================================================================================

                       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 September 30, 2001

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


                        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)       (Zip Code)

                                  303-293-0212
                 ----------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 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.

                                 [X] Yes [ ] No

As of November 14, 2001, there were 8,204,918 shares of the Issuer's common
stock outstanding.

Transitional Small Business Disclosure Format                 Yes     No  X
                                                                 -----  -----

<PAGE>


                               INFONOW CORPORATION

                                      INDEX

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

ITEM 1.   FINANCIAL STATEMENTS

          Unaudited Balance Sheets - September 30, 2001 and
            December 31, 2000..................................................3

          Unaudited Statements of Operations - For the Three
            and Nine Months Ended September 30, 2001 and 2000..................4

          Unaudited Statements of Cash Flows - For the Nine
            Months Ended September 30, 2001 and 2000...........................5

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


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION............8


                           PART II. OTHER INFORMATION


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K................................... 14

          SIGNATURES..........................................................15


                                       2
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                                      PART I - FINANCIAL INFORMATION
                                      ------------------------------

ITEM 1. FINANCIAL STATEMENTS
                                            INFONOW CORPORATION
                                              BALANCE SHEETS
                                                (UNAUDITED)
                            (In thousands, except share and per share amounts)


ASSETS                                                             September 30, 2001      December 31, 2000
------                                                             ------------------      -----------------
<S>                                                                     <C>                     <C>
CURRENT ASSETS:
Cash and cash equivalents                                               $  1,976                $  4,013
Restricted cash                                                               17                      76
Accounts receivable, net of allowance
   of $59 and $49, respectively                                            1,809                   1,547
Deferred implementation costs                                                249                     295
Prepaids and other current assets                                          1,054                     335
                                                                        --------                --------
         Total current assets                                              5,105                   6,266

PROPERTY AND EQUIPMENT, net                                                1,886                   2,222

Non-current deferred implementation costs                                    186                     274
Other assets and deferred charges                                             29                      46
                                                                        --------                --------
TOTAL ASSETS                                                            $  7,206                $  8,808
                                                                        ========                ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
Notes payable and capital leases - current portion                      $    147                $    173
Accounts payable and accrued expenses                                      1,860                   1,033
Short-term deferred revenues                                               1,822                   1,761
                                                                        --------                --------
         Total current liabilities                                         3,829                   2,967

Notes payable and capital leases, net of current portion                     256                     362
Long-term deferred revenues                                                  768                   1,156

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, 800,000 shares authorized,
       250,000 shares issued and outstanding at September 30, 2001
       and December 31, 2000, liquidation preference of
       $ 5,000,000                                                          --                      --
Common stock, $.001 par value; 15,000,000 shares authorized
     8,199,494 and 8,146,244 shares issued and outstanding at
     September 30, 2001 and December 31, 2000, respectively                    8                       8
Additional paid-in capital                                                38,905                  38,811
Accumulated deficit                                                      (36,560)                (34,496)
                                                                        --------                --------
         Total stockholders' equity                                        2,353                   4,323
                                                                        --------                --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $  7,206                $  8,808
                                                                        ========                ========


                The accompanying notes are an integral part of these financial statements.

                                                     3
<PAGE>


                                         INFONOW CORPORATION
                                      STATEMENTS OF OPERATIONS
                                             (UNAUDITED)
                         (In thousands, except share and per share amounts)


                                                 Three Months                  Nine Months
                                              Ended September 30,           Ended September 30,
                                            -------------------------    --------------------------
                                                2001          2000           2001          2000
                                                ----          ----           ----          ----
                                                           (Restated)                    (Restated)
                                                            (Note 3)                      (Note 3)

REVENUES                                    $     3,951   $     1,799    $     9,904    $     5,230
COST OF REVENUES                                  1,528         1,248          4,609          3,325
                                            -----------   -----------    -----------    -----------
      Gross margin                                2,423           551          5,295          1,905
                                            -----------   -----------    -----------    -----------
OPERATING EXPENSES:
Selling and marketing                             1,243         1,233          4,032          3,538
Product development                                 389           399          1,201          1,063
General and administrative                          745           542          2,175          1,532
                                            -----------   -----------    -----------    -----------
     Total operating expenses                     2,377         2,174          7,408          6,133
                                            -----------   -----------    -----------    -----------

INCOME/(LOSS) FROM OPERATIONS                        46        (1,623)        (2,113)        (4,228)

OTHER INCOME:
Interest income, net                                  4            98             49            276
                                            -----------   -----------    -----------    -----------

INCOME/(LOSS) BEFORE EFFECT
 OF CHANGE IN ACCOUNTING
 PRINCIPLE                                           50        (1,525)        (2,064)        (3,952)

CUMULATIVE EFFECT OF CHANGE
 IN ACCOUNTING PRINCIPLE                           --            --             --           (1,188)
                                            -----------   -----------    -----------    -----------
NET INCOME/(LOSS) APPLICABLE
 TO COMMON STOCKHOLDERS                     $        50   $    (1,525)   $    (2,064)   $    (5,140)
                                            ===========   ===========    ===========    ===========

BASIC EARNINGS/(LOSS) PER
 COMMON SHARE:
   Before accounting change                 $       .01   $      (.19)   $      (.25)   $      (.51)
   Cumulative effect of change in
     accounting principle                          --            --             --             (.15)
                                            -----------   -----------    -----------    -----------

BASIC EARNINGS/(LOSS) PER
 SHARE                                      $       .01   $      (.19)   $      (.25)   $      (.66)
                                            ===========   ===========    ===========    ===========
BASIC AVERAGE COMMON SHARES
 OUTSTANDING                                  8,171,526     8,144,000      8,157,264      7,815,000
                                            ===========   ===========    ===========    ===========

DILUTED EARNINGS/(LOSS) PER COMMON SHARE:
   Before accounting change                 $       .01   $      (.19)   $      (.25)   $      (.51)
   Cumulative effect of change in
     accounting principle                          --            --             --             (.15)
                                            -----------   -----------    -----------    -----------


DILUTED EARNINGS/(LOSS) PER
 SHARE                                      $       .01   $      (.19)   $      (.25)   $      (.66)
                                            ===========   ===========    ===========    ===========

DILUTED AVERAGE COMMON SHARES OUTSTANDING     9,218,641     8,144,000      8,157,264      7,815,000
                                            ===========   ===========    ===========    ===========


             The accompanying notes are an integral part of these financial statements.

                                                  4
<PAGE>


                               INFONOW CORPORATION
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (In thousands)

                                                                 Nine Months
                                                             Ended September 30,
                                                             -------------------
                                                               2001       2000
                                                               ----       ----
                                                                       (Restated)
                                                                        (Note 3)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                     $(2,064)   $(5,140)
Adjustments to reconcile net loss to net cash used in
operating activities:
     Depreciation and amortization                               819        557
     Cumulative effect of change in accounting principle        --        1,188
     Stock based compensation                                     35         18
     Changes in operating assets and liabilities:
       Restricted cash                                            59       --
       Accounts receivable, net of allowance                    (262)      (964)
       Other current assets                                     (673)      (133)
       Other assets and deferred charges                         105        (58)
       Accounts payable and other liabilities                    758        (91)
       Unearned revenue and prepaid service fees                (327)       413
                                                             -------    -------
Net cash used in operating activities                         (1,550)    (4,210)

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                         (414)    (1,203)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net proceeds from the issuance of common stock             --        4,645
     Proceeds from the exercise of options and warrants           59        688
     Principal payments on debt and lease obligations           (132)       (69)
                                                             -------    -------
Net cash flows provided by (used in) financing activities        (73)     5,264
                                                             -------    -------

Net decrease in cash and cash equivalents                     (2,037)      (149)

CASH AND CASH EQUIVALENTS:
   Beginning of period                                         4,013      5,356
                                                             -------    -------

   End of period                                             $ 1,976    $ 5,207
                                                             =======    =======

Supplemental Information:
   Cash paid during the period for interest                  $    36    $     6

Non cash investing and financing activities:
   Non cash purchases of property and equipment              $    69        310


   The accompanying notes are an integral part of these financial statements.

                                        5
</TABLE>
<PAGE>


                               INFONOW CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The financial statements are unaudited and 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.

     The balance sheet as of December 31, 2000, has been derived from audited
financial statements. The financial statements should be read in conjunction
with the financial statements and accompanying notes contained in InfoNow's (the
"Company") Form 10-K for the fiscal year ended December 31, 2000. The results of
operations for the three- and nine-month periods ended September 30, 2001 are
not necessarily indicative of the results that will be achieved for the entire
fiscal year ending December 31, 2001 or any other subsequent period.


Note 2. EQUITY TRANSACTIONS

     On March 30, 2000 the Company sold 526,316 shares of common stock in a
private placement to Putnam Information Sciences Trust, NR Ventures, Ltd., and
RIT Capital Partners, PLC. Putnam purchased 105,263 shares of common stock, and
NR Ventures and RIT Capital Partners collectively purchased 421,053 shares of
common stock. The private placement resulted in gross proceeds to the Company of
$5,000,000, or $9.50 per share. Net cash proceeds of $4,645,000 were realized
after deducting issuance costs of $355,000.

     During the first nine months of 2000, the Company issued 381,100 shares of
common stock as a result of the exercise of options and warrants by employees.
The per share price range of $0.79 to $5.99 resulted in proceeds to the Company
of $688,000. During the first nine months of 2001, the Company issued 53,250
shares of common stock as a result of the exercise of options by employees. The
per share price range of $0.79 to $1.40 resulted in proceeds to the Company of
$59,000.

     During 2001, the Company modified certain terms of two officers' stock
option agreements. As a result of these modifications, the Company recognized
$35,000 of compensation expense for the difference between the exercise price of
the options and the fair value of the common stock on the date of the
modification.


Note 3. RESTATEMENT OF PRIOR PERIOD

     Effective March 16, 2000, the Company changed its method of accounting for
implementation fees to deferring non-license initial implementation fees related
to service contracts over the expected term of the customer relationship. Prior
to this change in accounting principle, the Company recognized revenue from
non-license initial implementation fees using the percentage-of-completion
method as the implementation was completed. This change in accounting principle
is based on guidance provided in the Securities and Exchange Commission Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, and
Emerging Issues Task Force 00-3, "Application of AICPA Statement of Position
97-2, Software Revenue Recognition, to Arrangements that Include the Right to
Use Software Stored on Another Entity's Hardware." As a result of this change in
accounting principle, the Company recorded a charge of $1,188,000 as the
cumulative effect of the change in accounting principle consisting of $1,631,000
in net deferred revenues and $443,000 in net deferred implementation costs. As
of September 30, 2001, the remaining deferred revenue and expense balances
associated with the cumulative effect of this accounting change were $426,000
and $139,000, respectively.

                                       6
<PAGE>


Note 4. RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001 the Financial Accounting Standards Board (FASB) issued SFAS
No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible
Assets." SFAS No. 141 requires business combinations initiated after June 30,
2001 to be accounted for using the purchase method of accounting, and broadens
the criteria for recording intangible assets separate from goodwill. The
provisions of SFAS No. 141 had no impact on the Company's financial statements.
SFAS No. 142 requires the use of a nonamortization approach to account for
purchased goodwill and certain intangibles. Under a nonamortization approach,
goodwill and certain intangibles will not be amortized into results of
operations, but instead would 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 provisions
of SFAS No. 142 are required to be applied in the Company's fiscal year
beginning in 2002, but management does not believe the provisions will have a
material 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. SFAS No. 144 is effective for the Company's fiscal year
beginning in 2002, but is not expected to have a material impact on the
Company's financial statements.


                                       7
<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
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, including our Annual Report on Form 10-K for
the fiscal year ended December 31, 2000.


General Information and Overview

     We provide Enterprise Channel Management solutions that include e-Business
software and services for Fortune 1000 companies, which sell locally, through
dealers, distributors or branches, also known as channel partners. Our
technology and services enable traditional companies to use the power of the
Internet to sell to and service end customers in collaboration with their
channel partners. Through our software and services, we provide a comprehensive,
Internet-based business solution that enables companies to increase revenues,
lower operating costs and deliver a significant return on investment. Our
managed service centers house software, databases and systems that respond to
inquiries received across a client's enterprise, including Internet sites,
interactive voice response systems and call centers.

     As of September 30, 2001, we had 56 clients. Most of our clients are large
multi-national companies who have extensive channel networks. Our clients
include Hewlett-Packard, Compaq, Avaya, Visa, Bank of America, First Union,
Ariens, Maytag and Miller Electric, a major subsidiary of Illinois Tool Works.

     Our software and services are typically sold through annual or multi-year
contracts. The initial term of these contracts is typically one to three years
and contracts are renewable upon mutual agreement of InfoNow and the client. A
typical contract fee could include five components: a software license fee, an
implementation fee, a license maintenance fee, a recurring managed service fee
and a variable monthly fee. The license fee applies to the configured software
used in the client's application. The implementation fee applies to the
development of a tailored, client-specific interface to the system and the
design and implementation of client business rules and databases. The license
maintenance fee covers updates to the client's software as well as any
reconfiguration or maintenance on the software necessary during the contract
term. The monthly or annual managed service fee applies to hosting and provision
of the service as well as performance of recurring maintenance to client
databases and core systems. The variable monthly fee includes charges for system
usage in excess of contracted thresholds, as well as pass-through charges for
voice recordings, faxes, geocoding and telecommunications. Revenue from license
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 or the implementation period as project milestones are
achieved.

     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. Prior to our adoption of SAB 101, we
recognized revenue from all implementation fees under the
percentage-of-completion method based on the achievement of project milestones.
The guidelines under SAB 101 require that we recognize revenues from non-license
initial implementation fees over the expected term of the customer relationship.
In accordance with SAB 101, we have also deferred direct incremental costs
related to these deferred revenues. We recorded a charge of $1,188,000 in the
first quarter of 2000 to record the net cumulative effect of this change in
accounting principle consisting of $1,631,000 of deferred revenue net of
$443,000 of deferred costs. As of September 30, 2001, the remaining deferred

                                       8
<PAGE>


revenue and expense balances associated with the cumulative effect of the
accounting change were $426,000 and $139,000, respectively. Implementation fees
related to enhancements of existing customer systems continue to be recognized
under the percentage-of-completion method.

     During the first quarter of 2001, we began offering a software license
purchase option, designed to expand the addressable market for our technology by
meeting the needs of companies who wish to purchase our software. Because the
sale of our software requires client-specific configuration, both license and
implementation revenue is recognized under the percentage-of-completion method.

     We have received correspondence from Murex Licensing Corporation asserting
that certain technologies employed by the Company infringe on patents owned by
Murex. While we are continuing to evaluate Murex's position, at this point we
believe that the patent infringement claims asserted in the correspondence from
Murex are without merit, and we intend 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.


Results of Operations

Comparison of the Three Months Ended September 30, 2001 to the Three Months
Ended September 30, 2000
---------------------------------------------------------------------------

     Revenues. Our revenues consist primarily of implementation fees, license
fees and monthly managed service fees from new and existing customers. Total
revenues increased by $2,152,000, or 120%, to $3,951,000 for the three months
ended September 30, 2001 from $1,799,000 for the same period in the previous
year. Of the increase in total revenues, $964,000 was the result of one
significant contract we secured with an existing customer during the second
quarter of 2001. The third quarter revenue from this contract was comprised of
$451,000 in recurring managed service fees, $408,000 in implementation fees and
$105,000 of license fees. Revenues generated from implementation fees increased
by $1,057,000, or 260%, to $1,464,000 from $407,000 during the three months
ended September 30, 2000. Approximately $782,000 of the increase in
implementation fees was generated by additional products and services sold to
new and existing customers during the third quarter of 2001. The remaining
$275,000 of the increase in implementation fees was primarily attributable to
the recognition of revenue on contracts that were deferred under SAB 101.
Recurring managed service fees were $1,930,000 for the three months ended
September 30, 2001, an increase of $629,000, or 48%, from $1,301,000 for the
three months ended September 30, 2000. This increase is the result of additional
products sold to new and existing customers. Recurring managed service fees
comprised 49% of total revenue during the three months ended September 30, 2001,
compared to 72% during the same period a year earlier. License fees were
$502,000 for the three months ended September 30, 2001, representing 13% of
total revenues. We did not sell licenses during the three months ended September
30, 2000, accordingly, the increase over the comparable period last year is
$502,000. Miscellaneous revenues decreased by $36,000, or 40%, to $55,000 from
$91,000. The decrease in miscellaneous revenues is attributable to a decrease in
the number of contracts with charges for voice recordings, faxes, geocoding and
telecommunications, as well as a reduction in interactive voice response
transaction volume.

     Cost of Revenues. Our cost of revenues includes technical personnel
salaries, 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 deferred implementation
expenses. The cost of revenues decreased to 39% of revenues for the three-month
period ended September 30, 2001 from 69% of revenues for the three-month period
ended September 30, 2000. The decrease is attributable to the hiring of
additional technical personnel during the third quarter of 2000 in advance of
expected future revenue increases. In the third quarter of 2001, anticipated
revenue increases were realized without a proportionate increase in costs. The
total cost of revenues over the same period increased by 22%, or $280,000. This

                                       9
<PAGE>


increase is a result of increased costs in creating and expanding an
infrastructure for delivering our services, including $209,000, or 75% of the
increase, related to the hiring of additional technical personnel to implement
and maintain services to our clients. The remaining $71,000 increase in costs is
primarily attributable to an 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. The total costs of revenues are expected to continue to
increase as additional customers use our services.

     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 31% of revenues for the
three-month period ended September 30, 2001 from 69% of revenues for the
three-month period ended September 30, 2000. The total amount of selling and
marketing expenses increased by $10,000, or 1%, to $1,243,000 for the three
months ended September 30, 2001, from $1,233,000 for the three months ended
September 30, 2000. The change is partially attributable to a $146,000, or 113%,
increase in commissions generated by higher sales levels. We also experienced a
$204,000 increase in personnel related costs as a result of additions to our
sales and marketing teams. These increases were partially offset by a $298,000
decrease in consulting costs resulting from the increase in personnel. In
addition, we experienced a $42,000 reduction in travel expenses and personnel
support costs attributable to successful cost management activities.

     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 of subcontracted costs and
salaries and related 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,
personnel levels, and related costs, have remained relatively constant. However,
for the three months ended September 30, 2001, product development costs
decreased $10,000, or 3%, to $389,000 from $399,000 during the same period in
2000. This is primarily attributable to a slight reduction in the number of
Product Development personnel resulting from the allocation of certain resources
to the service implementation team to support the growth of our business.
Product development costs as a percentage of revenue decreased to 10% of revenue
for the three months ended September 30, 2001 from 22% of revenue for the
three-month period ended September 30, 2000. The decrease is attributable to the
hiring of additional product development personnel in the second quarter of 2000
in advance of expected future revenue increases.

     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 19% of revenues for the three-month period ended September 30, 2001
from 30% of revenues for the three-month period ended September 30, 2000. The
total amount of general and administrative costs increased by $203,000, or 37%,
to $745,000 for the three months ended September 30, 2001, from $542,000 in the
three months ended September 30, 2000. We experienced a $156,000 increase in
salaries, bonuses and benefits as a result of salary increases and bonuses for
key personnel, as well as hiring additional corporate staff to handle increased
business activity and support business initiatives. Our facilities-related costs
increased by approximately $50,000 as a result of the expansion of our office
facilities to accommodate growth in the business and the number of employees.
Legal fees increased by $44,000 as a result of increased business and investor
relations activities. The increase in general and administrative expenses
related to personnel, facilities and legal costs was partially offset by
decreases in professional fees and travel and entertainment of $25,000 and
$22,000, respectively.

     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.

                                       10
<PAGE>


     Non-Operating Income. Net non-operating income was $4,000 for the three
months ended September 30, 2001 compared to $98,000 for the three months ended
September 30, 2000. The decrease is primarily attributable to lower interest
income on cash and cash equivalents. Cash and cash equivalents decreased to
$1,976,000 at September 30, 2001 from $5,207,000 at September 30, 2000.

     Net Income/Loss. Net income for the three months ended September 30, 2001
was $50,000 compared to a net loss of $1,525,000 for the three months ended
September 30, 2000, a $1,575,000 increase. This increase is attributable to a
$2,152,000, or 120%, increase in total revenues and a $483,000, or 14%, increase
in total expenses for the quarter ended September 30, 2001, compared to the
quarter ended September 30, 2000 as discussed above.

Comparison of the Nine Months Ended September 30, 2001 to the Nine Months Ended
September 30, 2000
-------------------------------------------------------------------------------

     Revenues. Total revenues increased by $4,674,000, or 89%, to $9,904,000 for
the nine months ended September 30, 2001 from $5,230,000 during the same period
in the previous year. Approximately $1,778,000, or 38%, of this increase was
related to one contract, as discussed above. The revenue from this contract was
comprised of $1,060,000 in implementation fees, $451,000 in recurring managed
service fees and $267,000 of license fees. Implementation fees increased by
$2,894,000, or 280%, to $3,929,000 from $1,035,000, and managed service fees
increased by $941,000, or 24%, to $4,908,000 from $3,967,000. These increases
were attributable in part to sales of additional products and services to new
and existing customers during the nine months ended September 30, 2001. Also
contributing to the increase in implementation fees was an $870,000 increase in
the recognition of revenue on contracts that were deferred under SAB 101. In
addition, license fees were $883,000 during the nine months ended September 30,
2001. We did not sell licenses during the nine months ended September 30, 2000,
accordingly, the increase over the comparable period last year is $883,000.
Miscellaneous revenues decreased by $44,000, or 19%, to $184,000 from $228,000.
The reduction in miscellaneous revenues is attributable to a decrease in the
number of contracts with charges for voice recordings, faxes, geocoding and
telecommunications, as well as a reduction in interactive voice response
transaction volume. Bad debt expense of $37,000 was incurred during the nine
months ended September 30, 2001, while there was no bad debt expense during the
same period in 2000.

     Cost of Revenues. Our cost of revenues for the nine months ended September
30, 2001 increased by $1,284,000, or 39%, to $4,609,000 from $3,325,000. This
increase is a result of increased costs in creating and expanding an
infrastructure for delivering our services, as discussed above. Cost of revenues
was 47% of revenues for the nine-month period ended September 30, 2001, compared
to 64% for the same period a year earlier. This change is the result of
increasing our resource levels during the first half of 2000 in advance of
anticipated revenue increases. As a result, the revenue increases generated
during the nine months ended September 30, 2001 did not result in proportionate
increases in cost.

     Selling and Marketing Expenses. Selling and marketing expenses decreased to
41% of revenues for the nine-month period ended September 30, 2001 from 68% of
revenues for the nine-month period ended September 30, 2000. The total amount of
selling and marketing expenses increased by 14%, or $494,000, to $4,032,000 from
$3,538,000. The overall increase is primarily the result of the addition of
sales and marketing personnel, including recruiting costs, as well as increases
in commissions due to higher sales levels. We experienced an $810,000 increase
in salaries and related costs as well as a $376,000 increase in sales
commissions. These increases were partially offset by a $594,000 decrease in
consulting and other external service fees, as well as decreases of $85,000 in
travel costs and $13,000 in personnel support costs.

     Product Development Expenses. Total product development expenses decreased
to 12% of revenues for the nine-month period ended September 30, 2001 from 20%
of revenues for the nine-month period ended September 30, 2000. The total amount

                                       11
<PAGE>


of product development expenses increased by $138,000 to $1,201,000 for the
nine-month period ended September 30, 2001 from $1,063,000 in the nine-month
period ended September 30, 2000. This increase is primarily the result of
increased salaries and other personnel costs associated with the hiring of
additional product development employees to support growth in our business.

     General and Administrative Expenses. General and administrative expenses
decreased to 22% of revenues for the nine-month period ended September 30, 2001
from 29% of revenues for the nine-month period ended September 30, 2000. The
total amount of general and administrative expenses increased by 42%, or
$643,000. The overall increase is primarily the result of additional personnel
and facilities costs related to growth in business activity.

     Non-Operating Income. Net non-operating income was $49,000 for the nine
months ended September 30, 2001 compared to $276,000 for the nine months ended
September 30, 2000. The decrease is attributable to lower interest income on
cash and cash equivalents. Cash and cash equivalents decreased to $1,976,000 at
September 30, 2001 from $5,207,000 at September 30, 2000.

     Net Loss. The net loss before cumulative effect of accounting change for
the period ended September 30, 2001 was $2,064,000 compared to a $3,952,000 net
loss for the period ended September 30, 2000, a $1,888,000 decrease. This
decrease is attributable to increased revenues associated with our continued
growth and small corresponding increases in costs, as discussed earlier.


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 $2,426,000
from the exercise of stock options and warrants since we began offering our
solutions in 1996.

     We had cash and cash equivalents of $1,976,000 at September 30, 2001,
compared to $4,013,000 at December 31, 2000. The decrease is associated with
operating losses as we increased spending on product development, sales and
marketing, among other areas. We also hired additional personnel to meet our
current and projected growth demands.

     Net cash used in operating activities during the nine months ended
September 30, 2001 was $1,550,000, compared to net cash used in operating
activities of $4,210,000 during the nine months ended September 30, 2000. This
decrease is primarily due to a $1,888,000 decrease in net loss before cumulative
effect of accounting change as well as changes in working capital and non-cash
charges.

     Cash used in investing activities decreased to $414,000 for the nine-month
period ended September 30, 2001 from $1,203,000 for the nine-month period ended
September 30, 2000. The cash used in investing activities during the nine months
ended September 30, 2000 was related to the purchase of computer hardware and
software for our data centers and additional personnel, as well as for leasehold
improvements. We increased our capacity levels during the first half of 2000 in
anticipation of future business growth, which caused cash expenditures related
to investing activities to be greater during the nine months ended September 30,
2000 than during the nine months ended September 30, 2001.

     Net cash used in financing activities for the nine months ended September
30, 2001 was $73,000, which consisted of $132,000 in principal payments on
capital lease obligations, net of $59,000 in proceeds received from the exercise
of stock options. Net cash generated from financing activities during the nine
months ended September 30, 2000 was $5,264,000, which included $5,000,000 of
cash received from the issuance of common stock and $688,000 from the exercise
of stock options net of $355,000 of costs incurred related to the common stock
issuance. Payments on capital lease obligations during the nine months ended
September 30, 2000 were $69,000.

                                       12
<PAGE>


     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 and that planned
expenditures for sales, marketing, capital equipment and administrative costs
will not 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.

     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.


Risks Associated with Forward Looking Statements

     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    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-K for the fiscal year ended December 31, 2000.

                                       13
<PAGE>


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


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

               Included as exhibits are the items listed on the Exhibit Index.
               The Registrant will furnish a copy of any of the exhibits listed
               upon payment of $5.00 per exhibit to cover the costs to the
               Registrant of furnishing such exhibit.

     (b) Reports on Form 8-K

               None




                                       14
<PAGE>


                                   SIGNATURES

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

     Dated:  November 14, 2001

                                            INFONOW CORPORATION

                                            (Registrant)



                                            /s/  Michael W. Johnson
                                            -----------------------------------
                                                 Michael W. Johnson
                                                 Chairman and Chief Executive
                                                 Officer (Principal Executive
                                                 Officer)


                                            /s/  Harry R. Herbst
                                            -----------------------------------
                                                 Harry R. Herbst
                                                 Chief Financial Officer
                                                 (Principal Financial Officer)


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


                                       15

<PAGE>


                                  EXHIBIT INDEX

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

2.1       Stock Purchase Agreement for Common Stock between the Company and
          Putnam Investors dated March 30, 2000 (E)

3.1       Certificate of Incorporation of the Company, as amended (A)

3.1.1     Certificate of Designation, Preferences and Rights of Series B
          Convertible Participating Preferred Stock of InfoNow Corporation (D)

3.2       Bylaws of the Company, as amended (B)

4.1       Form of Common Stock certificate for the Company's Common Stock, $.001
          par value per share (B)

4.4       Form of Class C Warrant (C)

4.5       Form of Series B Convertible Preferred Stock Certificate (D)

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

(A)  Incorporated by reference to the Company's Annual Report filed on Form 10-K
     for the year ended December 31, 1996.

(B)  Incorporated by reference to the Company's Registration Statement 33-43035
     on Form S-1 dated February 14, 1992.

(C)  Incorporated by reference to the Company's Post-Effective Amendment No. 2
     to Registration Statement No. 33-43035 on Form S-1 dated July 13, 1993.

(D)  Incorporated by reference to the Company's Annual Report filed on Form
     10-KSB for the year ended December 31, 1999.

(E)  Incorporated by reference to the Company's report on Form 8-K dated May 2,
     2000.