Washington, D.C. 20549


                                   FORM 10-QSB


[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                           EXCHANGE ACT OF 1934

               For the quarterly period ended: September 30, 1996

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                           Commission File No. 0-11808

                             MB SOFTWARE CORPORATION


         Colorado                                                 59-2219994
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                           Identification Number)

                      2225 E. Randol Mill Road - Suite 305
                           Arlington, Texas 76011-6306
                                 (817) 633-9400


     Check  whether  the Issuer (1) filed all  reports  required  to be filed by
     Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the past
     12 months (or for 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 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 a plan confirmed by a court.

                                    Yes   [ X ]               No   [   ]


     As of September 30, 1996, 66,850,000 shares of the Issuer's $.001 par value
     common stock were outstanding.

Transitional Small Business Disclosure Format

                                    Yes  [   ]                No  [ X  ]

<PAGE>






                             MB SOFTWARE CORPORATION

                                   Form 10-QSB

                        Quarter Ended September 30, 1996


                                      INDEX

PART I  -  FINANCIAL INFORMATION                                  PAGE NUMBER

           Item 1  -  Financial Statements

   Consolidated Balance Sheet
   September 30, 1996 (Unaudited) and December 31, 1995 (Audited)           3-4

       Consolidated Statements of  Cash Flow
       for the Nine Months ended September 30, 1996 (Unaudited
       and  December 31,1995   (Audited)                                      5

       Consolidated Statements of Operations
       for the Nine Months and Three Months ended  September 30, 1996)
       and September 1995 (Unaudited)                                         6

            Notes to Consolidated Financial Statements                        7

           Item 2  -  Management's Discussion
           and Analysis of Financial Condition or Plan of Operation
                                                                            7-9

PART II - OTHER  INFORMATION



           Item 4  - Submission of Matters to Vote by Security Holders       10

           Item 6  -  Exhibits, Financial Statement Schedules                10
           and Reports on Form 8-K



SIGNATURES                                                                   10

                                       2

<PAGE>

                                             September 30,        December 31,
                                                 1996                 1996
                                          -----------------    -----------------

CURRENT ASSETS
Cash                                   $     151,529                   $ 36,535
Trade accounts receivable                    210,664                     59,788
Notes receivable                                   -                          -
Advance                                       44,652
Prepaid  Expenses                             16,064
                                          ------------------    ----------------
Total current assets                         422,909                     96,323


PROPERTY AND EQUIPMENT, NET                   44,305                     23,839
                                          ------------------    ----------------


OTHER ASSETS
Goodwill                                     942,882                    956,045
Software Source Code
                                                   -
Software development costs                   228,921                     51,879
Deposits                                      18,488                     17,788

      Total other assets                   1,234,596                  1,025,712
                                          ------------------    ----------------
                                           1,657,505                  1,145,874
                                           =================    ================
<PAGE>



                                            September 30,           December 31,
                                                 1996                    1995
                                          ------------------   -----------------
CURRENT LIABILITIES
Bank Overdraft                         $           -         $          29,616
                                                                               
Notes Payable, including $38,214 and
$130,172 respectively,due to related
parties
                                             299,889                    397,741
Accounts payable
                                             169,086                    177,266
Accrued liabilities                          110,384                    142,754
Other liabilities                            119,269                    527,350
Other                                              -
                                          ------------------    ----------------

       Total current liabilities             698,628                  1,274,727
                                          ------------------    ----------------

LONG TERM LIABILITIES
Note Payable                               1,321,715                   710,900
Other liabilities                            130,000                   130,000
Deferred Revenue                             132,775                   160,878
                                          ------------------    ----------------
       Total long term liabilities         1,584,490                  1,001,778


SHAREHOLDERS' EQUITY
Common stock .001 par value; 
100,000,000 shares
authorized; 66,850,000 shares issued          66,885                     49,485
                                                  
Additional paid-in capital                   501,320                    518,720
Retained Earnings (deficit)               (1,551,796)                (1,551,797)
Treasury stock, at cost; 57,518 shares      (102,039)                  (147,039)
                                          ------------------    ----------------
Net Earnings                                 460,017
Total shareholders' equity (deficit)        (625,613)                (1,130,631)
                                          ------------------    ----------------

                                     $     1,657,505                  1,145,874
                                        ===================     ================
<PAGE>


                                                September             December
                                                   1996                 1995
                                           -----------------   -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income(Loss) for the period              $    460,017        $   (690,487)
Adjustments to reconcile net 
income(loss)to net cash used
by operating activities:
Depreciation                                       13,163             129,467
                                                                             
Loss on write down of software                                         77,885
                                                                         
Loss on disposition and write down of
assets held for sale and related notes 
receivable                                                            168,972

Gain on disposition of PC3 assets and
certain liabilities                                                   (17,944)

Changes in assets and liabilities
Trade accounts receivable                        (150,876)             (3,420)
Advances                                          (44,652)             18,732
Prepaid expenses and other                        (16,064)             22,479
Deposits                                             (700)              1,500
Accounts payable                                    8,180             (58,059)
Accrued Liabilities                                32,370            (113,384)
Other Liabilities                                 408,081              12,456
Deferred revenues                                  28,103             160,878
Other                                                   -                   -
                                            ----------------   -----------------
Net cash used by operating activities             737,622            (290,925)


CASH FLOWS FROM INVESTING ACTIVITIES
Disposal (Purchase) of property and
equipment                                         (20,466)             (3,227)
Software development costs capitalized           (177,042)            (55,750) 
                                                        
Cash paid in connection with sale of PC3                -              (2,580)
                                                                             
Proceeds from sale of Assets held for Sale
and related notes receivable                                       
Collections on notes receivable                         -              75,000 
                                                                             
Advances on notes receivable                            -                   -
                                            ----------------    ----------------

Net cash provided (used) by investing          
activities                                       (197,508)            308,955

CASH FLOWS FROM FINANCING ACTIVITIES
Receipts on notes payable                         790,949            (556,854)
                                                                              
Principle payments on notes payable              (350,446)            561,538
                                                                              
Increase (decrease) in cash overdraft              29,616               7,593
                                                                            
Common Stock                                      (17,400)
Paid in Capital                                    17,402
Purchase of treasury stock                        (45,000)                  -
                                             ---------------    ----------------
Net cash provided by financing activities         425,121              12,277

INCREASE / (DECREASE) IN CASH                     114,993              30,307
                                             ---------------    ----------------
  
Cash at beginning of period                       36,535              6,228

Cash at end of period                        $   151,529        $    36,535  
                                                                         
                                             ===============    ================


SUPPLEMENTAL INFORMATION
Cash paid during the period for interest     $                   $  87,427
                                                                   
                                             ===============    ================

<PAGE>

<TABLE>
<CAPTION>
<S>                               <C>                       <C>                    <C>                   <C>          


                                     THREE MONTHS            THREE MONTHS           NINE MONTHS            NINE MONTHS
                                    ENDED 9-30/96           ENDED -9/30/95         ENDED 9/30/96          ENDED 9/30/95
REVENUES
Service fee & broker income         $    119,190               $   45,131           $   404,026            $   100,008
Smart card product sales                                           13,747                     -                      -
Software & maintenance                                                  
sales                                    558,344                   34,103             1,845,042                354,565
Other income                                   -                   41,241                 1,008                 79,380
                                -----------------------  ---------------------  ---------------------  ---------------------
          Total revenues                 677,534                  134,223             2,250,076                533,954
                                -----------------------  ---------------------  ---------------------  ---------------------

COST OF REVENUES
Cost of service & broker                
fees                                           -                  11,985                 2,548                 15,044
Cost of smart card                                                                                  
product sales                                  -                   7,238                     -                      -
Cost of software &                                                                                  
maintenance                              140,769                  23,241               326,226                174,890
                                -----------------------  ---------------------  ---------------------  ---------------------
Total cost of                                                                                 
revenues                                 140,769                  42,465               328,774                189,934
                                -----------------------  ---------------------  ---------------------  ---------------------

GROSS PROFIT                             536,765                  91,757             1,921,302                344,020
                                -----------------------  ---------------------  ---------------------  ---------------------

OPERATING EXPENSES
Selling, general &                                                                                  
administrative                           433,944                140,206              1,429,299                501,516

Depreciation and                                                                                    
amortization                                   -                 10,042                 10,262                 15,227

Gain on disposition of                                                                              
assets held                                    -                      -                261,552
for resale and           
related note receivable                        -
                                -----------------------  ---------------------  ---------------------  ---------------------
Total operating                                                                               
expenses                                 433,944                150,248              1,439,561                778,295
                                -----------------------  ---------------------  ---------------------  ---------------------

INCOME FROM OPERATIONS                   102,821                (58,489)               481,741               (434,275)
                                -----------------------  ---------------------  ---------------------  ---------------------

OTHER INCOME (EXPENSES)
Interest income, net                        (792)                 4,905                   (797)                15,792            
                                               
Other, net                                (1,883)                 2,424                 22,521                    656
                                -----------------------  ---------------------  ---------------------  ---------------------
Total other                                                                                   
income, net                               (2,675)                 7,329                 21,724                 16,448
                                -----------------------  ---------------------  ---------------------  ---------------------

NET INCOME BEFORE TAXES                  105,496                (65,819)               460,017               (450,723)
                                -----------------------  ---------------------  ---------------------  ---------------------

PROVISION FOR INCOME TAXES                     -

NET INCOME                               105,496            $   (65,819)           $   460,017            $  (450,723)
                                                                                              
                                =======================  =====================  =====================  =====================

Income per weighted-average                                                                       
common shares                     $   (0.00)                $     (0.00)             $    0.01            $     (0.01)           
                                         
                                =======================  =====================  =====================  =====================

Weighted-average common                                                                             
shares outstanding                    66,885,000             49,485,000             66,885,000             49,485,000
                                =======================  =====================  =====================  ====================
</TABLE>

<PAGE>

                             MB SOFTWARE CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1996
                                   (Unaudited)

1.       BASIS OF PRESENTATION

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted,  although  management  believes the  disclosures
herein are adequate to make the  information  presented  not  misleading.  These
interim financial  statements should be read in conjunction with the more recent
financial statements of MB Software Corporation included in the Company's report
on Form 10-KSB for the year ended December 31, 1995.

The interim  financial  information  included  herein is  unaudited;  however it
reflects all adjustments  (consisting  solely of normal  recurring  adjustments)
which are, in the opinion of  management,  necessary for a fair  representation,
results of  operations  and cash flows for the  interim  period.  The results of
operations for the nine months and three months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full year.

This Quarterly Report on Form 10-QSB contains  forward looking  statements about
the  business,  operations  and  financial  condition of the Company,  including
various  statements  contained  in  "Management's  Discussions  and  Analysis of
Financial  Condition  and  Results of  Operations."  The  actual  results of the
Company  could  differ   materially  from  those  forward  looking   statements,
contingent  upon market  factors and economic  volatility.  Causal  factors that
could  impact  actual  results of the  Company to differ  materially  from those
contained in the forward  looking  statements  are discussed in connection  with
those statements.




ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company

MB  Software  Corporation  remains  one of the  leading  providers  of  practice
management  software  and cash  management  resources to  physicians,  dentists,
chiropractors and medical billing centers. As of September 30, 1996, the Company
maintained market share with business management services to approximately 3,500
physicians,  dentists  and  chiropractors,  with over 2,350  physical  locations
supporting these services.

The  Company's  long term  business  plan  focuses on  increasing  the number of
physician customers using its practice management software products and, through
the use of a common software convention, become a pivotal link in the electronic
exchange of  information  between  physician  practices and  connecting  service
providers.   Currently   over  250  clients  enjoy   fully-electronic,   on-line
capabilities and process financial  information  through the Company's  OneClaim
Plus(TM) practice management system.



Prospectively,  the Company also plans to establish  Internet and World-Wide Web
connectivity  with customers via an Internet/WWW  hub set up to be integral with
the Company's practice management software. The Company's strategy for achieving
this objective is to transition the Company's 3,500 existing practice management
customers to the SDS Health  Network  Information  System,  acquire new practice
management  systems  under the SDS Health  Network  Platform,  and offer new and
enhanced services along with related service products.

The  Company's  near term outlook  focuses on  enhancement  of its core business
products  developed by Santiago SDS, Inc. and corresponding  announcement of its
Windows 95 version of OneClaim  Plus(TM).  Additionally,  the Company intends to
seek and obtain  certification  as a Windows 95 approved  vendor,  a competitive
strategy  aligned  with  healthcare's   market  and   technological   direction.
Accordingly,  roll-out of the Windows 95 version of OneClaim Plus(TM)  commenced
late in September with initial market  reception  showing strong support for its
expanded and enhanced value-added features.

The Company remains  positioned to maximize the opportunities that appear likely
from  pending  federal  healthcare   legislation.   Specifically,   healthcare's
transition  toward  electronic  processing of billing and  collections,  and the
potential that electronic submission of claims may be mandated in certain health
care sectors,  places the Company in good stead within the  industry.  Given the
stability of annual  inflation rates for 1996,  near term inflation  trends as a
non-issue.


Results of Operations

This  section  discusses  the  results  of  operations  of the  Company  and its
subsidiaries for the quarterly period ended September 30, 1996. Since January 1,
1996, the Company has been able to exceed projections  following the acquisition
of Santiago  SDS,  Inc. In the  quarter  ending  September  30,  1996,  revenues
improved to $677,534,  a 404% increase  from the $134,223  revenues for the same
period in 1995. For the nine months ending September 30, 1996, revenues improved
to $2,250,076, an increase of 321.4% compared with $533,954, in revenues for the
same period in 1995. Net income trended upward for the third consecutive quarter
ended  September 30, 1996, a 260% increase from the same period in 1995. For the
nine month period ending September 30, 1996, net income of $460,017  improved by
202% from  ($450,723)  for the same period in 1995.  Operating  expenses for the
quarter  ending  September  30, 1996  increased at a  decreasing  rate given the
Company's  comprehensive  efforts to maximize profit margins  through  effective
cost containment programs.  Actual operating expenses for the third quarter grew
188% from the third quarter of 1995 to $433,944. Operating expenses included the
non-recurring  costs associated with development of the Windows 95 product.  The
Company's  ability to fund said  development from operating  revenues  evidences
management's  commitment to a policy of fiscal prudence and incremental  revenue
growth  financed  primarily by  operating  expense  outlays.  For the nine month
period ending September 30, 1996, operating expenses increased 84% from $788,295
to $1,439,561%, during the same period in 1995.

Total current  liabilities as of September 30, 1996 evidenced strong improvement
by a  decrease  of 45%  to  $698,628  from  $1,274,727  in  December  31,  1995.
Management  maintains a core strategy to reduce debt and current  liabilities in
order  to  grow  the  company  with  minimal  debt   obligations.   The  Company
demonstrated strong results and exceeded profit targets in the first, second and
third  quarters  1996.  While the  Company  moves to minimize  debt,  management
recognizes  that  limited  outside  capitalization  may be necessary to properly
underwrite the roll-out of its two new products. Initial market response to both
products has been positive,  yet management  prioritized  the flagship  product,
OneClaim Plus(TM) as the Company's focus in order to create a financing platform
from which to launch its second product,  KI.D.  While the window of opportunity
for launch of its second product  remains open today,  management  believes that
the new KI.D.  product must be introduced through a national campaign within the
next 120 to 150 days. The current status of the Windows 95 healthcare package is
positive  and market  response  strong.  Moreover,  an expanded  sales force and
increased  promotional  advertising form the basis for an improved sales revenue
outlook.  New promotional  brochures and marketing  strategies were developed to
take aim at the  optimization  of the current  install base  revenue  potential,
contribute  in large part to an improved  outlook for sales.  Additionally,  the
Company  continues  to  consider  offers  from  industry  vendors  that  produce
complimentary  products who seek strategic alliances in order to capture greater
market  share.  Although no major  alliance  has yet been  formed,  negotiations
remain active and promising.  Reaching accord with current vendor(s)  represents
minimal  development  costs  and  presents  no  major  distraction,   yet  could
significantly  expand the Company's market presence and build positive  critical
mass.


Liquidity and Capital Resources

As of September 30, 1996, the Company recorded total assets of $1,657,505,  with
current  assets  of  $422,909  and  property,  equipment  and  other  assets  of
$1,234,596.  Total current  liabilities  as of September 30, 1996 were $696,628.
Net working capital at the end of the period was ($275,719), an improvement from
($1,265,095) or 358% from December 31, 1995.

The KI.D., Kid Identity Defense Program remains positioned for national roll-out
with an advertising and public relations firm that will orchestrate the elements
for KI.D.'s  success.  To date,  the unveiling of KI.D. has turned on a strategy
that:

     Creates an infrastructure of local distributors;

     Incorporates  a  recognized-name  sponsor  company  positively  and closely
     identified with infants and children;

     Includes direct or tacit endorsement by law enforcement agencies; and

     Demonstrates  public assurance of KI.D.'s integrity and ethics as a program
     is supported by the systems capabilities that safeguard customer privacy.

Release of KI.D. currently has been limited to California and Texas as beta test
markets.  Initial  response to  promotional  and live field test  through  local
venues  has  been  strong  and  positive.  Over 70  distributorships  have  been
contracted  nationwide who will work with the national  sponsor(s) in the actual
enrollment of children.  The Company  believes that KI.D.  represents a positive
image and service for corporate  America,  while providing a proactive  solution
for a compelling special issue - child safety. Given the populace's  sensitivity
to child abduction, KI.D. allows parents,  grandparents,  educators, the medical
community,  and law enforcement at large to effectively  utilize the information
super  highway as a child  abduction  deterrent.  The  Company's  management  is
determined  to  foster  KI.D.  as a  social  positive  akin to  usage of 911 for
emergency calls.  Clearly,  the  initialization  and roll-out of KI.D. forms the
nucleus for incremental growth. The advent of KI.D., coupled with the solidarity
of the core  Windows 95  business,  together  represent  the single  focus for a
strong  outlook.  Notwithstanding  the positive  potential  evidenced by its new
products and the subsequent revenue  generation,  there can be no guarantee that
such revenues will be generated or that the revenues will be significant,  given
the competitive nature found in the health care practice management arena.


<PAGE>


PART II - OTHER INFORMATION

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

                  None.


ITEM 6.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

Exhibits - All other exhibits are  incorporated  by reference from prior filings
with the Commission on Form 8-K during the period.

Financial  Statements  - See Item 1 for  financial  statements  filed  with this
report.

Reports of Form 8-K - No reports were filed on Form 8-K during this period.

                                   SIGNATURES

In accordance  with the  requirements  of the Exchange Act, the  registrant  has
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.


                                                  MB SOFTWARE CORPORATION



Dated:  October 23, 1996                         /s/ Scott A. Haire
                                          ---------------------------
                                          Scott A. Haire, Chairman of the Board,
                                          Chief Executive Officer and President
                                         (Principal Financial Officer)