****UNITED STATES****
****SECURITIES AND EXCHANGE COMMISSION****
****Washington, DC 20549****
****FORM 10-KSB****
****[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****
**For the fiscal year ended February 28, 2003**
****[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****
**For the transition period from       to      **
****Commission File Number 0-9587****
****HEALTH OUTCOMES MANAGEMENT, INC.****
**(Name of Small Business Issuer in its Charter)**
****          Minnesota                                                  41-1546471****
**(State or Other Jurisdiction of Incorporation or Organization)              (IRS Employer Identification Number)**
****8311 Windbreak Trail N.St. Paul, Minnesota 55042****
**(Address of Principal Executive Offices, including Zip Code)**
****(612) 245-4773****
**(Registrant's Telephone Number, including Area Code)**
****Securities registered pursuant to Section 12(b) of the Act:**  None**
****Securities registered pursuant to Section 12(g) of the Act:**  Common Stock, $0.01 par value**

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     [X]  Yes     [  ]  No

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not 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]

The issuer's revenues for the fiscal year ended February 28, 2003 were $0.

The aggregate market value of the voting stock held by non-affiliates (persons other than officers, directors, or holders of more than 5% of the outstanding stock) of the registrant was approximately $79,121 based upon the closing price of the Common Stock as reported on the OTC:BB on May 28, 2003.

The number of shares outstanding of the registrant's Common Stock, $0.01 par value, on May 28, 2003 was 9,287,720.

****DOCUMENTS INCORPORATED BY REFERENCE****

No documents are incorporated by reference.

Transitional Small Business Disclosure Format (check one):  [  ] Yes   [X] No

----

****HEALTH OUTCOMES MANAGEMENT, INC.Form 10-KSB for the Year Ended February 28, 2003****
****TABLE OF CONTENTS****
|  |                    |  |                                                                                                                 |  |  |
|--|--------------------|--|-----------------------------------------------------------------------------------------------------------------|--|--|
||
||
||
|  | **PART I**         |  |                                                                                                                 |  |  |
||
||
||
|  | Item 1.            |  | Description of Business                                                                                         |  |  |
|  | Item 2.            |  | Description of Property                                                                                         |  |  |
|  | Item 3.            |  | Legal Proceedings                                                                                               |  |  |
|  | Item 4.            |  | Submission of Matters to a Vote of Security Holders                                                             |  |  |
||
||
||
|  | **PART II**        |  |                                                                                                                 |  |  |
||
||
||
|  | Item 5.            |  | Market for Common Equity and Related Stockholder Matters                                                        |  |  |
|  | Item 6.            |  | Management's Discussion and Analysis or Plan of Operation                                                       |  |  |
|  | Item 7.            |  | Financial Statements and Supplementary Data                                                                     |  |  |
|  | Item 8.            |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                            |  |  |
||
||
||
|  | **PART III**       |  |                                                                                                                 |  |  |
||
||
||
|  | Item 9.            |  | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act |  |  |
|  | Item 10.           |  | Executive Compensation                                                                                          |  |  |
|  | Item 11.           |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                  |  |  |
|  | Item 12.           |  | Certain Relationships and Related Transactions                                                                  |  |  |
|  | Item 13.           |  | Exhibits and Reports on Form 8-K                                                                                |  |  |
|  | Item 14.           |  | Controls and Procedures                                                                                         |  |  |
||
||
||
||
|  | **SIGNATURES**     |  |                                                                                                                 |  |  |
||
||
||
||
|  | **CERTIFICATIONS** |  |                                                                                                                 |  |  |

----

****PART I****

**ITEM 1 - BUSINESS**

**Introduction**Through October 31, 2001, Health Outcomes Management, Inc. (the "Company", "Health Outcomes",  or "HOMI") was engaged in licensing proprietary software services to long-term care facilities, home healthcare agencies, hospitals and retail pharmacies.Health Outcomes sold its assets to an unrelated party effective November 1, 2001 and has had no operations since that time.

**Operating Segments/Principal Products/Markets**The Company had 5 primary products until November 1, 2001.  These were: Long-Term Care Software, Home Healthcare Agency Software, Hospital Software, Pharmacy Practice Software and Continuing Support Services.  The software products were designed to help practitioners in the healthcare and pharmaceutical industries to care for patients and meet the reporting standards required by federal and state regulations.The Company currently has no operations, products or markets.

**Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts**The Company assigned its rights to its Pharmaceutical Care software during the year 2001 to an outside entity.  The Company received the right to royalties from future revenues generated by the sale of software licenses by this entity, at varying rates on gross revenues, through February 2007.  To date, the Company has received no royalties.

**Employees**The Company has had no employees since November 1, 2001, but currently has two independent contractors.

**ITEM 2 - PROPERTIES**The Company doesn't own or lease any facilities at this time.

**ITEM 3 - LEGAL PROCEEDINGS**As of May 28, 2003, the Company was not involved in any legal proceedings.

**ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**There were no matters submitted to a vote of security holders during the period ended February 28, 2003.

----

****PART II****

**ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**The Company's Common Stock trades on the OTC Bulletin Board Market (Over-The-Counter includes OTC and OTC:BB) under the symbol "HOMI".  The following table sets forth the quarterly high and low reported last sales prices for the Company's Common Stock over the past two years.

|  |                  |  | **Period**     |  | **High** |  | **Low** |  |
|--|------------------|--|----------------|--|----------|--|---------|--|
|  | **Fiscal 2003:** |  | First Quarter  |  | $0.015   |  | $0.013  |  |
|  |                  |  | Second Quarter |  | $0.015   |  | $0.013  |  |
|  |                  |  | Third Quarter  |  | $0.015   |  | $0.008  |  |
|  |                  |  | Fourth Quarter |  | $0.024   |  | $0.010  |  |
||
||
||
||
||
|  | **Fiscal 2002:** |  | First Quarter  |  | $0.030   |  | $0.010  |  |
|  |                  |  | Second Quarter |  | $0.024   |  | $0.012  |  |
|  |                  |  | Third Quarter  |  | $0.020   |  | $0.015  |  |
|  |                  |  | Fourth Quarter |  | $0.020   |  | $0.010  |  |

As of May 28, 2003, management believes that the number of share owner accounts of record was approximately 280, at which date the closing market price of the Company's common stock was $0.010 per share.To date, the Company has paid no dividends and does not intend to pay dividends in the foreseeable future.  Future dividend policy with respect to the common stock will depend on conditions existing at the time, including the Company's earnings (if any), capital needs, financial condition, general business conditions and other factors considered by the Board of Directors.

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

**General**The information appearing below relates to prior periods, the results of operations for which periods are not necessarily indicative of the results which may be expected for any subsequent periods.  Because of the sale of the Company's assets in November 2001, future periods will primarily reflect general and administrative expenses associated with the continuing administration of the Company.  No inferences as to future performance should be drawn.As it relates to future operations, the Company's intent is to acquire an interest in a business entity which desires the perceived advantages of a corporation which has a class of securities registered under the Exchange Act.  The Company will not restrict its search to any specific business, industry or geographical location and the Company may participate in a business venture of virtually any kind or nature.  The Company's management anticipates that it will be able to participate in only one potential business venture because of its nominal assets and limited financial resources.The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes.The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky.  Management believes, but has not conducted any research to confirm, that there are business entities seeking the perceived benefits of a reporting corporation.  Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, increasing the opportunity to use securities for acquisitions, providing liquidity for shareholders and other factors.

----

The Company has, and will continue to have, no capital with which to provide the owners of business entities with any cash or other assets.  However, the Company's management believes it will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a reporting company without incurring the cost and time required to conduct an initial public offering.The Company is currently subject to all reporting requirements included in the Securities and Exchange Act of 1934.  Included in these requirements is the duty of the Company to file audited financial statements as part of or within 60 days following the due date for filing its Form 8-K which is required to be filed with the Securities and Exchange Commission within 15 days following the completion of a business combination.  The Company intends to acquire or merge with a company for which audited financial statements are available or for which it believes audited financial statements can be obtained within the required period of time.  The Company may reserve the right in the documents for the business combination to void the transaction if the audited financial statements are not timely available or if the audited financial statements provided do not conform to the representations made by the target company.The Company will not restrict its search for any specific kind of business entities, but may acquire a venture, which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life.  It is impossible to predict when, or if, such a transaction will be consummated.

**Results of Operations**

**Comparison of Fiscal Year 2003 vs. Fiscal Year 2002**

The Company had no revenue in 2003.  Operational expenses were incurred in connection with the administration of the Company.

**Comparison of Fiscal Year 2002 vs. Fiscal Year 2001**

***Net Sales***Net sales for fiscal year 2002 decreased $505,928 to $363,055, or 58.2% when compared to net sales for fiscal year 2001.  This decrease is attributable to the Company's sale of its Pharmaceutical Care software product during fiscal year 2001.

***Cost of Goods Sold***The Company's cost of goods sold decreased from $586,201 to $115,223, a difference of $470,978 or 80.3%.  This decrease is a direct result of the reduced fixed and variable costs associated with the decrease of the net revenues for the Company's Pharmaceutical Care software product.  This product was sold in fiscal year 2001.

***Gross Profit***Gross profit for the fiscal year 2002 was 68.3% versus 32.5% for fiscal year 2001.  The increase in gross profit is a result of the substantial reduction in the cost of sales associated with the Company's Pharmaceutical Care software product which was sold in fiscal year 2001.

***Operating Expenses***Total operating expenses for fiscal year 2002 increased $70,526 or 44.6% when compared to fiscal year 2001. Selling and marketing costs decreased to $0, a decrease of 100%; general and administrative costs increased to $228,710, an increase of 168.0%; and research and development costs decreased to $0, a decrease of 100%.Selling and marketing costs decreased due to the Company reducing its efforts to market its products.General and administrative costs increased due to absorption of costs for all of its products, as well as expenses related to the efforts of completing the sale of the Company's operating assets.Research and development costs decreased due to the sale of the Company's Pharmaceutical Care product.  All prior research and development efforts were put into this product.

***Non-Operating Income***During fiscal 2002, the Company sold its operating assets to an outside party.  The amount received in consideration for this transaction was $265,000.

**Liquidity and Capital Resources**The Company had working capital of $17,759 compared to $75,793 for fiscal 2003 and 2002, respectively, a decrease of $58,034.  The decrease in working capital was substantially due to the Company not having any influx of cash, yet continuing to pay ongoing administrative expenses.The Company does not have commitments for any capital expenditures for the fiscal year 2004.The Company's cash flow position has deteriorated during the fiscal year.  The Company's efforts will be concentrated on finding a company to merge with or acquire.  However, no assurance can be given if or when such a transaction will occur.  The Company may not have enough cash to fund the search through the end of fiscal 2004.

----

**ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

****INDEX TO CONSOLIDATED FINANCIAL STATEMENTS****
|  |                                                                                                                                    |  |  |
|--|------------------------------------------------------------------------------------------------------------------------------------|--|--|
||
||
||
|  | Independent Auditors' Report on the Financial Statements                                                                           |  |  |
||
||
||
|  | Financial Statements                                                                                                               |  |  |
||
|  |   Consolidated Balance Sheets as of February 28, 2003 and 2002                                                           |  |  |
||
|  |   Consolidated Statements of Discontinued Operations for the fiscal years ended February 28, 2003, 2002 and 2001         |  |  |
||
|  |   Consolidated Statements of Cash Flows for the fiscal years ended February 28, 2003, 2002 and 2001                      |  |  |
||
|  |   Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended February 28, 2003, 2002 and 2001 |  |  |
||
|  |   Notes to the Consolidated Financial Statements                                                                         |  |  |
||
||
||

----

****INDEPENDENT AUDITOR'S REPORT****

The Board of Directors and Stockholders'Health Outcomes Management, Inc. and SubsidiariesMinneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Health Outcomes Management, Inc. and Subsidiaries as of February 28, 2003 and 2002, and the related consolidated statements of discontinued operations, changes in stockholders' equity, and cash flows for the three years in the period ended February 28, 2003.  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 auditing standards generally accepted in the United States of America.  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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Health Outcomes Management, Inc. and Subsidiaries as of February 28, 2003 and 2002, and the results of their operations and their cash flows for the three years in the period ended February 28, 2003, in conformity with accounting principles generally accepted in the United States of America.The accompanying financial statements have been prepared assuming that Health Outcomes Management, Inc. and Subsidiaries will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company's net working capital, and lack of sufficient revenues from operations raise substantial doubt about the entity's ability to continue as a going concern.  Management's plans in regard to these matters are described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.SCHWEITZER KARON & BREMER, LLCCertified Public AccountantsMinneapolis, MinnesotaMay 13, 2003

----

**HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESConsolidated Balance Sheets**

----

| **February 28,** |  | **2003** |  |  | **2002** |  |  |  |  |
|------------------|--|----------|--|--|----------|--|--|--|--|

----

| **ASSETS**                            |   |        |  |   |        |  |  |  |  |
|---------------------------------------|---|--------|--|---|--------|--|--|--|--|
| **Current Assets:**                   |   |        |  |   |        |  |  |  |  |
|   Cash and Cash Equivalents | $ | 26,365 |  | $ | 81,921 |  |  |  |  |
|   Prepaid Expenses          |   | 523    |  |   | 4,253  |  |  |  |  |
|   Other Current Assets      |   | 0      |  |   | 7,940  |  |  |  |  |

----

| **Total Current Assets** |  | 26,888 |  |  | 94,114 |  |  |  |  |
|--------------------------|--|--------|--|--|--------|--|--|--|--|

----

| **Property and Equipment, net** |  | 0 |  |  | 9,709 |  |  |  |  |
|---------------------------------|--|---|--|--|-------|--|--|--|--|

----

| **TOTAL ASSETS** | $ | 26,888 |  | $ | 103,823 |  |  |  |  |
|------------------|---|--------|--|---|---------|--|--|--|--|

----

| **LIABILITIES AND STOCKHOLDERS' EQUITY**                            |   |       |  |   |        |  |  |  |  |
|---------------------------------------------------------------------|---|-------|--|---|--------|--|--|--|--|
| **Current Liabilities:**                                            |   |       |  |   |        |  |  |  |  |
|   Accounts Payable                                        | $ | 9,129 |  | $ | 12,198 |  |  |  |  |
|   Current Installments of Obligations Under Capital Lease |   | 0     |  |   | 5,924  |  |  |  |  |
|   Other Current Liabilities                               |   | 0     |  |   | 199    |  |  |  |  |

----

| **Total Current Liabilities** |  | 9,129 |  |  | 18,321 |  |  |  |  |
|-------------------------------|--|-------|--|--|--------|--|--|--|--|

----

| **STOCKHOLDERS' EQUITY**                                                                                              |  |                        |   |  |                        |   |  |  |  |
|-----------------------------------------------------------------------------------------------------------------------|--|------------------------|---|--|------------------------|---|--|--|--|
|   Common Stock, par value $0.01 per share;  Authorized 15,000,000 shares; Issued 9,287,720 shares |  | 92,877                 |   |  | 92,877                 |   |  |  |  |
|   Additional Paid-In Capital                                                                                |  | 4,815,148              |   |  | 4,815,148              |   |  |  |  |
|   Retained Earnings                                                                                         |  | (  4,890,266 | ) |  | (  4,822,523 | ) |  |  |  |

----

| **Total Stockholders' Equity** |  | 17,759 |  |  | 85,502 |  |  |  |  |
|--------------------------------|--|--------|--|--|--------|--|--|--|--|

----

| **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | $ | 26,888 |  | $ | 103,823 |  |  |  |  |
|------------------------------------------------|---|--------|--|---|---------|--|--|--|--|

----

See Accompanying Notes to the Consolidated Financial Statements

----

**HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESConsolidated Statements of Discontinued Operations**

----

| **For the Years Ended February 28,** |  | **2003** |  |  | **2002** |  |  | **2001** |  |
|--------------------------------------|--|----------|--|--|----------|--|--|----------|--|

----

| Net Sales          | $ | 0 |  | $ | 363,055 |  | $ | 868,983 |  |
|--------------------|---|---|--|---|---------|--|---|---------|--|
| Cost of Goods Sold |   | 0 |  |   | 115,223 |  |   | 586,201 |  |

----

| Gross Profit |  | 0 |  |  | 247,832 |  |  | 282,782 |  |
|--------------|--|---|--|--|---------|--|--|---------|--|

----

| **Operating Expenses:**                |  |        |  |  |         |  |  |        |  |
|----------------------------------------|--|--------|--|--|---------|--|--|--------|--|
|   Selling and Marketing      |  | 0      |  |  | 0       |  |  | 1,635  |  |
|   General and Administrative |  | 66,996 |  |  | 228,710 |  |  | 85,328 |  |
|   Research and Development   |  | 0      |  |  | 0       |  |  | 71,221 |  |

----

| **Total Operating Expenses** |  | 66,996 |  |  | 228,710 |  |  | 158,184 |  |
|------------------------------|--|--------|--|--|---------|--|--|---------|--|

----

| **Operating Income (Loss)** |  | (  66,996 | ) |  | 19,122 |  |  | 124,598 |  |
|-----------------------------|--|---------------------|---|--|--------|--|--|---------|--|

----

| **Non-Operating Income (Expense):**                  |  |                  |   |  |                     |   |  |                     |   |
|------------------------------------------------------|--|------------------|---|--|---------------------|---|--|---------------------|---|
|   Interest Income                          |  | 0                |   |  | 433                 |   |  | 0                   |   |
|   Interest Expense                         |  | (  747 | ) |  | (  11,591 | ) |  | (  16,785 | ) |
|   Other Income (Expense)                   |  | 0                |   |  | 8,821               |   |  | 27,868              |   |
|   Gain (Loss) on Sale of Assets/Operations |  | 0                |   |  | 264,147             |   |  | 0                   |   |

----

| **Total Non-Operating Income (Expense)** |  | (  747 | ) |  | 261,810 |  |  | 11,083 |  |
|------------------------------------------|--|------------------|---|--|---------|--|--|--------|--|

----

| **Net Income (Loss)** | $ | (  67,743 | ) | $ | 280,932 |  | $ | 135,681 |  |
|-----------------------|---|---------------------|---|---|---------|--|---|---------|--|

----

| **Net Income (Loss) Per Share Data:**             |   |                   |   |   |           |  |   |            |  |
|---------------------------------------------------|---|-------------------|---|---|-----------|--|---|------------|--|
| ***Basic***                                       |   |                   |   |   |           |  |   |            |  |
|   Net Income (Loss) Per Share           | $ | (  0.01 | ) | $ | 0.03      |  | $ | 0.01       |  |
|   Shares Used in Per Share Calculations |   | 9,287,720         |   |   | 9,273,137 |  |   | 9,262,130  |  |
||
||
| ***Diluted***                                     |   |                   |   |   |           |  |   |            |  |
|   Net Income (Loss) Per Share           | $ | (  0.01 | ) | $ | 0.03      |  | $ | 0.01       |  |
|   Shares Used in Per Share Calculations |   | 9,287,720         |   |   | 9,273,137 |  |   | 10,022,130 |  |

----

See Accompanying Notes to the Consolidated Financial Statements

----

**HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESConsolidated Statements of Cash Flows**

----

| **For the Years Ended February 28,** |  | **2003** |  |  | **2002** |  |  | **2001** |  |
|--------------------------------------|--|----------|--|--|----------|--|--|----------|--|

----

| **CASH FLOWS FROM OPERATING ACTIVITIES:** |   |                     |   |   |         |  |   |         |  |
|-------------------------------------------|---|---------------------|---|---|---------|--|---|---------|--|
|   Net Income (Loss)             | $ | (  67,743 | ) | $ | 280,932 |  | $ | 135,681 |  |

----

| **Adjustments to Reconcile Net Income (Loss) to NetCash Provided By (Used In Operating Activities:** |  |                    |   |  |                      |   |  |                     |   |
|------------------------------------------------------------------------------------------------------|--|--------------------|---|--|----------------------|---|--|---------------------|---|
|   Depreciation and Amortization                                                            |  | 9,709              |   |  | 7,513                |   |  | 10,865              |   |
|   Provision for Losses on Trade Receivables                                                |  | 0                  |   |  | 1,933                |   |  | 13,155              |   |
|   Net Recoveries (Writeoffs) of Bad Debt(s)                                                |  | 0                  |   |  | (  154     | ) |  | (  16,964 | ) |
|   Loss (Gain) on Disposal of Inventory and Equipment                                       |  | 0                  |   |  | (  3,430   | ) |  | (  5,739  | ) |
|   Loss (Gain) on Disposal of Segment                                                       |  | 0                  |   |  | 0                    |   |  | (  22,478 | ) |
|   Non-Cash Compensation                                                                    |  | 0                  |   |  | 255                  |   |  | 0                   |   |
|   Net Monies Owed Relieved on Sale of Software                                             |  | 0                  |   |  | 0                    |   |  | (  27,868 | ) |
|   Loss (Gain) on Sale of Assets/Operations                                                 |  | 0                  |   |  | (  264,147 | ) |  | 0                   |   |
||
||
| **Changes in Operating Assets and Liabilities, Net of Acquisitions**                                 |  |                    |   |  |                      |   |  |                     |   |
|   (Increase) Decrease in Trade Receivables                                                 |  | 0                  |   |  | 24,379               |   |  | 20,910              |   |
|   (Increase) Decrease in Prepaid Expenses                                                  |  | 3,730              |   |  | 2,790                |   |  | 4,171               |   |
|   (Increase) Decrease in Other Current Assets                                              |  | 7,940              |   |  | (  7,940   | ) |  | 0                   |   |
|   Increase (Decrease) in Accounts Payable                                                  |  | (  3,069 | ) |  | (  59,341  | ) |  | (  87,962 | ) |
|   Increase (Decrease) in Deferred Revenue                                                  |  | 0                  |   |  | (  25,115  | ) |  | (  85,586 | ) |
|   Increase (Decrease) in Accrued Expenses                                                  |  | 0                  |   |  | (  49,535  | ) |  | 5,284               |   |
|   Increase (Decrease) in Other Current Liabilities                                         |  | (  199   | ) |  | (  7,479   | ) |  | 818                 |   |

----

| **Net Cash Used In Operating Activities** |  | (  49,632 | ) |  | (  99,339 | ) |  | (  55,713 | ) |
|-------------------------------------------|--|---------------------|---|--|---------------------|---|--|---------------------|---|

----

| **CASH FLOWS FROM INVESTING ACTIVITIES:**                               |  |   |  |  |         |  |  |       |  |
|-------------------------------------------------------------------------|--|---|--|--|---------|--|--|-------|--|
|   Net Proceeds from the Sale of Assets/Operations             |  | 0 |  |  | 265,671 |  |  | 0     |  |
|   Proceeds from the Sale of Equipment, Furniture and Fixtures |  | 0 |  |  | 3,430   |  |  | 5,739 |  |

----

| **Net Cash Provided by Investing Activities** |  | 0 |  |  | 269,101 |  |  | 5,739 |  |
|-----------------------------------------------|--|---|--|--|---------|--|--|-------|--|

----

| **CASH FLOWS FROM FINANCING ACTIVITIES:**                      |  |                    |   |  |                      |   |  |                     |   |
|----------------------------------------------------------------|--|--------------------|---|--|----------------------|---|--|---------------------|---|
|   Principal Payments under Capital Lease Obligations |  | (  5,924 | ) |  | (  5,377   | ) |  | (  7,902  | ) |
|   Principal Payments under Notes Payable             |  | 0                  |   |  | (  117,500 | ) |  | (  19,097 | ) |
|   Proceeds from Notes Payable                        |  | 0                  |   |  | 0                    |   |  | 65,000>             |   |

----

| **Net Cash Provided By (Used In) Financing Activities** |  | (  5,924 | ) |  | (  122,877 | ) |  | 38,001 |  |
|---------------------------------------------------------|--|--------------------|---|--|----------------------|---|--|--------|--|

----

| **Net Increase (Decrease) in Cash and Cash Equivalents** |  | (  55,556 | ) |  | 46,885 |  |  | (  11,973 | ) |
|----------------------------------------------------------|--|---------------------|---|--|--------|--|--|---------------------|---|
||
||
||
| **Cash and Cash Equivalents:**                           |  |                     |   |  |        |  |  |                     |   |
|   Beginning                                    |  | 81,921              |   |  | 35,036 |  |  | 47,009              |   |

----

|   Ending | $ | 26,365 |  | $ | 81,921 |  | $ | 35,036 |  |
|--------------------|---|--------|--|---|--------|--|---|--------|--|

----

| **SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:** |   |     |  |   |       |  |   |       |  |
|---------------------------------------------------------|---|-----|--|---|-------|--|---|-------|--|
| Cash Paid During the Year for Interest                  | $ | 747 |  | $ | 9,790 |  | $ | 9,269 |  |

----

See Accompanying Notes to the Consolidated Financial Statements

----

**HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESConsolidated Statements of Changes in Stockholders' Equity**

----

| **Balance - February 29, 2000** | 0 | $ | -- | 9,262,130 | $ | 92,622 | $ | 4,815,148 | $ | (  5,239,136 | ) | $ | (  331,366 | ) |
|---------------------------------|---|---|----|-----------|---|--------|---|-----------|---|------------------------|---|---|----------------------|---|
| Net Income (Loss)               | 0 |   | -- | 0         |   | --     |   | --        |   | 135,681                |   |   | 135,681              |   |

----

| **Balance - February 28, 2001**                                | 0 | $ | -- | 9,262,130 | $ | 92,622 | $ | 4,815,148 | $ | (  5,103,455 | ) | $ | (  195,685 | ) |
|----------------------------------------------------------------|---|---|----|-----------|---|--------|---|-----------|---|------------------------|---|---|----------------------|---|
| September 30, 2001                                             |
| Issuance of Common Stock BODShares (Convert Options to Shares) | 0 |   | -- | 25,590    |   | 255    |   | --        |   | --                     |   |   | 255                  |   |
| Net Income (Loss)                                              | 0 |   | -- | 0         |   | --     |   | --        |   | 280,932                |   |   | 280,932              |   |

----

| **Balance - February 28, 2002** | 0 | $ | -- | 9,287,720 | $ | 92,877 | $ | 4,815,148 | $ | (  4,822,523 | ) | $ | 85,502              |   |
|---------------------------------|---|---|----|-----------|---|--------|---|-----------|---|------------------------|---|---|---------------------|---|
| Net Income (Loss)               | 0 |   | -- | 0         |   | --     |   | --        |   | (  67,743    | ) |   | (  67,743 | ) |

----

| **Balance - February 28, 2003** | 0 | $ | -- | 9,287,720 | $ | 92,877 | $ | 4,815,148 | $ | (  4,890,266 | ) | $ | 17,759 |  |
|---------------------------------|---|---|----|-----------|---|--------|---|-----------|---|------------------------|---|---|--------|--|

----

See Accompanying Notes to the Consolidated Financial Statements

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 1.  Nature of Business and Significant Accounting PoliciesNature of Business:**Health Outcomes Management, Inc. (the "Company"), formerly known as Data Med Clinical Support Services, Inc., and its wholly owned subsidiaries, developed and supplied computer software systems and services to the healthcare industry.The Company marketed clinical and financial software systems and related services used for the management of long-term care facilities, homecare facilities, and hospital departments.  The various software systems were designed to meet the needs of the specific industry and required little or no production, modification or customization.The Company intends to acquire an interest in a business entity which desires the perceived advantages of a corporation which has a class of securities registered under the Exchange Act.  See Note 2 for additional information relating to the Company's continuation as a going concern.

**Significant Accounting Policies:****Principles of Consolidation**The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  All intercompany transactions and balances are eliminated in consolidation.  The wholly owned subsidiaries were inactive as of February 2002.**Fair Value of Financial Instruments**The Company's financial instruments consist of cash and cash equivalents, short-term trade receivables and payables for which current carrying amounts approximate fair market value.**Uses of Estimates**The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, 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 revenue and expenses during the reported period.  Actual results could differ from those estimates.**Income Taxes**Deferred tax assets and liabilities are recognized for the future tax consequence attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.**Property and Equipment**Property and equipment are recorded at cost.  Expenditures for renewals and betterments are capitalized.  Repairs and maintenance costs are charged to expense.  Additionally, where required by accounting principles generally accepted in the United States of America, all significant equipment leases are capitalized as installment purchases.  When items are disposed of, the cost and accumulated depreciation are eliminated from the accounts, and any gain or loss is reflected in the results of operations.

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 1.  Nature of Business and Significant Accounting Policies (continued)Significant Accounting Policies (continued):****Depreciation and Amortization**Depreciation of property and equipment is provided over the useful lives of the respective assets on a straight-line basis.  The useful lives, for financial reporting purposes, range from three to seven years.**Research and Development**Research and development costs were charged as incurred.**Comprehensive Income**The Company does not have any items of other comprehensive income in any of the periods presented.**Revenue Recognition**The Company generated several types of revenue, including the following:*Software Licenses:*The Company licensed software for which revenues were generally recognized when a non-cancelable license agreement was signed, the customer had completed necessary training, the software product was shipped, there were no uncertainties surrounding product acceptance, the fees were fixed and determinable and collection was considered probable.  For customer license agreements which met these recognition criteria, the portion of the fees related to software licenses was generally recognized in the current period, while the portion related to services (maintenance, support and consulting) was recognized over the period the services were to be performed.  For arrangements including multiple elements, revenues were allocated to the various elements based upon vendor-specific objective evidence (VSOE) of fair value.  VSOE of fair value was determined by the price charged when the same element was sold separately.  When the Company was acting as a reseller, the software license revenue was not recognized until the license was delivered and necessary training had been completed.*Training and Education Services:*  The Company provided training and education services to its customers in the use of its software products.  Classes were held either at the Company's training facilities or the customer's site.  Revenues from such services were recognized at completion of the training.  VSOE was determined by the price charged when the same element was sold separately.  VSOE was not essential to the functionality of any other element of the transaction, and the total price of the arrangement would have been expected to vary as the result of the inclusion or exclusion of these services.*Software Maintenance and Support:*The Company entered into agreements with its software customers to provide post-contract support (PCS) activities including industry consulting, software support and software maintenance.  These agreements varied in length from one month to three years.  The maintenance agreements included certain program updates, which principally resulted from various changes in regulations affecting the healthcare industry.  These updates were unspecified.  There was no implicit or explicit commitment or agreement to deliver any upgrades or enhancements at any time.  They were provided on a when-and-if available basis.  Support fees were considered PCS and were recognized ratably.  Maintenance was included in the pricing of support fees and therefore was also recognized ratably.*Deferred Revenue:*Revenues related to post-contract support agreements (generally product maintenance and consulting agreements) were deferred and recognized ratably over the period of the agreement.  The Company changed its support agreement practices to generally billing on a monthly basis in the prior fiscal year.  The Company deferred revenues received for software licenses that did not meet its revenue recognition criteria until such criteria were met.

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 1.  Nature of Business and Significant Accounting Policies (continued)Significant Accounting Policies (continued):****Net Income (Loss) Per Common Share**Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for that period.  Diluted net income (loss) per share is computed giving effect to all dilutive potential common shares that were outstanding during that period.  Dilutive potential shares consist of incremental common shares issuable upon exercise of stock options and warrants and conversion of preferred stock and convertible debt for all periods.**Capitalized Software**The Company capitalized software production costs after technological feasibility was established and prior to general release to clients.  Annual amortization of capitalized software was based on the greater of the amount computed using the straight-line method over the estimated 36-month economic product life or using the ratio that current gross revenues for the software product bears to the total of current and anticipated future gross revenues for that product.**Cash and Cash Equivalents**For purposes of the cash flow statements, the Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.  The Company maintains its cash in bank deposit accounts and has not experienced any losses in such accounts.  The Company believes it is not exposed to any significant credit risk on cash.**Stock Based Compensation**The Company accounted for its stock-based compensation awards to employees under Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its stock option plan.  Accordingly, no compensation expense had been recognized for its stock-based compensation plan.  The Company had adopted the disclosure requirements of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation."**Reclassifications**Certain amounts in the prior years consolidated financial statements have been reclassified for comparative purposes to conform with the presentation in the current year consolidated financial statements.  These reclassifications had no effect on net income or stockholders' equity.

**NOTE 2.  Continuation as a Going Concern**The accompanying financial statements are prepared assuming the Company will continue as a going concern.  The Company generated an operating loss of $66,996 during the year ended February 28, 2003.  The Company incurred a decrease in assets of $76,935 during the year ended February 28, 2003; net cash used in operating activities was $49,632.  As of February 28, 2003, the Company had current assets of $26,888 and working capital of $17,759.  The Company will not generate any revenues or receive any cash inflows unless management's attempts to acquire an interest in a business entity which seeks the perceived advantages of a corporation which has a class of securities registered under the Exchange Act are successful.  Accordingly, there is doubt about the Company's ability to continue in existence.  The financial statements do not include any adjustments that might result should the Company's be unable to continue as a going concern.

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 3.  Property and Equipment**Property and equipment, at cost, consisted of the following:

----

|  |  | **2003** |  | **2002** |  |  |  |
|--|--|----------|--|----------|--|--|--|

----

| Property acquired under capital leases |  | $   0 |  | $ 16,181 |  |  |  |
|----------------------------------------|--|----------------------|--|---------------|--|--|--|
| Furniture and equipment                |  | 0                    |  | 14,516        |  |  |  |

----

|                                                                                                                                                              |  | 0 |  | 30,697              |   |  |  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---|--|---------------------|---|--|--|
| Less accumulated amortization and depreciation, including accumulated amortization on equipment acquired under capital leases of $0 and $6,472, respectively |  | 0 |  | (  20,988 | ) |  |  |

----

| Net property and equipment |  | $   0 |  | $  9,709 |  |  |  |
|----------------------------|--|----------------------|--|--------------------|--|--|--|

----

**NOTE 4. Income Taxes**There was no income tax expense or benefit amounts recorded for 2003, 2002 or 2001.The provisions for income taxes from continuing operations for the years ended February 28, 2003, 2002 and 2001 differs from the statutory federal tax rate applied as follows:

----

|  |  | **2003** |  | **2002** |  | **2001** |  |
|--|--|----------|--|----------|--|----------|--|

----

| Federal tax calculated at the statutory rate |  | 34%  |  | 34%  |  | 34%  |  |
|----------------------------------------------|--|------|--|------|--|------|--|
| State taxes, net                             |  | 2%   |  | 2%   |  | 2%   |  |
| Change in valuation allowance                |  | -36% |  | -36% |  | -36% |  |

----

|  |  | 0% |  | 0% |  | 0% |  |
|--|--|----|--|----|--|----|--|

----

Deferred taxes consist of the following:

----

|  |  | **2003** |  | **2002** |  | **2001** |  |
|--|--|----------|--|----------|--|----------|--|

----

| Deferred tax assets:                           |  |                                  |  |                        |  |                    |  |
|------------------------------------------------|--|----------------------------------|--|------------------------|--|--------------------|--|
|   Capital leases                     |  | $     0 |  | $   800 |  | $  1,000 |  |
|   Book depreciation greater than tax |  | 0                                |  | 0                      |  | 2,900              |  |
| Trade receivables                              |  | 0                                |  | 0                      |  | 500                |  |
| Net operating loss carryforwards               |  | 1,080,000                        |  | 1,479,200              |  | 1,603,400          |  |
| Deferred revenue                               |  | 0                                |  | 0                      |  | 9,000              |  |

----

| Gross deferred tax assets |  | 1,080,000              |   | 1,480,000              |   | 1,616,800              |   |
|---------------------------|--|------------------------|---|------------------------|---|------------------------|---|
| Less valuation allowance  |  | (  1,080,000 | ) | (  1,480,000 | ) | (  1,616,800 | ) |

----

| Net deferred tax assets |  | $     0 |  | $     0 |  | $     0 |  |
|-------------------------|--|----------------------------------|--|----------------------------------|--|----------------------------------|--|

----

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 4.  Income Taxes (continued)**As of February 28, 2003, the Company had net operating loss carryforwards for tax reporting purposes of approximately $3,000,000, which expire beginning in 2003.

**NOTE 5.  Net Income (Loss) Per Share**The following table presents the computation of basic and diluted net income (loss) per share:

----

|  |  | **2003** |  | **2002** |  | **2001** |  |
|--|--|----------|--|----------|--|----------|--|

----

| Net income (loss) available to common stockholders for basic earnings per share | $ | (  67,743 | )      $ | 280,932 | $ | 135,681 |  |
|---------------------------------------------------------------------------------|---|---------------------|----------------------------------------|---------|---|---------|--|
| Plus interest on convertible debt                                               |   | --                  |                                        | 8,997   |   | 9,487   |  |

----

| Net income (loss) available to common stockholders for diluted earnings per share | $ | (  67,743 | )     $ | 289,929 | $ | 145,168 |  |
|-----------------------------------------------------------------------------------|---|---------------------|----------------------------------|---------|---|---------|--|

----

| Reconciliation of shares used in basic and diluted per share calculations:          |  |           |  |           |  |           |  |
|-------------------------------------------------------------------------------------|--|-----------|--|-----------|--|-----------|--|
| Denominator for basic income per share - weighted average common shares outstanding |  | 9,287,720 |  | 9,273,137 |  | 9,262,130 |  |
| Effect of dilutive securities:                                                      |  |           |  |           |  |           |  |
|   Stock options                                                           |  | --        |  | --        |  | --        |  |
|   Warrants                                                                |  | --        |  | --        |  | --        |  |
|   Convertible debt                                                        |  | --        |  | --        |  | 760,000   |  |

----

| Denominator for diluted net income (loss) per share adjusted by weighted average shares and assumed converstions |  | 9,287,720 |  | 9,273,137 |  | 10,022,130 |  |
|------------------------------------------------------------------------------------------------------------------|--|-----------|--|-----------|--|------------|--|

----

| Basic per share data:   |  |                    |   |       |  |       |  |
|-------------------------|--|--------------------|---|-------|--|-------|--|
| Net income (loss)       |  | $(  0.01 | ) | $0.03 |  | $0.01 |  |
| Diluted per share data: |  |                    |   |       |  |       |  |
| Net income (loss)       |  | $(  0.01 | ) | $0.03 |  | $0.01 |  |

----

**NOTE 6.  Stockholders' EquityPreferred Stock**The Company has authorized Series A, convertible preferred stock.  All preferred shares are non-voting, receive no dividends, and have liquidation preference over the Company's common stock.  All 1,000,000 preferred shares are unissued and are undesignated as of February 28, 2003.

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 6.  Stockholders' Equity (continued)Stock Option Plan**In February 1986, the Company adopted a stock option plan providing for the issuance of up to 1,200,000 shares of common stock to associates, members of the board of directors, and other non-employee agents of the Company.  The exercise price of the options must be at least 100% (110% for stockholders with 10% or more ownership) of the fair market value of the common stock as of the date of grant.  Generally, options are exercisable for a period of ten years (five years for stockholders with 10% or more ownership) commencing on the date of grant.During February 1996, the Company's 1986 stock option plan expired.  No additional stock options can be issued under this plan to associates, members of the board of directors, or other non-employee agents of the Company without stockholder approval of a new stock option plan.During 2002 and 2001, the Company granted non-qualified options to various employees, directors, and non-employee agents.  No options were granted in 2003.Information with respect to options for the Company's common shares is summarized as follows:

----

|  |  |  | **Incentive Options** | **Non-Qualified Options** |
|--|--|--|-----------------------|---------------------------|

----

|  |  | **         Price Per** | **Stock**   | **Wtd Avg**    | **Stock**   | **Wtd Avg**    |
|--|--|---------------------------------------------------------------------|-------------|----------------|-------------|----------------|
|  |  | **       Share Range**           | **Options** | **Exer Price** | **Options** | **Exer Price** |

----

| **Balance - February 29, 2000** | $ | 0.08 | $ | 0.97 | 133,815             | $ | 0.54 | 908,800              | $ | 0.15 |
|---------------------------------|---|------|---|------|---------------------|---|------|----------------------|---|------|
||
||
| Granted                         |   | 0.12 |   | 0.18 | --                  |   |      | 9,600                |   | 0.14 |
| Exercised                       |   |      |   |      | --                  |   |      | --                   |   |      |
| Cancelled                       |   | 0.10 |   | 0.97 | (  90,315 | ) | 0.51 | (  445,000 | ) | 0.14 |

----

| **Balance - February 28, 2001** |  | 0.08 |  | 0.97 | 43,500              |   | 0.51 | 473,500              |   | 0.16 |
|---------------------------------|--|------|--|------|---------------------|---|------|----------------------|---|------|
||
||
| Granted                         |  | 0.31 |  | 0.59 | --                  |   |      | 22,500               |   | 0.46 |
| Exercised                       |  |      |  |      | --                  |   |      | --                   |   |      |
| Cancelled                       |  | 0.10 |  | 0.97 | (  43,500 | ) | 0.51 | (  186,600 | ) | 0.20 |

----

| **Balance - February 28, 2002** |  | 0.08 |  | 0.97 | -- |  | -- | 309,300             |   | 0.16 |
|---------------------------------|--|------|--|------|----|--|----|---------------------|---|------|
||
||
| Granted                         |  |      |  |      | -- |  |    | --                  |   |      |
| Exercised                       |  |      |  |      | -- |  |    | --                  |   |      |
| Cancelled                       |  | 0.08 |  | 0.31 | -- |  |    | (  75,000 | ) | 0.17 |

----

| **Balance - February 28, 2003** | $ | 0.10 | $ | 0.31 | -- | $ | -- | 234,300 | $ | 0.16 |
|---------------------------------|---|------|---|------|----|---|----|---------|---|------|

----

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 6.  Stockholders' Equity (continued)Stock Option Plan (continued)**The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in fiscal 2003, 2002 and 2001:

----

|  |  | **2003** |  | **2002** |  | **2001** |  |
|--|--|----------|--|----------|--|----------|--|

----

| Risk-free interest rate  |  | N/A |  | 5.25%   |  | 6.32%   |  |
|--------------------------|--|-----|--|---------|--|---------|--|
| Expected life of options |  | N/A |  | 2 years |  | 5 years |  |
| Expected volatility      |  | N/A |  | 30%     |  | 158%    |  |
| Expected dividend yield  |  | N/A |  | 0%      |  | 0%      |  |

----

The Company applied APB No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plan.  Accordingly, no compensation expense has been recognized for its stock-based compensation plan.  Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's fiscal pro forma net income (loss) and pro forma net income (loss) per share would have been as follows:

----

|  |  | **2003** |  | **2002** |  | **2001** |  |
|--|--|----------|--|----------|--|----------|--|

----

| Pro forma net income (loss)  |  | $(  67,743 | ) | $277,332 |  | $124,981 |  |
|------------------------------|--|----------------------|---|----------|--|----------|--|
| Pro forma earnings per share |  | $(  0.01   | ) | $0.03    |  | $0.01    |  |

----

Pro forma amounts reflect only options granted in 1996 and after.  Therefore, the full impact of calculating compensation cost for stock options under SFAS No. 123 is not reflected in the pro forma net income (loss) amounts presented because compensation cost is reflected over the options' vesting period and compensation cost for options granted prior to March 1, 1995 is not considered.**Warrants**Occasionally, the Company granted warrants to officers, employees and non-employees in consideration for loans extended to the Company and for recognition of services performed.

----

|  |  |            |  | **Average Exercise**                        |  |
|--|--|------------|--|---------------------------------------------|--|
|  |  | **Shares** |  | **  Price Per Share  ** |  |

----

| Balance, February 29, 2000 |  | 165,000              |   | $0.39 |  |
|----------------------------|--|----------------------|---|-------|--|
| Expired                    |  | (  165,000 | ) | $0.39 |  |

----

| Balance, February 28, 2001 |  | --     |  | $     -- |  |
|----------------------------|--|--------|--|-----------------------------------|--|
| Granted                    |  | 30,000 |  | $0.31                             |  |

----

| Balance, February 28, 2002 |  | 30,000              |   | $0.31 |  |
|----------------------------|--|---------------------|---|-------|--|
| Expired                    |  | (  30,000 | ) | $0.31 |  |

----

| Balance, February 28, 2003 |  | -- |  | $     -- |  |
|----------------------------|--|----|--|-----------------------------------|--|

----

----

****HEALTH OUTCOMES MANAGEMENT, INC. AND SUBSIDIARIESNotes to the Consolidated Financial Statements****

**NOTE 7.  Supplemental Cash Flow Information**Supplemental schedule of non-cash investing and financing activities:In 2003, the Company (1) had no non-cash investing nor financing activities.In 2002, the Company (1) received $265,000, net of fees and expenses, in consideration for the sale of substantially all of its operating assets to an unrelated party effective November 1, 2001 (see Note 11); and (2) issued 25,590 shares of common stock to the Board of Directors in lieu of compensation for services rendered for fiscal years ended February 28, 1998 through February 28, 2002.In 2001, the Company (1) acquired equipment under a capital lease obligation in the amount of $16,181; (2) wrote-off $22,478 in settlement of amounts owed to a vendor; and (3) received $27,868 in consideration for the sale of Pharmaceutical Care software (see Note 10).

**NOTE 8.  Employment Agreement(s)**On February 1, 1991, the Company entered into employment agreements with its then President and Vice President, which provided for their employment for a term of three years with automatic renewal of the term for one year periods thereafter, unless terminated by the Company within the provisions of the agreement, or by the President or Vice President for any reason upon twelve weeks advance notice.  The Company may be required to purchase all of the employees' common shares including unregistered shares, unexercised stock options and warrants at the average fair market value price at the time of the termination.  In December 1997, the Company terminated the employment of its President, and in September 2000, the Company terminated the employment of its Vice President.  During January 2002, the Company paid $40,000 to its prior Vice President as consideration for any amounts due under the employment agreement.

**NOTE 9.  Major Clients**During fiscal years 2003, 2002 and 2001, one client accounted for approximately 0.0%, 0.0% and 17.0% of total revenues, respectively.  Revenue derived from this client pertained to the Pharmaceutical Care software, which was sold in February 2001 (see Note 10). 

**NOTE 10.  Sale of Pharmaceutical Care Software**The Company developed Pharmaceutical Care software in conjunction with an outside entity.  The Company assigned its rights to the Pharmaceutical Care software during the fiscal year 2001 to that outside entity.  The Company received consideration via extinguishment of amounts owed to this outside entity totaling $27,868 and the right to royalties from future revenues generated by the software licenses.  The Company is entitled to receive royalties at varying rates on gross revenues pertaining to Pharmaceutical Care software through February 2007.

**NOTE 11.  Sale of Operating Assets**On October 30, 2001, the Company entered into an Asset Purchase Agreement to sell substantially all of its operating assets to an outside party.  Operating assets sold included fixed assets, customer lists, intellectual property, related tangible and intangible assets, and other assets.This transaction was approved by the Company's stockholders at a Special Meeting of Stockholders on January 16, 2002.  The effective date of the sale was November 1, 2001.The Company received $265,000, net of fees and expenses, in cash in consideration for the sale of substantially all of its operating assets.  The Company recorded a gain of approximately $264,000 from this sale.With the proceeds from this sale, management reduced its liabilities, including notes and interest payable to the Company's President that were beyond their maturity dates (see Note 12), as well as some amounts due the prior Vice President, per stipulations of his employment agreement (see Note 8).At February 28, 2002, the Company had recorded an amount in other assets due from the outside party of this transaction, which represented cash collections from receivables not sold under the transaction to the buyer.

**NOTE 12.  Related Party Transactions**Due to the sale of substantially all of its operating assets in November 2001, the Company completed the following transactions to related parties:In January 2002, the Company made payments to its President for notes payable, and the related interest payable on such notes that had been in default.  The amounts due and paid by the Company for such notes was $117,500.  Amounts due and paid by the Company for interest on those notes was $12,725 (see Note 11).In January 2002, the Company made a payment to its prior Vice President for amounts due for prior expenses, as well as amounts stipulated by his employment agreement.  The total amount paid for all such expenses was $40,000 (see Notes 8 and 11).

----

**ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE**Not applicable.

****PART III****

**ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS**The following table sets forth information regarding the Company's executive officers and directors as of May 28, 2003:

----

|  | **Name** |  | **Age** |  | **Position** |  |
|--|----------|--|---------|--|--------------|--|
||

----

||
||
||
||
|  | Peter J. Zugschwert |  | 37 |  | President, Chief Executive Officer and Director |  |
||
||
||
|  | Stanford M. Baratz |  | 47 |  | Director |  |
||
||
||
|  | Jonathan R. Gordon |  | 51 |  | Director |  |
||
||
||
|  | Matthew E. Goldberg |  | 36 |  | Director |  |
||
||
||
|  | B. Marie Cooper |  | 35 |  | Principal Accounting Officer and Controller |  |

----

**Business Experience**Peter J. Zugschwert, age 37, has served as President of the Company since December 1997 and CEO of the Company since September 1997.  Prior to joining the Company, he was the Senior Vice President of Operations for Baratz Financial, Inc. since June 1995.Stanford M. Baratz, age 47, has been the President of Baratz Financial, Inc., a Minneapolis based private investment firm, since founding the company in 1994.  Mr. Baratz has been a Director of the Company since September 1997.Jonathan R. Gordon, age 51, is the President of JR Gordon, Ltd.  Mr. Gordon is a Certified Public Accountant (CPA).  Mr. Gordon has been a Director of the Company since September 1997.Matthew E. Goldberg, age 36, is the President of Stems and Vines, a chain of retail florist shops.  Mr. Goldberg has been a Director of the Company since September 1997.B. Marie Cooper, age 35, joined the Company in April 1998 as its Principal Accounting Officer and Controller.  Prior to joining the Company, Ms. Cooper was the Accounting Manager for Newcom Group, Inc. and its subsidiaries.

**Committees and Meetings of the Board of Directors**The present standing committescommitteesoard of Directors are described below.  The Board of Directors does not have a standing nominating committee.The Board of Directors met one time during the last fiscal year.  No incumbent member of the Board of Directors attended fewer than 75% of the total number of meetings held by the Board of Directors and the committee(s) on which he served (during the periods that he served).The Board of Directors has determined that the Company has at least one audit committee financial expert serving on its audit committee.  The Company's audit committee financial expert is Jonathan R. Gordon and is considered independent as required.

----

**Directors' Compensation**Effective October 23, 1997, each member of the Board of Directors receives, in lieu of compensation, 800 shares of the Company's common stock per meeting.  In addition, in consideration for their services, each of the new directors elected at the Annual Meeting of Shareholders on September 19, 1997, were granted a 5-year option to purchase 10,000 shares of the Company's common stock exercisable at a price of $0.08 per share (the price of the Company's common stock on the day of their agreement to serve, if elected).  These shares expired on September 19, 2002.During the fiscal year ended February 28, 2003, Board of Director compensation totaled 0 shares.  Board of Director compensation shares for fiscal years 1999, 2000 and 2001 were issued during the fiscal year ending February 28, 2002.

**Independent Auditors' Fees**The firm of Schweitzer Karon & Bremer, LLC ("SKB") served as the Company's independent auditors for the fiscal year ended February 28, 2003.*Audit Fees:*  The SKB fees for the annual audit and the reviews of the financial statements included in the Company's Form 10-KSB and Forms 10-QSB for the 2003 fiscal year were $9,100 and $2,000, respectively.*Financial Information Systems Design and Implementation Fees:*  There were no fees billed by SKB for financial information systems design and implementation for the 2003 fiscal year.*All Other Fees:*  There were no other fees billed by SKB for the 2003 fiscal year.The Board Of Directors has concluded that the services provided by SKB to the Company that were not related to its audit of the Company's financial statements, if any, were at all times compatible with maintaining that firm's independence.

----

**ITEM 10 - EXECUTIVE COMPENSATION**

**Compensation Summary**The following table summarizes information concerning the compensation awarded or paid to, or earned by, the Company's President and Chief Executive Officer.

----

**SUMMARY COMPENSATION TABLE**

----

|  |  |  |  |  | **                                            Long-Term Compensation                            ** |  |
|--|--|--|--|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
||

|  |  |  |  |  | **                                           Awards                                           ** | **    Payouts    ** |  |
|--|--|--|--|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|--|
||

| **      Name and** | ****     | ****           | ****          | **Other Annual**                           | **Restricted Stock**                     | **Securities Underlying**                    | **    LTIP** | **All Other**      |
|--------------------------------------------------|----------|----------------|---------------|--------------------------------------------|------------------------------------------|----------------------------------------------|----------------------------------|--------------------|
| **Principal Position**                           | **Year** | **Salary ($)** | **Bonus ($)** | **     Comp ($)** | **    Award(s) ($)** | **    Options/SARs (#)** | **Payouts ($)**                  | ** Comp ($)** |
||

----

||
||
| Peter J. Zugschwert (1) | 2003 | 16,180 |  |  |  |  |  |     4,208 (2) |
||
| President and CEO | 2002 | 67,500 (3) |  |  |  |  |  |  |
||
|  | 2001 | 78,925 |  |  |  |  |  |     2,100 (4) |
||

----

(1) Mr. Zugschwert has been Chairman of the Board of Directors since September 19, 1997.  He has been President and CEO since December 9, 1997.(2) During fiscal year 2003, Mr. Zugschwert was retained as a consultant to act as President of the Company.  Mr. Zugschwert billed the Company $16,180 during fiscal year 2003.  Of this amount, $11,972 was paid by the Company in cash and $4,208 remained due and payable.(3) During fiscal year 2002, Mr. Zugschwert was retained as a consultant to act as President of the Company.  Mr. Zugschwert billed the Company $67,500 during fiscal year 2002.  Of this amount, $67,500 was paid by the Company.(4) During fiscal year 2001, Mr. Zugschwert was retained as a consultant to act as President of the Company.  Mr. Zugschwert billed the Company$81,025 during fiscal year 2001.  Of this amount, $78,925 was paid by the Company in cash and $2,100 remained due and payable.

**Stock Options**The following tables set forth information concerning (1) individual grants of options to purchase Company common stock made to the named executive officer(s) during fiscal year 2003, and (2) individual exercises of stock options by the named executive officer(s) during fiscal 2003, as well as the number of options outstanding at the end of fiscal 2003 for the named executive officer(s).(1) During fiscal year 2003, no options/SARs were granted.

----

(2) **AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTIONS/SAR VALUES**

----

| **** | **** | **** | **Number of Securities Underlying Unexercised**                                              | ** Value of Unexercised In-the-Money** |
|------|------|------|----------------------------------------------------------------------------------------------|---------------------------------------------|
| **** | **** | **** | **         Options/SARs at Final Year-End (#)** | **Options/SARs at Fiscal Year-End ($)**     |
||

| ****     | **Shares Acquired**             | **      Value** | ****                                                            | ****                                                              | ****            | ****              |
|----------|---------------------------------|-----------------------------------------------|-----------------------------------------------------------------|-------------------------------------------------------------------|-----------------|-------------------|
| **Name** | **  on Exercise (#)** | **Realized ($)**                              | **        Exercisable** | **        Unexercisable** | **Exercisable** | **Unexercisable** |
||

----

| Peter J. Zugschwert | 0 |       $-- | 65,800 | -- |      $-- |        $-- |
|---------------------|---|-----------------------------------------|--------|----|-----------------------------------|-----------------------------------------------|
||

----

----

**ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**The following table sets forth information regarding the beneficial ownership of the outstanding shares of Common Stock by persons known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock, by nominees for director and directors of the Company, by the executive officers named in the Summary Compensation Table, and by all directors and executive officers of the Company as a group.  Amounts are as of May 28, 20023for directors and executive officers.  Amounts for 5% shareholders are reported as of the date such shareholders reported such holdings in filings under the Securities Exchange Act of 1934, unless more recent information was provided.

|  |  |  | **          COMMON STOCK** |  |
|--|--|--|------------------------------------------------------------------------------|--|
||
||

|  | **        Name of** |  | **   Number of Shares** |  |  |  | **Percent**  |  |
|--|-------------------------------------------------------------|--|----------------------------------------|--|--|--|--------------|--|
|  | **Beneficial Owner**                                        |  | **Beneficially Owned (1)**             |  |  |  | **of Class** |  |
||

----

|  | Peter J. Zugschwert |  | 1,188,249 |  | (2) |  | 12.8% |  |
|--|---------------------|--|-----------|--|-----|--|-------|--|
||
||
|  | Jonathan R. Gordon  |  | 68,800    |  |     |  | 0.7%  |  |
||
||
|  | Stanford M. Baratz  |  | 49,800    |  |     |  | 0.5%  |  |
||
||
|  | B. Marie Cooper     |  | 45,000    |  | (3) |  | 0.5%  |  |
||
||
|  | Matthew E. Goldberg |  | 8,800     |  |     |  | 0.1%  |  |
||
||

----

|  | All Officers and Directors as a Group |  | 1,360,649 |  | (4) |  | 14.7% |  |
|--|---------------------------------------|--|-----------|--|-----|--|-------|--|
||
||

----

(1) Except as otherwise indicated, each person named or included in the group has the sole power to direct the disposition of all shares listed as beneficially owned by him/her.(2) Includes 65,000 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2003.(3) Includes 40,000 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2003.(4) Includes 105,000 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2003.

**ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**Not applicable. 

**ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K**

**Exhibits**No exhibits are filed with this Form 10-KSB.

**Reports on Forms 8-K**No reports were filed on Form 8-K during the fourth quarter of the fiscal year ended February 28, 2003.

**ITEM 14 - CONTROLS AND PROCEDURES**Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the filing of this report.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms.  Subsequent to the date of this evaluation, there have not been any significant changes in our internal controls or, to our knowledge, in other factors that could significantly affect the Company's internal controls.

----

****SIGNATURES****

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.**HEALTH OUTCOMES MANAGEMENT, INC.**("Registrant")By:       /s/ Peter J. Zugschwert                     Peter J. Zugschwert           Chairman and President           Chief Executive OfficerDate:   May 28, 2003

----

**CERTIFICATIONS**

I, Peter J. Zugschwert, certify that:1. I have reviewed this annual report on Form 10-KSB of Health Outcomes Management, Inc. and subsidiaries;2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 annual report (the "Evaluation Date"); and  c) presented in this annual 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; and6. The registrant's other certifying officers and I have indicated in this annual 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.Date:  May 28, 2003     /s/ Peter J. ZugschwertChief Executive Officer

----

**CERTIFICATIONS**

I, B. Marie Cooper, certify that:1. I have reviewed this annual report on Form 10-KSB of Health Outcomes Management, Inc. and subsidiaries;2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 annual report (the "Evaluation Date"); and  c) presented in this annual 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; and6. The registrant's other certifying officers and I have indicated in this annual 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.Date:  May 28, 2003     /s/ B. Marie CooperChief Executive Officer