U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

__X__    Annual report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934 for the year ended December 31, 2000

_____    Transition report under section 13 or 15(d) of the Securities Act of
         1934 for the transition period from _____ to _____.

                         Commission File Number: 0-27554


                      PACE HEALTH MANAGEMENT SYSTEMS, INC.
                      ------------------------------------
           (Name of small business issuer as specified in its charter)

                    Iowa                               42-1297992
-------------------------------------    ---------------------------------------
     (State or other jurisdiction of      (IRS Employer Identification Number)
      incorporation or organization)

                              2116 Financial Center
                              Des Moines, IA 50309
--------------------------------------------------------------------------------
              (Address and zip code of principal executive offices)

                                 (515) 244-5746
                      ------------------------------------
                (Issuer's telephone number, including area code)


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

         Securities registered under Section 12(g) of the Exchange Act:

                              Common Stock, no par
                              --------------------
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject of the filing requirements for at least the past 90
days. YES _X_ NO __

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's net revenues for its most recent fiscal year: $0

<PAGE>


The aggregate market value of the voting and non-voting common stock held by
non-affiliates, based upon the closing sale price of the common stock on March
23, 2001 as reported by Reuters, Ltd., was approximately $328,000. Shares of
common stock held by each officer and director and by each person who owns 5% or
more of the outstanding common stock have been excluded in that such persons may
be deemed to be affiliates.

The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:

                                       Number of Shares Outstanding
                  Class                       March 23, 2001
                  -----                       --------------
           Common Stock, no par                  5,716,074


Transitional Small Business Disclosure Format (Check one): YES ___ NO _X_

<PAGE>


                      PACE HEALTH MANAGEMENT SYSTEMS, INC.
                         2000 FORM 10-KSB ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I.

                                                                            Page
                                                                            ----
ITEM 1.     Description of Business                                           1

ITEM 2.     Description of Property                                           2

ITEM 3.     Legal Proceedings.                                                2

ITEM 4.     Submission of Matters to a Vote of Security Holders               2

                                    PART II.

ITEM 5.     Market for Common Equity and Related Shareholder Matters          3

ITEM 6.     Management's Discussion and Analysis or Plan of Operation         3

ITEM 7.     Financial Statements                                              5

ITEM 8.     Changes In and Disagreements With Accountants on Accounting
            and Financial Disclosure                                         17

                                    PART III.

ITEM 9.     Directors, Executive Officers, Promoters and Control Person,
            Compliance With Section 16(a) of the Exchange Act                17

ITEM 10.    Executive Compensation                                           18

ITEM 11.    Security Ownership of Certain Beneficial Owners and Management   18

ITEM 12.    Certain Relationships and Related Transactions                   20

ITEM 13.    Exhibits and Reports on Form 8-K                                 20

<PAGE>


                                     PART I.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Prior to October 1998, PACE developed and marketed advanced patient care
management software systems that enabled healthcare providers to standardize the
delivery of care, maximize resource utilization and improve clinical outcomes.
The Company's enterprise-wide, client/server applications automated charting,
clinical workflow processes and clinical pathways. The Company's core system,
PACE CMS, was a modular suite of advanced software applications that provided
hospitals, physicians' offices, and integrated delivery systems a comprehensive
system for interdisciplinary documentation, nursing care planning, clinical
pathway management and enterprise-wide order management, all at the point of
care.

On October 7, 1998, the Company completed the sale of substantially all of its
assets to, and the assumption of certain of its liabilities by, Minnesota Mining
and Manufacturing Company ("3M") ("the Transaction"). The sale was made pursuant
to an Asset Purchase Agreement dated June 30, 1998, as amended, as described in
Company's definitive proxy statement dated September 14, 1998. The Transaction
was approved by the holders of both the common stock and the preferred stock at
a special meeting of shareholders held on October 7, 1998.

The purchase price of the Transaction was approximately $5.9 million, including
$4.75 million in cash, of which $750,000 was originally placed in escrow to
secure the Company's indemnification obligations under the Asset Purchase
Agreement, plus the assumption of substantially all of the Company's liabilities
other than $2.1 million in line of credit balances, which were paid off from
proceeds at closing. Subsequent to the closing of the Transaction, the Company
agreed that $25,000 of the amount in escrow could be paid to 3M as part of a
purchase price adjustment contemplated by the Asset Purchase Agreement, leaving
an escrow balance of $725,000.

In July 1999, the Company received proceeds from the restricted escrow account
totaling approximately $525,000. In December 2000, the Company received final
proceeds from the restricted escrow account totaling $104,953. A like amount was
also paid to 3M in final settlement and as an adjustment to the purchase price.

Following the Transaction, the Company has no ongoing operations and no revenues
and has minimal operating expenses. The Company presently has no employees. The
Company's December 31, 2000 balance sheet reflects cash in excess of $2.0
million and no liabilities.

The net proceeds from the sale will be retained by the Company pending a
determination of whether to engage in a follow-on transaction. The Company has
been seeking a business combination with another entity, before considering
possible liquidation and distribution of its assets. The Company believes that
with the cash on hand and net operating loss carryforwards, subject to the
limitation of such carryforwards under the Internal Revenue Code, such a
combination may be attractive to potential partners and would better serve the
interests of the Company's shareholders. As of the date of this Form 10-KSB, no
definitive agreement has been signed for a follow-on transaction. If no suitable
business combination is identified within a reasonable period of time, the
Company may elect to liquidate and distribute the remaining net proceeds to
shareholders. If the Company liquidated at the present time, all of the net
assets of the Company would be paid to holders of the Company's preferred stock.


                                      -1-
<PAGE>


THE COMPANY

PACE was organized in 1987 as a computer systems consulting firm. In 1989, the
Company began to develop and market a nursing management system built around an
artificial intelligence-based "Clinical Library." To that foundation, PACE added
point-of-care software applications in the early 1990's and introduced PACE
Clinical Information System ("PACE/CIS"). During fourth quarter of 1995, the
Company discontinued the marketing and sale of PACE/CIS; however, it was from
these core modules that PACE CMS complete care management system evolved. During
1996, PACE CMS, the system from which the Company derived substantially all of
its revenues, was further enhanced through the first release of a graphical user
interface (GUI) utilizing an object-oriented open three-tier, client/server
architecture ("Graphical PACE CMS"). The Company's open-systems architecture and
object orientation allowed PACE CMS to be integrated with a healthcare
provider's existing information systems, including financial management,
admissions, pharmacy, laboratory, and other ancillary systems. Graphical PACE
CMS had the user friendliness of Windows with significantly enhanced clinical
functionality.

In the second quarter of 1997, the Company expanded its product line into the
ambulatory market when it purchased substantially all of the assets of
Healthcare Software Solutions, L.C. (HSS), an affiliate of Wellmark, Inc.
(formerly IASD Health Services Corporation). The MR2000 product integrated
traditional paper charting activities into a system that improved practice
efficiency and quality of care.

As of December 31, 1997, PACE had 74 customers under contract and had completed
installation of the Graphical PACE CMS in six facilities. During 1997, the
Company signed new contracts valued at over $4,000,000; however, the lack of
substantial capital on the balance sheet seriously impacted end of year
operations. To reduce overhead, minimize negative cash flow, and try to attract
capital or secure strategic partners for operational growth, the Company
determined it necessary to terminate approximately 40 employees on February 18,
1998. These reductions were primarily targeted at legacy non-graphical product
cost centers, allowing the Company to continue directing resources into the
Graphical PACE CMS development and sales efforts and remain focused on current
implementation agreements.

In June 1998 the Company entered into the Asset Purchase Agreement with 3M
whereby the Company sold substantially all of its assets for cash and an
assumption of substantially all liabilities, except the Company's lines of
credit. The Transaction closed on October 7, 1998. See "The Company -- General."

ITEM 2. DESCRIPTION OF PROPERTY

Prior to the Transaction, the Company leased office space in West Des Moines,
Iowa, Huntersville, North Carolina and Charlotte, North Carolina. The Charlotte,
North Carolina lease was terminated prior to closing the Transaction. As part of
the Transaction, 3M assumed the West Des Moines and Huntersville leases. The
Company does not currently have any office facilities.

ITEM 3. LEGAL PROCEEDINGS

None

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

No matters were submitted to a vote of the shareholders of the Company in the
fourth quarter of 2000.


                                      -2-
<PAGE>


                                    PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Beginning May 19, 1998, PACE Common Stock has been quoted on the OTC Bulletin
Board under the symbol "PCES." From the Company's initial public offering on
April 27, 1995 through May 18, 1998, the Company's Common Stock was traded on
The Nasdaq SmallCap Market. The following table sets forth the range of high and
low sales prices of the Company's Common Stock by quarter over the last two
years. These quotations reflect inter-dealer prices, without retail markup,
markdown, or commission and may not reflect actual transactions.

               Quarter ended            High             Low
               ------------------------------------------------------
               3/31/99                  0.28             0.02
               6/30/99                  0.29             0.04
               9/30/99                  0.50             0.06
               12/31/99                 0.90             0.36
               3/31/00                  0.81             0.40
               6/30/00                  0.73             0.22
               9/30/00                  0.34             0.17
               12/31/00                 0.18             0.05

The Company has declared no cash dividends since its inception with respect to
the Common Stock, and has no plan to declare a dividend in the near future. If
declared by the Board of Directors, the holders of Preferred Stock are entitled
to receive annual dividends at the rate of $0.10 per share. The Board has
declared no cash dividends with respect to the Preferred Stock and has no plan
to declare a dividend in the near future other than in connection with the
completion of a follow-on transaction or the liquidation of the Company. As of
March 23, 2001, there were 65 shareholders of record of the Company's common
stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

REVENUES: Following the Transaction, the Company has no ongoing operations or
revenues.

GENERAL AND ADMINISTRATIVE: General and administrative expenses include salaries
and expenses for the corporate administration and finance, legal and accounting,
insurance, rent and depreciation expenses. General and administrative expenses
were $83,250 and $144,351 in 2000 and 1999, respectively, representing a
decrease of 42%.

OTHER INCOME (EXPENSE) NET: Other income (expense), net is comprised primarily
of interest income and an adjustment to the gain on sale of assets. Interest
income was $109,034 and $84,323 in 2000 and 1999, respectively. As described
elsewhere herein, the Company recognized a purchase price adjustment of $104,953
during 2000.

LIQUIDITY AND CAPITAL RESOURCES

Since inception in 1987 through 1994, the Company's primary source of funding
for working capital needs, capital expenditures and its operating losses was
from the sale of common and convertible preferred stock. During this time, the
Company completed numerous private placements, receiving approximately $7.8
million in aggregate net proceeds. In 1995, the Company completed its initial
public offering by selling 1,300,000 shares of common stock at $5.00 per share
for net proceeds to the Company of approximately $5.5 million. Additionally, in
September 1996, PACE sold 900,000 shares of common stock at $3.25 per share
providing net proceeds of approximately $2.8 million. In the third and fourth
quarters of 1997, the Company sold 2,250,000 shares of convertible preferred
stock at $1.00 per share


                                      -3-
<PAGE>


representing total proceeds of $2,250,000. In the first quarter of 1998, the
Company sold an additional 625,000 shares of convertible participating preferred
stock at $1.00 per share representing proceeds of $625,000. Each share of
preferred stock is convertible into 2 shares of common stock.

The Company recorded net losses of $79,169 and $44,188 with cash used in
operations of $3,990 and $12,696 for 2000 and 1999 respectively.

Net cash provided by investing activities for the years ended December 31, 2000
and 1999 was $104,953 and $524,958 respectively, and resulted from the receipt
of funds from the asset sale to 3M.

Net cash provided by financing activities for the years ended December 31, 2000
and 1999 was $62,864 and $91,728, respectively, and resulted from proceeds from
the exercise of stock options and warrants.

As of December 31, 2000, the Company had no liabilities and a cash balance of
$2,080,801. As of March 1, 2001 the Company has no ongoing operations and no
revenues and has minimal operating expenses. The Company presently has no
employees.

The net proceeds from the sale will be retained by the Company pending a
determination of whether to engage in a follow-on transaction. The Company has
been seeking a business combination with another entity, before considering
possible liquidation and distribution of its assets. The Company believes that
with the cash on hand and net operating loss carryforwards, subject to the
limitation of such carryforwards under the Internal Revenue Code, such a
combination may be attractive to potential partners and would better serve the
interests of the Company's shareholders. As of the date of this Form 10-KSB, no
definitive agreement has been signed for a follow-on transaction. If no suitable
business combination is identified within a reasonable period of time, the
Company may elect to liquidate and distribute the remaining net proceeds to
shareholders. If the Company liquidated at the present time, all of the net
assets of the Company would be paid to holders of the Company's preferred stock.


                                      -4-
<PAGE>


ITEM 7. FINANCIAL STATEMENTS


                                    CONTENTS


--------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT                                                  6
--------------------------------------------------------------------------------

FINANCIAL STATEMENTS
       Balance sheets                                                         7
       Statements of operations                                               8
       Statements of shareholders' equity                                     9
       Statements of cash flows                                              10
       Notes to financial statements                                         11

--------------------------------------------------------------------------------


                                      -5-
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
PACE Health Management Systems, Inc.
Des Moines, Iowa

We have audited the accompanying balance sheets of PACE Health Management
Systems, Inc. as of December 31, 2000 and 1999, and the related statements of
operations, shareholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PACE Health Management Systems,
Inc. as of December 31, 2000 and 1999, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.

McGladrey & Pullen, LLP
Des Moines, Iowa
March 2, 2001


                                      -6-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

BALANCE SHEETS
DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
ASSETS                                                                    2000               1999
-------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                <C>
CURRENT ASSETS
   Cash and cash equivalents (Note 5)                                $    2,080,801     $    1,916,974
   Restricted escrow account (Note 7)                                            --            200,042
   Accounts receivable                                                          320                520
   Prepaid expenses                                                           8,166                 --
                                                                     ----------------------------------
                                                                     $    2,089,287     $    2,117,536
                                                                     ==================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                                  $           --     $        2,944
   Accrued expenses                                                              --              9,000
                                                                     ----------------------------------
             TOTAL CURRENT LIABILITIES                                           --             11,944
                                                                     ----------------------------------

SHAREHOLDERS' EQUITY
   Serial preferred stock, no par value, authorized 1,000,000
       shares; issued none                                                       --                 --
   Convertible participating preferred stock, Series A, no par
       value; authorized 4,000,000 shares; issued and outstanding
       2,875,000 shares (Note 6)                                          2,875,000          2,875,000
   Common stock, no par value; authorized 20,000,000 shares;
       issued and outstanding 2000 5,716,074 ; 1999 5,567,436
       shares (Note 2)                                                   17,065,136         17,002,272
   Additional paid-in capital                                               673,486            673,486
   Accumulated deficit                                                  (18,524,335)       (18,445,166)
                                                                     ----------------------------------
                                                                          2,089,287          2,105,592
                                                                     ----------------------------------
                                                                     $    2,089,287     $    2,117,536
                                                                     ==================================
</TABLE>

See Notes to Financial Statements


                                      -7-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                     2000             1999
------------------------------------------------------------------------------
<S>                                             <C>              <C>
Net revenues                                    $         --     $         --

General and administrative expenses (Note 8)          83,250          144,351
                                                ------------------------------
          LOSS FROM OPERATIONS                       (83,250)        (144,351)
                                                ------------------------------

Other income (expense):
   Interest income                                   109,034           84,323
   Adjustment to gain on asset sale (Note 7)        (104,953)              --
   Other                                                  --           15,840
                                                ------------------------------
                                                       4,081          100,163
                                                ------------------------------
          (LOSS) BEFORE INCOME TAXES                 (79,169)         (44,188)

Provision for income taxes (Note 4)                       --               --
                                                ------------------------------
          NET (LOSS)                            $    (79,169)    $    (44,188)
                                                ==============================

(Loss) per share (Note 3)
   Basic                                        $      (0.06)    $      (0.06)
                                                ==============================
   Fully diluted                                $      (0.06)    $      (0.06)
                                                ==============================
</TABLE>

See Notes to Financial Statements.


                                      -8-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                Additional
                                      Preferred      Common       Paid-In     Accumulated
                                        Stock        Stock        Capital       Deficit         Total
--------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>           <C>           <C>            <C>
Balance, December 31, 1998         $  2,875,000  $ 16,910,544  $    673,486  $(18,400,978)  $  2,058,052
  Exercise of 245,652 stock
    options (Note 2)                         --        91,728            --            --         91,728
  Net loss                                   --            --            --       (44,188)       (44,188)
                                   ----------------------------------------------------------------------
Balance, December 31, 1999            2,875,000    17,002,272       673,486   (18,445,166)     2,105,592
  Exercise of 148,638 stock
    options and warrants (Note 2)            --        62,864            --            --         62,864
  Net loss                                   --            --            --       (79,169)       (79,169)
                                   ----------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000         $  2,875,000  $ 17,065,136  $    673,486  $(18,524,335)  $  2,089,287
                                   ======================================================================
</TABLE>

See Notes to Financial Statements


                                      -9-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                     2000            1999
---------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net (loss)                                                   $    (79,169)    $    (44,188)
   Adjustments to reconcile net (loss) to net cash (used in)
         operating activities
       Adjustment to gain on sale of assets to 3M (Note 7)           104,953               --
   Change in assets and liabilities:
       Decrease in accounts receivable                                   200            2,278
       (Increase) decrease in prepaid expenses and other             (18,030)          29,366
            current assets
       (Decrease) in accounts payable
          and accrued expenses                                       (11,944)            (152)
                                                                ------------------------------
          NET CASH (USED IN) OPERATING ACTIVITIES                     (3,990)         (12,696)
                                                                ------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net proceeds from sale to 3M (Note 7)                             104,953          524,958
                                                                ------------------------------
           NET CASH PROVIDED BY INVESTING ACTIVITIES                 104,953          524,958
                                                                ------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from exercise of stock options and warrants               62,864           91,728
                                                                ------------------------------
          NET CASH PROVIDED BY FINANCING ACTIVITIES                   62,864           91,728
                                                                ------------------------------
          NET INCREASE IN CASH AND CASH EQUIVALENTS                  163,827          603,990

CASH AND CASH EQUIVALENTS
   Beginning                                                       1,916,974        1,312,984
                                                                ------------------------------
   Ending                                                       $  2,080,801     $  1,916,974
                                                                ==============================
</TABLE>


                                   (Continued)

                                      -10-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of business: Prior to the sale of the majority of its assets (Note 10),
the Company was in the business of developing, marketing and supporting advanced
clinical software that automates the recording, storage and management of
patient care information. The software provided complete care management
solutions to physicians, nurses and other clinicians in multiple settings at the
point of care.

A summary of the Company's significant accounting policies is as follows:

   Accounting estimates and assumptions: The preparation of financial statements
   in conformity with generally accepted accounting principles requires
   management to make estimates and assumptions that affect the reported amounts
   of assets and liabilities and disclosure of contingent assets and liabilities
   at the date of the financial statements and the reported amounts of revenues
   and expenses during the reporting period. Actual results could differ from
   those estimates.

   Cash equivalents: The Company considers all highly liquid debt instruments
   purchased with a maturity of three months or less to be cash equivalents.

   Stock-based compensation: In October 1995, the Financial Accounting Standards
   Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.
   123, Accounting for Stock-Based Compensation, which establishes a fair value
   based method for financial accounting and reporting for stock-based employee
   compensation plans and for transactions in which an entity issues its equity
   instruments to acquire goods and services from non-employees. However, the
   new standard allows employee compensation to continue to be measured by using
   the intrinsic value based method of accounting prescribed by Accounting
   Principles Board Opinion (APBO) No. 25, Accounting for Stock Issued to
   Employees, but requires expanded disclosures. The Company has elected to
   continue to apply the intrinsic value based method of accounting for
   stock-based employee compensation. Accordingly, compensation cost for stock
   options issued to employees is measured as the excess, if any, of the quoted
   market price of the Company's stock at the date of grant over the amount an
   employee must pay to acquire the stock.

   Income taxes: Deferred taxes are provided on a liability method whereby
   deferred tax assets are recognized for deductible temporary differences and
   operating loss carryforwards and deferred tax liabilities are recognized for
   taxable temporary differences. Temporary differences are the differences
   between the reported amounts of assets and liabilities and their tax bases.
   Deferred tax assets are reduced by a valuation allowance when, in the opinion
   of management, it is more likely than not that some portion or all of the
   deferred tax assets will not be realized.

   Basic and diluted loss per share: In February 1997, the Financial Accounting
   Standards Board (FASB) issued Statement of Financial Accounting Standards
   (SFAS) No. 128, Earnings per Share, which requires the Company to present
   basic and diluted income (loss) per share amounts. Basic loss per share is
   based on the weighted average number of common shares outstanding during the
   period. Diluted income (loss) per share is based on the weighted average
   number of common shares and dilutive potential common shares outstanding
   during the period. Dilutive potential common shares consist of stock options
   and warrants (using the treasury stock method) and convertible preferred
   stock (using the if-converted method).


                                      -11-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 2. COMMON STOCK WARRANTS AND OPTIONS

Common stock warrants

The Company has issued common stock purchase warrants to various shareholders,
directors, employees, and certain accredited investors. One group of warrants
expires ten years after the date of issuance. The second group of warrants
expires five years after the date of issuance. Warrants to purchase 52,003
shares with an exercise price ranging from $0.50 to $3.67 expired during 2000.
Warrants to purchase 19,092 shares with an exercise price of $0.10 were
exercised during 2000. At December 31, 2000, warrants to purchase 105,183 shares
were outstanding and exercisable. The warrants provide for reductions in the
exercise price under certain terms and conditions and are exercisable at prices
ranging from $.50 to $3.67 per share with an average price per share of
approximately $1.11.

The Company has issued Series A warrants to convertible, participating Series A
preferred stock shareholders. In addition, the Company has issued Series A
warrants to certain shareholders for their unconditional promise to guarantee
repayment of the Company's revolving line of credit. The warrants were
exercisable beginning in July 1997 and expire beginning in July 2002 through
August 2003. The exercise price of the warrants is $0.50. The Series A warrant
holders were granted certain limited piggyback and Form S-3 registration rights
with respect to the shares issuable upon exercise of the warrants. At December
31, 2000, Series A warrants to purchase 2,830,360 shares were outstanding and
exercisable.

For nominal consideration, the Company has issued a warrant to the underwriter
of the initial public offering to purchase 115,445 shares of common stock at an
exercise price of $6.00 per share. The warrant was exercisable beginning April
1996 and expired in April 2000.

Common stock options

In December 1994, the Board of Directors adopted the Company's 1995 Stock
Compensation Plan (the "stock compensation plan"). The stock compensation plan
provides for the grant of incentive stock options, nonqualified stock options,
restricted stock, stock bonuses and stock appreciation rights. The stock
compensation plan is administered by the Board of Directors which has the
authority and discretion to determine: the persons to whom the options will be
granted; when the options will be granted; number of shares subject to each
option; the price at which the shares subject to each option may be purchased;
and when each option will become exercisable. Options under the stock
compensation plan expire on the second anniversary of the date the employee
ceased employment with the Company. On January 5, 1998 by Board action, the
exercise price for all current employee options was changed to $0.50. The
exercise price was subsequently reduced to $0.10 for options held by one
employee in recognition of his continued employment by the Company subsequent to
the sale of assets. At December 31, 2000, all options to purchase shares were
either exercised or expired.

Stock option activity under the 1995 stock compensation plan is summarized as
follows:

                                      Option price                    Available
                                        per share     Outstanding     for grant
                                     --------------  --------------  -----------

       Balance, December 31, 1998     $0.10 - 0.50        220,671       319,750
            Exercised                 $0.10 - 0.50        (69,564)           --
                                                     --------------  -----------
       Balance, December 31, 1999     $0.10 - 0.50        151,107       319,750
            Exercised                     $0.10            (9,546)           --
            Expired                       $0.50          (141,561)      141,561
                                                     --------------  -----------
       BALANCE, DECEMBER 31, 2000         $0.50                --       461,311
                                                     ==============  ===========

                                      -12-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

In March 1996, the Board of Directors adopted the Nonqualified Executive Stock
Option Plan (the "stock option plan"). The stock option plan provides for the
grant of nonqualified stock options to executive officers of the Company. The
Company has reserved 800,000 shares for issuance pursuant to the stock option
plan. Options may be granted at prices determined by the Board of Directors,
which may not be less than 85% of the fair market value of the shares subject to
the options as of the date of grant. Options vest at the rate of 20% on the
first anniversary date of the grant and 20% on each of the next four anniversary
dates of the grant. On January 5, 1998, by Board action, the exercise price for
all current, non-qualified stock options to executive officers was changed to
$0.50. Options expire on the second anniversary of the date the employee ceased
employment with the Company. Options to purchase 335,700 shares with an exercise
price of $0.50 expired during 2000. Options to purchase 10,000 shares with an
exercise price of $0.50 were exercised during 2000 and 152,086 shares with
exercise prices of $0,10 to $0.50 were exercised in 1999. As of December 31,
2000, 1999 and 1998 options to purchase 10,200, 355,900 and 507,986 shares were
outstanding, all of which were exercisable.

In March 1996, the Company granted a nonqualified stock option to an officer of
the Company to purchase 210,000 shares of common stock, all of which were
exercisable at the price of $0.50 per share. Options expire on the second
anniversary of the date the employee ceased employment with the Company. Options
to purchase 100,000 shares with an exercise price of $0.50 expired in 2000.
Options to purchase 110,000 shares at an exercise price of $0.50 per share were
exercised during 2000.

There was no compensation cost charged to income for the grant of stock options
for 2000 and 1999. Had compensation cost for all of the stock-based compensation
plans been determined based on the grant date fair values of awards (the method
described in SFAS No. 123), approximate reported net loss and loss per common
and common equivalent share would have been increased to the pro forma amounts
shown below:

                                                  2000            1999
                                              ------------    ------------
Net Income (loss):
             As reported                      $   (79,000)    $   (44,000)
             Pro forma                            (79,000)        (44,000)
Basic and diluted income (loss) per
   common share
             As reported                      $     (0.06)    $     (0.06)
             Pro forma                              (0.06)          (0.06)

The fair value of each grant is estimated at the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions for grants after December 31, 1994: dividend rate of 0%, price
volatility ranging from 77% to 79%, risk-free interest rates ranging from 5.74%
to 7.40%, and expected lives ranging from 5 to 10 years.

The effects of applying SFAS No. 123 are not indicative of future amounts since,
among other reasons, options vest over several years and additional awards
generally are made each year.


                                      -13-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 3. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted (loss)
per-share:

<TABLE>
<CAPTION>
                                                                                       Per-Share
                                                                                         Amount
                                                                                      ------------
                                                                                          Net
                                                      Numerator       Denominator        (loss)
                                                    ------------     ------------     ------------
                                                             YEAR ENDED DECEMBER 31, 2000
                                                    ----------------------------------------------
<S>                                                 <C>              <C>              <C>
Net (loss)                                          $    (79,169)
Dividends in arrears included in the calculation        (287,500)
                                                    ------------
Basic earnings per share, available to
   common stockholders                                  (366,669)       5,683,197    $      (0.06)
                                                                                     ============

Effect of dilutitive securities                               --               --
                                                    ------------     ------------
Diluted earnings per share, available to
   common stockholders plus assumed
   conversion of preferred shares                   $   (366,669)       5,683,197    $      (0.06)
                                                    ============     ============    ============

<CAPTION>
                                                              Year Ended December 31, 1999
                                                    ----------------------------------------------
<S>                                                 <C>              <C>              <C>
Net (loss)                                          $    (44,188)
Dividends in arrears included in the calculation        (287,500)
                                                    ------------
Basic earnings per share, available to
   common stockholders                                  (331,688)       5,567,436    $      (0.06)
                                                                                     ============
Effect of dilutitive securities:
   convertible preferred stock                                --               --
                                                    ------------     ------------
Diluted earnings per share, available to
   common stockholders plus assumed
   conversion of preferred shares                   $   (331,688)       5,567,436    $      (0.06)
                                                    ============     ============    ============
</TABLE>

NOTE 4. INCOME TAX MATTERS

Approximate deferred taxes consist of the following components as of December
31, 2000 and 1999:

<TABLE>
<CAPTION>
Deferred tax assets:                                                      2000          1999
                                                                      ------------  ------------
<S>                                                                   <C>           <C>
Net operating loss carryforwards                                      $  6,526,000  $  6,483,000
Research and development credit carryforwards                              391,000       391,000
Compensation expense on stock options                                           --       169,000
Amortization expense on unearned debt guarantee fees                       110,000       110,000
Other                                                                           --         5,000
                                                                      ------------  ------------
                                                                         7,027,000     7,158,000
Less valuation allowance                                                 7,027,000     7,158,000
                                                                      ------------  ------------
                                                                      $         --  $         --
                                                                      ============  ============
</TABLE>

The Company recorded a valuation allowance of $7,027,000 and $7,158,000, against
deferred tax assets at December 31, 2000 and 1999, respectively, to reduce the
total to an amount that management believes will ultimately be realized.
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. The net change in the
valuation allowance for deferred tax assets was an increase (decrease) of
($131,000) and $16,000 during 2000 and 1999, respectively.


                                      -14-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

The provision for income taxes differs from the approximate amount of income tax
benefit determined by applying the U.S. Federal income tax rate to pretax loss
for the years ended December 31, 2000 and 1999, due to the following:

<TABLE>
<CAPTION>
                                                        2000             1999
                                                    ------------     ------------
<S>                                                 <C>              <C>
Computed federal income tax (benefit)               $    (28,000)    $    (15,000)
Other, primarily computed state income tax
  benefit                                                 (2,000)          (1,000)
Effect of stock options exercised and expired            161,000               --
Accounting losses (income) for which deferred
  deferred federal and state income tax benefits
  benefits could not be recognized (reduced
  the valuation allowance)                              (131,000)          16,000
                                                    ------------     ------------
                                                    $         --     $         --
                                                    ============     ============
</TABLE>

At December 31, 2000, the Company has approximately $16,733,000 of net operating
loss carryforwards to offset future federal taxable income. This net operating
loss carryforward will, if unused, expire in the years 2006 through 2020.

NOTE 5. CONCENTRATION OF CREDIT RISK

The Company maintains cash in bank deposit accounts that, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.

NOTE 6. CONVERTIBLE PARTICIPATING PREFERRED STOCK AND VOTING RIGHTS

The Convertible Participating Preferred Stock must be converted into fully paid
and non-assessable shares of Common Stock by the Company upon the earlier of (i)
the closing of a Qualified Public Offering, or (ii) the affirmative vote of the
holders of a majority of the outstanding Convertible Participating Preferred
Stock for a mandatory conversion. A "Qualified Public Offering" is a public
offering of the shares of the Company in which (a) a minimum of $10 million is
raised in such offering by the Company, or (b) the per share purchase price is
at least $4.00 and (c) the offering is underwritten on a firm basis by a
recognized underwriter.

Each share of Convertible Participating Preferred Stock shall be convertible
into fully paid and nonassessable shares of Common Stock at a rate of two shares
of Common Stock for each share of Convertible Participating Preferred Stock,
subject to adjustment when Common Stock has been proportionately adjusted. The
initial "Conversion Price" shall be equal to $1.00 per share divided by the
Conversion Rate. Upon conversion, all accumulated and unpaid dividends to the
conversion date on the Convertible Participating Preferred Stock so converted
shall also be converted into fully paid and nonassessable shares of Common Stock
at the rate of $0.50 of accumulated and unpaid dividends for each share of
Common Stock.

The holders of the Convertible Participating Preferred Stock are entitled to an
annual $0.10 cumulative dividend per share payable in cash and shall become due
and payable when, as and if declared by the Board of Directors or the conversion
of the Convertible Preferred Stock. Accumulated undeclared dividends in arrears
were approximately $875,000 and $587,500 at December 31, 2000 and 1999,
respectively.

Convertible Participating Preferred Stock and Common Stock are entitled to one
vote per share.


                                      -15-
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 7. SALE OF ASSETS

On October 7, 1998, the Company completed the sale of substantially all of its
assets to, and the assumption of certain of its liabilities by, Minnesota Mining
and Manufacturing Company ("3M").

The purchase price of the Transaction was approximately $5.9 million, including
$4.75 million in cash (of which $750,000 was originally placed in escrow to
secure the Company's indemnification obligations under the Asset Purchase
Agreement), plus the assumption of substantially all of the Company's
liabilities other than $2.1 million in line of credit balances, which were paid
off from proceeds at closing. In July 1999, the Company received proceeds from
the restricted escrow totaling approximately $525,000. In December 2000, the
Company received final proceeds from the restricted escrow account totaling
$104,953. A like amount was also paid to 3M in final settlement and as an
adjustment to the purchase price.

The net proceeds from the sale will be retained by the Company pending a
determination of whether to engage in a follow-on transaction. The Company has
been seeking a business combination with another entity, before considering
possible liquidation and distribution of its assets. If no suitable business
combination is identified within a reasonable period of time, the Company may
elect to liquidate and distribute the remaining net proceeds to shareholders. If
the Company liquidated at the present time, all of the net assets of the Company
would be paid to holders of the Company's preferred stock.

NOTE 8. RELATED PARTY TRANSACTIONS

Administration expenses paid to Equity Dynamics, Inc., an entity wholly owned by
a Director of the Company, totaled $42,674 and $5,851 in 2000 and 1999,
respectively.


                                      -16-
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

                                    PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

The Company's Articles of Incorporation provide that the Board of Directors will
consist of no less than three and no more than seven members and that the Board
is divided into three classes, each class to be as nearly equal in number as
possible. Presently the Company has one Director -- John Pappajohn -- and six
vacancies. Following the closing of the Transaction, board members Mark J.
Emkjer, Carl S. Witonsky, R. David Spreng and Gordon M. Derzon resigned. Board
member Bill Childs resigned in November 2000. None of the resigning directors
has furnished the Company with any letter describing any disagreement with the
Company on any matter relating to the Company's operations, policies or
practices. The term of Director John Pappajohn expired in 1998. Mr. Pappajohn is
continuing his position until such time as the next annual meeting of
shareholders. The Company does not intend to incur the expense of convening such
a meeting because it will either complete a follow-on transaction or dissolve
and does not intend to engage in any further business activities.

DIRECTORS OF THE COMPANY

The following paragraphs set forth information concerning each of the current
Directors of the Company:

John Pappajohn, age 72, has been a Director of the Company since January 1994.
Since 1969, Mr. Pappajohn has been the sole owner of Pappajohn Capital
Resources, a venture capital fund, and President of Equity Dynamics, Inc., a
financial consulting firm, both located in Des Moines, Iowa. Mr. Pappajohn also
serves as a director of the following public companies: MC Informatics, Inc.;
Allion Healthcare, Inc.; and Patient Infosystems, Inc.

EXECUTIVE OFFICERS

All of the Company's executive officers other than Mark J. Emkjer, President and
Chief Executive Officer, and Roger D. Huseman, Chief Financial Officer, resigned
as employees of the Company following the closing of the Transaction in October
1998. Mr. Emkjer terminated his employment with the Company effective January 1,
1999. Mr. Huseman became a part-time employee of the Company, effective March 1,
1999 and terminated his employment with the company in August of 1999.

ORGANIZATION OF THE BOARD OF DIRECTORS

The Board of Directors has established an Audit Committee to advise the Board of
Directors on questions, policies and general matters of accounting, financing
and operating controls, to review the audit of the Company's financial
statements, and to select auditors subject to the approval of the full Board and
ratification by the shareholders. From January 1, 1998 through the dates of
resignation of Messrs. Spreng and Witonsky, the Audit Committee consisted of Mr.
Pappajohn, Mr. Spreng and Mr. Witonsky. Four Audit Committee meetings were held
during 2000.

The Board of Directors as a whole acts as a nominating committee for candidates
for the Board of Directors. Directors are selected without regard to race,
creed, color, sex or national origin, and must have demonstrated outstanding
business and civic accomplishments. The Board of Directors will consider all
candidates recommended by shareholders in accordance with the procedure to be
established in the Company's Bylaws which require recommendations to be
submitted in writing ninety days in advance of the annual meeting of
shareholders. Such recommendations should include the name and


                                      -17-
<PAGE>


address of the shareholder and the candidate pursuant to which the
recommendation is being made, such other information about the candidate
pursuant to which the recommendation is being made, such other information about
the candidate as required to be included in the Company's proxy statement and
the consent of the candidate to serve as a director if elected. Recommendations
should be sent to the Secretary, PACE Health Management Systems, Inc., 2116
Financial Center, Des Moines, Iowa 50309.

The Board of Directors of the Company held four meetings during 2000.

ITEM 10. EXECUTIVE COMPENSATION

DIRECTOR COMPENSATION

Directors receive no compensation for serving on the Board of Directors other
than reimbursement of reasonable expenses incurred in attending meetings.
Nonemployee directors who are not affiliated with principal shareholders and who
began service as directors prior to February 1995 received nonqualified warrants
to purchase Common Stock. All warrants issued to nonemployee directors prior to
February 1995 have expired and are no longer outstanding.

Subsequent to February 10, 1995, under the 1995 Stock Compensation Plan, new
non-employee directors receive a nondiscretionary grant of nonqualified stock
options for 21,820 shares upon their election or appointment to the Board. The
Plan provides for automatic grants of nonqualified stock options to new
non-employee directors at an exercise price equal to 100% of the fair market
value of the shares on the date of grant. One-fifth of such options vest over
each of five years from the date of election or appointment of the new
non-employee director. The non-employee director options are exercisable for ten
years from the date of grant. The Compensation Committee has no discretion
regarding the grant or terms of non-employee director options. During 2000, no
options were granted to any board members.

EXECUTIVE COMPENSATION

The Company did not employ a Chief Executive Officer during the year ended
December 31, 2000. In addition, there were no other persons who served as
executive officers of the Company during the year ended December 31, 2000 whose
total annual salary and bonus for the year exceeded $100,000.

STOCK OPTIONS/SARs/LTIPs

There were no stock options, stock appreciation rights or restricted stock units
granted during the year ended December 31, 2000. There were no payments made on
any long-term incentive plans during the year ended December 31, 2000.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SHARE OWNERSHIP

The following tables set forth, as of March 23, 2001, based on the information
available to the Company, the number and percentages of shares of the Common
Stock and Preferred Stock beneficially owned by each current director, by the
chief executive officer of the Company and all other executive officers whose
total cash compensation in the year ended December 31, 2000 exceeded $100,000,
by all directors and such executive officers as a group, and by each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock and Preferred Stock. The table
setting forth information with respect to holders of Common Stock includes (i)
shares of Common Stock issuable upon the exercise of options and warrants
exercisable within 60 days and (ii) ownership of Preferred Stock, which is
convertible into Common Stock on a 2 for 1 basis. The Company is aware of no
stockholder, other than those listed below, claiming to hold more than five
percent of any class of the Company's outstanding voting securities.


                                      -18-
<PAGE>


<TABLE>
<CAPTION>
NAME AND ADDRESS                                    NO. OF SHARES         PERCENT OF CLASS
OF BENEFICIAL OWNER(3)                         BENEFICIALLY OWNED(1)(7)    OUTSTANDING(8)
<S>                                                 <C>                      <C>
COMMON STOCK:

   DIRECTORS AND OFFICERS:
     John Pappajohn                                 5,706,648 (2)            54.6
     All present directors and named executive
       officers as a group (1 person)               5,706,648 (8)            54.6

   OTHER FIVE PERCENT OR MORE SHAREHOLDERS:
     Simon Casady (4)                                 302,465 (9)             5.3
     Edgewater Private Equity Fund, L.P. (5)        2,213,520(10)            29.9
     William Walters (6)                            2,689,199(11)            33.9

PREFERRED STOCK:

   DIRECTORS AND OFFICERS:
     John Pappajohn                                 1,500,000                52.2

   OTHER FIVE PERCENT OR MORE SHAREHOLDERS:
     William Walters                                  875,000                30.4
     Edgewater Private Equity Fund, L.P.              500,000                17.4
</TABLE>

------------
1)    Unless otherwise noted, each person has sole investment and voting power
      with respect to the shares indicated. Preferred stock is entitled to two
      votes per share and is convertible into common stock on a two for one
      basis.

2)    Includes 100,000 common stock shares held by Halkis, Ltd. and 109,917
      common shares held by the John & Mary Pappajohn Scholarship Foundation,
      both affiliates of Mr. Pappajohn, 765,301 common stock shares, 1,500,000
      preferred stock shares and presently exercisable warrants to purchase
      1,731,430 shares held by Mr. Pappajohn.

3)    Except as noted, the address of each director of the Company is 2116
      Financial Center, Des Moines, Iowa 50309.

4)    Address: 1238 Fulton, Indianola, Iowa 50125.

5)    Address: 900 N. Michigan Ave., 14th Floor, Chicago, IL 60611.

6)    Address: 650 Fifth Avenue, New York, NY 10019.

7)    Assumes exercise of options or warrants exercisable on or before December
      31, 2000 by the named person or group, but by no other person.

8)    Includes shares, options and warrants as described in the notes above.

9)    Includes 302,465 common shares.

10)   Includes 517,090 common stock shares, 500,000 preferred stock shares and
      presently exercisable warrants to purchase 696,430 shares.

11)   Includes 466,699 common stock shares, 875,000 preferred stock shares and
      presently exercisable warrants to purchase 472,500 shares.


                                      -19-
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 2000, the Company paid $2,500 on a monthly basis, plus direct expenses,
for a total of $42,674 to Equity Dynamics, Inc., an entity wholly owned by John
Pappajohn, a Director of the Company, in reimbursement of expenses related to
administration of the Company.

In August 1997, the Company's Board of Directors reduced the exercise price of
all outstanding stock options of the Company to $1.75 per share. In January
1998, the Board of Directors reduced the exercise price of all outstanding stock
options to $.50 per share. In adopting each resolution, the Board determined
that, prior to the amendment, the options no longer provided an incentive for
the holders of such options because the market price of the Company's stock had
declined to substantially below the then-effective exercise price of the
options. In each case, the Board also determined that the amended exercise price
was equal to the fair market value of the Company's common stock, within the
meaning of the stock option plans, as of the date of the amendment. These
amendments applied to options held by officers and directors of the Company, as
well as to options held by employees who were not officers or directors. Also,
in consideration for Roger Huseman's staying with the Company after the sale of
assets to 3M, the Company reduced the exercise price of all of his outstanding
options to $0.10 per share.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed as a part of this report.

<TABLE>
<S>     <C>         <C>
        3.          Articles of Incorporation and Bylaws
        3.1               Restated Articles of Incorporation, as amended (1)
        3.2               Restated Bylaws (1)
        4.          Instruments defining the rights of shareholders
        4.1               Form of Common Stock Certificate (2)
        4.9               Form of Class A Warrant Certificate (2)
        4.12              Form of Class B Warrant Certificate (2)
        4.13              Form of Agent's Warrant (2)
        4.14              Restated Articles of Incorporation, as amended (Incorporated by
                             reference to Exhibit 3.1)
        4.15              Restated Bylaws (Incorporated by reference to Exhibit 3.2)
        10.         Material Contracts
        10.1              Employment Agreement for Michael Vasquez, as amended December
                             16, 1994 (2)
        10.2              Employment Agreement for Simon Casady, as amended December 16,
                             1994 (2)
        10.3              1995 Stock Compensation Plan, effective February 10, 1995 (2)
        10.4              Form of Incentive Stock Option Agreement (2)
        10.5              Form of Non-Qualified Stock Option Agreement (2)
        10.6              Form of Non-Employee Director Non-Qualified Stock Option
                             Agreement (2)
        10.7              Incentive Stock Option Agreement for Michael J. Vasquez dated
                             December 16, 1994 (2)
        10.8              Form of Five-year Employee Warrants (2)
        10.9              Form of Three-year Employee Warrants (2)
        10.10             Compensatory Warrants issued to Director Carl S. Witonsky dated
                             April 22, 1994 and December 16, 1994 (2)
        10.11             Compensatory Warrants issued to Director Bill W. Childs dated
                             February 26, 1990 and December 16, 1994 (2)
        10.12             Form of Lockup Agreements with Executive Officers, Directors and
                             Shareholders (2)
        10.13             Consulting Services Agreement with Steven Evans dated December 31, 1993 (2)
        10.14             Consulting Services Agreement with Carl S. Witonsky dated January 1, 1995 (2)
</TABLE>


                                      -20-
<PAGE>


<TABLE>
<S>     <C>               <C>
        10.15             Software Purchase Agreement with JRS Clinical Technologies, Inc.
                             dated October 18, 1989 (2)
        10.16             COMMES Purchase Agreement between the Company and Creighton
                             University dated December 18, 1989 (2)
        10.17             Office Lease and Amendments thereto between the Company and
                             Ashworth Plaza Ltd. (2)
        10.18             Merit Client Agreement with Customer dated January 1, 1995 (2)
        10.19             Master Agreement with Customer dated September 30, 1994 (2)
        10.20             Nonqualified Executive Stock Option Plan adopted March 25, 1996 (3)
        10.21             Employment Agreement with Mark J. Emkjer dated February 15, 1996 (4)
        10.22             Amendment to Employment Agreement with Mark J. Emkjer dated October 17,
                              1997 (5)
        10.23             Form of Employee Retention Agreement (5)
        10.24             Asset Purchase Agreement dated June 30, 1998, as amended, with Minnesota
                              Mining and Manufacturing Company (6)
        11                Earnings Per Share Calculation (included herein)
</TABLE>


1)    Incorporated by reference to the Company's Form 8-K dated May 3, 1996.

2)    Incorporated by reference to the Company's Registration Statement on Form
      SB-2, Registration No. 33-90408-C, effective April 27, 1995.

3)    Incorporated by reference to the Company's Form 10-QSB for the quarter
      ended March 31, 1996.

4)    Incorporated by reference to the Company's Registration Statement on Form
      S-1, Registration No. 333-7487, effective August 9, 1996.

5)    Incorporated by reference to the Company's Form 10-KSB for the year ended
      December 31, 1997.

6)    Incorporated by reference from the Company's definitive Proxy Statement
      dated September 14, 1998.


(b) Reports on Form 8-K

    No reports on Form 8-K were filed during the year ended December 31, 2000.


                                      -21-
<PAGE>


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   PACE HEALTH MANAGEMENT SYSTEMS, INC.
                                   -----------------------------------
                                   (Registrant)

                                   By /s/ John Pappajohn
                                   ---------------------
                                   John Pappajohn, Director

                                   March 28, 2001
                                   --------------
                                   Dated

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

March 28, 2001                      By /s/ John Pappajohn
------------------                     ----------------------------------------
Dated                                  John Pappajohn, Director