`UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549


     FORM 10-QSB


(Mark One)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarter ended September 30, 2001

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________ to __________

Commission File Number: 333-30176

                         NMXS.COM, INC.
     (Exact name of Registrant as specified in charter)

DELAWARE                                            91-1287406
State or other jurisdiction of               I.R.S. Employer I.D. No.
incorporation or organization

5041 INDIAN SCHOOL ROAD NE, SUITE 200, ALBUQUERQUE, NM             87110
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number, including area code:  (505) 255-1999

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

State the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date:  At October 16, 2001, there
were 22,157,639 shares of the Registrant's Common Stock outstanding.

PART I
FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS



NMXS.COM, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Balance Sheet
September 30, 2001
(unaudited)

ASSETS
Current assets:
Cash and cash equivalents                                                        $9,000
Restricted cash                                                                  41,000
Accounts receivable, less allowance for doubtful accounts of $40,000            558,000
Estimated earnings in excess of billings on uncompleted contracts                61,000
Prepaid expenses and other assets                                                59,000
Officer loans                                                                    32,000
                                                                              ---------
Total current assets                                                            760,000

Furniture, equipment and improvements - net                                     332,000
Security and other deposits                                                      23,000
Goodwill                                                                        105,000
                                                                              ---------
                                                                             $1,220,000
                                                                              =========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses                                          $312,000
Estimated billings in excess of earnings on uncompleted
contracts                                                                       271,000
Notes payable                                                                   340,000
                                                                              ---------
Total current liabilities                                                       923,000
                                                                              ---------
Commitments

STOCKHOLDERS' EQUITY
Capital stock $.001 par value:
Preferred stock, authorized 500,000 shares; issued and outstanding none
Common stock, authorized 50,000,000 shares; 22,129,539 issued and outstanding    22,000
Additional paid-in capital                                                    7,459,000
Deficit accumulated during the development stage                             (7,184,000)
                                                                              ---------
Total stockholders' equity                                                      297,000
                                                                              ---------
                                                                             $1,220,000
                                                                              =========


NMXS.COM, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Statements of Operations
(unaudited)

                                                            Three Months Ended
                                                            September 30,
                                                            2001               2000



Revenues                                                   $407,000            $284,000
                                                           --------            --------
Operating costs and expenses:
Cost of services                                            176,000             174,000
General and administrative                                  676,000             563,000
Research and development                                     32,000              13,000
                                                           --------            --------
Total operating costs and expenses                          884,000             750,000

Other income (expense), net:
   Interest income                                            1,000               9,000
   Interest expense                                          (9,000)             (1,000)
                                                             (8,000)              8,000
                                                           --------            --------
Net loss/comprehensive loss                               $(485,000)          $(458,000)
                                                           ========            ========

Weighted average number of common shares outstanding     21,805,000          20,734,000
                                                           ========            ========
   Basic and diluted loss per share                          $(0.02)             $(0.02)
                                                           ========            ========



NMXS.COM, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Statements of Operations
(unaudited)
                                                                                     Period From
                                                                                     April 2, 1996
                                                                                     (Inception)
                                                        Nine Months Ended             Through
                                                        September 30,                 September 30,
                                                       2001          2000               2001




Revenues                                              $998,000        $452,000         $2,293,000
                                                     ---------       ---------          ---------
Operating costs and expenses:
Cost of services                                       464,000         291,000          1,023,000
General and administrative                           2,174,000       1,732,000          6,392,000
Research and development                               220,000         203,000            961,000
                                                     ---------       ---------          ---------
Total operating costs and expenses                   2,858,000       2,226,000          8,376,000
                                                     ---------       ---------          ---------
Other income (expense), net:
   Interest income                                       4,000          47,000             82,000
   Interest expense                                    (26,000)         (2,000)           (30,000)
                                                       (22,000)         45,000             52,000
                                                     ---------       ---------          ---------
Net loss/comprehensive loss                        $(1,882,000)    $(1,729,000)       $(6,031,000)
                                                     =========       =========          =========

Weighted average number of common shares
 outstanding                                        21,335,000      20,555,000
                                                     =========       =========

Basic and diluted loss per share                        $(0.09)         $(0.08)
                                                     =========       =========




NMXS.COM, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Statements of Stockholders' Equity (Capital
Deficiency)
(unaudited)

                                                                                                      Deficit
                                                                 Common Stock                         Accumulated
                                                                 $.001 Par Value          Additional  During the
                                                                                          Paid-In     Development
                                                                 Shares         Amount    Capital     Stage             Total

Initial issuance of shares to founder for $1,000                118,800                     $1,000                      $1,000
Balance, December 31, 1996                                      118,800                      1,000                       1,000
                                                               --------                    -------                     -------
Fair value of services provided by founder                                                  75,000                      75,000
Net loss/comprehensive loss                                                               $(77,000)    (77,000)
Balance, December 31, 1997                                      118,800                     76,000     (77,000)         (1,000)
                                                               --------                    -------     -------         -------
Fair value of services provided by founder                                                  90,000                      90,000
Net loss/comprehensive loss                                                                           (114,000)       (114,000)
Balance, December 31, 1998                                      118,800           -        166,000    (191,000)        (25,000)
                                                               --------                    -------     -------         -------
Issuance of shares - June                                     5,416,300          $5,000     95,000                     100,000
Special distribution of shares to founder - June              5,618,900           6,000     (6,000)                          -
Issuance of shares at $.75 per share for consulting
 services - July                                                726,000           1,000    544,000                     545,000
Shares deemed issued in connection with reverse
 acquisition - August                                         5,333,336           5,000     (5,000)                          -
Issuance of shares at $.75 per share, net of issuance
 costs - August                                               2,360,500           2,000  1,715,000                   1,717,000
Issuance of stock options at fair value for consulting
 services - August                                                                         267,000                     267,000
Estimated value of services provided by Founder                                            120,000                     120,000
Shares issued for legal services provided to the
 Company - December                                              20,000                     40,000                      40,000
Shares issuable at $2.94 per share for consulting services                                 147,000                     147,000
Net loss/comprehensive loss                                                             (1,687,000)                 (1,687,000)
Balance, December 31, 1999                                   19,593,836          19,000  3,083,000   (1,878,000)     1,224,000
                                                               --------         -------    -------      -------        -------
Issuance of shares at $2.94 per share for consulting
 services - January                                              50,000
Issuance of shares at $1.00 per share net of issuance
 costs -  January                                             1,090,000           1,000  1,089,000                   1,090,000
Issuance of stock options at fair value for legal services                                  38,000                      38,000
Issuance of stock options as fair value for consulting
 services - June                                                                            81,000                      81,000
Issuance of stock options at fair value for consulting services                            518,000                     518,000
Shares issuable at $1.45 for rent and leasehold improvements                               109,000                     109,000
Warrant dividend                                              1,153,000                 (1,153,000)                          -
Net loss/comprehensive loss                                  (2,271,000)                (2,271,000)
Balance, December 31, 2000                                   20,733,836          20,000  6,071,000   (5,302,000)       789,000
                                                               --------         -------    -------      -------        -------
Issuance of shares at $.75 per share for guarantee fee          250,000           1,000    186,000                     187,000
Issuance of warrants at fair market value of investment acquisition                        225,000                     225,000
Issuance of stock options at fair value for legal services                                  11,000                      11,000
Issuance of stock options at fair value for Director's fee                                  19,000                      19,000
Issuance of stock options at fair value for consulting services                             89,000                      89,000
Issuance of previously issuable shares                           75,000                                                      -
Shares issued at market value for employee compensation          29,155                     12,000                      12,000
Issuance of stock options at fair value for legal services                                  19,000                      19,000
Issuance of stock options at fair value for professional services                          215,000                     215,000
Shares issued at market value for professional services          75,000                     42,000                      42,000
Shares  issued for sales of common stock at $0.40 per share     287,500                    115,000                     115,000
Shares issued at market value for professional services         580,891           1,000    331,000                     332,000
Shares issued at market value for outside services               80,916                     40,000                      40,000
Shares issued at market value for employee compensation          17,241                     10,000                      10,000
Issuance of stock options at fair value for consulting services                             74,000                      74,000

Net loss/comprehensive loss                                                                          (1,882,000)    (1,882,000)
                                                             ----------         -------   ---------    ---------      ---------
Balance, September 30, 2001                                  22,129,539         $22,000  $7,459,000 $(7,184,000)      $297,000
                                                             ==========         =======   =========   =========      =========





NMXS.COM, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Statements of Cash Flows
(unaudited)

                                                                                     Three Months Ended
                                                                                     September 30,
                                                                                     2001          2000
Cash flows from operating activities:
Net loss/comprehensive loss                                                        $(485,000)       $(458,000)
Adjustments to reconcile net loss/comprehensive loss to net cash used in
operating activities:
Common stock issued for services                                                     381,000                -
Stock options issued for services                                                     74,000          112,000
Depreciation                                                                          31,000           37,000
Amortization of goodwill                                                               6,000            6,000
Changes in:
Accounts receivable                                                                 (187,000)        (139,000)
Estimated earnings in excess of billings on uncompleted contracts                    (21,000)
Prepaid expenses and other assets                                                     14,000           (3,000)
Officer advances                                                                      20,000           (1,000)
Security deposits                                                                          -                -
Accounts payable and accrued expenses                                                (36,000)          12,000
Billings in excess of estimated earnings on uncompleted contracts                    178,000            5,000
                                                                                   ---------         --------
Net cash used in operating activities                                                (25,000)        (429,000)
                                                                                   ---------         --------
Cash flows from investing activities:
Acquisition of fixed assets                                                                           (85,000)
Deposits                                                                             (13,000)               -
                                                                                   ---------         --------
Net cash used in investing activities                                                (13,000)         (85,000)
                                                                                   ---------         --------
Cash flows from financing activities:

Proceeds from note payable                                                             3,000
Restricted cash                                                                       (1,000)               -
                                                                                   ---------         --------
Net cash provided by financing activities                                              2,000                -
                                                                                   ---------         --------

Net increase (decrease) in cash and cash equivalents                                 (36,000)        (514,000)
Cash and cash equivalents, beginning of period                                        45,000          833,000
                                                                                   ---------         --------
Cash and cash equivalents, end of period                                              $9,000         $319,000
                                                                                   =========         ========
Supplemental disclosure of cash flow information:
Interest paid                                                                         $9,000




NMXS.COM, INC. AND SUBSIDIARIES
(a development stage enterprise)
Consolidated Statements of Cash Flows
(unaudited)

                                                                                                         Period from
                                                                                                         April 2, 1996,
                                                                                                         (Inception)
                                                                      Nine Months Ended                    Through
                                                                      September 30,                     September 30,
                                                                      2001          2000                    2001
Cash flows from operating activities:
Net loss/comprehensive loss                                         $(1,882,000)  $(1,729,000)           $(6,031,000)
Adjustments to reconcile net loss/comprehensive loss to
 net cash used in operating activities:
Common stock issued for rent                                                                                  47,000
Consulting fee paid by exchange for investment                          225,000                              225,000
Common stock issued for services                                        623,000                            1,355,000
Stock options issued for services                                       427,000       496,000              1,331,000
Fair value of services provided by founder                                                                   285,000
Depreciation                                                             78,000        49,000                173,000
Provision for bad debt                                                                                        40,000
Amortization of goodwill                                                 22,000        15,000                 45,000
Changes in:
Notes receivable                                                                       20,000
Accounts receivable                                                    (335,000)     (170,000)              (598,000)
Estimated earnings in excess of billings on uncompleted contracts       122,000        21,000                (61,000)
Prepaid expenses and other assets                                         3,000       (23,000)               (26,000)
Officer advances                                                         18,000        (2,000)               (32,000)
Security deposits                                                         4,000                               (9,000)
Accounts payable and accrued expenses                                   139,000        53,000                277,000
Billings in excess of estimated earnings on uncompleted contracts       147,000       (26,000)               271,000
                                                                       --------     ---------              ---------
Net cash used in operating activities                                  (409,000)   (1,296,000)            (2,708,000)
                                                                       --------     ---------              ---------

Cash flows from investing activities:
Acquisition of fixed assets                                                          (297,000)              (477,000)
Acquisition of subsidiary                                                            (150,000)              (115,000)
Deposits                                                                (13,000)       (4,000)               (13,000)
                                                                       --------     ---------              ---------
Net cash used in investing activities                                   (13,000)     (451,000)              (605,000)
                                                                       --------     ---------              ---------

Cash flows from financing activities:
Repayment of note payable                                               (50,000)                             (50,000)
Proceeds from note payable                                              353,000                              390,000
Net proceeds from sale of common stock                                  115,000     1,090,000              3,023,000
Restricted cash                                                          (1,000)       (1,000)               (41,000)
                                                                       --------     ---------              ---------
Net cash provided by financing activities                               417,000     1,089,000              3,322,000
                                                                       --------     ---------              ---------

Net increase (decrease) in cash and cash equivalents                     (5,000)     (658,000)                 9,000
Cash and cash equivalents, beginning of period                           14,000       977,000                      -
                                                                       --------     ---------              ---------
Cash and cash equivalents, end of period                                 $9,000      $319,000                 $9,000
                                                                       ========     =========              =========
Supplemental disclosure of cash flow information:
Interest paid                                                           $26,000                              $26,000










NOTE A - ORGANIZATION AND OPERATIONS

NMXS.com, Inc. (formerly Conserve, Inc.) and its wholly-owned subsidiaries
(collectively "the Company"), operates with two business segments that develop
and market proprietary internet technology-based software for the management
of digital high-resolution graphic images, video clips and audio recordings.
The Company believes that its software has major applications for the media,
advertising, publishing, medical, entertainment, e-commerce and university
markets.

In August 1999, NMXS.com, Inc., then a non-operating public corporation with
nominal net assets acquired all of the outstanding common stock of New Mexico
Software, Inc. ("NMS") in a transaction that gave the stockholders of NMS
actual control of the combined company.  For accounting purposes, the
acquisition was treated as a capital stock transaction rather than a business
combination. This transaction was recorded as a recapitalization of NMS with
NMS as the acquirer ("Reverse Acquisition") and no goodwill or other
intangible was recognized.  The historical financial statements prior to the
date of the reverse acquisition are those of NMS with the accounting
acquirer's capital deficiency prior to the acquisition having been
retroactively restated (i.e. recapitalized) for the equivalent number of
shares received in the transaction and the difference between the par value of
Conserve's and NMS's stock recorded as an offset to additional paid-in
capital.  The historical deficit accumulated during the development stage of
NMS was carried forward after the reverse acquisition.  Loss per share
reflects the restatement for the number of equivalent shares received by NMS's
stockholders.

NMS, a New Mexico corporation, was formed in April 1996.  NMS was formed to
develop and market proprietary internet technology-based software as currently
conducted by the Company.

On August 3, 1999, Conserve, Inc. issued to the stockholders of NMS 11,880,000
shares of Conserve's common stock in exchange for all of the shares of NMS
with NMS becoming a wholly-owned subsidiary of Conserve.  In connection with
this transaction, Conserve, Inc.  changed its name to NMXS.com, Inc.

During April 2000, the Company purchased 100% of the capital stock of Working
Knowledge, Inc., a Kansas corporation with its office in California, for a
total price of $152,000. The business combination has been accounted for using
the purchase method. Tangible assets purchased were of nominal value. Working
Knowledge, Inc. provides services which are necessary to prepare, enter, and
maintain the customer's data on the Company's image management system. Prior
to its purchase, the Company serviced certain customers jointly with Working
Knowledge, Inc. and shared the revenue resulting from this service equally.
The Company recorded goodwill of $150,000 in connection with the acquisition.
The accompanying financial statements include the results of operations of
Working Knowledge, Inc. commencing April 1, 2000 (date of acquisition).

The Company conducts its operations primarily in the United States.

There is no assurance that the Company's research and development and
marketing efforts will be successful, or that the Company will achieve
significant sales of any such products.  Since its inception as a development
stage enterprise, the Company has incurred net losses and negative cash flows
from operations.  In addition, the Company operates in an environment of rapid
change in technology and is dependent upon the services of its employees and
its consultants.  If the Company is unable to successfully bring its
technologies to commercialization, it is unlikely that the Company could
continue its business.

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of
the Company as a going concern and realization of assets and settlement of
liabilities and commitments in the normal course of business.  The Company
will continue to require the infusion of capital until operations become
profitable.  During 2001, the Company anticipates raising additional capital,
increasing revenues and continuing to monitor their expenses.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]     Principles of consolidation:

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries.  All material inter-company accounts and
transactions have been eliminated.

[2]     Revenue recognition:

Maintenance contract revenue is recognized on a straight-line basis over the
life of the respective contract. Revenue from custom software development,
which is generally billed separately from the Company's proprietary software,
is recognized based on its percentage of completion.  Revenues recognized
under percentage of completion contracts are generally based upon specific
milestones achieved as specified in customer contracts.  The Company also
derives revenue from the sale of third party hardware and software. Consulting
revenue is recognized when the services are rendered.  License revenue is
recognized ratably over the term of the license.

Due to uncertainties inherent in the estimation process it is at least
reasonably possible that completion costs for programs in progress will be
further revised in the near-term.

The cost of services, consisting of staff payroll, outside services, equipment
rental, communication costs and supplies, is expensed as incurred.

[3]     Cash and cash equivalents:

The Company considers all highly liquid instruments purchased with a maturity
of three months or less to be cash equivalents. The Company maintains its cash
and cash equivalents at three financial institutions.

[4]     Furniture, equipment and improvements:

Furniture, equipment and improvements are recorded at cost.  The cost of
maintenance and repairs is charged against results of operations as incurred.
Depreciation is charged against results of operations using the straight-line
method over the estimated economic useful life.  Leasehold improvements are
amortized on a straight-line basis over the life of the related lease.

[5]     Income taxes:

The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns.  Under this method, deferred tax liabilities and
assets are determined on the basis of the differences between the tax basis of
assets and liabilities and their respective financial reporting amount
("temporary differences") at enacted tax rates in effect for the years in
which the differences are expected to reverse.

Prior to the acquisition of NMS by NMXS.com, Inc., NMS was an S corporation as
defined in the Internal Revenue Code.  Upon the consummation of this
transaction, NMS Subchapter S status was terminated.  The accumulated loss
through the date of acquisition, which amounted to $32,000, was reported on
the individual income tax return of the former stockholder of NMS and
therefore is not available to the Company.

 [6]     Per share data:

The basic and diluted per share data has been computed on the basis of the net
loss available to common stockholders for the period divided by the historic
weighted average number of shares of common stock adjusted for the retroactive
treatment of common shares issued to the founder (historical number of shares
represents the shares issued by Conserve to NMS stockholders in connection
with the reverse merger) immediately prior to the reverse acquisition.  All
potentially dilutive securities have been excluded from the computations since
they would be antidilutive; however, these dilutive securities could
potentially dilute basic earnings per share in the future.

[7]     Research and development expenses:

Costs of research and development activities are expensed as incurred.

[8]     Advertising expenses:

The Company expenses advertising costs, which consist primarily of promotional
items and print media, as incurred.  Advertising expenses amounted to $18,000,
$93,000 and $175,000 for the nine months ended September 30, 2001 and 2000 and
the cumulative period April 2, 1996 (inception) through September 30, 2001,
respectively.  Advertising expenses for the three months ended September 30,
2001 and 2000 were $2,000 and $15,000, respectively.

[9]     Use of estimates:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period.  Actual
results could differ from those estimates.

[10]     Stock-based compensation:

Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("FAS 123") allows companies to either expense the
estimated fair value of stock options and warrants, or to continue following
the intrinsic value method set forth in Accounting Principles Board Opinion
25, "Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro
forma effects on net income had the fair value of the options and warrants
been expensed.  The Company has elected to apply APB 25 in accounting for its
stock based incentive plans.  Equity instruments issued to non-employees are
measured based on their fair values.

[11]     Software development:

The Company accounts for computer software development costs in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed".  As
such, all costs incurred prior to the product achieving technological
feasibility are expensed as research and development costs.  Technological
feasibility is generally achieved upon satisfactory beta test results.  Upon
achieving technological feasibility, programming costs are capitalized and
amortized over the economic useful life, which is estimated to be two years.
There were no capitalized software development costs as of September 30, 2001.

 [12]     Rental expense:

The Company has recognized the total minimum rental payments due under the
lease on a straight-line basis over the lease term.  As of September 30, 2001,
the Company has a prepaid rent asset of $17,000.

[13]     Goodwill:

Goodwill resulting from the acquisition of Working Knowledge, Inc., accounted
for as a purchase, is being amortized on a straight-line basis over 5 years.
The carrying value of goodwill is analyzed on an annual basis.  Such analysis
is based upon the expected future cash flows of Working Knowledge, Inc.
Amortization of approximately $22,000 and $15,000 has been included in general
and administrative expenses for the nine months ended September 30, 2001 and
2000, respectively.  Amortization for the three months ended September 30,
2001 and 2000 is approximately $6,000 for each period.

[14]    Interim financial statements:

Financial statements as of September 30, 2001 and the nine months and three
months ended September 30, 2001 and 2000 and the respective amounts included
in the period from inception April 2, 1996 are unaudited but in the opinion of
management, the financial statements include all adjustments consisting of
normal recurring accruals necessary for a fair presentation of the comparative
financial position and results of operations.  Results of operations for
interim periods are not necessarily indicative of those to be achieved or
expected for the entire year.

NOTE C - RESTRICTED CASH

The Company has a certificate of deposit in the amount of $41,000 to
collateralize a note payable.  Interest is compounded on a quarterly basis at
an annual percentage yield of 3.875%.


NOTE D - FURNITURE, EQUIPMENT, AND IMPROVEMENTS

Furniture, equipment, and improvements as of September 30, 2001 consist of the
following:


Computers                               $246,000
Furniture, fixtures and equipment        176,000
Leasehold improvements                    84,000

                                         506,000

Accumulated depreciation                (174,000)

                                        $332,000


NOTE E - NOTES PAYABLE

The Company has a $37,000 promissory note expiring on August 31, 2002.  The
principal balance and all accrued, unpaid interest is due on this date.
Interest is payable on a monthly basis at a rate of 5.875% per annum.

The Company has a promissory note payable, which matures on January 24, 2002,
in the amount of $300,000 for working capital requirements. The loan is
collateralized by substantially all of the Company's assets and personally
guaranteed by an officer of the Company as well as an outside investor. The
outside investor was issued 250,000 shares of the Company's common stock
valued at approximately $187,500 in exchange for the personal guarantee.
Interest is payable at maturity at a variable rate of prime plus 1%, but with
a minimum rate of 8%.  The current rate is 8%.

The Company also has a line of credit with a maximum amount of $15,000.  As of
September 30, 2001 the balance owed is approximately $3,000.  Interest is
payable monthly on the outstanding balance at a variable rate which is
currently 16%.

NOTE F - CAPITAL TRANSACTIONS

Common stock:

The following common stock transactions include the effects of restating
stockholders' equity for the shares received in the recapitalization as a
result of the reverse acquisition.  The exchange rate of such shares was 118.8
Conserve common shares for each NMS common share.  Accordingly, there were
11,880,000 common shares outstanding immediately prior to consummating the
reverse acquisition.

Effective April 2, 1996, the Company issued 118,800 shares of common stock to
the founder for a capital contribution.

During 1999, the Company effected the following stock transactions:

In June 1999, in contemplation of the anticipated reverse acquisition, the
Company adjusted its capitalization in order to facilitate the exchange of
shares required as part of the acquisition transaction.  Prior to this
adjustment, the founding stockholder owned 100% (1,000 pre-exchange common
shares) (118,800 shares giving effect to the exchange) of NMS.  In connection
with this adjustment, the Company distributed 47,297 pre-exchange common
shares (5,618,900 shares giving effect to the exchange) to the founding
stockholder.  As a result of this distribution, the founding stockholder's
overall ownership percentage did not change.  This event resulted in no charge
and has been recorded in a manner similar to a recapitalization.

In June 1999, issued 5,416,300 shares of common stock for $100,000 in
accordance with a stock purchase agreement.

In July 1999, issued 726,000 shares of common stock with a fair market value
of  $.75 per share for consulting services.

In August 1999, in accounting for the reverse acquisition transaction, the
Company was deemed to have issued 5,333,336 common shares for the net monetary
assets of Conserve which was nominal.  These shares represented the common
shares outstanding immediately prior to the reverse acquisition.

In August 1999, issued 2,360,500 shares of its common stock at $.75 per share
in a private placement offering, net of issuance costs of $53,000.

In August 1999, the Company agreed to issue 50,000 common shares to a former
officer of the Company.  The fair value of such shares amounting to $147,000
has been recorded in the statement of operations for the year ended December
31, 1999.

On December 28, 1999, the Company issued 20,000 shares of common stock to one
individual valued at $40,000 in exchange for services.

During 2000, the Company effected the following stock transactions:

In January 2000, the Company issued 50,000 shares of its common stock to a
former officer of the Company for services rendered prior to August, 1999. The
fair value of such shares amounting to $147,000 was recorded in the statement
of operations for the year ended December 31, 1999.

In January and February, 2000, in connection with a private placement
offering, the Company issued 1,090,000 units at $1.00 per unit consisting of
one share of common stock and one Series B warrant to purchase one share of
common stock at $1.00 per share exercisable for a period of up to five years
from date of issuance.

In May 2000, the Chief Executive Officer, who is a principal stockholder of
the Company, transferred 75,000 shares to a lessor of the Company for future
rent obligations and certain leasehold improvements. As a result of this
transaction, the Company recognized a credit to additional paid-in capital of
$109,000, representing the fair value of the stock exchanged. The Company
reimbursed the officer by the issuance of 75,000 of the Company's common
stock.

During the nine months ended September 30, 2001, the Company effected the
following stock transactions:

During January, the Company borrowed $300,000 for working capital
requirements. The loan is collateralized by substantially all of the Company's
assets and personally guaranteed by an officer of the Company as well as an
outside investor.  The outside investor was issued 250,000 shares of the
Company's common stock valued at approximately $187,500 in exchange for the
personal guarantee.

During May, the Company sold 287,500 shares of its common stock for
$115,000.

One of the Company's employees agreed to be partially compensated for his
salary during the six months ended June 30, 2001 by accepting payment in the
form of the Company's common stock.  The Company issued 29,155 shares of its
common stock to the employee, and approximately $12,000 is included in the
statement of operations for the nine months ended September 30, 2001.

The Company issued 17,241 shares of its common stock to an employee as
additional compensation and approximately $10,000 is included in the statement
of operations for the three months and the nine months ended September 30,
2001.

The Company issued 736,807 shares of its common stock for various legal and
other professional services.  Approximately $414,000 has been included in the
statement of operations for the three months and the nine months ended
September 30, 2001.


Warrants:

In conjunction with the closing of the reverse merger, the Company declared a
distribution of 1,000,000 warrants at the rate of one warrant for each 5.3
common shares held by the stockholders of record as of the beginning of
business on August 3, 1999.  The warrants have an exercise price of $1.25 per
share and a three year contractual life from date of issuance.  The warrants
are redeemable by the Company for $.01 per warrant subject to 30 days written
notice at any time the closing bid price of the stock equals or exceeds 300%
of the exercise price of the warrant for ten consecutive trading days.  The
warrants became issuable on November 14, 2000, the date the Company's Form
SB-2 filing was declared effective.  As a result, the Company recorded a
warrant dividend valued at $1,153,000, the fair value of the warrants on the
effective date. The fair value was estimated using the Black-Scholes pricing
model. The following assumptions were used in computing the fair value of the
warrant dividend: risk free interest rate of 5.7%, zero dividend yield,
volatility of the Company's common stock 218% and an expected life of three
years.  The warrants were issued on January 25, 2001.

On February 20, 2001, the Company entered into a stock swap agreement with a
principal corporate stockholder (a public company). The agreement provides for
the exchange of cashless assignable warrants to purchase 1,500,000 shares of
the Company's common stock at an exercise price of $.50 per share for 150,000
restricted shares of the stockholder's common stock. The transaction was
recorded as an investment valued at $225,000, which represents the market
value of the stockholder's common stock exchanged on the date of the agreement
(See Note L).

Stock options:

On August 3, 1999, the Company adopted its 1999 Stock Option Plan (the
"Plan").  Under the Plan, incentive and non-qualified stock options may be
granted to key employees and consultants at the discretion of the Board of
Directors.  Any incentive option granted under the Plan will have an exercise
price of not less than 100% of the fair market value of the shares on the date
on which such option is granted.  With respect to an incentive option granted
to a Participant who owns more than 10% of the total combined voting stock of
the Company or of any parent or subsidiary of the Company, the exercise price
for such option must be at least 110% of the fair market value of the shares
subject to the option on the date on which the option is granted.  A
non-qualified option granted under the Plan (i.e., an option to purchase the
common stock that does not meet the Internal Revenue Code's requirements for
incentive options) must have an exercise price of not less than 100% of the
fair market value of the stock on the date of grant.  The plan also contains
provisions affecting outstanding options in the case of certain corporate
transactions or in the event of a change of control.  The Company could
accelerate the vesting and termination dates of the options.  A maximum of
3,000,000 options can be awarded under the Plan.  The terms of grant permit a
non-cash exercise.

Disclosures required by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), including pro
forma operating results had the Company prepared its financial statements in
accordance with the fair value based method of accounting for stock-based
compensation prescribed therein are shown below.  Exercise prices and
weighted-average contractual lives of stock options outstanding as of
September 30, 2001 are as follows:

     Options Outstanding                    Options Exercisable
Exercise  Number          Weighted   Weighted    Number         Exercise
Price     Outstanding     Average    Average     Exercisable    Price
          Remaining       Exercise
          Contractual     Price
          Life
$0.2800     300,000       4.5       $0.2800       300,000      $0.2800
 0.3125      60,000       4.5        0.3125        60,000       0.3125
 0.3900     150,000       9.5        0.3900             0       0.3900
 0.5000     300,000       9.5        0.5000             0       0.5000
 0.5400     100.000       9.7        0.5400             0       0.5400
 0.6100      60,000       4.6        0.6100        60,000       0.6100
 0.7500     452,000       3.7        0.7500       181,000       0.7500
 0.7700      60,000       9.2        0.7700             0       0.7700
 0.8250     120,000       2.8        0.8250        48,000       0.8250
 1.2500     172,000       8.7        1.2500        89,000       1.2500
 1.4900      35,000       9.7        1.4900             0       1.4900
 1.6250      94,000       8.3        1.6250        94,000       1.6250
 2.1250     163,000       8.3        2.1250        84,000       2.1250

Summary of Options Granted and Outstanding:


                                             Nine Months Ended September 30,
                                                   2001                         2000
                                        Shares     Weighted Average      Shares      Weighted Average
                                                   Exercise Price                    Exercise Price



Options:
Outstanding at beginning of year     1,593,000     $1.33                 572,000     $0.77
Granted                              1,088,000      0.48               1,346,000      1.56
Cancelled/Forfeited                    615,000      1.42

Outstanding at end of period         2,066,000     $0.59               1,918,000     $1.32


During the year ended December 31, 1999, the Company granted the following
stock options:

During the year ended December 31, 1999, the Company issued 647,000 options of
which 75,000 options were cancelled in 1999.  The most recent quoted market
price of the Company's common shares was $3 per share at the date of grant.
The total fair value of such options approximated $1,391,000. There were no
options outstanding prior to August 3, 1999. Through September 30,2001,
229,000 of the 572,000 options have vested.  Charges for the 114,000 options
that vested during 2001 and the 67,000 options that vested during 2000
included in the statements of operations for the three months ended September
30, 2001 and 2000 in general and administrative expenses are approximately
$65,000 and $108,000, respectively; and $244,000.and $428,000 for the nine
months ended September 30, 2001 and 2000, respectively

The fair value of each option granted prior to 2000 has been estimated on the
date of grant using the Black-Scholes option pricing model.  The weighted
average fair value of the options granted during 1999 was $2.42.  The
following weighted average assumptions were used in computing the fair value
of option grants for 1999.  Weighted average risk-free interest rate of 5.50%;
zero dividend yield, volatility of the Company's common stock of 40% and an
expected life of the options of five years.  The options vest ratably over a
five year period.

During the year ended December 31, 2000, the Company granted the following
stock options:

In January 2000, the Company granted 308,000 stock options to employees with
an exercise price of $2.12, equal to the fair value of the common stock, with
a contractual life of ten years and a two year vesting period, 50% at the end
of each one year period from the date of grant; 145,000 of such options have
cancelled. The fair value of the noncancelled options has been estimated on
the date of grant using the Black-Scholes option pricing model. The weighted
average fair value of these options was $2.12.  The following assumptions were
used in computing the fair value of these option grants.  Weighted average
risk-free interest rate of 6.66%; zero dividend yield, volatility of the
Company's common stock of 218% and an expected life of the options of ten years.

During April 2000, the Company entered into an agreement with a third party to
provide legal services to the Company in exchange for an initial grant of
150,000 options at an exercise price of $1.625, equal to the fair value of the
common stock.  In accordance with the agreement, legal counsel earns as a
retainer fee an automatic vesting of 1,000 options each month services are
rendered and earns additional vesting of stock options for services rendered
based on a calculation defined in the agreement.  The fair value of each of
these options has been estimated on the date of grant using the Black-Scholes
option pricing model.  The weighted average fair value of these options was
$1.62.  The following assumptions were used in computing the fair value of
these option grants.  Weighted average risk-free interest rate of 5.99%; zero
dividend yield, volatility of the Company's common stock of 218% and an
expected life of the options of ten years.  This agreement was cancelled
during  August 2001 and for the nine months ended September  2001 and 2000
options valued at approximately $21,000 and $19,000 respectively, were earned
and are reflected in general and administrative expenses.  For the three
months ended September 2001 and 2000 options valued at approximately $2,000
and $4,000 respectively, were earned and are reflected in general and
administrative expenses.

During April 2000, the Company entered into an independent account
representative agreement with a third party to provide outside sales services
to the Company in exchange for a grant of 250,000 options at an exercise price
of $1.625, equal to the fair value of the common stock.  In accordance with
the agreement, 50,000 options vested as of the effective date of the agreement
and additional stock options vest based on services rendered as defined in the
agreement.  The fair value of each of these options has been estimated on the
date of grant using the Black-Scholes option pricing model.  The weighted
average fair value of these options was $1.62.  The following assumptions were
used in computing the fair value of these option grants.  Weighted average
risk-free interest rate of 5.99%; zero dividend yield, volatility of the
Company's common stock of 218% and an expected life of the options of ten
years.  Options valued at approximately $50,000 were earned and are included
in general and administrative expense for the nine months ended September 30,
2000.  This agreement was cancelled during August 2001.

In July 2000, the Company granted 638,000 stock options to employees with an
exercise price of $1.25, equal to the fair value of the common stock, with a
contractual life of ten years and a two year vesting period, 50% at the end of
each one year period from the date of grant; 466,000 of such options have
cancelled.  The fair value of the noncancelled options has been estimated on
the date of grant using the Black-Scholes option pricing model. The weighted
average fair value of these options was $1.25.  The following assumptions were
used in computing the fair value of these option grants. Weighted average
risk-free interest rate of 6.05%; zero dividend yield, volatility of the
Company's common stock of 218% and an expected life of the options of ten
years.

During the nine months ended September 30, 2001, the Company granted the followi
ng stock options:

In January 2001, the Company granted 83,000 stock options to employees with an
exercise price of $.77, equal to the fair value of the common stock, with a
contractual life of ten years and a two year vesting period, 50% at the end of
each one year period from the date of grant, 24,000 of such options have been
cancelled.  The fair value of the options has been estimated on the date of
grant using the Black-Scholes option pricing model. The weighted average fair
value of these options was $.77.  The following assumptions were used in
computing the fair value of these option grants.  Weighted average risk-free
interest rate of 6.05%; zero dividend yield, volatility of the Company's
common stock of 218% and an expected life of the options of ten years.

During March, 2001, the Company granted 60,000 stock options to a member of
the Board of Directors with an exercise price of $.3125, equal to the fair
value of the common stock, with a contractual life of five years and a thirty
day vesting period from the date of grant.  The fair value of the options has
been estimated on the date of grant using the Black-Scholes option pricing
model.  The weighted average fair value of these options was $.3125.  The
following assumptions were used in computing the fair value of these option
grants.  Weighted average risk-free interest rate of 4.64%; zero dividend
yield, volatility of the Company's common stock of 247% and an expected life
of the options of five years.  Options valued at approximately $19,000 were
earned and are included in general and administrative expense for the nine
months ended September 30, 2001.

During April, 2001, the Company granted 300,000 stock options for outside
consulting services with an exercise price of $.28, equal to the fair value of
the common stock, with a contractual life of five years, exercisable as of the
date of grant.  The fair value of the options has been estimated on the date
of grant using the Black-Scholes option pricing model.  The weighted average
fair value of these options was $.28.  The following assumptions were used in
computing the fair value of these option grants.  Weighted average risk-free
interest rate of 4.64%; zero dividend yield, volatility of the Company's
common stock of 247% and an expected life of the options of five years.
Options valued at approximately $84,000 were earned and are included in
general and administrative expense for the nine months ended September 30, 2001.

During April, 2001, the Company granted 150,000 stock options for outside
consulting services with an exercise price of $.39, $.11 more than the fair
value of the common stock, with a contractual life of ten years and a two year
vesting period, 50% at the end of each one year period from the date of
grant.  The fair value of the options has been estimated on the date of grant
using the Black-Scholes option pricing model. The weighted average fair value
of these options was $.28.  The following assumptions were used in computing
the fair value of these option grants. Weighted average risk-free interest
rate of 5.14%; zero dividend yield, volatility of the Company's common stock
of 247% and an expected life of the options of ten years.  Options valued at
approximately $5,000 and $10,000 were earned and are included in general and
administrative expense for the three months and nine months ended September
30, 2001 respectively.

During April 2001, the Company granted 300,000 stock options to an employee
with an exercise price of $.50, $.25 over the fair value of the common stock,
with a contractual life of ten years and a two year vesting period, 50% at the
end of each one year period from the date of grant.  The fair value of the
options has been estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair value of these options was $.25.  The
following assumptions were used in computing the fair value of these option
grants. Weighted average risk-free interest rate of 6.05%; zero dividend
yield, volatility of the Company's common stock of 247% and an expected life
of the options of ten years.

During April, 2001, the Company granted 60,000 stock options for professional
services with an exercise price of $.61, equal to the fair value of the common
stock, with a contractual life of five years, excusable as of the date of
grant.  The fair value of the options has been estimated on the date of grant
using the Black-Scholes option pricing model.  The weighted average fair value
of these options was $.61.  The following assumptions were used in computing
the fair value of these option grants.  Weighted average risk-free interest
rate of 4.76%; zero dividend yield, volatility of the Company's common stock
of 247% and an expected life of the options of five years. Options valued at
approximately $36,000 were earned and are included in general and
administrative expense for the nine months ended September 30, 2001.

During June 2001, the Company granted 35,000 stock options to an employee with
an exercise price of $1.49, $.84 over the fair value of the common stock, with
a contractual life of ten years and a vesting period of 50% at the end of five
months and 50% at the end of seventeen months.  The fair value of the options
has been estimated on the date of grant using the Black-Scholes option pricing
model. The weighted average fair value of these options was $.65.  The
following assumptions were used in computing the fair value of these option
grants.  Weighted average risk-free interest rate of 6.05%; zero dividend
yield, volatility of the Company's common stock of 247% and an expected life
of the options of ten years.

During July 2001, the Company granted 100,000 stock options to an employee
with an exercise price of $.54, equal to the fair value of the common stock,
with a contractual life of ten years and a vesting period of 50% at the end of
five months and 50% at the end of seventeen months.  The fair value of the
options has been estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair value of these options was $.54.  The
following assumptions were used in computing the fair value of these option
grants.  Weighted average risk-free interest rate of 6.05%; zero dividend
yield, volatility of the Company's common stock of 247% and an expected life
of the options of ten years.


The following table summarizes the pro forma operating results of the Company
for the nine months ended September 30, 2001 had compensation costs for the
stock options granted to employees been determined in accordance with the fair
value based method of accounting for stock based compensation as prescribed by
SFAS No. 123.

               Pro forma net loss available to common stockholders  $(2,138,000)

               Pro forma basic and diluted loss per share           $      (.10)

As of September 30, 2001, the Company has reserved 6,843,352 shares of its
common stock for issuance upon exercise of stock options, warrants and shares
to be issued under the Stock Issuance Plan (See Note N).

NOTE G - INCOME TAXES

The significant components of the Company's deferred tax asset as of September
30, 2001 are as follows:

Deferred income tax asset:
Net operating losses carryforwards     $     1,731,000
Deferred compensation                          391,000
Other                                           20,000
                                             2,142,000
Valuation allowance                         (2,142,000)

Net deferred tax asset                 $             0

The significant components of the provision for income taxes for the nine
Months ended September 30, 2001 and 2000 are as follows:

                                                            2001               2000

Deferred:
Federal                                          $     (600,000)     $     (1,199,000)
State                                                  (113,000)             (225,000)
Change in valuation allowance                           713,000             1,424,000

Total deferred income taxes                      $            0      $              0



As of September 30, 2001, the Company has net operating loss carryforwards of
approximately $4,560,000 for federal income tax purposes, which expire through
2020.  In the event of potential future ownership changes (Note A), Internal
Revenue Code Section 382 limits the amount of such net operating loss
carryforward available to offset future taxable income.

The difference between the statutory federal income tax rate on the Company's
pre-tax loss and the Company's effective income tax rate is summarized as
follows:

                                                          2001                 2000

Statutory federal income tax rate                          34.0%               34.0%
Increase in valuation allowance                           (37.9)              (34.3)
Other                                                       3.9                 0.3

Effective income tax rate                                   0%                  0%



NOTE H - RELATED PARTY TRANSACTIONS

Officer loans:

Represents advances to the Chief Executive Officer who is a principal
stockholder of the Company which bears interest at 7% per annum.  The amount
is to be repaid by December 31, 2001

Officer compensation:

During 1999, the Company recorded the fair value of services provided by the
Company's chief executive officer in the amount of $120,000 in the statement
of operations with a corresponding increase to additional paid-in capital.

Management Services:

An officer and stockholder of a significant stockholder was hired in September
1999 and provides management and consulting services to the Company.  The
amount charged to operations for the nine months and three months ended
September 30, 2000 were $45,000 and $15,000, respectively.  No salary has been
charged to operations for the nine months ended September 30, 2001.

Rent:

In May 2000, the Chief Executive Officer, who is a principal stockholder of
the Company, transferred 75,000 shares to a lessor of the Company for future
rent obligations and certain leasehold improvements. As a result of this
transaction, the Company recognized a credit to additional paid-in capital of
$109,000, representing the fair value of the stock exchanged. The Company has
reimbursed the officer by the issuance of 75,000 of the Company's common
stock.

NOTE I - COMMITMENTS

Leases

The Company leases office space, equipment and automobiles under operating
leases.  Future minimum lease payments as of September 30, 2001 are as
follows:

Twelve Months
Ending
September 30,

2002      $145,000
2003       131,000
2004        44,000
2005           - 0 -

Lease expense for the nine months ended September 30, 2001 and 2000 amounted
to $133,000 and $132,000 respectively.

Lease expense for the three months ended September 30, 2001 and 2000 amounted
to $43,000 and $46,000, respectively.

Employment agreement:

On December 10, 1999, the Company entered into an employment and
noncompetition agreement with a stockholder to act in the capacity of
President and Chief Executive Officer.  The term of the employment agreement
is for three years and the noncompetition agreement is for one year with both
agreements commencing on January 1, 2000.  The agreement allows for a one year
renewal option unless terminated by either party.  Base salary is $120,000 per
annum with available additional cash compensation as defined in the
agreement.  Compensation under this agreement of $90,000 and $30,000 is
included in general and administrative expenses for the nine months and the
three months ended September 30, 2000, respectively.  The President has agreed
to forgo his compensation for the nine months ended September 30, 2001.

Equipment purchase:

As of September  30, 2001 the Company has a commitment to purchase computer
hardware for an amount of approximately $322,000.

NOTE J - MAJOR CUSTOMERS

During the nine months ended September 30, 2001 two customers accounted for
18%, and 15% of the Company's revenue.

During the nine months ended September 30, 2000, two customers accounted for
16% and 10% of the Company's revenue.

During the three months ended September 30, 2001, two customers accounted for
27% and 21% of the Company's revenue.  During the three months ended September
30, 2000, three customers accounted for 21%, 14% and 12% of the Company's
revenue.

As of September 30, 2001, balances due from three customers comprised 19%, 17%
and 15% of total accounts receivable.  As of September 30, 2000, balances due
from two customers comprised 18% and 13% of total accounts receivable.

NOTE K - PRO FORMA FINANCIAL INFORMATION

The following pro forma information is provided to reflect the consolidated
operations of the Company and its subsidiaries for the nine months ended
September 30, 2000, assuming that the purchase of Working Knowledge, Inc.
which occurred April 2000 was consummated at the beginning of the period.

     Nine months ended September 30, 2000

Sales              $    741,000
Net loss             (1,323,000)
Loss per share            (0.06)




NOTE L - CONSULTING AGREEMENT

The Company has entered into an agreement with a company to provide consulting
and public relation services.    The consultant received an initial fee of
150,000 shares of Manhattan Scientifics, Inc. stock.  In consideration of
furnishing this initial fee, the Company agreed to issue 1,500,000 Series C
warrants to Manhattan Scientifics, Inc. (see Note F).  In addition, a monthly
fee of 15,000 shares will be furnished during the term of agreement, and
incentive shares based upon increases in the number of shareholders and the
trading volume of the shares, increased market capitalization, and eligibility
for listing on NASDAQ.  The agreement, as revised, was terminated as of
October 31, 2001. Expense of $267,000 and $23,000 has been included in the
statement of operations for the nine months and the three months ended
September 30, 2001, respectively.

NOTE M - REPORTABLE SEGMENTS

Management has elected to identify the Company's reportable segments based on
separate legal entities.  NMS derives revenues from the development and
marketing proprietary internet technology-based software and Working
Knowledge, Inc. provides data maintenance services related to NMS image
management system.  Information related to the Company's reportable segments
for the nine months ended September 30, 2001 is as follows:

                                   NMS     Working Knowledge, Inc.     Total

Revenues                     $  731,000       $         267,000       $   998,000

Cost of services                335,000                 129,000           464,000
General and administrative    2,081,000                  93,000         2,174,000
Research and development        220,000                       -           220,000

Other Income (Expense)          (22,000)                      -           (22,000)

Operating (loss) Income      (1,927,000)                 45,000        (1,882,000)

Total assets                 $1,027,000       $         193,000        $1,220,000


Prior to acquisition of Working Knowledge, Inc., in April 2000, the Company
operated within one business segment.


NOTE N - STOCK ISSUANCE PLAN

On July 30, 2001, the Company adopted the 2001 Stock Issuance Plan ("Plan").
The Plan provides for a stock issuance program under which persons may be
issued shares of the Company's common stock by the immediate purchase of such
shares or as a bonus for either past service to the Company or any of its
subsidiaries, or as an incentive to accept employment or a board position with
the Company or any of its subsidiaries.  There are 800,000 shares of the
Company's common stock authorized for stock grants under the Plan, which are
subject to adjustment in the event of stock splits, stock dividends, and other
situations.  As of September 30, 2001, a total of  546,648 shares have been
issued under the Plan.

NOTE O - CONTINGENCY

A former employee has threatened to bring a claim against the Company for
breach of an alleged oral contract.  As of the filing of this 10-QSB no
claim has been filed.  The Company believes there is no merit to the
allegations and intends to vigorously defend against any claims.





ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN
OF OPERATIONS.

The following discussion and analysis should be read in conjunction with our
financial statements and accompanying notes appearing elsewhere in this Form
10-QSB.

Plan of Operations

Three months ended September 30, 2001 compared to three months ended September
30, 2000.

Total revenues for the three months ended September 30, 2001 increased 43.3%
to $407,000 as compared to $284,000 for the three months ended September 30,
2000.  This increase in revenues is the result of an increase in the number of
new products released and in an increase in the number of new customers.

The acquisition of Working Knowledge, Inc. as of April 1, 2000 contributed
approximately 21% of our consolidated revenues for the three months ended
September 30, 2001, or $84,000 of the consolidated $407,000 of revenues.
Operations of NMS resulted in an increase in revenues of $157,000 to $323,000
for the three months ended September 30, 2001 as compared to $166,000 for the
three months ended September 30, 2000.  This increase in revenues is the
result of an increased number of products and customers.

The cost of services for the three months ended September 30, 2001 represented
43% of sales of $407,000 as compared to 61% of sales of $284,000 for the three
months ended September 30, 2000.  As installations have been completed, the
amount of ongoing support required to maintain the systems has been
reduced.

Total general and administrative expenses have increased 20% to $676,000 for
the three months ended September 30, 2001 as compared to $563,000 for the
three months ended September 30, 2000.  This includes non-cash expenses
resulting from the issuance of common stock and common stock options of
approximately $455,000.  $65,000 of this $455,000 represents the expense of
incentive stock options issued during 1999; stock options expense for legal
services, investor relations services and consulting services totals $9,000.
Approximately $381,000 of the non-cash expenses are attributable to common
stock issuances for legal services, investor relations services, consulting
services, employee compensation and other outside services.  During the three
months ended September 30, 2000, non-cash expenses resulting from the issuance
of common stock and common stock options approximated $112,000, consisting of
$108,000 for the expense of incentive options issued during 1999 and $4,000 of
stock options expense for legal services.

We have undertaken various cost-cutting measures, primarily in the area of
personnel costs, which included top management.  As a result, total
administrative salaries have decreased for the three months ended September
30, 2001 by approximately $121,000 compared to the three months ended
September 30, 2000 .


Plan of Operations

Nine months ended September 30, 2001 compared to nine months ended September
30, 2000.

Total revenues for the nine months ended September 30, 2001 more than doubled
to $998,000 as compared to $452,000 for the nine months ended September 30,
2000.  This increase in revenues is the result of an increased number of
products and customers.

The acquisition of Working Knowledge, Inc. as of April 1, 2000 contributed
approximately  27% of  our consolidated revenues for the nine months ended
September 30, 2001, or $267,000 of the consolidated $998,000 of revenues.
Operations of NMS resulted in an increase in revenues of $397,000 to $731,000
for the nine months ended September 30, 2001 as compared to $357,000 for the
nine months ended September 30, 2000.

Although the cost of services for the nine months ended September 30, 2001
increased 59% to $464,000 as compared to $291,000 for the nine months ended
September 30, 2000, the percentage of sales revenues has decreased from
approximately 64% to approximately 46%.  As installations have been completed,
the amount of ongoing support required to maintain the systems has been
reduced.

Total general and administrative expenses have increased 26% to $2,174,000 for
the nine months ended September 30, 2001 as compared to $1,732,000 for the
nine months ended September 30, 2000.  This includes Working Knowledge, Inc.
expenses of approximately $93,000, non-cash expenses of depreciation and
amortization of approximately $100,000, and non-cash expenses resulting from
the issuance of common stock and common stock options of approximately
$1,275,000.  $244,000 of this $1,275,000 represents the expense of incentive
stock options issued during 1999; expense attributable to stock options and
common stock issued for legal services, investor relations services,
consulting services, employee compensation and other outside services totals
$844,000; common stock issued for a loan guarantee fee totals $187,000.
During the nine months ended September 30, 2000, Working Knowledge, Inc.
expenses were approximately $45,000 and non-cash expenses resulting from the
issuance of common stock and common stock options approximated $496,000,
consisting of $428,000 for the expense of incentive options issued during 1999
and $68,000 of stock options expense for legal and sales services.

We have undertaken various cost-cutting measures, primarily in the area of
personnel costs, which included top management.  Total staff, excluding
Working Knowledge, Inc, has been decreased from 22 employees to 15 employees.
Advertising expense and travel expense were also areas in which major cost
savings were achieved, with decreases of  $75,000 and $35,000, respectively.

Total research & development expenses increased 8% to $220,000 for the nine
months ended September 30, 2001 as compared to $203,000 for the nine months
ended September 30, 2000.



LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001

As of September 30, 2001 we have a commitment to purchase computer hardware, a
Sony Petasite storage unit, for an amount of approximately $322,000.  We have
no other material commitments for capital expenditures as of September 30,
2001.

Operating activities for the nine months ended September 30, 2001 resulted in
a net cash decrease of $409,000.  We had a net loss for the nine months of
$1,882,000.  This was adjusted for non-cash items of $1,375,000 and changes in
current assets and liabilities, which increased of $98,000.  Non-cash items
consist of depreciation and amortization of approximately $100,000, stock
options and common stock issued for various services of $427,000, incentive
stock options of $244,000, and common stock issued for a loan guarantee fee of
$187,000.  Changes in current assets and liabilities consist of an increase in
accounts receivable of $335,000, a decrease in estimated earnings in excess of
billings on uncompleted contracts of $122,000, a net decrease in other current
assets of $25,000, an increase in accounts payable and accrued expenses of
$139,000, and a net increase in billings in excess of estimated earnings on
uncompleted contracts of $147,000.

We acquired an investment in the common stock of Manhattan Scientifics, Inc.,
one of our principal shareholders, in exchange for the issuance of 1,500,000
warrants.  That investment was utilized as payment of an initial fee to a firm
which provided consulting and public relations services to the Company.

During the nine months ended September 30, 2001, we obtained financing for a
working capital credit line of  $365,000.  As of September 30, 2001, after
repayment of $50,000, we owed a balance of $303,000.  During May, 2001, we
sold 287,500 shares of common stock for a total of $115,000.

Cash requirements for the twelve months ending September 30, 2002 will be
largely dependent on our success in selling our products and services.  We
estimate that our research and development, marketing, support for existing
sites and administrative expenses necessary to support our operation will
require approximately $1,700,000.  We have entered into a pilot test program
for medical imaging technology which we believe will contribute to additional
revenues and provide market expansion for the remainder of 2001.  We estimate
that future revenues from contracts currently in place as well as new
contracts and collection of receivables of approximately $558,000, together
with anticipated financing and the issuance of common stock in lieu of cash
payment for certain services rendered to the Company, will provide the
necessary liquidity to meet our requirements.

A former employee has threatened to bring a claim against the Company for
breach of an alleged oral contract.  As of the filing of this 10-QSB no
claim has been filed.  The Company believes there is no merit to the
allegations and intends to vigorously defend against any claims.

Should our projected revenues not be achieved, we may be required to further
reduce our expenses and possibly restrict or eliminate planned product
development and marketing. There is no assurance that additional financing
will be available to us.  This could hamper potential business opportunities
or the Company's response to competitive pressures.  Should these situations
occur, they could have a material adverse affect on our operations and
financial condition.



FORWARD-LOOKING STATEMENTS

This report contains statements that plan for or anticipate the future.
Forward-looking statements include statements about the future of operations
involving the management of large volumes of media or digital material,
statements about our future business plans and strategies, and most other
statements that are not historical in nature.  In this report forward-looking
statements are generally identified by the words "anticipate," "plan,"
"believe," "expect," "estimate," and the like.  Although we believe that any
forward-looking statements we make in this report are reasonable, because
forward-looking statements involve future risks and uncertainties, there are
factors that could cause actual results to differ materially from those
expressed or implied.  For example, a few of the uncertainties that could
affect the accuracy of forward-looking statements include the following:

-     Rapid changes in technology relating to the Internet;

-     the continued growth and use of the Internet;

-     changes in government regulations

-     changes in our business strategies;

-     market acceptance of our products;

-     hardware failure of a catastrophic proportion;

-     difficulty recruiting and retaining staff of sufficient technical
caliber to provide adequate and on-going customer support and product
maintenance and development;

-     failure to successfully market our products through the Internet and
company representatives; and

-     catastrophic and universal hardware failure.

In light of the significant uncertainties inherent in the forward-looking
statements made in this report, particularly in view of our early stage of
development, the inclusion of this information should not be regarded as a
representation by us or any other person that our objectives and plans will be
achieved.

PART II
OTHER INFORMATION

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

     On July 30, 2001, shareholders owning a majority of the outstanding
shares of common stock approved by written consent the adoption of a stock
issuance plan designated as the 2001 Stock Issuance Plan. At the close of
business on July 30, 2001, the date on which the consent approving the
adoption of the plan was signed by  shareholders holding a majority of the
voting power of our company, we had outstanding 21,058,836 shares of common
stock, each outstanding share entitled to one vote per share.  Richard
Govatski and Manhattan Scientifics, Inc., shareholders owning an aggregate of
10,646,800 shares (50.56%) of our common stock, consented to the approval of
the adoption of the plan.

ITEM 5.   OTHER INFORMATION

     In Item 2 of Part II of our quarterly report on Form 10-QSB for the first
quarter ended March 31, 2001, we erroneously reported that the warrants issued
to Manhattan Scientifics, Inc. represented the right to purchase 150,000
shares of our common stock.  We had correctly stated previously in Item 5 of
Part II of our annual report on Form 10-KSB for the year ended December 31,
2000, that we had granted warrants to Manhattan Scientifics, Inc. to purchase
1,500,000 shares.  The correct number was also reflected in the notes to the
financial statements filed with our second quarter report on Form 10-QSB for
the quarter ended June 30, 2001.  Further, after reviewing the form of the
Series C warrant certificate representing such warrants, the parties
determined that it did not accurately reflect the terms of the original letter
agreement dated February 20, 2001.  As a result, the parties revised the form
of the warrant certificate.  A copy of the original letter agreement and the
revised warrant certificate representing such issuance is attached to this
report.

On August 13, 2001, the agreement between us and Stockbroker Associates
Corporation ("SAC") dated January 1, 2001, was restated and the former
agreement was terminated.  Under the new agreement SAC agreed to provide
certain investor and public relations services for us.  The term of the new
agreement was for three months commencing August 1, 2001, subject to
continuation thereafter until terminated by either party.  On October 15,
2001, we notified SAC of our intent to terminate the agreement after the
initial period.  As a result, the revised agreement terminated on October 31,
2001.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits.

Exhibit No.     Description of Exhibit                         Location

4.5           Revised Form of Series C Warrant Certificate     Attached

10.7          Letter Agreement dated February 20, 2001,
               with Manhattan Scientifics, Inc.                Attached

(b)     Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended September 30, 2001.

     SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

NMXS.com, INC.


Date: November 13, 2001            By /s/ Richard Govatski
                                          Richard Govatski, President


Date: November 13, 2001            By /s/ Teresa Dickey
                                          Teresa Dickey, Principal Financial Officer`