PHYSICIANS INFORMATION EXCHANGE INC
SB-2/A, 1996-07-15
COMPUTER INTEGRATED SYSTEMS DESIGN
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<PAGE>
 
              
   As filed with the Securities and Exchange Commission on July 15, 1996    
                                                           
                                                       Registration No. 333-3618
                                                                                
- --------------------------------------------------------------------------------
                        SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                             _____________________

                                     
                              AMENDMENT NO. 4 TO          
                                   FORM SB-2
                             REGISTRATION STATEMENT
                                     Under
                           The Securities Act of 1933
                             _____________________

                     PHYSICIANS INFORMATION EXCHANGE, INC.
                 (Name of small business issuer in its charter)
<TABLE>
<S>                                  <C>                            <C>
            TEXAS                                7373                  72-1315594
(State or other jurisdiction of      (Primary Standard Industrial   (I.R.S. Employer
 incorporation or organization)      Classification Code Number)    Identification No.)
                                     1401 HUDSON LANE, SUITE 202
                                       MONROE, LOUISIANA 71201
                                           (318) 323-5000
</TABLE> 
             (Address, including zip code, and telephone number, 
       including area code, of registrant's principal executive offices)
                             _____________________

<TABLE>
<CAPTION>
                                                           COPIES OF COMMUNICATIONS TO:
<S>                                                <C>
 
             PHYSICIANS INFORMATION                           RONALD J. FRAPPIER, ESQ.
                 EXCHANGE, INC.                    JENKENS & GILCHRIST, A PROFESSIONAL CORPORATION
          1401 HUDSON LANE, SUITE 202                      1445 ROSS AVENUE, SUITE 3200
             MONROE, LOUISIANA 71201                            DALLAS, TEXAS 75202
                (318) 323-5000                                     (214) 855-4743
</TABLE>
(Name, address, including zip code, and telephone 
number, including area code, of agent for service)
                              ____________________
        Approximate date of commencement of proposed sale to the public:
     From time to time after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [_]
_______________
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]____________

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

                              __________________

<TABLE>     
<CAPTION> 
========================================================================================================
                                     CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
Title of each class of   Dollar amount to be     Proposed maximum      Proposed maximum       Amount of
   securities to be          registered           offering price      aggregate offering     registration
     registered                                     per unit(1)             price(1)             fee(2)
- ---------------------------------------------------------------------------------------------------------
<S>                      <C>                     <C>                  <C>                    <C>
Class A Common Stock      15,000,000 shares            $1.00              $15,000,000          $12,069
Class B Common Stock       1,885 Units(3)              $9,550             $18,001,750        
=========================================================================================================
</TABLE>     
   
(1) Estimated solely for the purpose of calculating the registration fee 
    pursuant to Rule 457(c).
(2) The Registrant has previously paid the registration fee in the amount of 
    $12,069.
(3) Each Unit consists of 9,550 shares of Class B Common Stock.
    
                              __________________

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.

                             Cross-Reference Sheet
<TABLE>
<CAPTION> 
ITEM
 NO.                             CAPTION                                    LOCATION IN PROSPECTUS
- ----                             -------                                    ----------------------
<S>         <C>                                                <C>
1.          Front of Registration Statement and Outside
             Front Cover Page of Prospectus.................   Outside Front Cover Page of Prospectus

2.          Inside Front and Outside Back Cover Pages          Inside Front Cover Page and Outside Back Cover
             of Prospectus..................................    Page of Prospectus

3.          Summary Information and Risk Factors............   Prospectus Summary; Risk Factors

4.          Use of Proceeds.................................   Use of Proceeds

5.          Determination of Offering Price.................   Risk Factors; Plan of Distribution

6.          Dilution........................................   Dilution

7.          Selling Security Holders........................   Not Applicable

8.          Plan of Distribution............................   Plan of Distribution

9.          Legal Proceedings...............................   Business

10.         Directors, Executive Officers, Promoters and
             Control Persons................................   Management

11.         Security Ownership of Certain Beneficial           Security Ownership of Management and
             Owners and Management..........................    Principal Shareholders

12.         Description of Securities.......................   Description of Capital Stock

13.         Interest of Named Experts and Counsel...........   Not Applicable

14.         Disclosure of Commission Position on
             Indemnification of Securities Act Liabilities..   Description of Capital Stock

15.         Organization Within Last Five Years.............   Business

16.         Description of Business.........................   Business

17.         Management's Discussion and Analysis or
             Plan of Operation..............................   Plan of Operation

18.         Description of Property.........................   Business

19.         Certain Relationships and Related Transactions..   Certain Transactions

20.         Market for Common Equity and Related Stockholder   Market for Common Equity and
             Matters........................................    Related Stockholder Matters

21.         Executive Compensation..........................   Management

22.         Financial Statements............................   Financial Statements

23.         Changes In And Disagreements With Accountants on
             Accounting and Financial Disclosure............   Not Applicable
</TABLE>
<PAGE>
 
                      
               SUBJECT TO COMPLETION, DATED JULY 15, 1996.    

                     PHYSICIANS INFORMATION EXCHANGE, INC.
                       
                   15,000,000 SHARES OF CLASS A COMMON STOCK      
                       1,885 UNITS OF CLASS B COMMON STOCK      
         (EACH UNIT REPRESENTING 9,550 SHARES OF CLASS B COMMON STOCK)
         

           
     This Prospectus relates to 15,000,000 shares of Class A Common Stock, par
value $.001 per share, being offered at $1.00 per share, and 1,885 Units of
Class B Common Stock, $.001 par value per share, being offered at $9,550.00 per
Unit, each Unit representing 9,550 shares of Class B Common Stock, of Physicians
Information Exchange, Inc., a Texas corporation ("PIE" or the "Company"), that
may be offered and sold at any time or from time to time by the Company.    

     The Company has two classes of common stock outstanding, Class A and Class
B (collectively, the "Common Stock"). The rights of holders of Class A Common
Stock and Class B Common Stock are essentially identical, except that (i)
holders of Class A Common Stock are entitled to one vote per share and holders
of Class B Common Stock are entitled to 10 votes per share and (ii) holders of
Class A Common Stock are entitled to receive a $1.00 per share liquidation
preference. In addition, the Class B Common Stock can be owned only by licensed
medical doctors and, upon transfer to other than a permitted transferee, shall
be converted automatically into an equivalent number of shares of Class A Common
Stock. Each share of Class B Common Stock is convertible at any time at the
option of the holder into one share of Class A Common Stock. See "Description of
Capital Stock." Upon completion of this offering, assuming that all of the
securities offered hereby are sold, the Chairman of the Board and President of
the Company, by virtue of his holdings of Class B Common Stock, will own
beneficially shares of Class B Common Stock having 75.1% of the total voting
power of the Company.
     
    
     Prior to the offering, there has been no public market for the Class A and
Class B Common Stock or the Units, and it is not anticipated that a public
market will develop.  Such securities will not be listed on a stock exchange or
quoted by the Nasdaq Stock Market and should be purchased only by persons with
no need for liquidity in their investment and who are able to risk the entire
loss of their investment.  See "Plan of Distribution" for factors considered in
determining the initial offering price.      
    
     FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SECURITIES
OFFERED HEREBY, SEE "RISK FACTORS," BEGINNING ON PAGE 5.     
       
   THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
      AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
        THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES 
           COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS 
                PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY 
                            IS A CRIMINAL OFFENSE.     
     
<TABLE>     
<CAPTION> 
                                           PRICE TO                BROKER COMMISSIONS                 PROCEEDS
                                            PUBLIC                  AND EXPENSES (1)               TO COMPANY (2)
- -----------------------------------------------------------------------------------------------------------------
<S>                                        <C>                     <C>                             <C> 
Per Share of                                                                                  
Class A Common Stock                       $      1.00             $                               $
Per Unit                                         9,550             $                               $
Total Minimum                              $   300,000             $                               $
Total Maximum                              $33,001,750             $                               $
- -----------------------------------------------------------------------------------------------------------------
(1)  In the sole discretion of management, the Company may pay commissions of up to 10% of sales made, as allowed by applicable
     law.  The Company will not pay sales commissions on the first $300,000 of securities sold hereby.  See "Plan of Distribution."
(2)  Before deduction of expenses of this offering, estimated at $170,000.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>      
     
      
     The Company is effecting this offering of securities on a "best efforts"
basis through its officers and employees without the use of an underwriter.
However, the securities offered hereby may be sold to underwriters, to or
through dealers, acting as principals for their own account or acting as agents,
or directly to other purchasers by or on behalf of the Company. In the sole
determination of management, the Company may pay the persons making this
offering, excluding its officers and employees, commissions of up to 10% of
sales made, as allowed by applicable law. The Company may indemnify such
underwriters, dealers and agents against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See "Plan of
Distribution." Investor funds will be held in escrow until a minimum of $300,000
in securities of the Company are sold pursuant to this offering (the "Minimum
Offering"). In the event the Minimum Offering is not sold on or before
______________, 1998, the offering will be terminated and the escrowed funds,
plus any interest earned thereon, will be promptly returned to the investors.
Upon the sale of the Minimum Offering, the escrowed funds will be released to
the Company. Any subsequent sales with respect to this offering will continue to
be held in the subscription escrow, but will be immediately available for use by
the Company upon the Company's request. In the event the Minimum Offering is
sold, the offering will be terminated on the earlier of the sale of all
securities registered hereby, the second anniversary of the date of this
Prospectus or at the Company's discretion if the Company believes that 
additional selling efforts will be unsuccessful.          
    
                 THE DATE OF THIS PROSPECTUS IS JULY  , 1996.     
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                        CLINICAL INFORMATION EVOLUTION

Clinical Records Information System   

                                    Integrated Healthcare Information & Research

                    Healthcare Information Exchange Network
<TABLE> 
<CAPTION> 
                    (CRIS)                                (Exchange)                              (Knowledge Bank)            
               ----------------                       ---------------------                    -----------------------        
<S>            <C>                                    <C>                                      <C>                            
Primary        Capture of and Access to               Transportation of clinical and           Integration of clinical        
Purpose          clinical and cost information          cost information                         inventions, outcomes and     
                                                                                                 cost data                    
Means/         Sophisticated physician interface      Private Telecommunication                Regional and national clinical 
Vehicle          and computer-based patient-                                                     repositories                 
                 record software                                                                                            

Capabilities   Real time patient specific             Peer to peer physician transfer of       Normalized comparison of
                 clinical data retrieval                patient diagnostic information           clinically derived data and
               Access to clinical decision support    Automatically gathers patient              outcomes measures
               Ability to analyze quality and           anonymous clinical abstract            Epidemiological research
                 cost of medical interventions          data for research                      Disease management
               Tools for analyzing performance
                 and negotiating with payors

Features       Clinical flowcharts and guidelines     Top secret government security           "Best Practice" benchmarking
               Multiple entry methodologies             standards                              Geographically dispersed and
                 (voice, picklist & cursive)          24 hour access, minimum                    statistically significant
               Mobile, intuitive interface              downtime                                 outcomes treatment processes

Location       Physician clinics                      Virtual communication linkages           Regional facilities
                                                        between physicians as well as
                                                        repositories
               --------------------------------       -------------------------------------    ----------------------------------
</TABLE> 
<PAGE>
 
                               PROSPECTUS SUMMARY

     The following information is qualified in its entirety by the more detailed
information, financial statements and related notes thereto included elsewhere
in this Prospectus.

                                  THE COMPANY
    
     Physicians Information Exchange, Inc. ("PIE" or the "Company") is a
development stage company that is controlled by physicians, as well as directed
and operated primarily by physicians.  PIE was founded on the principle that
physicians desire to provide healthcare market leadership, strengthen the
physician/patient relationship and improve the quality of care while reducing
cost.  The Company intends to help physicians accomplish this by leveraging
physician training and experience with current information technology to
transform clinical data into medical knowledge and knowledge of the healthcare
system.  The products and services described below are currently being developed
by the Company; however, such products and services have not been completed and
are not commercially available.      

     PIE is focused on improving the quality and lowering the cost of healthcare
through the capture of clinical data at the point of care using the Company's
computer-based Clinical Record Information System ("CRIS") software or any
future compatible computer-based patient record ("CPR") system. Clinical data
will be collected by PIE in an anonymous and abstract format through a
computerized physician network (the "Exchange").  This clinical data will form
the basis of a national clinical data repository (the "Knowledge Bank") and
facilitate the widespread adoption of "evidenced-based medicine."  (Evidence-
based medicine is regarded as a promising development for improving the practice
of medicine and the delivery of healthcare at lower costs).  This practice of
medicine bases patient care protocols and other clinical policies on the
vigorous scientific analysis of patient outcomes.

     Evidence-based medicine relies on the detailed analysis of a large
population of patient medical records and clinical data. To date, such analysis
has not been practical on a large scale since medical records are generally not
centrally located, under common control or in a standardized format. PIE intends
to help solve such problems by addressing the five integral components of
evidence-based medicine listed below with the corresponding PIE product, service
or methodology:

<TABLE> 
<CAPTION> 
     EVIDENCE-BASED MEDICINE COMPONENT                    PIE, Product, Service or Methodology
     ---------------------------------                    ------------------------------------
     <S>                                                  <C> 
     .  DATA.  Clinical data must be recorded in a        CRIS
     standardized format using consistent collection 
     methods.

     .  DISCIPLINE.  Physicians must submit clinical      THE EXCHANGE'S automatic data collection
     data, use the developed protocols (when 
     applicable) and contribute feedback to improve 
     the process.

     .  SOFTWARE AND SYSTEMS.  The tools used to          THE KNOWLEDGE BANK and CRIS
     collect data must be efficient, user-friendly, 
     economical and reliable.

     .  PROCESS.  The procedures used for data            PIE's physician ADVISORY COUNCIL
     management and analysis, as well as protocol, 
     treatment patterns and guideline development,
     must be coordinated to support agreed upon 
     clinical objectives.

     .  GOVERNANCE.  To be effective, this entire         Physicians acting through their role as DIRECTORS and 
     process should be voluntary and under the            SHAREHOLDERS of PIE
     direction of a unified management structure 
     that is organized and respected by physicians.
</TABLE> 

                                       3
<PAGE>
 
    
          CRIS. The Company is currently developing the CRIS software by 
     enhancing version 6.0 of the Matrix Plus computer-based patient record
     product. The CRIS software will be licensed at no charge to each physician
     who purchases at least one Unit in this offering and who executes an
     agreement with PIE to provide clinical abstract data to the Company. This
     allows PIE to normalize the interface and data elements among users and
     thereby collect statistically significant quantities of data in an
     economically and technologically feasible manner. (Only anonymous patient
     and physician abstract data will be used to ensure that the confidentiality
     of patient and physician information remains secure within the confines of
     the physician clinic.) In return, the physicians participate in the
     automated sharing of abstracted clinical information with PIE's information
     repositories. This distribution method is designed to facilitate a rapid
     rollout and begin creation of clinical information repositories as quickly
     as the software is installed. Once installed, the physician-shareholder
     base provides a clinical information source that is expected to be
     continually expanded and enhanced. The Company will market, install and
     service CRIS. It is the Company's current intention that the CRIS software
     will not be sold or distributed except in conjunction with this offering.
     Although, in certain situations in the future, the Company may determine to
     provide the software without requiring the recipient to purchase securities
     of the Company, as has been proposed for the beta test site described
     below.     

    
          THE EXCHANGE. When completed, the Exchange will be a confidential and
     secure interactive patient record exchange network for physicians. The
     Exchange's services will be provided upon patient authorization to
     referral, new or emergency physicians needing real-time access to a
     patient's clinical history for diagnostic purposes. With authorization from
     both the patient and physician, others such as pharmacies, labs and payers
     may electronically access patient non-confidential clinical information or
     update the record with clinical results. However, PIE does not presume to
     "own" an individual patient's medical record. Rather, the Exchange will
     provide services that facilitate the collection, analysis and secured
     distribution of this information between physician offices.     

    
          THE KNOWLEDGE BANK. The Company is currently developing the
     infrastructure of the Knowledge Bank. The Knowledge Bank services are
     anticipated to provide the largest revenue and profits of the Company's
     products and services. These services are derived from regional and
     national data repositories fed by the automated sharing of abstracted
     clinical data from PIE's physician customers/shareholders (using CRIS)
     through the Exchange. Some of the Knowledge Bank services will be clinical
     outcome studies (both diagnostic and wellness), normative profiles,
     treatment therapies, disease management programs, clinical protocols,
     epidemiological research studies, capitation projections, benchmark
     analysis, market studies and cost/benefit analyses. It is expected that the
     Company will derive a significant percentage of its future revenues
     principally by the formatting, analysis and transfer of this information to
     integrated delivery systems, payers, major providers, provider groups,
     managed care organizations, bio/pharmaceutical companies, research
     institutions and government agencies, as well as physicians and
     organizations needing current, clinically derived, outcomes-based data and
     cost information.     

          ADVISORY COUNCIL. To meet the needs of the physician on an on-going
     basis, the Company's service and product offerings will be guided by an
     Advisory Council consisting of nationally recognized physicians
     representing all major specialties, including primary care.

          DIRECTORS AND SHAREHOLDERS. The physicians will assume the
     responsibility to oversee and direct the usage of the network and the
     information repositories on behalf of their patients through the
     physicians' votes as shareholders and in their capacity as directors of the
     Company. The physicians will always make up a majority of the Board of
     Directors and a majority of the shareholders' votes.

          The demand for clinical information and medical knowledge is rapidly
increasing as a result of significant economic and competitive pressures on
healthcare providers to reduce costs while maintaining 

                                       4
<PAGE>
 
high-quality care. Clinical decision-support networks and healthcare information
repositories help providers achieve these objectives by providing clinical
information at the point-of-care as well as access to the latest clinical
knowledge and knowledge of the healthcare system. That knowledge can take many
forms, including specific protocols, treatment therapies, processes, disease
management programs as well as the corresponding outcomes, results and costs. In
addition, the availability of dispersed, clinically-derived, outcomes-based
information enhances the speed in which healthcare research is able to deliver
new and improved products and procedures to physicians and their patients. CRIS,
as well as the services of the Exchange and the Knowledge Bank are specifically
designed by physicians to expand physician clinical management and diagnostic
decision capabilities using evidence-based medicine. These services also provide
physicians, healthcare providers, research organizations and others with the
clinically-derived information necessary to expedite the healthcare improvement
process.
 
       
     The Company has entered into an agreement to acquire the rights to the MR1
Clinical Record System software that was originally developed by Matrix Plus,
Inc., a company controlled by Dr. Rutherford, the Chairman, Chief Executive
Officer, President and a principal shareholder of the Company. See "Certain
Transactions - Transactions with Matrix Plus." This software product has been in
continuous use since 1985 and is currently operating in 19 clinical sites in the
United States and Canada. The MR1 software is designed to facilitate clinical
communication and form the basis for a computerized patient record. The Company
expects to consummate the purchase in June 1996, subject to the effectiveness of
this offering. The consummation is not conditioned upon the Company selling the
Minimum Offering. In anticipation thereof, PIE has been enhancing the MR1
software to create the ambulatory Clinical Record Information System described
in this Prospectus.         
    
     In April 1996, PIE entered into an oral agreement with the 190-physician
Physician Hospital Organization (the "PHO") of two northeast Louisiana
hospitals.  The two hospitals are St. Francis Medical Center in Monroe,
Louisiana and Glenwood Medical Center in West Monroe, Louisiana.  It is the
understanding of the parties that the PHO will serve as a beta test site for the
CRIS product, subject to the parties reaching a definitive agreement.  Such
agreement is not subject to the effectiveness of the offering or the sale of the
Minimum Offering.  See "Plan of Operation - Beta Test Site."       

     The Company was incorporated in Texas in November 1995 and its headquarters
are located at 1401 Hudson Lane, Suite 202, Monroe, Louisiana 71201.  The
Company's telephone number at such address is (318) 323-5000.

                                  RISK FACTORS

     Prior to making an investment decision, prospective investors should
carefully consider all of the information set forth in this Prospectus and, in
particular, should evaluate the factors set forth in "Risk Factors."

                                  THE OFFERING
       
     This Prospectus relates to 15,000,000 shares of Class A Common Stock and
1,885 Units of Class B Common Stock (each Unit representing 9,550 shares of
Class B Common Stock) that may be offered and sold at any time or from time to
time on a best efforts basis by the Company. See "Plan of Distribution."    

     The proceeds from this offering will be used for the development of
products, services and technologies as well as general corporate purposes,
including the acquisition of additional businesses. See "Use of Proceeds."

                         SUMMARY FINANCIAL INFORMATION

                                       5
<PAGE>
 
<TABLE>    
<CAPTION>
                                           FOR THE PERIOD FROM       FOR THE THREE-
                                            NOVEMBER 10, 1995         MONTH PERIOD
                                           (DATE OF INCEPTION)           ENDED
                                           TO DECEMBER 31, 1995      MARCH 31, 1996
                                           --------------------      --------------
<S>                                             <C>                     <C>
General and administrative expenses.......      $ 342,425               $ 208,815
Net loss..................................      $(342,425)              $(208,815)
Net loss per common share.................      $    (.00)              $    (.00)
</TABLE>     
                                      
                                  RISK FACTORS      

     An investment in the Common Stock or Units of the Company involves certain
risks.  Before purchasing any shares of Common Stock or Units offered by this
Prospectus, prospective investors should carefully consider the following
factors relating to the Company and this offering in addition to the other
information contained in this Prospectus in evaluating an investment in the
securities offered hereby. Except for the historical information contained
herein, the matters discussed in this Prospectus are forward-looking statements
that involve risks and uncertainties detailed below. The actual results that the
Company achieves may differ materially from any forward-looking projections due
to such risks and uncertainties.

NO HISTORY OF OPERATIONS

     The Company was formed on November 10, 1995 and has no operating history.
The success of the Company will depend in part on the management of the
Company's business by the officers of the Company. Although the officers of the
Company have expertise and experience in the medical information industry, there
can be no assurance that they will be successful in managing and operating the
Company. See "Plan of Operation."

DEVELOPMENT STAGE COMPANY; UNCERTAINTY OF PRODUCT DEVELOPMENT AND MARKET
ACCEPTANCE

     PIE is a development stage company, and no revenues have been generated
from service, product or information sales. To date, the Company's resources
have been dedicated primarily to the research and development of services based
on a product that the Company has an agreement to purchase from Matrix Plus,
Inc. Although the Company believes that it will be able to develop and
commercialize such services based on this product or similar products, any or
all of the Company's services and products may fail to be accepted. Once such
services and products become commercially available, there can be no assurance
that the Company will be able to gain satisfactory market acceptance for such
services and products. The failure of the Company's products to achieve such
market acceptance, or maintain such acceptance, if achieved, as a result of
competition, technological change or other factors, could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Services and Product Development."

HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY

     Due to its lack of operating history, the Company has not yet
commercialized any services or products. The Company expects to incur operating
losses during the next two years while it builds its national healthcare network
and regional data repositories. The amount of net losses and the time required
by the Company to reach profitability are uncertain. There can be no assurance
that the Company will ever be able to generate service or product revenue or
achieve profitability on a sustained basis. See "Plan of Operation."

FUTURE CAPITAL REQUIREMENTS AND UNCERTAINTY OF FUTURE FUNDING

    
     The Company expects that its current cash and cash equivalents, together
with the maximum proceeds of this offering will be sufficient to fund the
Company's operations for approximately 36 months from the date of this
Prospectus. If only the Minimum Offering is achieved, the Company will have the
resources to satisfy its projected cash requirements for only the next nine
months. In which case, the use of proceeds from the offering will be used
primarily for product development expenses. However, the development and       

                                       6
<PAGE>
 
marketing of the Company's products will require the commitment of substantial
resources to conduct the time-consuming research and development necessary to
bring its services and products to market and to establish production, marketing
and sales capabilities. The Company may need to raise substantial additional
funds for these purposes. The Company may seek such additional funding through
collaborative arrangements and through public or private financing, including
equity financings. Any additional equity financing, if available, may be
dilutive to stockholders and any debt financing, if available, may restrict the
Company's ability to pay dividends on its capital stock or the manner in which
the Company conducts its business. The Company currently has no commitments for
any additional financings and there can be no assurance that any such financings
will be available to the Company or that adequate funds for the Company's
operations, whether from financial markets, collaborative or other arrangements
with corporate partners or from other sources, will be available when needed or
on terms attractive to the Company. The inability to obtain sufficient funds may
require the Company to delay, scale back or eliminate some or all of its
research and product development programs or to limit the marketing of its
services and products. See "Use of Proceeds," "Plan of Operation" and "Certain
Transactions."

    
SALE OF SMALL AMOUNT OF SECURITIES      

   
     The offering may be consummated by the Company with the sale of $300,000 in
securities of the Company. However, the Company intends to continue the offering
until the earlier of the sale of all securities relating to this Prospectus or
two years from the date of this Prospectus. If only a small portion of the
Maximum Offering amount of approximately $34.6 million is eventually sold by the
Company, the Company would scale back its research and development programs and
would limit the scope of the products and services it intends to offer. In such
an event, the growth of the Company and the development of CRIS, the Exchange
and the Knowledge Bank would be significantly slowed, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Plan of Operation."       

ABSENCE OF SALES AND MARKETING EXPERIENCE

     Although the Company's officers have previous experience in the medical
software industry, the Company itself has no history or experience in sales,
marketing or distribution.  To market its products directly, the Company must
either establish a marketing and sales force with technical expertise and
distribution capability or obtain the assistance of a company with a
distribution system and sales force.  There can be no assurance that the Company
will be able to establish sales and distribution capabilities or be successful
in gaining market acceptance for its services and products.  See "Business -
Marketing and Sales."

DEPENDENCE ON AND NEED FOR ADDITIONAL KEY PERSONNEL

     The success of the Company is dependent, in part, on its key management
personnel.  In particular, the Company is highly dependent upon Dr. W. Ernest
Rutherford.  The loss of the services of Dr. Rutherford could have a material
adverse effect on the Company.  To minimize the potential damaging effect of the
loss of Dr. Rutherford's services, the Company has secured a key man life
insurance policy for one million dollars.  In addition, the Company's
potentially rapid growth and expansion will increase burdens on the Company's
management, and its operational and financial resources.  These demands are
expected to require a substantial increase in management and personnel as well
as the development of additional expertise by existing management personnel.
Recruiting and retaining management and qualified operational personnel to
perform research and development work in the future will be critical to the
Company's success.  Although the Company believes that it will be successful in
attracting and retaining skilled and experienced management and operational
personnel, there can be no assurance that the Company will be able to attract
and retain such personnel on acceptable terms, considering the market
competition for such personnel. See "Business-Employees" and "Management."

INTELLECTUAL PROPERTY RIGHTS

     The Company is highly dependant on its ability to protect its proprietary
technology.  There can be no assurance that the Company's efforts to protect its
intellectual property rights will be successful.  The Company 

                                       7
<PAGE>
 
relies on a combination of copyright, trademark and trade secret laws, non-
disclosure agreements and other contractual provisions to establish and maintain
its proprietary rights. The Company has not sought patent protection for its
services and products. Enforcement of the Company's intellectual property rights
may be difficult. Some of the Company's services and products are licensed under
"shrink wrap" license agreements that are not signed by licensees and therefore
may not be binding under the laws of certain jurisdictions. Despite the
precautions taken by the Company, it may be possible for unauthorized third
parties, including competitors, to copy certain portions of the Company's
services and products or to reverse engineer or obtain and use information that
the Company regards as proprietary. Also, there can be no assurance that the
Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technologies.

     Although the Company does not believe that its services and products
infringe on the rights of third parties, there can be no assurance that third
parties will not assert infringement claims against the Company in the future,
or that any such assertions will not result in costly litigation or require the
Company to obtain a license for the intellectual property rights of third
parties. There can be no assurance that such licenses will be available on
reasonable terms or at all. See "Business - Intellectual Property Rights."

ABSENCE OF PUBLIC MARKET

     Prior to the offering, there has been no public market for the Common Stock
or the Units and none is likely to develop. The Company does not presently
intend to list these securities on any national securities exchange or to seek
the admission of such securities for quotation and trading in the National
Association of Securities Dealers Automated Quotation System. Although certain
broker/dealers may determine to make a market in the Common Stock and the Units,
there can be no assurance that a secondary market will develop. These securities
should be purchased only by persons who have no need for liquidity in their
investment. The offering price of the Common Stock and the Units has been
determined arbitrarily by the officers of the Company without arm's-length
negotiation. Although the Company believes the price is fair, there can be no
assurance that the offering price represents the current or future fair market
value of the Common Stock or the Units. The fair market value of shares of
Common Stock and Units may be significantly affected by such factors as quarter-
to-quarter variations in the Company's results of operations, news announcements
or changes in general market or industry conditions. See "Plan of Distribution"
for a discussion of factors that were considered in establishing the initial
public offering price.

RELATIONSHIP WITH FIRST CONSULTING GROUP

       
     The Company is currently dependent upon First Consulting Group ("FCG") to
provide design and development support in selected technical areas as well as
implementation specialists to support the proposed national rollout of CRIS and
network infrastructure. FCG is the largest independent healthcare-oriented,
project management and technology consulting firm in the United States with 16
offices nationwide and 430 employees as of May 30, 1996. The firm also possesses
significant experience with the type of products and services being created by
PIE. Currently, PIE does not have on its own the experience or expertise to
effectively manage and coordinate the design, development and implementation
requirements necessitated by the projected growth. FCG has accumulated knowledge
and experience from thousands of healthcare information technology engagements.
A number of these engagements were with companies whose products and services
were similar to PIE's in terms of technology and development complexity. FCG is
routinely involved in developing strategic information technology plans for
large healthcare industry providers and integrated delivery networks as well as
selecting vendors that are capable of executing those plans. FCG has experience
in continuous project management and quality assurance in a broad spectrum of
healthcare information technology product development environments. Specific
product development activities include assessment, market research, service and
technical architecture development, design, prototype development, vendor
selection, implementation and operations.
      
     Although PIE has projected a rapid and aggressive ramp-up schedule of
management, financial, marketing and technological resources, it does not
foresee establishing the infrastructure and developing the capability necessary
to independently run an information technology company of the projected size for
a minimum of several years. Currently, PIE has two contracts with FCG for
professional support services through March 31, 1997 and June 30, 1997,
respectively, for consideration in the aggregate amount of $732,000. It is
anticipated that these contracts will be expanded and extended, but there can be
no     
                                       8
<PAGE>
 
        
assurance that they will be. Pursuant to the Company's current agreements with
FCG, FCG performs project management services, including for product
development, implementation, training, market research and coordination support
for the Company's management. In addition, the Company has granted to FCG a
right of first refusal to perform any additional contractual consulting
assignments initiated by the Company during the term of the contract expiring on
March 31, 1997. Because of FCG's integral understanding of the Company's
products, strategies and market, termination of FCG's relationship with the
Company for any reason would have a material adverse effect on the Company's
business, financial condition and results of operations. The Company is not
aware of any imminent termination of FCG's relationship with the Company. There
can be no assurance that future financial, strategic or other considerations
experienced by FCG will not have an adverse impact upon FCG's ability or
willingness to meet the Company's management support requirements, which would
have a material adverse effect on the Company's business, financial condition
and results of operations and would require the Company to make substantial
investments to convert to an alternative implementation approach. There can be
no assurance that such conversion, if required, could be accomplished in a cost-
effective or timely manner.

DIFFICULTY OF PLANNED EXPANSION; MANAGEMENT OF GROWTH

     The Company's operating results will be adversely affected if net revenues
do not increase sufficiently to compensate for the increase in operating
expenses caused by the Company's growth and expansion. In addition, the
Company's planned expansion of operations may cause significant strain on the
Company's management, technical, financial and other resources. To manage its
growth effectively, the Company must continue to develop, improve and expand its
existing resources and management information systems and must attract, train
and motivate qualified managers and employees. There can be no assurance,
however, that the Company will be able to achieve these goals. If the Company is
unable to manage growth effectively, its operating results will be adversely
affected.

COMPETITION

     The market for healthcare information products and services is intensely
competitive.  Competitors vary in size and in the scope and breadth of products
as well as services offered.  The Company competes with different companies in
each of its target markets.  Many companies that now provide claims-based data
are trying to enter the clinically-derived data markets.  The Company's
competitors have significantly greater financial, technical, product development
and marketing resources than the Company.  Furthermore, other major information
companies not presently offering clinical healthcare information services may
enter the markets in which the Company competes. The Company's potential
competitors include specialty healthcare information companies, healthcare
information system and software vendors and large data processing and
information companies.  Many of these competitors have substantial installed
customer bases in the healthcare industry and the ability to fund significant
product development and acquisition efforts.  As a result, they may be able to
adapt more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of their
products than the Company.

     The Company believes that the principal competitive factors in the
healthcare network and clinical information markets are the physician acceptance
of the point-of-care interface, access to point-of-care clinical data, price and
the effectiveness of marketing and sales efforts. In addition, the Company
believes that the speed with which information companies can anticipate and
respond to the evolving healthcare industry structure and identify unmet
information needs is an important competitive factor. The Company believes that
it compares well and will compete favorably with respect to each of these
factors. See "Business--Competition."

RISK OF NEW PRODUCT/SERVICE INTRODUCTIONS; RISK OF ERRORS OR FAILURES

    
     The Company expects that the initial CRIS version will be commercially
available by the first quarter of 1997.  The initial CRIS version is a
simplified version that will not include voice digitization, real time access to
historical outcome and cost information beyond their organization, electronic
signature, alerts, external industry standard interface outside of certain HL7
lab interfaces, e-mail or the ability to identify "protected" data at a level
more detailed than "all or none."  The Company expects the final version of CRIS
to be commercially available in 1998.  The Company is also developing the
Exchange and the Knowledge Bank, which the Company expects to be commercially
available during 1997.  The key       

                                       9
<PAGE>
 
        
assumptions underlying the Company's timing for commercial availability are
based on (i) the completion of the prototype design and testing of CRIS, which
are anticipated to be completed August 1996 and January 1997, respectively and
(ii) the Company's ability to raise approximately $750,000 to complete the
initial CRIS version and an additional $1,250,000 to complete the Exchange and
the Knowledge Bank. To the extent the Company raises less than such amounts, the
commerical availability of the Company's products and services will be delayed
since the Company will have fewer resources to utilize. There can be no
assurance that the Company will be able to develop and introduce these new
products within the expected time frames or that such products will achieve
market acceptance or, if market acceptance is achieved, that the Company will be
able to maintain such acceptance for a significant period of time.     

     In addition, as the healthcare information industry continues to evolve,
the Company plans to develop and introduce new products and services to address
the changing needs of the evolving healthcare information market. There can be
no assurance that the Company will be able to develop new products and services
or that such products and services will achieve market acceptance or, if market
acceptance is achieved, that the Company will be able to maintain such
acceptance for a significant period of time. Any inability of the Company to
develop products and services on a timely basis that address changing customer
requirements may require the Company to substantially increase development
expenditures or may result in a loss of market share to a competitor. Moreover,
products and services as complex as those offered by the Company may contain
undetected errors when first introduced or when new versions are released. There
can be no assurance that, despite testing by the Company, errors will not occur
in new products and services, resulting in adverse publicity or in loss of or
delay in market acceptance, which could have a material adverse effect on the
Company's business, financial condition and results of operations.

UNAUTHORIZED ACCESS TO INFORMATION

     Advances in techniques by individuals and entities seeking to gain
unauthorized access to networks of information could expose the Company's
existing products to new and unexpected attacks and require accelerated
development of new encryption or other security measures.  There can be no
assurance that the Company will be able to keep pace with technological changes
implemented by persons seeking to breach network security, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

CONCENTRATION OF VOTING CONTROL IN MANAGEMENT

     After completion of the offering, Dr. Rutherford, the Company's Chairman,
President and Chief Executive Officer will beneficially own an aggregate of
75.1% of the voting power of the Common Stock.  Therefore, Dr. Rutherford will
be able to determine the outcome of the election of the Board of Directors and
all matters submitted to shareholders.  Dr. Rutherford will also be able to
control the direction and future operations of the Company, including decisions
regarding the issuance of additional shares of Common Stock and other
securities.  In addition, as long as Dr. Rutherford beneficially owns the
largest block of issued and outstanding Common Stock of the Company, it will be
impossible for third parties to obtain control of the Company through purchases
of Common Stock not beneficially owned by Dr. Rutherford.  See "Security
Ownership of Management."

     The Company's Board of Directors has the authority to issue shares of
Preferred Stock and to determine the price, rights, preferences, privileges and
restrictions of those shares without further vote or action by the shareholders.
The right of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any Preferred Stock that may
be issued in the future.  The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company.  The Company has no present plans to issue shares of Preferred Stock.

         

LACK OF PARTICIPATING BROKER/DEALERS

     The Company intends to effect the offering on a "best efforts" basis
primarily through its officers and employees. As of the date of this Prospectus,
the Company has not chosen a broker/dealer to participate in the offering. The
failure of the Company to use broker/dealers in the offering may increase the
likelihood that less

                                       10
<PAGE>
 
than all of the securities in this offering will be sold, which may have a
material adverse effect on the Company's business, financial condition and
results of operations. See "--Sale of Small Amount of Securities."

DILUTION

    
     Based upon an offering price of $1.00 per share of Common Stock, purchasers
of the Class A Common Stock and Units offered hereby will suffer an immediate
and substantial dilution in the net tangible book value per share of the Common
Stock from the initial public offering price in the amount of $1.00 per share if
the Minimum Offering is sold and $.73 per share if all of the securities offered
hereby are sold. See "Dilution."     

                                       11
<PAGE>
 
                                USE OF PROCEEDS

       
    The gross proceeds to the Company from the sale of the 15,000,000 shares of
Class A Common Stock and 1,885 Units of Class B Common Stock offered by the
Company hereby, are estimated to be $33,001,750 if the maximum amount of
securities are sold and $300,000 if the minimum amount of securities are sold.
The Company expects to use the net proceeds for the development of products,
services and technologies as well as general corporate purposes, as described in
footnote 6 below, including, but not limited to, the acquisition of additional
businesses. While the Company continually evaluates potential acquisitions, the
Company has no present agreements or commitments with respect to any significant
acquisition, nor are any negotiations regarding any significant acquisition
currently ongoing. Pending such uses, the net proceeds of this offering will be
invested in short-term, interest-bearing, investment-grade securities and
deposit accounts.    

  The use of proceeds is set forth below in tabular form/(1)/.

<TABLE>        
<CAPTION>
                                          MINIMUM            MAXIMUM
                                        ($300,000)/(2)/   ($33,001,750)
                                         --------          -----------
<S>                                      <C>               <C> 
Offering Expenses/(2)/                          0              170,000

Selling Commissions/(3)/                        0            3,300,175

Product Development Expenses/(4)/         210,000            2,500,000

Marketing and Customer Support /(5)/       60,000           11,000,000

General Corporate Purposes/(6)/            30,000           16,031,575
</TABLE>          
/(1)/ The amounts actually expended for each purpose and the timing of such
      expenditures may vary significantly depending upon numerous factors,
      including the progress, costs and timing of (i) the Company's development
      of CRIS, the Exchange and the Knowledge Bank, (ii) the extent to which the
      Company's products and services gain market acceptance, (iii) the amount
      of proceeds the Company is able to raise in the offering and (iv)
      competition.

/(2)/ Dr. Rutherford has funded $189,358 of the offering and organizational
      expenses for which the Company issued to Dr. Rutherford a promissory note,
      which will be exchanged for 189,358 shares of Class B Common Stock after
      the effectiveness of the offering. In addition, Dr. Rutherford has agreed
      to personally fund any additional offering expenses in exchange for a non-
      interest bearing promissory note of the Company. Dr. Rutherford and the
      Company have agreed that in the event the Company sells less than
      $1,000,000 of its securities through this offering, the new note will be
      converted into Class B Common Stock, at a conversion price of $1.00 per
      share. In the event the Company sells in excess of $1,000,000 of its
      securities through this offering, Dr. Rutherford will have the option to
      convert the new note into Class B Common Stock or accept a cash payment.
      See "Certain Transactions-Transactions with Dr. Rutherford."       
    
/(3)/ In the sole determination of management, the Company may pay the persons
      making this offering, excluding its officers and employees, commissions of
      up to 10% of sales made, as allowed by applicable law. The Company will
      not pay sales commissions on the first $300,000 of securities sold hereby
      and currently does not contemplate paying commissions on additional
      securities. To the extent that the Company does not pay selling
      commissions, such monies will be spent on general corporate purposes. The
      Company has not identified any underwriters, broker/dealers or agents. See
      "Plan of Distribution."     
   
/(4)/ "Marketing and Customer Support" includes expenses associated with the
      expansion of the Company's marketing and customer support efforts to
      accomodate growth in the number of users of the Company's products and
      services.    
   
/(5)/ "Product Development Expenses" are direct costs relating to the
      development of CRIS, the Exchange and the Knowledge Bank. The key items
      included are (i) consulting fees to FCG, fees to other independent
      professional contractors and employee salaries, which in the aggregate
      account for approximately 90% of product development expenses, and (ii)
      the purchase and leasing of hardware and software, which account for
      approximately 10% of product development expenses. If only the Minimum
      Offering is sold, Dr. Rutherford has orally agreed to assume the financial
      obligations of the Company pursuant to the terms of the contracts with FCG
      in the aggregate amount of $732,000 in exchange for a non-interest bearing
      promissory note of the Company having the same terms and provisions as the
      new note described in footnote 2 above.    
   
/(6)/ "General Corporate Purposes" includes (i) possible future acquisitions of
      products, technologies or businesses that expand, complement or otherwise
      relate to the Company's products and services, (ii) general and
      administrative purposes and (iii) working capital. The Company considers
      and engages in discussions relating to product, technology and corporate
      acquisitions, merger, financing and other opportunities on a continual and
      ongoing basis. As of the date of this Prospectus, except as disclosed
      herein, the Company has no present commitments or agreements with respect
      to any such transaction, and there can be no assurance that any such
      transaction will be made in the future.    

                                      12

<PAGE>
 
                                 CAPITALIZATION

    
     The following table sets forth at March 31, 1996 (i) the capitalization of
the Company and (ii) the capitalization of the Company as adjusted to give
effect to the sale of the shares of Class A Common Stock and Units offered by
the Company hereby at an initial public offering price of $1.00 per share and
$9,550 per Unit and the application of the estimated net proceeds to the Company
therefrom as described under "Use of Proceeds."       

    
<TABLE>        
<CAPTION>
                                                                  (MINIMUM OFFERING)            (MAXIMUM OFFERING)
                                                                    MARCH 31, 1996                MARCH 31, 1996
                                                               -----------------------      --------------------------
                                                                                AS                             AS
                                                                 ACTUAL      ADJUSTED          ACTUAL       ADJUSTED
                                                               ----------   ----------      ------------   -----------
<S>                                                            <C>          <C>             <C>            <C>
SHAREHOLDERS' EQUITY:
Preferred Stock, $.001 par value; 5,000,000
 shares authorized; no shares outstanding..................    $      --    $      --      $      --       $        --
Class A Common Stock, $.001 par value; 250,000,000
shares authorized; 30,000 shares outstanding; 15,030,000
shares outstanding as adjusted.............................           30           30             30            15,030
 
Class B Common Stock, $.001 par value; 250,000,000
shares authorized; 75,240,000 shares outstanding;
93,241,750 shares outstanding as adjusted..................       75,240       75,540         75,240            93,242
 
Additional paid-in capital.................................      259,730      559,430        259,730        29,712,115
Deficit accumulated during the development stage...........     (578,240)    (578,240)      (578,240)         (578,240)
                                                               ---------    ---------      ---------       -----------

Total shareholders' equity (deficit).......................     (243,240)      56,760       (243,240)       29,242,147
                                                               =========    =========      =========       ===========

Total capitalization.......................................    $(243,240)   $  56,760      $(243,240)      $29,242,147
                                                               =========    =========      =========       ===========
</TABLE>           
- ----------
        
                                DIVIDEND POLICY

     The Company has never paid, and has no present intention of paying, cash
dividends on its Common Stock. The Company currently intends to retain its
earnings to finance the growth and development of its business.  Any
determination in the future to pay dividends will depend on the Company's
financial condition, capital requirements, results of operations, contractual
limitations and any other factors deemed relevant by the Board of Directors.
See "Plan of Operation."


                                    DILUTION

        
     The net tangible book value (deficit) of the Common Stock as of March 31,
1996 was ($290,378) or $.00 per share of Common Stock. Net tangible book value
(deficit) per share represents the amount of the Company's shareholders' equity,
less intangible assets, divided by the number of shares of Common Stock
outstanding. Dilution per share represents the difference between the amount per
share paid by purchasers of shares of Common Stock in the offering made hereby
and the pro forma net tangible book value per share of Common Stock immediately
after completion of the offering. After (i) giving effect to the sale of
15,000,000 of the shares of Class A Common Stock and 18,001,750 shares of Class
B Common Stock offered hereby by the Company at an initial public offering price
of $1.00 per share and (ii) deducting selling commissions, if any, pro forma net
tangible book value of the Company as of March 31, 1996, would have been
$29,241,197 or $.27 per share. This represents an immediate increase in pro
forma net tangible book value of $.27 per      

                                       13
<PAGE>
 
        
share to existing investors and an immediate dilution of $.73 per share to new
public investors purchasing Common Stock in the offering, as illustrated in the
following table:       

                                        
                                    TABLE 1      
                                   
                               (MAXIMUM OFFERING)      

<TABLE>    
<S>                                                                         <C>         <C>
Initial public offering price per share....................................              $1.00
  Net tangible book value per share before the offering....................  $.00
  Increase in tangible book value per share attributable to new public
    investors..............................................................  $.27
                                                                             ----
Pro Forma Net tangible book value per share after the offering.............                .27
                                                                                         -----
Dilution per share to new public investors.................................              $ .73
                                                                                         =====
</TABLE>     
     
    
     The following table sets forth on a pro forma basis as of March 31, 1996
the difference between existing shareholders and the purchasers of shares in the
offering with respect to the number of shares purchased from the Company, the
total consideration paid and the average price paid per share, at an initial
public offering price of $1.00 per share and prior to deduction of estimated
costs of the offering.     
    
<TABLE>        
<CAPTION>
                              SHARES PURCHASED       TOTAL CONSIDERATION         
                           ----------------------   -----------------------      AVERAGE PRICE
                             NUMBER      PERCENT       AMOUNT      PERCENT         PER SHARE
                           -----------   --------   ------------   --------      -------------
<S>                        <C>           <C>        <C>            <C>           <C>
Existing stockholders...    75,270,000      69.5     $   335,000       1.0%           $0.00
New public investors....    33,001,750      30.5      33,001,750      99.0             1.00
                           -----------     -----     -----------     -----            -----
     Total..............   108,271,750     100.0%    $33,336,750     100.0%           $0.31
                           ===========     =====     ===========     =====            =====
</TABLE>          

    
     Assuming the Minimum Offering is sold, after (i) giving effect to the sale
of 300,000 shares of Class B Common Stock offered hereby by the Company at an
initial public offering price of $1.00 per share and (ii) deducting selling
commissions, if any, pro forma net tangible book value of the Company as of
March 31, 1996, would have been $82,810 or $.00 per share. This represents an
immediate dilution of $1.00 per share to new public investors purchasing Common
Stock in the offering, as illustrated in the following table:     

                                        
                                    TABLE 2      
                                   
                               (MINIMUM OFFERING)      
<TABLE>     
<S>                                                                         <C>         <C>
Initial public offering price per share................................                  $1.00
  Net tangible book value per share before the offering................      $.00
  Increase in tangible book value per share attributable to new public
    investors..........................................................      $.00
                                                                             ----
Pro Forma Net tangible book value per share after the offering.........                    .00
                                                                                         -----
Dilution per share to new public investors.............................                  $1.00
                                                                                         =====
</TABLE>      

    
     The following table sets forth on a pro forma basis as of March 31, 1996
the difference between existing shareholders and the purchasers of shares in the
offering with respect to the number of shares purchased from the Company, the
total consideration paid and the average price paid per share, at an initial
public offering price of $1.00 per share and prior to deduction of estimated
costs of the offering.     

<TABLE>     
<CAPTION>
                             SHARES PURCHASED       TOTAL CONSIDERATION       
                           ---------------------   ---------------------      AVERAGE PRICE  
                             NUMBER     PERCENT      AMOUNT     PERCENT         PER SHARE
                           ----------   --------   ----------   --------      -------------
<S>                        <C>          <C>        <C>          <C>            <C>
Existing stockholders...   75,270,000      99.6      $335,000      52.8%           $0.01
New public investors....      300,000        .4       300,000      47.2             1.00
                           ----------      ----      --------      ----            -----
</TABLE>        

                                       14
<PAGE>
 
<TABLE>      
<S>                        <C>          <C>        <C>          <C>            <C>
Total...................   75,570,000     100.0%     $635,000     100.0%           $0.01
                           ==========     =====      ========     =====            =====
</TABLE>      

                                       15
<PAGE>
 
                               PLAN OF OPERATION


    
     SUFFICIENCY OF CASH RESERVES.  If the Maximum Offering is achieved, the
Company will have the resources to satisfy its projected cash requirements for
approximately the next 36 months as a result of this offering.  Management does
not expect the Company to generate significant revenues from Knowledge Bank or
Exchange services until the fiscal year 1998. Therefore, the offering is vital
to the continued operations of the Company.  If only the Minimum Offering is
achieved, the Company will have the resources to satisfy its projected cash
requirements for only the next nine months, in which event, the Company will
have to raise additional capital.  The Company intends to continue the offering
until the earlier of the sale of all securities relating to this Prospectus or
two years from the date of this Prospectus.  If only a small portion of the
Maximum Offering amount of approximately $34.6 million is eventually sold by the
Company, the Company intends to scale back its research and development programs
and the scope of the products and services it intends to offer.  Therefore, the
growth of the Company and the development of CRIS, the Exchange and the
Knowledge Bank would be significantly slowed.  See "Risk Factors-Sale of Small
Amount of Securities."      

     The Company believes that it must have an installed base of at least 800
physician-shareholders utilizing CRIS in order to accumulate clinical abstract
data of sufficient volume to generate revenues from the sale thereof that will
support the operations of the Company.
    
     RESEARCH AND DEVELOPMENT. The Company does not anticipate incurring
research and development costs in excess of 20% of the net proceeds to the
Company from the offering.       
           
     EMPLOYEE ADDITIONS.  The Company has chosen to conduct its operations
utilizing independent contractors and thereby delay hiring employees until after
the effectiveness of the offering.  However, within the span of the next 12
months, the Company anticipates hiring a Vice President, President, Systems
Analyst, Receptionist/Secretary, Trainer, Administrative Assistant, Quality
Director, Director of Support Services, Controller, Database Sales/Marketing
Director, Network Administrator, Database Administrator, Director of
Telecommunication, Data Architect, Testers and Maintenance Programmers. Pursuant
to the Company's current agreements with FCG, FCG does not perform research and
development functions. Rather, FCG performs project management services,
including for product development, implementation, training, market research and
coordination support for the Company's management. This includes quality
assurance oversight of work done by other independent contractors involved with
the development of the Company's products and services, including The Americas
Group, Technology Consultants, Inc., which performs certain software development
functions. FCG will also help the Company meet selected short-term labor needs
until the Company hires full-time employees.    
    
     BETA TEST SITE. In April 1996, PIE entered into an oral agreement with the
190-physician PHO of two northeast Louisiana hospitals. The two hospitals are
St. Francis Medical Center in Monroe, Louisiana and Glenwood Medical Center in
West Monroe, Louisiana. It is the understanding of the parties that the PHO will
serve as a beta test site for the CRIS product, subject to the parties reaching
a definitive agreement. Such agreement is not subject to the effectiveness of
the offering or the sale of the Minimum Offering. It is anticipated that the
Company will provide the software to the PHO at no charge and the PHO will be
responsible for the costs of installation and training.      

        
     MATRIX PLUS PURCHASE AGREEMENT. In November 1995, the Company entered into
an agreement with Matrix Plus, Inc., a company controlled by Dr. Rutherford, the
Chairman, Chief Executive Officer, President and a principal shareholder of PIE,
to purchase from Matrix the MR1 Clinical Record System software developed by
Matrix, in consideration for the issuance of 200,000 shares of Class A Common
Stock of PIE. The purchase price was determined by arm's-length negotiations
between Matrix and PIE, based, in large part, upon the software developer's
estimation of the value of the software (considering development costs and
expenses). The transaction was approved by a majority of the independent, 
disinterested members of the Board of Directors of the Company on terms no less
favorable to the Company than could be obtained from unaffiliated parties. It is
anticipated that the Company will consummate the purchase upon the effectiveness
of the offering. See "Certain Transactions-Transactions with Matrix Plus.     

                                      16
<PAGE>
 
    
     ACCOUNTING POLICIES.  The following is an explanation of the Company's
principal revenue recognition policies relating to its products and services and
the Company's accounting treatment for software development.       

    
     REVENUE RECOGNITION.       

    
     CRIS -- CRIS will be provided to physician-shareholders without charge
(except for annual maintenance fees and third-party license fees as well as any
third-party royalty charges. See "Business-Distribution and Fees") in exchange
for the physician-shareholder agreeing to provide clinical data to the Company.
This fee will be recognized by accrual on a monthly basis as it is earned. No
accounting recognition will be given to the "without charge" aspect of 
CRIS.       

    
     The Exchange -- Revenues from the Exchange will be recognized when earned
in accordance with a future pricing schedule.       

    
     The Knowledge Bank -- Revenues from the Knowledge Bank will be recognized
when earned in accordance with a future pricing schedule.       

    
     SOFTWARE DEVELOPMENT. The Company will account for development of software
in accordance with Statement of Financial Accounting Standard No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed" ("SFAS 86"). Under SFAS 86, costs incurred internally to create a
computer software product shall be charged to expense when incurred as research
and development until technological feasibility has been established for the
product. Technological feasibility is established upon completion of a detailed
program design or, in its absence, completion of a working model. Thereafter,
all software production cost shall be capitalized and subsequently reported at
the lower of unamortized cost or net realizable value. Capitalized costs are
amortized based on current and future revenue for each product with an annual
minimum equal to the straight-line amortization over the remaining estimated
economic life of the product.       

                                       17
<PAGE>
 
                                    BUSINESS

GENERAL

    
     PIE is a development stage company that is controlled by physicians, as
well as directed and operated primarily by physicians. PIE was founded on the
principle that physicians desire to provide healthcare market leadership,
strengthen the physician/patient relationship and improve the quality of care
while reducing cost. The Company intends to help physicians accomplish this by
leveraging physician training and experience with current information technology
to transform clinical data into medical knowledge and knowledge of the
healthcare system. The products and services described below are currently being
developed by the Company; however, such products and services have not been
completed and are not commercially available.      

     PIE is focused on improving the quality and lowering the cost of healthcare
through the capture of clinical data at the point of care using CRIS, the
Company's computer-based Clinical Record Information System software or any
future compatible CPR system. Clinical data will be collected by PIE in an
anonymous and abstract format through a computerized physician network. This
clinical data will form the basis of the Knowledge Bank's national clinical data
repositories and facilitate the widespread adoption of "evidenced-based
medicine." (Evidence-based medicine is regarded as a promising development for
improving the practice of medicine and the delivery of healthcare at lower
costs. This practice of medicine bases patient care protocols and other clinical
policies on the vigorous scientific analysis of patient outcomes.)

     Evidence-based medicine relies on the detailed analysis of a large
population of patient medical records and clinical data. To date, such analysis
has not been practical on a large scale since medical records are generally not
centrally located, under common control or in a standardized format. PIE intends
to help solve such problems by addressing the five integral components of
evidence-based medicine listed below with the corresponding PIE product, service
or methodology:

<TABLE> 
<CAPTION> 
     EVIDENCE-BASED MEDICINE COMPONENT                    PIE Product, Service or Methodology
     ---------------------------------                    -----------------------------------
     <S>                                                  <C> 
     .  DATA.  Clinical data must be recorded in          CRIS
     a standardized format using consistent 
     collection methods.

     .  DISCIPLINE.  Physicians must submit               THE EXCHANGE'S automatic data collection
     clinical data, use the developed protocols 
     (when applicable) and contribute feedback 
     to improve the process.

     .  SOFTWARE AND SYSTEMS.  The tools used             THE KNOWLEDGE BANK and CRIS
     to collect data must be efficient, user-
     friendly, economical and reliable.

     .  PROCESS.  The procedures used for data            PIE's physician ADVISORY COUNCIL
     management and analysis, as well as 
     protocol, treatment patterns and guideline 
     development, must be coordinated to 
     support agreed upon clinical objectives.

     .  GOVERNANCE.  To be effective, this                Physicians acting through their role as DIRECTORS 
     entire process should be voluntary and               and SHAREHOLDERS of PIE
     under the direction of a unified 
     management structure that is organized and 
     respected by physicians.
</TABLE> 

                                       18
<PAGE>
 
     
     CRIS.  The Company is currently developing the CRIS software by enhancing 
version 6.0 of the Matrix Plus computer-based patient record product. The CRIS
software will be licensed at no charge to each physician who purchases at least
one Unit in this offering and who executes an agreement with PIE to provide
clinical abstract data to the Company. This allows PIE to normalize the
interface and data elements among users and thereby collect statistically
significant quantities of data in an economically and technologically feasible
manner. (Only anonymous patient and physician abstract data will be used to
ensure that the confidentiality of patient and physician information remains
secure within the confines of the physician clinic.) In return, the physicians
participate in the automated sharing of abstracted clinical information with
PIE's information repositories. This distribution method is designed to
facilitate a rapid rollout and begin creation of clinical information
repositories as quickly as the software is installed. Once installed, the
physician-shareholder base provides a clinical information source that is
expected to be continually expanded and enhanced. The Company will market,
install and service CRIS. It is the Company's current intention that the CRIS
software will not be sold or distributed except in conjunction with this
offering. Although, in certain situations in the future, it may provide software
without requiring the recipient to purchase securities of the Company, as has
been proposed for the beta test site. However, additional charges at normal
rates, such as for installation, training or maintenance fees would not
necessarily be waived. In addition, the Company may choose to require the
purchase of a minimum number of services if the securities purchase requirement
were waived.      
    
     CRIS will permit each physician to build and access computer-based patient
records automatically and save the physician time while providing real-time
diagnostic decision support, cost-basis and patient specific clinical
information at the "point-of-care." The physician will not need to change his or
her preferred practice style since the records are built as a by-product of
normal clinical operations. Physicians will be able to directly interact with
the system by using various data entry techniques to provide certain notations
and patient observations. CRIS will further provide a user-friendly technical
infrastructure supporting collegial communication among physicians regarding
their findings and experiences with respect to protocol outcomes, new treatments
and process improvements, for example. Other CRIS attributes will include easy-
to-use, physician-specific clinical outcomes and cost information from the
clinic's own data repository. This information when combined with regional and
national bench-mark information will help physician-shareholders to market,
negotiate and compete more effectively in the provider marketplace. The CRIS
physician interface will integrate the latest pen-based, hand-held, data
collection, character recognition, voice digitization and wireless data transfer
technologies with a vast knowledge database using self-organizing data. See "-
Products and Services."      
    
     THE EXCHANGE.  It is anticipated that, when completed, the Exchange will be
a confidential and secure, interactive patient record exchange network for
physicians. The Exchange's services will be provided upon patient authorization
to referral, new or emergency physicians needing real-time access to a patient's
clinical history for diagnostic purposes. With authorization from both the
patient and physician, others such as pharmacies, labs and payers may
electronically access patient non-confidential clinical information or update
the record with clinical results. However, PIE does not presume to "own" an
individual patient's medical record. Rather, the Exchange will provide services
that facilitate the collection, analysis and secured distribution of this
information between physician offices.      
    
     THE KNOWLEDGE BANK.  The Company is currently developing the infrastructure
of the Knowledge Bank. The Knowledge Bank services are anticipated to provide
the largest revenue and profits of the Company's products and services. These
services are derived from regional and national data repositories fed by the
automated sharing of abstracted clinical data from PIE's physician
customers/shareholders (using CRIS) through the Exchange. Some of the Knowledge
Bank services will be clinical outcome studies (both diagnostic and wellness),
normative profiles, treatment therapies, disease management programs, clinical
protocols, epidemiological research studies, capitation projections, benchmark
analysis, market studies and cost/benefit analyses. It is expected that the
Company will derive a significant percentage of its future revenues principally 
     

                                       19
<PAGE>
 
     
by the formatting, analysis and transfer of this information to integrated
delivery systems, payers, major providers, provider groups, managed care
organizations, bio/pharmaceutical companies, research institutions and
government agencies, as well as physicians and organizations needing current,
clinically derived, outcomes-based data and cost information. The Company
anticipates that the Knowledge Bank services will be provided by employees of
the Company; however, the Company may choose to additionally employ independent
contractors depending on market demand.      

     ADVISORY COUNCIL.  To meet the needs of the physician on an on-going basis,
the Company's service and product offerings will be guided by an Advisory
Council consisting of nationally recognized physicians representing all major
specialties, including primary care.
    
    
     DIRECTORS AND SHAREHOLDERS.  Physicians, including Dr. Rutherford, will
always make up a majority of the Board of Directors and a majority of the
shareholders' votes.          

CERTAIN AGREEMENTS
    
    
     The Company has entered into an agreement to acquire the rights to the MR1
Clinical Record System software that was originally developed by Matrix Plus,
Inc., a company controlled by Dr. Rutherford, the Chairman, Chief Executive
Officer, President and principal shareholder of the Company. See "Certain
Transactions - Transactions with Matrix Plus." This software product has been in
continuous use since 1985 and is currently operating in 19 clinical sites in the
United States and Canada. The MR1 software is designed to facilitate clinical
communication and form the basis for a computerized patient record. The Company
expects to consummate the purchase in June 1996, subject to the effectiveness of
this offering. The consummation is not conditioned upon the Company selling the
Minimum Offering. In anticipation thereof, PIE has been enhancing the MR1
software to create the ambulatory Clinical Record Information System described
in this Prospectus.          
    
     In April 1996, PIE entered into an oral agreement with the 190-physician
PHO of two northeast Louisiana hospitals. The two hospitals are St. Francis
Medical Center in Monroe, Louisiana and Glenwood Medical Center in West Monroe,
Louisiana. The agreement provides for the PHO to be a beta test site for the
CRIS product.      

INDUSTRY BACKGROUND

     Market-driven efforts to contain rising healthcare costs have resulted in
an increasing demand for access to sophisticated clinical decision-support
information. The importance of clinical decision-support information is
increasing as a result of significant economic pressures within the healthcare
industry. Healthcare delivery costs have risen dramatically compared to the
overall rate of inflation. This rise has led to substantial pressure on
physicians and other healthcare providers to contain healthcare costs. At the
same time, increased competition has resulted in a greater focus on the
demonstrated quality of care delivered to patients. The ongoing pressure to
contain healthcare costs is also changing the structure of healthcare provider
organizations and their information requirements. Healthcare payers are
increasingly transferring the economic risk of healthcare delivery to providers
by shifting from the traditional fee-for-service reimbursement modes to managed
care reimbursement modes, the most evolved form of which is capitation. Under
capitation, physicians and other providers are paid a fixed fee to deliver all
required services per individual patient. This payment mechanism encourages
physicians and other healthcare providers to modify their emphasis from not only
treating illness, but also to maintaining wellness. Consequently, the movement
to managed care has increased the importance of comprehensive outcomes-based,
patient-centered healthcare information. Physicians and other

                                       20
<PAGE>
 
healthcare providers use this information to more accurately measure the
clinical value of medical tests, procedures and clinical pathways.

                                       21

<PAGE>
 
     
          [THIS IS A CHART THAT DEPICTS THE FACT THAT ECONOMIC RISK TO
                    HEALTHCARE PROVIDERS INCREASES THE VALUE
          OF OUTCOMES-BASED PATIENT-CENTERED HEALTHCARE INFORMATION.]      



     Efforts to control the clinical costs of healthcare historically have been
hampered by the complexity of healthcare delivery and the lack of "benchmark"
data required to study the appropriateness, efficiency and effectiveness of
healthcare delivery. Currently the only healthcare data available in large
volumes is claims-based data. However, only limited insights can be drawn from
claims-based data in the absence of corresponding clinical or outcomes data.
Only clinically-based data can demonstrate the efficacy of the care provided.
Further, physicians remain skeptical about information that fails to address
outcomes.

     Currently, outcomes assessment is performed by physicians, payers,
pharmaceutical manufacturers and academic researchers combining forces to
measure and compare the clinical and cost-effectiveness of specific medical
diagnostic and treatment processes of care (such as immunization levels or
mammography screen rates). By inference, these processes should lead to good
results; however, it is hard to prove that the link between process and outcome
is valid. The cause and effect relationship between process and outcomes is
difficult to relate unless the processes are clearly defined, the outcomes
consistently measured and the results reflect the continuum of care. Claims-
based data cannot address these issues. However, outcomes assessment using the
Knowledge Bank's clinically-derived information and outcomes will permit such
analysis.

     At present, the Company believes that most physicians practice in relative
isolation from their peers with considerable practice variability existing
between providers. The variability frequently follows consistent patterns but,
unfortunately, little information about care decisions is returned to the
physicians. The Company believes aggregating patient populations to examine
variation in physician decision making will yield valuable insights for
practitioners. Information is a crucial enabler in this process, allowing
physicians to engage in constructive discussions about practice pattern
variation. PIE believes that physician groups are in the best position to create
value and benefits from clinically-based information in the future because
physicians are the care providers and can best put new insights into practice.
However, to date, this has not happened because:

     1.   Clinically-based information has not been available.

     2.   Physician groups have been too fragmented to gain access to the
necessary capital. To create significant volumes of dispersed clinically
derived, outcomes-based information requires raising sufficient capital to build
the significant infrastructure required to assemble the data.

                                       22
<PAGE>
 
STRATEGIC VISION

     The Company's strategic vision is to facilitate physicians working together
to produce higher quality, lower cost healthcare while strengthening the
patient/physician relationship. The enabling aspect of this vision is
physicians, empowered by PIE, leveraging their training and experience with
current information technology. This combination will enable physicians to
exercise healthcare leadership by transforming clinical and cost information
into cost-effective medical knowledge. Physicians will achieve this
transformation by initiating and directing an electronic information exchange
network along with regional and national clinical abstract data repositories.

PHYSICIAN SOLUTION
    
       
     PIE is owned, directed and operated primarily by physicians. Its strategic
initiative is to build clinical decision support networks and healthcare
information repositories. To meet the needs of the physician community on an on-
going basis, the Company's service and product offerings will be guided by an
Advisory Council consisting of nationally recognized physicians representing all
major medical specialties. The physicians of PIE will assume their time honored
responsibility to oversee and direct the usage and confidentiality of the
information on behalf of their patients. PIE has no plans to become a software
company and is therefore committed to using the best clinical information
collection software available. The Company designed CRIS to be easily integrated
with numerous practice management, accounts receivable, CPR and acute care
systems that adhere to industry interface and open architecture standards. The
expansion of data will be handled by use of open architecture standards and
proven data storage technologies, such as WORM and CD-ROM . The Company intends
to cooperate with vendors and major telecommunications providers wishing to
develop integration interfaces with CRIS, the Exchange and the Knowledge Bank.
             

PRODUCTS AND SERVICES

     PIE will offer CRIS, a computer-based patient record product, as well as
the services of the Exchange and the Knowledge Bank. PIE will acquire (data
collection), enhance (statistical analysis to convert data into information),
evaluate (form theories to learn and gain knowledge), store (through the
Knowledge Bank) and distribute (through the Exchange and other means) clinical
data, information and knowledge.

     CLINICAL RECORD INFORMATION SYSTEM (CRIS)
    
     CRIS is a patient record software program that will allow access to PIE's
network of fee-based services, the Exchange and the Knowledge Bank. The
development of CRIS has not yet been completed. CRIS is being designed to
complement the physician's existing practice patterns. The product's goal is to
enhance the physician's ability to provide higher quality care at lower cost.
CRIS will offer a wide variety of options for physicians to access and store
information. These options include transcription and hand-held, pen-based
interfaces as well as standard work stations.      

     Some of the immediate benefits that CRIS will allow are the ability to:

     .    Quickly access and store clinical patient records.
     .    Access the historical outcome and cost of a proposed medical
          intervention in real time.
     .    Utilize an information-based continual quality improvement approach to
          patient care rather than retrospective analysis of the outliers.
     .    Reduce paperwork.
     .    Increase the efficiency of physicians and office staff.
     .    Decrease errors and omissions by utilizing alerts and protocols at the
          point of care.

                                       23
<PAGE>
 
     .    Permit physicians to differentiate themselves in the market with
          medically meaningful and clinically credible outcomes information.
     .    Protect patient medical record confidentiality.

     Longer term benefits from the CRIS product are the ability to:

     .    Analyze and improve the profitability of managed care contracts
          (including capitation contracts) for the physician-shareholders.
     .    Negotiate beneficial managed care contracts with payers by increasing
          available information to physicians.
     .    Analyze costs and historical outcomes of various protocols and
          treatment patterns at the point of care.
     .    Provide cost information on procedures, diagnosis and protocols that
          is broken down into manageable components.
     .    Confidentially provide individual physicians the ability to compare
          their quarterly practice outcomes with a national specialty composite
          profile.

     The following is a more detailed description of some of the CRIS benefits:
    
     DISTRIBUTION AND FEES.  CRIS software and documentation is offered to
physician-shareholders who purchase at least one unit in this offering and is
delivered without charge (other than annual maintenance fees and third-party
license fees as well as any third-party royalty charges). Training, 
installation, separate interfaces, customization, out-of-pocket costs, hardware
and site preparation expenses, third-party database server software, each as
required, will necessitate additional charges.     
    
     CONFIDENTIALITY OF PHYSICIAN INFORMATION.  All physician-specific
correspondence, results, reports and services will be provided directly and
solely to that individual physician-shareholder unless they instruct PIE
otherwise.      

     INTEGRATED SOLUTIONS.  PIE is committed to providing integrated solutions
and services that meet the clinical information requirements of physicians.
Using standard application interface protocols such as Health Level Seven (HL7),
American Society for Testing and Materials (ASTM) and other industry interface
standards, CRIS's operating environment is designed to provide inter-operability
with leading software packages. This environment encourages integrated
interfaces with practice management, billing, scheduling, computer-based patient
records and hospital information systems that adhere to PIE's published open
architecture and system standards. The use of CRIS will not be a requirement for
gaining access to the Exchange or the Knowledge Bank. As market demand dictates,
CRIS may be augmented or superseded by other software products.

     ADAPTABILITY TO PRACTICE STYLE.  CRIS is integrating the latest user-
friendly data entry and access technology. In a single physician interface, the
user will be able to use or mix multiple technologies. These technologies
include pen-based, hand-held wireless communication, handwritten character
recognition and voice digitization. Access to these technologies allows
physicians to build patient records as a by-product of their normal clinical
operations.

     FAMILIAR "LOOK AND FEEL."  CRIS will present personalized patient
information and communication reminders to streamline physician work flow and
support flexible, personalized formats of clinical results. The systems'
intuitive, icon-based interface will be comfortable for clinicians to learn and
use. "Chart tabs" that are graphical representations of the tabs found in a
patient's paper medical record, will provide intuitive and easy navigation
through the patient's electronic medical record. Physicians and other clinicians
can analyze flow sheets of either scheduled patient care activities or global
results in personalized formats.

                                      24
<PAGE>
 
  EASE OF SYSTEM USE.  The system incorporates uniform icon-based screens with
on-line help facilities.  These Windows-based screens are being designed to
reduce user training requirements and increase the user's ability and
willingness to use the system.  The flexibility of the CRIS data display will
permit individual users to view information differently. Electronic signature
capacity will be provided to facilitate the documentation process as well as for
medical record completion and attestation.

  PROTOCOLS AND GUIDELINES.  PIE believes that quality improvements and cost-
reduction can most efficiently be driven by the physician (supported with
information) at the point of care.  Physicians will have access to on-line, at
the point of care, specialty specific protocols (standardized plans for treating
specific conditions) and/or guidelines.  They will also have the ability to add
customized or modified protocols that they commonly use.  The clinic's cost of
each protocol or treatment pattern can be displayed, detailed by procedure
components. (PIE's cost reporting modules require specific initial accounting
input from the clinic's accountant or CPA.)  Protocols and guidelines help to
reduce variance by standardizing the steps; however, the physician will always
have the option to deviate from the pathway at any point.  The system will also
allow the addition of free-form narrative entry through the transcription or
keyboard functions.

  CONTRACT NEGOTIATION INFORMATION SUPPORT.  The emergence of managed care
(capitation in particular) has increased the need for clinical and financial
patient information. CRIS will allow physicians to analyze the profitability of
their managed care contracts, including capitation.  More importantly, it will
provide information to the physician that assists in negotiating a rate with
payers that more closely reflects the physician's activities and regional
epidemiological data.

  RESULTS REPORTING.  CRIS will provide on-line review of results, including
laboratory and radiology.  The system also provides on-line review of narrative
results such as transcriptions, discharge summaries and medication profiles.
Results will be stored permanently as part of the patient's electronic medical
record.

  COSTS/OUTCOMES/ANALYSIS/MANAGEMENT.  CRIS's database of clinical and financial
information will enable physicians to measure and analyze the quality and cost
effectiveness of care provided.  Specifically, CRIS will give physicians the
ability to:

  .   Evaluate the historical quality, as well as the cost, of alternative
      medical interventions at the point of care.

  .   Confidentially provide individual physicians the ability to compare their
      quarterly practice outcomes with a national specialty composite profile.

  .   Access full absorption costing data for each procedure, diagnosis or
      treatment pattern. Cost components are broken down into manageable size
      with line item detail. (PIE's cost reporting modules require specific
      initial accounting input from the clinic's accountant or CPA.)

  .   Access on-line their clinic and research database to monitor, manage and
      report detailed clinical information on their medical procedures,
      diseases, protocols and patient outcomes.

  .   Reengineer medical interventions by using the above cost and outcome
      information.

  ALERTS.  CRIS will alert physicians when a potentially unsuitable medication
is ordered. This would include reminder alerts for drug interactions and
allergies.  PIE will also be expanding CRIS to include protocol reminders using
decision support algorithms to aid clinical decisions.  CRIS will also be
enhanced to allow physicians the ability to select ranges for abnormal test
result alerts.

  MEDICATION MANAGEMENT.  CRIS will enable clinicians to prescribe new
medications to a patient as well as renew medications existing in a patient's
history.  This system will also provide patients with educational material as
part of the care delivery process and will allow the clinician to print, fax or
transmit a prescription.

                                       25
<PAGE>
 
  LIFETIME PATIENT RECORD.  CRIS will incorporate an on-line record of patient
specific prior services, diagnosis, therapies and outcomes.  It is being
designed to (i) enable improved efficiency and reduced uncertainty during the
care giving process, (ii) reduce the potential for adverse medical decisions
(such as prescribing drugs to which the patient is known to be allergic) and
(iii) reduce administrative burden.  PIE believes that these benefits will
result in reduced healthcare delivery costs, improved outcomes and a higher
quality of care, as well as provide complete and easily accessible information
for reimbursement documentation.  The system will allow providers to track
patients' status over time, which is particularly beneficial for following
patients with chronic conditions such as diabetes, instage renal disease and
congestive heart failure.

  PHYSICIANS' ON-LINE RESOURCE.  CRIS is being designed to meet the clinical and
diagnostic information needs of physicians.  In addition to patient data, CRIS
will provide access to the most current medical reference materials and
bibliographic databases available, including MEDLINE, medical specialty practice
knowledge banks as well as other information sources.  Physicians will be able
to communicate with each other through the CRIS E-mail system, as well as with
their affiliated institutions and organizations.

  OPEN SYSTEM ARCHITECTURE.  PIE is committed to open system architecture.  PIE
adheres to standards at all levels of implementation from software standards,
such as Windows development tools (including ODBC database interfaces) to data
standards similar to the X.12 electronic form layout for EDI documents.  These
standards create interfaces to a host of industry standard hardware and software
products as well as databases that give the user a familiar look and feel. Open
system architecture allows PIE's products and services to maintain the
flexibility required in an ever-changing healthcare industry. CRIS currently
interfaces with automated third-party laboratory systems to ac cess laboratory
test results.

  CURRENT TECHNOLOGY.  PIE will operate in the Microsoft Windows (3.1, 95 and
NT) environment.  This environment features an easy to use, intuitive, Graphical
User Interface (GUI) point-and-click presentation.  PIE utilizes the current
client/server (Services Model) architecture to deliver high performance access
to vast amounts of clinical data that can be distributed to multiple platforms
and locations.  Programs are being developed using rapid development, object-
oriented development tools, such as Visual Basic, SQL and C++.  PIE supports
mission critical hardware designs that insure minimum "down time."  In addition,
PIE supports the use of standard interfaces and components that include OLE
servers, automation servers and custom controls.

  CRIS builds on true client-server architecture and state-of-the-art
technology.  It uses available developer tool kits extensively.  PIE will also
license third-party databases and specialized software components, such as drug
pricing and interactions.  CRIS will use HL-7 and other industry standards to
import laboratory, radiology and transcription data electronically.

  INTEGRATION CAPABILITY.  The CRIS system can be accessed simultaneously at
different locations within the healthcare delivery system by doctors, nurses and
technicians using distributed deployment of LAN and WAN technology.  CRIS's
distributed architecture will allow for the transparent communication and
interaction with other products from different vendors.  The utilization of
industry standard software supports integration of voice, data, video and
imaging.  This creates effective network solutions for ambulatory practitioners.
    
  PATIENT ACCOUNTING.  CRIS will collect and organize patient and clinical
information, which may be used in the physician's current billing system.      
    
  SECURITY.  Application security is designed to use standard controls of user
names and passwords.  A permanent audit trail will be provided for complete
tracking of all additions, changes or deletions.  See "--Confidentiality of
Clinical Information."      

                                       26
<PAGE>
 
  HEALTHCARE INFORMATION EXCHANGE NETWORK (EXCHANGE) SERVICES
    
  The Company believes that the Exchange is an important component of PIE's
strategy. It is anticipated that, when completed, the Exchange will be a
national communication network that allows physicians to transfer patient
information within and between regional clinical information networks.  Access
to the Exchange will be provided through CRIS or through the physician's
compatible ambulatory computer-based patient record software. physicians in
locally defined geographic areas will be provided access to their own regional
communications network and information repository. The Exchange will use this
network to provide access designed to enhance the physician's skills and
experience by providing real-time delivery of critical clinical information. The
Exchange is being designed to put vital information into the hands of an
attending healthcare professional at the time of decision. It will make medical
diagnostic information available even if the data resides in another PIE
physician's clinic hundreds of miles away. This network will help physicians to
provide higher quality care at lower cost by providing the necessary information
at decision time, thereby eliminating unnecessary analysis and testing.      

  The following describes the Exchange in more detail:
    
    
  EASE OF USE.  The Exchange will be an electronic network that is fast and
efficient, yet simple for the physician and staff to use (featuring a menu-
driven GUI). The Exchange will enable critical clinical data to be transmitted
or accessed by physicians 24 hours a day. Downtime at regional and national data
centers will be minimized through network redundancy provided by major network
providers and data storage technologies such as WORM and CD-ROM. Duplicate
backup hardware will be maintained at regional and national sites insuring
minimal downtime. Initially, a single regional data repository and a national
data repository will be located at the same location. To protect data from being
damaged by fire or other events, the Company will use onsite duplicate hardware
and offsite backups. As the volume of data increases, the number of regional
data repositories will increase. Each repository will be connected using high-
speed data links that will also permit each repository to act as a backup for
the other repositories.     
    
  The Exchange will also enable physicians and their staffs to operate their
existing software applications (such as patient billing software) on their
computers, while records and messages are automatically and unintrusively
received in the background. Since the network does not interfere with other
computer application programs, recipients will be able to choose to review the
message immediately or continue their current computer activity and process the
message at their convenience.     

  SECURITY.  All communications on the Exchange will comply with C2 Level
Federal Government security standards (i.e., "Top Secret" Security).  This level
of security increases patient confidentiality.  See "--Confidentiality of
Clinical Information."

  BENEFITS.  The Exchange will improve management of patient service from
physician to physician.  The Exchange will also enable delivery of a number of
automatic electronic services to physicians (See description of CRIS and the
Knowledge Bank).  The physician and staff will be able to decrease telephone
calls by using the Exchange to electronically receive lab reports as well as
other results reports and patients charts.  In addition, the Exchange will
improve the ease of communications between physicians in resolving complex
diagnosis.

       
  PHYSICIAN ROYALTY PAYMENT.  The Company will incent physicians to participate
in the Exchange by paying royalties to physicians who transfer clinical data
automatically to requesting physicians through the Exchange's electronic
network. These royalties may be paid in shares of Class B Common Stock.     

INTEGRATED HEALTHCARE INFORMATION AND RESEARCH (KNOWLEDGE BANK) SERVICES

  The Knowledge Bank will be PIE's data warehouse of healthcare information and
knowledge.  This knowledge and information will be mined from the Company's
integrated network of regional healthcare information repositories.  Each
regional information repository will be created by the automated collection of
clinical information from physicians in that region.  The Knowledge Bank will
enable healthcare professionals to increase the quality of healthcare while
managing and reducing resource consumption through research, 

                                       27
<PAGE>
 
benchmarking and comparative analysis. The Knowledge Bank will also allow the
active integration of clinical data with outcomes and cost information and does
not rely upon retrospective claims-based data. The Knowledge Bank will be a
comprehensive clinical data warehouse consisting of clinically rich,
statistically representative and geographically distributed clinical information
housed in secure data repositories. The Knowledge Bank will contain the latest
clinical outcomes and costs abstract data (encrypted to ensure patient
confidentiality). As the Knowledge Bank continually expands and is enhanced,
this healthcare information will serve as a resource for education, research,
prevention, epidemiology and clinical process improvement. It is anticipated
that the Knowledge Bank services will be commercially available by the third
quarter of 1997; however, there can be no assurance that such timing will be
achieved by the company.
    
SERVICES.  The Knowledge Bank will allow physicians to compare their results
against relevant regional and national specialty benchmarks.  This database will
also be used as a foundation to perform many types of research and retrospective
analysis, some examples are:      

  .   Cost and outcome specialty benchmarks by diagnosis, procedure and
      treatment on a regional as well as national basis.

  .   Interactive data analysis to identify specific patient groups for
      intensive care and/or disease management.

  .   Patient cohort classification with patterns of care.

  .   Identification of areas with high resource consumption.

  .   Patient-centered measures of outcomes and satisfaction, including
      preventative screening and the ability to return to work.

  .   Retrospective analysis on process of care delivery (protocols and
      guidelines) organized by:

      .    Chronic disease groups.

      .    Patient health-risk behaviors.

      .    High volume procedures.

      .    Resource intensive procedures.

      .    Best demonstrated practice for outcomes.

      .    Low cost protocols and treatment patterns.

      .    Detailed cost and outcome variance analysis using normative
           comparisons by principal procedure, diagnosis, disease, and treatment
           pattern.

      .    Longitudinal analysis across the care continuum.

  .   Measuring the relative effectiveness of treatment and mode of intervention
      results (e.g., pill, shot or patch; telemedicine, phone call or visit).

  .   Applied clinical research on outcomes and costs of treatment for chronic
      diseases.

  .   Statistical analysis, models and simulations.

NO CHARGE SERVICES TO CRIS PHYSICIANS.  The Knowledge Bank will identify and
update the list of specialty-specific, point of care protocols and corresponding
historical outcome measures.  It will also be used to produce confidential
physician practice outcome profiles. These standard profile reports will
document a physician's outcomes relative to an appropriate national peer group.
A copy of this profile will be provided quarterly to each physician without
charge after a statistically significant amount of data has been collected.

KNOWLEDGE ENGINEERING.  Medical data, by its very nature, is extremely complex
and difficult to normalize.  PIE will use the standardized data of the CRIS
system and other compatible systems along with advanced knowledge engineering
skills to build integrated clinical databases.  These databases will be designed
to be unbiased, while preserving the quality and integrity of the data.  The
data will be organized in rigorously structured formats to permit multiple
logical views of data including longitudinal, encounter, episodic and context
dependent.  The latest scientific and clinical methodologies and models will be
used to normalize and link clinical outcomes and cost data with patient care
episodes across the continuum of care.

                                       28
<PAGE>
 
STANDARD RESEARCH STUDIES AND REPORTS.  The Knowledge Bank will produce general
distribution publications and standardized reports that target all major markets
for clinically-based healthcare information.  These products may often be the
initial product purchased by a non-physician customer.  The products will be
developed from specific portions of the Company's data warehouse and feature
particular views or niches (e.g., national or regional views by a specialty for
outcomes, costs for procedure, disease/diagnosis group or protocol). "Best
Demonstrated Practice" studies will report outcome measures and intervention
costs for various diagnosis/disease groups per specialty.  These studies consist
of evidence-based, rigorous scientific identification of best practices as
demonstrated from clinical results.

  Most standardized reports will be sold as annual renewable subscriptions or on
a multi-year contract.  Products intended for general distribution will be
available in a variety of standardized formats that should appeal to broad
audiences.  These products will range from structured statistical reports to
more complex analyses.

STRATEGIC RELATIONSHIPS.  The Company intends to enter into strategic
relationships with organizations of providers, managed care and integrated
delivery networks, whereby the Company will build a database for such
organizations and provide services to the organizations and their members.
These organizations could include state medical societies, medical specialty
associations and various healthcare provider organizations.

SUPPLIER SERVICES.  The distribution system for medical products is rapidly
realigning as a result of industry changes (such as the use of pharmacy benefits
managers and consolidation of hospital group purchasing organizations).  These
entities select and purchase a medical product based not only on the product's
ability to resolve medical conditions, but also on its demonstrated ability to
minimize total treatment costs.  As a result, PIE believes its benefit/cost and
outcomes analysis can be a vital tool for the successful marketing of drugs,
medical devices and supplies in the future.

  Information used to provide supplier services will be derived from PIE's
database and will support pharmaceutical, medical supply and device companies as
well as biotechnology companies in market analysis, product positioning,
benefit/cost analyses and outcomes analyses.

CONSULTING SERVICES.  Consulting clinicians, knowledge engineers and technicians
will provide the expertise to prepare the customized analysis, as well as
perform research, data mining and customer reporting.  These clinicians,
engineers and technicians will also support customers in their use of the
Company's decision support tools.  PIE personnel will provide expertise and
knowledge in resolving issues such as stratification and granularity of data or
exploratory and confirmatory data analysis as well as how to account for
confounding and colinearity. It is anticipated that the bulk of the consultants'
time will be spent on original custom research for PIE's clients.

BENEFITS.  The Company believes that some of the benefits of the Knowledge Bank
are:

  .   Normalized information on outcome measures and full absorption costs to
      support the active management of chronic disease processes across the
      continuum of care.

  .   Utilization management information that captures resource consumption for
      disease groups rather than measuring departmental productivity.

  .   Outcomes assessment data focusing on treatment and patient outcome
      measures rather than indirect links to outcomes through process
      measurements (e.g., immunization levels or mammography screen rates).

  .   Healthcare research data that captures diagnosis, severity of condition,
      functional status after treatment, recovery time and treatment paths
      rather than billing information.

  .   Information to facilitate healthcare resource management using the tools
      of process re-engineering, protocol and guideline assessment as well as
      trend analysis.

                                       29
<PAGE>
 
  .   Ability to identify the "Best Demonstrated Practice" across the country
      that produce the best outcomes and cost effectiveness per disease group.

  .   Access to the "Best Demonstrated Practice" protocols; their associated
      therapeutic resources (e.g., therapy in lieu of surgery or vice versa)
      and the intensity with which those resources are historically applied.

  .   Enabling of a physician-driven, experienced-based collaborative approach
      to joint development of treatment protocols and guidelines.

  .   Normalized comparison of clinically-derived data and outcome measures that
      enables insight into disease management by pharmaceutical companies,
      medical device manufacturers and other industry participants.

  .   Early identification of emerging trends and changing patterns in
      healthcare practices.

  .   Epidemiological analysis of trends as well as a retrospective research
      resource for disease prevalence.

  .   Evidence-based, normalized outcome and cost data from which to conduct
      healthcare policy and economic research.

  .   Communication of "Best Demonstrated Practices" in an educational manner
      for collaborative process improvement as well as protocol development.

  .   Empowerment of physicians to practice the Continuous Quality Improvement
      approach to outcomes using benchmark comparisons with the "Best
      Demonstrated Practices" across the country.

  .   Provision of meaningful cohort analysis of patient populations by severity
      and disease groupings.

CONFIDENTIALITY OF CLINICAL INFORMATION
    
  PIE understands the public's patient-confidentiality concerns.  Additionally,
PIE concurs with those who believe that the health professionals they engage can
be trusted to keep their records confidential and not misuse them.  Given the
physician's practical experience regarding patient confidentiality, PIE has
taken the position that its security system will exceed the "trustee" system
requirements currently being proposed before the United States Congress.  This
"trustee" system defines any one who comes into contact with individually
identifiable health information (i.e., "protected" health information) as a
health information "trustee."  Proposed protection is afforded against
unauthorized disclosure via a deterrence structure of civil and criminal
penalties.  While the Company supports this protection of patient privacy, it
does not believe that the "trustee" system is adequate.      
    
  The PIE Confidentiality Security System will function like a safety deposit
box in a bank.  In other words, the contents (information) of the box can be
retrieved only with a combination of keys from the correct bank (PIE) and the
customer (physician/patient). Physicians and patients will be able to select the
information that will be unaccessible to others.  The Company's security system
not only encourages authorized usage of clinical data, it mandates its
enforcement by designing the system to only access protected data through
physicians at their office.  PIE employees and all other non-physician users of
PIE information are denied access to protected patient information unless a
specific use authorization for such information is provided by the patient. 
     
        
  PIE does not believe that non-physician groups (government or private) need to
access healthcare data that can be linked to an individual patient.  PIE does
not intend to provide a source of data for unauthorized access and will not have
the capability to respond to court orders for individual patient healthcare
information.  This information will continue to be accessible only through the 
attending physician's office.  Therefore, PIE has designed its security system
using one-way encryption that allows healthcare information identified with a
specific patient to be retrieved only in the physician's office, as it is today.
All patient information will receive maximum security status whereby all 
information is completely protected (locked) from access without the patient's 
specific approval. Consistent with current physician practice, PIE's security 
system will require emergency, new or referral physicians to receive the 
patient's authorization and social security number prior to the emergency, new 
or referral physician receiving the patient's healthcare information. In
addition, the PIE security system requires a PIE physician to use his PIE-
physician password and request the patient information through his clinic's one-
way encryption device. Patients may elect even further security by requesting a
patient password that would be required to obtain the patient's medical records.
This password would be required of physicians in addition to PIE's other
security measures. PIE will also maintain audit trails of all requests for
patient information.     

                                       30
<PAGE>
 
               

SERVICES AND PRODUCT DEVELOPMENT

  The Company is investigating new technologies and engaging in product
development activities to enhance the ability of physicians and other providers
to provide higher quality healthcare at lower cost.  The Company's goal is to
accomplish this by increasing access to CRIS, the Exchange and the Knowledge
Bank.  Additional Company goals are to lower barriers to user acceptance,
improve reliability and enhance performance as well as expand access to current
decision-relevant clinical and cost information.  Development activities will be
conducted in cooperation with and under the review of the Company's Advisory
Council, which provides medical specialty-specific requirements, product design
suggestions and beta test user sites.  The Company is committed to a substantial
and sustained focus on product development in order to continuously improve the
knowledge base used by PIE's physician-shareholders and customers.

  The Company's strategic development initiatives are to follow the "Best of
Breed" approach by leveraging the best available software to support clinical
data collection in the physician's clinic and at the hospital.  The Company's
initial development efforts will focus on creating a national network of
regional data repositories.  PIE will cooperate with other vendors to permit
integration with major practice management and accounts receivable systems.
    
  The Company's product development project has three phases.  The Company
expects phase one (the initial CRIS version) will be commercially available by
the first quarter of 1997. The subsequent two phases are expected to produce
clinical information exchange software and regional and national clinical
repositories that should be commercially available during 1997. PIE's phased
approach is predicated upon the data volume dynamics depicted in the graph
below:      

                                       31
<PAGE>
 
     
  [THIS IS A CHART THAT DEPICTS THE FACT THAT ACCESSIBILITY TO LARGER VOLUMES
   OF CLINICAL DATA FACILITATES HIGHER VALUE INFORMATION REPORTING USAGES.]     



ASSET CREATION

  PIE is creating a strategic relationship with physician-shareholders to
resolve the expensive proposition of collecting, enriching and distributing
significant quantities of clinically-derived information.  PIE's solution is to
provide CRIS software to physician-shareholders without charge.  (This allows
PIE to normalize the interface and data elements among users and thereby collect
statistically significant quantities of data in an economically and
technologically feasible manner.)  In return, the physicians participate in the
automated sharing of abstracted clinical information with PIE's information
repositories.  This distribution method is designed to facilitate a rapid
service rollout and begin creation of clinical information repositories as
quickly as the software is installed.  Once installed, the physician-
shareholders provide a continually expanding clinical information base.

MAINTENANCE FEES
    
  It is anticipated that annual physician maintenance fees for CRIS (without
regard to hardware costs) initially will be $850 per year per physician,
collected on an advance basis. However, the Company has no interest in retaining
any maintenance fee net income from its physician-shareholder customers.
Therefore, the Company has developed a formula to reallocate the "maintenance
fee net income," as defined below, to those physician-shareholders most
responsible for disseminating medical knowledge to their specialty.  (The
Company anticipates that there will be approximately 50 specialty categories.)
Maintenance fee net income is equal to maintenance fee revenue less Company
expenses related to maintenance releases, help desk and software support,
documentation, expenses incurred by Advisory Council members in the normal
conduct of Company      

                                       32
<PAGE>
 
business, and related general and administrative expenses. Maintenance fee net
income will be allocated as follows:

 .  70%  Current Advisory Council members (70% of each specialty's maintenance
fee net income will be divided among that specialty's Advisory Council 
members)     

 .  15%  Current Advisory Council members (15% of the total maintenance fee net
income from all specialties will be divided pro rata to the various Advisory
Council members in each specialty, based upon the number of physician-
shareholders in a specialty relative to the total physician base in that
specialty)

 .  15%  Non-Advisory Council Physician-shareholders (15% of each specialty's
maintenance fee net income will be divided pro rata among that specialty's
physician-shareholders who are not Advisory Council members and who make a good
faith effort, as determined by the Board of Directors, to make a medical
knowledge contribution during the year to their fellow specialists through PIE's
medical knowledge base (e.g., new or modified clinical protocol))

        

CUSTOMERS

  PIE anticipates that its customers for the ambulatory care CRIS will be
physicians located throughout the United States.  Anticipated customers for the
Exchange services will be physicians, integrated delivery systems and payers
located throughout the United States.  The customers for the Knowledge Bank
services will include integrated delivery systems, payers, major providers,
provider groups, managed care organizations, bio/pharmaceutical companies,
research institutions and government agencies, as well as physicians and
organizations needing current, clinically derived, outcomes-based data and cost
information.

  Healthcare suppliers, which include pharmaceutical, biotechnology, as well as
medical supply and device companies are a particularly strong customer market.
Historically, suppliers have marketed their products based on specific
attributes.  However, given the increasing emphasis on cost and efficiency, and
in order to restrict physician choices, suppliers are increasingly required to
differentiate the clinical and economic utility of their products from the
alternatives.  When the entire cost of treating an illness is considered, the
selection of a high per-unit cost therapy may be justified based on its lower
overall cost (with equivalent or better outcomes) for the treatment of that
illness.  This "higher per unit cost" and lower overall cost is possible if the
higher per-unit cost therapy actually shortens the duration or intensity of the
illness.

                                       33
<PAGE>
 
SALES AND MARKETING

  The Company's marketing efforts are organized into physician marketing,
general corporate marketing, customer communication programs and target
marketing.  Physician marketing is designed using the "pull-through" or "add-on"
approach of offering CRIS without charge to all PIE physician-shareholders. The
physician-shareholder customer base will be further developed by PIE paying
royalties to physicians who transfer clinical data to other physicians and
authorized users in an electronic format through the Exchange.  In return,
physician-shareholders will participate in the automated sharing of their
abstracted clinical data with PIE's information repositories.  Medical
societies, specialty associations and a variety of other means will be used to
introduce the "no-charge" service opportunity to the physician community.
Introduction methods will include direct mail, seminars, telemarketing,
presentations at industry events and trade shows as well as speaking
engagements.

  The general corporate marketing activities will include press releases,
customer testimonials, presentations at industry events and trade shows as well
as advertising.  PIE intends to seek opportunities to create name recognition as
a leading provider of healthcare clinical and cost information.  As part of this
strategy, the Company will attempt to be quoted widely in media and have its
senior officers frequently speak at conferences and serve on the editorial
boards of industry newsletters and publications.  In addition, the Company
intends to seek opportunities to use its physician base of customers, network
and information to form strategic marketing relationships.

  The Company's Advisory Council representatives will lead the customer
communications programs for their respective representative specialties.  This
will entail interpreting and prioritizing annual customer satisfaction surveys,
providing reviews and critiques of proposed services, chairing their specialty
user groups, as well as being visible and available at industry events and trade
shows.

  Utilizing target marketing, the Company will communicate directly with
targeted decision makers, consultants, researchers and policy makers in the
healthcare community using seminars, direct mail and telemarketing to sell
lower-priced general distribution and standardized reports. Many of these
products will be specifically designed to increase the visibility of the Company
as a industry-leading source of healthcare clinical information.  This existing
customer base will then become the target of a direct sales approach for PIE's
more sophisticated and expensive customer research reports and analysis.  The
Company's field sales force will be highly specialized with access to the
Company's Advisory Council as well as physicians, pharmacists and other
clinicians on staff.

COMPETITION

  The market for healthcare information products and services is intensely
competitive. Competitors vary in size and in the scope and breadth of products
and services offered, and the Company competes with different companies in each
of its target markets.  Many companies that now provide claims-based data are
trying to enter the clinically-derived data market.  The Company's competitors
have significantly greater financial, technical, product development and
marketing resources than the Company.  Furthermore, other major information
companies not presently offering clinical healthcare information services may
enter the markets in which the Company competes.  The Company's potential
competitors include specialty healthcare information companies, healthcare
information system and software vendors and large data processing and
information companies.  Many of these competitors have substantial installed
customer bases in the healthcare industry and the ability to fund significant
product development and acquisition efforts.

  The Company believes that the principal competitive factors in the healthcare
network and clinical information markets are the physician acceptance of the
point-of-care interface, access to point-of-care clinical data, price and the
effectiveness of marketing and sales efforts. In addition, the Company believes
that the 

                                       34
<PAGE>
 
speed with which information companies can anticipate and respond to the
evolving healthcare industry structure and identify unmet information needs is
an important competitive factor. The Company believes that it compares well and
will compete favorably with respect to each of these factors.

INTELLECTUAL PROPERTY

  The Company will seek to protect its information through nondisclosure
agreements with its employees, contractors and vendors.  The Company's policy is
to have employees enter into a nondisclosure agreement containing provisions
prohibiting the disclosure of confidential information to anyone outside the
Company, requiring disclosure to the Company of any new ideas, developments,
discoveries or inventions conceived during employment, and requiring assignment
to the Company of proprietary rights to such matters that are related to the
Company's business and technology.  The Company also relies on a combination of
trade secret, copyright and trademark laws, contractual provisions and technical
measures to protect its rights in its tool and software technology.  Due to the
nature of each, the Company believes that patent, trade secret and copyright
protection are less significant than the Company's ability to further develop,
enhance and modify its current services and products.

EMPLOYEES

  The Company has chosen to contract its operations with independent contractors
and therefore delay hiring employees until after the effectiveness of the
offering.

LITIGATION

  The Company is not a party to any litigation.

CORPORATE HEADQUARTERS

          The Company's corporate headquarters are located at 1401 Hudson Lane,
Suite 202, Monroe, Louisiana 71201 and contain approximately 2,000 square feet
of office space.  The Company believes that this space is adequate for its
current needs.

                                       35
<PAGE>
 
                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

  The following table sets forth certain information regarding the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
 
NAME                          AGE            POSITIONS
- ---------------------------   ---   ----------------------------
- ----------------------------------------------------------------
<S>                           <C>   <C>
Dr. W. Ernest Rutherford       56   Chairman, Chief Executive
                                    Officer and President
- ----------------------------------------------------------------
Ileta Rutherford               53   Vice President--Operations,
                                    Secretary and Director
- ----------------------------------------------------------------
Philip A. Ratcliff             66   Vice President-Marketing
                                    and
                                    Director
- ----------------------------------------------------------------
Dr. Joan Blondin               58   Director
- ----------------------------------------------------------------
Robert L. Boyle, Jr.           52   Director
- ----------------------------------------------------------------
Dr. David Raines, Jr.          54   Director
- ----------------------------------------------------------------
- ----------------------------------------------------------------
 
 
</TABLE>
  All officers are appointed by and serve at the discretion of the Board of
Directors. Directors serve for one-year terms or until their successor is duly
elected and qualified.

  Dr. W. Ernest Rutherford - Dr. Rutherford - has served as Chairman, Chief
Executive Officer and President of the Company since its inception in December
1995. From 1990 to 1995, Dr. Rutherford served on the North Louisiana Hospital
Board of Directors (Columbia/HCA) and is currently a Clinical Associate
Professor at Louisiana State Medical Center and an Adjunct Professor at
Louisiana Tech University. In 1991, Dr. Rutherford began introducing the
Continuous Quality Improvement ("CQI") principles in his dialysis facilities,
which resulted in lower cost and higher quality (decreased mortality). As an
authority in the application of CQI to healthcare, he is frequently asked to
speak and is often quoted in the media. In 1990, Dr. Rutherford co-founded the
Northern Louisiana Healthcare Alliance, bringing hospitals, doctors, businesses
and insurance companies together to study the quality and cost issues in
healthcare. In 1985, Dr. Rutherford founded Matrix Plus, a computer software
company, and has served as President and a director since its inception. Since
1979, Dr. Rutherford has been a partner in Nephrology Consultants, a medical
consulting firm and was the head of the Renal Division of the Wash. U. Service
at St. Louis City Hospital, from 1973-1978, where he conducted independent
research funded with independent grants from the National Institute of Health.
During that time Dr. Rutherford authored 32 articles in international, peer-
reviewed scientific publications. In 1978, Dr. Rutherford entered private
practice in Monroe, Louisiana where he and his partners established five chronic
and two acute dialysis facilities serving all of northeast Louisiana.

  Ileta Rutherford - Ms. Rutherford, the spouse of Dr. Rutherford, has served as
Vice President--Operations, Secretary and Director of the Company since December
1995.  Since August 1993, Ms. Rutherford has held various positions at Matrix
Plus, including Chief Executive Officer, Secretary and Treasurer.  Ms.
Rutherford is a licensed real estate agent with John Rea Reality and served on
the Board of Directors of the Louisiana Realtor Association from December 1991
to December 1995.

  Phillip A. Ratcliff - Mr. Ratcliff has served as Vice President - Marketing of
the Company since May 1996 and as a Director of the Company since December 1995.
Since March 1994, Mr. Ratcliff has been an instructor at Webster Junior College
in Florida.  Prior to retiring in April 1991, Mr. Ratcliff served as Chief
Executive Officer of AFCA Communications, Inc., an agency specializing in
marketing and investor public relations.

  Dr. Joan Blondin - Dr. Blondin has served as a Director of the Company since
December 1995. Since 1978, Dr. Blondin has been a Partner in Nephrology
Consultants, a medical consulting firm. Dr. Blondin has served as a medical
director of the North Louisiana Dialysis Center, a medical service provider,
since 1992. Dr. Blondin has been an active staff member at North Monroe
Community
                                       36
<PAGE>
 
Hospital and St. Francis Medical Center, since 1984 and 1978,
respectively. From 1980 to 1992, Dr. Blondin was President of the Northern
Louisiana Dialysis Center, Inc., a medical service provider.

  Robert L. Boyle, Jr. - Mr. Boyle has served as a Director of the Company since
April 1996.  Since September 1995, Mr. Boyle has served as Chief Executive
Officer of Cardiovascular Provider Resources, Inc.  Since 1994, Mr. Boyle has
served as Executive Vice President and Chief Operating Officer of Camino
Healthcare.  Since 1989, Mr. Boyle has served as Vice President-Administration
of the Palo Alto Medical Foundation, a physician multi-specialty group practice.
In addition, Mr. Boyle is currently the President-elect of the Medical Group
Management Association ("MGMA").


  Dr. David Raines, Jr. - Dr. Raines has served as a Director of the Company
since December 1995.  Since 1978, Dr. Raines has been in private practice at the
Gastroenterology Clinic, Inc.  In addition, Dr. Raines has served as an
Associate of Medicine at Louisiana State University since 1980.

DEPENDENCE ON KEY PERSONNEL

  The Company's success depends to a significant extent, on the Company's
Chairman, Chief Executive Officer and President, Dr. Rutherford.  The loss of
the services of Dr. Rutherford could have a material adverse effect on the
Company.  The Company's future success will also depend in part upon its ability
to attract and retain highly qualified personnel.  There can be no assurance
that the Company will be successful in attracting and retaining such personnel.

  In order to protect itself against the possibility of loss of Dr. Rutherford's
services, the Company has taken out a Key Man Insurance policy on Dr. Rutherford
in the amount of $1,000,000.

EXECUTIVE COMPENSATION

  The following table sets forth, for fiscal 1996, the compensation to be
awarded to Dr. Rutherford, the Company's Chief Executive Officer (the "Named
Executive Officer").  No executive officer of the Company received any salary or
bonus for fiscal 1995.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
 
                                                                           LONG TERM COMPENSATION
                                                                  ----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
                                                  ANNUAL COMPENSATION                             Awards                   PAYOUTS
                                                                                                ----------                 -------
- -----------------------------------------------------------------------------------------------------------------------
(A)                 (B)        (C)          (D)         (E)           (F)            (G)           (H)           (I)
- -----------------------------------------------------------------------------------------------------------------------
 
 
                                                       OTHER                      SECURITIES
NAME AND                                              ANNUAL       RESTRICTED    UNDERLYING                   ALL OTHER
 PRINCIPAL                                            COMPEN-        STOCK        OPTIONS/         LTIP       COMPEN-
 POSITION          YEAR     SALARY($)     BONUS($)   SATION($)    AWARD(S)($)      SARS(#)      PAYOUTS($)   SATION ($)
 
 
 
- -----------------------------------------------------------------------------------------------------------------------
<S>                <C>     <C>            <C>        <C>          <C>            <C>            <C>          <C>           <C>
Dr. W. Ernest      1996    40,000/(1)/         --           --             --             --           --            --
 Rutherford
 CEO/COB
 
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
  
</TABLE>

                                       37
<PAGE>
 
/(1)/ Dr. Rutherford's salary is anticipated to increase to $273,500 in 1997. 

                                       38
<PAGE>
 
DIRECTOR COMPENSATION

     Directors who are also employees of the Company receive no additional
compensation for services as directors. Nonemployee directors receive no annual
fee, but are reimbursed for all expenses incident to their service on the Board
of Directors.

COMMITTEES OF THE BOARD OF DIRECTORS

     The Board of Directors has established two standing committees:  The
Compensation Committee and the Audit Committee.  Dr. Joan Blondin, Mr. Robert L.
Boyle, Jr. and Dr. David Raines, Jr. serve on the Compensation Committee and the
Audit Committee.  The Compensation Committee is responsible for recommending to
the Board of Directors the Company's executive compensation policies for senior
officers and administering the 1996 Employee Stock Option Plan. See "--Stock
Option Plan."  The Audit Committee is responsible for recommending independent
auditors, reviewing the audit plan, the adequacy of internal controls, the audit
report and management letter, and performing such other duties as the Board of
Directors may from time to time prescribe.

EMPLOYMENT AGREEMENTS

     The Company anticipates that it will enter into employment agreements with
its employees containing certain confidentiality and noncompetition provisions.

ADVISORY COUNCIL

     The Company believes that the PIE Advisory Council concept will become an
integral part of the Company's future success.  Ultimately to consist of two or
three nationally recognized physicians in each major specialty, PIE expects to
have up to 150 Advisory Council members.  The Advisory Council is the Company's
direct communication link to the physicians and their needs in each specialty.
The Company is currently forming the Advisory Council.

     Specifically, it is anticipated that the Advisory Council will contribute
in the following manners:

 .    Represent the physician-shareholders as their inside voice to the Company's
Board of Directors.
 .    Provide the initial clinical protocol information and overall specialty-
specific requirements for service development and implementation purposes (by
Founders).

 .    Keep PIE informed of their specialty's specific needs by making technical
and medical information-related recommendations to the Board.  This would
include suggestions on available medical knowledge banks or sources of
information that need to be integrated or connected at the "point-of-care."
(Additional recommendations might include new practice patterns, reengineering
ideas and specific ways that PIE could empower physicians to raise their quality
of care and lower the cost).

 .    Initiate committees in their specialty societies to perform the research
and information gathering functions necessary to secure the technical and
medical information described above. Such committees would relieve those
specialty Advisory Council members of the information-gathering functions. The
Advisory Council members would then convey such committees' information, and new
protocols, for example to PIE's Board, Advisory Council and Company technical
committees. (An example technical committee could be a Protocol Review
Committee.)

 .    Represent the Company at specialty-specific meetings.
 .    Work together as a group to reconcile differences between the needs of
specialties and make unified recommendations to the Board of Directors.

Selected Advisory Council members will serve on the following committees:

                                       39
<PAGE>
 
 .    Physician Interface Committee (reviewing design specifications for user
friendliness)
 .    Data Usage Policy Committee (trustee function)

ADVISORY COUNCIL COMPENSATION

     Each Advisory Council member and each future Advisory Council member will
enter into a "sharing" agreement with the Company, pursuant to which each
Advisory Council member will receive a predetermined percentage of the Company's
maintenance fee net income.  See "Business-Maintenance Fees."  The allocation of
maintenance fee net income will generally be dependent upon the physician's
relationship to the specialty group that generated the maintenance net income.

       
  Each Original Advisory Council member ("Founder") upon becoming a member of
the Advisory Council will receive a grant of shares of Class B Common Stock
equal to $9,550 based upon the fair market value of a share of Class B Common
Stock as determined by the Board of Directors (which equals 9,550 shares of
Class B Common Stock assuming a price per share equal to the initial public
offering price set forth on the cover page of this Prospectus). It is
anticipated that the Company will impose restrictions on the transfer of such
shares, with such restrictions lapsing with respect to one-third of such shares
each year over a three-year period. In addition, the Board of Directors, in its
discretion, may provide additional incentives to attract and retain certain
Advisory Council members, such as providing CRIS software at no charge.    

STOCK OPTION PLAN

     In February 1996, the Board of Directors adopted the 1996 Employee Stock
Option Plan (the "1996 Employee Plan").  The 1996 Employee Plan was also
approved by the shareholders of the Company in February 1996.  The purpose of
the 1996 Employee Plan is to advance the interests of the Company by providing
additional incentives to attract and retain qualified and competent employees
and consultants of the Company and directors of the Company's subsidiaries, upon
whose efforts and judgment the success of the Company is largely dependent.
Nonemployee directors of the Company are not eligible to participate in the 1996
Employee Plan.

     A total of 6,000,000 shares of Class B Common Stock have been reserved for
sale upon exercise of Employee Options granted under the 1996 Employee Plan.  To
date, no Employee Options have been granted.  The 1996 Employee Plan is
currently administered by the Compensation Committee of the Board of Directors,
which consists of three members of the Board of Directors.  The 1996 Employee
Plan provides for adjustments to the number of shares under which 1996 Employee
Options may be granted, to the number of shares subject to outstanding 1996
Employee Options and to the exercise price of such outstanding Employee Options
in the event of a declaration of a stock dividend or any recapitalization
resulting in a stock split-up, combination or exchange of shares of Common
Stock.
 
     The 1996 Employee Plan authorizes the granting of incentive stock options
("Incentive Options") and nonqualified stock options ("Nonqualified Options") to
purchase Class B Common Stock.  No Incentive Option may be granted with an
exercise price per share less than the fair market value at the date of grant,
which is determined in the judgment of the Board of Directors, if the Common
Stock is not listed or admitted for trading.  Nonqualified Options may be
granted with any exercise price determined by the administrator of the 1996
Employee Plan, but shall not be less than 85% of the fair market value at the
date of grant. The exercise price of an Employee Option may be paid in cash, by
certified or cashier's check, by money order, by personal check or by delivery
of already owned shares of Common Stock having a fair market value equal to the
exercise price, or by delivery of a combination of cash and already owned shares
of Common Stock.

     No Employee Option granted under the 1996 Employee Plan is assignable or
transferable, otherwise than by will or by laws of descent and distribution.
During the lifetime of an optionee, his Employee Option is exercisable only by
him or his guardian or legal representative.  The expiration date of a Employee
Option is determined by the administrator at the time of the grant, but in no
event may a Employee Option be exercisable after the expiration of 10 years from
the date of grant of the Employee Option.

     The administrator of the 1996 Employee Plan may limit an optionee's right
to exercise all or any portion of a Employee Option until one or more dates
subsequent to the date of grant.  The administrator also has the right,
exercisable in its sole discretion, to accelerate the date on which all or any
portion of an Employee Option may be exercised.  The 1996 Employee Plan also
provides that 30 days prior to certain major corporate events such as, among
other things, certain changes in control, mergers or sales of substantially all
of the assets of the Company 

                                       40
<PAGE>
 
(a "Major Corporate Event"), each Employee Option shall immediately become
exercisable in full. In anticipation of a Major Corporate Event, however, the
administrator may, after notice to the optionee, cancel the optionee's Employee
Options on the consummation of the Major Corporate Event. The optionee, in any
event, will have the opportunity to exercise his Employee Options in full prior
to such Major Corporate Event.

     If terminated for cause, all rights of an optionee under the 1996 Employee
Plan cease and the Employee Options granted to such optionee become null and
void for all purposes.  The 1996 Employee Plan further provides that in most
instances an Employee Option must be exercised by the optionee prior to
termination of the consulting contract between such consultant and the Company
or termination of the optionee's employment with the Company, as the case may be
(for any reason other than termination for cause, mental or physical disability
or death), if and to the extent such Employee Option was exercisable on the date
of such termination.  If the optionee is not otherwise employed by, or a
consultant to, the Company, his Employee Option must be exercised prior to the
date he ceases to be a director of a subsidiary of the Company.  Generally, if
an optionee's employment or consulting contract is terminated due to mental or
physical disability, the optionee will have the right to exercise the Employee
Option (to the extent otherwise exercisable on the date of termination) for a
period of one year from the date on which the optionee suffers the mental or
physical disability.  If an optionee dies while actively employed by, or
providing consulting services under a consulting contract to, the Company, the
Employee Option may be exercised (to the extent otherwise exercisable on the
date of death) within one year of the date of the optionee's death by the
optionee's legal representative or legatee.

NONEMPLOYEE DIRECTOR STOCK OPTION PLAN

     In February 1996, the Board of Directors adopted the 1996 Nonemployee
Director Stock Option Plan (the "1996 Director Plan").  The 1996 Director Plan
was also approved by the shareholders of the Company in February 1996.  The
purpose of the 1996 Director Plan is to advance the interests of the Company by
providing an incentive to retain as independent directors persons of training,
experience and ability, to encourage a sense of proprietorship of such persons,
and to stimulate the active interest of such persons in the development and
financial success of the Company.

     Options under the 1996 Director Plan ("Director Options") are granted only
to nonemployee directors of the Company.  Director Options exercisable for
75,000 shares of Class B Common Stock are automatically granted to each
nonemployee director upon his initial election as a director.  In the event a
non-physician is elected as a director of the Company, such shares of Class B
Common Stock will be converted to Class A Common Stock.  Each Director Option
expires 10 years after its date of grant.  An aggregate of one-third of the
total number of shares subject to such Director Option vest on each anniversary
date of the date of grant.  Shares subject to a Director Option vest as to all
shares then subject to the Director Option upon the occurrence of a Major
Corporate Event.  The 1996 Director Plan is, to the extent that discretion is
allowed pursuant to the terms of the 1996 Director Plan, administered by the
Board of Directors.  For example, the Board of Directors may cancel outstanding
unexercised options granted under the 1996 Director Plan upon the consummation
of Major Corporate Events.  In addition, the Board of Directors has certain
limited discretion in amending, modifying, suspending or discontinuing the 1996
Director Plan.

     A total of 2,000,000 shares of Class B Common Stock have been reserved for
issuance upon exercise of Director Options granted under the 1996 Director Plan.
Director Options are granted with an exercise price per share equal to the fair
market value of such shares on the date of grant.  The exercise price of a
Director Option may be paid in cash, by certified or cashier's check, by money
order, by personal check or by delivery of already owned shares of Common Stock
having a fair market value equal to the exercise price, or by delivery of a
combination of cash and already owned shares of Common Stock.  The 1996 Director
Plan provides for adjustments to the number of shares under which Director
Options may be granted and to the exercise price of such outstanding Director
Options in the event of a declaration of a stock dividend or any
recapitalization resulting in a stock split-up, combination or exchange of
shares of Common Stock.

                                       41
<PAGE>
 
     No Director Option granted under the 1996 Director Plan is assignable or
transferable, otherwise than by will or by laws of descent and distribution.
During the lifetime of an optionee, his Director Options are exercisable only by
him or his guardian or legal representative.  In addition, no Director Option is
exercisable prior to the six-month anniversary of the date of grant for such
Director Option.  The unexercised portion of a Director Option automatically and
without notice terminates and becomes null and void and is forfeited 10 years
after the date of grant of such Director Option.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Decisions concerning executive compensation for fiscal 1996 will be made by
the compensation committee of the Company.  Descriptions of certain transactions
between the Company and members of its Board of Directors are set forth under
"Certain Relationships and Related Transactions."  The Board of Directors of the
Company has established a Compensation Committee.  See "--Committees of the
Board of Directors."

     None of the executive officers of the Company currently serves on the
compensation committee of another entity or any other committee of the board of
directors of another entity performing similar functions.

                              CERTAIN TRANSACTIONS

    
TRANSACTIONS WITH MATRIX PLUS      

        
     In November 1995, the Company entered into an agreement with Matrix Plus,
Inc., a company controlled by Dr. Rutherford, the Chairman, Chief Executive
Officer, President and a principal shareholder of PIE, to purchase from Matrix
the MR1 Clinical Record System software developed by Matrix, in consideration
for the issuance of 200,000 shares of Class A Common Stock of PIE. The purchase
price was determined by arm's-length negotiations between Matrix and PIE, based,
in large part, upon the software developer's estimation of the value of the
software (considering development costs and expenses). The transaction was
approved by a majority of the independent, disinterested members of Board of
Directors of the Company on terms no less favorable to the Company than could be
obtained from unaffiliated parties. It is anticipated that the Company will
consummate the purchase upon the effectiveness of the offering. See "Plan of
Operation-Matrix Plus Purchase Agreement."      

        
     In addition, effective January 1996, the Company began leasing office space
for its corporate headquarters on a month-to-month basis from Matrix for $585
per month.     
ORGANIZATION OF THE COMPANY
    
     The Company was formed in November 1995 by Dr. Rutherford, at which time
Dr. Rutherford was issued 75,000,000 shares of Class B Common Stock, in
consideration of his payment of approximately $75,000 in costs and expenses of
the Company.      
    
TRANSACTIONS WITH DR. RUTHERFORD      

     In November 1995, the Company issued a promissory note in the aggregate
principal amount of $189,358 to Dr. Rutherford in consideration of certain
advances made by Dr. Rutherford to the Company.  It is anticipated that after
the effectiveness of the offering, such note will be exchanged for 189,358
shares of Class B Common Stock.
    
     In addition, Dr. Rutherford has agreed to personally fund any additional
offering expenses in exchange for a non-interest bearing promissory note of the
Company.  Dr. Rutherford and the Company have agreed that in the event the
Company sells less than $1,000,000 of its securities through this offering, the
new note will be converted into Class B Common Stock at a conversion price of
$1.00 per share.  In the event the Company sells in excess of $1,000,000 of its
securities through this offering, Dr. Rutherford will have the option to convert
the new note into Class B Common Stock or accept a cash payment.      
    
POLICY REGARDING FUTURE TRANSACTIONS BETWEEN THE COMPANY AND RELATED PERSONS
     
    
     All future transactions between the Company and its officers, directors and
principal shareholders or affiliates of any such persons must be on terms no
less favorable to the Company than could be obtained      

                                       42
<PAGE>
 
     
from unaffiliated parties, and such transactions must be approved by a majority
of the independent and disinterested directors of the Company.      

                                       43
<PAGE>
 
                        SECURITY OWNERSHIP OF MANAGEMENT
                           AND PRINCIPAL STOCKHOLDERS

     The following table sets forth information regarding the beneficial
ownership of Class A and Class B Common Stock as of March 26, 1996, by each
person or group who owned, to the Company's knowledge, more than five percent of
the Common Stock, each of the Company's directors, the Company's Chief Executive
Officer, and all of the Company's directors and executive officers as a group.
    
<TABLE>     
<CAPTION>
                                      TITLE OF CLASS        SHARES BENEFICIALLY OWNED            SHARES BENEFICIALLY OWNED
           NAME                      OF COMMON STOCK         PRIOR TO THE OFFERING/(1)/           AFTER THE OFFERING/(1)/
- ------------------------------     ------------------      ---------------------------           -------------------------
                                                                             PERCENT                           PERCENT   
                                                            NUMBER       OF CLASS/(2)/            NUMBER     OF CLASS/(3)/
                                                           ---------------------------           -------------------------
<S>                                  <C>                    <C>                                <C>
Dr. W. Ernest Rutherford/(4)/               Class A             200,000/(5)/    87.0%               200,000/(5)/     1.3%
                                            Class B          75,189,358/(6)/    99.7             75,189,358/(6)/    78.8
Ileta Rutherford                             --                   --             --                     --           --

Dr. Joan Blondin                             --                   --             --                     --           --
Robert L. Boyle, Jr.                         --                   --             --                     --           --
Dr. David Raines, Jr.                       Class B             200,000          *                  200,000          *
All directors and
executive officers as a group               Class A             200,000         87.0                200,000          1.3
(5 persons)                                 Class B          75,389,358(2)      99.9             75,389,358/(2)/    79.0
</TABLE>      
     

- ---------------
* Represents less than one percent.

(1)  Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally includes
voting or investment power with respect to the securities.  Except as indicated
in the footnotes to this table and subject to applicable community property
laws, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned.

        
(2) Based on 230,000 shares of Class A Common Stock outstanding and 75,429,358
shares of Class B Common Stock.  See footnote (6).      
 
       
(3) Based on 15,230,000 shares of Class A Common Stock outstanding and 
95,427,058 shares of Class B Common Stock. See footnote (6).          

        
(4) Includes 74,875,882 shares of Common Stock that Dr. Rutherford has agreed to
hold in escrow pursuant to certain state blue-sky requirements. The escrow
agreement provides that the shares will be held in escrow until the earliest of
(i) the Company achieving in each of two consecutive fiscal years fully diluted
net earnings per share of at least $.10, (ii) the Company achieving during any
five consecutive fiscal years accumulated fully diluted net earnings per share
of at least $.30, (iii) the Company's Common Stock trading in a reliable public
market at a price per share of at least $1.75 for a period of at least 90
consecutive days after at least one year from the effective date of this
offering, (iv) subject to certain restrictions, a tender offer or offer to merge
or otherwise acquire the Company's Common Stock (occurring after the 18th month
anniversary of this offering) in which all stockholders of the Company receive
cash or publicly traded securities, or (v) the sixth anniversary of this
offering (and on each anniversary thereafter) at which time 20% of the escrowed
shares will be released.      

        
(5) Includes 200,000 shares expected to be issued upon effectiveness of the
offering to Matrix Plus, Inc. See "Certain Transactions-Transactions with 
Matrix Plus."    

        
(6) Includes 189,358 shares expected to be issued after the effectiveness of the
offering in satisfaction of a $189,358 note issued by the Company for advances
made by Dr. Rutherford to the Company.  See "Certain Transactions."           

                          DESCRIPTION OF CAPITAL STOCK
    
     The Company is a Texas corporation that is authorized to issue 505,000,000
shares of capital stock, of which 250,000,000 shares are Class A Common Stock,
$.001 par value per share, 250,000,000 shares are Class B Common Stock, $.001
par value per share, and 5,000,000 shares are Preferred Stock, $.001 par value
per share.     

GENERAL
    
     The following summary description is qualified in its entirety by reference
to the Company's Articles of Incorporation, which are filed as an exhibit to the
Registration Statement on Form SB-2 (the "Registration Statement") of which this
Prospectus is a part.  Currently, there are five recordholders of the Common
Stock.      

                                       44
<PAGE>
 
PREFERRED STOCK

     The Board of Directors is authorized to amend the Articles of
Incorporation, without further action by the Company's shareholders, to issue
Preferred Stock from time to time in one or more series and to fix, as to any
such series, the voting rights, if any, applicable to such series and such other
designations, preferences and special rights as the Board may determine,
including dividend, conversion, redemption and liquidation rights and
preferences.  There are no shares of Preferred Stock outstanding.

CLASS A AND CLASS B COMMON STOCK

     Voting Rights.  With respect to all matters submitted to a vote of the
shareholders, the record holders of the Class A Common Stock are entitled to one
vote per share and the record holders of Class B Common Stock are entitled to 10
votes per share.  Except as may otherwise be required by law or by the Articles
of Incorporation, the holders of the Class A and Class B Common Stock vote
together as a single class.

     Dividend and Liquidation Rights.  The record holders of shares of Class A
and Class B Common Stock shall be entitled to receive such dividends and
distributions as may be declared thereon by the Board of Directors out of the
Company's funds legally available therefor.  However, no such dividends or
distributions may be paid unless the holders of both classes receive the same
per share dividend, as if such classes constituted a single class.  In the case
of dividends payable in shares of Class A and Class B Common Stock, or stock
splits or subdivisions involving such stock, holders of each such class are
entitled to receive only shares of the class held by them.

    
     Upon liquidation or dissolution of the Company, whether voluntary or
involuntary, all of the holders of Class A and Class B Common Stock are entitled
to share ratably in the assets available for distribution after payment of all
prior obligations of the Company, including a $1.00 per share liquidation
preference to holders of Class A Common Stock and any liquidation preferences
granted to any future holders of Preferred Stock.     

     Transferability and Convertibility.  The Class A Common Stock is freely
transferable, subject to applicable securities laws.  The Class B Common Stock
may be held only by licensed medical doctors (i.e., M.D.s and D.O.s) (each a
"qualified holder").  Consequently, the transfer of Class B Common Stock is
restricted by the Articles of Incorporation to transfers to a "Permitted
Transferee," as defined below.

     If a holder of shares of Class B Common Stock transfers any such shares to
any person or entity other than a "Permitted Transferee," such transfer, without
any further action of the parties or the Company, shall automatically and
irrevocably convert such shares into an equal number of shares of Class A Common
Stock and the transferee shall be deemed a holder of such shares of Class A
Common Stock from the date of such transfer.  The term "Permitted Transferee"
shall mean only:

          (i)   a qualified holder;

          (ii)  the trustee of a trust for the sole benefit of a qualified
     holder;

          (iii) a partnership (which may include a limited liability
     partnership) made up exclusively of qualified holders or a corporation
     (which may include a professional corporation or a limited liability
     corporation) wholly owned by qualified holders or a professional
     association made up of exclusively qualified holders; provided, however,
     that as of the date that such partnership or corporation is no longer
     comprised of or owned exclusively by qualified holders, such partnership or
     corporation will no longer be a Permitted Transferee and any Class B Common
     Stock held by it shall be automatically and irrevocably converted into
     Class A Common Stock without any further action of the parties or the
     Company; or

          (iv)  a pledgee of a qualified holder, provided that such pledgee
     becomes a pledgee of a qualified holder by reason of the grant by such
     qualified holder to the pledgee of a lien on or security interest in or
     other similar encumbrance on any shares of Class B Common Stock or any
     interest therein created for the purpose of securing the repayment of
     borrowings extended by the pledgee to such qualified holder; provided,
     further, however, as of the date that such pledgee (or any successor or
     assign of such pledgee) forecloses upon such lien, security interest or
     encumbrance or otherwise becomes the owner of such shares

                                       45
<PAGE>
 
     of Class B Common Stock or interest therein following a default upon such
     borrowings or for any other reason, such pledgee will no longer be, and its
     transferee(s) and/or assign(s), if any, shall not be, a Permitted
     Transferee and any shares of Class B Common Stock held or transferred by it
     or its assigns shall be automatically and irrevocably converted into Class
     A Common Stock without any further action of the parties or the Company.

     To provide liquidity to holders of Class B Common Stock, the Articles of
Incorporation provide that each share of Class B Common Stock is convertible at
any time at the option of the record holder into one share of Class A Common
Stock.  A shareholder desiring to sell an equity interest represented by Class B
Common Stock could thereby convert and sell, subject to applicable securities
laws, shares of Class A Common Stock.  Shares of Class B Common Stock will be
automatically converted into an equal number of shares of Class A Common Stock
upon transfer to any person other than a Permitted Transferee.  Once converted,
shares of Class B Common Stock shall be canceled and not reissued.

     Preemptive Rights.  The holders of Class A and Class B Common Stock do not
have any preemptive, subscription, conversion (other than as described above) or
redemption rights, and are not subject to calls, assessments or rights of
redemption by the Company.  The outstanding shares of Class A and Class B Common
Stock are, and the shares offered hereby will be, duly authorized and issued,
fully paid and non-assessable.

     Effect of Subsequent Issuances and of Dual Classes.  The Articles of
Incorporation authorize the issuance of 250,000,000 million shares of Class A
Common Stock, 250,000,000 shares of Class B Common Stock and five million shares
of Preferred Stock.

     The authorized and unissued shares of Class A Common Stock, Class B Common
Stock and Preferred Stock may be utilized for various purposes, including
possible future acquisitions.  The Company currently does not have plans to
issue any shares of Common Stock, Class B Common Stock or Preferred Stock, other
than the sale of the shares of Class A Common Stock and Units of Class B Common
Stock offered hereby, and pursuant to the Company's stock option plans.

     One of the effects of the existence of authorized but unissued Class A and
Class B Common Stock and undesignated Preferred Stock may be to enable the Board
of Directors to make more difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender offer, proxy contest or
otherwise, and thereby to protect the continuity of the Company's management.
If, in the due exercise of its fiduciary obligations, the Board of Directors
were to determine that a takeover proposal was not in the Company's best
interest, such shares could be issued by the Board of Directors without
shareholder approval in one or more transactions that might prevent or render
more difficult or costly the completion of the takeover transaction by diluting
the voting or other rights of the proposed acquiror or insurgent shareholder
group, by putting a substantial voting block in institutional or other hands
that might undertake to support the position of the incumbent Board of
Directors, by effecting an acquisition that might complicate or preclude the
takeover, or otherwise.

     Certain state securities laws restrict issuers with dual classes of common
stock from offering equity securities or restrict the secondary trading of
equity securities of such issuers.  The Company does not believe that any such
state law restrictions will have a material adverse effect on the amount of
equity securities the Company will be able to offer or the price obtainable for
such securities by the Company or by shareholders in the secondary trading
market.
    
     The Company's transfer agent and registrar for the Common Stock is Stock
 Transfer Company of America, Inc.     
 
INDEMNIFICATION PROVISIONS

     The Company is a Texas corporation.  Section 2.02-1 of the Texas Business
Corporation Act (the "Act") provides authority for broad indemnification of
officers, directors, employees and agents of a corporation.  The Act also
permits a corporation to purchase and maintain liability insurance on behalf of
any such officer, director, employee or agent of a corporation.

                                       46
<PAGE>
 
     Article VIII of the Company's Articles of Incorporation provides that the
Company will indemnify its directors, officers, employees and agents to the
fullest extent currently allowed by the Act and will have the power to purchase
and maintain liability insurance on behalf of such persons.  At the present
time, the Company is in the process of obtaining liability insurance.  The
Company does not have indemnification agreements with any of its directors or
officers.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.


                              PLAN OF DISTRIBUTION
    
     The Company is effecting this offering of securities on a "best efforts"
basis through its officers and employees without the use of an underwriter,
broker or dealer.  However, the Company may engage underwriters, broker/dealers
or securities dealers to assist in the offering.  The Company may sell Class A
Common Stock or Units to or through underwriters, broker/dealers or a group of
such persons, directly to other purchasers, or through agents.  The Company also
may, from time to time, authorize dealers, acting as the Company's agents, to
solicit offers to purchase the offered Class A Common Stock or Units upon the
terms and conditions set forth in this Prospectus or a supplement hereto.
Investor funds will be held in escrow until a minimum of $300,000 in securities
of the Company are sold pursuant to this offering.  In the event the Minimum
Offering is not sold on or before ________________, 1998, the offering will be
terminated and the escrowed funds, plus any interest earned thereon, will be
promptly returned to the investors.  Upon the sale of the Minimum Offering, the
escrowed funds will be released to the Company.  Any subsequent sales with
respect to this offering will continue to be held in the subscription escrow,
but will be immediately available for use by the Company upon the Company's
request.  Escrowed Funds will be invested in short-term, investment grade,
interest-bearing securities and deposit accounts.       
  
     In connection with the sales of Class A Common Stock or Units,
underwriters, broker/dealers or agents may receive compensation from the Company
or from purchasers of Class A Common Stock or Units for whom they may act as
agents, in the form of discounts, concessions or commissions.  Underwriters,
broker/dealers and agents that participate in the distribution of Class A Common
Stock or Units may be deemed to be "underwriters," and any discounts or
commissions received by them and any profit on the resale of Class A Common
Stock or Units may be deemed to be underwriting discounts and commissions under
the Securities Act.  Any such underwriter, broker/dealer or agent may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.  In the sole determination of
management, the Company may pay the persons effecting the offering, excluding
its officers and employees, commissions of up to 10% of sales made, as allowed
by applicable law; provided, however, that the Company will not pay commissions
on the first $300,000 of securities sold hereby.     

       
     To purchase securities in this offering an investor must fully complete and
sign a subscription agreement and make payment for the amount of securities 
subscribed for. The Company intends to accept in the order received properly 
completed subscriptions and payments for subscription amounts from investors. 
Upon achievement of the maximum subscription amount for the offering, any 
subsequently received subscriptions will not be accepted by the Company and will
be promptly returned. Prior to the Company achieving the Minimum Offering, a 
subscriber may revoke or cancel his subscription. However, once the Minimum 
Offering is achieved, a subscriber may not revoke or cancel his subscription 
without the prior written consent of the Company.          

            
     The Company reserves the right, in its absolute discretion, to reject any
subscriptions, in whole or in part, for the purchase of Class A Common Stock or
Units. In the case of subscriptions that are rejected or partially rejected, the
Company will promptly refund the amount of the subscription price that has not
been accepted, without interest.          

     Prior to the offering, there has been no public market for the Common Stock
or the Units and none is likely to develop.  The offering price of the Common
Stock was determined arbitrarily by the officers of the Company without arm's-
length negotiation.  In determining such price, the Company considered
prevailing market conditions, the revenue and earnings potential of the Company,
estimates of the business potential of the Company, the present state of the
Company's business operations, and other factors deemed relevant.

                                       47
<PAGE>
 
RISK OF INSUFFICIENT FUNDS FROM THIS OFFERING
    
     This offering may be consummated by the Company upon the sale of as little
as $300,000 of securities of the Company.  In the event the Minimum Offering is
achieved, such funds will be available to the Company for the purposes described
in "Use of Proceeds."  Therefore, once the Minimum Offering is sold by the
Company, all of the investors' funds become subject to risk of loss.  Management
believes that such risk of loss increases if the Company is not able to raise
significantly more funds than the Minimum Offering.  Management does not expect
the Company to generate significant revenues from the sale of clinical abstract
data until the fiscal year 1998.  Therefore, this offering is vital to the
continued operations of the Company.  See "Plan of Operations."  In addition,
although the Company may engage underwriters, broker/dealers or securities
dealers to assist in this offering, no such persons have been engaged.
Consequently, the Company is relying solely on the selling efforts of Dr.
Rutherford and Philip A. Ratcliff, as registered agents of the issuer.      


                                   TAX CONSIDERATIONS

             
     The following discussion is a summary of the principal federal income tax 
consequences of providing the CRIS software to shareholders in the manner 
described elsewhere in this prospectus. The following discussion is based upon 
the Internal Revenue Code of 1986, as amended (the "Code"), existing and 
proposed regulations thereunder, reports of congressional committees, judicial 
decisions and current administrative rulings and practices. Any of these 
authorities could be repealed, overruled or modified at any time after the date 
hereof. Any such change could be retroactive and, accordingly, could modify the 
tax consequences discussed herein. No ruling from the Internal Revenue Service 
(the "IRS") with respect to the matters discussed herein has been requested and 
there is no assurance that the IRS would agree with the conclusions set forth in
this discussion.     

       
     Shareholders should be aware that this discussion summarizes only the 
material federal income tax consequences of providing the CRIS software to
shareholders that are generally applicable to shareholders and PIE and does not
address the federal income tax consequences that may be relevant to particular
shareholders who may be subject to special treatment under the federal income
tax laws. In addition, this discussion does not address any tax consequences
under state, local or foreign laws.
   
     In the opinion of Jenkens & Gilchrist, a Professional Corporation, counsel
to PIE, PIE's provision of the CRIS software to a shareholder in exchange for
the shareholder's providing data to PIE will be treated as a taxable exchange
for federal income tax purposes. In that event, PIE should be treated as
recognizing income equal to the fair rental value of the software. PIE also
should be treated as having paid a like amount for the data it receives from the
shareholders. The payment for this data should be capitalized for federal income
tax purposes as either the purchase or cost of the creation of an intangible
asset. If PIE can establish that this asset has a limited useful life that is
ascertainable with reasonable accuracy, PIE should be allowed to amortize this
asset over that limited useful life.
   
     Also, a shareholder who receives the CRIS software should be treated for 
federal income tax purposes as recognizing income measured by the fair rental 
value of the software but, if the shareholder uses the CRIS software in his 
trade or business, he should recognize an offsetting deduction for data 
furnished for the use of the CRIS software. Since the deduction for the use of 
the CRIS software is dependent on the software being used in the shareholder's 
trade or business, the PIE shares should be purchased by the entity actually 
using the CRIS software in its trade or business. This will usually be the 
professional association or other entity through which the physician engages his
medical practice. Shareholders are urged to consult their tax advisors as to the
particular entity that should purchase the PIE shares.

     Provided PIE's provision of the CRIS software to a shareholder in return 
for that shareholder providing data to PIE is treated as an exchange for federal
income tax purposes, PIE would be required to report the income, measured by the
fair rental value of the software, to each shareholder receiving the use of the 
CRIS software on a Form 1099-B.     

     SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR 
TAX CONSEQUENCES TO THEM OF THE CRIS SOFTWARE EXCHANGE FOR SHAREHOLDER DATA, 
INCLUDING THE APPLICABILITY OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, CHANGES IN
APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION.     

                                 LEGAL MATTERS

   
          The validity of the securities being offered hereby and the statements
in this Prospectus under the caption "Tax Considerations" will be passed
upon for the Company by Jenkens & Gilchrist, a Professional Corporation, Dallas,
Texas.     


                                    EXPERTS

          The financial statements of the Company at December 31, 1995, and for
the period then ended, included in this Prospectus, have been audited by Jackson
& Rhodes, P.C., independent auditors, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

                             AVAILABLE INFORMATION
    
          As a result of the offering, the Company will become subject to the
informational requirements of the Exchange Act of 1934, as amended.  The Company
has filed a Registration Statement under the Securities Act of 1933, as amended,
with the Commission with respect to the securities offered pursuant to this
Prospectus.  This Prospectus, which forms a part of the Registration Statement,
does not contain all of the information included in the Registration Statement
and the exhibits thereto.  For further information, reference is made to the
Registration Statement and amendments thereto and to the exhibits thereto, which
are available for inspection without charge at the office of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. Copies of the Registration
Statement may be obtained from the Commission at prescribed rates.      

                                       48
<PAGE>
 
                            REPORTS TO SHAREHOLDERS

          The Company intends to furnish to its shareholders annual reports of
the Company containing audited financial statements.  The Company will also
furnish, upon request from any shareholder, copies of any quarterly report filed
with the Commission.

                                       49
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>    
<CAPTION>

                                                                     Page
<S>                                                                  <C>

Independent Auditors' Report.....................................     F-2

Balance Sheets at March 31, 1996 (unaudited)
     and December 31, 1995.......................................     F-3

Statements of Operations for the Three Months
     Ended March 31, 1996 (unaudited) and
     for the Period from November 10, 1995
     (Date of Inception) to December 31, 1995....................     F-4

Statements of Changes in Stockholders' Equity
     for the Three Months Ended March 31, 1996 (unaudited)
     and for the Period from November 10, 1995
     (Date of Inception) to December 31, 1995....................     F-5

Statements of Cash Flows for the Three Months
     Ended March 31, 1996 (unaudited) and
     for the Period from November 10, 1995
     (Date of Inception) to December 31, 1995....................     F-6

Notes to Financial Statements....................................     F-7
</TABLE>     

                                      F-1
<PAGE>
 
                         INDEPENDENT AUDITORS' REPORT


Board of Directors
Physicians Information Exchange, Inc.

We have audited the accompanying balance sheet of Physicians Information
Exchange, Inc. (a development stage company) as of December 31, 1995 and the
related statements of operations, changes in stockholders' equity and cash flows
for the period from November 10, 1995 (date of inception) to December 31, 1995.
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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Physicians Information
Exchange, Inc. (a development stage company) as of December 31, 1995, and the
results of its operations and its cash flows for the period from November 10,
1995 (date of inception) to December 31, 1995 in conformity with generally
accepted accounting principles.

        
As discussed in Note 6 of Notes to the Financial Statements, management of the 
Company has discovered, in May 1996, that certain costs, aggregating 
approximately $152,000, incurred during the period ended December 31, 1995, 
previously classified as an asset, deferred offering costs, should have been 
expensed. Accordingly, the accompanying financial statements have been restated 
to correct the error.     

                                            Jackson & Rhodes P.C.



Dallas, Texas
    
May 29, 1996      

                                      F-2
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                       (A Development Stage Company)
                                BALANCE SHEETS


    
<TABLE> 
<CAPTION> 
                                    ASSETS

                                               March 31,         December 31,
                                                 1996               1995       
                                            -------------      ---------------- 
                                             (unaudited)          (restated)
<S>                                         <C>                 <C>  
Current assets:                                                              
   Cash                                      $    171,469           $  100,000  
                                             ------------           ---------- 
                                                                             
Deferred offering costs                            46,188               18,933  
                                                                             
Organization costs                                    950                1,000  
                                             ------------           ---------- 
                                                                             
                                             $    218,607           $  119,933  
                                             ============           ========== 


                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Accounts payable - stockholder            $    450,013           $  189,358
   Accounts payable - trade                        11,834               -
                                             ------------           ----------
       Total current liabilities                  461,847              189,358
                                             ------------           ----------

Commitments and contingencies                      -                    -

Stockholders' equity (deficit) (Note 4):
   Preferred stock, $.001 par; 5,000,000 
     shares authorized; none issued                -                    -
   Common stock:
      Class A, $.001 par; 250,000,000 shares 
       authorized; 30,000 shares issued and      
       outstanding                                     30                   10
      Class B, $.001 par; 250,000,000 shares 
       authorized; 75,240,000 shares issued  
       and outstanding                             75,240               75,240
   Additional paid-in capital                     259,730              249,750
   Stock subscriptions receivable                  -                   (25,000)
   Deficit accumulated during the 
    development stage                            (578,240)            (369,425)
                                             ------------           ----------
       Total stockholders' equity (deficit)      (243,240)             (69,425)
                                             ------------           ----------

                                             $    218,607           $  119,933
                                             ============           ==========
</TABLE> 
     

                See accompanying notes to financial statements.

                                      F-3

<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
                           STATEMENTS OF OPERATIONS

    
<TABLE>
<CAPTION>
                                                                       Period from                  Period from              
                                                                    November 10, 1995            November 10, 1995
                                           Three months ended       (Date of Inception) to       (Date of Inception) to   
                                            March 31, 1996           December 31, 1995              March 31, 1996
                                           ------------------       ----------------------       ----------------------
                                              (unaudited)                (restated)                   (unaudited)              
<S>                                        <C>                      <C>                          <C> 
General and administrative expenses           $    208,815             $     369,425                $     578,240         
                                              ------------             -------------                -------------        
                                                                                                                        
Net loss                                      $   (208,815)            $    (369,425)               $    (578,240)        
                                              ============             =============                =============         
                                                                                                                   
Net loss per common share                     $       0.00             $        0.00                               
                                              ============             =============                              
                                                                                                                   
Weighted average shares outstanding             75,270,000                75,250,000                               
                                              ============             =============                               
</TABLE> 
     

                See accompanying notes to financial statements.

                                      F-4

<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
           For the Period from November 10, 1995 (Date of Inception)
                      to December 31, 1995 and the Three
                          Months Ended March 31, 1996

    
<TABLE>    
<CAPTION>
 
                                                                                  
                                                                                  
                                                      Common Stock                                               Deficit  
                                        --------------------------------------                                 Accumulated
                                             Class A               Class B        Additional      Stock         During the  
                                        ----------------  --------------------     Paid-in     Subscriptions   Development
                                        Shares    Amount   Shares     Amount       Capital      Receivable        Stage      Total
                                        ------    ------  --------   ---------    ----------   -------------   -----------   -----
<S>                                     <C>       <C>     <C>        <C>          <C>          <C>            <C>           <C>
 
Issuance of common stock (Note 4):
   For notes receivable and services    10,000     $10       40,000    $    40      49,950      $(25,000)     $       -   $  25,000
   For payment of costs                      -       -   75,000,000     75,000           -             -              -      75,000
   For cash and services                     -       -      200,000        200     199,800             -              -     200,000
Net loss (restated)                          -       -            -          -           -             -       (369,425)   (369,425)
                                        ------     ---   ----------    -------    --------      --------      ---------   --------- 
Balance, December 31, 1995              10,000      10   75,240,000     75,240     249,750       (25,000)      (369,425)    (69,425)
Collection of stock subscription             -       -            -          -           -        25,000              -      25,000
Sale of common stock                    20,000      20            -          -       9,980             -              -      10,000
Net loss (unaudited)                         -       -            -          -           -             -       (208,815)   (208,815)
                                        ------     ---   ----------    -------    --------      --------      ---------   --------- 
Balance, March 31, 1996 (unaudited)     30,000     $30   75,240,000    $75,240    $259,730      $      0      $(578,240)  $(243,240)
                                        ======     ===   ==========    =======    ========      ========      =========   ========= 
</TABLE>
          
 
                See accompanying notes to financial statements.

                                      F-5
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
                           STATEMENTS OF CASH FLOWS

    
<TABLE>     
<CAPTION> 
                                                                                       Period from                Period from
                                                                                     November 10, 1995          November 10, 1995
                                                             Three Months Ended    (Date of Inception) to     (Date of Inception) to
                                                               March 31, 1996        December 31, 1995             March 31, 1996
                                                             ------------------    ----------------------     ----------------------
                                                                 (unaudited)             (restated)                 (unaudited)
<S>                                                          <C>                   <C>                        <C>
Cash flows from developmental activities:
  Net loss                                                          $(208,815)              $(369,425)               $(578,240)
  Adjustments to reconcile net loss
   to net cash used in developmental activities:
      Amortization                                                         50                       -                       50
      Common stock issued for services                                      -                 125,000                  125,000
      Common stock issued for payment of costs                              -                  75,000                   75,000
      Changes in assets and liabilities:                                                                               
       Organization costs                                                   -                  (1,000)                  (1,000)
       Accounts payable - trade                                        11,834                       -                   11,834
                                                                    ---------               ---------                --------- 
         Net cash used in developmental activities                   (196,931)               (170,425)                (367,356)
                                                                    ---------               ---------                ---------  

Cash flows from financing activities:
   Sale of common stock                                                35,000                 100,000                  135,000
   Deferred offering costs                                            (27,255)                (18,933)                 (46,188)
   Accounts payable - stockholder                                     260,655                 189,358                  450,013
                                                                    ---------               ---------                --------- 
      Net cash provided by financing activities                       268,400                 270,425                  538,825
                                                                    ---------               ---------                --------- 
 
Net change in cash and cash equivalents                                71,469                 100,000                  171,469
 
Cash and cash equivalents:
   Beginning of period                                                100,000                       -                        -
                                                                    ---------               ---------                --------- 
   End of period                                                    $ 171,469               $ 100,000                $ 171,469
                                                                    =========               =========                =========
</TABLE>      
     
 
Non-cash transactions:
 
   The Company issued 10,000 shares of Class A common stock and 240,000 shares
   of Class B common
   stock for notes receivable of $25,000.
 
   See Note 4 for other non-cash transactions.
 


                See accompanying notes to financial statements.

                                      F-6
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
                         Notes to Financial Statements
                     December 31, 1995 and March 31, 1996


1.   DESCRIPTION OF BUSINESS AND SUBSEQUENT EVENTS
    
     Organization      

     Physicians Information Exchange, Inc. ("the Company" or "PIE") was formed
     November 10, 1995. The Company was formed to introduce a new technology
     service that saves the physician time while collecting clinical information
     at the "point of care". This clinical information will provide structured
     outcomes and clinical data necessary to improve quality care and lower
     treatment cost. This technology service integrates the latest pen-based,
     handheld, data collection and wireless data transfer technologies with a
     robust knowledge database.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires the use of estimates based on
     management's knowledge and experience. Due to their prospective nature,
     actual results could differ from those estimates.
         
     Basis of Presentation      
    
     The Company's financial statements have been presented on the basis that it
     is a going concern, which contemplates the realization of assets and the
     satisfaction of liabilities in the normal course of business. The Company
     has reported a net loss of $578,240 since inception and net cash resources
     were used in developmental activities. The Company's future is dependent on
     raising additional capital.      
    
     The Company intends to raise equity funds in the public market by filing a
     registration statement with the Securities and Exchange Commission in 1996.
     The Company's principal shareholder has continued to fund the Company's
     developmental activities.      

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        
     Unaudited Interim Information     

    
     The accompanying financial information as of March 31, 1996 and for the
     three months then ended has been prepared by the Company, without audit,
     pursuant to the rules and regulations of the Securities and Exchange
     Commission. The financial statements reflect all adjustments which, in the
     opinion of management, are necessary to make the financial statements not
     misleading.     

     Cash and Cash Equivalents

     For purposes of reporting cash flows, cash and cash equivalents include
     cash and certificates of deposit with original maturities of less than
     three months.

     Deferred Offering Costs

     Costs incurred in connection with the Company's prospective public offering
     are being deferred and will be offset against the proceeds.

                                      F-7
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
                         Notes to Financial Statements


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Organization Costs

     Costs incident to the creation of the corporation, including various
     accounting and legal fees, have been capitalized and are being amortized
     over a five-year period.

     Net Loss Per Common Share

     Net loss per common share has been computed using the weighted average
     number of shares outstanding during the period. Weighted average shares
     include all shares of common stock issued for the entire period (cheap
     stock).

     Income Taxes

     The Company accounts for income taxes pursuant to Statement of Financial
     Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). The
     objective of this asset and liability method is to establish deferred tax
     assets and liabilities for the temporary differences between the financial
     reporting basis and the tax basis of the Company's assets and liabilities
     at enacted tax rates expected to be in effect when such amounts are
     realized or settled.

3.   INCOME TAXES
    
     The Company has recorded no income tax benefit for the period because it
     has no ability to carry back its operating loss. For tax purposes, the
     Company is required to defer its operating losses until it begins to
     receive operating revenues. These operating losses for tax purposes
     amounted to approximately $217,000 at December 31, 1995. A valuation
     allowance has been recorded to offset the related deferred tax asset for
     this temporary difference since the Company, in accordance with SFAS 109,
     deems it more likely than not that the deferred tax asset will not be
     realized.      

4.   STOCKHOLDERS' EQUITY

     Common Stock

     With respect to all matters submitted to a vote of the shareholders, the
     record holders of the Class A common stock are entitled to one vote per
     share and the record holders of Class B common stock are entitled to 10
     votes per share. Except as may otherwise be required by law or by the
     Articles of Incorporation, the holders of the Class A and Class B common
     stock vote together as a single class. The Class B common stock may be held
     only by licensed medical doctors.

                                      F-8
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
                         Notes to Financial Statements


4.   STOCKHOLDERS' EQUITY (CONTINUED)

     Common Stock (Continued)

     Upon its formation on November 10, 1995, the Company issued 75,000,000
     shares of Class B common stock to its founder, Dr. Ernie Rutherford, and
     recorded $189,358 in accounts payable to Dr. Rutherford in exchange for Dr.
     Rutherford's payment of $264,358 in costs and expenses for the Company. The
     payable to Dr. Rutherford will be satisfied with shares of common stock at
     the public offering price upon the successful completion of its public
     offering.

     As of December 31, 1995, the Company issued 200,000 shares of Class B
     common stock to a shareholder of Matrix Plus, Inc. ("Matrix"), a company
     owned by Dr. Rutherford, for $100,000 in cash. The Company recorded
     $100,000 in compensation for this transaction.

     As of December 31, 1995, the Company issued 40,000 shares of Class B common
     stock and 10,000 shares of Class A common stock to two shareholders of
     Matrix for $25,000 in cash. The Company recorded $25,000 in compensation
     for this transaction.

     Stock Option Plans

     In February 1996, the Board of Directors adopted the 1996 Employee Plan
     (the "1996 Employee Plan"). The purpose of the 1996 Employee Plan is to
     advance the interests of the Company by providing additional incentives to
     attract and retain qualified and competent employees and consultants of the
     Company and directors of the Company's subsidiaries, upon whose efforts and
     judgment the success of the Company is largely dependent. Nonemployee
     directors of the Company are not eligible to participate in the 1996
     Employee Plan. A total of 6,000,000 shares of Class B Common Stock have
     been reserved for sale upon exercise of Employee Options granted under the
     1996 Employee Plan. To date, no Employee Options have been granted.

     In February 1996, the Board of Directors adopted the 1996 Director Plan.
     The purpose of the 1996 Director Plan is to advance the interests of the
     Company by providing an incentive to retain as independent directors
     persons of training, experience and ability, to encourage a sense of
     proprietorship of such persons, and to stimulate the active interest of
     such persons in the development and financial success of the Company.
     Options under the 1996 Director Plan ("Director Options") are granted only
     to nonemployee directors of the Company. Director Options are automatically
     granted to each nonemployee director upon his election as a director. Each
     person serving as a nonemployee director of the Company on the date of
     adoption of the 1996 Director Plan received a Director Option under the
     1996 Director Plan exercisable for 75,000 shares of Class B Common Stock at
     an exercise price per share equal to the prospective initial public
     offering price. Each Director Option expires ten years after its date of
     grant. An aggregate of one-third of the total number of shares subject to
     such Director Options vest on each anniversary date of the date of grant.
     Shares subject to a Director Option vest as to all shares then subject to
     the Director Option upon the occurrence of a Major Corporate Event. A total
     of

                                      F-9
<PAGE>
 
                     PHYSICIANS INFORMATION EXCHANGE, INC.
                         (A Development Stage Company)
                         Notes to Financial Statements


4.   STOCKHOLDERS' EQUITY (CONTINUED)

     Stock Option Plans (Continued)

     2,000,000 shares of Common Stock have been reserved for issuance upon
     exercise of Director Options granted under the 1996 Director Plan. Director
     Options are granted with an exercise price per share equal to the fair
     market value of such shares on the date of grant.

5.   RELATED PARTY TRANSACTIONS
    
     In November 1995, the Company entered into an agreement with Matrix Plus,
     Inc. ("Matrix"), a company controlled by Dr. Rutherford, to purchase from
     Matrix the MR1 Clinical Record System software developed by Matrix, in
     consideration for the issuance of 200,000 shares of Class A common stock of
     PIE. The agreement is contingent upon the success of the Company's proposed
     public offering. The purchase price was determined by arm's-length
     negotiations between Matrix and PIE, based, in large part, upon the
     software developer's estimation of the value of the software (considering
     development costs and expenses). The Company will record the MR1 Clinical
     Record System at its appraised value of $150,000. Historical development
     costs to Matrix amounted to approximately $250,000.      
    
     The Company also began leasing office space on a month-to-month basis from
     Matrix for $585 per month. Rent expense amounted to $1,755 for the three
     months ended March 31, 1996.      

       
6.   RESTATEMENT
    
     Management of the Company has discovered, in May 1996, that certain costs,
     aggregating approximately $152,000, incurred during the period ended
     December 31, 1995, previously classified as an asset, deferred offering
     costs, should have been expensed. Accordingly, the accompanying financial
     statements have been restated to correct the error. The effect of the
     restatement was to decrease assets and increase net loss and stockholders'
     deficit by approximately $152,000.               

                                      F-10
<PAGE>
 
=============================================================================== 
          NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE ANY SECURITIES OTHER THAN THE
SHARES OF COMMON STOCK OFFERED HEREBY, IN ANY STATE OR JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.


                               TABLE OF CONTENTS
<TABLE>    
<CAPTION>

CAPTION                               PAGE
- -------                               ----
<S>                                   <C>

Prospectus Summary...................    2
Risk Factors.........................    5
Use of Proceeds......................   10
Capitalization.......................   11
Dividend Policy......................   11
Dilution.............................   11
Plan of Operation....................   13
Business.............................   15
Management...........................   32
Certain Transactions.................   37
Security Ownership of Management.....   38
Description of Capital Stock.........   38
Plan of Distribution.................   41
Tax Considerations...................   41
Legal Matters........................   41
Experts..............................   41
Available Information................   41
Reports to Shareholders..............   42
Index to Financial Statements........  F-1
</TABLE>     

     UNTIL              , 1996 (      DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
===============================================================================

===============================================================================
                                  
                              15,000,000 SHARES OF      
                              CLASS A COMMON STOCK


                                 1,885 UNITS OF       
                              CLASS B COMMON STOCK

                                           
                                  
                                  PHYSICIANS
                                  INFORMATION
                                 EXCHANGE, INC.


                     --------------------------------------

                                   PROSPECTUS

                     --------------------------------------


                                    
                                JULY     , 1996      



==================================================
<PAGE>
 
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
          ----------------------------------------- 

     The Company is a Texas corporation.  Section 2.02-1 of the Texas Business
Corporation Act (the "Act") provides authority for broad indemnification of
officers, directors, employees and agents of a corporation.  The Act also
permits a corporation to purchase and maintain liability insurance on behalf of
any such officer, director, employee or agent of a corporation.

     Article VIII of the Company's Articles of Incorporation provides that the
Company will have the power both to indemnify its directors, officers, employees
and agents to the fullest extent currently allowed by the Act and to purchase
and maintain liability insurance on behalf of such persons.

     At the present time, the Company does not have any such liability
insurance, nor does the Company have indemnification agreements with any of its
directors, officers, employees or agents.

ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
          ------------------------------------------- 

     The estimated fees and expenses payable by the Company in connection with
the issuance and distribution of the Common Stock registered hereunder are as
follows:

<TABLE>    
<S>                                                      <C>
Securities and Exchange Commission registration fee..... $ 12,069
Legal fees and expenses.................................   75,000*
Blue Sky fees and expenses (including legal fees).......   25,000*
Printing and engraving expenses.........................   40,000*
Accounting fees and expenses............................    6,000*
Transfer Agent and Registrar fees.......................    2,000*
Miscellaneous...........................................    9,931*
                                                         --------
          TOTAL......................................... $170,000
                                                         ========
</TABLE>     
_____________
* Estimated.
 
ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES.
          --------------------------------------- 

     The following sets forth information as of the date of this Prospectus
regarding all sales of unregistered securities of the Registrant since its
incorporation in November 1995.  In connection with each of these transactions,
the shares were sold to a limited number of persons, such persons were provided
access to all relevant information regarding the Registrant and/or represented
to the Registrant that they were "sophisticated" investors, and such persons
represented to the registrant that the shares were purchased for investment
purposes only and not with a view toward distribution. The issuances described
below were not registered under the Securities Act of 1933, as amended, in
reliance on the exemption provided under Section 4(2) thereof.
    
     On November 10, 1995, the Company issued 75,000,000 shares of Class B
Common Stock to its founder, Dr. W. Ernest Rutherford, in connection with the
formation of the Company, in consideration for Dr. Rutherford's payment of
$75,000 in costs and expenses of the Company.      

                                      II-1
<PAGE>
 
     On December 31, 1995, the Company issued 200,000 shares of Class B Common
Stock to a shareholder of Matrix Plus, Inc. ("Matrix") for $100,000 in cash.

     On December 31, 1995, the Company issued 40,000 shares of Class B Common
Stock and 10,000 shares of Class A common stock to two shareholders of Matrix
for $25,000 in cash.

     On February 12, 1996, the Company issued 20,000 shares of Class A Common
Stock to a shareholder of Matrix for $10,000.


ITEM 27.  EXHIBITS.
          -------- 

     (a)  Exhibits:

    
<TABLE>     
<S>            <C> 
     ++3.1     Articles of Incorporation of the Registrant and form of amendment
               thereto.

     ++3.2     Bylaws of the Registrant.

     
     ++5       Opinion of Jenkens & Gilchrist, a Professional Corporation, with
               respect to the legality of the securities' being registered.

      *8       Opinion of Jenkens and Gilchrist, a Professional Corporation, 
               with respect to tax matters.

    ++10.1     Stock Option Plan of the Registrant.

    ++10.2     Non-Employee Director Stock Option Plan of the Registrant.

    ++10.3     Form of Stock Escrow Agreement betwen Dr. W. Ernest Rutherford 
               and Agent.

    ++10.4     Purchase Agreement between the Registrant and Matrix Plus, Inc.

    ++10.5     Form of Advisory Council Member Sharing Agreement.

    ++10.6     Form of Clinical Abstract Data Agreement between Physician-
               shareholders and Registrant.

    ++10.7     Form of Escrow Agreement between the Registrant and Escrow Agent.

    ++10.8     Form of Subscription Agreement.

    ++10.9     Letter of Engagement, dated February 26, 1996, between the
               Registrant and First Consulting Group.
    
    ++10.10    Letter of Engagement, dated June 26, 1996, between the Registrant
               and First Consulting Group.

    ++11       Computation of Net Loss Per Common Share.

     *23.1     Consent of Accountants.

    ++23.2     Consent of Jenkens & Gilchrist, a Professional Corporation
               (contained in Exhibit 5).

     *23.3     Consent of Jenkens and Gilchrist, a Professional Corporation 
               (contained in Exhibit 8).

    ++24       Power of Attorney (contained on page II-6 hereto).
</TABLE>     
          

     (b) Financial Statement Schedules:
          None.

                                      II-2
<PAGE>
 
____________________
+  To be filed by amendment.
*  Filed herewith.
    
++ Previously Filed.     

                                      II-3
<PAGE>
 
ITEM 28.  UNDERTAKINGS.
          ------------ 

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Securities Act or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.  In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;

         (i)   To include any prospectus required by section 10(a)(3) of the
     Securities Act of 1933;

        (ii)   To reflect in the prospectus any facts or events arising after
     the effective date of the registration statement (or the most recent post-
     effective amendment thereof) which, individually or in the aggregate,
     represent a fundamental change in the information set forth in the
     registration statement; and

        (iii)  To include any material information with respect to the plan of
     distribution not previously disclosed in the registration statement or any
     material change to such information in the registration statement.

     (2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

The undersigned Registrant hereby undertakes:

     (1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

     (2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

                                      II-4
<PAGE>
 
                                   SIGNATURES
    
           
     In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Dallas,
State of Texas, on July 15, 1996.              

                              PHYSICIANS INFORMATION EXCHANGE, INC.


                              By:   /s/ W. Ernest Rutherford
                                    ----------------------------------------
                                    W. Ernest Rutherford
                                    President and
                                    Chief Executive Officer


     In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.

        
<TABLE>       
<CAPTION>
      SIGNATURE                                  CAPACITY                               DATE
      ---------                                  --------                               ----
<S>                                     <C>                                          <C>
/s/ W. Ernest Rutherford                President, Chief Executive Officer and       July 15, 1996
- ------------------------------          Chairman of the Board (Principal
    W. Ernest Rutherford                Executive Officer)

/s/ Ileta Rutherford*                   Vice President Operations/Secretary          July 15, 1996
- ------------------------------          and Director (Principal Financial and
    Ileta Rutherford                    Accounting Officer)

/s/ Philip Ratcliff*                    Vice President-Marketing and                 July 15, 1996 
- ------------------------------          Director
    Philip Ratcliff

/s/ Joan Blondin*                       Director                                     July 15, 1996
- ------------------------------
    Joan Blondin

/s/ David Raines, Jr.*                  Director                                     July 15, 1996
- ------------------------------
    David Raines, Jr.

                                        Director                                     June __, 1996
- ------------------------------
    Robert L. Boyle, Jr.

*By:  /s/ W. Ernest Rutherford
    --------------------------
       W. Ernest Rutherford
    Agent and Attorney-in-fact
</TABLE>          
          

                                      II-5
<PAGE>
 
                                EXHIBITS INDEX

    
<TABLE>         
<CAPTION>                           
                                                                                          Sequentially
Exhibit No.                  Description                                                 Numbered Page
- -----------                  -----------                                                 -------------
<S>            <C>                                                                       <C> 
     ++3.1     Articles of Incorporation of the Registrant and form of 
               amendment thereto.

     ++3.2     Bylaws of the Registrant.

     ++5       Opinion of Jenkens & Gilchrist, a Professional Corporation, with
               respect to the legality of the securities' being registered.

      *8       Opinion of Jenkens and Gilchrist, a Professional Corporation, 
               with respect to tax matters.

    ++10.1     Stock Option Plan of the Registrant.

    ++10.2     Non-Employee Director Stock Option Plan of the Registrant.

    ++10.3     Form of Stock Escrow Agreement between Dr. W. Ernest Rutherford and 
               Agent.

    ++10.4     Purchase Agreement between the Registrant and Matrix Plus, Inc.

    ++10.5     Form of Advisory Council Member Sharing Agreement.

    ++10.6     Form of Clinical Abstract Data Agreement between Physician-
               shareholders and Registrant.

    ++10.7     Form of Escrow Agreement between the Registrant and Escrow Agent.

    ++10.8     Form of Subscription Agreement.

    ++10.9     Letter of Engagement, dated February 26, 1996, between the
               Registrant and First Consulting Group.

    ++10.10    Letter of Engagement, dated June 26, 1996, between the Registrant
               and First Consulting Group.

    ++11       Computation of Net Loss Per Common Share.

     *23.1     Consent of Accountants.

    ++23.2     Consent of Jenkens & Gilchrist, a Professional Corporation (contained
               in Exhibit 5).

     *23.3     Consent of Jenkens and Gilchrist, a Professional Corporation
               (contained in Exhibit 8)

    ++24       Power of Attorney (contained on page II-6 hereto).
</TABLE>          
     

____________________
    
+  To be filed by amendment.      
    
*  Filed herewith.      
    
++ Previously filed.     


<PAGE>
 
                                                                   EXHIBIT 8    
 
    [LOGO FOR JENKENS & GILCHRIST A PROFESSIONAL CORPORATION APPEARS HERE]



                                FOUNTAIN PLACE
                          1445 ROSS AVENUE, SUITE 3200       AUSTIN, TEXAS
                                DALLAS, TX 75202             (512) 499-3800

                                (214) 855-4500               HOUSTON, TEXAS
                            TELECOPIER (214) 855-4300        (713) 951-3300

                                                           SAN ANTONIO, TEXAS
                                                             (210) 246-5000

                                                             WASHINGTON, D.C.
WRITER'S DIRECT DIAL NUMBER                                   (202) 326-1500


                                 July 3, 1996



Physicians Information Exchange, Inc.
1401 Hudson Lane, Suite 202
Monroe, Louisiana  71201


          Re:   Material Federal Income Tax Consequences Anticipated to Result
                from Certain Transactions between Physicians Information
                Exchange, Inc. ("Registrant") and its Shareholders.

Gentlemen:

          Registrant will file with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on or
about July 3, 1996, on Form SB-2 under the Securities Act of 1933, as amended
(the "Securities Act").  The Registration Statement will be filed in connection
with 15,000,000 shares of Class A Common Stock, 1,885 Units of Class B Common
Stock and 1,995,950 shares of Class B Common Stock of Registrant.  Except as
otherwise indicated, capitalized terms used herein shall have the meanings
assigned to them in the Registration Statement.

          Jenkens & Gilchrist, a Professional Corporation (the "Firm"), has
acted as counsel to Registrant in connection with the issuance of the Class A
and Class B Common Stock of Registrant.  You have requested our opinion that the
discussion relating to the Registrant providing CRIS software to shareholders in
the manner described in the Prospectus (the "CRIS Software Transaction") under
the caption "Tax Considerations" is an accurate summary of the material federal
income tax consequences anticipated to result from that transaction.  Section I
of this letter (the "Opinion Letter") contains the Firm's opinion.  Section II
of this Opinion Letter contains limitations on the opinion.

                                 I. OPINION
                                    -------

          We have reviewed all authorities as of the date hereof relevant to the
issue of whether the discussion relating to the CRIS Software Transaction in the
Prospectus under the caption "Tax Considerations" is an accurate summary of the
material federal income tax consequences
<PAGE>
 
    [LOGO FOR JENKENS & GILCHRIST A PROFESSIONAL CORPORATION APPEARS HERE]

Physicians Information Exchange, Inc.
July 3, 1996
Page 2

anticipated to result from the CRIS Software Transaction.  Based upon our
analysis of the foregoing authorities and subject to the limitations set forth
in Section II, the Firm is of the opinion that the discussion relating to the
CRIS Software Transaction under the caption "Tax Considerations" is an accurate
summary of the material federal income tax consequences anticipated to result
from the CRIS Software Transaction.

                             II.  LIMITATIONS
                                  -----------

          1.    Except as otherwise indicated, the opinion set forth in Section
I is based upon the Code and its legislative history, the regulations
promulgated thereunder, judicial decisions and current administrative rulings
and practices of the IRS, all as in effect on the date of this Opinion Letter.
These authorities may be amended or revoked at any time. Any such changes may or
may not be retroactive with respect to transactions entered into or contemplated
prior to the effective date thereof and could significantly alter the
conclusions reached in this Opinion Letter. There is no assurance that
legislative history, judicial or administrative changes will not occur in the
future. The Firm assumes no obligation to update or modify this Opinion Letter
to reflect any developments that may occur after the date of this Opinion
Letter.

          2.    The opinion set forth in Section I is not binding on the IRS or
the courts and is dependent upon the accuracy of the representations contained
in the Certificates signed by an officer of Registrant and attached hereto as
Exhibit "A."  The Firm has relied upon these representations and any inaccuracy
in the representations could adversely affect the opinion stated in Section I.

          3.    In connection with this opinion, the Firm has examined and is
familiar with originals or copies, certified or otherwise identified, of such
documents and records and such statutes, regulations and other instruments as it
deemed necessary or advisable for the purposes of this opinion, including (i)
the Registration Statement and (ii) the Plan of Arrangement.  The Firm has
assumed that all signatures on all documents presented to it are genuine, that
all documents submitted to it as originals are accurate originals thereof, that
all information submitted to it was accurate and complete, and that all persons
executing and delivering originals or copies of documents examined by it were
competent to execute and deliver such documents.

          4.    The Firm is expressing its opinion only as to those matters
expressly set forth in Section I.  No opinion should be inferred as to any other
matters.
   
          5.    This Opinion Letter is issued for your benefit and no other
person or entity may rely hereon without the express written consent of the
Firm. This Opinion Letter may be filed as an exhibit to the Registration
Statement. Consent also is given to the reference to this firm     

<PAGE>
 
    [LOGO FOR JENKENS & GILCHRIST A PROFESSIONAL CORPORATION APPEARS HERE]

Pysicians Information Exchange, Inc.
July 3, 1996
Page 3


under the caption "Legal Matters" in the Prospectus as having rendered the
opinion in the "Tax Considerations" section of such Prospectus.  In giving this
consent, the Firm does not thereby admit that it comes into the category of
persons whose consent is required under section 7 of the Securities Act or the
rules and regulations of the Commission promulgated thereunder.

                                   Respectfully submitted,

                                   Jenkens & Gilchrist,
                                   A Professional Corporation



                                   By:  /s/ William P. Bowers
                                        -------------------------------
                                        William P. Bowers, for the Firm

 

<PAGE>
 
                                                                    EXHIBIT 23.1

The Board of Directors
Physicians Information Exchange, Inc.



We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus and the Registration
Statement on Form SB-2.



                                       Jackson & Rhodes P.C.


Dallas, Texas
              
July 15, 1996                    



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