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

                                   FORM 10-QSB


/X/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

/ /   TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

                        Commission File Number: 00-19813


                               InfoNow Corporation
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


             Delaware                                     04-3083360
             --------                                     ----------
     (State of incorporation)              (I.R.S. Employer Identification No.)

            1875 Lawrence Street, Suite 1100, Denver, Colorado, 80202
            ---------------------------------------------------------
                    (Address of principal executive offices)

                                  303-293-0212
                                  ------------
                           (Issuer's telephone number)

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 filing requirements for the past 90 days.

                              Yes   X       No
                                   ---         ---

As of May 14, 2002, there were 8,361,162 shares of the Issuer's common stock
outstanding.

Transitional Small Business Disclosure Format (Check one):    Yes      No  X
                                                                  ---     ---



<PAGE>



                               INFONOW CORPORATION

                                      INDEX

                                                                       Page No.
                                                                       -------
                          PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

          Unaudited Balance Sheet - March 31, 2002.........................3

          Unaudited Statements of Operations - For the Three Months
            Ended March 31, 2002 and March 31, 2001........................4

          Unaudited Statements of Cash Flows - For the Three Months
            Ended March 31, 2002 and March 31, 2001........................5

          Notes to Unaudited Financial Statements..........................6


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.......10


                       PART II. OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K................................18

          SIGNATURES......................................................19


                                       2

<PAGE>
<TABLE>
<CAPTION>
                          PART I. FINANCIAL INFORMATION
                          -----------------------------

ITEM 1.  Financial Statements
-------  --------------------

                               INFONOW CORPORATION
                                  BALANCE SHEET
                    (In Thousands, Except Share Information)
                                   (Unaudited)

                                                                          MARCH 31,
                                                                            2002
                                                                          --------
                                        ASSETS
                                        ------
<S>                                                                        <C>
CURRENT ASSETS:
    Cash and cash equivalents                                             $  2,551
    Accounts receivable:
          Billed, net of allowance of $34                                    1,330
          Unbilled                                                             130
    Deferred implementation costs                                              143
    Prepaid expenses                                                           515
                                                                          --------
         Total current assets                                                4,669
                                                                          --------

PROPERTY AND EQUIPMENT, net                                                  1,452

    Non-current deferred implementation costs                                   51
    Other assets and deferred charges                                           39
                                                                          --------

TOTAL ASSETS                                                              $  6,211
                                                                          ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
CURRENT LIABILITIES:
    Notes payable and capital leases - current portion                    $    127
    Accounts payable                                                           476
    Payroll related liabilities                                                678
    Other liabilities                                                          104
    Short-term deferred revenues                                             1,705
                                                                          --------
         Total current liabilities                                           3,090

    Notes payable and capital leases, net of current portion                   206
    Long-term deferred revenues                                                415

COMMITMENTS (Note 2)

STOCKHOLDERS' EQUITY:
       Preferred stock, $.001 par value; 1,962,335 shares authorized:
       Series A Convertible, 213,483 shares authorized,
         none issued and outstanding                                          --
       Series B Convertible Participating Preferred Stock,
         800,000 shares authorized, 250,000 shares issued
         and outstanding at March 31, 2002,
         liquidation preference of $5,000,000                                 --
       Common stock, $.001 par value; 15,000,000
         shares authorized; 8,349,018 issued
         and outstanding at March 31, 2002                                       9
       Additional paid-in capital                                           39,144
       Accumulated deficit                                                 (36,653)
                                                                          --------
         Total stockholders' equity                                          2,500
                                                                          --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $  6,211
                                                                          ========

                  See notes to the unaudited financial statements.

                                        3


<PAGE>



                                   INFONOW CORPORATION
                                STATEMENTS OF OPERATIONS
                      (In Thousands, Except Per Share Information)
                                       (Unaudited)



                                                      THREE MONTHS ENDED MARCH 31,
                                                     2002                     2001
                                                    -------                  -------

REVENUES:
     Implementation and service fees                $ 3,100                  $ 2,466

     License fees                                        24                       21
                                                    -------                  -------
                Total revenues                        3,124                    2,487
                                                    -------                  -------

COST OF REVENUES                                      1,589                    1,535
                                                    -------                  -------


GROSS MARGIN                                          1,535                      952

OPERATING EXPENSES:
    Selling and marketing                               875                    1,357
    Product development                                 353                      433
    General and administrative                          677                      677
                                                    -------                  -------
         Total operating expenses                     1,905                    2,467
                                                    -------                  -------

LOSS FROM OPERATIONS                                   (370)                  (1,515)

OTHER INCOME (EXPENSE):
    Interest income                                       8                       45
    Interest expense                                     (9)                     (13)
                                                    -------                  -------
         Total other income (expense)                    (1)                      32
                                                    -------                  -------

NET LOSS                                            $  (371)                 $(1,483)
                                                    =======                  =======

BASIC AND DILUTED NET LOSS PER COMMON SHARE         $  (.04)                 $  (.18)
                                                    =======                  =======

BASIC AND DILUTED WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                                 8,337                    8,146
                                                    =======                  =======


                See notes to the unaudited financial statements.

                                       4


<PAGE>


                                          INFONOW CORPORATION
                                        STATEMENTS OF CASH FLOWS
                                              (in Thousands)
                                               (Unaudited)

                                                                        THREE MONTHS ENDED MARCH 31,
                                                                         2002                2001
                                                                       --------             --------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                           $  (371)             $(1,483)
    Adjustments to reconcile net loss to net cash used in
         operating activities:
         Depreciation and amortization                                     272                  263
         Allowance for bad debt                                            (24)                --
         Stock based compensation                                         --                      5
         Changes in operating assets and liabilities:

             Restricted cash                                                17                   59
             Accounts receivable                                           142                  162
             Other current assets                                          215                   42
             Other assets and deferred charges                              20                   54
             Accounts payable                                               54                  160
             Payroll related and other liabilities                        (154)                 193
             Deferred revenue                                              (15)                (372)
                                                                       -------              -------

         Net cash provided by (used in) operating activities               156                 (917)

CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of property and equipment                                     (11)                 (81)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of stock options                                151                 --
    Principal payments on debt obligations                                  (4)                 (45)
                                                                       -------              -------

         Net cash provided by (used in) financing activities               147                  (45)


NET CHANGE IN CASH AND EQUIVALENTS                                         292               (1,043)

CASH AND EQUIVALENTS, beginning of period                                2,259                4,013
                                                                       -------              -------

CASH AND EQUIVALENTS, end of period                                    $ 2,551              $ 2,970
                                                                       =======              =======

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest                                             $     1              $    14
                                                                       =======              =======

NON CASH INVESTING AND FINANCING ACTIVITIES:
    Non cash purchases of property and equipment                       $    38              $  --
                                                                       =======              =======


                           See notes to the unaudited financial statements.

                                                 5
</TABLE>

<PAGE>

                               INFONOW CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)



1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     -----------------------------------------------------------

     Organization and Business Activity - InfoNow Corporation (the "Company")
     was incorporated under the laws of the State of Delaware on October 29,
     1990. The Company provides Enterprise Channel Management software and
     managed services to Global 2000 companies that sell locally through
     dealers, distributors, resellers or branches, also known as channel
     partners. The Company's software and services enable large, multi-national
     companies to utilize the power of the Internet to sell to and service end
     customers in collaboration with their channel partners.


     Use of Estimates - The preparation of financial statements in conformity
     with accounting principles generally accepted in the United States of
     America requires management to make estimates and assumptions that affect
     the reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported amounts of revenues and expenses during the reporting period.
     Actual results could differ from those estimates. The financial statements
     reflect all adjustments (consisting only of normal recurring adjustments)
     which are, in the opinion of management, necessary for a fair presentation
     of the financial position and operating results for the interim periods.

     Cash and Cash Equivalents - The Company considers all highly liquid
     investments with original maturity dates of three months or less to be cash
     equivalents.

     Property and Equipment - Property and equipment are stated at cost.
     Replacements, renewals and improvements are capitalized and costs for
     repairs and maintenance are expensed as incurred. Depreciation is computed
     using the straight-line method over estimated useful lives of three to five
     years.

     Revenue Recognition - The company offers its software and managed services
     to clients in two forms. The first (and historical) method utilizes an
     application service provider ("ASP") model. Under this business model the
     Company sells the right to use its software for the term of a specific
     agreement, and it implements and hosts that solution to meet specific
     client requirements. The revenue related to the right to use the Company's
     software is recognized through monthly service fees as services are
     performed. The implementation fee is deferred and recognized ratably over
     the longer of the expected customer life or contract term. During the three
     months ended March 31, 2002, implementation fees of $229,000 were deferred,
     of which $3,000 was recognized during the three months ended March 31,
     2002. During the three months ended March 31, 2001, implementation fees of
     $96,000 were deferred, of which $2,000 was recognized during the three
     months ended March 31, 2001.

     The second method of delivering our software and services is via a licensed
     software with managed services model, sometimes referred to as the
     license-hosted model. The Company began offering this model in 2001. Under
     this model, the Company sells clients a perpetual license for its software.
     They can install the software on their own in-house systems, or InfoNow

                                       6

<PAGE>


     will host the software and perform related services for them under a
     managed services agreement. Under this model, the Company recognizes both
     license and implementation revenues under Statement of Position 97-2 ("SOP
     97-2") on a percentage-of-completion basis, and it recognizes monthly
     service fees as earned.

     For certain projects, the Company invoices for work yet to be performed.
     These pre-billed amounts totaled $586,000 at March 31, 2002 and are
     reflected as deferred revenues in the accompanying balance sheet.

     Losses are recognized immediately if projected direct costs exceed
     anticipated revenues.

     New Accounting Pronouncements - In July 2001 the Financial Accounting
     Standards Board ("FASB") issued SFAS No. 142 "Goodwill and Other Intangible
     Assets." SFAS No. 142 requires the use of a non-amortization approach to
     account for purchased goodwill and certain indefinite life intangibles.
     Under a non-amortization approach, goodwill and certain indefinite life
     intangibles will not be amortized into results of operations, but instead
     will be reviewed for impairment and written down and charged to results of
     operations only in the periods in which the recorded value of goodwill and
     certain intangibles is more than its fair value. The adoption of SFAS No.
     142 on January 1, 2002 had no impact on the Company's financial statements.

     In August 2001 the FASB issued SFAS No. 144 "Accounting for the Impairment
     or Disposal of Long-Lived assets." SFAS No. 144 provides new guidance on
     the recognition of impairment losses on long-lived assets to be held and
     used or to be disposed of and also broadens the definition of what
     constitutes a discontinued operation and how the results of a discontinued
     operation are to be measured and presented. The adoption of SFAS No. 144 on
     January 1, 2002 had no impact on the Company's financial statements.

     Income Taxes - The Company accounts for its tax liabilities in accordance
     with SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires
     recognition of deferred tax assets and liabilities for the expected future
     income tax consequences of transactions. Under this method, deferred tax
     assets and liabilities are determined based on the difference between the
     financial statement and tax basis of assets and liabilities using enacted
     tax rates in effect for the year in which the differences are expected to
     reverse. Net deferred tax assets are then reduced by a valuation allowance
     for amounts which do not satisfy the realization criteria of SFAS No. 109.

     Stock Compensation Expense - The Company records its stock compensation
     expense in accordance with SFAS No. 123, Accounting for Stock-Based
     Compensation. SFAS No. 123 specifies a fair value based method to measure
     compensation cost of issued stock options and similar instruments issued
     using a Black-Scholes model or other comparable method. However, the
     Company has elected an option under SFAS No. 123 that allows a Company to
     continue to recognize compensation cost for employees in accordance with
     the guidance in APB No. 25 and disclose the pro forma results of operations
     as if SFAS No. 123 had been applied to the financial statements.
     Transactions in which the Company issues stock options or other equity
     instruments to acquire goods or services from non-employees are accounted

                                       7

<PAGE>


     for in accordance with SFAS No. 123. The Company accounts for stock
     compensation for employees via the intrinsic value method and for
     non-employees via the fair value method.

     During the three months ended March 31, 2002, the Company received $151,000
     of proceeds from the exercise of 100,100 options by former employees.

     At March 31, 2002, the Company had accrued bonuses of $362,000 that were
     recorded in 2001 and were expected to be paid during the second quarter of
     2002 in the form of cash or stock and not in stock options. As a result of
     operational performance and current uncertain market conditions, the
     Company's Compensation Committee may approve the payment of this obligation
     in the form of cash, stock, stock options, or a combination of these
     instruments.

     Net Loss Per Common Share - The loss per share is presented in accordance
     with the provisions of SFAS No. 128, Earnings Per Share ("EPS"). Basic EPS
     is calculated by dividing the income or loss available to common
     stockholders by the weighted average number of common shares outstanding
     for the period. Diluted EPS reflects the potential dilution that could
     occur if securities or other contracts to issue common stock were exercised
     or converted into common stock. Basic and diluted EPS were the same for the
     quarters ended March 31, 2002 and 2001 because the Company had losses from
     operations and therefore, the effect of all potential common stocks was
     anti-dilutive.

     Stock options, warrants outstanding and their equivalents are included in
     diluted EPS computations through the "treasury stock method" unless they
     are antidilutive. Convertible securities are included in diluted EPS
     computations through the "if converted" method unless they are
     antidilutive. Common share equivalents are excluded from the computations
     in loss periods, as their effect would be antidilutive.

     Reclassifications - Certain amounts in the prior year financial statements
     have been reclassified to conform with the current year classifications.

     Concentrations of Credit Risk - Financial instruments which potentially
     subject the Company to concentrations of credit risk are accounts
     receivable. The Company's customers are primarily large multi-national
     entities located throughout the U.S. The Company grants credit, generally
     without collateral, to these customers under specific contractual terms.
     The Company has not experienced any material losses related to its accounts
     receivable to date.

     During the quarter ended March 31, 2002, the Company received 44% of its
     revenue from one customer, or approximately $1,381,000, and no other
     customer accounted for more than 10% of the Company's revenue. As of March
     31, 2002, that same customer accounted for approximately 50%, or $665,000,
     of the Company's accounts receivable balance. During the three months ended
     March 31, 2001, the Company received 12%, or $308,000, of its revenues from
     one client, 11%, or $262,000, from another client and 10%, or 246,000, from
     another client. No other customers accounted for more than 10% of revenue.

     Segment Information - The Company operates in a single reportable segment
     and all revenues from customers are primarily from the sale of its
     Enterprise Channel Management software and services.

                                       8

<PAGE>


2.   COMMITMENTS
     -----------

     The Company leases approximately 26,000 square feet of office space under
     two leases at an average rate of approximately $14.00 per square foot. The
     leases are with unrelated parties and one of the leases terminates on
     September 30, 2002. The Company is currently renegotiating the lease that
     terminates on September 30, 2002 and expects to retain the same office
     space for between $17.00 and $18.00 per square foot.

     From time to time the Company may be involved in litigation that arises in
     the normal course of business operations. As of the date of this report,
     the Company is not a party to any litigation that it believes could
     reasonably be expected to have a material adverse effect on the business or
     results of operations.

     The Company received correspondence in 2001 from Murex Licensing
     Corporation asserting that certain technologies employed by the Company
     infringe on patents owned by Murex. During the first quarter of 2002 the
     Company received correspondence from Murex indicating that they had no
     intention at this time of suing InfoNow for patent infringement. While the
     Company is continuing to evaluate Murex's position, at this point it
     believes that the patent infringement claims asserted in the earlier
     correspondence from Murex are without merit, and the Company intends to
     defend against them vigorously should Murex bring a formal claim or
     litigation against the Company. Notwithstanding the existence of
     meritorious defenses, any litigation over the scope and application of
     patents or similar intellectual property claims could involve significant
     costs of defense and could involve risks and uncertainties.



                                       9

<PAGE>


Item 2.    Management's Discussion and Analysis or Plan of Operation.
-------    ----------------------------------------------------------

The following discussion and analysis of the financial condition and results of
operations for InfoNow should be read in conjunction with our unaudited
financial statements and related notes appearing elsewhere in this report. This
discussion contains statements that are not historical fact. These
forward-looking statements are based on our current expectations, assumptions,
estimates and projections about our industry and business and include statements
about markets for our software and services, planned development of products and
anticipated expense and revenue levels. These forward-looking statements contain
words such as "anticipate", "believe", "plan", "expect" or similar language.
These forward-looking statements are subject to business and economic risks. Our
actual results could differ materially from those anticipated in such
forward-looking statements as a result of many factors, including those set
forth in this discussion and in other documents we have filed with the
Securities and Exchange Commission.

General Information and Overview

We provide Enterprise Channel Management solutions in the form of software and
services to primarily Global 2000 companies that sell through dealers,
distributors, agents, branches or resellers (collectively referred to as channel
partners). Our software and services help companies use the power of the
Internet to sell to and service end-customers by effectively managing channel
partners worldwide, providing partners and end-customers with information about
their products and services, connecting end customers with the proper channel
partners, capturing and managing leads through the sales cycle, promoting and
selling a company's branded products and services online, and gaining meaningful
insights into their customers and the partners serving them. This in turn
enables companies to increase revenues, lower operating costs and deliver a
significant return on investment.

As of March 31, 2002, we had 50 clients versus the 57 we had as of March 31,
2001. Most of our clients are Global 2000 companies with extensive channel
partner networks. Our clients include Ariens, Avaya, Bank of America, Compaq,
First Union, Hewlett-Packard, Maytag, Miller Electric, a major subsidiary of
Illinois Tool Works, and Visa.

We offer our solutions to clients in two forms. The first (and historical)
method utilizes an application service provider ("ASP") model. Under this
business model we sell the right to use our software for the term of a specific
agreement, and we implement and host that solution to meet specific client
requirements. The revenue related to the right to use our software is recognized
through monthly service fees as services are performed. The implementation fee
and related direct costs are deferred and recognized ratably over the longer of
the expected customer life or contract term. Since most of our contracts do not
exceed three years in duration, the customer life is typically the longer
deferral period and is estimated to be three years. This estimate is based on a
number of factors including customer churn, the rate of evolution for the
technology underlying our solutions and the expectation that our customers will
continue to convert from the ASP model to the license-hosted model, under which
implementation fees and direct costs are not deferred.

                                       10

<PAGE>


The second method of delivering our software and services is via a licensed
software and managed services model, sometimes referred to as our license-hosted
model. We began offering this model in 2001 and we expect it to be our
predominant methodology going forward. Under this model, we sell our clients a
perpetual license for our software. They can install our software on their own
in-house systems, or InfoNow will host the software and perform related services
under a managed services agreement. Under this model, we recognize both license
and implementation revenues under Statement of Position 97-2 ("SOP 97-2") on a
percentage-of-completion basis, and we recognize monthly service fees as earned.

InfoNow's services are generally sold with annual or multi-year contracts. The
initial term of these agreements is typically one to three years and they are
renewable upon mutual agreement of InfoNow and the client.

A typical contract could include six separate revenue producing components: a
software license fee, an implementation fee, a managed service fee, a variable
monthly fee, a software maintenance fee, and other fees.

License/Implementation fees:

     o    The software license fee applies to all configured application
          software and related functionality used in the client's application.
     o    The implementation fee applies to the configuration of a tailored,
          client-specific software interface to the system and the design and
          configuration of client business rules and databases.

Monthly service fees:

     o    The managed service fee applies to hosting and provision of the
          service, any reconfiguration or maintenance on the software necessary
          during the contract term, as well as performance of routine
          maintenance to client databases and core systems.
     o    The variable monthly fee includes charges for system usage in excess
          of contracted thresholds.
     o    The software maintenance fee (for customers utilizing a
          licensed-hosted model) includes updates to the client's software.

Other fees:

     o    Variable fees included under this heading are pass-through charges for
          voice recordings, faxes, geocoding, and telecommunications charges.

Revenue from software maintenance fees, recurring managed service fees and
variable monthly fees is recognized as the services are performed. Revenue from
software license fees and implementation fees is recognized ratably over either
the expected term of the client relationship (for ASP contracts) or the
implementation period on a percentage of completion basis (for licensed-hosted
contracts). During 2002 we began to match commission expense with revenues over
the term of the contract rather than at the time of contract execution. The
historical method generally was to recognize commission expense at the time of
contract execution. This change is based on a change in commission policy that
allows for recovery of commission payments if the client receives a refund. The
new commission plan resulted in $11,000 lower commission expense in the first
quarter of 2002 than would have been recognized using the historical
methodology.

                                       11

<PAGE>


Results of Operations

Comparison of the Three Months Ended March 31, 2002 with the Three Months Ended
March 31, 2001.

Revenues. Our revenues consist primarily of implementation fees, license fees
and monthly service fees from new and existing customers. Total revenues
increased by $637,000, or 26%, to $3,124,000 for the three month period ended
March 31, 2002 from $2,487,000 for the same period in the previous year. Managed
service fees were $2,178,000 during the three months ended March 31, 2002, an
increase of $738,000, or 51%, from $1,440,000 during the three months ended
March 31, 2001. This increase is net of $118,000 in lost managed service fees
due to customer terminations. Approximately $675,000 of the increase is the
result of the $10 million contract we signed during the second quarter of 2001,
while the remaining $63,000 of the increase was generated primarily by sales to
one new customer. To date, we have recognized total revenue of $3,143,000 on the
$10 million contract, consisting of $1,800,000 in managed service fees,
$1,072,000 in implementation fees and $271,000 in license fees. Managed service
fees comprised 70% of total revenue during the first quarter of 2002, compared
to 58% during the same period a year earlier. License fees were $24,000 in the
three months ended March 31, 2002, an increase of $3,000 over the $21,000 of
license fees in the three months ended March 31, 2001. License fees represented
approximately 1% of total revenue for both the first quarter of 2002 and the
first quarter of 2001. Going forward, we anticipate that more sales contracts
will be executed under license-hosted arrangements. Therefore, we expect an
increased portion of our future revenues to be generated by the sales of our
licensed software. Revenues generated from implementation fees during the three
months ended March 31, 2002 decreased by $71,000, or 7%, to $881,000 from
$952,000 during the three months ended March 31, 2001. This decrease is
primarily attributable to a $166,000 reduction in revenue recognition related to
contracts with implementation fees that were deferred in previous years under
the ASP model. Partially offsetting this decrease in revenue was a $95,000
increase in implementation fees generated by additional products and services
sold to new and existing customers during the first quarter of 2002.
Miscellaneous revenues decreased by $33,000, or 45%, to $41,000 during the first
quarter of 2002 from $74,000 during the first quarter of 2001. The decrease in
other revenues is attributable to a decrease in the number of contracts with
charges for voice recordings, faxes, geocoding and telecommunications charges,
as well as a reduction in interactive voice response transaction volume.

Cost of Revenues. Our cost of revenues includes technical personnel salaries and
related personnel costs, data royalties, depreciation for server equipment,
reimbursable expenses such as telecommunications and contract labor related to
specific projects, co-location facility fees and other direct costs related to
operating our data centers, as well as the recognition of previously deferred
implementation expenses. The cost of revenues decreased to 51% of revenues for
the three months ended March 31, 2002 from 62% of revenues for the three months
ended March 31, 2001. The decrease is attributable to the fact that our revenue
growth was primarily the result of the managed service fees associated with the
$10 million contract signed in 2001, for which direct costs were low relative to
revenue recognized. The total cost of revenues over the same period increased by

                                       12

<PAGE>


$54,000, or 4%, to $1,589,000 during the first quarter of 2002 from $1,535,000
during the first quarter of 2001. $152,000 of the increase in our cost of
revenues is a result of continued expansion of the infrastructure for delivering
our services, including a $100,000 increase in costs associated with our data
centers as a result of the increase in the sales of our services. These costs
include data license royalties and telecommunications charges, as well as
depreciation and amortization. In addition, our personnel and personnel support
costs increased $52,000 due to the hiring of additional personnel to implement,
maintain and support services to our clients. The increases in costs associated
with expanding our infrastructure were partially offset by a $57,000 reduction
in contract labor costs as a result of the increase in personnel, as well as a
$29,000 reduction in the recognition of implementation expense on contracts that
were deferred under ASP arrangements. The remaining $12,000 reduction in our
cost of sales is primarily attributable to lower bad debt expense.

Selling and Marketing Expenses. Selling and marketing expenses consist of sales,
pre-sales, marketing and business development personnel costs and related
expenses, travel and entertainment expenses, sales commissions, and advertising
and promotion costs. These costs decreased to 28% of revenues for the three
months ended March 31, 2002 from 55% of revenues for the three months ended
March 31, 2001. The total amount of selling and marketing expenses decreased by
$482,000, or 36%, to $875,000 during the first quarter of 2002 from $1,357,000
during the first quarter of 2001. The change is primarily attributable to a
$325,000 decrease in personnel related costs due to a reduction in the number of
sales and marketing personnel. Also contributing to the decrease in sales and
marketing expenses was a $182,000, or 70%, decrease in public relations and
advertising and promotion consulting costs. Trade show and travel costs also
decreased by $72,000 and $45,000, respectively, during the first quarter of
2002. The decreases in selling and marketing expenses related to personnel,
consulting, trade show and travel costs were partially offset by an $80,000
increase in costs associated with our outsourced lead generation efforts. We
also experienced a $62,000, or 41%, increase in commissions, which was primarily
attributable to the fact that a portion of the commission expense related to the
$10 million contract signed in 2001 is tied to the collection of managed service
fees and, therefore, was recognized during the first quarter of 2002.

Product Development Expenses. Product development expenses consist of time spent
on development not specifically associated with a client contract. To date,
product development costs have been comprised primarily of salaries and related
costs and subcontracted costs. Historically, a majority of product development
expenses have been incurred in conjunction with delivery of our services to
customers and were classified in the cost of revenues. Beginning in the second
quarter of 2000, we significantly increased expenditures for personnel dedicated
to product development in anticipation of future growth. Since that time,
product development personnel levels and related costs have declined slightly as
a result of normal attrition as well as the allocation of certain resources to
the service implementation team to support the growth of our business. For the
three months ended March 31, 2002, product development expenses decreased
$80,000, or 18%, to $353,000 from $433,000 for the three months ended March 31,
2001. During the first quarter of 2002 we experienced a $35,000 reduction in
personnel and related personnel support costs attributable to lower staffing
levels and successful cost management. In addition, contract labor costs and
travel expenses decreased by $31,000 and $14,000, respectively, during the first
quarter of 2002. Product development costs decreased to 11% of revenue for the
quarter ended March 31, 2002 compared to 17% of revenue for the quarter ended
March 31, 2001.

                                       13

<PAGE>


General and Administrative Expenses. General and administrative expenses relate
to the personnel costs of our executive management, finance, investor relations
and other corporate functions, general expenses such as legal and accounting
fees, insurance and costs related to our facilities. These costs decreased to
22% of revenues for the three months ended March 31, 2002 from 27% of revenues
for the three months ended March 31, 2001. The total amount of general and
administrative costs over the comparable periods remained flat at $677,000. We
experienced a $52,000 decrease in personnel related costs during the first
quarter of 2002, which was primarily attributable to lower recruiting costs and
a reduction in bonuses for key personnel. These decreases were offset, however,
by higher legal and accounting fees, as well as increases in our facilities
costs.

Provision for Income Tax Expenses. InfoNow has paid no income taxes since its
inception and has not recorded a provision for income taxes due to valuation
allowances provided against net deferred tax assets, which consist primarily of
operating loss carryforwards.

Non-Operating Income (Expense). Net non-operating expense was $1,000 for the
three months ended March 31, 2002 compared to net non-operating income of
$32,000 for the three months ended March 31, 2001. The reduction of $33,000 is
primarily attributable to lower interest income on cash and cash equivalents
resulting from a reduction in our cash balance as well as lower interest rates.
Cash and cash equivalents decreased to $2,551,000 at March 31, 2002 from
$2,970,000 at March 31, 2001. See "Liquidity and Capital Resources" below for an
explanation of the use of cash and cash equivalents during the period.

Net Loss. Net loss for the three months ended March 31, 2002 was $371,000
compared to $1,483,000 for the three months ended March 31, 2001, a $1,112,000
decrease. This decrease is primarily attributable to a $637,000, or 26%,
increase in total revenues and a $508,000, or 13%, decrease in total expenses
for the quarter ended March 31, 2002, compared to the quarter ended March 31,
2001, as discussed above.


Liquidity and Capital Resources

InfoNow has financed its operations primarily through the placements of private
equity securities and, to a lesser extent, through borrowing and equipment
leasing arrangements. We have received a total of approximately $13,800,000 from
private offerings and have received an additional $2,662,000 from the exercise
of stock options and warrants since we began offering our channel management
solutions in 1996. In February 2002, we secured a bank credit facility with both
a $1,000,000 revolving line of credit to support future operating needs of the
company and a $1,000,000 equipment facility to support future investing needs of
the organization. When and/or if we draw on these facilities we will be held to
specific affirmative, negative and financial covenants including, but not
limited to: minimum Liquidity Covenant, defined as cash held at the credit
issuing institution plus accounts receivable divided by the debt held by the
credit issuing institution, of 1.5:1.0, rolling three month EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) of at least $60,000 and a
monthly pretax loss not to exceed $250,000 for February and March of 2002 and
$200,000 for the balance of 2002.

                                       14

<PAGE>


We had cash and cash equivalents of $2,551,000 at March 31, 2002, compared to
$2,259,000 at December 31, 2001. The increase of $292,000 is primarily due to
cash generated by our operating activities as well as proceeds from stock option
exercises.

Net cash provided by operating activities during the three months ended March
31, 2002 was $156,000, compared to net cash used in operating activities of
$917,000 during the three months ended March 31, 2001. The change of $1,073,000
is primarily due to a $1,112,000 decrease in our net loss as well as changes in
working capital and non-cash charges.

Cash used in investing activities decreased to $11,000 for the three months
ended March 31, 2002 from $81,000 for the three months ended March 31, 2001. The
cash used in investing activities during both periods was primarily related to
the purchase of computer hardware and software for both personnel and our data
centers. We believe our existing capacity levels are adequate to support current
and near-term business activity. Therefore, capital expenditures were lower
during the first quarter of 2002.

Net cash provided by financing activities during the three months ended March
31, 2002 was $147,000, which consisted of $151,000 in proceeds received from the
exercise of stock options, net of $4,000 of principal payments on debt
obligations. Net cash used in financing activities during the three months ended
March 31, 2001 was $45,000 of cash payments on debt obligations.

At March 31, 2002, we had accrued bonuses of $362,000 that were recorded in 2001
and we anticipated paying out during the second quarter of 2002 in the form of
cash or stock and not in stock options. As a result of operational performance
and current uncertain market conditions, our Compensation Committee may approve
the payment of this obligation in the form of cash, stock, stock options, or a
combination of these instruments.

We believe that our expenditures in sales and marketing will continue to
generate new sales equal to, or greater than, our historical experience. In
addition, we do not expect that there will be a substantial change in cash
inflow provided from our existing managed service fees, nor do we expect that
planned expenditures for sales, marketing, capital equipment and administrative
costs will exceed current budgeted amounts. However, variation in the timing of
our cash receipts and disbursements can significantly impact our overall cash
flow for a given period and there can be no assurance that our current cash
balance will be sufficient to fund operations.

If we believe it is advisable, we may seek additional funding to continue our
operations. Our ability to successfully complete an offering is dependent on a
number of factors. There can be no assurances that we can successfully complete
an equity placement, or that a placement can be concluded on the terms and
conditions that would be acceptable to us.

The following table summarizes the Company's contractual payments and
obligations by period (amounts in thousands):
<TABLE>
<CAPTION>

Contractual Obligations                                             Payment Due by Period
                                         Total        Less Than 1 year    1-3 years    4 - 5 years     After 5 years
                                         -----        ----------------    ---------    -----------     -------------

<S>                                      <C>              <C>
Long-Term Debt                           $      5         $      5               -              -             -
Capital Lease Obligations                     377              143             234              -             -
Operating Leases                              502              224             278              -             -
Unconditional Purchase Obligations              -                -               -              -             -
Other Long-Term Obligations                     -                -               -              -             -
Total Contractual Cash Obligation        $    884         $    372         $   512      $       -       $     -


                                                    15
</TABLE>

<PAGE>


We are currently renegotiating one of our office leases, which terminates on
September 30, 2002. We expect to retain the same office space for between $17.00
and $18.00 per square foot in a five year operating lease obligation.

Related Business Risks and Assumptions
--------------------------------------

Our actual results may vary materially from the forward-looking statements made
above, which have been made pursuant to the Private Securities Litigation Reform
Act of 1995. We intend that such statements be subject to the safe harbor
provisions of the Securities Act of 1933 and the Securities Exchange Act of
1934. Our forward-looking statements include the plans and objectives of
management for future operations and relate to a variety of factors, including
management's assumptions about our ability to:

     o    Gain market acceptance of our services;
     o    Retain existing customers and attract new customers;
     o    Accurately forecast and meet demands for our services, including our
          ability to maintain technical performance of the system as new clients
          are added;
     o    Maintain our ability to serve new and existing customers;
     o    Improve our operational and financial systems in order to address
          planned growth in our operations;
     o    Maintain pricing and adequate profit margins on our products and
          services;
     o    Retain and attract qualified technical personnel;
     o    Develop future enhancements to our services and control development
          costs of those enhancements;
     o    Operate our business in accordance with our operating budget;
     o    Respond to competitive threats; and
     o    Raise additional capital, if needed.

Our assumptions are based on judgments with respect to, among other things,
future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our ability to control.

We believe that the assumptions underlying our forward-looking statements are
reasonable. However, our assumptions may prove to be inaccurate and therefore
there can be no assurance that the results contemplated in forward-looking
statements will be realized. You should not regard any statements made in this
report on Form 10-QSB as a representation by InfoNow or any other person that we
will achieve our objectives.

For a more comprehensive discussion of the risk factors associated with our
business, please refer to our Annual Report filed with the Securities and
Exchange Commission on Form 10-KSB for the fiscal year ended December 31, 2001.

We utilize two internet data centers, which are housed in two separate
facilities in Denver, Colorado, maintained by InFlow, Inc., to provide services
to our clients. These facilities have safeguard protections such as a halon fire
system, redundant telecommunications access, off-site storage of backups and

                                       16

<PAGE>


24-hour systems maintenance support. In May 2002 InFlow informed us that, as
part of their restructuring, they will shut down four of their 17 data centers,
including a facility in Denver that houses one of our data processing
operations. As a result, we will be required to relocate our data center
equipment to a different site, also in Denver, Colorado. During the move, some
of our clients will experience short service outages. We will coordinate these
outages with them in advance and we expect the interruptions will be similar to
normal recurring system maintenance downtime. We expect the relocation to occur
in the third quarter of 2002 and take one to three weeks to complete.

We received correspondence in 2001 from Murex Licensing Corporation asserting
that certain technologies employed by us infringe on patents owned by Murex.
During the first quarter of 2002 we received correspondence from Murex
indicating that they had no intention at this time of suing InfoNow for patent
infringement. While we are continuing to evaluate Murex's position, at this
point we believe that the patent infringement claims asserted in the earlier
correspondence from Murex are without merit, and we intend to defend against
them vigorously should Murex bring a formal claim or litigation against us.
Notwithstanding the existence of meritorious defenses, any litigation over the
scope and application of patents or similar intellectual property claims could
involve significant costs of defense and could involve risks and uncertainties.

Two of our major clients, one of which is our largest client and made up 44% of
our revenue during the first quarter of 2002, are currently involved in a
merger. We are also currently negotiating contract renewals with our largest
client. The effects that the merger and the renewal negotiation will have on our
future results are currently uncertain. Notwithstanding the merger and renewal
negotiation, we continue to enhance the business relationship with our largest
client.

                                       17

<PAGE>


                           PART II. OTHER INFORMATION
                           --------------------------


Item 6.   Exhibits and Reports on Form 8-K
-------   --------------------------------

     (a)  Exhibits


     The Registrant will furnish a copy of any of the exhibits listed below upon
     Payment of $5.00 per exhibit to cover the costs to the Registrant of
     furnishing such exhibit. Electronic copies may be obtained free of charge
     from the Securities and Exchange Commission web site: www.sec.gov.



Exhibit
Number                      Exhibit Description
------                      -------------------


10.44      Credit Facility between the Company and Silicon Valley Bank dated
           February 15, 2002. (A)

10.45    * Employment Agreement between the Company and Michael W. Johnson dated
           February 26, 2002. (A)

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

          (A)  Incorporated by reference to the Company's Annual Report filed on
               Form 10-KSB for the year ended December 31, 2001.

     * Denotes management contract or compensatory plan.

     (b) Reports on Form 8-K.


                                       18


<PAGE>



                                   SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                     INFONOW CORPORATION



Date:  May 14, 2002                  By: /s/ Michael W. Johnson
                                         ---------------------------------------
                                             Michael W. Johnson, Chief Executive
                                             Officer


Date               Title                              Signature
----               -----                              ---------


May 14, 2002       Chief Financial Officer and        /s/ Harold R. Herbst
                   Executive Vice President           --------------------------
                   (Principal Financial Officer)          Harold R. Herbst


May 14, 2002       Vice President, Controller and     /s/ James L. Medina
                   Treasurer                          --------------------------
                   (Principal Accounting Officer)         James L. Medina


                                       19
<PAGE>



                                  EXHIBIT INDEX
                                  -------------


Exhibit
Number                      Exhibit Description
------                      -------------------


10.44       Credit Facility between the Company and Silicon Valley Bank dated
            February 15, 2002. (A)

10.45     * Employment Agreement between the Company and Michael W. Johnson
            dated February 26, 2002. (A)


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

          (A)  Incorporated by reference to the Company's Annual Report filed on
               Form 10-KSB for the year ended December 31, 2001.

* Denotes management contract or compensatory plan.


                                       20