U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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


     For the quarter ended:                         Commission File Number:
       September 30, 2002                                  0-27554
-------------------------------             ------------------------------------

                      PACE Health Management Systems, Inc.
                      ------------------------------------
        (Exact 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
                                   666 Walnut
                              Des Moines, IA 50309
       -------------------------------------------------------------------
              (Address and zip code of principal executive offices)


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

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 preceding 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 ___

State 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                                     November 12, 2002
           -----                                     -----------------
    Common Stock, no par                                 5,716,074

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


                                       1
<PAGE>


                      PACE HEALTH MANAGEMENT SYSTEMS, INC.


                          PART I. FINANCIAL INFORMATION
                          -----------------------------

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)                                    Page
                                                                            ----

Condensed Balance Sheets
     September 30, 2002 and December 31, 2001                                 3

Condensed Statements of Operations
     Three Months and Nine Months Ended September 30, 2002 and 2001           4

Condensed Statements of Cash Flows
     Nine Months Ended September 30, 2002 and 2001                            5

Notes to Condensed Financial Statements                                       6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
     PLAN OF OPERATION                                                        7

ITEM 3.  DISCLOSURE CONTROLS AND PROCEDURES                                   8


                           PART II. OTHER INFORMATION
                           --------------------------

ITEM 1.  LEGAL PROCEEDINGS                                                    8

ITEM 2.  CHANGES IN SECURITIES                                                8

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                      8

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                  8

ITEM 5.  OTHER INFORMATION                                                    8

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                     9


                                       2
<PAGE>


                          PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PACE HEALTH MANAGEMENT SYSTEMS, INC.
CONDENSED BALANCE SHEETS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,       DECEMBER 31,
                                                                           2002               2001
                                                                       ------------       ------------
<S>                                                                    <C>                <C>
  ASSETS
  CURRENT ASSETS:
     Cash and cash equivalents                                         $    993,210       $  2,043,827
     Certificate of deposit                                               1,000,000                 --
     Accounts receivable                                                         20                 20
     Interest receivable                                                      1,911                 --
     Prepaid insurance                                                       15,138              8,166
                                                                       ------------       ------------
                                                                       $  2,010,279       $  2,052,013
                                                                       ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                  $      2,728       $      4,536
                                                                       ------------       ------------
         TOTAL CURRENT LIABILITIES                                            2,728              4,536
                                                                       ------------       ------------

SHAREHOLDERS' EQUITY:
     Serial preferred stock, no par value, authorized 1,000,000
         shares; issued none                                                     --                 --
     Convertible participating preferred stock, Series A, no par
         value; issued and outstanding 2,875,000 shares                   2,875,000          2,875,000
     Common stock, no par value, issued and outstanding 5,716,074
         shares                                                          17,065,136         17,065,136
     Additional paid-in capital                                             673,486            673,486
     Accumulated deficit                                                (18,606,071)       (18,566,145)
                                                                       ------------       ------------
                                                                          2,007,551          2,047,477
                                                                       ------------       ------------
                                                                       $  2,010,279       $  2,052,013
                                                                       ============       ============
</TABLE>

See Notes to Condensed Financial Statements


                                       3
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED               NINE MONTHS ENDED
                                                                SEPTEMBER 30,                   SEPTEMBER 30,
                                                        ---------------------------     ---------------------------
                                                            2002            2001            2002            2001
                                                        -----------     -----------     -----------     -----------
<S>                                                     <C>             <C>             <C>             <C>
NET REVENUES                                            $        --     $        --     $        --     $        --
                                                        -----------     -----------     -----------     -----------
COSTS AND EXPENSES
     General and administrative                              19,110          45,744          67,222          93,764
                                                        -----------     -----------     -----------     -----------
                                                             19,110          45,744          67,222          93,764
                                                        -----------     -----------     -----------     -----------

         (LOSS) FROM OPERATIONS                             (19,110)        (45,744)        (67,222)        (93,764)

INTEREST INCOME                                               9,620          16,949          27,296          64,007
                                                        -----------     -----------     -----------     -----------

         (LOSS) BEFORE INCOME TAXES                          (9,490)        (28,795)        (39,926)        (29,757)

PROVISION FOR INCOME TAXES                                       --              --              --              --
                                                        -----------     -----------     -----------     -----------
         NET (LOSS)                                     $    (9,490)    $   (28,795)    $   (39,926)    $   (29,757)
PREFERRED DIVIDENDS IN ARREARS                              (71,875)        (71,875)       (215,625)       (215,625)
                                                        -----------     -----------     -----------     -----------
         NET (LOSS) AVAILABLE TO COMMON SHAREHOLDERS    $   (81,365)    $  (100,670)    $  (255,551)    $  (245,382)
                                                        ===========     ===========     ===========     ===========

     (LOSS) PER SHARE
Basic                                                   $     (0.01)    $     (0.02)    $     (0.04)    $     (0.04)
                                                        ===========     ===========     ===========     ===========
Fully diluted                                           $     (0.01)    $     (0.02)    $     (0.04)    $     (0.04)
                                                        ===========     ===========     ===========     ===========

WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING                             5,716,074       5,716,074       5,716,074       5,716,074
                                                        ===========     ===========     ===========     ===========
</TABLE>


See Notes to Condensed Financial Statements


                                       4
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED
                                                                        SEPTEMBER 30,
                                                                 ---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                2002            2001
                                                                 -----------     -----------
<S>                                                              <C>             <C>
Net (Loss)                                                       $   (39,926)    $   (29,757)
Change in working capital components:
     Decrease in accounts receivable                                      --             300
     (Increase) in prepaid insurance and other current assets         (8,883)         (6,126)
     Increase (decrease) in accounts payable                          (1,808)         15,688
                                                                 -----------     -----------
         NET CASH (USED IN) OPERATING ACTIVITIES                     (50,617)        (19,895)
                                                                 -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of certificate of deposit                           (1,000,000)             --
                                                                 -----------     -----------

           NET (DECREASE) IN CASH AND CASH EQUIVALENTS            (1,050,617)        (19,895)

CASH AND CASH EQUIVALENTS
Beginning                                                          2,043,827       2,080,801
                                                                 -----------     -----------
Ending                                                           $   993,210     $ 2,060,906
                                                                 ===========     ===========
</TABLE>


See Notes to Condensed Financial Statements


                                       5
<PAGE>


PACE HEALTH MANAGEMENT SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


NOTE 1. BASIS OF PRESENTATION

The accompanying financial information should be read in conjunction with the
annual financial statements and notes thereto for the year ended December 31,
2001. The financial information included herein is unaudited; such information
reflects all adjustments, which, in the opinion of management, are necessary in
order to make the financial statements not misleading.

The results of operations for the nine months are not necessarily indicative of
the results to be expected for the entire fiscal year.


NOTE 2. 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 income (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). The effect of stock
options, warrants, and convertible preferred stock was not included in the
computation because to do so would have been antidilutive. At September 30,
2002, there are approximately 2,550,000 shares issuable under warrant or option
arrangements and 5,750,000 shares issuable under conversion of Series A
convertible participating preferred stock.


NOTE 3.   RELATED PARTY TRANSACTIONS

Administration expenses paid to Equity Dynamics, Inc., an entity wholly owned by
a Director of the Company, totaled $8,000 and $9,550 for the three months ended
September 30, 2002 and 2001, respectively, and totaled $27,531 and $28,050 for
the nine months ended September 30, 2002 and 2001, respectively.


                                       6
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


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. 3M offered positions to most of the Company's employees and
assumed full support of the Company's customers. 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 September 30, 2002 balance sheet reflects cash, cash equivalents, and
a certificate of deposit of approximately $2 million and no material
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-QSB, 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.


RESULTS OF OPERATIONS

GENERAL AND ADMINISTRATIVE: General and administrative expenses include
bookkeeping costs, legal fees, expenses associated with shareholder relations
and SEC reporting requirements, and insurance. General and administrative
expenses were $19,110 and $45,744 for the three months ended September 30, 2002
and 2001,


                                       7
<PAGE>


respectively, representing a decrease of 58.2%. General and administrative
expenses were $67,222 and $93,764 for the nine months ended September 30, 2002
and 2001, respectively, representing a decrease of 28.3%. These decreases are a
result of a decrease in the legal fees from the prior year.


INTEREST INCOME: Interest income was $9,620 and $16,949 for the three months
ended September 30, 2002 and 2001, respectively, representing a decrease of
43.3%. Interest income was $27,296 and $64,007 for the nine months ended
September 30, 2002 and 2001, respectively, representing a decrease of 57.4%.
These decreases are a result of a decrease in the interest rates from the prior
year.


PROVISION FOR INCOME TAXES: No provision for income tax benefit has been
recorded due to the Company recording a valuation allowance on the deferred tax
assets.


LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities for the nine months ended September 30,
2002 and September 30, 2001 was $50,617 and $19,895, respectively. Following the
Transaction, the Company has no ongoing operations and no revenues and has
minimal operating expenses. The Company's September 30, 2002 balance sheet
reflects cash, cash equivalents, and a certificate of deposit of approximately
$2 million and no material 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. As of the date of this Form
10-QSB, 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.


ITEM 3. DISCLOSURE CONTROLS AND PROCEDURES

Based on his evaluation conducted within 90 days of this report on Form 10-QSB,
our director and acting chief executive and financial officer has concluded that
our disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) promulgated under Securities Exchange Act of 1934, as amended) are
effective and designed to alert him to material information relating to PACE.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls subsequent to the date of
our most recent evaluation.


                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS
     N/A


ITEM 2.  CHANGES IN SECURITIES
     N/A


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
     N/A


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


ITEM 5.  OTHER INFORMATION.
     N/A


                                       8
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  99.1 Certification by Director and Acting Chief Executive
                           Officer

                  99.2 Certification by Director and Acting Chief Financial
                           Officer

         (b)      Reports on Form 8-K
                  No reports on Form 8-K were filed during the quarter for which
         this report is filed.






                                   SIGNATURES

In accordance with requirements 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)

November 12, 2002                                        /s/ John Pappajohn
-----------------                                   ----------------------------
     Dated                                            John Pappajohn, Director


                                       9
<PAGE>


                   CERTIFICATION PURSUANT TO 18 U.S.C.ss.1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, John Pappajohn, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of PACE Health
          Management Systems, Inc.;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and


                                       10
<PAGE>


          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls;

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.


                                                         /s/ John Pappajohn
                                                       -------------------------
                                                         John Pappajohn
                                                         Director and Acting CEO
                                                         November 12, 2002



                   CERTIFICATION PURSUANT TO 18 U.S.C.ss.1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, John Pappajohn, certify that:

     1.   I have reviewed this quarterly report on Form 10-QSB of PACE Health
          Management Systems, Inc.;

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and


                                       11
<PAGE>


          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls;

     6.   The registrant's other certifying officers and I have indicated in
          this quarterly report whether there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.


                                                         /s/ John Pappajohn
                                                       -------------------------
                                                         John Pappajohn
                                                         Director and Acting CFO
                                                         November 12, 2002


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