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                                                                  Exhibit 10.10

 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HCAC
 
     HCAC was incorporated in March 1995 as a SPAC, the objective of which is to
acquire an operating business in the Healthcare Industry. See "Business of HCAC"
for information as to the characteristics of a SPAC.
 
     In May 1995, HCAC raised $200,000 in the Bridge Financing from six
investors in order to pay certain organizational expenses and the costs of the
Bridge Financing and of its IPO. Such investors were issued promissory notes in
the amount of $200,000, bearing interest at the rate of 10% per annum and
payable at the consummation of HCAC's IPO, and 400,000 Bridge Warrants. Other
than organizational activities and preparing for its IPO, HCAC had no business
activities in 1995.
 
     HCAC's IPO was consummated in March 1996, and raised net proceeds of
approximately $9,000,000, after payment of offering expenses. HCAC deposited
$8,383,500 of such proceeds in the Trust Fund. As of December 31, 1996,
approximately $8,732,000 was held in the Trust Fund.
 
     Substantially all of HCAC's working capital needs subsequent to the IPO
have been attributable to general and administrative expenses, including
director and officer liability insurance and legal and accounting fees primarily
due to SEC filing requirements, the identification, evaluation and selection of
a suitable Target Business and the structuring, negotiation and consummation of
the Merger. HCAC will satisfy all of such working capital needs and the payment
of federal and state income taxes with its existing cash balances and, to the
extent necessary, its working capital after consummation of the Merger. See "The
Merger" for information as to the Agreement and Plan of Merger, the parties
thereto and the transactions contemplated thereby. All income is from interest.
Except for its efforts to effect a Business Combination following its IPO, HCAC
has not engaged in any business activities.
 
     If HCAC does not consummate a Business Combination within 18 months from
the consummation of the IPO (September 8, 1997), or 24 months (March 8, 1998) if
certain criteria are met, HCAC will be dissolved and will distribute to all
Public Stockholders in proportion to their respective equity interests in HCAC,
an aggregate sum equal to the amount in the Trust Fund, inclusive of any
interest thereon, plus any remaining net assets of HCAC. A Public Stockholder
also is entitled to receive funds from the Trust Fund if such stockholder
exercises his Conversion Rights in connection with the Business Combination
against which the stockholder votes but which is consummated by HCAC. See "The
Merger -- Conversion Rights."
 
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                                BUSINESS OF HCAC
 
GENERAL
 
     HCAC was formed in March 1995 as a SPAC the objective of which is to
acquire an operating business in the Healthcare Industry. To date, HCAC's
efforts have been limited to organizational activities, completion of its IPO
and evaluation of possible Business Combinations.
 
     A SPAC is an entity incorporating the following selected investor
safeguards. Immediately after the consummation of a Business Combination, these
provisions (other than as described under "Escrow of Initial Stockholders'
Shares") will no longer be applicable.
 
     OFFERING PROCEEDS HELD IN TRUST.  The proceeds of HCAC's IPO consummated in
March 1996 after payment of underwriting discounts and the underwriter's
nonaccountable expense allowance, totalled approximately $9,000,000, after
payment of expenses. Approximately $8,383,500 of such proceeds was placed in the
Trust Fund and invested in United States government securities. The Trust Fund
will not be released until the earlier of the consummation of a Business
Combination or the liquidation of HCAC. The Trust Fund contained approximately
$8,732,000 as of December 31, 1996. If the Merger is consummated, the Trust Fund
will be released to HCAC, less amounts paid to HCAC stockholders exercising
Conversion Rights in the Merger. See "The Merger -- Conversion of Shares;
Exchange Ratio" and "The Merger -- Conversion Rights."
 
     STOCKHOLDER APPROVAL OF BUSINESS COMBINATION.  To approve and authorize the
Merger, HCAC's Certificate of Incorporation requires the affirmative vote of at
least a majority of the outstanding HCAC Common Shares and also requires that
Conversion Rights be exercised with respect to less than 20% of the Public
Shares. In addition, the Initial Stockholders have agreed to vote the Initial
Shares (approximately 17.9% of the HCAC Common Shares outstanding as of the date
of this Joint Proxy Statement/Prospectus) in accordance with the vote of the
holders in interest of a majority of the Public Shares on the proposal to
approve the Agreement and Plan of Merger. The Initial Stockholders may vote any
Public Shares they own in their discretion.
 
     CONVERSION RIGHTS.  HCAC's Certificate of Incorporation provides that each
Public Stockholder has the right to have his HCAC Common Shares converted to
cash if such stockholder votes against the Business Combination and follows
specified procedures, and the Agreement and Plan of Merger is approved and the
Merger consummated. See "The Merger -- Conversion Rights."
 
     ESCROW OF INITIAL STOCKHOLDERS' SHARES.  The Initial Shares owned by the
Initial Stockholders, representing approximately 17.9% of the outstanding HCAC
Common Shares as of the date of this Joint Proxy Statement/Prospectus, have been
placed in escrow with Continental Stock Transfer and Trust Company, as escrow
agent, until March 8, 1999. During such escrow period, the Initial Stockholders
may vote their HCAC Common Shares held in escrow but will not be able to sell or
otherwise transfer such shares, except for estate planning purposes to their
spouses and children (or to trusts established for their benefit).
 
     LIQUIDATION IF NO BUSINESS COMBINATION.  If HCAC does not consummate a
Business Combination within 18 months of the consummation of HCAC's IPO
(September 8, 1997), or 24 months from the consummation of the IPO if certain
extension criteria have been satisfied (March 8, 1998), HCAC will be dissolved
and will distribute to all Public Stockholders, in proportion to their
respective equity interests in HCAC, an aggregate sum equal to the amount in the
Trust Fund, inclusive of any interest thereon, plus any remaining net assets of
HCAC. The Initial Stockholders have waived their respective rights to
participate in any liquidation distribution with respect to the HCAC Common
Shares owned by them prior to HCAC's IPO, and, in addition, if HCAC liquidates
prior to consummation of a Business Combination, the Initial Stockholders have
agreed to contribute an aggregate of an additional $25,000 to HCAC.
 
COMPETITION
 
     If the Merger is consummated, HCAC will become subject to competition from
competitors of Encore. See "Business of Encore -- Competition."
 
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EMPLOYEES
 
     HCAC has no employees except three executive officers who receive no
compensation.
 
FACILITIES
 
     HCAC does not lease any permanent office space. However, it does pay an
administrative services fee to its legal counsel for the periodic use of office
space and secretarial and other basic office services. If the Merger is
consummated, HCAC will discontinue its use of such offices and its utilization
of such services and conduct its activities from the current offices of Encore.
See "Business of Encore -- Facilities".
 
LEGAL PROCEEDINGS
 
     There are no legal proceedings pending against HCAC.









 
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                               MANAGEMENT OF HCAC
 
DIRECTORS AND EXECUTIVE OFFICERS
 
     The following individuals are the current directors and executive officers
of HCAC.
 
<TABLE>
<CAPTION>
NAME                                         AGE                    POSITION
----                                         ---                    --------
<S>                                          <C>   <C>
Jay M. Haft................................  61    Chairman, Secretary and Director
John H. Abeles, M.D........................  52    President, Treasurer and Director
Joel S. Kanter.............................  40    Vice President and Director
Paul E. Freiman............................  62    Director
</TABLE>
 
     JAY M. HAFT has been Chairman of the Board and Secretary of HCAC since its
inception. Since November 1994, Mr. Haft has been interim Chief Executive
Officer of Noise Cancellation Technologies Inc. (a company engaged in the
development of noise cancellation technology and products that is traded on the
Nasdaq National Market). From January 1994 to February 1996, Mr. Haft was of
counsel to the law firm of Ruden, McClosky, Smith, Schuster & Russell, P.A. in
Fort Lauderdale, Florida. Since December 1993, Mr. Haft has been of counsel to
the law firm of Parker, Duryee, Rosoff & Haft in New York, New York. Mr. Haft
was a partner of Parker, Duryee, Rosoff & Haft from September 1989 through
December 1993 and a partner in the New York law firm of Rivkin, Radler, Dunne
and Bayh from 1988 to August 1989. Mr. Haft currently serves as a member of the
board of directors of Robotic Vision Systems, Inc., Noise Cancellation
Technologies Inc., DUSA Pharmaceuticals, Inc., PC Service Source, Inc., Extech
Inc., Viragen, Inc. and Oryx Technology Corporation. Mr. Haft earned both his
B.A. and J.D. degrees from Yale University.
 
     JOHN H. ABELES, M.D. has been President, Treasurer and a director of HCAC
since its inception. From 1971 to 1975, Dr. Abeles was an executive with several
major pharmaceutical companies in the United Kingdom and the United States,
including Sterling Drugs (UK), Pfizer Labs and USV Pharmaceuticals (a division
of Revlon Healthcare). From 1975 to 1980, he was an analyst in Kidder Peabody's
healthcare research department. Since 1980, Dr. Abeles has been President of
MedVest Inc., which has provided consulting services to, and has been active in
the founding and financing of, emerging companies, principally in the healthcare
industry. Dr. Abeles is currently a member of the board of directors of Oryx
Technology Corporation, DUSA Pharmaceuticals, Inc., AccuMed International, Inc.,
PharmaPrint Corporation and I-Flow Corporation. Dr. Abeles earned a M.B., Ch.B.
from the University of Birmingham (England).
 
     PAUL E. FREIMAN has been a director of HCAC since June 8, 1995. Prior to
joining HCAC as a director, he was a member of the Board of Advisors to HCAC
since its inception. From 1963 to February 1995, Mr. Freiman was employed with
Syntex Corporation, where he served as Chairman of the Board and CEO from
January 1991 through September 1994. In September 1994, Syntex was acquired by
Roche Holdings Inc., and thereafter he was Chairman of Syntex USA, a division of
Roche, from September 1994 through February 1995. Mr. Freiman is currently a
member of the Board of Directors of Penwest Corp. Mr. Freiman has been actively
involved as a member and former Chairman of the Pharmaceutical Manufacturers
Association. In addition, Mr. Freiman was recently elected as Chairman of the
University of California San Francisco Foundation. Mr. Freiman earned a B.S.
degree from Fordham University's Pharmacy College.
 
     JOEL S. KANTER has been a director of HCAC since its inception. In January
1997, Mr. Kanter was elevated to the role of Vice President of HCAC. Since
February 1995, Mr. Kanter has been President and a director of Walnut Financial
Services, Inc., a financial service and consulting firm listed on the Nasdaq
SmallCap Market, and Walnut Capital Corp., a venture capital firm listed on the
Nasdaq SmallCap Market that has provided financing and consulting services to
many companies in the healthcare industry. In 1996, Mr. Kanter was also named
chief executive officer of these companies. Mr. Kanter is also currently a
consultant to Universal Partners, L.P., which specializes in the provision of
bridge financing to small and medium sized corporations. From 1988 through
February 1995, Mr. Kanter was a consultant to Walnut Capital Corp. and from 1986
through the present, Mr. Kanter has served as the President of Windy City, Inc.,
and currently serves as a director of GranCare, Inc., I-Flow Corporation,
Vitalink Corp. and Osteoimplant Technologies, Inc. Mr. Kanter earned a B.A.
degree from Tulane University.
 
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<PAGE>   5
 
EXECUTIVE AND DIRECTOR COMPENSATION
 
     No officer, director or stockholder of HCAC received any compensation other
than reimbursement for any out-of-pocket business expenses incurred in
connection with activities on behalf of HCAC. None of HCAC's officers, directors
or stockholders or their respective affiliates have received any consulting or
finder's fees in connection with introducing HCAC to Encore, or evaluating
Encore or any other Target Business. The HCAC Board has no compensation policies
required to be disclosed as none of its executive officers receives any
compensation.







 
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<PAGE>   6
 
                               OTHER TRANSACTIONS
 
     In April 1995, HCAC issued 425,000 HCAC Common Shares for an aggregate
purchase price of $25,000 to the Initial Stockholders and a former director of
HCAC. In June 1995 such former director resigned, and in July 1995 he
transferred his shares to certain Initial Stockholders for approximately $0.06
per share. In January 1996, the Initial Stockholders contributed an aggregate of
100,000 HCAC Common Shares to HCAC, and in March 1996, HCAC effected a 1 2/13
for 1 stock split, so that the Initial Stockholders' ownership of HCAC would
equal 375,000 HCAC Common Shares. The Initial Stockholders have agreed that, if
HCAC liquidates prior to consummating a Business Combination, they will
contribute an aggregate of an additional $25,000 to HCAC.
 
     In May 1995, HCAC consummated its Bridge Financing in order to pay certain
organizational expenses, the costs of the Bridge Financing and certain costs of
the IPO. Six "Bridge Investors" loaned an aggregate of $200,000 to HCAC and were
issued "Bridge Notes" in that amount, each note bearing interest at the rate of
10% per annum and payable at the consummation of the IPO, and 400,000 Bridge
Warrants. None of the Bridge Investors is affiliated with HCAC or any of HCAC's
Initial Stockholders. One of the six Bridge Investors is a minority stockholder
of GKN Holding Corp., the sole stockholder of GKN Securities Corp., and a
minority stockholder of Gaines, Berland Inc., the underwriters in the IPO. The
Bridge Warrants are identical to the HCAC $5.00 Warrants except they are not
redeemable by HCAC until 90 days after consummation of a Business Combination.
The Bridge Investors have agreed not to transfer the Bridge Warrants until after
the consummation of a Business Combination and not to exercise them until 90
days after such consummation. The resale of the Bridge Warrants and the issuance
of the HCAC Common Shares underlying the Bridge Warrants were registered under
the Registration Statement filed with respect to the IPO, and the Bridge Notes
issued in the Bridge Financing were paid in full from the proceeds of the IPO.
 
     HCAC has engaged GKN Securities Corp. ("GKN") on a non-exclusive basis, as
its agent for the solicitation of the exercise of the HCAC $5.00 Warrants. To
the extent not inconsistent with the guidelines of the NASD and the rules and
regulations of the Commission, HCAC has agreed to pay GKN for bona fide services
rendered a commission equal to 5% of the exercise price for each HCAC $5.00
Warrant exercised more than one year after the date of the Prospectus relating
to HCAC's IPO if the exercise was solicited by GKN. In addition to soliciting,
either orally or in writing, the exercise of the HCAC $5.00 Warrants, such
services may also include disseminating information, either orally or in
writing, to warrantholders about the HCAC or the market for HCAC's securities,
and assisting in the processing of the exercise of HCAC $5.00 Warrants. No
compensation will be paid to GKN in connection with the exercise of the HCAC
$5.00 Warrants if the market price of the underlying HCAC Common Shares is lower
than the exercise price, the holder of the HCAC $5.00 Warrants has not confirmed
in writing that GKN solicited such exercise, the HCAC $5.00 Warrants are held in
a discretionary account, the HCAC $5.00 Warrants are exercised in an unsolicited
transaction or the arrangement to pay the commission is not disclosed in the
prospectus provided to warrantholders at the time of exercise. In addition,
unless granted an exemption by the Commission from Rule 10b-6 under the Exchange
Act, while it is soliciting exercise of the HCAC $5.00 Warrants, GKN will be
prohibited from engaging in any market making activities or solicited brokerage
activities with regard to HCAC's securities unless GKN has waived its right to
receive a fee for the exercise of the HCAC $5.00 Warrants.
 
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