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:
          March 31, 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                        May 13, 2002
                     -----                        ------------
             Common Stock, no par                   5,716,074

Transitional Small Business Disclosure Format (Check one): YES _____ NO __X__.


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<PAGE>


                      PACE HEALTH MANAGEMENT SYSTEMS, INC.

                          PART I. FINANCIAL INFORMATION


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

Condensed Balance Sheets
   March 31, 2002 and December 31, 2001                                      3

Condensed Statements of Operations
   Three Months Ended March 31, 2002 and 2001                                4

Condensed Statements of Cash Flows
   Three Months Ended March 31, 2002 and 2001                                5

Notes to Condensed Financial Statements                                      6

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


                           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                                     8


                                       2
<PAGE>


                          PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                     MARCH 31, 2002      DEC. 31, 2001
                                                                     --------------     --------------
<S>                                                                  <C>                <C>
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                       $    2,036,572     $    2,043,827
     Accounts receivable                                                         20                 20
     Prepaid insurance                                                        2,042              8,166
                                                                     --------------     --------------
                                                                     $    2,038,634     $    2,052,013
                                                                     ==============     ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                $        1,703     $        4,536
                                                                     --------------     --------------
         TOTAL CURRENT LIABILITIES                                            1,703              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                                                (18,576,691)       (18,566,145)
                                                                     --------------     --------------
                                                                          2,036,931          2,047,477
                                                                     --------------     --------------
                                                                     $    2,038,634     $    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
                                                                  MARCH 31,
                                                        -----------------------------
                                                            2002              2001
                                                        ------------     ------------
<S>                                                     <C>              <C>
NET REVENUES                                            $         --     $         --
                                                        ------------     ------------
COSTS AND EXPENSES
     General and administrative                               19,532           15,497
                                                        ------------     ------------
                                                              19,532           15,497
                                                        ------------     ------------
         (LOSS) FROM OPERATIONS                              (19,532)         (15,497)

INTEREST INCOME                                                8,986           25,969
                                                        ------------     ------------
         INCOME (LOSS) BEFORE INCOME TAXES                   (10,546)          10,472

PROVISION FOR INCOME TAXES                                        --               --
                                                        ------------     ------------
         NET INCOME (LOSS)                              $    (10,546)    $     10,472
                                                        ------------     ------------
PREFERRED DIVIDENDS IN ARREARS                               (71,875)         (71,875)
                                                        ------------     ------------
         NET (LOSS) AVAILABLE TO COMMON SHAREHOLDERS         (82,421)         (61,403)
                                                        ============     ============
(LOSS) PER SHARE
     Basic                                              $      (0.01)    $      (0.01)
                                                        ============     ============
     Fully diluted                                      $      (0.01)    $      (0.01)
                                                        ============     ============
WEIGHTED AVERAGE NUMBER OF COMMON
     AND COMMON EQUIVALENT SHARES
     OUTSTANDING                                           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>
                                                                         THREE MONTHS ENDED
                                                                             MARCH 31,
                                                                   -----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                   2002             2001
                                                                   ------------     ------------
<S>                                                                <C>              <C>
Net Income (Loss)                                                  $    (10,546)    $     10,472
Change in assets and liabilities:
     Decrease in accounts receivable                                         --              300
     Decrease in prepaid insurance and other current assets               6,124            6,124
     (Decrease) in accounts payable                                      (2,833)
                                                                   ------------     ------------
         NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES             (7,255)          16,896
                                                                   ------------     ------------


         NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            (7,255)          16,896

CASH AND CASH EQUIVALENTS
Beginning                                                             2,043,827        2,080,801
                                                                   ------------     ------------
Ending                                                             $  2,036,572     $  2,097,697
                                                                   ============     ============
</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 three 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 March 31, 2002,
there are approximately 2,900,000 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 $10,511 and $7,500 for the three months ended
March 31, 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 March 31, 2002 balance sheet reflects cash in excess of $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 $19,532 and $15,497 for the three months ended March 31, 2002 and
2001, respectively, representing an increase of 26.0%, due mainly to an increase
in general administrative costs.


                                       7
<PAGE>


INTEREST INCOME: Interest income was $8,986 and $25,969 for the three months
ended March 31, 2002 and 2001, respectively, representing a decrease of 65.4%,
due mainly to 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 three months ended March 31, 2002
was $7,255. Net cash provided by operating activities for the three months ended
March 31, 2001 was $16,896. Following the Transaction, the Company has no
ongoing operations and no revenues and has minimal operating expenses. The
Company's March 31, 2002 balance sheet reflects cash of over $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.

                           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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
     (a) Exhibits
              N/A
     (b) Reports on Form 8-K
              No reports on Form 8-K were filed during the quarter for which
              this report is filed.


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<PAGE>



                                   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)

    May 13, 2002                                /s/ John Pappajohn
--------------------                    ---------------------------------
       Dated                                 John Pappajohn, Director


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