Book excerpt: This report covers technical progress during the first year of the NASA Space Physics Theory contract between NASA and Science Applications International Corporation. Under this contract SAIC, the University of California, Irvine (UCI), and the Jet Propulsion Laboratory (JPL), have conducted research into theoretical modeling of active regions, the solar corona, and the inner heliosphere, using the MHD model. During the period covered by this report we have published 26 articles in the scientific literature. These publications are listed in Section 4 of this report. In the Appendix we have attached reprints of selected articles. Mikic, Zoran Goddard Space Flight Center NAS5-96081...