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 JUNE 30, 2003

/ /  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 August 14, 2003, there were 9,324,304 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 - June 30, 2003...............................3

         Unaudited Statements of Operations - For the Three and Six
           Months Ended June 30, 2003 and June 30, 2002........................4

         Unaudited Statements of Cash Flows - For the Six Months
           Ended June 30, 2003 and June 30, 2002...............................5

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


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............12

ITEM 3.  CONTROLS AND PROCEDURES..............................................23


                           PART II. OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS................24

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.....................................26

         SIGNATURES...........................................................27


                                       2
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<TABLE>
<CAPTION>

                            PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------

                                 INFONOW CORPORATION
                                    BALANCE SHEET
                      (In Thousands, Except Share Information)
                                     (Unaudited)
                                                                            JUNE 30,
                                                                              2003
                                                                            --------
                                       ASSETS
                                       ------
<S>                                                                         <C>
CURRENT ASSETS:
    Cash and cash equivalents                                               $  2,679
    Accounts receivable:
          Billed, net of allowance of $4                                         769
          Unbilled                                                               140
    Deferred implementation costs                                                 23
    Prepaid expenses                                                             547
                                                                            --------
         Total current assets                                                  4,158
                                                                            --------

PROPERTY AND EQUIPMENT, net                                                      773

    Non-current deferred implementation costs                                     48
    Other assets and deferred charges                                             10
                                                                            --------

TOTAL ASSETS                                                                $  4,989
                                                                            ========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
                        ------------------------------------
CURRENT LIABILITIES:
    Capital leases - current portion                                        $     68
    Accounts payable                                                             309
    Payroll related liabilities                                                  371
    Other liabilities                                                            142
    Short-term deferred revenues                                                 724
                                                                            --------
         Total current liabilities                                             1,614

    Capital leases, net of current portion                                        91
    Long-term deferred revenues                                                  124
    Deferred rent                                                                237

COMMITMENTS AND CONTINGENCIES (Note 2)

STOCKHOLDERS' EQUITY:
    Preferred stock, $.001 par value; 1,712,335 shares authorized:
       Series A Convertible, 213,483 shares authorized, none issued and
       outstanding. - Series B Convertible Participating Preferred Stock,
       550,000 shares authorized, none issued and outstanding                   --
    Common stock, $.001 par value; 40,000,000 shares authorized;
         9,318,581 issued and outstanding                                          9
    Additional paid-in capital                                                39,160
    Accumulated deficit                                                      (36,246)
                                                                            --------
         Total stockholders' equity                                            2,923
                                                                            --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $  4,989
                                                                            ========

                  See notes to the unaudited financial statements.

                                          3
<PAGE>

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


                                                 Three Months           Six Months
                                                Ended June 30,        Ended June 30,
                                              ------------------    ------------------
                                               2003        2002      2003        2002
                                              -------    -------    -------    -------
REVENUES:
    Service and other fees                    $ 2,528    $ 2,243    $ 4,897    $ 4,462
    Implementation fees                           394        547      1,585      1,428
    Software license fees                           3         24         78         48
                                              -------    -------    -------    -------
        Total revenues                          2,925      2,814      6,560      5,938
                                              -------    -------    -------    -------

COST OF REVENUES                                1,469      1,415      3,054      3,004
                                              -------    -------    -------    -------

GROSS MARGIN                                    1,456      1,399      3,506      2,934

OPERATING EXPENSES:
    Selling and marketing                         652        887      1,292      1,762
    Product development                           336        269        695        622
    General and administrative                    717        454      1,485      1,131
                                              -------    -------    -------    -------
        Total operating expenses                1,705      1,610      3,472      3,515
                                              -------    -------    -------    -------

INCOME (LOSS) FROM OPERATIONS                    (249)      (211)        34       (581)

OTHER INCOME (EXPENSE):
    Interest income                                 6          8         12         16
    Interest expense                               (5)        (8)       (10)       (17)
                                              -------    -------    -------    -------
        Total other income (expense)                1       --            2         (1)
                                              -------    -------    -------    -------

NET INCOME (LOSS)                             $  (248)   $  (211)   $    36    $  (582)
                                              =======    =======    =======    =======

NET INCOME (LOSS) PER COMMON SHARE:
    Basic                                     $  (.03)   $  (.03)   $  --      $  (.07)
    Fully diluted                             $  (.03)   $  (.03)   $  --      $  (.07)
                                              =======    =======    =======    =======

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
    Basic                                       9,318      8,360      9,318      8,349
    Fully diluted                               9,318      8,360      9,499      8,349
                                              =======    =======    =======    =======


                   See notes to the unaudited financial statements.

                                           4
<PAGE>

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

                                                            SIX MONTHS ENDED JUNE 30,
                                                                 2003       2002
                                                               -------    -------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                          $    36    $  (582)
    Adjustments to reconcile net income (loss) to net cash
         provided by (used in) operating activities:
         Depreciation and amortization                             344        524
         Allowance for bad debt                                    (11)       (28)
         Stock based compensation                                   12       --
         Bonus accrual                                            --         (362)
         Changes in operating assets and liabilities:
             Restricted cash                                      --           17
             Accounts receivable                                   892        483
             Other current assets                                   25        305
             Other assets and deferred charges                      42         34
             Accounts payable                                       61        310
             Payroll related and other liabilities                  64       (175)
             Deferred revenue                                   (1,080)      (534)
                                                               -------    -------
         Net cash provided by (used in) operating activities       385         (8)

CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of property and equipment                            (150)       (18)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of stock options                       --          154
    Principal payments on debt obligations                         (46)       (43)
                                                               -------    -------
         Net cash provided by (used in) financing activities       (46)       111

NET INCREASE IN CASH AND CASH EQUIVALENTS                          189         85

CASH AND CASH EQUIVALENTS, beginning of period                   2,490      2,259
                                                               -------    -------

CASH AND CASH EQUIVALENTS, end of period                       $ 2,679    $ 2,344
                                                               =======    =======

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest                                     $     8    $     9
                                                               =======    =======

NON CASH INVESTING AND FINANCING ACTIVITIES:
    Non-cash purchases of property and equipment               $  --      $    40
                                                               =======    =======


                See notes to the unaudited financial statements.

                                        5
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<PAGE>

                               INFONOW CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Organization and Business Activity - Unless otherwise indicated, all
     references in this form 10-QSB to "InfoNow," the "Company," "we," or "our"
     refer to 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 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.

     The accompanying interim condensed financial statements are unaudited but,
     in the opinion of management, reflect all adjustments (consisting of those
     of a normal recurring nature) necessary for a fair presentation of the
     results for such periods. The results of operations for any interim period
     are not necessarily indicative of results for the full year. These
     condensed financial statements should be read in conjunction with the
     financial statements and notes thereto contained in the Company's previous
     filings with the U.S. Securities and Exchange Commission.

     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 and the differences could
     be material. Significant estimates include the estimate of a customer life,
     over which deferred revenue and implementation expenses are recognized, the
     percentage of completion on a customer contract, and the allowance for
     doubtful accounts.

     Cash and Cash Equivalents - The Company considers all highly liquid
     investments with original maturity dates of three months or less to be cash
     equivalents. The Company's excess cash is maintained in a money market
     fund.

     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 services to
     clients in two forms. The first (and historical) method utilizes an
     application service provider, or 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

                                       6
<PAGE>

     performed. The implementation fee is deferred and recognized ratably over
     the longer of the expected customer life or contract term. During the three
     and six months ended June 30, 2003, implementation fees of $172,000 and
     $206,000, respectively, were deferred, of which $138,000 and $139,000 was
     recognized during the three and six months ended June 30, 2003. During the
     three and six months ended June 30, 2002, implementation fees of $90,000
     and $319,000, respectively, were deferred, of which $9,000 and $13,000 was
     recognized during the three and six months ended June 30, 2002.

     The second method of delivering our software and services is via a
     license-hosted model. The Company began offering this model in 2001. Under
     this model, the Company sells clients a perpetual license for its software.
     The client can install the software on their own in-house systems, or, as
     is most often the case, InfoNow will host the software and perform related
     services for them under a services agreement. The Company recognized
     $587,000 in previously deferred revenue during the first quarter of 2003 as
     a result of the Company's largest client converting its Locator and Lead
     Management solutions from an ASP arrangement to a license-hosted
     arrangement. 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 over the implementation period, and it
     recognizes monthly service fees as earned. Losses are recognized
     immediately if projected direct costs exceed anticipated revenues.

     Income Taxes - The Company accounts for its income tax assets and
     liabilities in accordance with SFAS No. 109, Accounting for Income Taxes
     ("SFAS No. 109"). 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 that do not
     satisfy the realization criteria of SFAS No. 109. As a result of the
     valuation allowance, the Company had no net deferred tax assets at June 30,
     2003.

     Stock Compensation Expense - The Company records its stock compensation
     expense in accordance with SFAS No. 123, Accounting for Stock-Based
     Compensation ("SFAS No. 123"). 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 and
     directors in accordance with the guidance in Accounting Principles Board
     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 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. The
     intrinsic value method results in no compensation expense for new stock
     option grants because the market value and strike price of the stock option
     grant are the same on the grant date. Had compensation cost for the
     Company's plans been determined consistent with SFAS No. 123, the Company's
     net loss and loss per share would have been increased to the pro forma
     amounts indicated below:

                                       7

<PAGE>
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<CAPTION>

                                                         Three Months Ended June 30,
                                                              2003         2002
                                                            -------     ---------
                                                  (In thousands, except per share amounts)
     <S>                                                    <C>         <C>
        Net Income (Loss)
           As reported                                      $  (248)    $    (211)
           Add: Stock-based employee compensation
             expense included in reported net
             income, net of tax effect                           12          --
           Deduct: Total stock-based employee
             compensation expense determined under
             fair value based method for all
             awards, net of tax effect                         (268)       (1,027)
                                                            -------     ---------
           Pro forma                                        $  (504)    $  (1,238)
                                                            =======     =========

        Earnings per share:
             Basic and diluted-as reported                  $  (.03)    $    (.03)
             Basic and diluted-pro forma                    $  (.05)    $    (.15)


                                                          Six Months Ended June 30,
                                                              2003         2002
                                                            -------     ---------
                                                  (In thousands, except per share amounts)
        Net Income (Loss)
           As reported                                      $    36     $    (582)
           Add: Stock-based employee compensation
             expense included in reported net
             income, net of tax effect                           12          --
           Deduct: Total stock-based employee
             compensation expense determined under
             fair value based method for all
             awards, net of tax effect                         (709)       (1,706)
                                                            -------     ---------
           Pro forma                                        $  (661)    $  (2,288)
                                                            =======     =========

        Earnings per share:
             Basic and diluted-as reported                  $  --       $    (.07)
             Basic and diluted-pro forma                    $  (.07)    $    (.27)


                                        8
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<PAGE>

     During the six months ended June 30, 2003, the Company received $169 of
     proceeds from the exercise of 222 options by former employees pursuant to
     the terms of the original options. During the six months ended June 30,
     2002, the Company received $154,000 of proceeds from the exercise of
     101,746 options by former employees pursuant to the terms of the original
     options.

     Net Income (Loss) Per Common Share - The loss per share is presented in
     accordance with the provisions of SFAS No. 128, Earnings Per Share. Basic
     earnings per share, or 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. Stock options,
     warrants outstanding and their equivalents are included in diluted earnings
     per share computations through the "treasury stock method" unless they are
     antidilutive. Convertible securities are included in diluted earnings per
     share computations through the "if converted" method unless they are
     antidilutive. Basic and diluted EPS were the same for the second quarter of
     2003 and 2002, and for the six months ended June 30, 2002, because the
     Company had losses from operations and therefore, the effect of all
     potential common stocks was antidilutive. However, because the Company had
     net income for the six months ended June 30, 2003, an additional 181,000
     potentially dilutive in-the-money shares of common stock were included for
     purposes of the fully diluted EPS calculation.

     For the three months ended June 30, 2003 and 2002, and for the six months
     ended June 30, 2002, approximately 134,000, 245,000, and 663,000,
     respectively, equivalent dilutive in-the-money securities (primarily common
     stock options) have been excluded from the weighted-average number of
     common shares outstanding for the diluted net loss per share computations,
     as they are antidilutive.

     Concentrations of Credit Risk - Financial instruments which potentially
     subject the Company to concentrations of credit risk are cash equivalents
     and accounts receivable. The Company attempts to limit its credit risk
     associated with cash equivalents by placing the Company's financial
     instruments with major institutions. 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 three and six months ended June 30, 2003, the Company earned
     $1,564,000, or 53%, and $3,122,000, or 48%, respectively, of its revenue
     from one global organization. No other organization accounted for more than
     10% of the Company's revenue during the three and six months ended June 30,
     2003. As of June 30, 2003, that same organization accounted for
     approximately 33%, or $250,000, of the Company's net accounts receivable
     balance. The loss of this client and the related reduction in revenue, or
     its inability or failure to pay would have a material adverse impact on the
     Company's financial condition and results of operations. Another client
     accounted for 25%, or $193,000, of the Company's net accounts receivable
     balance at June 30, 2003. No other customers accounted for more than 10% of
     the Company's accounts receivable balance at June 30, 2003.

                                       9
<PAGE>

     During the three and six months ended June 30, 2002, the Company earned
     $1,192,000, or 42%, and $2,573,000, or 43%, respectively, of its revenue
     from one global organization. No other customer accounted for more than 10%
     of the Company's revenue during the three and six months ended June 30,
     2002.

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

     Recent Accounting Pronouncements - In December 2002, the Financial
     Accounting Standards Board issued SFAS No. 148, Accounting for Stock-Based
     Compensation-Transition and Disclosure, an amendment of SFAS No. 123. The
     statement provides alternative methods of transition for a voluntary change
     to the fair value method of accounting for stock-based employee
     compensation. In addition, the statement requires companies to disclose in
     both annual and interim financial statements the method of accounting for
     stock-based compensation and the effect of the method used on reported
     results. The statement is effective for annual periods ending after
     December 15, 2002 and interim periods beginning after December 15, 2002.
     The Company has adopted the disclosure provisions of SFAS No. 148; however,
     it has not adopted the fair value method, and expects to continue to
     recognize compensation cost in accordance with the guidance in APB No. 25
     unless future accounting rules dictate a change in method. If the Company
     were to adopt the fair value method, management believes there would be a
     material impact on the Company's results of operations.

     In May 2003, the Financial Accounting Standards Board issued SFAS No. 150,
     Accounting for Certain Financial Instruments with Characteristics of both
     Liabilities and Equity, ("SFAS 150"). SFAS 150 establishes standards for
     how an issuer classifies and measures certain financial instruments with
     characteristics of both liabilities and equity. It requires that an issuer
     classify a financial instrument that is within its scope as a liability (or
     an asset in some circumstances), many of which were previously classified
     as equity. The provisions of SFAS 150 are effective for financial
     instruments entered into or modified after May 31, 2003, and with one
     exception, is effective at the beginning of the first interim period
     beginning after June 15, 2003. The adoption of SFAS 150 will not have a
     material effect on the Company's financial statements.

     In November 2002, the Financial Accounting Standards Board issued
     Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure
     Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
     of Others. FIN 45 requires that a liability be recorded in the guarantor's
     balance sheet upon issuance of a guarantee. FIN 45 also requires additional
     disclosures about the guarantees an entity has issued, including a
     roll-forward of the entity's product warranty liabilities. The Company will
     apply the recognition provisions of FIN 45 prospectively to guarantees
     issued or modified after December 31, 2002. The disclosure requirements
     were effective for the Company's financial statements for the year ended
     December 31, 2002. The adoption of FIN 45 did not have an impact on the
     Company's consolidated financial position or results of operation in the
     second quarter of 2003.

     In January 2003, the Financial Accounting Standards Board issued
     Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest
     Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable
     interest entities to be consolidated by the primary beneficiary of the

                                       10
<PAGE>

     entity if the equity investors in the entity do not have the
     characteristics of a controlling financial interest or do not have
     sufficient equity at risk for the entity to finance its activities without
     additional subordinated financial support from other parties. FIN 46 is
     effective immediately for all new variable interest entities created or
     acquired after January 31, 2003. For variable interest entities created or
     acquired prior to February 1, 2003, the provisions of FIN 46 must be
     applied for the first interim or annual period beginning after June 15,
     2003. The Company does not believe that the adoption of this standard will
     have a material impact on its financial position or results of operations.

     In November 2002, the Emerging Issues Task Force reached a consensus on
     Issue No. 00-21 ("EIFT 00-21"), Revenue Arrangements with Multiple
     Deliverables. EITF 00-21 requires a company to determine whether the
     company should divide an arrangement with multiple deliverables into
     separate units of accounting. The EIFT 00-21 is effective for revenue
     arrangements entered into in fiscal periods beginning after June 15, 2003.
     Alternatively, companies may elect to report the change in accounting as
     cumulative effect of a change in accounting principle. The adoption of EITF
     No. 00-21 had no impact on the Company's financial position or results of
     operation.

2.   COMMITMENTS AND CONTINGENCIES

     The Company leases approximately 27,000 square feet of office space at a
     rate of $16.50 per square foot for the period between October 1, 2002 and
     June 30, 2003. The rate increases to $17.00 per square foot from July 2003
     through September 2005 and $18.00 per square foot from October 2005 through
     September 2007, when the lease expires. The new lease contains a
     refurbishment allowance of $326,000, of which the Company utilized
     approximately $35,000 to improve the premises and $291,000 to offset a
     portion of its rent obligations from September 2002 through May 2003. Rent
     expense, net of the refurbishment allowance, is recognized on a
     straight-line basis over the term of the lease.

     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 its business or
     results of operations.

3.   SUBSEQUENT EVENTS

     In August 2003 the Company resolved an ongoing informal patent dispute with
     Murex Licensing Corporation. In 2001 and 2002 the Company received
     correspondence from Murex Licensing Corporation asserting that certain
     technologies employed by the Company infringe on patents owned by Murex and
     that the Company is required to license this technology from Murex. The
     Company has established a mutually cooperative relationship with Murex in
     which Murex will benefit from certain of InfoNow's intellectual property
     and the Company will benefit by avoiding potentially protracted and costly
     litigation that may otherwise have arisen. In addition, the Company will
     have available a license under Murex patents for use in future products and
     services. The Company will continue to provide customers with its complete
     spectrum of location-based services.

                                       11
<PAGE>

     The Company took steps to reduce its costs during the third quarter of
     2003. These steps include a 14-person reduction in regular full-time
     personnel and a significant reduction in its use of temporary resources,
     both primarily in InfoNow's Services group. InfoNow also implemented a
     temporary, company-wide reduction in employee salaries through the end of
     the year.


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 including our annual report on
Form 10-KSB, 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 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: i) effectively managing channel partners
worldwide; ii) providing partners and end customers with information about their
products and services; iii) referring end customers to the proper channel
partners; iv) capturing and managing leads through the sales cycle; v) promoting
and selling a company's branded products and services online; and vi) providing
meaningful insights into end customers and the channel partners serving them.
This in turn enables companies to increase revenues, lower operating costs and
deliver a significant return on investment.

As of June 30, 2003, we had 42 managed services clients, compared to the 47 we
reported as of June 30, 2002. We have and may continue to experience decreases
in our client count for various reasons, including client consolidation due to
mergers and acquisitions. Despite the reduction in the number of clients, our
contracted managed service fees, which include fees that are currently in a
month-to-month contract status, increased from $773,000 per month as of June 30,
2002, to $790,000 per month as of June 30, 2003. Most of our clients are Global
2000 companies with extensive channel partner networks. Our clients include
Apple, Avaya, Bank of America, Hewlett Packard, Lexmark, Maytag, The Hartford,
Visa, Vision Service Plan (VSP) and Wachovia Corporation.

                                       12
<PAGE>

Critical Accounting Policies

We believe the following accounting policies, which are important to our
financial position and results of operations, require significant judgments and
estimates on the part of management. We believe that the following description
represents our critical accounting policies and estimates used in the
preparation of our financial statements, although it is not all-inclusive.

Revenue Recognition
-------------------

We offer our solutions to clients in two forms. The first (and historical)
method utilizes an application service provider, or 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 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 range from one to 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
turnover, the rate of change for the technology underlying our solutions and the
expectation that our customers will continue to convert from the ASP model to
our license-hosted model, under which software, implementation fees and direct
costs are not deferred, but are recognized on a percentage of completion basis.

The second method of delivering our software and services is via a
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, as is most often the case, we 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. As
changes occur in our estimate of completion percentage, revenue recognition is
adjusted accordingly.

We began offering the license-hosted model in order to add flexibility to
offering our software and services and expand the addressable market for our
technology by meeting the needs of companies who wish to purchase our software.
Customers and prospects sometimes prefer a license-hosted arrangement as it
enables them to fund these projects using capital budgets, potentially reduces
the total cost of ownership, and offers a method for ensuring their long-term
right to use the software.

Our 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 generally
renewable upon mutual agreement between InfoNow and the client.

A typical contract fee could include the following six separate
revenue-producing components:

Software license/implementation fees:

     -    The software license fee applies to all configured application
          software and related functionality used in the client's application.
     -    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.

                                       13
<PAGE>

Monthly service fees and software maintenance fees:

     -    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.
     -    The variable monthly fee includes charges for system usage in excess
          of contracted thresholds.
     -    A software maintenance fee (for customers utilizing a license-hosted
          model) includes updates to the client's software.

Other fees:

     -    Variable fees included under this heading are pass-through charges for
          voice recordings, faxes, geocoding, and telecommunications charges,
          which are typically billed with an incremental administrative fee in
          addition to the direct charge we incur to provide these services.

Revenue from software maintenance fees is recognized on a straight-line basis
over the term of the maintenance agreement. Recurring managed service fees and
variable monthly fees are recognized as services are performed. Software license
fees are generally recognized on a percentage-of-completion basis, and
implementation fees are recognized either on a percentage-of-completion basis or
over the estimated customer life, as discussed above.

Effective March 16, 2000, we adopted Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements ("SAB 101"), which sets forth SEC guidelines
for the recognition of revenue. The guidelines under SAB 101 require that we
recognize revenues from non-licensed initial implementation fees over the longer
of the expected customer life or contract term.

The following table summarizes the distribution of our employees as of June 30,
2003 and June 30, 2002:

                                           June 30, 2003         June 30, 2002
                                           -------------         -------------
Staff related to the Cost of Revenues           86                     72
Selling and Marketing                           17                     18
Product Development                             15                     14
General and Administrative                      12                     12
   Total Employees                              130                   116

The table above includes 106 full-time employees and 24 temporary employees at
June 30, 2003, and 100 full-time employees, 15 temporary employees and one
part-time employee at June 30, 2002.

                                       14
<PAGE>

Results of Operations

Comparison of the Three Months Ended June 30, 2003, with the Three Months Ended
June 30, 2002.

Revenues: Our revenues consist primarily of implementation fees, software
license fees, monthly service fees and software maintenance fees from new and
existing customers. Total revenues increased by $111,000, or 4%, to $2,925,000
for the three month period ended June 30, 2003 from $2,814,000 for the same
period in the previous year.

Monthly Service Fees and Software Maintenance Fees - Monthly service fees and
software maintenance fees were $2,509,000 during the three months ended June 30,
2003, an increase of $306,000, or 14%, from $2,203,000 during the three months
ended June 30, 2002. This increase is net of $98,000 in lost service fees due to
customer terminations. Approximately $349,000 of the increase in managed service
fees was generated by additional services that were sold to our largest customer
during the second half of 2002. The remaining $55,000 increase is due to
additional products and services sold to other existing customers. Monthly
service fees and software maintenance fees comprised 86% of total revenue during
the second quarter of 2003, compared to 78% during the same period a year
earlier.

Implementation Fees - Revenues generated from implementation fees during the
three months ended June 30, 2003 decreased by $153,000, or 28%, to $394,000 from
$547,000 during the three months ended June 30, 2002. This decrease is primarily
attributable to a $94,000 reduction in revenue recognition related to contracts
with implementation fees that were deferred in previous years under the ASP
model. The remaining $59,000 reduction in implementation fees was caused by
lower sales of our products and services.

Software License Fees - Software license fees were $3,000 during the three
months ended June 30, 2003, a decrease of $21,000 from the $24,000 of license
fees during the three months ended June 30, 2002. The decrease is attributable
to a decrease in the number of licensed solutions sold in the second quarter of
2003 compared to the second quarter of 2002. License fees represented less than
1% of total revenue during the second quarter of 2003 and 1% of revenue during
the second quarter of 2002. The Company intends to focus its efforts on
increasing its sales under license-hosted arrangements. If successful, sales of
our licensed solutions would make up an increased portion of our future
revenues.

Other Fees - Other fees decreased by $21,000, or 53%, to $19,000 during the
second quarter of 2003 from $40,000 during the second quarter of 2002. The
decrease in other fees 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
and negotiated rate reductions in our telecommunications charges.

To date, we have recognized total revenue of $6,527,000 on the $10 million
contract , consisting of $5,184,000 in managed service fees, $1,072,000 in
implementation fees and $271,000 in software license fees. The balance of the
contract consists of managed service fees that are expected to be recognized in
2003 and 2004 on a monthly basis as we perform services.

Cost of Revenues: Our cost of revenues includes technical personnel salaries and
related personnel costs, data royalties, software costs, depreciation for server
equipment, reimbursable expenses such as telecommunications and contract labor
related to specific projects, co-location facility fees and other direct costs

                                       15
<PAGE>

related to operating our data centers, as well as the recognition of previously
deferred implementation expenses. The cost of revenues was 50% of revenues for
the three months ended June 30, 2003, which was consistent with the three months
ended June 30, 2002. The total cost of revenues increased by $54,000, or 4%, to
$1,469,000 during the second quarter of 2003 from $1,415,000 during the second
quarter of 2002. This was due, in part, to a $129,000 increase in our personnel
and personnel support costs primarily due to the hiring of additional personnel
to support the growth in service level requirements related to our Channel
Insight solution. A significant portion of this increase is the result of adding
resources to support the $10 million contract with our largest client and
related upgrades and enhancements to that solution. We also experienced a
$56,000 increase in bonus expense as a result of the reversal of the 2001 bonus
accrual in the second quarter of 2002; these bonuses were paid in the form of
stock options. We had no bonus expense in the second quarter of 2003; therefore,
the $56,000 expense reversal that took place in the second quarter of 2002
resulted in a lower expense during that period. The increases in our cost of
sales associated with personnel costs and bonus expense were partially offset by
a $53,000 decline in reimbursable expenses mainly because of lower
telecommunications charges as a result of negotiated rate reductions and lower
system usage due to the decline in our customer base. In addition, our data
center costs decreased by $34,000 primarily as a result of negotiated rate
reductions in our data royalties, as well as a decline in depreciation expense
related to our data center hardware and software. We also experienced a $44,000
reduction in the recognition of implementation expense on contracts that were
deferred under ASP arrangements.

Operating Expenses:
-------------------

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 22% of revenues for the three
months ended June 30, 2003 from 32% of revenues for the three months ended June
30, 2002. The total amount of selling and marketing expenses decreased by
$235,000, or 26%, to $652,000 during the second quarter of 2003 from $887,000
during the second quarter of 2002. This change is partially attributable to a
$138,000 decrease in public relations and advertising and promotion consulting
costs. We also experienced a $99,000 reduction in commission expense partly as a
result of the decline in the sales of our solutions and partly because a portion
of the commission on the $10 million contract with our largest client was paid
in the second quarter of 2002. In addition, recruiting fees decreased $40,000 as
we incurred costs during the second quarter of 2002 related to an effort to
enhance the quality of our sales team, while we did not add any new sales staff
during the second quarter of 2003. The decreases in sales and marketing expenses
associated with consulting costs, commissions and recruiting fees were partially
offset by a $31,000 increase in bonus expense as a result of the reversal of the
2001 bonus accrual in the second quarter of 2002 when certain 2001 bonuses were
paid in the form of stock options. We had no bonus expense in the second quarter
of 2003; therefore, the $31,000 expense reversal that took place in the second
quarter of 2002 resulted in a lower expense during that period. Travel costs
also increased $11,000 during the three months ended June 30, 2003, compared to
the three months ended June 30, 2002.

Product Development Expenses - Product development expenses consist of time
spent on development of our Enterprise Channel Management software that is not
specifically associated with a client contract. Product development expenses are
primarily made up of salaries and related costs and subcontracted costs. For the
three months ended June 30, 2003, product development expenses increased

                                       16
<PAGE>

$67,000, or 25%, to $336,000 from $269,000 for the three months ended June 30,
2002. This change was primarily due to a $65,000 increase in bonus expense as a
result of the reversal of the 2001 bonus accrual in the second quarter of 2002;
these 2001 bonuses were paid in the form of stock options. We had no bonus
expense in the second quarter of 2003, therefore, the $65,000 expense reversal
that took place in the second quarter of 2002 resulted in a lower expense during
that period. The remaining $2,000 increase in product development expenses is
primarily due to increased personnel costs as a result of allocating more of our
existing resources to support product development efforts; these costs were
partially offset by a reduction in depreciation expense. Product development
costs increased to 11% of revenue for the quarter ended June 30, 2003, compared
to 10% of revenue for the quarter ended June 30, 2002.

General and Administrative Expenses - General and administrative expenses relate
to the personnel costs of executive management, finance, investor relations,
human resources and other corporate functions, general expenses such as legal
and accounting fees, insurance and costs related to our facilities. These costs
increased to 25% of revenues for the three months ended June 30, 2003, from 16%
of revenues for the three months ended June 30, 2002. The total amount of
general and administrative costs over the same periods increased $263,000, or
58%, to $717,000 during the second quarter of 2003 from $454,000 during the
second quarter of 2002. This increase was primarily due to a $207,000 increase
in bonus expense as a result of the reversal of the 2001 bonus accrual in the
second quarter of 2002; these 2001 bonuses were paid in the form of stock
options. We had no bonus expense in the second quarter of 2003; therefore the
$207,000 expense reversal that took place in the second quarter of 2002 resulted
in a lower expense during that period. We also experienced a $28,000 increase in
personnel and personnel support costs partly due to salary increases for
executive management, finance, investor relations and human resources personnel.
Also contributing to the increase in personnel costs was a $12,000 compensation
expense charge related to a former director's stock option modification during
the second quarter of 2003. Professional fees also increased by $44,000. In
addition, insurance costs increased by $7,000 as a result of increases in our
insurance rates. The increases in general and administrative costs related to
bonus expense, personnel costs, professional fees and insurance costs were
partially offset by an $8,000 decrease in our facilities cost mainly because of
lower depreciation expense on our office equipment. We also experienced lower
investor relations costs of $15,000.

Income Taxes: 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.

Other Income/Expense: We had net other income of $1,000 during the three months
ended June 30, 2003, compared to no net other income during the three months
ended June 30, 2002. The increase of $1,000 is primarily attributable to lower
interest expense due to a reduction in our capital lease obligations. The
reduction in interest expense was partially offset by lower interest income on
cash and cash equivalents resulting from lower interest rates during the second
quarter of 2003 relative to the second quarter of 2002.

Net Income/Loss: Net loss for the three months ended June 30, 2003, was $248,000
compared to $211,000 for the three months ended June 30, 2002, a $37,000
increase. This increase is primarily attributable to a $148,000, or 5%, increase
in total expenses, which was partially offset by a $111,000, or 4%, increase in
total revenues for the quarter ended June 30, 2003, compared to the quarter
ended June 30, 2002, as discussed above.

                                       17
<PAGE>

Comparison of the Six Months Ended June 30, 2003, with the Six Months Ended June
30, 2002.

Revenues: Total revenues increased by $622,000, or 10%, to $6,560,000 for the
six month period ended June 30, 2003, from $5,938,000 for the same period in the
previous year.

Monthly Service Fees and Software Maintenance Fees - Monthly service fees and
software maintenance fees were $4,846,000 during the six months ended June 30,
2003, an increase of $465,000, or 11%, from $4,381,000 during the six months
ended June 30, 2002. The increase in managed service fees was generated
primarily by additional services that were sold to our largest customer during
the second half of 2002. Monthly service fees and software maintenance fees
comprised 74% of total revenue during the six months ended June 30, 2003, and
the six months ended June 30, 2002.

Implementation Fees - Revenues generated from implementation fees during the six
months ended June 30, 2003, increased by $157,000, or 11%, to $1,585,000 from
$1,428,000 during the six months ended June 30, 2002. The increase in
implementation fees is primarily attributable to a $560,000 increase in the
recognition of previously deferred implementation fees from $223,000 during the
six months ended June 30, 2002, to $783,000 during the six months ended June 30,
2003. This change is mainly due to the recognition of $587,000 of implementation
fees for our largest client that were deferred in previous years under the ASP
model. During the first quarter of 2003, this client converted the term licenses
related to its Locator and Lead Management solutions to perpetual licenses,
which required the recognition of previously deferred implementation fees. The
increase in implementation fee revenue associated with the recognition of
previously deferred revenue was partially offset by a $403,000 decrease in
implementation fees caused by a decline in the sales of our solutions.

Software License Fees - Software license fees were $78,000 during the six months
ended June 30, 2003, an increase of $30,000 from the $48,000 of license fees
during the six months ended June 30, 2002. This increase in license fees is
primarily attributable to a significant sale of our Channel Insight solution in
the fourth quarter of 2002 for which implementation was completed during the
first six months of 2003. Software license fees represented approximately 1% of
total revenue during the six months ended June 30, 2003, and during the six
months ended June 30, 2002.

Other Fees - Other fees decreased by $30,000, or 37%, to $51,000 during the six
months ended June 30, 2003 from $81,000 during the six months ended June 30,
2002. The decrease in other fees 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 and negotiated rate reductions in our telecommunications
charges.

Cost of Revenues: Our cost of revenues decreased to 47% of revenues for the six
months ended June 30, 2003 from 51% of revenues for the six months ended June
30, 2002. This is primarily because our revenue increased as a result of the
recognition of previously deferred implementation fees during the first six
months of 2003, as discussed above, which did not generate a proportionate
increase in cost. The total cost of revenues increased by $50,000, or 2%, to
$3,054,000 during the six months ended June 30, 2003, from $3,004,000 during the
six months ended June 30, 2002. This was due, in part, to a $190,000 increase in

                                       18
<PAGE>

our personnel and personnel support costs primarily due to the hiring of
additional personnel to support the growth in service level requirements related
to our Channel Insight solution. A significant portion of this increase is the
result of adding resources to support the $10 million contract and related
upgrades and enhancements that were sold to our largest customer during 2002
pursuant to the contract. We also experienced a $56,000 increase in bonus
expense as a result of the reversal of the 2001 bonus accrual in the second
quarter of 2002; these 2001 bonuses were paid in the form of stock options. Bad
debt expense also increased by $28,000 mainly because we reversed bad debt
expense in the second quarter of 2002 when we collected cash for accounts
receivable that had previously been reserved. The increases in the cost of
revenues associated with personnel costs, bonus expense and bad debt expense
were partially offset by a $109,000 decline in our reimbursable expenses mainly
because of lower telecommunications charges as a result of negotiated rate
reductions and lower system usage due to the decline in our customer base. Our
data center costs also decreased $106,000 mainly as a result of negotiated rate
reductions in our data royalties, as well as a decline in depreciation expense
related to our data center hardware and software. We also experienced a $9,000
reduction in the recognition of implementation expense on contracts that were
deferred under ASP arrangements.

Operating Expenses:
-------------------

Selling and Marketing Expenses - Selling and marketing expenses decreased to 20%
of revenues for the six months ended June 30, 2003 from 30% of revenues for the
six months ended June 30, 2002. The total amount of selling and marketing
expenses decreased by $470,000, or 27%, to $1,292,000 during the six months
ended June 30, 2003 from $1,762,000 during the six months ended June 30, 2002.
The change is partially attributable to a $261,000 decrease in public relations
and advertising and promotion consulting costs. We also experienced a $228,000
reduction in commission expense partly as a result of the decline in the sales
of our solutions and partly because a portion of the commission on the $10
million contract with our largest client was paid during the first half of 2002.
In addition, travel costs decreased $13,000 and personnel related costs
decreased $5,000 as lower recruiting fees and personnel support costs were
partially offset by higher salaries due to an effort to enhance the quality of
our sales team. The decreases in selling and marketing expenses associated with
consulting costs, commissions, travel expenses and personnel related costs were
partially offset by a $31,000 increase in bonus expense as a result of the
reversal of the 2001 bonus accrual in the second quarter of 2002; these 2001
bonuses were paid in the form of stock options. Trade show expenses also
increased by $6,000.

Product Development Expenses - For the six months ended June 30, 2003, product
development expenses increased $73,000, or 12%, to $695,000 from $622,000 for
the six months ended June 30, 2002. This change was primarily due to a $65,000
increase in bonus expense as a result of the reversal of the 2001 bonus accrual
in the second quarter of 2002; these 2001 bonuses were paid in the form of stock
options. The remaining $8,000 increase in product development expenses is
primarily due to increased personnel costs as a result of allocating more of our
existing resources to support product development efforts; these costs were
partially offset by a reduction in depreciation expense. Product development
costs increased to 11% of revenue for the six months ended June 30, 2003
compared to 10% of revenue for the six months ended June 30, 2002.

                                       19
<PAGE>


General and Administrative Expenses - General and administrative expenses
increased to 23% of revenues for the six months ended June 30, 2003 from 19% of
revenues for the six months ended June 30, 2002. The total amount of general and
administrative costs over the same periods increased $354,000, or 31%, to
$1,485,000 during the first half of 2003 from $1,131,000 during the first half
of 2002. This increase was caused primarily by a $207,000 increase in bonus
expense as a result of the reversal of the 2001 bonus accrual in the second
quarter of 2002; these 2001 bonuses were paid in the form of stock options. We
also experienced an $86,000 increase in professional fees, including a 45%
increase on our audit fees. In addition, personnel and personnel support costs
increased $80,000 partly due to salary increases for executive management,
finance, investor relations and human resources personnel. Also contributing to
the increase in personnel costs was a $12,000 compensation expense charge
related to a former director's stock option modification during the second
quarter of 2003. Our insurance costs also increased $19,000 as a result of
increases in our insurance rates. The increases in general and administrative
expenses related to bonus expense, professional fees, personnel costs and
insurance expenses were partially offset by a $19,000 reduction in our
facilities costs mainly because of lower depreciation expense on our office
equipment. We also experienced lower investor relations costs of $19,000.

Income Taxes: 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.

Other Income/Expense: We had net other income of $2,000 during the six months
ended June 30, 2003, compared to net other expense of $1,000 for the six months
ended June 30, 2002. The increase of $3,000 is primarily attributable to lower
interest expense due to a reduction in our capital lease obligations. The
reduction in interest expense was partially offset by lower interest income on
cash and cash equivalents resulting from lower interest rates during the first
half of 2003 relative to the first half of 2002.

Net Income/Loss: Net income for the six months ended June 30, 2003 was $36,000
compared to a net loss of $582,000 for the six months ended June 30, 2002, a
$618,000 increase. This increase is primarily attributable to a $622,000, or
10%, increase in total revenues, which was partially offset by a $4,000 increase
in total expenses and other income and expenses for the six months ended June
30, 2003, compared to the six months ended June 30, 2002, 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 $2,667,000 from the exercise
of stock options and warrants since we began offering our Enterprise 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 our future
operating needs and a $1,000,000 equipment facility to support our future
investing needs. The bank credit facility requires that we meet various
covenants. We failed to meet certain of the financial covenants during the month
of June 2003. We have obtained a waiver for this instance of non-compliance; in
addition, the bank has revised our financial covenants based on the current
business environment and our business plan. We are not permitted to draw on the
bank credit facility if we are out of compliance with any of the covenants. As
of the date of this report we are in compliance with all covenants and we have
no outstanding debt under this facility. In March 2003, we renewed the financing
arrangement through February 14, 2004 under substantially the same terms. The
interest rate on the revolving line of credit is the prime rate plus 1 percent,
and the interest rate on the equipment facility is the U.S. Treasury note yield
to maturity for a term equal to 36 months as quoted in the Wall Street Journal
plus 587 basis points.

                                       20
<PAGE>

We had cash and cash equivalents of $2,679,000 at June 30, 2003, compared to
$2,490,000 at December 31, 2002. The increase of $189,000 is due to $385,000 of
cash generated by our operating activities, which was partially offset by
capital expenditures and principal payments on debt obligations of $150,000 and
$46,000, respectively.

Net cash generated by operating activities during the six months ended June 30,
2003, was $385,000, compared to net cash used in operating activities of $8,000
during the six months ended June 30, 2002. The change of $393,000 is primarily
due to a $618,000 decrease in our net loss, which was partially offset by
working capital and non-cash charges.

Cash used in investing activities increased to $150,000 for the six months ended
June 30, 2003, compared to cash used in investing activities of $18,000 for the
six months ended June 30, 2002. The change of $132,000 is mainly due to an
increase in purchases of computer hardware for our data centers.

Net cash used in financing activities during the six months ended June 30, 2003
was $46,000, which was for principal payments on debt obligations. Net cash
provided by financing activities during the six months ended June 30, 2002 was
$111,000, consisting of $154,000 in proceeds from the exercise of stock options,
net of $43,000 of principal payments on debt obligations.

Variation in the timing of our cash receipts and disbursements can significantly
impact our overall cash flow for a given period; 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 or debt financing, or that any such financing can be obtained 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):

Contractual Obligations                     Payment Due by Period
                              ------------------------------------------------
                                        Less Than   1 - 3     4 - 5     After
                               Total     1 year     years     years    5 years
                               -----     ------     -----     -----    -------
Capital Lease Obligations     $   174    $   77    $    97    $    -    $   -
Operating Leases                1,870       313        945       612        -
Total Contractual Cash
  Obligations                 $ 2,044    $  390    $ 1,042    $  612    $   -

We lease approximately 27,000 square feet of office space at a rate of $16.50
per square foot for the period between October 1, 2002 and June 30, 2003. The
rate increases to $17.00 per square foot from July 2003 through September 2005
and $18.00 per square foot from October 2005 through September 2007, when the
lease expires. The new lease contains a refurbishment allowance of $326,000, of
which we utilized approximately $35,000 to improve the premises and $291,000 to
offset a portion of our rent obligations from September 2002 through May 2003.

                                       21
<PAGE>

Recent Accounting Pronouncements
--------------------------------

In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment
of SFAS No. 123. If we were to adopt the fair value method, we believe there
would be a material impact on our results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity, ("SFAS 150").
The adoption of SFAS 150 will not have a material effect on the Company's
financial statements.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. The adoption of FIN 45 did not have an
impact on the Company's consolidated financial position or results of operations
in the second quarter of 2003.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51 ("FIN 46"). We do
not believe that the adoption of this standard will have a material impact on
our financial position or results of operations.

In November 2002, the Emerging Issues Task Force reached a consensus on Issue
No. 00-21, Revenue Arrangements with Multiple Deliverables ("EIFT No. 00-21").
We do not believe the EITF No. 00-21 will have a material impact on our
financial position or results of operations.

For a more complete description of these accounting pronouncements, please refer
to Note 1 to the accompanying unaudited financial statements.

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. Such statements are 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    Continue 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.

                                       22
<PAGE>

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 the section entitled "Related Business Risks and
Assumptions: beginning on page 27 of our Annual Report filed with the Securities
and Exchange Commission on Form 10-KSB for the fiscal year ended December 31,
2002.

Item 3. Controls and Procedures.
--------------------------------

Our management has evaluated, with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of our disclosure
controls and procedures, as defined in Exchange Act Rules 13a-15(e) and
15d-15(e), as of June 30, 2003. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of June 30, 2003 in timely alerting them to
material information required to be included in our reports filed with or
submitted to the Securities and Exchange Commission. There was no change in our
internal control over financial reporting that occurred during our most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.




                                       23
<PAGE>

                           PART II. OTHER INFORMATION


Item 4. Submission of Matters to a Vote of Securities Holders
-------------------------------------------------------------

     The Company held its annual meeting of stockholders on May 9, 2003. In
     connection with the annual meeting, pursuant to Regulation 14A under the
     Securities Act of 1934, we furnished our stockholders with a definitive
     proxy statement with respect to the matters acted upon. At the meeting,
     four directors were re-elected to their positions to serve until the next
     annual meeting of our stockholders or until their successors are elected
     and have qualified. The following votes were cast with respect to the
     election of directors:

                                                      For            Withheld

     Michael Johnson                               8,446,982          25,077
     Duane Wentworth                               8,441,675          30,384
     Jeffrey Peotter                               8,443,687          28,372
     Al Spies                                      8,446,982          25,077

     The Company also submitted three additional proposals for shareholder
     consideration, all of which were approved:

     Proposal #2:

          Ratification of the appointment of Deloitte & Touche, LLP as the
          independent auditors of the Company for the fiscal year ended December
          31, 2003.

             For           Against         Abstain         Broker Non-Votes

          8,447,368          9,117          15,574                0


     Proposal #3:

          Amendment to the Company's Certificate of Incorporation to increase
          the total number of authorized shares of common stock from 15,000,000
          to 40,000,000.

             For           Against         Abstain         Broker Non-Votes

          8,157,071        300,608          14,380                0


     Proposal #4:

          Amendment to the Company's 1999 Stock Option Plan to increase the
          number of shares of common stock available for issuance from 3,500,000
          to 6,000,000.

             For           Against         Abstain         Broker Non-Votes

          2,137,126        620,531           9,509            5,704,893


                                       24
<PAGE>

          With respect to Proposal #4, brokers and other nominees were not
          permitted to vote the shares of common stock held of record by them
          without specific instructions from the beneficial owners of such
          shares of common stock. The broker non-votes that resulted when such
          brokers voted with respect to the other proposals but did not vote
          with respect to Proposal #4 were not counted as votes cast in the
          tabulation of votes with respect to Proposal #4 in accordance with
          Delaware law. Because only a majority of the votes cast with respect
          to Proposal #4 was required to approve the amendment, the broker
          non-votes had no impact on the voting results.






                                       25
<PAGE>

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

     (a)  Exhibits

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

          3.1             Certificate of Incorporation of InfoNow Corporation
                          as amended

          10.1            InfoNow 1999 Stock Option Plan, as amended

          31              Rule 13a-14(a) certifications

          32              Section 1350 certifications



     (b)  Reports on Form 8-K.

          On April 24, 2003 the Company filed a Form 8-K under items 7 and 9
          thereof to report that it had announced its financial results for the
          quarter ended March 31, 2003.



                                       26
<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:  August 14, 2003                      By: /s/ Michael W. Johnson
                                            --------------------------
                                            Michael W. Johnson, Chief Executive
                                            Officer



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


August 14, 2003      Chief Financial Officer and            /s/ Harold R. Herbst
                     Executive Vice President               --------------------
                     (Principal Financial Officer)          Harold R. Herbst


August 14, 2003      Vice President, Controller and         /s/ James L. Medina
                     Treasurer                              --------------------
                     (Principal Accounting Officer)         James L. Medina











                                       27
<PAGE>

                                  EXHIBIT INDEX


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

3.1              Certificate of Incorporation of InfoNow Corporation as amended

10.1             InfoNow 1999 Stock Option Plan, as amended

31               Rule 13a-14(a) certifications

32               Section 1350 certifications








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