reporting company.

Michael Wener, D.P.M.                   Chairman, Board of Directors, President
Board  Certified in both foot and ankle surgery,  Dr. Wener has been involved in
peer  review  since  1972.  He  founded  the first  podiatry  insurance  captive
(Podiatrist  Indemnity Fund,  Ltd.) in 1974 which maintained a 28.5% loss ratio.
The present program for podiatrists was started in 1992 on a direct  procurement
basis.  Dr.  Wener has  maintained  a 10% loss  ratio by  thorough  underwriting
procedures, restrictive policy requirements and strict risk management.

Kathryn Turnham                                      Director, Treasurer
Ms.  Turnham  is the sole  owner of Kay's  Bookkeeping  Service  in San  Rafael,
California.  For the last thirteen years she has provided bookkeeping and income
tax  services,   for  which  she  is  licensed  by  the  State  of   California.
Additionally,   she  has   served  as  the   Administrator   for   International
Associations' Coalition, Inc.

Harry Walsh                                                   Director
Mr. Walsh has over 40 years experience in a variety of insurance and reinsurance
activities,  including start-ups and claims adjustment and has performed in many
roles including CEO and Chairman of the Board.

Mark R. Weiss, D.P.M.                                Director
Dr.  Weiss took his  podiatry  degree at the  California  College  of  Podiatric
Medicine at San  Francisco in 1971.  He is  certified  by the American  Board of
Podiatric  Orthopedics and the American Board of Podiatric Surgery.  He has held
numerous clinical,  association and hospital appointments and currently conducts
a private  practice of podiatric  sports  medicine in Los Angeles where he is on
staff at Century City Hospital and Cedars-Sinai Medical Center.


Sally A. Geer                                                 Director
Ms. Geer has been a banker for 25 years.  She is currently  Vice  President  and
Manager for  Redwood  Bank in their San  Francisco  office.  Her duties  include
oversight  of branch  operation  and  personnel  as well as  development  of the
commercial loan portfolio of the Main Business Banking Office.


Item 10.    Executive Compensation.
         The sole officer who received a salary was the  President,  Dr. Michael
Wener,  who received  $85,125 in the year ended December 31, 1996.  There are no
other compensation or bonus plans.

Item 11.    Security Ownership of Certain Beneficial Owners and Management.
         The  following  table sets  forth  security  ownership  as known to the
Company as of March 25, 1997.

  (1)                   (2)                      (3)                (4)
Title of Class    Name & Address of        Amount & Nature of   Percent of
(a) (b) (c)       Beneficial Owner         Beneficial Owner      Class

Common Stock       Dr. Michael Wener             2,100,450             49.16%
                   206 Ridgewood
                   San Rafael, CA  94901

Common Stock       Kathryn Turnham                   2,000         less than 1%
                   47 Manor View
                   Fairfax, CA  94930

Common Stock       Sally A. Geer                     5,000         less than 1%
                   15005 B'way Terrace
                   Oakland, CA  94611

Common Stock       Officers & Directors as a     2,107,450               49.32%
                   group

Common Stock       Richard W. Lahey                726,426               17.00%
                   419 Crown Road
                   Kentfield, CA 94904

Preferred Stock    Dr. Michael Wener               587,500               93.25%
                   206 Ridgewood
                   San Rafael, CA  94901

                   Officers & Directors as a       587,500               93.25%
                   group

(a) Except as otherwise  indicated,  the Company  believes  that the  beneficial
owners of Common  Stock listed  above,  based on  information  furnished by such
owners,  have sole  investment  and voting  power with  respect to such  shares,
subject to community  property laws where  applicable.  Beneficial  ownership is
determined  in  accordance  with  the  rules  of  the  Securities  and  Exchange
Commission  and generally  includes  voting or investment  power with respect to
securities.
(b) Total number of common shares outstanding is 4,272,578 at March 25, 1997.
(c) Total number of preferred  shares  outstanding  is 630,000.  Each  preferred
share is  entitled  to one vote and is  convertible  into ten  shares  of common
stock.



<PAGE>


Item 12.    Certain Relationships and Related Party Transactions.
         The Company does not have  specific  guidelines  as to how to deal with
potential  conflicts.  Rather, the management's guiding principle will always be
the fiduciary  responsibility of those concerned.  Further, as to an opportunity
that might be attractive  to the Company and to another  entity or entities with
which  officers,  directors or key employees have an interest,  the  opportunity
would be regarded  as that of the  concern to which it first  came.  The Company
does not at  present  have any  specific  plans,  arrangements,  commitments  or
undertakings  as to proposed  transactions  that would  reasonably be thought to
give rise to conflicts of interest with affiliates.
         If any of the  Company's  officers,  directors,  key employees or their
affiliates  generate prospects deemed attractive by the Company and in which the
company  ultimately  acquired an interest,  the Board of Directors may authorize
compensation  to such person.  No  guidelines  have been adopted by the Board of
Directors  regarding the amount or form of compensation to be paid in connection
with the generation of such prospects.
         Dr. Wener assigned his interests in the Consultation Agreement with 
International Associations' Coalition, Inc. to IAC, Inc. in exchange for 
2,100,000 shares of the Common Stock and 210,000 shares of Convertible 
Preferred Stock in IAC, Inc.

Item 13.    Exhibits and Reports on Form 8-K.
(a)  Exhibit Table
          Articles of Incorporation
          By-laws
          Material Contracts
               Podiatric Consultation Agreement
               Addendum to Podiatric Consultation Agreement
               Agreement for Issuance of Group Master Insurance Policy
          Plan of Acquisition, Reorganization
          Additional Exhibits
               Nevada Business Code.  78.037
               
     The above documents are hereby incorporated by reference to Amendment #3 
     of the Company's Form 10-SB filed November 2, 1995.

          Exhibit 27.  Financial Data Schedule

(b) There were no Form 8-K's filed.

<PAGE>

                                   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.

IAC, Inc.
(Registrant)

By:   /s/Dr. Michael Wener
         Dr. Michael Wener, President

Date:    March 26, 1997

         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.
                                      By:    /s/ Dr. Michael Wener
                                          Dr. Michael Wener, President

                                            Date:    March 26, 1997