UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 10-KSB/A

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2002
[  ] 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)
2331 University Avenue SE
Minneapolis, Minnesota 55414 (Address of Principal Executive Offices, including Zip Code)
(612) 378-2931 (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, 2002 were $363,055.

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 $78,741 based upon the closing price of the Common Stock as reported on the OTC:BB on May 28, 2002.

The number of shares outstanding of the registrant's Common Stock, $0.01 par value, on May 28, 2002 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, 2002


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
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
Item 12.	Certain Relationships and Related Transactions
Item 13.	Exhibits and Reports on Form 8-K
SIGNATURES

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. Results of operations prior to November 1, 2001 are reflected in the Company's financial statements for the year ended February 28, 2002 and amounts related to the sale of the assets have been categorized as discontinued operations.

Operating Segments/Principal Products/Markets

The Company's primary products were as follows:

LONG-TERM CARE SOFTWARE
The Company marketed computer software services to long-term care facilities to provide the clinical documentation required by federal and state regulations. The Assurance Long-Term Care System ^TM utilized a relational database and could be installed individually or as a complete system with the clinical documentation system.

HOME HEALTHCARE AGENCY SOFTWARE
The Assurance Homecare System^TM was designed for the collection and analysis of information needed to manage homecare patients when they no longer need to be in a hospital and are being cared for at home. This system could be installed as a stand-alone or as part of a complete system with the Company's clinical documentation system.

HOSPITAL SOFTWARE
Hospitals utilized several of the Company's software services. Rehabilitation hospitals utilized a customized, computerized system specifically for the needs of the rehabilitation market segment. Procedures and reportes were specific for the needs of treating acute care, long-term care and outpatient rehabilitation patients.

The Assurance Kinetics System^TM allowed easier, faster and more cost efficent methods of calculating proper dosages and track schedules of commonly monitored drugs.

The Assurance Nutrition System^TM allowed institutions and/or physicians to provide nutritional consult that was specifically geared to the patient's nutritional status.

PHARMACY PRACTICE SOFTWARE
The Assurance Patient-Centered Coordinated Comprehensive Pharmaceutical Care System^TM was designed to help practitioners care for patients and for network and practice management. This system was designed to implement the (University of Minnesota's) Peter's Institute of Pharmaceutical Care model of generalist pharmaceutical care practice.

On February 8, 2001, the Company disposed of one of its assets relating to this software as reported on Form 8-K filed with the Securities and Exchange Commission on February 9, 2001.

CONTINUING SUPPORT SERVICES
All computerized Health Outcomes systems were licensed with an agreement for the Company to provide continuing support services via a telephone help line (800-STAT-911).

Marketing and Distribution

The Company's products were marketed through direct efforts which consisted of Company personnel and a commissioned sales representative in the promotion and sales of products and services to all of the Company's markets for its software systems.

The Company's marketing objective was to establish itself as a leader in providing clinical support services. The Assurance 2001 systems were stand-alone systems that could be integrated, but were designed to meet specific productivity and outcome management needs of practitioners and clinicians in the various markets. The software was licensed directly by the Company to its clients.

Competition

The market for healthcare information products and services was intensely competitive. The Company competed with various companies in each of the various markets. Many of the competitors had greater resources for financing and marketing.

The Company's competitors included specialty healthcare companies, heathcare information system and software vendors and healthcare management organizations.

The Company had competitive advantages by having products with a wide range of applications in a variety of different healthcare settings, but had disadvantages by competitors with larger sales forces and greater financial resources.

Suppliers

The Company did not utilize any outside suppliers for its products and/or services provided to its customers.

Customers

During fiscal year 2001, one customer accounted for approximately 17.0% of the Company's revenues. Revenue derived from this client pertained to the Pharmaceutical Care software, which was sold in February 2001.

The Company was not dependent upon any single or few customers for a material (10% or more) portion of sales of any of its products or services.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts

The Company held no patents, licenses, franchises, concessions or labor contracts with respect to any of its products or services. The Company sought to protect proprietary information regarding its products and services as trade secrets by utilizing non-disclosure agreements with its employees, clients and others who are permitted access to such information.

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.

Governmental Approvals

The Company was not required to obtain governmental approval of its products.

Effect of Governmental Regulations

The healthcare industry is subject to extensive regulation by both Federal and State governments. Generally, state laws prohibit the practice of medicine and nursing without a license. Many states interpret the practice of nursing to include health teaching, health counseling, the provision of care supportive to or restorative of life and well being and the execution of medical regimens prescribed by a physician. Accordingly, to the extent that the Company assisted providers in improving patient compliance by publishing educational materials or providing behavior modification training to patints, such activities could be deemed by a state to be the practice of medicine or nursing. The Company believed it was not engaged in the practice of medicine.

Research and Development

The Company spent approximately $0 and $71,221 on research and development efforts in the two fiscal years ended February 28, 2002 and 2001, respectively. These expenditures were incurred primarily by the Pharmaceutical Care software system development. No further research and development went into this product after September 2000.

Compliance with Environmental Laws (Federal, State and Local)

Compliance with federal, state and local environmental provisions had no effect on capital expenditures and had no material effect on earnings or on the competitive position of the Company.

Employees

As of November 1, 2001, the Company had no employees and continues to have no employees.

The Company currently has two independent contractors.

ITEM 2 - PROPERTIES

The Company leased a facility of approximately 1,500 square feet located at 2331 University Avenue SE, Minneapolis, Minnesota 55414. All operating entities were located within this facility.

Currently, the Company sublets, on a month-to-month basis, one office within this facility located at this address. No current or future lease obligation exists.

ITEM 3 - LEGAL PROCEEDINGS

As of May 28, 2002, the Company was not involved in any material legal proceedings.

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

ON January 16, 2002, a special meeting of shareholders was held relating to the proposed sale of the Company's assets. At that meeting, shareholders approved of the proposed transaction with a 56.2% vote.

PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock trades on the OTC Bulleting Board Market (Over-The-Counter includes OTC and OTCBB) 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 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
Fiscal 2001	First Quarter	$0.250	$0.125
	Second Quarter	$0.150	$0.120
	Third Quarter	$0.130	$0.040
	Fourth Quarter	$0.040	$0.010

As of May 28, 2002, management believes that the number of share owner accounts of record was approximately 270, at which date the clsoing 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 associates 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 to seek 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 percieved 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 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 fisal year 2001. This decrease is attributable top the Company's sale of its Pharmaceutical Care software product during the prior year.

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 the prior fiscal year.

Gross Profit

Gross profit for the fiscal year 2002 was 68.3% versus 32.5% for the prior fiscal year. 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 increased $70,526 or 44.6% when compared to the prior fiscal year. 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.

Comparison of Fiscal Year 2001 vs. 2000

Net Sales

Net sales for fiscal year 2001 decreased $408,519 to $868,983, or 32.0% when compared to net sales for fiscal year 2000. This decrease represents reduced sales for third-party software and declining support and training fees.

Cost of Goods Sold

The Company's cost of goods sold decreased from $835,616 to $586,201, a difference of $249,415 or 29.8%. This decrease is representative of the decrease in revenues for the fiscal year.

Gross Profit

Gross profit for the fiscal year 2001 was 32.5% versus 34.6% for the prior fiscal year. The decrease in gross profit was directly related to revenue and cost amounts consistently.

Operating Expenses

Total operating expenses decreased $228,235 or 59.1% when compared to the prior fiscal year. Selling and marketing costs increased to $1,635, an increase of 141.9%; general and administrative costs decreased to $85,328, a decrease of 63.6%; and research and development costs decreased to $71,221, a decrease of 53.0%.

Selling and marketing costs were immaterial during both fiscal year 2001 and 2000. The Company completed marketing functions internally at minimal cost.

General and administrative costs were decreased through ongoing efforts of the Company to reduct all expenses throughout the year as a result of decreasing revenues.

Research and development costs decreased due to reduced staffing, mostly relating to the Company's Pharmaceutical Care software product.

Liquidity and Capital Resources

The Company had working capital of $75,793 compared to a deficit of $208,507 for fiscal 2002 and 2001, respectively, an increase of $284,300. The increase in working capital was substantially due to the Company selling its operating assets in the current fiscal year.

The Company does not have commitments for any capital expenditures for the fiscal year 2003.

The Company's cash flow position has improved for the fiscal year. The Company will not, however, have ongoing cash flow, due to the sale of its operating assets. 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.

ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors' Report on the Financial Statements

Financial Statements

  Consolidated Balance Sheets

  Consolidated Statements of Discontinued Operations

  Consolidated Statements of Cash Flows

  Consolidated Statements of Changes in Stockholders' Equity (Deficit)

  Notes to Consolidated Financial Statements

INDEPENDENT AUDITOR'S REPORT

The Board of Directors and Shareholders
Health Outcomes Management, Inc. and Subsidiaries
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Health Outcomes Management, Inc. and Subsidiaries as of February 28, 2002 and February 28, 2001, and the related statements of discontinued operations, changes in stockholders' deficit, and cash flows for the three years in the period ended February 28, 2002. 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, 2002 and 2001, and the results of their operations and their cash flows for the three years in the period ended February 28, 2002, in conformity with accounting principles generally accepted in the United States of America.

SCHWEITZER KARON & BREMER, LLC
Certified Public Accountants
Minneapolis, Minnesota
May 10, 2002

See Accompanying Notes to Consolidated Financial Statements




See Accompanying Notes to Consolidated Financial Statements




See Accompanying Notes to Consolidated Financial Statements




See Accompanying Notes to Consolidated Financial Statements

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, 2002:

Name Age Position

Peter J. Zugschwert	36	President, Chief Executive Officer and Director
Stanford M. Baratz	46	Director
Jonathan R. Gordon	50	Director
Matthew E. Goldberg	35	Director
B. Marie Cooper	34	Principal Accounting Officer and Controller

Business Experience

Peter J. Zugschwert, age 36, 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. Between 1993 and 1995, Mr. Zugschwert was a private business consultant in Chicago and Minneapolis.

Stanford M. Baratz, age 46, has been the President of Baratz Financial, Inc., a Minneapolis based private investment firm, since founding the company in 1994. Between 1985 and 1994, Mr. Baratz served in various capacities with the Welsh Companies, a Minneapolis based real estate firm, most recently as Executive Vice President. Mr. Baratz has been a Director of the Company since September 1997.

Jonathan R. Gordon, age 50, 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 35, was the President of In-Sight Optical, Inc., dba InVision, a retail optical store chain, from 1996 through 1998. Between 1992 and 1996, Mr. Goldberg was an account manager with Campbell-Mithun Esty, a Minneapolis based advertising agency. Mr. Goldberg has been a Director of the Company since September 1997.

B. Marie Cooper, age 34, joined the Company in April 1998 as its Principal Accounting Officer and Controller. From June 1995 to March 1998, Ms. Cooper was the Accounting Manager for Newcom Group, Inc. and its subsidiaries, as well as the Express Pages, LLC. Ms. Cooper holds a BA degree in Accounting from Augsburg College in Minneapolis, Minnesota.

Committees and Meetings of the Board of Directors

The present standing committes of the Board of Directors are described below. The Board of Directors does not have a standing nominating committee.

The Board of Directors met twice 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).

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).

During the fiscal year ended February 28, 2002, Board of Director compensation totaled 6,400 shares. Board of Director compensation shares for fiscal years 1999, 2000 and 2001 were issued during the current fiscal year.

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, 2002.

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 2002 fiscal year were $11,300 and $4,700, respectively.

Financial Information Systems Design and Implementation Fees: There were no fees billed by SKB for financial information systems design and implementation for the 2002 fiscal year.

All Other Fees: There were no other fees billed by SKB for the 2002 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 (the only executive officer whose salary and bonus for fiscal 2002 exceeded $100,000) during each of the Company's last three fiscal years.

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)	2002	67,500
President and CEO	2001	78,925	2,100 (2)
	2000	34,700	61,550 (3)

(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 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.
(3) 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 2002, and (2) individual exercises of stock options by the named executive officer(s) during fiscal 2002, as well as the number of options outstanding at the end of fiscal 2002 for the named executive officer(s).

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS

		Number of Securities	Percent of Total Options/SARs	Exercise or
Name	Grant Date	Underlying Options/SARs Granted	Granted to Employees in Fiscal Yr	Base Price ($/sh)	Expiration Date

Peter J. Zugschwert    NA 0 0% NA NA

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       $0 62,500 12,500 $6,050 $1,250

Employment Agreements

On February 1, 1991, the Company entered an employment agreement with Michael J. Frakes, then Vice President of the Company, for a period of three years. The agreement provided for automatic renewals for one year periods, pursuant to which the agreement had been extended to January 31, 2001.

Under the employment agreement with Mr. Frakes, he was paid $8,412 per month from February 1, 1996 to January 31, 1997. Beginning May 1, 1996, Mr. Frakes took a 10% voluntary salary reduction which was still in effect at September 15, 2000. Mr. Frakes, per the agreement, was also eligible to receive bonus compensation in the form of cash or shares of common stock.

The employment agreement between the Company and Mr. Frakes contained certain restrictive covenants, including prohibition of the use of proprietary information by Mr. Frakes, and restrictions on future competing employment. The restrictions on competing employment were to be enforceable following termination of employment by the Company, only if the Company continued to pay prescribed amounts each month during the period of restriction. Certain provisions of the agreement may have required the Company to purchase all of Mr. Frakes' common shares, including unregistered shares, unexercised stock options and warrants at the average fair market value price upon termination or an ownership control change exceeding 40% control by an outside party.

In September 2000, the Company laid-off six (6) employees primarily employed for research and development of the Pharmaceutical Care software system; Mr. Frakes was included in this layoff.

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, 2002 for 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 (the "Exchange Act") unless more recent information was provided.

          COMMON STOCK

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

Peter J. Zugschwert	1,198,249	(2)	12.9%
Jonathan R. Gordon	85,200	(3)	0.9%
Stanford M. Baratz	66,200	(3)	0.7%
B. Marie Cooper	38,750	(4)	0.4%
Matthew E. Goldberg	25,200	(3)	0.3%

All Officers and Directors as a Group 1,413,599 (5) 15.2%

(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 62,500 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2002.
(3) Includes 10,000 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2002.
(4) Includes 33,750 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2002.
(5) Includes 136,250 shares purchasable upon exercise of options presently exercisable or exercisable within 60 days of May 28, 2002.

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

The Company filed Form 8-K on January 17, 2002, regarding the sale of its assets to Quality Business Solutions, Inc.

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 Officer


Date:   May 28, 2002