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To: SSP who wrote (6891)	8/11/1999 10:04:00 PM
From: SSP	Read Replies (1) \| Respond to of 150070

PCES - from the 10QSB today : ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION GENERAL Prior to October 1998, PACE developed and marketed advanced patient care management software systems that enabled healthcare providers to standardize the delivery of care, maximize resource utilization and improve clinical outcomes. The Company's enterprise-wide, client/server applications automated charting, clinical workflow processes and clinical pathways. The Company's core system, PACE CMS, was a modular suite of advanced software applications that provided hospitals, physicians' offices, and integrated delivery systems a comprehensive system for interdisciplinary documentation, nursing care planning, clinical pathway management and enterprise-wide order management, all at the point of care. On October 7, 1998, the Company completed the sale of substantially all of its assets to, and the assumption of certain of its liabilities by, Minnesota Mining and Manufacturing Company ("3M") ("the Transaction"). The sale was made pursuant to an Asset Purchase Agreement dated June 30, 1998, as amended, as described in Company's definitive proxy statement dated September 14, 1998. The Transaction was approved by the holders of both the common stock and the preferred stock at a special meeting of shareholders held on October 7, 1998. The purchase price of the Transaction was approximately $5.9 million, including $4.75 million in cash, of which $750,000 was originally placed in escrow to secure the Company's indemnification obligations under the Asset Purchase Agreement, plus the assumption of substantially all of the Company's liabilities other than $2.1 million in line of credit balances, which were paid off from proceeds at closing. 3M offered positions to most of the Company's employees and assumed full support of the Company's customers. Subsequent to the closing of the Transaction, the Company agreed that $25,000 of the amount in escrow could be paid to 3M as part of a purchase price adjustment contemplated by the Asset Purchase Agreement, leaving an escrow balance of $725,000. In July 1999, subsequent the end of the second quarter, the Company received proceeds from the escrow account totaling $555,958, including interest of $25,671. Approximately $195,000 currently remains in the escrow account pending resolution of certain disputed indemnification claims. Following the Transaction, the Company has no ongoing operations and no revenues and has minimal operating expenses. The Company presently has only one part-time employee. The Company's June 30, 1999 balance sheet reflects cash (including the escrow balance pursuant to the Transaction) of almost $2 million and minimal debt. The net proceeds from the sale will be retained by the Company pending a determination of whether to engage in a follow-on transaction. The Company has been seeking a business combination with another entity, before considering possible liquidation and distribution of its assets. The Company believes that with the cash on hand and net operating loss carryforwards, subject to the limitation of such carryforwards under the Internal Revenue Code, such a combination may be attractive to potential partners and would better serve the interests of the Company's shareholders. As of the date of this Form 10-QSB, no definitive agreement has been signed for a follow-on transaction. If no suitable business combination is identified within a reasonable period of time, the Company may elect to liquidate and distribute the remaining net proceeds to shareholders. If the Company liquidated at the present time, all of the net assets of the Company would be paid to holders of the Company's preferred stock.