PART 1.

Item 1.  Business

     General

Applied Intelligence Group, Inc. (the "Company") is engaged in
the business of  providing information systems technology to the
retail and wholesale distribution industries. Since its formation
in 1985, the Company's operations have included consulting
services, which were primarily focused on the planning,
designing, building, and installation of computerized information
management systems and computerized checkout or point-of-sale
systems in the retail and distribution industry. In 1993, the
Company began development of viaLink, a subscription service on
the World Wide Web of the Internet (the "Internet"), which was
announced in April 1996, and live services were first delivered
in January 1997. In 1994, the Company began work on its RETAIL
SERVICES APPLICATION ("RSA"), which was released in August 1995.

The Company's Internet home page can be located on the Internet
at http://www.aig.viaLink.com. The Company's principal executive
offices and headquarters are located at 13800 Benson Road,
Edmond, Oklahoma  73013-6417, and its telephone number is (405)
936-2300.

Vantage Capital Resources Inc. Acquisition

On June 12, 1996, Vantage Capital Resources, Inc. ("VCRI"), an
Oklahoma corporation , merged with and into the Company pursuant
to an Agreement and Plan of Merger dated May 8, 1996 (the
"Merger").  On June 5, 1996, VCRI completed a private offering of
250,000 shares of its common stock at an offering price of $1.75
per share and received net proceeds of approximately $394,567
(the "Private Placement Offering").  In consummation of the
Merger, the Company exchanged 610,000 shares of its Common Stock,
on a one-for-one basis, for the outstanding common stock of VCRI.
The merger was accounted for as an acquisition of VCRI by the
Company in a manner similar to the pooling of interests method of
accounting.  Pursuant to an Exchange Agreement dated October 14,
1996, each of John Simonelli and Larry E. Howell, exchanged
180,000 shares of Common Stock of the Company received in
connection with the Merger for stock options, each exercisable on
or after November 20, 1998, and on or before November 30, 2001,
for the purchase of Common Stock for $5.00 per share.
Furthermore, during October 1996, the Company redeemed 22,500
shares of Common Stock issued to David B. North, an executive
officer of the Company, pursuant to the Merger and 1,000 shares
of Common Stock issued to a former executive officer pursuant to
the Merger for $1.75 per share (the offering price of the VCRI
common stock under the Private Placement Offering) for an
aggregate amount of $39,375 and $1,750, respectively.

Overview of Products and Services

The Company is engaged in the business of providing information
systems services to retail companies and to the manufacturers,
wholesalers, and other suppliers who provide the products that
these retail companies sell (the "Retail Supply Chain"). These
information systems services include (i) management consulting
and computer system integration services, (ii) proprietary
software products and applications, and (iii) network services
and network-based computer applications. The Company is organized
to provide all three information systems services in several
business areas: Retail Consulting, Store Systems Consulting,
Internet Consulting, viaLink Implementation and
Production/Operations.

Management Consulting and Systems Integration

The Company's consulting services includes designing, building,
installation, and implementation of custom computerized checkout
or point-of-sale systems and integrated custom software products
for customers in the retail and distribution industries.  The
Company also selects and then customizes and installs third-party
software for many of its customers.

The Company's consulting services include determination of
business and technology requirements, operating system planning
and implementation, situational and due diligence studies,
information technology plans, business and technology
recommendations, and training. A typical consulting arrangement
may last from two to six months, or longer for more complex
projects. A single consulting and systems integration arrangement
may include multiple projects, using a wide range of the
Company's professional staff.

The Company's systems integration services include various
computer architectures and operating systems for personal
computer("PC") based systems (i.e., DOS, Windows, Windows NT,
UNIX, OS/2, 4680/OS, 4690/OS) and intermediate to large systems
(AS/400, RS/6000, HP, MVS, and VSE). The Company has significant
development and support experience with industry-standard
technologies, such as COBOL, SQL, DB2 and ORACLE. The Company is
also developing software applications using object-oriented
technology, such as the Smalltalk programming language, provided
by ParcPlace-Digitalk, Inc.

Solutions

Many of the Company's customers are retail chains, who are
attempting to implement information management systems in their
headquarters and/or store locations, in addition to accounting,
payroll and other financial management information systems.   A
typical in-store retail system includes these components:

   * a "front-end" system (i.e., "checkout system", "cash
     register system" or "Point-of-Sale system") which records sales
     to consumers, provides a cash drawer, prints customer receipts,
     etc. Most front-end systems  utilize PC hardware, and include
     programs that operate the PC and specialized hardware, such as
     the cash drawer or barcode scanner;

  *  a "back-office" system, which typically coordinates the
     operation of the registers, and provides store management
     applications, such as receiving and inventory control; and

  *   a "communication" system, which transfers information (e.g.,
     sales or inventory) electronically between the store and the
     retailer's headquarters.

The Company is a business partner of International Business
Machine Corp. ("IBM") and an authorized reseller of IBM hardware
and point-of-sale software. When implementing in-store systems
for retailers, the Company has historically relicensed and
customized one or more IBM software programs, and installed these
programs on IBM hardware that the Company sold to the retailer.
Such hardware includes point-of-sale registers, radio frequency
hand-held terminals, in-store processors, and other in-store
equipment. The Company also provides programming services to
personalize and customize the in-store software, and
implementation services related to software installation  and
personnel training.

In 1994, the Company identified a market need for an in-store
software system that would operate on a wide range of hardware,
including different models of IBM and non-IBM hardware, and on a
variety of non-IBM operating systems such as UNIX and Windows
NTT. The Company subsequently developed its proprietary in-store
software applications for licensing to retailers, as an
alternative to re-licensing and customizing IBM software
applications and programs. The Company's RSA software
application, was first licensed and implemented in a retail chain
in 1995. Because the Company's software applications operate on a
variety of PC operating systems, and with a wide variety of PC
hardware, the Company's software applications now address a
broader market. RSA allows retailers to selectively install new
in-store systems without store-wide or company-wide replacement
of existing hardware.

The Company is also a global solutions partner of the NCR
Corporation ("NCR"). This relationship, along with the IBM
relationship, enables the Company to provide a full-service,
single-source solution for the store automation needs of
retailers. The contractual relationships with IBM and NCR provide
the Company with the ability to relicense software, resell
hardware, and gain access to technical support for the Company's
customers.

The Company has also developed CHAINLINK, a cost-effective, easy-
to-use store communications program, which provides reliable and
consistent movement of data between stores and headquarters.
CHAINLINK is designed to work with RSA, as well as other point-of-
sale software packages. CHAINLINK is currently in use in at least
eight retail chains in the United States.

Together, RSA and CHAINLINK provide the retailer with store
management and point-of-sale applications, including check-out at
the cash register, and store to headquarters communications. RSA
can be customized to meet the specific needs of the retailer. RSA
can provide the store managers and cashiers with the same "look
and feel" on a variety of installed point-of-sale computer
systems, while giving the retailer's information management
systems staff a consistent interface to all of its store systems.
RSA was first installed in 1995, and is currently installed in
three retail chains.  The primary target market for RSA is
general merchandise retailers who generally have more than 100
stores, and more than $100 million in sales.

Network Services

The Company provides a full range of network services including
its viaLink  subscription service, telecommunications planning
and consulting, Internet-based applications development, and
internal and external Web site development.  Through its internal
customer support network, the Company provides Web site hosting
and maintenance.

viaLink is  an industry-specific, shared business application
subscription service, developed and maintained by the Company,
with access through telecommunications, including private
networks, and the Internet. Through viaLink, the Company is a
content provider on the Internet.

viaLink establishes a moderately-priced electronic commerce
service for manufacturers, suppliers, retail headquarters and
individual retail stores through which subscribing customers are
connected via the Internet to a database which resides and is
maintained on the Company's computer systems.  Using a PC and
commonly available and inexpensive computer programs,
participants can subscribe to the viaLink service, without having
to purchase, install, or implement complex information system
technology.  viaLink provides a common set of business systems
and support offerings to subscribers, and allows them to avoid
the costs associated with building and maintaining such network
information systems. viaLink is priced as a monthly subscription
network information service.

In April 1996, the Company  introduced the viaLink network
information service for the convenience store industry, which
consists of approximately 68,000 stores operated by approximately
1,650 companies. According to the National Association of
Convenience Stores ("NACS"), only a small percentage of
convenience store companies have implemented in-store
computerized retail information systems. In order to implement
computerization and scanning in a retail store, the retail chain
must first develop and then maintain a  "pricebook" which
contains information for all items offered for sale in the store.
The pricebook typically contains descriptions of the items, along
with their Universal Product Codes ("UPCs"), purchase costs,
retail sales prices, and any discounts or rebates to be received
from the supplier. Pricebook maintenance  is a difficult problem
for the retail chain to solve.  A convenience store chain may
have hundreds of suppliers, and each supplier may have different
prices on the items it supplies to the chain, depending on the
locations of the stores being supplied, which makes pricebook
maintenance difficult, but essential.  Pricebook maintenance
typically involves inefficient manual entry of item information,
which can introduce errors into the pricebook. According to
NACSr, maintenance of the pricebook often poses the most
significant challenge to the success of a scanning project and
computerization of the convenience store.

A subscribing retailer can use the viaLink Item Catalog Service
to electronically retrieve product item information (e.g., item
numbers, UPCs, descriptions, pricing information, deal and
promotional pricing) that has been placed in the database by
manufacturers, wholesalers, or other product suppliers. This
information can be electronically loaded into the retailer's
pricebook, which helps the retailer improve the accuracy and
reliability of the pricebook.

Product manufacturers can use viaLink to efficiently introduce
new products, by electronically providing product information to
retailers and wholesalers. Wholesalers and other suppliers can
use viaLink to electronically provide product and pricing
information to retailers by placing this information in the
viaLink databases, and allowing the retailers to access these
prices. The databases in viaLink are specifically designed to
manage the complexity of the arrangements that exist between
retailers and their wholesalers and suppliers, especially related
to prices and promotions. viaLink is offered on a monthly
subscription basis and is accessible through the Internet.

As of March 14, 1997, 14 convenience retail chains, that have in
excess of 1,700 stores, and 12 suppliers have signed subscription
agreements for viaLink. The Company is in the process of
implementing viaLink with these retail chains and suppliers. As
of December 31, 1996, total revenues from viaLink were less than
$1,100.

In addition to the convenience store industry, the Company
intends to deploy viaLink in other segments of the retail
industry, including grocery and chain drug retailers, who share
much of their supply chain (manufacturers and distributors) with
the convenience store industry.

The Company also constructs Internet-based information
applications for its customers, such as NACS. The Company
constructed, operates and maintains the Internet-based
applications and directories which allow NACS to offer services
on the Internet.  This site or "home page" is known as "C-Store
Central" and can be found  on the Internet at
http://www.cstorecentral.com. NACS places daily news about the
convenience store industry on this site which also allows members
easy access to the viaLink services.

Customer Support

Customers of the Company are provided telephone and on-line
technical support by the Company's customer support group. As of
March 14, 1997, the Company's customer support group consisted of
four full-time representatives. However, all the Company's
technical staff can be used, when appropriate, for resolving
technical problems and supporting specific customer needs.

Sales and Marketing

The Company's services and products are marketed directly to the
Company's customers through its sales and marketing support group
and senior staff members. As of March 14, 1997, the Company's
sales and marketing support group consisted of 12 full-time
employees including the President of the Company.  The Company is
actively recruiting a senior sales executive to assume leadership
of the marketing and sales.   The sales and marketing team is
responsible for sales lead generation, follow up on customer
referrals, and provides input into the Company's ongoing services
and product development efforts based on customer feedback and
market data. Sales and marketing leads are generated through
advertising, customer referrals, public relations, trade shows,
and strategic relationships with hardware manufacturers and
customers. The Company also utilizes a variety of other
consulting and contractor relationships to help develop and
promote viaLink.

Licenses and Intellectual Property

The Company regards its software as proprietary, and licenses its
software products generally under written license agreements.
Because the Company's software products allow customers to
customize their applications without altering source programs,
the source programs for the Company's products are typically
neither licensed nor provided to customers.

The Company has no patents or patent applications pending. The
Company attempts to protect its products through a combination of
copyright, trademark and trade secret laws. CHAINLINK is a
registered trademark of the Company and trademark applications
are pending with the United States Patent and Trademark Office
for RETAIL SERVICES APPLICATION and viaLink. The Company also
requires employee and third-party non-disclosure and
confidentiality agreements. Despite these precautions, it may be
possible for unauthorized parties to copy certain portions of the
Company's products,  reverse engineer or obtain and use
information that the Company regards as proprietary.

Because the software development industry is characterized by
rapid technological change, the Company believes that factors
such as the technological and creative skills of its personnel,
new product developments, frequent product enhancements, name
recognition and reliable product maintenance, are more important
to establishing and maintaining a technology leadership position,
than the various legal protections available for its technology.

Software License Agreements

From time to time, the Company licenses third-party software
components for inclusion principally in its software application
RSA. In January 1994, the Company entered into a non-exclusive
confidential software license agreement with Applied Retail
Solutions Corporation ("ARSC") related to certain computer
software programs, development tools, interfaces and codes (the
"ARS Software") used by the Company in the development and
marketing of RSA for use on certain identified point-of-sale
computer terminals. This agreement had an initial term of two
years and, following the initial term, the agreement has
continued on the same terms and conditions and is subject to
termination on 90 days' notice.  The agreement requires the
Company to pay periodic license and support fees. The ARS
Software and all modifications and enhancements to the ARS
Software by the Company remain the property of ARSC.

In March 1994, the Company entered into a five year confidential
Agreement for Licensing of IBM Software with International
Business Machines Corporation ("IBM") pursuant to which the
Company became an authorized reseller and technical support
provider of certain IBM software. Furthermore, in February 1995,
the Company entered into a two-year confidential IBM Business
Partner Agreement and became an authorized remarketer of IBM
computer hardware. Pursuant to these agreements, the Company
receives discounts on the purchase of IBM software and hardware
products. With respect to IBM software, the Company is required
to pay IBM a one-time royalty on each distributed or installed
copy of the IBM software.

Effective January 1, 1996, the Company entered into an 18-month
Global Solutions Partners Agreement with NCR.  Pursuant to such
agreement the Company receives discounts on NCR hardware and
software purchases and maintenance, personnel education and
training, software support, and certain commissions and fees
associated with NCR equipment and software installations.

Employees and Consultants

As of March 14, 1997, the Company had a total of 109 full time
employees, of which 12 were employed in sales and marketing
support, including the President of the Company, 20 were employed
in product research and development and Technical Support, 64
were employed in professional services and customer support, and
13 were employed in human resources, administration and finance.
In addition, the Company utilizes the services of two independent
consultants in business and product development and marketing.
The Company's future performance depends in significant part upon
the continued service of its key technical and senior management
personnel, and its continuing ability to attract and retain
highly qualified and motivated personnel in all areas of its
operations. Competition for such personnel is intense, and there
can be no assurance that the Company can retain key managerial
and technical employees or that it can attract, assimilate or
retain other highly qualified personnel in the future. None of
the Company's employees is represented by a labor union. The
Company has not experienced any work stoppages and considers its
relations with its employees to be good.

Government Regulation

The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to
businesses in general. There are currently few laws or
regulations directly applicable to access to or commerce on the
Internet; however, due to the increasing popularity and use of
the Internet, it is possible that a number of federal and state
laws and regulations may be enacted or adopted with respect to
the Internet, covering issues such as user privacy, taxation,
encryption, authentication technology, pricing, quality of
products or services. The enactment or adoption of any such laws
and regulations may decrease the growth of the Internet and
increase the cost of commerce on the Internet, which could affect
the marketability of viaLink, and, in such event, could have an
adverse effect on the Company's operating results and financial
condition. Furthermore, the applicability to the Internet of
existing laws governing issues such as property ownership, libel
and personal privacy is uncertain.

Competition

The environment within which the Company operates is intensely
competitive and subject to rapid change. To maintain or increase
its market share position in the retail, supplier, and wholesale
distribution industries, the Company will need to continually
develop additional products, introduce new product features and
enhancements, and expand its professional services capability.
The Company currently competes principally on the basis of the
specialized nature of its services and products. Specifically,
the features and functions of the Company's software products
include adaptability and scalability and their interoperability
with other network products, the ability to deploy complex
systems, product quality, ease-of-use, reliability and
performance, company reputation and professional service,
integration with other enterprise and network applications, and
availability on popular operating systems, relational databases
and communications hardware architecture. The Company believes
its products and services compete favorably in all of these
areas.

Competitors vary in size and in the scope and breadth of the
products and services offered. The Company encounters competition
from a number of sources, including the big-six accounting firms,
IBM and other software and hardware manufacturers, local and
regional  consulting and software companies most of whom are
privately-held, third-party professional services organizations,
and management information systems departments of potential
customers who are developing custom software. In the market place
of retail and wholesale distribution industries, the Company
competes with numerous, smaller, privately-held companies based
on product features and functionality, as well as larger,
publicly-held companies with greater resources and having greater
product and market diversification. The Company competes with
these companies based upon the specialized nature of its focus on
the retail and wholesale distribution industries and company
reputation.

With respect to its proprietary retail software products, many of
the Company's current and potential competitors, both privately-
held and publicly-held, have greater financial, technical,
marketing and distribution resources than those of the Company.
As a result, they may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, and
devote greater resources to the development and distribution of
their products. In addition, because there are relatively low
barriers to entry in the software marketplace, the Company
expects additional competition from other established or emerging
companies as the network services market continues to expand.
Increased competition may result in pricing pressures, reduced
gross margins and loss of market share, any of which could
materially adversely affect the Company's business and results of
operations. The Company also believes that competition will
increase as a result of software industry consolidations. There
can be no assurance that the Company will be able to compete
successfully against current and future competitors or that
competitive pressures faced by the Company will not materially
adversely affect its business and results of operations.

Clients and Customers

The Company's clients and customers range from small, rapidly
growing companies to large corporations, principally within the
retail and wholesale distribution industries. The following is a
partial list of the Company's clients as of March 14, 1997.

     ALDI Inc.                   Duckwall-ALCO Stores, Inc.
     Fleming Companies, Inc.     Fred's Inc.
     Genovese Drug Stores, Inc.  Jan-Bell Marketing, Inc.
     Michaels' Stores, Inc.      Petro PSC, L.P.
     Sonic Corp.                 Crabtree & Evelyn

In 1996, three individual customers each accounted for 17, 14 and
10 percent of the Company's revenues, respectively.  Furthermore,
in 1996, five of the Company's customers accounted for 57 percent
of the Company's total revenues. The Company believes that
revenues derived from existing and future large customers will
continue to represent a significant portion of its total
revenues.

Other Business Strategies

The Company's principal business objective is to become a leading
provider of fully-integrated information and network services
linking retailers, distributors and manufacturers throughout the
retail supply chain. Utilizing the Company's experience and
expertise in the retail and distribution industries, the
Company's principal strategy is to continue further development
and enhancement of viaLink as well as further development and
deployment of its Solutions software offerings, RSA and
CHAINLINK, and potentially their integration with viaLink.

The Company has more than 20 customers that use software
solutions that were either specifically developed for them by the
Company or are modified versions of "standard" software packages
that the Company installed and modified for them. The Company
intends to increase revenues generated from its existing customer
base by providing such customers with additional consulting and
systems integration services, enhancements to its existing
products customized to their particular needs, continuing
customer support services and new products offerings.

Security Technologies

To minimize the security risks associated with a shared network
on the Internet, the Company has researched and implemented
security protocols in viaLink. For example, the viaLink service
uses the secure sockets layer of the Internet, so that
confidential information is encrypted as it passes through the
Internet. The Company has also constructed a double "firewall"
between its services and the Internet, which is intended to
restrict unauthorized use and prevent security breaches.

Although the Company has implemented these and other security
measures, viaLink may still be vulnerable to break-ins and
similar security breaches that jeopardize the security of the
information stored in and transmitted through the computer
systems of viaLink subscribers, which may result in significant
liability to the Company and also deter potential subscribers.
Moreover, the security and privacy concerns of potential
subscribers, as well as concerns related to computer viruses, may
inhibit the marketability of viaLink. The Company does not
currently have product liability insurance to protect against
these risks, and there can be no assurance that such insurance
will be available to the Company on commercially reasonable terms
or at all.

Product Development and Enhancement

The Company will continue to make significant investments in
product development and enhancement to continue to provide
technological solutions to its customers' business needs.
Historically, the Company has obtained customer funding to
develop products and services which jointly met the Company's
need to remain competitive and the customer's need to solve
information management problems. Currently, the dynamic nature of
the information technology industry places large research and
development demands on businesses that desire to remain
competitive. Competing with larger firms with substantially
greater capital resources, the Company has devoted significant
portions of available resources to stay abreast of industry
developments and to offer competitive products and services.

As of March 14, 1997, the Company's product development staff
consisted of 20 employees and two independent consultants. The
Company's total expenditures for product development during 1996
and 1995 were approximately $1,204,000 and $1,060,000,
respectively. These expenditures represented 13 percent and nine
percent of total revenues for 1996 and 1995, respectively. Of the
product development costs, the Company capitalized software
development costs and interest totaling $655,248 and $650,158 in
1996 and 1995, respectively. The Company anticipates that it will
continue to commit substantial resources to product development
in the future, including further development and enhancement of
viaLink, RSA and CHAINLINK.

Item 2.  Properties

The Company's corporate headquarters consists of a two-story
office facility of approximately 30,000 square feet at 13800
Benson Road, Edmond, Oklahoma, which the Company first occupied
in January 1996.  The office facility is leased under a ten-year
lease requiring monthly rental payments of $24,545 during the
first 36 months, $27,500 during the next 48 months, and $28,750
during the remaining term of the lease. The lease expires on June
30, 2006.

The current facility has internal systems consisting of a local
area network with associated servers, a wide area network, high
speed ("T1") connectivity to the Internet, two RS/6000's, an
AS/400, an HP 9000, and approximately 140 workstations. The
facility is designed to support a projected increase in staff for
both traditional and viaLink services and the increased office
space required to house a production computer operations
facility.

Item 3.  Legal Proceedings

From time to time, the Company may be involved in litigation
relating to claims arising out of its operations in the normal
course of business. The Company is not currently a party to any
legal proceedings.

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

No matters were submitted to a vote of security holders during
the fourth quarter ended December 31, 1996.
                                
                             PART II

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

The Common Stock and the Redeemable Common Stock Purchase
Warrants began trading separately in November 1996 (subsequent to
the initial public offering) on the Nasdaq SmallCap Market under
the symbols "IQIQ" and "IQIQW", respectively.  The following
table sets forth the high and low closing bid quotations of the
Common Stock and Redeemable Common Stock Purchase Warrants as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ").  For the fourth quarter of
1996, the bid quotation reflects inter-dealer prices without
adjustment for retail markups, markdowns or commissions and may
not reflect actual transactions.  Prior to the fourth quarter of
1996, no established public trading market existed for the Common
Stock and Redeemable Common Stock Purchase Warrants.

<TABLE>
<CAPTION>
                                              Redeemable Common
                         Common Stock Price     Stock Purchase
                                                Warrants Price
                         ------------------   -----------------
                           High       Low      High     Low
                         --------  --------   -------  --------
   <S>                    <C>       <C>        <C>        <C>                   
    Fourth Quarter-1996    $6.00     $4.375     $1.75      $.75
</TABLE>
    
The number of record holders of the Company's Common Stock as of
March 14, 1997, was approximately 750.

The Company has not paid a dividend with respect to its common
stock nor does the Company anticipate paying dividends in the
foreseeable future.

Item 6.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations

This Form 10-KSB contains forward-looking statements which
involve risks and uncertainties.  The Company's actual results
may differ significantly from the results discussed in the
forward-looking statements.

Overview

The Company is engaged in the business of providing information
systems services to retail companies and to the manufacturers,
wholesalers, and other suppliers who provide the products that
these retail companies sell (the "Retail Supply Chain"). These
information systems services include (i) management consulting
and computer system integration services (Consulting), (ii)
proprietary software products and applications (Solutions), and
(iii) network services and network-based computer applications
(Network Services).  The Company is organized to provide all
three information systems services in several business areas:
Retail Consulting, Store Systems Consulting, Internet Consulting,
viaLink Implementation and Production/Operations.

Through its Consulting Services, the Company provides business,
computer and technology consulting and systems integration
services. Through its Solutions, the Company sells computer
hardware and software, including the Company's proprietary
software applications, RSA and CHAINLINK. Through its Network
Services, the Company offers its network information subscription
service, viaLink, and other Web page hosting and subscription
services.

The following table sets forth selected results of operations for
the fiscal years ended December 31, 1996, 1995 and 1994, which
are derived from the audited financial statements of the Company.

<TABLE>
<CAPTION>
                          For the Years Ended December 31,
                  ------------------------------------------------
                        1996                1995              1994
                  -----------------  -----------------  ------------------
                   Amount       %     Amount        %     Amount         %
                  ----------  -----  ------------  -----  -----------  -----

 <S>              <C>         <C>     <C>          <C>    <C>          <C>
 Revenues         $9,507,370  100.0   $11,590,224  100.0  $11,609,652  100.0
 Direct cost of                                                    
  sales            2,570,840   27.0     3,616,687   31.2    5,262,740   45.3
                   ----------  -----  ------------  -----  -----------  ----    
                   6,936,530   73.0     7,973,537   68.8    6,346,912   54.7
                                  
 Expenses:                                                         
  Salaries and                                                     
   benefits        5,167,571   54.4     5,673,034   49.0    4,336,206   37.4
  Selling,                                                         
   general and    
   administrative  2,007,999   21.1     1,588,655   13.7    1,168,615   10.1
  Interest expense   219,089    2.3       149,042    1.3      121,678    1.0
  Depreciation and                                                    
   amortization      591,205    6.2       511,494    4.4      374,107    3.2
                   ---------  -----     ---------  -----    ---------  -----
    Total expenses 7,985,864   84.0     7,922,225   68.4    6,000,606   51.7
                   ---------  -----     ---------  -----    ---------  -----
  Income (loss)                                                    
   before income
   taxes         $(1,049,334) (11.0)  $    51,312    0.4   $ (346,306)   3.0   %
                 ===========  =====   ===========  =====   ===========  =====  
</TABLE>

The Company's revenues declined 18 percent during the year ended
December 31, 1996, compared to the fiscal year  1995, and
moderately decreased .2 percent during the 1995 fiscal year,
compared to the 1994 fiscal year.  The decline in revenues was
principally attributable to the reduction in computer hardware
sales and revenues from consulting and system integration
services due to lower overall levels of consulting and computer
systems integration projects, while the Company allocated and
devoted substantial consulting and programming personnel time to
the further development, enhancement and implementation of
viaLink, as the Company increases its focus on recurring revenue
and network services.  The decline in hardware sale revenues was
in part attributable to the completion of two  large point-of-
sale hardware installations in 1995 and generally overall lower
hardware orders and installations by customers in 1996.  The
decline in revenues (0.2 percent) during the 1995 fiscal year
compared to 1994 was principally attributable to the reduction in
computer hardware sales, while revenues from consulting and
system integration services (which included the sale of the
Company's RSA product) increased. Management of the Company
cannot predict whether revenues will further decline and, if the
decline in such revenues continues, the severity or length of
time such declining revenues and the impact upon the financial
condition and results of operations of the Company. Although
there can be no assurance, management of the Company anticipates
increasing revenues through additional sales of the Company's RSA
and subscriptions for the Company's viaLink network information
service, along with consulting revenues.

The Company's quarterly operating results have, in the past,
varied and may in the future vary significantly depending on
factors such as the size, timing and recognition of revenue from
significant customer consulting and systems integration activity,
hardware and software orders, the timing of new product releases
and market acceptance of these new releases, increases in
operating expenses, and to some extent, the seasonal nature of
its business. Thus, the Company's revenues and results of
operations have and may continue to vary significantly from
quarter to quarter, period to period, and year to year based upon
frequency and volume of sales and licensing of the Company's
software applications and providing of consulting services during
such periods, as well as the future volume of viaLink
subscriptions. Due to the relatively fixed nature of certain of
the Company's costs throughout each  period, including personnel
and facilities costs, the decline of revenues in any period
typically results in lower profitability. There can be no
assurance that the Company will be successful in achieving and
maintaining profitability on a fiscal year basis or avoiding
losses in any future period.

As a result of the Company's decision to develop and build
certain software applications and viaLink, and to finance the
growth and investment through internally generated cash flows as
much as possible, much of the cost incurred with the internal
projects has been expensed for financial reporting purposes.
Accordingly, the Company's expense levels are based in part on
its expectations as to future revenues. The Company typically
operates on a backlog of consulting and systems integration
projects; however, there are likely to be periods when expenses
exceed revenues.

Results of Operations

Comparison of Fiscal 1996 and 1995

Revenues.  During 1996, revenues decreased on an overall basis by
$2,082,854 (an 18 percent decrease) to $9,507,370 compared to
revenues of $11,590,224 during 1995. Fifty-three percent of the
decrease was attributable to declining  revenues from computer
hardware sales, which decreased $1,095,965 (a 28 percent
decrease).  The decrease in hardware sales revenue  was the
result of the completion of two large point-of-sale hardware
installations in 1995, while  orders and installations by
customers were generally lower in 1996.  In 1995, the Company
made its first significant sale of RSA for approximately $1.3
million, which accounted for a significant portion (78 percent)
of the revenues from proprietary software products and
applications in 1995.  The Company made two sales of RSA in 1996
totaling $895,941, which accounted for 90 percent of its total of
$997,499 in revenues from proprietary software products and
applications. Overall, proprietary and software product revenues
decreased $674,193 (a 40 percent decrease) from 1995.  Consulting
revenues decreased $427,271 (a 7.5 percent decrease) during 1996.
Consulting revenues decreased primarily as a result of an overall
lower level of consulting and systems integration work having
been performed by the Company for its customers and  due to an
increase in utilization of consulting personnel and programmers
for internal research and development of viaLink.  These
declines in revenues in 1996 compared to 1995 were offset by an
increase of $114,575  in recurring revenue sources (a 31 percent
increase), as the Company is beginning development of its
recurring revenue base through viaLink and other network
services.

Direct Cost of Sales. Direct cost of sales represents the cost of
hardware and certain point-of-sale software purchased by the
Company as an authorized reseller of IBM equipment and software,
and includes certain required royalty payments based on the
Company's sale of its proprietary software products.  As a result
of lower hardware sales, cost of sales decreased accordingly by
$1,045,847 (a 29 percent decrease).  As a result of the change in
sales mix to more profitable software applications and consulting
fees, and less hardware sales, the gross margin on revenues
decreased $1,037,007 (a 13 percent decrease) in 1996 compared to
1995.

Salaries and benefits. Total salaries and benefits decreased by
$505,463 (a nine percent decrease) to $5,167,571 during 1996 from
$5,673,034 in  1995. Payroll costs, including taxes and bonuses,
decreased $229,095 (a  four percent decrease), as the Company's
total  employed personnel remained  relatively constant at
approximately 105 throughout 1996. This decrease was in part due
to the hiring in 1995 of several higher-cost  temporary
programmers to meet the demand and workload. These  programmers
were not employed in 1996. Contract labor was also utilized in
1995 to meet the workload demand.  As with the temporary
programmers, these contractors were not employed in 1996,
resulting  in  a decrease of $331,590 (an 80 percent decrease)in
contract labor costs from 1996 to 1995. In the  development of
viaLink and enhancement of RSA a portion of the employee
compensation and associated costs of such personnel were
capitalized as software development costs.  The Company
capitalized $600,825 of software development costs in 1996
compared to $628,094 in 1995, exclusive of capitalized interest
costs, a decrease of $27,269 (a four percent decrease).  The
Company expects to spend approximately these same amounts on
software development during 1997. Benefits and insurance expenses
increased slightly in 1996 from 1995 by $4,346 (a two percent
increase).

Selling, General and Administrative Expenses. Selling, general
and administrative expenses in 1996 increased  by $419,344 (a 26
percent increase) to $2,007,999 compared to $1,588,655 during
1995. On January 5, 1996, the Company completed the relocation
to its new leased office facilities. As a result of this move and
the increased occupancy costs, coupled with the increase in staff
during 1995, many of the individual categories of selling,
general and administrative expenses increased from the 1995
levels. Occupancy costs, including rent of facilities, utilities,
maintenance and insurance, and equipment leases increased by
$142,315 (a 42 percent increase) over 1995 as additional
equipment was leased for development, production  and
implementation of viaLinkT  . The expenses associated with
personnel development, education and training  increased by
$24,222 (a 15 percent increase), due to increased demands on
current technology training.  Also with increased communications
requirements and capabilities, telecommunications expenses,
including postage and shipping, increased $66,637 (a 54 percent
increase) during 1996 compared to 1995. Supplies and resources,
due to the relocation and employment growth mentioned above,
increased $86,906 (a 47 percent increase).  Advertising and
Promotion expenses, in connection with preparation for the
viaLinkT  implementation, increased $20,046 (a 40 percent
increase).  Professional fees decreased by $22,774 (a nine
percent decrease) as the Company employed several professional
consultants in connection with the development of viaLink
starting in mid-1995, who were  utilized to a lesser extent
during 1996. Other expense increased by $86,712 during 1996,
which consisted primarily of a bad debt provision of $54,783. All
other expenses increased a net total of $15,280.

Interest Expense. Interest expense increased by $70,047 (a 47
percent increase) for 1996 compared to 1995. In July 1995, the
Company entered into a revolving credit agreement with a bank to
replace its IBM line of credit that was in place through July
1995. The revolving credit agreement provided for two separate
notes to provide hardware and software sales financing, working
capital needs, and bridge financing for the continued development
of viaLink.  Average outstanding debt during 1995 was
approximately $1,392,000, while the average outstanding debt
during 1996 was approximately $2,277,000, including $361,000 of
capital leases.  During 1996, $54,423 of interest costs were
capitalized as a portion of the development costs of viaLink and
RSA, while during 1995, $22,064 of interest costs were
capitalized.

Depreciation and Amortization. Depreciation and amortization
expense increased in 1996 by $79,711 (a 16 percent increase) due
to the expenditure during 1995 on fixed assets and software
development costs of $376,541 and $650,158, respectively, and the
expenditure during 1996 on fixed assets and software development
costs of $625,893 and 655,248, respectively, which resulted in
the increased depreciation and amortization  during 1996.

Comparison of Fiscal 1995 and 1994

Revenues. During 1995, revenues decreased  $19,428 (a .2 percent
decrease) to $11,590,224 compared to 1994, as the mix in sales
changed due to normal business activities. Consulting and systems
integration service revenues increased by $779,851 (a 16 percent
increase) from 1994 to 1995. Long-term consulting arrangements
with two customers accounted for $2,506,729 (a 44 percent
increase) of the total 1995 consulting fees revenues of
$5,668,846. Hardware sales decreased $2,010,771 (a 34 percent
decrease) as two large customers completed their store roll-outs
of point-of-sale systems during 1995. During 1995 the Company
continued to sell large volumes of hardware to two of its major
customers. Revenues from software product sales increased by
$1,216,133 (a 267 percent increase) over 1994,  principally due
to the first sale of the Company's proprietary software
application RSA of approximately $1.3 million. Customer support
network revenue decreased  $4,641 (a one percent decrease) from
1994.

Direct Cost of Sales. Direct cost of sales represents the cost of
hardware and certain point-of-sale software acquired for resale.
The decrease in hardware sales resulted in a corresponding
decrease in cost of sales of $1,646,053 (a 31 percent decrease)
to $3,616,687 in 1995 compared to $5,262,740 in 1994. As a result
of the change in sales mix to more profitable software
applications and consulting fees, and less hardware sales, the
gross margin on sales increased $1,626,625 (a 26 percent
increase)to $7,973,537 compared to $6,346,912 in 1994.

Salaries and Benefits. Salaries and benefits increased a total of
$1,336,828 31 percent increase) to $5,673,034 in 1995 form
$4,336,206 in 1994, due to the increase in employed personnel. In
May 1994, the Company embarked on a significant growth pattern,
increasing from 74 to 95 employees by the end of 1994. This
employment level remained constant through 1995, as compared to
an average of five months in 1994, as well as new staff additions
during 1995 increased the employed personnel to a level of 105 as
of December 31, 1995.

Selling, General and Administrative Expenses. Selling, general
and administrative expenses in 1995 increased $420,040 (a 36
percent increase) to $1,588,655 from $1,168,615 in 1994  due to
several factors. Recruiting and staffing expenses increased
$39,882 (a 78 percent increase) due to costs of hiring and
relocating certain key personnel.  Travel expenses increased
$102,909, due to the increase in staff and higher levels of
travel associated with training in 1995. Rent and occupancy costs
increased by $52,095 (an 18 percent increase) during 1995 due to
the leasing of three temporary buildings to accommodate increased
employed personnel.  As a result of employment growth,
telecommunications and supplies and resources increased a total
of $63,640 (a 22 percent increase). Professional Fees increased
$127,166 (a 91 percent increase) due to legal fees and financing
efforts in connection with development of viaLink and additional
consultants hired by the Company for the development and
marketing of viaLink. All other selling, general and
administrative expenses decreased a net total of $34,438.

Depreciation and Amortization. Depreciation and amortization
expense increased in 1995 by $137,387 (a 37 percent increase) to
$511,494 due to continued high levels of fixed asset and software
development additions. Gross capital expenditures and capitalized
expenditures for software development were $659,140 and
$1,026,699 in 1994 and 1995, respectively.

Interest Expense.  In 1995, the Company completed a new credit
facility with a bank to replace the IBM line-of-credit. The new
credit facility established two separate notes payable totaling
$3 million, to provide hardware and software sales financing,
working capital needs, and bridge financing for the continued
development of viaLink. Average outstanding debt, including
shareholder loans, was approximately $1,392,000 and $1,169,000,
during 1995 and 1994, respectively. During 1995, $22,064 of
interest costs were capitalized due to the ongoing development of
viaLink and RSA.

Liquidity and Capital Resources

As of December 31, 1996, the Company had cash and cash
equivalents of $1,821,014.  The Company's working capital was
$2,311,907.

Prior to its sale of stock in 1996, the Company  financed its
operations and growth through internal operations, cash flows and
borrowings. In July, 1995, the Company entered into two lines-of-
credit arrangements with a local bank to finance the ongoing
product sales operations and to provide working capital and
financing for the continued development and enhancement of
viaLink and RSA until more permanent long-term or equity
financing was completed.  In June  1996, Vantage Capital
Resources, Inc. merged with the Company and in November 1996, the
Company completed an initial public offering, and received total
net proceeds of $4,425,969.  Costs and expenses of the offerings
totaled  $428,162, which was offset against the net proceeds.
After receipt of the net proceeds, the Company paid in full both
lines of credit totaling $2,181,000 as a cash interest cost-
saving measure, and the Company has remaining a single line of
credit of $1,000,000.  Total net cash flows provided from
financing activities in 1996 were $3,174,291.

During the fiscal year ended December 31, 1996, the Company  used
$90,635 of cash flows from operations, compared to generating
$353,868 in the 1995 fiscal year, and in 1996, used $1,281,141 of
such cash flows for additional investment in furniture, equipment
and leasehold improvements and software development costs.  As of
December 31, 1996, and March 14, 1997, the Company did not have
any borrowings outstanding on its line-of-credit financing
arrangement.  The borrowing base at December 31, 1996 was
approximately $1,123,000.

The Company's capital expenditures of $1,281,141 for the year
ended December 31, 1996, were primarily for computer hardware and
software, office equipment and furniture, and internal software
development costs associated with the development and/or
enhancement of RSA and viaLink.  Of this total, $655,248 relates
to internal software development costs for the Company's network
information services and point-of-sale application.  While future
capital expenditures will depend upon a number of factors, the
level of expenditures is expected to increase over the historical
level of such expenditures as the Company expands to deliver its
network information services and continues to enhance its point-
of-sale applications.

As of December 31, 1996, the Company had no borrowings
outstanding under its revolving credit agreement with Liberty
Bank and Trust Company of Oklahoma City, N.A. (the "Bank"). The
amended revolving credit agreement provides for a single line of
credit of $1,000,000, under a promissory note, which matures on
October 1, 1997, and bears interest at the national prime rate,
as defined in the agreement and note, plus one-half percent ( the
prime rate was 8.25 percent at December 31, 1996). Under the
terms of the agreement, the Company can borrow up to the lesser
of $1,000,000 or the borrowing base as defined in the agreement.
Borrowings under the revolving credit agreement  and the
promissory note thereunder are secured by the Company's
furniture, fixtures and equipment, accounts receivable, and
inventory. In addition, borrowings are personally guaranteed by
Robert L. Barcum, Robert N. Baker and David B. North up to
$460,000, $460,000 and $50,000, respectively. The notes mature
and any outstanding borrowings thereunder will become payable in
full on October 1, 1997. The agreement requires the Company to
maintain certain financial ratios and restricts and limits the
creation of additional debt, the sale of certain assets, and the
payment of dividends.

At December 31, 1996, pursuant to eleven separate three-year
promissory notes, Robert L. Barcum, Robert N. Baker and Russell
L. Reinhardt, shareholders and executive officers of the Company,
had aggregate outstanding loans to the Company of $457,000 (the
"Shareholders' Loans"). The proceeds of the Shareholders' Loans
were utilized to fund operating costs and development of the
Company's viaLinkT network subscription services and RSA
software application. The Shareholders' Loans bear interest at
rates of 8.5 percent to 10 percent per annum, and mature
commencing January 3, 1997 through March 8, 1999. Furthermore, on
October 15, 1996, the Company issued a promissory note to David
B. North, a shareholder and executive officer of the Company, in
redemption of 22,500 shares of Common Stock of the Company issued
to Mr. North in connection with the merger of VCRI, in the
principal amount of $39,375, bearing interest at the rate of 10
percent per annum, with a maturity date of November 15, 1997.
See Item 12. Certain Relationships and Related Transactions.  It
is anticipated that the Shareholders' Loans and the promissory
note held by Mr. North will be repaid as the respective notes
mature from cash flows from operations.

The Company anticipates that its operations and growth strategy
will be financed with cash and cash equivalents , operating cash
flows, capital and operating leases and the existing bank credit
facility of $1,000,000.  The Company believes that these sources
of funds will be sufficient to satisfy the Company's capital
requirements for at least 18 months.  There may be circumstances,
however, that would accelerate the Company's use of available
capital resources.  If this occurs, the Company may, from time to
time, incur indebtedness or issue, in public or private
transactions, equity or debt securities.  The company currently
has no arrangements, however, for additional financing, and there
can be no assurance that the Company will be able to obtain
requisite financing when needed on acceptable terms.

Forward Looking Statements

Statements of the Company's or management's intentions, beliefs,
anticipations, expectations and similar expressions concerning
future events contained in this Report 10-KSB constitute "forward
looking statements" as defined in the Private Securities
Litigation Reform Act of 1995.  As with any future event, there
can be no assurance that the events described in forward looking
statements made in this Report 10-KSB will occur or that the
results of future events will not vary materially from those
described in the forward looking statements.  Important factors
that could cause the Company's actual performance and operating
results to differ materially from the forward looking statements
include, but are not limited to, changes in the general level of
economic activity in the markets served by the Company,
introduction of new products or services by competitors, delays
in implementing the Company's viaLink services, the availability
of capital sufficient to support the Company's level of activity
and the ability of the Company to implement its business
strategies.

Item 7.  Financial Statements

The financial statements are included beginning at page F-2.  See
page F-1 for the Index to the Financial Statements.

Item 8.  Changes In and Disagreements With Accountants on
         Accounting and Financial Disclosure

              None

                            PART III
Item 9.  Directors and Executive Officers of the Registrant

Set forth below is certain information with respect to each
executive officer and Director of the Company. Directors are
generally elected at the annual shareholders' meeting and hold
office until the annual shareholders' meeting three years
following their election and until their successors are elected
and qualify. Executive officers are elected by the Board of
Directors and serve at its discretion. The Bylaws of the Company
provide that its Board of Directors shall consist of not less
than three nor more than fifteen. As of the December 31, 1996,
the Board of Directors of the Company consisted of three members.

<TABLE>
<CAPTION>
            Name          Age               Position
  ---------------------   ---    ------------------------------                
  <S>                      <C>   <C>
  Robert L. Barcum(1)(2)   48    President and Chairman of the
                                   Board
                                   
  Robert N. Baker(1)(2)    45    Vice President-Network
                                   Services, Secretary and
                                   Director
                                   
  Russell L.               50     Vice President-Solutions and
  Reinhardt(1)(3)                   Director
                                   
  David B. North(1)        40     Vice President-Technology,
                                    Assistant Secretary
                                   
  John M. Duck             54     Vice President, Treasurer,
                                    Chief Financial Officer
----------
<FN>
(1)  Member of Stock Option Committee of the Applied Intelligence
     Group,  Inc.  1995 Stock Option Plan. See "Stock Option  Plan,"
     below.

(2)  A Class II Director, whose term expires in 1997.

(3)  A Class I Director, whose term expires in 1996.
</FN>
</TABLE>

Background Information of Executive Officers and Directors

The following is a brief description of the business background
of the executive officers and Directors of the Company:

Robert L. Barcum, as a cofounder, has served as a Director and as
an executive officer of the Company since its formation in 1985
and currently serves as Chairman of the Board and President and
Chief Executive Officer. Mr. Barcum is responsible for developing
the Company's national retail practice, including product and
services planning, marketing and business alliances. He also
manages the Consulting and Systems Integration business area. Mr.
Barcum has more than 25 years of experience in management
information systems for retail organizations. He is active in the
National Retail Federation.  Since 1991 has served as an outside
Director of Duckwall-ALCO Stores, Inc., a publicly-held retailer
and a Company customer and since 1993, has served as an outside
director of Commercial Distributing Inc. , a distributor of
automotive products in the automobile after-market and a Company
customer. Since 1995, he has served on the Business Advisory
Council of Oklahoma Christian University of Science and Arts
(formerly Oklahoma Christian College), and since 1996 has served
as a member of the Advisory Board of Kent State University.

Robert N. Baker, as a cofounder, has served as a Director and
Vice President of the Company since its formation in 1985 and
currently serves as Vice President-Network Services and Corporate
Secretary. Mr. Baker is responsible for developing the viaLINK
services as well as managing the Network Services business area.
Mr. Baker has over 20 years of experience in management,
technical support and systems development within the retail
industry. He graduated magna cum laude from Oklahoma Christian
University of Sciences and Arts (formerly Oklahoma Christian
College) with a Bachelor of Science in Mathematics.

Russell L. Reinhardt has served as a Director, Vice President and
Secretary since joining the Company in 1986 and currently serves
as Vice President-Solutions. Mr. Reinhardt is responsible for
product development, business partnerships and business
relations, and holds various responsibilities related to business
planning. Mr. Reinhardt manages the Solutions business area. Mr.
Reinhardt has 20 years experience with the IBM Corporation during
which time he held a range of staff and management positions. Mr.
Reinhardt is a graduate of the University of Michigan with a
B.S.E. in Science Engineering.

David B. North has served as Vice President since joining the
Company in 1985 and currently serves as Vice President-Technology
and Assistant Secretary. Mr. North is the Company's chief
computer scientist and serves as project manager, system designer
and technical consultant. Mr. North was an instructor of computer
science at the University of Oklahoma for two years and also an
Instructor, Systems Analyst and Program Developer at Oklahoma
Christian University of Sciences and Arts. Currently he serves in
an advisory capacity to the University of Oklahoma Center for MIS
Studies. Mr. North is a graduate of Oklahoma Christian University
of Sciences and Arts (formerly Oklahoma Christian College) with a
Bachelor of Science in Chemistry. He was awarded a Masters of
Science in Computer Science from the University of Oklahoma and
has completed further graduate studies in Artificial Intelligence
at the University of Oklahoma.

John M. Duck has served as Director of Finance and Administration
since joining the Company in 1991 and currently serves as Vice
President, Treasurer and Chief Financial Officer. Mr. Duck is
responsible for all financial and tax reporting and compliance as
well as for overall direction of the Finance Department of the
Company. Prior to joining the Company, Mr. Duck served as Chief
Financial Officer of Griffin Entities, Inc. as well as Mr. Rooter
Corporation. Mr. Duck currently serves on the Board of Directors
of the Edmond Chamber of Commerce and is a member of the Oklahoma
County Private Industry Council. Mr. Duck is a certified public
accountant and holds a Bachelor of Science in Economics from
Oklahoma City University.

Board of Directors

Pursuant to the terms of the Company's Certificate of
Incorporation , the directors are divided into three classes.
Class I Directors hold office initially for a term expiring at
the annual meeting of shareholders to be held in 1997, Class II
Directors hold office initially for a term expiring at the annual
meeting of shareholders to be held in 1998, and Class III
Directors hold office initially for a term expiring at the annual
meeting of shareholders to be held in 1999. Each director will
hold office for the term to which he or she is elected and until
his or her successor is duly elected and qualified. Mr. Reinhardt
is serving as a Class I Director under a term expiring in 1997,
and Messrs. Barcum and Baker are serving as Class II Directors
under terms expiring in 1998. As of December 31, 1996, no member
of the Board of Directors is serving as a Class III Director. At
each annual meeting of the shareholders of the Company, the
successor or successors to a member of the class of directors
whose term expires at such meeting will be elected to hold office
for a term expiring at the annual meeting of  shareholders  held
in  the  third  year  following the year of his election.

Director Liability and Indemnification

As permitted by the provisions of the Oklahoma General
Corporation Act, the Certificate of Incorporation (the
"Certificate") of the Company, including amendments thereto,
eliminates in certain circumstances the monetary liability of
directors of the Company for a breach of their fiduciary duty as
directors. These provisions do not eliminate the liability of a
director (i) for a breach of the director's duty of loyalty to
the Company or its shareholders; (ii) for acts or omissions by a
director not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) for liability
arising under Section 1053 of the Oklahoma General Corporation
Act (relating to the declaration of dividends and purchase or
redemption of shares in violation of the Oklahoma General
Corporation Act); or (iv) for any transaction from which the
director derived an improper personal benefit. In addition, these
provisions do not eliminate liability of a director for
violations of federal securities laws, nor do they limit the
rights of the Company or its shareholders, in appropriate
circumstances, to seek equitable remedies such as injunctive or
other forms of non-monetary relief. Such remedies may not be
effective in all cases.

The Certificate and the Bylaws of the Company, as amended,
provide that the Company shall indemnify its directors and
officers to the full extent permitted by the Oklahoma General
Corporation Act. Under such provisions, any director or officer
who, in his capacity as such, is made or threatened to be made a
party to any suit or proceeding, may be indemnified if the Board
of Directors determines such director or officer acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. The Certificate and
Bylaws and the Oklahoma General Corporation Act further provide
that such indemnification is not exclusive of any other rights to
which such individuals may be entitled under the Certificate, the
Bylaws, an agreement, vote of shareholders or disinterested
directors or otherwise.

Item 10.  Executive Compensation

All of the Directors of the Company are employees of the Company
and do not receive any compensation in their capacity as
Directors of the Company. The following table sets forth the
total cash compensation of the President and each named executive
officer that during 1994, 1995 and 1996 received compensation in
excess of $100,000 during 1996.

<TABLE>
<CAPTION>

           Director and Executive Officer Compensation
                                            
                                                 Annual
                                            Compensation (1)          
                                      ----------------------------         
  Name and Principal Position          Year   Salary(2)   Bonus(3)
  -------------------------------      ----   ---------   --------             
 <S>                                  <C>    <C>         <C>
 Robert L. Barcum(4)                   1996   $169,987    $    --
    President and Chief Executive      1995    170,710    $    --
      Officer                          1994    165,406    $15,000
                                                                               
                                                        
  Robert N. Baker(4)                   1996    169,150    $    --
    Vice President-Network Services,   1995    170,389    $    --
      Secretary                        1994    163,645    $15,000
                                                                              
                                                        
  Russell L. Reinhardt(4)              1996    171,840    $    --
    Vice President-Solutions           1995    171,256    $    --
                                       1994    165,756    $15,000
                                                        
                                                                               
  David B. North                       1996    116,248    $    --
    Vice President-Technology,         1995    109,194    $    --
      Assistant Secretary              1994    106,202    $15,000
      
----------
<FN>
(1)   The  named  executive officer received additional  non-cash
      compensation, perquisites and other personal benefits; however,
      the aggregate amount and value thereof did not exceed 10 percent
      of the total annual salary and bonus paid to and accrued for the
      named executive officer during the year.
(2)   Dollar value of base salary (both cash and non-cash) earned
      during the year.
(3)   Dollar value of bonus (both cash and non-cash) earned during
      the year.
(4)   During the years 1996 and 1995,  Robert L. Barcum, Robert N.
      Baker  and Russell L. Reinhardt each were paid the same  annual
      base salary of $175,127, and during 1994, each were paid the same
      base  salary  of   $168,391.  The differences  in  the  amounts
      presented above are due to different levels of participation of
      each individual in the Section 125 Cafeteria Plan offered by the
     Company to all employees on a non-discriminatory basis.
</FN>
</TABLE>

Stock Option Plan

The Company established the Applied Intelligence Group, Inc. 1995
Stock Option Plan (the "Stock Option Plan" or the "Plan") in
March 1995, and amended the Plan on April 29, 1996. The Plan
provides for the issuance of incentive stock options ("ISO
Options") and non-incentive stock options ("NSO Options") to
employees and non-employees of the Company, including employees
who also serve as Directors of the Company. The number of shares
of Common Stock authorized and reserved for issuance under the
Plan is 300,000. As of December 31, 1996, options to purchase a
total of 75,208 shares of Common Stock ranging from $.63 to $1.80
(with a weighted average exercise price of $1.06) per share were
outstanding, all of which were exercisable.

The Stock Option Committee, which is currently comprised of Ms.
Kay H. Titchenal and Messrs. Barcum, Baker, Reinhardt and North,
administers and interprets the Plan and has authority to grant
options to all eligible participants and determine the types of
options granted, the terms, restrictions and conditions of the
options at the time of grant.

The option price of the Common Stock is determined by the Stock
Option Committee. The option price of NSO Options may not be less
than 75 percent of the fair market value of the shares on the
date of grant of the option. In the case of an ISO Option, the
option price may not be less than the fair market value of the
Common Stock on the date of the grant of the ISO Option. The fair
market value of a share of the Common Stock is determined by the
Stock Option Committee. Upon the exercise of an option, the
option price must be paid in full, in cash, Common Stock (at the
fair market value thereof) or a combination thereof. For a period
of two years ending November 21, 1998, the Company has agreed
with Barron Chase Securities, Inc., the underwriter of the
Company's initial public offering (the "Underwriting")  not to
grant more than 25,000 NSO Options having an option price of less
than fair market value of the shares on the date of grant of the
option, without written consent of the Underwriter.

Options are exercisable during employment and for a period of
three months after the participant ceases to be an employee, a
director, or non-employee service provider of the Company;
however, in the event of death or disability of the participant,
the ISO Options are exercisable for a period of one year
following death or disability. In any event options may not be
exercised beyond the expiration date of the option. NSO Options
may only be granted to key management employees, directors, key
professional employees or key professional non-employee service
providers of the Company, while ISO Options may only be granted
to key management or key professional non-employees of the
Company. No option may be granted after February 28, 2005.
Options are not transferable except by will or by the laws of
descent and distribution.

All outstanding options granted pursuant to the Plan will become
fully vested and immediately exercisable in the event that (i)
within any 12-month period, the Company sells an amount of Common
Stock that exceeds 50 percent of the number of shares of Common
Stock outstanding immediately prior to such 12-month period, (ii)
the Company completes an initial public offering of its stock, or
(iii) a "change of control" occurs. For purposes of the Plan, a
"change of control" is defined as the acquisition in a
transaction or series of transactions by any person, entity or
group (two or more persons acting as a partnership, limited
partnership, syndicate or other group for the purpose of
acquiring securities of the Company) of beneficial ownership of
50 percent or more (or less than 50 percent as determined by a
majority of the directors of the Company) of either the then
outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding voting securities.

Profit Sharing Plan

In 1987, the Company adopted the Applied Intelligence Group, Inc.
Profit Sharing Plan (the "Profit Sharing Plan"). The Profit
Sharing Plan covers all employees of the Company who have
completed at least one year of service with the Company as of the
enrollment date under the Profit Sharing Plan. The Company may
make an annual contribution to the Profit Sharing Plan on behalf
of employees which, if made, begins to vest for each employee's
account after the employee has completed two years of service
with the Company. Thereafter, each employee's account vests
ratably as to 20 percent of the employee's account following each
subsequent year of completed service with the Company. Vested
contributions will normally be distributed to an employee upon
(i) the employee's retirement, (ii) the employee's death or
disability, (iii) the termination of the employee's employment
with the Company or (iv) the termination of the Profit Sharing
Plan. The Company did not make any contributions to the Profit
Sharing Plan for the fiscal years ended December 31, 1994, 1995
and 1996.

In 1993, the Company amended the Profit Sharing Plan to include a
401(k) deferred compensation feature, whereby eligible
participants may elect to defer up to 15 percent of their
salaries, not to exceed the annual statutory limits, pursuant to
a voluntary salary reduction agreement. The Company may determine
matching levels of contributions from time to time, at the
discretion of the administrative committee. No matching
contributions were made by the Company during 1994, 1995 and
1996. All employee contributions under the 401(k) feature are
fully vested at all times.

Keyman Life Insurance

The Company maintains keyman policies insuring the lives of
Messrs. Barcum, Baker and Reinhardt for $1,250,000, $1,250,000
and $820,000, respectively,  the proceeds of which are payable to
the Company.

Item 11.  Security Ownership of Certain Beneficial Owners and
          Management

The following table presents certain information as to the
beneficial ownership of the Common Stock of the Company as of
March 14, 1997, of (i) each person who is known by the Company to
own beneficially more than five percent of the outstanding Common
Stock, (ii) each Director of the  Company,  (iii)  each
executive  officer  named  in  the  Summary  Compensation  Table
and (iv) all current executive officers and Directors as a group,
together with their percentage holdings of the outstanding
shares. All persons listed have sole voting and investment power
with respect to their shares unless otherwise indicated, and
there is no family relationship between the executive officers
and Directors of the Company.

<TABLE>
<CAPTION>
                                    Shares      Percent of
Name (and Address)               Beneficially  Outstanding
of Beneficial Owner                 Owned         Shares
---------------------------     -------------  -----------   
 <S>                               <C>            <C>
 Robert L. Barcum(1)               554,529        20.33%
 Robert N. Baker(1)                554,529        20.33%
 Russell L. Reinhardt(1)           316,081        11.59%
 David B. North(1)                  74,861         2.74%
 Executive Officers                                  
  and Directors as a              1,502,056       55.07%
  group (five persons)(2)
----------
<FN>
(1)   The   business address of the named person is 13800  Benson
      Road, Edmond, Oklahoma 73013-6417.
(2)   The number of shares and percent  include 2,056 shares of
      Common Stock issuable pursuant to stock options held  and
      exercisable by an executive officer of the Company.
</FN>
</TABLE>

Item 12.  Certain Relationships and Related Transactions

On June 12, 1996, Vantage Capital Resources, Inc., an Oklahoma
corporation ("VCRI"), merged with and into the Company (the
"Merger"). VCRI was organized on March 28, 1996, by John
Simonelli and Larry E. Howell with an initial capitalization of
$360. On June 5, 1996, VCRI completed a private placement
offering of 250,000 shares of VCRI common stock at an offering
price of $1.75 per share, with net proceeds to VCRI of $394,567 (
the "VCRI Private Placement"). Pursuant to the VCRI Private
Placement offering, David B. North, an executive officer and
Director of the Company, purchased 22,500 shares of VCRI common
stock, and James R. Stepp, a former executive officer of the
Company, purchased 1,000 shares of VCRI common stock; however,
all of such shares were subsequently redeemed by the Company, as
described below. In consummation of the Merger, the Company
issued 610,000 shares of its Common Stock, on a one-for-one
basis, for the outstanding Common Stock of VCRI.

In connection with the organization of VCRI, each of Messrs.
Simonelli and Howell were issued 180,000 shares of VCRI Common
Stock for $.001 per share. Prior to the Merger, VCRI had not
engaged in any operations other than the negotiation of the
Merger and the offering of its Common Stock pursuant to a private
placement offering. Upon consummation of the Merger, each of
Messrs. Simonelli and Howell, as well as the other shareholders
of VCRI, exchanged their shares of VCRI Common Stock, on a one-
for-one basis, for the Company's Common Stock. Furthermore, upon
closing of the Merger, Messrs. Simonelli and Howell entered into
three-year employment agreements with the Company and were
elected to the Board of Directors and appointed executive
officers of the Company. In connection with the Merger and the
transactions related thereto, an independent determination of
fairness and reasonableness of the terms of the transactions was
not obtained; however, the transactions were negotiated on an
arm's-length basis by the respective parties (which included all
of the shareholders of the Company) and are believed by
respective parties and management of the Company to have been
fair.

In connection with the Company's application with The Nasdaq
Stock Market, Inc. ("Nasdaq") for listing of the Common Stock and
Warrants on the Nasdaq SmallCap Marketr, the staff of Nasdaq
raised investor protection concerns regarding (i) the 360,000
shares of Common Stock received by Messrs. Simonelli and Howell
in consummation of the Merger and their employment with the
Company pursuant to certain three-year employment agreements, and
(ii) the VCRI Private Placement of the VCRI common stock at $1.75
per share followed by the exchange of such shares for the Common
Stock of the Company. In addition, the staff of Nasdaq orally
expressed concerns regarding the purchase of the shares of VCRI
common stock by Messrs. North and Stepp. Initially the staff of
Nasdaq denied listing of the Company's securities on the Nasdaq
SmallCap Marketr, and the Company appealed the staff's decision
to the Nasdaq appeal panel (the "Panel"). In an effort to
alleviate the concerns of the staff of Nasdaq and obtain the
listing on appeal, the Company, pursuant to agreements with
Messrs. Simonelli and Howell, North and Stepp completed the
transactions described below, including the redemption of the
shares of Common Stock received by Messrs. North and Stepp in
consummation of the Merger. However, the Panel in its written
appeal decision of October 28, 1996, did not require such
redemption.

Pursuant to an Exchange Agreement dated October 14, 1996 (the
"Exchange Agreement"), each of Messrs. Simonelli and Howell
exchanged 180,000 shares of Common Stock for stock options
exercisable on or after November 30, 1998 and on or before
November 30, 2001 for the purchase of 180,000 shares of Common
Stock for $5.00 per share. The stock options and the Common Stock
or other securities issuable under the stock options may not be
offered for sale except in compliance with the applicable
provisions of the Securities Act of 1933, as amended. The Company
has agreed that if it files with the Securities and Exchange
Commission a post-effective amendment to the registration
statement, a new registration statement, or similar offering
document, Messrs. Simonelli and Howell (or other holders of the
stock options) shall have the right through December 31, 2001, to
include in such registration statement or offering statement the
Common Stock or other securities issuable upon exercise of the
stock options at no expense to Messrs. Simonelli and Howell. In
addition, pursuant to the Exchange Agreement, Messrs. Simonelli
and Howell resigned as executive officers and Directors of the
Company, and their employment agreements were terminated
effective April 1, 1996, without any payment of or continuing
right to receive compensation under such employment agreements.

Although not required pursuant to the Panel's written appeal
decision, on October 14, 1996, the Company redeemed the shares of
Common Stock issued to James R. Stepp, a former executive officer
of the Company, in exchange for the 1,000 shares of VCRI common
stock that he purchased in connection with the VCRI Private
Placement Offering, for $1.75 per share and for an aggregate
amount of $1,750. Also, on October 15, 1996, the Company redeemed
the shares of Common Stock issued to David B. North in exchange
for the 22,500 shares of VCRI common stock that he purchased in
connection with the VCRI Private Placement Offering for $1.75 per
share for an aggregate amount of $39,375. In redemption of the
shares, the Company issued to Mr. North a promissory note in the
principal amount of $39,375, bearing interest at the rate of 10
percent per annum (payable at maturity), with a maturity date of
November 15, 1997. Management of the Company believes that the
terms of the promissory note were at least as favorable as could
be obtained from unaffiliated third-party lenders. These
redemptions were completed based solely in reliance upon the oral
concerns expressed by the Nasdaq staff and were completed in
anticipation that the Panel's appeal decision would require such
redemptions. The Company does not intend to redeem any of the
remaining outstanding shares of Common Stock of the Company
issued to the shareholders of VCRI in consummation of the Merger.

Pursuant to eleven separate promissory notes, Robert L. Barcum,
Robert N. Baker and Russell L. Reinhardt have loaned to the
Company, in the aggregate,  $457,000  (the "Shareholders'
Loans"). The Shareholders' Loans are each evidenced by a
promissory note, bearing interest at rates of 8.5 percent to 10
percent per annum, with maturity dates three years from the date
of the note. With respect to the Shareholders' Loans, the
interest paid or accrued for payment to each of Robert L. Barcum,
Robert N. Baker and  Russell L. Reinhardt  was $13,055, $13,900,
and $16,600, respectively, during 1996, and $9,503, $10,487 and
$11,915,respectively, during 1995. Management of the Company
believes that the terms of the Shareholders' Loans were at least
as favorable as could be obtained from unaffiliated third-party
lenders.

The Company has adopted policies that any loans to officers,
directors and five percent or more shareholders ("affiliates")
and any future transactions between the Company and any
affiliates will be subject to approval by a majority of the
disinterested independent directors of the Company and will be on
terms no less favorable than could be obtained from unaffiliated
parties. As of December 31, 1996, the Board of Directors is
comprised of three members, none of whom are independent
directors.

Item 13.  Exhibits and Reports on Form 8-K

The following documents are filed or incorporated by reference as
part of this Form 10-KSB:

<TABLE>
<CAPTION>

Exhibit
Number         Description
-------   ------------------------------------------------------------------
<S>       <C>
2.1       The Agreement and Plan of Merger among Registrant,
          Vantage Capital Resources, Inc., John Simonelli, Larry E. Howell,    
          Robert L. Barcum, Robert N. Baker, and David B. North, dated
          May 8, 1996*
3.1       Registrant's Certificate of Incorporation*
3.2       Registrant's Bylaws*
4.1       Form of Certificate of Common Stock of Registrant
4.2       Form of Underwriter's Warrant Agreement between Barron
          Chase Securities, Inc. and Registrant*
4.3       Form of Warrant Agreement between Liberty Bank & Trust
          Company of Oklahoma City, Oklahoma, N.A. and Registrant*
4.4       Form of Certificate of Redeemable Common Stock Purchase Warrant*
4.5       Stock Option Agreement between John Simonelli and Registrant, dated
          October 15, 1996*
4.6       Stock Option Agreement between Larry A. Howell and  Registrant,
          dated October 15, 1996*
10.1      Lease between Oklahoma Christian Investment Corporation and
          Registrant, dated October 3, 1994*
10.2      Employment Agreement (Amended and Restated) between John Simonelli
          and Registrant, with an effective date of June 12, 1996*
10.3      Employment Agreement (Amended and Restated) between Larry A. Howell
          and Registrant, with an effective date of June 12, 1996*
10.4      Applied Intelligence Group, Inc. Profit Sharing Plan*
10.5      Global Solutions Partners Agreement with NCR Corporation, having an
          effective date of January 1, 1996*
10.6      IBM Business Partner Agreement with International Business Machines
          Corporation, dated February 20, 1995*
10.7      Agreement for Licensing of IBM Software between International
          Business Machines Corporation, executed by Registrant on
          March 18, 1996*
10.8      Master Software License Agreement with Applied Retail Solutions,
          Inc., dated January 28, 1994*
10.9      Form of Merger and Acquisition Agreement between Barron Chase
          Securities, Inc. and Registrant*
10.10     Master Arrangement Letter agreement with Fred's Inc. and Registrant,
          dated December 1, 1995*
10.11     Master Arrangement Letter agreement with Fleming  Companies, Inc.
          and Registrant, dated May 3, 1995*
10.13     Master Arrangement Letter agreement with Fleming Companies, Inc.
          and Registrant, dated May 3, 1995*
10.14     Master Arrangement Letter agreement with Fleming Companies, Inc.
          and Registrant, dated September 28, 1995*
10.15     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant Dated May 12, 1995*
10.16     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated May 31, 1995*
10.17     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated June 29, 1995*
10.18     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated May 18, 1995*
10.19     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated October 31, 1995*
10.20     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated November 8, 1995*
10.21     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated September14, 1995*
10.22     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated May 10, 1995*
10.23     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated June 16, 1995*
10.24     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated August 9, 1995*
10.25     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated September 28, 1995*
10.26     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated October 4, 1995*
10.27     Arrangement Letter agreement with Fleming Companies, Inc. and
          Registrant dated December 15, 1995*
10.28     AIG Computer Software License Agreement between ALDI Inc. and
          Registrant, dated August 28, 1995*
10.29     Arrangement Letter agreement with ALDI Inc. and Registrant, dated
          January 7, 1994*
10.30     Arrangement Letter agreement with ALDI Inc. and Registrant, dated
          February 7, 1995*
10.31     Master Arrangement Letter agreement with ALDI Inc. and Registrant,
          dated May 4, 1995*
10.32     Memorandum agreement with ALDI Inc. and Registrant, dated May 30,
          1995*
10.33     Master Arrangement Letter agreement with ALDI Inc. and Registrant,
          dated August 3, 1995* 
10.34     Master Arrangement Letter agreement with ALDI Inc. and Registrant,
          dated September 21, 1995*
10.35     Master Arrangement Letter agreement with ALDI Inc. and Registrant,
          dated February 7, 1995*
10.36     Exchange Agreement among Registrant, Robert L. Barcum, Robert N.
          Baker, Russell L. Reinhardt, and David B. North, John
          Simonelli, and Larry A. Howell, dated October 15, 1996*
10.37     Stock Redemption and Employment Severance Agreement  between
          Registrant and James R. Stepp, dated October 14, 1996*
10.38     Stock Redemption Agreement between Registrant and David B. North,
          dated October 15, 1996*
10.39     Master Arrangement Letter agreement with Sonic Corp. and Registrant,
          dated July, 31, 1996
10.40     Addendum No. 3 to Arrangement Letter agreement with Sonic Corp. and
          Registrant, dated October 24, 1996
10.41     Arrangement Letter agreement with Dollar General Corporation and
          Registrant, dated January 30, 1997
10.42     Addendum, dated December 12, 1996, to Arrangement Letter agreement
          between ALDI Inc. and Registrant, dated August 3, 1995
24.4      Consent of Coopers & Lybrand L.L.P.
27.1      Financial Data Schedule

* Incorporated by reference to Exhibit of same number of the
  Registrant's Registration Statement on Form SB-2 (Registration
  No. 333-5038-D) as filed with the Central Regional Office of the
  Commission.
</TABLE>

                           SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Edmond, Oklahoma, on this 28th day of March, 1997.

                              APPLIED INTELLIGENCE GROUP, INC.


                              BY: /s/ROBERT L. BARCUM
                                   Robert L. Barcum
                                   President


Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>

     SIGNATURES                 TITLE               DATE

<S>                       <C>                     <C>
/s/  ROBERT L. BARCUM     Chairman of the         March 28, 1997
Robert L. Barcum          Board of Directors


/s/ ROBERT N. BAKER       Vice President and      March 28, 1997
Robert N. Baker           Director


/s/ RUSSELL L. REINHARDT  Vice President and      March 28, 1997
Russell L. Reinhardt      Director


/s/  DAVID B. NORTH       Vice President          March 28, 1997
David B. North


/s/ JOHN M. DUCK         Vice President and       March 28, 1997
John M. Duck             Chief Financial
                         Officer
</TABLE>