##### 









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-Q



|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|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



|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|o | Transition Report Pursuant to Section 13
	or 15(d) of the Securities Exchange Act of 1934



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Commission File Number: 0-29625



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HIGH SPEED NET SOLUTIONS, INC.

(Exact Name of Registrant as Specified in
its Charter)


|                                                                       |  |                                                        |  |                                                   
|---------------------------------------------------------------------- |  | ------------------------------------------------------ |  | --------------------------------------------------
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Florida(State or other Jurisdiction of
	Incorporation or Organization) |  | 7389(Primary Standard Industrial
	Classification Code) |  | 65-0185306(I.R.S. Employer
	Identification Number)



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434 Fayetteville Street Mall, Suite 600

Raleigh, North Carolina 27601


(919) 807-5600


(Address, Including Zip Code, and Telephone
Number, Including Area Code


of Registrants Principal Executive
Offices)




---

Indicate by check mark whether the registrant: 
(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), x Yes   No; and (2) has been subject to such filing
requirements for the past
90 days x Yes   No

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest
practicable date:

|                                        |  |                                   
|--------------------------------------- |  | ----------------------------------
|Class                                   |  | Outstanding as of October 31, 2001
|Common stock, par value $.001 per share |  | 36,392,201                        



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##### 



HIGH SPEED NET SOLUTIONS, INC.

FORM 10-Q


FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001


TABLE OF CONTENTS

|         |  |                                                                                        |                                                                                                           |          |    |   | 
|-------- |  | -------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -------- | -- | - | 
|         |  |                                                                                        |                                                                                                           | Page No.
|         |  |                                                                                        |                                                                                                           |         
|Part I   |  | Financial Information                                                                  |                                                                                                           |          | 1  |  
|        
|        
|        
|        
|Item  1. |  | Financial Statements (Unaudited)                                                       |                                                                                                           |          | 1  |  
|        
|        
|        
|        
|         |  |                                                                                        | Consolidated Balance Sheets as of
	September 30, 2001 (Unaudited) and December 31, 2000                   |          |    | 1 | 
|        
|        
|        
|        
|         |  |                                                                                        | Consolidated Statements of Operations for the
	Three Months Ended September 30, 2001 and 2000 (Unaudited) |          |    | 2 | 
|        
|        
|        
|        
|         |  |                                                                                        | Consolidated Statements of Operations for the
	Nine Months Ended September 30, 2001 and 2000 (Unaudited)  |          |    | 3 | 
|        
|        
|        
|        
|         |  |                                                                                        | Consolidated Statements of Shareholders
	Equity as of September 30, 2001 (Unaudited)                     |          |    | 4 | 
|        
|        
|        
|        
|         |  |                                                                                        | Consolidated Statements of Cash Flows for the
	Nine Months Ended September 30, 2001 and 2000 (Unaudited)  |          |    | 5 | 
|        
|        
|        
|        
|         |  |                                                                                        | Notes to Consolidated Financial Statements                                                                |          |    | 6 | 
|        
|        
|        
|        
|Item  2. |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |                                                                                                           |          | 18 |  
|        
|        
|        
|        
|Item  3. |  | Quantitative and Qualitative Disclosures About
	Market Risk                            |                                                                                                           |          | 25 |  
|        
|        
|        
|        
|Part II  |  | Other Information                                                                      |                                                                                                           |          | 26 |  
|        
|        
|        
|        
|Item  1. |  | Legal Proceedings                                                                      |                                                                                                           |          | 26 |  
|        
|        
|        
|        
|Item  2. |  | Changes in Securities and Use of Proceeds                                              |                                                                                                           |          | 27 |  
|        
|        
|        
|        
|Item  3. |  | Defaults Upon Senior Securities                                                        |                                                                                                           |          | 28 |  
|        
|        
|        
|        
|Item  4. |  | Submission of Matters to a Vote of Security
	Holders                                   |                                                                                                           |          | 28 |  
|        
|        
|        
|        
|Item  5. |  | Other Information                                                                      |                                                                                                           |          | 28 |  
|        
|        
|        
|        
|Item  6. |  | Exhibits and Reports on Form 8-K                                                       |                                                                                                           |          | 29 |  

i



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##### 



PART I.

FINANCIAL INFORMATION


Item 1.  Financial Statements

HIGH SPEED NET SOLUTIONS, INC.

Consolidated Balance Sheets

|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |             |  
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------ | ---------- | ----------------- | - | - | ---------- | ----------- | -
|                                                      |                                                                                                                                                                                                  | September 30, 2001 |            | December 31, 2000
|                                                      |                                                                                                                                                                                                  |                    |            |                  
|                                                      |                                                                                                                                                                                                  | (Unaudited)        |            |                  
|                                                     
|                                                     
|                                                     
|                                                     
|Assets                                                |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|Current assets:                                       |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cash                                                                                                                                                                                             |                    | $          | 246,751           |   |   | $          | 208,495     |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Accounts receivable                                                                                                                                                                              |                    |            | 42,093            |   |   |            | 32,744      |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other current assets                                                                                                                                                                             |                    |            | 60,480            |   |   |            | 39,153      |  
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|Total current assets                                  |                                                                                                                                                                                                  |                    | 349,324    |                   |   |   | 280,392    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Receivable from related party                         |                                                                                                                                                                                                  |                    |           |                   |   |   | 134,677    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Capitalized software development costs                |                                                                                                                                                                                                  |                    | 337,451    |                   |   |   |           |            
|                                                     
|                                                     
|                                                     
|                                                     
|Equipment, software and furniture, net                |                                                                                                                                                                                                  |                    | 820,778    |                   |   |   | 991,202    |            
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|Total assets                                          |                                                                                                                                                                                                  | $                  | 1,507,553  |                   |   | $ | 1,406,271  |            
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|Liabilities and shareholders
	deficit                |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|Accounts payable and accrued expenses                 |                                                                                                                                                                                                  | $                  | 4,535,743  |                   |   | $ | 1,282,157  |            
|                                                     
|                                                     
|                                                     
|                                                     
|Non-cash settlement                                   |                                                                                                                                                                                                  |                    | 1,051,915  |                   |   |   |           |            
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued salaries and related costs                    |                                                                                                                                                                                                  |                    | 261,867    |                   |   |   | 721,956    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Deferred redemption feature                           |                                                                                                                                                                                                  |                    | 576,000    |                   |   |   |           |            
|                                                     
|                                                     
|                                                     
|                                                     
|Preferred stock dividends payable                     |                                                                                                                                                                                                  |                    | 267,910    |                   |   |   |           |            
|                                                     
|                                                     
|                                                     
|                                                     
|Notes payable, current portion                        |                                                                                                                                                                                                  |                    | 304,215    |                   |   |   | 229,215    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Capital lease obligations, current portion            |                                                                                                                                                                                                  |                    | 411,562    |                   |   |   | 339,724    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Loans payable to related party                        |                                                                                                                                                                                                  |                    |           |                   |   |   | 1,435,000  |            
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|Total current liabilities                             |                                                                                                                                                                                                  |                    | 7,409,212  |                   |   |   | 4,008,052  |            
|                                                     
|                                                     
|                                                     
|                                                     
|Capital lease obligations, less current portion       |                                                                                                                                                                                                  |                    | 117,549    |                   |   |   | 117,966    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Notes payable, less current portion                   |                                                                                                                                                                                                  |                    | 25,000     |                   |   |   | 100,000    |            
|                                                     
|                                                     
|                                                     
|                                                     
|Deferred software royalty revenue                     |                                                                                                                                                                                                  |                    |           |                   |   |   | 1,834,065  |            
|                                                     
|                                                     
|                                                     
|                                                     
|Shareholders equity (deficit):                       |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Preferred stock, Series A, $.001 par value;
	authorized 5,000,000 shares, 2,000 shares issued and outstanding
	(liquidation preference of $1,000 per share)                                      |                    |            | 2,000,000         |   |   |            |            |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Preferred stock, Series B, $.001 par value;
	authorized 6,500 shares, 6,000 shares issued and outstanding at
	September 30, 2001 and 4,000 shares issued and outstanding
	at December 31, 2000   |                    |            | 6                 |   |   |            | 4           |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Common stock, $.001 par value; authorized
	50,000,000 shares; 35,968,532 shares issued and outstanding at
	September 30, 2001 and 9,584,938 shares issued and
	outstanding at December 31, 2000. |                    |            | 35,968            |   |   |            | 9,585       |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Additional paid-in capital                                                                                                                                                                       |                    |            | 24,484,997        |   |   |            | 19,729,222  |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Stock subscription receivable                                                                                                                                                                    |                    |            | (100,000          | ) |   |            |            |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Deferred compensation                                                                                                                                                                            |                    |            | (591,723          | ) |   |            | (978,510    | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Accumulated deficit                                                                                                                                                                              |                    |            | (31,645,837       | ) |   |            | (23,414,113 | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Treasury stock, at cost (38,500 shares)                                                                                                                                                          |                    |            | (227,619          | ) |   |            |            |  
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|Total shareholders equity (deficit)                  |                                                                                                                                                                                                  |                    | (6,044,208 | )                 |   |   | (4,653,812 | )          
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            
|Total liabilities and shareholders equity
	(deficit) |                                                                                                                                                                                                  | $                  | 1,507,553  |                   |   | $ | 1,406,271  |            
|                                                      |                                                                                                                                                                                                  |                    |            |                   |   |   |            |            

The accompanying notes constitute an integral part of these
consolidated financial statements.

1



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##### 



HIGH SPEED NET SOLUTIONS, INC.

Consolidated Statements of Operations (Unaudited)

|                                                                                           |                                                                      |                              |            |                    |            |   |            |            |          |  
|------------------------------------------------------------------------------------------ | -------------------------------------------------------------------- | ---------------------------- | ---------- | ------------------ | ---------- | - | ---------- | ---------- | -------- | -
|                                                                                           |                                                                      |                             
|                                                                                           |                                                                      | Three Months Ended          
|                                                                                           |                                                                      |                             
|                                                                                           |                                                                      | September 30, 2001           |            | September 30, 2000
|                                                                                           |                                                                      |                              |            |                   
|Revenues:                                                                                  |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Contracts and license fees                                           |                              | $          | 117,279            |            |   | $          | 98,758     |         
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Costs of revenues:                                                                         |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Contracts and license fees                                           |                              |            | 54,388             |            |   |            | 42,054     |         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Gross Profit                                                                               |                                                                      |                              | 62,891     |                    |            |   | 56,074     |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Selling, general and administrative expenses                                               |                                                                      |                              | 2,238,529  |                    |            |   | 1,642,239  |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Non-cash compensation                                                                      |                                                                      |                              | 126,794    |                    |            |   | 875,739    |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Research and development                                                                   |                                                                      |                              | 149,042    |                    |            |   | 217,523    |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|                                                                                           | Loss before Other income (expense)                                   |                              |            | (2,451,474         | )          |   |            | (2,678,797 | )       
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Other income (expense):                                                                    |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Non-cash settlement                                                  |                              |            | (1,051,915         | )          |   |            |           |         
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Gain on sale of stock of equity investee                             |                              |            |                   |            |   |            | 435,298    |         
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Participation in loss of equity investee                             |                              |            |                   |            |   |            | (954,512   | )       
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Interest income (expense), net                                       |                              |            | (10,439            | )          |   |            | 1,716      |         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|                                                                                           |                                                                      | Total other income (expense) |            |                    | (1,062,354 | ) |            |            | (517,498 | )
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Loss from continuing operations                                                            |                                                                      |                              | (3,513,828 | )                  |            |   | (3,196,295 | )         
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Loss from operations of discontinued Rich Media
	Direct business                           |                                                                      |                              | (85,810    | )                  |            |   |           |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss                                                                                   |                                                                      | $                            | (3,599,638 | )                  |            | $ | (3,196,295 | )         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss applicable to common shareholders:                                                |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Net loss                                                             |                              | $          | (3,599,638         | )          |   | $          | (3,196,295 | )       
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Preferred stock dividends                                            |                              |            | (44,469            | )          |   |            |           |         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss applicable to common shareholders                                                 |                                                                      | $                            | (3,644,107 | )                  |            | $ | (3,196,295 | )         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Per share amounts (basic and diluted):                                                     |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Loss applicable to common shareholders from
	continuing operations   |                              | $          | (0.10              | )          |   | $          | (0.10      | )       
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Loss applicable to common shareholders from
	discontinued operations |                              |            | (0.00              | )          |   |            |           |         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss                                                                                   |                                                                      | $                            | (0.10      | )                  |            | $ | (0.10      | )         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Weighted average shares of common stock
	outstanding                                       |                                                                      |                              | 35,370,741 |                    |            |   | 9,561,860  |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Recapitalization resulting from the Summus, Ltd.
	asset acquisition                        |                                                                      |                              |           |                    |            |   | 23,392,035 |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Weighted average shares of common stock
	outstanding giving effect to the recapitalization |                                                                      |                              | 35,370,741 |                    |            |   | 32,953,895 |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           

The accompanying notes constitute an integral part of these
consolidated financial statements.

2



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##### 



HIGH SPEED NET SOLUTIONS, INC.

Consolidated Statements Of Operations (Unaudited)

|                                                                                           |                                                                      |                              |            |                    |            |   |            |            |         | 
|------------------------------------------------------------------------------------------ | -------------------------------------------------------------------- | ---------------------------- | ---------- | ------------------ | ---------- | - | ---------- | ---------- | ------- | 
|                                                                                           |                                                                      |                             
|                                                                                           |                                                                      | Nine Months Ended           
|                                                                                           |                                                                      |                             
|                                                                                           |                                                                      | September 30, 2001           |            | September 30, 2000
|                                                                                           |                                                                      |                              |            |                   
|Revenues:                                                                                  |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Contracts and license fees                                           |                              | $          | 624,458            |            |   | $          | 769,104    |        
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Costs of revenues:                                                                         |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Contracts and license fees                                           |                              |            | 290,144            |            |   |            | 329,416    |        
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Gross Profit                                                                               |                                                                      |                              | 334,314    |                    |            |   | 439,688    |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Selling, general and administrative expenses                                               |                                                                      |                              | 5,763,506  |                    |            |   | 4,535,295  |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Non-cash compensation                                                                      |                                                                      |                              | 899,056    |                    |            |   | 1,699,738  |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Research and development                                                                   |                                                                      |                              | 366,428    |                    |            |   | 991,436    |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|                                                                                           | Loss before Other income (expense)                                   |                              |            | (6,699,676         | )          |   |            | (6,786,781 | )      
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Other income (expense):                                                                    |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Non-cash settlement                                                  |                              |            | (1,051,915         | )          |   |            |           |        
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Gain on sale of stock of equity investee                             |                              |            |                   |            |   |            | 3,680,065  |        
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Participation in loss of equity investee                             |                              |            |                   |            |   |            | (3,037,205 | )      
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Interest income (expense), net                                       |                              |            | (22,512            | )          |   |            | 51,690     |        
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|                                                                                           |                                                                      | Total other income (expense) |            |                    | (1,074,427 | ) |            |            | 694,550 | 
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Loss from continuing operations                                                            |                                                                      |                              | (7,769,103 | )                  |            |   | (6,092,231 | )         
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Loss from operations of discontinued Rich Media
	Direct business                           |                                                                      |                              | (135,798   | )                  |            |   |           |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Loss on disposal of Rich Media Direct business                                             |                                                                      |                              | (215,500   | )                  |            |   |           |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss                                                                                   |                                                                      | $                            | (8,120,401 | )                  |            | $ | (6,092,231 | )         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss applicable to common shareholders:                                                |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Net loss                                                             |                              | $          | (8,120,401         | )          |   | $          | (6,092,231 | )      
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Preferred stock dividends                                            |                              |            | (111,323           | )          |   |            |           |        
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss applicable to common shareholders                                                 |                                                                      | $                            | (8,231,724 | )                  |            | $ | (6,092,231 | )         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Per share amounts (basic and diluted):                                                     |                                                                      |                              |            |                    |            |   |            |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Loss applicable to common shareholders from
	continuing operations   |                              | $          | (0.23              | )          |   | $          | (0.18      | )      
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Loss applicable to common shareholders from
	discontinued operations |                              |            | (0.01              | )          |   |            |           |        
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Net loss                                                                                   |                                                                      | $                            | (0.24      | )                  |            | $ | (0.18      | )         
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Weighted average shares of common stock
	outstanding                                       |                                                                      |                              | 30,127,689 |                    |            |   | 9,561,860  |           
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Recapitalization resulting from the Summus, Ltd.
	asset acquisition                        |                                                                      |                              | 3,985,310  |                    |            |   | 23,392,035 |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           
|Weighted average shares of common stock
	outstanding giving effect to the recapitalization |                                                                      |                              | 34,112,999 |                    |            |   | 32,953,895 |           
|                                                                                           |                                                                      |                              |            |                    |            |   |            |           

The accompanying notes constitute an integral part of these
consolidated financial statements.

3



---



##### 



HIGH SPEED NET SOLUTIONS, INC.

Consolidated Statement of Shareholders Equity

|                                        |                                                                                    |                 |       |          |  |              |           |            |  |        |       |        |  |                 |   |   |  |  |            |            |  |   |        |        |  |   |            |            |  
|--------------------------------------- | ---------------------------------------------------------------------------------- | --------------- | ----- | -------- |  | ------------ | --------- | ---------- |  | ------ | ----- | ------ |  | --------------- | - | - |  |  | ---------- | ---------- |  | - | ------ | ------ |  | - | ---------- | ---------- | -
|                                        |                                                                                    |                 |       |          |  |              |           |           
|                                        |                                                                                    | Preferred Stock |       |          |  |              |           |           
|                                        |                                                                                    |                 |       |          |  |              |           |           
|                                        |                                                                                    |                 |       |          |  |              |           |           
|                                        |                                                                                    | Series A        |       | Series B |  | Common Stock |           |           
|                                        |                                                                                    |                 |       |          |  |              |           | Additional
|                                        |                                                                                    | Shares          |       | Amount   |  | Shares       |           | Amount     |  | Shares |       | Amount |  | Paid-in Capital
|                                        |                                                                                    |                 |       |          |  |              |           |            |  |        |       |        |  |                
|                                       
|                                       
|                                       
|                                       
|Balance at December  31, 2000           |                                                                                    |                 |      |          |  | $            |          |            |  |        | 4,000 |        |  | $               | 4 |   |  |  | 9,584,938  |            |  | $ | 9,585  |        |  | $ | 19,729,222 |           
|                                       
|                                       
|                                       
|                                       
|                                        | Recapitalization resulting from the Summus, Ltd.
	asset acquisition                |                 |       | 2,000    |  |              |           | 2,000,000  |  |        |       | 2,000  |  |                 |   | 2 |  |  |            | 23,392,035 |  |   |        | 23,392 |  |   |            | (3,734,020 | )
|                                       
|                                       
|                                       
|                                       
|                                        | Elimination of deferred revenue                                                    |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            | 1,834,065  |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock options granted for services                                          |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            | 930,911    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock sold for cash                                                         |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            | 2,179,956  |  |   |        | 2,179  |  |   |            | 5,050,978  |  
|                                       
|                                       
|                                       
|                                       
|                                        | Preferred stock dividends                                                          |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            |           |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock issued in partial settlement of loss
	contingency                     |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            | 550,000    |  |   |        | 550    |  |   |            | 419,436    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred compensation recognized in connection
	with the issuance of stock options |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            | 360,500    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Amortization of deferred compensation                                              |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            |           |  
|                                       
|                                       
|                                       
|                                       
|                                        | Reversal of deferred compensation of forfeited
	options                            |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            | (551,897   | )
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock issued in settlement of amounts due
	to related parties               |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            | 250,000    |  |   |        | 250    |  |   |            | 435,565    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock issued in partial settlement of
	vendor liability                     |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            | 5,560      |  |   |        | 6      |  |   |            | 7,722      |  
|                                       
|                                       
|                                       
|                                       
|                                        | Stock option exercises                                                             |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            | 6,043      |  |   |        | 6      |  |   |            | 2,515      |  
|                                       
|                                       
|                                       
|                                       
|                                        | Net loss for the period                                                            |                 |       |         |  |              |           |           |  |        |       |       |  |                 |   |  |  |  |            |           |  |   |        |       |  |   |            |           |  
|                                        |                                                                                    |                 |       |          |  |              |           |            |  |        |       |        |  |                 |   |   |  |  |            |            |  |   |        |        |  |   |            |           
|Balance September  30, 2001 (Unaudited) |                                                                                    |                 | 2,000 |          |  | $            | 2,000,000 |            |  |        | 6,000 |        |  | $               | 6 |   |  |  | 35,968,532 |            |  | $ | 35,968 |        |  | $ | 24,484,997 |           
|                                        |                                                                                    |                 |       |          |  |              |           |            |  |        |       |        |  |                 |   |   |  |  |            |            |  |   |        |        |  |   |            |           

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                        |                                                                                    |              |          |          |   |             |          |          |   |               |             |            |   |   |          |          |   |   |            |            |  
|--------------------------------------- | ---------------------------------------------------------------------------------- | ------------ | -------- | -------- | - | ----------- | -------- | -------- | - | ------------- | ----------- | ---------- | - | - | -------- | -------- | - | - | ---------- | ---------- | -
|                                        |                                                                                    | Stock        |          |          |   |             |          |          |   | Total        
|                                        |                                                                                    | Subscription |          | Deferred |   | Accumulated |          | Treasury |   | Shareholders
|                                        |                                                                                    | Receivable   |          | Comp     |   | Deficit     |          | Stock    |   | Equity       
|                                        |                                                                                    |              |          |          |   |             |          |          |   |              
|                                       
|                                       
|                                       
|                                       
|Balance at December  31, 2000           |                                                                                    | $            |         |          |   | $           | (978,510 | )        |   | $             | (23,414,113 | )          |   | $ |         |          |   | $ | (4,653,812 | )         
|                                       
|                                       
|                                       
|                                       
|                                        | Recapitalization resulting from the Summus, Ltd.
	asset acquisition                |              |          |         |   |             |          |         |   |               |             |           |   |   |          | (227,619 | ) |   |            | (1,938,245 | )
|                                       
|                                       
|                                       
|                                       
|                                        | Elimination of deferred revenue                                                    |              |          |         |   |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 1,834,065  |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock options granted for services                                          |              |          |         |   |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 930,911    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock sold for cash                                                         |              |          | (100,000 | ) |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 4,953,157  |  
|                                       
|                                       
|                                       
|                                       
|                                        | Preferred stock dividends                                                          |              |          |         |   |             |          |         |   |               |             | (111,323   | ) |   |          |         |   |   |            | (111,323   | )
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock issued in partial settlement of loss
	contingency                     |              |          |         |   |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 419,986    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred compensation recognized in connection
	with the issuance of stock options |              |          |         |   |             |          | (360,500 | ) |               |             |           |   |   |          |         |   |   |            |           |  
|                                       
|                                       
|                                       
|                                       
|                                        | Amortization of deferred compensation                                              |              |          |         |   |             |          | 195,390  |   |               |             |           |   |   |          |         |   |   |            | 195,390    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Reversal of deferred compensation of forfeited
	options                            |              |          |         |   |             |          | 551,897  |   |               |             |           |   |   |          |         |   |   |            |           |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock issued in settlement of amounts due
	to related parties               |              |          |         |   |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 435,815    |  
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock issued in partial settlement of
	vendor liability                     |              |          |         |   |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 7,728      |  
|                                       
|                                       
|                                       
|                                       
|                                        | Stock option exercises                                                             |              |          |         |   |             |          |         |   |               |             |           |   |   |          |         |   |   |            | 2,521      |  
|                                       
|                                       
|                                       
|                                       
|                                        | Net loss for the period                                                            |              |          |         |   |             |          |         |   |               |             | (8,120,401 | ) |   |          |         |   |   |            | (8,120,401 | )
|                                        |                                                                                    |              |          |          |   |             |          |          |   |               |             |            |   |   |          |          |   |   |            |           
|Balance September  30, 2001 (Unaudited) |                                                                                    | $            | (100,000 | )        |   | $           | (591,723 | )        |   | $             | (31,645,837 | )          |   | $ | (227,619 | )        |   | $ | (6,044,208 | )         
|                                        |                                                                                    |              |          |          |   |             |          |          |   |               |             |            |   |   |          |          |   |   |            |           

The accompanying notes constitute an integral
part of these consolidated financial statements.

4



---



##### 



HIGH SPEED NET SOLUTIONS, INC.

Consolidated Statements of Cash Flows (Unaudited)

|                                                                                     |                                               |                    |            |                    |   |   |            |            |  
|------------------------------------------------------------------------------------ | --------------------------------------------- | ------------------ | ---------- | ------------------ | - | - | ---------- | ---------- | -
|                                                                                     |                                               |                   
|                                                                                     |                                               | Nine Months Ended 
|                                                                                     |                                               |                   
|                                                                                     |                                               | September 30, 2001 |            | September 30, 2000
|                                                                                     |                                               |                    |            |                   
|Operating activities                                                                 |                                               |                    |            |                    |   |   |            |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Loss from continuing operations                                                      |                                               | $                  | (7,769,103 | )                  |   | $ | (6,092,231 | )         
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Adjustments to reconcile loss to net cash used in
	operating activities:             |                                               |                    |            |                    |   |   |            |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Gain on sale of investment in equity investee |                    |            |                   |   |   |            | (3,680,065 | )
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Loss on investment in equity investee         |                    |            |                   |   |   |            | 3,037,205  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Non-cash compensation                         |                    |            | 899,056            |   |   |            | 1,699,738  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Common stock issued for services              |                    |            | 55,428             |   |   |            |           |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Depreciation                                  |                    |            | 565,573            |   |   |            | 230,515    |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Changes in operating assets and liabilities, net
	of Summus, Ltd. asset acquisition: |                                               |                    |            |                    |   |   |            |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accounts receivable                           |                    |            | 2,395              |   |   |            | 21,558     |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Other current assets                          |                    |            | (17,332            | ) |   |            | 20,815     |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accounts payable and accrued expenses         |                    |            | 252,371            |   |   |            | 766,259    |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Non-cash settlement                           |                    |            | 1,051,915          |   |   |            |           |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accrued salaries and related costs            |                    |            | 94,467             |   |   |            | 121,271    |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Deferred software royalty revenue             |                    |            |                   |   |   |            | (658,331   | )
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Net cash used in continuing operations                                               |                                               |                    | (4,865,230 | )                  |   |   | (4,533,266 | )         
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Net cash used in discontinued operations                                             |                                               |                    | (30,453    | )                  |   |   |           |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Net cash used in operating activities                                                |                                               |                    | (4,895,683 | )                  |   |   | (4,533,266 | )         
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Investing activities                                                                 |                                               |                    |            |                    |   |   |            |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Proceeds from sale of investment in equity
	investee                                 |                                               |                    |           |                    |   |   | 4,493,428  |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Purchases of property and equipment                                                  |                                               |                    |           |                    |   |   | (132,233   | )         
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Capitalized software development costs                                               |                                               |                    | (337,451   | )                  |   |   |           |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Net cash (used in) provided by investing
	activities                                 |                                               |                    | (337,451   | )                  |   |   | 4,361,195  |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Financing activities                                                                 |                                               |                    |            |                    |   |   |            |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Proceeds from sale of common stock and warrants                                      |                                               |                    | 4,955,678  |                    |   |   |           |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Proceeds from loan with related party                                                |                                               |                    | 540,000    |                    |   |   | 500,000    |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Principal payments on capital lease obligations
	and notes                           |                                               |                    | (124,288   | )                  |   |   | (180,222   | )         
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Cash payments on loss contingency accrual                                            |                                               |                    | (100,000   | )                  |   |   |           |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Net cash provided by financing activities                                            |                                               |                    | 5,271,390  |                    |   |   | 319,778    |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Net increase in cash                                                                 |                                               |                    | 38,256     |                    |   |   | 147,707    |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Cash at beginning of period                                                          |                                               |                    | 208,495    |                    |   |   | 647,704    |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Cash at end of period                                                                |                                               | $                  | 246,751    |                    |   | $ | 795,411    |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           
|Supplemental disclosures of cash flow
	information                                   |                                               |                    |            |                    |   |   |            |           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|Cash paid for interest                                                               |                                               | $                  | 22,512     |                    |   | $ | 3,715      |           
|                                                                                     |                                               |                    |            |                    |   |   |            |           

The accompanying notes constitute an integral part of these
consolidated financial statements.

5



---



##### 



HIGH SPEED NET SOLUTIONS, INC.

Notes to Consolidated Financial Statements

1.  Basis of Presentation

The condensed consolidated financial statements of High Speed
Net Solutions, Inc. (HSNS or the
Company) and its subsidiaries included in this
quarterly report on Form 10-Q are unaudited. In the opinion
of management, such financial statements contain all adjustments
(consisting of normal recurring adjustments) necessary to
present fairly the financial position of HSNS and its
subsidiaries as of September 30, 2001, the results of
operations for the three and nine month periods ended
September 30, 2000 and 2001, shareholders equity as
of September 30, 2001, and cash flows for the nine month
periods ended September 30, 2000 and 2001.

As disclosed in Note 2 below, effective February 16, 2001,
HSNS acquired all the assets and operations of Summus, Ltd.
under the terms of an asset purchase agreement, dated
October 30, 2000, as amended (the Asset Purchase
Agreement). In legal form, the transaction was effected by
HSNS issuing shares of its common and Series B preferred
stock, and other equity interests, in exchange for the net
assets of Summus, Ltd. As explained more fully in Note 2, the
transaction has been accounted for as a capital transaction,
accompanied by a recapitalization. In view of the accounting
associated with the transaction, the accompanying comparative
financial statements as of December 31, 2000, and for the
three and nine months ended September 30, 2000, reflect the
financial position, results of operations and cash flows of
Summus, Ltd. rather than the previously reported financial
information of HSNS. The condensed consolidated balance sheet of
the Company as of December 31, 2000 has been derived from
the audited balance sheet of Summus, Ltd. as of that date.

The accompanying unaudited condensed consolidated financial
statements as of and for the three and nine months ended
September 30, 2001 have been prepared in accordance with
accounting principles generally accepted in the United States
for interim financial information and with Article 10 of
Regulation S-X. Certain information and note disclosures
normally included in the Companys annual financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
unaudited condensed consolidated financial statements should be
read in conjunction with a reading of the financial statements
and accompanying notes included in Summus, Ltd.s audited
financial statements for the year ended December 31, 2000,
which were filed with the Securities and Exchange Commission in
the Companys annual report on Form 10-K for the
fiscal year ended December 31, 2000, as amended. The
Form 10-K, as amended, is available through the Internet in
the SECs EDGAR database at www.sec.gov or from the Company
upon request.

The accompanying unaudited condensed consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the
financial statements at September 30, 2001, the Company had
an accumulated deficit of $31,645,837 and a deficiency in
working capital. Additionally, for the nine months ended
September 30, 2001, the Company incurred a significant net
loss and experienced negative cash flows from operations. These
factors, among others, indicate the Company may be unable to
continue as a going concern for a reasonable period of time. As
a result of these matters, the Companys auditors have
issued their opinion on the December 31, 2000 financial
statements includes an explanatory paragraph which expresses
substantial doubt about the Companys ability to continue
as a going concern. The financial statements presented herein do
not include any adjustments relating to the recoverability of
assets and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

The Companys continuation as a going concern is dependent
on its ability to generate sufficient cash flow to meet its
obligations on a timely basis, to obtain additional financing or
refinancing as required, and ultimately to attain profitability.
Management anticipates that it will be able to attract
additional capital to continue to fund operations. However,
there can be no assurance that managements plans will be
executed as anticipated.

6



---



##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

1.  Basis of Presentation (continued)

Operating results for the nine months ended September 30,
2001, are not necessarily indicative of the results that may be
expected for the year ended December 31, 2001.

2.  Asset Acquisition/ Recapitalization

On February 16, 2001, HSNS acquired all the assets and
operations of Summus, Ltd. under the terms of the Asset Purchase
Agreement.

From Summus, Ltd.s perspective, the primary business
purpose of entering into the transaction with HSNS was to
provide a vehicle for raising capital. Summus, Ltd. was at a
stage in its development where it required additional financing
or needed to combine with another entity in order to finance its
business and realize its other objectives. Entering into the
Asset Purchase Agreement became the most logical course of
action to provide financing to Summus, Ltd. and accomplish other
key objectives in view of, among other things, the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Summus, Ltd. already had a substantial equity interest in HSNS.
	In fact, the transaction contemplated by the Asset Purchase
	Agreement provided both companies the opportunity to capitalize
	on investments they previously made in each other. Prior to the
	closing of the transaction, Summus, Ltd. owned approximately
	27.6% of HSNS on a fully-diluted basis and HSNS owned
	approximately 14% of Summus, Ltd.
|
| |  | HSNS had had success in raising equity capital through private
	placements or other types of fund-raising, notwithstanding its
	own limited financial resources and unprofitable operations.
	This caused Summus, Ltd.s management to believe that the
	Company, following the closing of the transaction, would be able
	to continue to have success in raising capital.                                            
|
| |  | HSNS was in the process of seeking to register its common stock
	under Section  12 of the Securities Exchange Act of 1934
	and then seeking to have such stock made eligible for quotation
	on the OTC Bulletin Board. This offered potential for future
	liquidity in such stock.                                                                                                                                    
|
| |  | The transaction offered the potential to create more growth
	opportunities for the Company based on the expected enhanced
	access to capital resources.                                                                                                                                                                                                                                                               

Prior to the closing of the transaction, Summus, Ltd. was the
largest shareholder of HSNS. It owned 8,217,781 shares (33.2%)
of HSNSs common stock, approximately 27.6% on a
fully-diluted basis. Immediately after the closing, Summus,
Ltd.s ownership interest in the Company increased to
20,593,352 shares (55.5%) of the Companys common stock on
an as-converted basis, approximately 53.1% on a fully-diluted
basis.

The Asset Purchase Agreement contemplates that Summus, Ltd. will
liquidate following the completion of its distribution of the
Companys securities received in the transaction to the
shareholders of Summus, Ltd. On March 13, 2001, Summus,
Ltd. distributed certain of the shares of the Companys
common stock received in the transaction to the shareholders of
Summus, Ltd. in accordance with their pro rata interests; the
balance of such shares was distributed in mid-July 2001.

In legal form, the transaction was effected by HSNS issuing
shares of its common and Series B preferred stock, and
other equity interests, in exchange for the net assets of
Summus, Ltd. The consideration paid by HSNS to acquire the
assets of Summus, Ltd. is described below:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | HSNS issued to Summus, Ltd. for distribution to the shareholders
	of Summus, Ltd. a total of 20,218,733 shares of HSNS common
	stock and 6,000 shares of Series B preferred stock. As a
	shareholder of Summus, Ltd., HSNS was entitled to receive
	3,604,445 of the total number of shares of common stock issued
	in the transaction. However, under the terms of the Asset
	Purchase Agreement

7



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)



| |  |                                                     
| |  | ----------------------------------------------------
| |  | 2.  Asset Acquisition/ Recapitalization
	(continued)

these shares were canceled, resulting in a net issuance of
16,614,288 shares of HSNS common stock. In addition, the Asset
Purchase Agreement provided for the cancellation of 8,217,781
shares of HSNS common stock owned by Summus, Ltd. prior to the
parties execution of the agreement.



| |   |                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | HSNS issued to Summus, Ltd. 6,000 shares of newly created
	Series B preferred stock, of which 2,000 shares were
	deposited with an escrow agent as security for any
	indemnification obligations of Summus, Ltd. and its shareholders
	under the Asset Purchase Agreement.                                                              
|
| |  | HSNS issued to Summus, Ltd. warrants to purchase a total of 500
	shares of its Series B preferred stock, exercisable for a
	period of 5 years from February 16, 2001. The exercise
	price of the warrants is $5,500.00 per share of Series B
	preferred stock ($5.50 per share of the Companys common
	stock on an as-converted basis).

In addition to the items described above, the terms of the Asset
Purchase Agreement provided for HSNSs assumption of
approximately $2.8 million of liabilities of Summus, Ltd.
to third parties. All amounts owed by and between HSNS and
Summus, Ltd. were cancelled upon the closing of the transaction.

The transaction was accounted for as a capital transaction,
accompanied by a recapitalization. By accounting for the
transaction as a capital transaction, the transaction is
effectively viewed as the issuance of stock by Summus, Ltd. in
exchange for the net monetary assets of HSNS, accompanied by a
recapitalization of Summus, Ltd. The accounting for the
transaction is quite similar to that resulting from a reverse
acquisition, except that no goodwill or other intangible assets
are recorded.

As a result of the transaction, the historical financial
statements of Summus, Ltd., for accounting purposes, are deemed
to be those of the Company. The equity accounts of Summus, Ltd.
have been adjusted for a recapitalization to reflect the equity
structure of HSNS, the legal acquirer. Specifically:



| |   |                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the historical shareholders equity of Summus, Ltd. prior
	to the transaction has been restated for the equivalent number
	of shares of HSNS common and Series B preferred stock, and
	other equity interests, received in the transaction after giving
	effect to any difference in par value of HSNSs and Summus,
	Ltd.s common stock, with an offset to additional paid-in
	capital;
|
| |  | the accumulated deficit of Summus, Ltd. has been carried forward
	after the transaction; and                                                                                                                                                                                                                                                                                             
|
| |  | loss per share for periods prior to the transaction have been
	restated to reflect the number of equivalent shares received by
	Summus, Ltd. in the transaction.                                                                                                                                                                                                                         

In connection with the transaction, the Company entered into a
three-year employment agreement with Dr. Bjorn Jawerth.
Under this employment agreement, in exchange for
Dr. Jawerths covenant not to compete with the Company
for a period of 18 months from and after the termination of
his employment with the Company, the Company issued options to
Dr. Jawerth to purchase 166,667 shares of common stock at
$0.50 per share and 333,333 shares of common stock at $3.75
per share. Non-cash compensation expense of $541,688 was
recorded upon the issuance of these options as of
February 16, 2001, the closing date of the transaction. The
issuance of these options was in lieu of a $500,000 cash payment
provided for in Dr. Jawerths employment agreement.

Under the Asset Purchase Agreement, HSNS agreed to use
reasonable commercial efforts to assist Dr. Jawerth in the
private sale of up to 1,666,667 shares of HSNS common stock held
by Dr. Jawerth (representing $2.5 million in value) at
a per share price of not less than $1.50 per share. The Asset
Purchase Agreement does not stipulate a date or time period by
which such sale is to occur. Under the terms of
Dr. Jawerths employment agreement, the Company is
obligated to issue to Dr. Jawerth options, with an exercise
price of $1.50 per share, exercisable for three times the number
of shares of common stock sold in the

8



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)



2.  Asset Acquisition/ Recapitalization
(continued)


private sale. The options will be exercisable during the second
through the fifth year after the options are issued. Non-cash
compensation will be recorded upon the issuance of these
options. The non-cash compensation will be determined under the
provisions of APB 25, pursuant to which the compensation cost
will be based on the difference between the stock option
exercise price of $1.50 per share and the traded value of the
HSNS common stock on the date the options are issued.

During the term of the employment agreement, Dr. Jawerth
will receive a base salary of $350,000 (which is subject to an
annual increase of at least 10%) plus other benefits including
severance benefits.

3.  Significant Accounting Policies

Principles of
Consolidation

The consolidated financial statements include the accounts of
the Company and its former wholly owned subsidiary, Douglas May
& Company, Inc. Significant intercompany accounts and
transactions have been eliminated in consolidation. The results
of operations of Douglas May & Company, Inc. have been
presented as discontinued operations for the three and nine
months ended September 30, 2001.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the 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
periods. Actual results could differ from those estimates.

Equipment and
Furniture

Equipment and furniture are stated at cost. Depreciation is
computed using the straight-line method over the estimated
useful lives of the assets (generally three to seven years)
beginning when the assets are placed in service.

Stock-Based
Compensation

The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based
Compensation.As permitted by the provisions of SFAS
No. 123, the Company continues to follow Accounting
Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employeesand
related interpretations for its stock-based awards.

In accordance with APB 25, the Company has valued employee stock
awards and stock issued to employees for services performed
based on the traded value of the Companys common stock, or
the stocks estimated fair value prior to its becoming
traded, at the measurement date of the stock options and awards.

Non-cash compensation related to the issuance of fully-vested
stock options with exercise prices below the fair market value
of the underlying stock plus the amortization of deferred
compensation arising from stock option issuances totaled
$899,056 in the nine months ended September 30, 2001.

The Company accounts for stock-based amounts issued to
non-employees of the Company, primarily consultants, at fair
value in accordance with the provisions of SFAS No. 123.

9



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

3.  Significant Accounting Policies (continued)

Income Taxes

Income taxes are accounted for using the liability method in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income
Taxes.Under SFAS 109, deferred tax assets or
liabilities are computed based upon the difference between the
financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when
the related asset or liability is expected to be realized or
settled. Deferred income tax expenses or benefits are based on
the changes in the asset or liability from period to period. If
available evidence suggests that it is more likely than not that
some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the
deferred tax assets to the amount that is more likely than not
to be realized. Future changes in such valuation allowance would
be included in the provision for deferred income taxes in the
period of change.

Revenue Recognition

The Company recognizes revenue on time and materials consulting
projects at the time services are rendered based upon the terms
of individual contracts.

The Company follows the provisions of AICPA Statement of
Position 97-2, Software Revenue Recognition,as amended by AICPA Statement of Position 98-9
Modification of SOP No. 97-2 Software Revenue
Recognition with Respect to Certain Transactions.

Revenues from software license fees and hardware sales are
generally recognized upon delivery provided that a contract has
been executed, the vendor fee is fixed or determinable, no
significant vendor obligations or uncertainties surrounding
customer acceptance remain, and collection of the resulting
receivable is deemed probable.

Deferred revenue is recorded for amounts received for which the
Company has not yet completed its contractual obligations.
Deferred revenue related to software agreements is used to
offset capitalized software costs related to the software
agreements.

Management has structured the Companys internal
organization as one business segment from which all operating
decisions are made and operating results are evaluated.

Loss Per Share

Loss per share has been calculated in accordance with Statement
of Financial Accounting Standards (SFAS)
No. 128, Earnings Per Share.Basic loss
per share was computed by dividing the net loss for each period
presented by the weighted average number of shares of common
stock outstanding for such period, as adjusted for the
recapitalization. Although the Company has potential common
stock equivalents related to its outstanding stock options,
warrants and preferred stock, these potential common stock
equivalents were not included in diluted loss per share for each
period presented because the effect would have been antidilutive.

Software Development
Costs

Capitalization of software development costs begins with the
establishment of technological feasibility of new or enhanced
software products. Technological feasibility of a computer
software product is established when the Company has completed
all planning, designing, coding and testing that is necessary to
establish that the software product can be produced to meet
design specifications including functions, features and
technical performance requirements. All costs incurred prior to
establishing technological feasibility of a software product are
charged to research and development expense as incurred.

10



---



##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

3.  Significant Accounting Policies (continued)

Valuation of Long-Lived
Assets

The Company periodically reviews its long-lived assets to
determine if events or changes in circumstances indicate that
the carrying amount of an asset may be impaired and not
recoverable. Adjustments will be made if the sum of the expected
future undiscounted cash flows is less than the carrying value
of the asset.

New Accounting
Pronouncements

On September 29, 2001, the Financial Accounting Standards
Board (FASB) unanimously approved the issuance of
Statements of Financial Accounting Standards (SFAS)
No. 141, Business Combinationsand
No. 142, Goodwill and Other Intangible
Assets.SFAS 141 eliminates the pooling-of-interests
method of accounting for business combinations except for
qualifying business combinations that were initiated prior to
July 1, 2001. SFAS 141 also includes new criteria to
recognize intangible assets separately from goodwill. The
requirements of SFAS 141 are effective for any business
combination accounted for by the purchase method that is
completed after September 30, 2001. Under SFAS 142,
goodwill and intangible assets with indefinite lives are no
longer amortized but are reviewed annually, or more frequently
if impairment indicators arise, for impairment. Separable
intangible assets that are not deemed to have an indefinite life
will continue to be amortized over their useful lives. The
amortization provisions of SFAS 142 requiring non-amortization
of goodwill and indefinite-lived intangible assets apply to
goodwill and indefinite-lived intangible assets acquired after
September 30, 2001. The Company will adopt SFAS 142 in the
fiscal year beginning January 1, 2002. The effect of
adopting SFAS 142 by the Company beginning January 1, 2002
is not expected to have a significant effect on the operating
results or financial position of the Company.

4.  Deferred Software Royalty Revenue

In February 1999, Summus, Ltd. entered into a Marketing
License Agreement (MLA) with HSNS. In consideration
for its grant to HSNS of the right to resell certain stand-alone
software products specified in the MLA over the three-year term
of the agreement, Summus, Ltd. received prepaid software royalty
payments in the aggregate amount of $3,000,000, consisting of
cash payments of $2,250,000 and 1,500,000 shares of HSNS common
stock valued at $750,000. The value assigned to the 1,500,000
common shares was based on a discounted value of HSNSs
common stock taking into consideration the restricted nature of
these shares.

In mid-February 2000, Summus, Ltd. and HSNS entered into
several agreements (i.e., a master agreement, software license
agreement, software maintenance agreement, revenue sharing
agreement and software escrow agreement) that superseded the MLA
in its entirety. Under these agreements, Summus, Ltd. granted to
HSNS a non-exclusive license to use a suite of software products
referred to as MaxxSystem. The terms of the software
license agreement provided for HSNSs payment of a one-time
license fee of $1 million (against which HSNS received a
credit of $1 million, under the terms of the master
agreement, in recognition of payments HSNS had made under the
MLA), and a revenue-based fee of the greater of (i) 10% of
the gross revenues generated by HSNS with MaxxSystem, or (ii)
$.03 multiplied by the number of rich media messages delivered
to recipients (against which HSNS also received a credit of
$1 million, under the terms of the master agreement, in
recognition of payments made under the MLA). HSNS received an
additional credit of approximately $200,000 for other fees due
Summus, Ltd. under the software license agreement and/or the
software maintenance agreement.

The aggregate amount of the payments received by Summus, Ltd.
under the MLA was classified as deferred revenue in Summus,
Ltd.s balance sheet. Summus, Ltd. applied $507,604 and
$658,332 of this deferred revenue balance against the
capitalized software development costs of the software delivered
under the MLA in 1999 and 2000, respectively.

11



---



##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

4.  Deferred Software Royalty Revenue
(continued)

On February 16, 2001, HSNS acquired all the assets and
operations of Summus, Ltd. under the terms of the Asset Purchase
Agreement. See Note 2. As of the closing date of the
transaction, Summus, Ltd. had not delivered to HSNS all of the
MaxxSystem suite of software products specified in the software
license agreement and, therefore, was not able to recognize any
revenue associated with such agreement. Upon the closing of the
transaction, the agreements between Summus, Ltd. and HSNS
entered into in mid-February 2000 were made null and void.
As a result, the deferred revenue associated with the
mid-February 2000 agreements was reclassified to additional
paid-in capital as of the closing of the transaction.

5.  Common Stock

Subsequent to HSNSs acquisition of the assets and
operations of Summus, Ltd. (see Note 2), HSNS has issued
2,179,956 shares of its unregistered common stock and warrants
to purchase an additional 4,637,346 shares of common stock for
gross proceeds of $4,953,157. The warrants have exercise prices
ranging from $2.80 to $5.25 per share, a term of five years and
cannot be exercised within five months of the date of issuance.

6.  Preferred Stock

Series A Preferred
Stock

The Company has 2,000 shares of Series A preferred stock
outstanding at September 30, 2001, all of which were issued
on February 28, 2000. The holders of the Series A
preferred stock are entitled to receive cumulative cash
dividends at a rate of 8% per annum of the initial liquidation
preference of $1,000 per share (the Liquidation
Preference). The Company, at its election, can provide for
the payment of dividends on the Series A preferred stock
through the issuance of additional shares of Series A
preferred stock having an aggregate initial liquidation
preference equal to the amount of cash dividends otherwise
payable. Dividends are cumulative from the date of issuance and
are payable, when, as and if declared by the Board of Directors,
on March 31 and September 30 of each year, commencing
on September 30, 2000. As of September 30, 2001 cumulative
dividends accrued were $267,910.

The holders of the outstanding shares of Series A preferred
stock are not entitled to vote on matters submitted to the
Companys shareholders for voting. However, approval of
holders of a majority of the outstanding shares of Series A
preferred stock is required prior to the issuance of a new
series of preferred stock that ranks senior to the Series A
preferred stock.

Each share of the Series A preferred stock is convertible
at the option of the holder, at any time after the date of
issuance, into shares of common stock equal to the Liquidation
Preference divided by the initial conversion price of $14.24.
The conversion price is subject to adjustment in accordance with
the Companys articles of incorporation.

Series B Preferred
Stock

During February 2001, HSNS amended it bylaws to provide for
the authorization of 6,500 shares of Series B preferred
stock. HSNS issued 6,000 shares of Series B preferred stock
(2,000 of which are being held in escrow) in connection with the
Summus, Ltd. asset acquisition. See Note 2. Each share of
Series B preferred stock:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | will be automatically converted into 1,000 shares of common
	stock, subject to adjustment for stock dividends, stock splits
	and the like, after the Companys charter is amended to
	increase the number of authorized shares of common stock to at
	least 60 million shares. Until then, the Series B
	preferred stock will not be convertible. Under the terms of the
	Asset Purchase Agreement, HSNS is required to

12



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)



6.  Preferred Stock (continued)




| |   |                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | seek shareholder approval to amend its charter to increase the
	number of authorized shares of common stock so that there will
	be sufficient shares of common stock available and reserved for
	issuance upon conversion of the Series B preferred stock.
|
| |  | is entitled to receive dividends and participate in
	distributions upon liquidation, pro rata, with the common stock
	on an as-converted basis.                                                                                                           
|
| |  | will vote equally with the common stock on an as-converted basis.                                                                                                                                                                                         

The above rights apply even if there are insufficient authorized
shares of common stock to permit conversion of the shares of
Series B preferred stock. There are no other preferences or
privileges associated with the Series B preferred stock.

7.  Settlements of Contractual Disputes and
Litigation

In June 2001, the Company entered into an agreement of
settlement and compromise whereby it issued 250,000 shares of
its restricted common stock in full satisfaction of a $435,815
payable to entities affiliated with a related party. Under the
terms of the agreement, the Company agreed to register the
resale of the shares issued upon the Companys filing of a
registration statement under the Securities Act of 1933.

On June 29, 2001, the Company entered into a settlement
agreement and a voting agreement with William R. Dunavant and
his counsel. Under the terms of such agreements:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Company issued an aggregate of 475,000 shares of common
	stock to Mr.  Dunavant and his counsel which were valued at
	$352,688. Such amount was determined by applying a discount to
	the traded value of the Companys stock on the date of the
	settlement agreement;                                                                                                                                                                                                                                                                                                                         
|
| |  | Mr. Dunavant agreed to certain resale restrictions with
	respect to all but 350,000 shares of common stock held by him
	(an aggregate of 2,275,000 shares), specifically, to limit his
	public resale of such shares to 30,000 shares per calendar month
	until February 15, 2002;                                                                                                                                                                                                                                                                                                                  
|
| |  | the Company agreed to prepare and proceed diligently to complete
	and file a registration statement with the SEC registering the
	resale of all of the shares held by Mr. Dunavant, his
	spouse and his counsel, with Mr. Dunavant and his counsel having
	a right to seek an immediate hearing for emergency injunctive
	relief if such registration statement was not filed before
	July 31, 2001, unless counsel to the Company advised the
	Company (as counsel has) that it was in the best interests of
	the Company and its shareholders to delay the filing of such
	registration statement;
|
| |  | Mr. Dunavant, his spouse and his counsel agreed, for a
	two-year period from the date of the agreements, to vote the
	shares held by them in favor of and for the election of Board
	nominees by the Company and to vote such shares in a manner
	consistent with the recommendation of the Board with respect to
	certain extraordinary transactions (such as a tender offer, an
	exchange offer, merger or other business combination); and                                                                                                                                                       
|
| |  | the Company, on the one hand, and Mr. Dunavant and his
	counsel, on the other, executed mutual general releases with
	respect to any and all claims against each other, except with
	respect to the obligations and liabilities under such agreements.                                                                                                                                                                                                                                                                                                                                              

At the meeting of the Companys Board of Directors held on
July 20, 2001, counsel to the Company advised the Board
that, in counsels opinion, it was in the best interests of
the Company and its shareholders to delay the filing of a
registration statement with the SEC to register the resale of
all the shares of common

13



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)



7.  Settlements of Contractual Disputes and
Litigation (continued)


stock held by Mr. Dunavant, his spouse and his attorney.
Counsels views on this subject took cognizance of, among
other things, the critical importance to the Company of:



| |   |                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | becoming timely in its reporting obligations under the
	Securities Exchange Act of 1934, as amended (at the time the
	Companys quarterly report on Form 10-Q for the first
	quarter of 2001, to have been filed on or before May 15,
	2001, had not yet been filed); and                                 
|
| |  | clearing its Form 10 at the earliest opportunity possible,
	since the clearance of the Form 10 is a prerequisite to
	having the Companys common stock made eligible for
	quotation on the OTC Bulletin Board and thereby potentially
	opening up greater opportunities for the Company to raise
	capital.

The Company and its counsel, in accordance with the
June 29, 2001 settlement agreement, have kept
Mr. Dunavant, through his counsel, apprised of the
Companys contemplated timing with respect to the filing of
the registration statement in view of these considerations.
Further, the Company has initiated the process by which all of
its shareholders with registration rights, including
Mr. Dunavant, have been sent a notice seeking an indication
from such shareholders of their desire to have their shares
subject to such registration rights covered by the registration
statement, the number of such shares and their intended plan of
distribution.

The Company cleared all comments with respect to its
Form 10 on November 2, 2001. The Company is now endeavoring
to file with the SEC a registration statement on Form S-1
as expeditiously as possible.

The AIC Litigation

On March 30, 2001, Analysts International Corporation
(AIC) filed a civil summons and complaint in General
Court of Justice, District Court Division, County of Wake, North
Carolina, against High Speed Net Solutions, Inc. The complaint
alleged that the Company breached certain contracts with AIC,
dated December 9, 1999, February 11, 2000,
April 25, 2000, May 9, 2000, and May 23, 2000,
under which AIC provided the Company with computer programming
services. AIC requested that the court enter judgment in its
favor for $358,426, plus pre-judgment interest from
September 26, 2000, on certain invoices at the rate of 18%
per annum, post-judgment interest at the rate of 8% per annum,
reasonable costs of AIC and other relief the court deems
equitable.

The Company and AIC entered into a settlement agreement and
release, dated August 7, 2001, under which the Company has
agreed to pay the sum of $358,426, plus interest accruing at the
rate of 8% per annum from March 31, 2000 (the
Indebtedness) according to the following payment
schedule: (i) $20,000 upon execution of the settlement
agreement, (ii) $5,000 per month for a period of nine months,
commencing one month after execution of the settlement
agreement, and (iii) $10,000 per month thereafter until the
balance of the Indebtedness is paid in full. The Company also
executed a consent order in favor of AIC providing for
AICs entry of a judgment by consent in the amount of the
Indebtedness, less any payments made under the settlement
agreement, in the event the Company defaults on its obligations
under the settlement agreement.

The ENELF Litigation

On March 15, 2001, ENELF, LLC filed a civil lawsuit in the
United States District Court for the Eastern District of Texas
alleging patent infringement by Microsoft Corporation, Texas
Instruments, Incorporated Aware, Inc. and Summus, Ltd. ENELF
alleged that certain modules of MaxxSystem and PhotoID SDK
infringed upon ENELFs U.S. Patent Number 4,599,567
entitled Signal Representation Generator. ENELF
sought to enjoin Summus, Ltd. from making, selling, offering for
sale, using, or importing its wavelet-based video and image
processing technology. In addition, ENELF sought an unspecified
amount of monetary damages. The Company has filed an answer
denying ENELFs allegations, and seeking a declaratory
judgment of non-infringement, invalidity, and unenforceability.
The Company has recently entered into

14



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

7.  Settlements of Contractual Disputes and
Litigation (continued)

settlement discussions with ENELF, but are prepared to provide a
vigorous defense to this lawsuit. Mediation has been scheduled
for November 2001. The Company has not recorded a loss
contingency relating to this complaint because, in
managements opinion, it is not probable that a loss
contingency exists and an amount cannot reasonably be estimated.

Settlement of Claims of Van
Ernst Jakobs N.V.

On August 21, 2001, the Company commenced negotiations with
Van Ernst Jakobs N.V. (VEJ) regarding the settlement
of disputed amounts claimed by VEJ.

VEJ asserted a claim for services rendered in connection with
fund raising activities it coordinated and for services as a
finder in the Summus, Ltd. asset acquisition. VEJ
asserted that certain amounts were due and payable by the
Company to VEJ, in the form of cash and equity securities of the
Company. The Companys management was of the view that
payment of any amounts to VEJ (beyond consideration previously
paid in connection with its capital-raising efforts on behalf of
the Company, consisting of a cash payment of $100,000 and the
issuance of 32,501 shares of the Companys common stock)
was conditioned on VEJ raising additional capital for the
Company.

Upon consultation with the Companys outside counsel, the
Company was advised of the strengths and weaknesses of
VEJs claims and the uncertain outcome of potential
litigation. After considering the facts and circumstances, the
Companys management agreed to settle the claim (for a
significantly lower amount than originally claimed and with no
disbursement of cash) in order to:



| |     |                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | maintain a good relationship with VEJ, as a shareholder of HSNS
	and as a representative of other significant HSNS shareholders;                                                                                                                                                                                                                            
|
| | (2) | further induce VEJ to assist with or participate in future
	capital raising activities (recognizing that VEJ has been
	involved in significant capital raising transactions on behalf
	of HSNS that have been critical to the financing of its
	operations and HSNS continues to depend upon sales of its equity
	securities to finance its operations); and
|
| | (3) | avoid costly litigation in connection with the asserted claim.                                                                                                                                                                                                                                                                                              

In October 2001, the Company and VEJ reached an agreement
in principle (currently being memorialized in a definitive
settlement agreement and release) which contemplates that the
Company will issue to VEJ:



| |     |                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | 80,000 shares of its common stock (in lieu of a cash payment of
	$143,415);                                                                                      
|
| | (2) | a warrant to purchase 250,000 shares of HSNS common stock with
	an exercise price of $4.00 per share, valued using the
	Black-Scholes pricing model, at $400,000;
|
| | (3) | a warrant to purchase 150,000 of HSNS common stock with an
	exercise price of 2.50 per share, valued, using the
	Black-Scholes pricing model, at $256,500; and   
|
| | (4) | a warrant to purchase 150,000 of HSNS common stock with an
	exercise price of 4.50 per share, valued, using the
	Black-Scholes pricing model, at $252,000.       

The Company has expensed the aggregate value of these
securities, $1,051,915, in the third quarter ending
September 30, 2001.

15



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

8.  Discontinued Operations

Divestiture of Rich
Media Direct (RMD) Business, including Douglas May
& Co., Inc.

Upon the closing of the Summus, Ltd. asset acquisition, the
Company determined to focus primarily on Summus, Ltd.s
business operations at the time of the transaction. The Company
chose to focus primarily on Summus, Ltd.s business plan
because management perceived it had the potential to create
greater shareholder value compared to the scope of HSNSs
business operations. In addition, the Company did not expect to
have the fund-raising capacity to continue to fund the business
plans of both Summus, Ltd. and HSNS, as previously envisioned.
The Company did not establish a plan to divest itself of its
rich media direct business (including Douglas May
& Co.s operations) but began to undertake a management
review to determine the appropriate course of action for this
portion of its business given the existing and anticipated
funding constraints.

On September 19, 2001, the Company and Douglas May entered
into a stock purchase agreement under which the Company sold and
transferred to Mr. May all of the Companys equity
interest in Douglas May & Co. and related rich media direct
assets. The date of the transaction represents the measurement
date, as defined by Accounting Principles Board Opinion
No. 30 (APB 30), for the disposition of the
Companys rich media direct business. The results of
operations of Douglas May & Co. have been presented as
discontinued operations in the Companys statement of
operations for the three and nine months ended
September 30, 2001 in accordance with the guidance of APB
30. For the period February 16, 2001 through
September 30, 2001, the operations of Douglas May & Co.
reflected approximately $319,000 in revenues and a net loss of
$135,798. The carrying value of the assets of Douglas May &
Co. was approximately $81,000 at September 30, 2001. The
Company has recorded a loss of $215,500 on this disposition for
the nine months ended September 30, 2001.

Under the terms of a share acquisition agreement, the Company
acquired all of the issued and outstanding shares of capital
stock of Douglas May & Co. from Mr. May in
September 2000. As partial consideration for the
Companys sale of Douglas May & Co. back to
Mr. May, the Company has been released from its obligations
with respect to two allotments of shares of the Companys
common stock issued to Mr. May under the terms of the
September 2000 share acquisition agreement, specifically:



| |   |                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the obligation to repurchase one allotment of 87,498 shares of
	the Companys common stock for $576,000; and                                                                                                                                                         
|
| |  | the obligation to issue to Mr. May additional shares of the
	Companys common stock, which when combined with an
	original 50,000 share allotment, would provide a value of
	$500,000 as of the first anniversary of the date the Company
	acquired Douglas May & Co.

The release is expressly made conditional upon the Company not
filing (or having filed against it) a petition in bankruptcy for
a period of one year from the closing of the sale of Douglas May
& Co. to Mr. May. Since this release is conditional for
one year, the Company will continue to reflect a liability of
$576,000, classified as a deferred redemption feature in the
accompanying balance sheets, relating to the 87,498 shares of
the Companys common stock owned by Mr. May for the
one year time period. If the Company does not file a petition in
bankruptcy during the one-year time period commencing
September 19, 2001, the $576,000 liability will be
reclassified to permanent equity.

Under the terms of the stock purchase agreement, Mr. May
retains his option, issued under his now terminated employment
agreement with the Company, to purchase 150,000 shares of the
Companys common stock at an exercise price of $2.50 per
share, such options being exercisable over a ten-year term.

In connection with the sale of the Companys entire equity
interest in Douglas May & Co., the Company transferred
certain technology to Douglas May & Co., including specific
applications of the Companys

16



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##### 



HIGH SPEED NET SOLUTIONS, INC.


Notes to Consolidated Financial Statements 
(Continued)

8.  Discontinued Operations (continued)

MaxxSystem suite of software products developed in connection
with the Companys previously planned rich media
direct service offering.

The Company also entered into a technology license agreement
(and a related source code escrow agreement) with a newly formed
corporation and wholly-owned subsidiary of Douglas May & Co.
Under the technology license agreement, the Company has granted
to this company a perpetual, non-exclusive, non-transferable
license with respect to some of the Companys core software
technology for image, video compression and video streaming. The
technology license agreement provides for the licensees
payment to the Company of royalties, payable on a quarterly
basis, equal to the greater of: (1) a percentage of the
net revenues derived from the sale or license of end
user products using or incorporating the licensed technology or
(2) specified minimum amounts. This royalty payment plan
will remain in effect each year the agreement remains in effect.
The agreement can be terminated by the licensee at any time
following the first to occur: (1) payment of $400,000 in
royalty payments to the Company or (2) ninety days prior to
the second anniversary of the agreement, provided that $400,000
in royalty payments have been earned by the Company.

17



---



##### 





|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
	Condition and Results of Operations

Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements
that we believe are within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, which are intended to be covered by the
safe harbors created by such acts. For this purpose, any
statements that are not statements of historical fact may be
deemed to be forward-looking statements, including the
statements under Managements Discussion and Analysis
of Financial Condition and Results of Operations regarding
our strategy, future operations, future expectations or future
estimates, financial position and objectives of management.
Those statements in this Form 10-Q containing the words
believes, anticipates,
plans, expects and similar expressions
constitute forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on our current expectations
and are subject to a number of risks, uncertainties and
assumptions relating to our operations, results of operations,
competitive factors, shifts in market demand and other risks and
uncertainties. The most important factors that could prevent us
from achieving our stated goals include, but are not limited to,
the following:



| |   |                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a lack of sufficient financial resources to implement the
	Companys business plan, which has resulted in the
	Companys receiving a going concern opinion
	from its independent auditors with respect to its audited
	financial statements as of and for the year ended December 
	31, 2000;
|
| |  | our ability to generate sufficient working capital to meet our
	operating requirements;                                                                                                                                                                                                        
|
| |  | our ability to develop and enter into strategic relationships
	with wireless service providers, semiconductor and device
	designers, wireless device manufacturers and content providers;                                                                                                      
|
| |  | timely deployment by wireless service providers, semiconductor
	and device designers, and wireless device manufacturers of our
	software in their networks and mobile information devices;                                                                                                     
|
| |  | the continued growth in demand for wireless and mobile usage;                                                                                                                                                                                                                                  
|
| |  | new product development and acceleration of commercial
	deployment of such products;                                                                                                                                                                                                           
|
| |  | technological competition, which creates the risk of the
	Companys technology being rendered obsolete or
	noncompetitive;                                                                                                                                                                     
|
| |  | the lack of patent protection with respect to the Companys
	technology; and                                                                                                                                                                                                                   
|
| |  | potential infringement of the patent rights of third parties.                                                                                                                                                                                                                                  

Although we believe that the assumptions underlying our
forward-looking statements are reasonable, any of the
assumptions could be inaccurate and actual results may differ
from those indicated by the forward-looking statements included
in this Form 10-Q. In light of the significant
uncertainties inherent in the forward-looking statements
included in this Form 10-Q, you should not consider the
inclusion of such information as a representation by us or
anyone else that we will achieve such results. Moreover, we
assume no obligation to update these forward-looking statements
to reflect actual results, changes in assumptions or changes in
other factors affecting such forward-looking statements.

Overview

High Speed Net Solutions, Inc. d/b/a Summus (HSNS or
the Company), following its acquisition of the
assets and operations of Summus, Ltd. (Summus, Ltd.)
in February 2001 (see Note 2 to the condensed
consolidated financial statements included in this
Form 10-Q), is engaged in research and development contract
work for government agencies in the areas of complex imaging and
object recognition.

From 1991 through the date of the Companys acquisition,
Summus, Ltd.s focus had been on providing its expertise in
the fields of mathematics, including wavelets, non-linear
partial differential equations and

18



---



##### 







| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | mine detection (both land and sea);                                               
|
| |  | automatic target recognition, de-noising and image compression
	and decompression;
|
| |  | side scan sonar 3D imaging;                                                       
|
| |  | missile imaging software (smart bomb technology); and                             
|
| |  | 3D (simulation and mapping).                                                      

Our government contract work will continue to focus on solving
specific technical and scientific problems in the government
sector. The government contract work has led to the development
of software development kits that allow software developers to
create new software products that are compatible with and
complementary to our software and technology, and revenue
generation through licensing and sales of that technology.
Summus, Ltd. generated revenues from the licensing of these
software development kits of $292,142, $101,682 and $105,112 in
2000, 1999 and 1998, respectively. Our current revenue stream
from these products is primarily attributable to renewal or
supplemental licenses.

Currently we are undertaking two major research projects:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | In September 1999, the Office of Naval Research awarded
	Summus, Ltd. a two-year, $600,000 contract to develop a software
	system to enable automatic identification and reconstruction of
	distinctive geological and topographic information of the
	seafloor bottom from side scan sonar images. The Company
	delivered a preliminary version of the system in July of 2001.
	We anticipate delivering a final version of the system in
	December 2001, at which time we expect to receive an
	additional payment of $85,000. The Company anticipates that the
	Office of Naval Research will extend the contract for purposes
	of having us provide additional functionality to the system.
|
| | (2) | In March 2001, the Office of Naval Research awarded the
	Company a one year, $167,000 contract to develop a computer
	model for the generation of synthetic side scan sonar images.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

The Company recently entered into an agreement with Face
Technologies (Pty) Ltd., a wholly-owned subsidiary of
arivia.kom, the South African information technology company, on
terms for the purchase by Face Technologies of 1,500 licenses of
the Companys Photo ID image decompressor for
Windows CE. The licenses will be used to access photo
identification pictures stored in the Companys format on
the South African credit card format drivers
license manufactured by Prodiba (Pty) Ltd. The purchase follows
a decision in 1998 by Face Technologies, Prodiba and the South
African government to include photo identification images within
the two-dimensional (2D) barcode printed on drivers
licenses. The Photo ID image decompressors will be used in
a mobile, wireless unit developed by SyGade (formerly NATech)
for Face Technologies and the South African Department of
Transport, and will assist law enforcement officials with
on-location identity verification and improved information
collection for accident and traffic violation reports. Although
the revenues to be generated from the agreement are relatively
nominal, the Company believes that its image technology may have
other ID card and security-related applications.

In conjunction with our government work, we are currently
exploring applications of our complex imaging and object
recognition technologies in the medical sector. Our current
focus is on computerized medical diagnosis solutions for the
anatomical pathological (AP) market. We are currently
considering entering into a joint venture or similar arrangement
with a company in this market for purposes of assessing the
viability of a computerized medical diagnosis solution and
potentially developing a post-screening application.

The core of the Companys business plan, following the
Summus, Ltd. asset acquisition in February 2001 and the
disposition of Douglas May & Co. in September 2001
(see Notes 2 and 8 to the Companys condensed
consolidated financial statements included in this
Form 10-Q), is to focus on the emerging wireless and mobile
market.

19



---



##### 



We are in the process of developing multimedia technology to
address the bandwidth, error constraints, contention with voice
and data traffic, and power challenges associated with
multimedia content transmission over existing and future
wireless networks. Our strategic vision is to develop and
commercialize technology that will enable higher quality
multimedia applications to run on moderately priced mobile and
wireless devices on existing wireless networks.

Our strategy is to continue to work toward commercial release of
our BlueFuelTM product line currently under
development. We anticipate that the first release of the
BlueFuel Efficiency Engine (a multimedia operating
system designed to efficiently route, store and monitor
multimedia traffic in a network) will be available during the
fourth quarter of 2001. We are targeting commercial release of
the BlueFuel Video solution (our video compression
software for multimedia applications), including
BlueFuelPlayer (player software), BlueFuel Create (a
content creation tool) and BlueFuel Server (the
server-side engine) in the first quarter of 2002. In
mid-September 2001, the Company conducted its first
over-the-air demonstration of its BlueFuelTM Video
and BlueFuelTM Image modules. The
BlueFuelTM Video module was demonstrated on the
Kyocera 3035 mobile phone; the BlueFuelTM Image
module, on a Qualcomm BREW-enabled mobile phone. Both
demonstrations featured the downloading and display of sports
highlights (video clips and images, respectively) using between
four and seven kilobits per second of bandwidth on the Verizon
CDMA network. The video clips and images were downloaded from
the Companys media server based in Raleigh, North Carolina.

We have recently expanded the focus of our product development
efforts to include the development of an interactive multimedia
exchange application that we anticipate will run, in its first
release, on the Qualcomm BREW wireless platform. This
application will utilize components of our BlueFuelTM
technology, including BlueFuelTM Image,
BlueFuelTM Create, BlueFuelTM Player,
BlueFuelTM Server and the first release of the
BlueFuelTM Efficiency EngineTM. This
latest application development effort is expected to consume a
significant amount of the Companys technical and business
development resources through the remainder of 2001. In parallel
with this effort, we are dedicating additional resources to
define, develop and execute a beta/field trial for
BlueFuel Video to support our internal development efforts
and begin to develop market awareness for BlueFuel. This
beta/field trial is planned for the first quarter of 2002.

The initial porting effort to Qualcomms BREW platform
should provide the foundation for future ports, with the
knowledge gained by porting our technology to the BREW platform
providing an increased knowledge base that can be used across
multiple wireless operating systems. The experience gained
should help reduce the time to market when porting to the
platforms of other industry participants.

Regardless of our technology development and porting efforts, we
will still have to secure contracts with carriers, content
providers and device manufacturers to generate revenue. In that
regard, we are actively seeking to enter into revenue-generating
business relationships and alliances with device manufacturers,
content providers and cellular carriers to extend the reach of
multimedia applications to wireless and mobile devices. It is
our intent to license our technology and provide a framework to
those with whom we enter into such relationships and alliances
that will increase usage, sell devices and increase their
customer base. A specific area of focus will be to identify
targeted applications to drive market pull for our
products. This will entail working with select content providers
to develop applications that represent a high likelihood of
early adoption by end-users. These applications will be offered
to wireless carriers and mobile virtual network operators on a
revenue-sharing basis. We believe that this represents a
significant opportunity for the Company to develop an on-going
service revenue model.

Although we are in the process of building relationships with
wireless and mobile device manufacturers, content providers and
cellular carriers, we have not, as yet, entered into any
revenue-generating contractual agreements with these parties,
and have not, to date, executed any product orders for the
BlueFuel product line. We recognize that a concern for our
corporate viability and the related concerns regarding our lack
of financial resources and ability to meet specific applications
demands and provide product support may hamper our efforts to
forge such business relationships and alliances. Nevertheless,
management believes that the attributes of our technology will
provide opportunities to enhance our product awareness and
profile through such relationships and alliances.

20



---



##### 



We anticipate that the various components of the BlueFuel
product line will be licensed separately or in combination with
one another, with pricing dependent on the number of components
licensed. Our present revenue model contemplates that wireless
carriers or service providers licensing the BlueFuel
product line would be assessed a base fee plus a royalty for
each subscriber that signs up to use the service (e.g., by
downloading BlueFuelPlayer or accessing
BlueFuelServer). A further charge would be assessed if the
service provider requires additional servers. In some cases, we
may effectively subsidize the rollout of the BlueFuel
product line through a revenue sharing arrangement entered into
with a handset manufacturer, content creator and service
provider.

Results of Operations

As explained in Note 2 to the consolidated condensed
financial statements included in this Form 10-Q, the
acquisition of Summus, Ltd.s assets and operations in
February 2001 was accounted for as a capital transaction,
accompanied by a recapitalization. By accounting for the
transaction as such, the transaction is effectively viewed as
the issuance of stock by Summus, Ltd. in exchange for the net
monetary assets of HSNS, accompanied by a recapitalization of
Summus, Ltd. The accounting for the transaction is quite similar
to that resulting from a reverse acquisition, except that no
goodwill or other intangible assets are recorded. As a result of
the transaction, the historical financial statements of Summus,
Ltd., for accounting purposes, are deemed to be those of the
Company.

Three Months ended September 30, 2001
compared to Three Months ended September 30, 2000

Revenues. Total revenues increased $18,521 to $117,279 in
the three months ended September 30, 2001, up 18.8% from
$98,758 in the three months ended September 30, 2000. The
increase in revenues was primarily due to an increase in
providing government contract services.

Costs of Revenues. Total costs of revenues increased
$12,334 to $54,388 in the three months ended September 30,
2001, up 29.3% from $42,054 in the corresponding period of the
prior year. Costs of contracts and license fees for the three
months ended September 30, 2001 and 2000 were comprised
primarily of salaries and related costs of providing government
contract services.

Total gross profit increased $6,817, or 12.2%, to $62,891 for
the three months ended September 30, 2001, compared with
$56,074 for the three months ended September 30, 2000. The
increase was primarily attributable to providing more government
contract services in the three months ended September 30,
2001 compared to the corresponding period of the prior year.

Selling, General and Administrative Expenses. Selling,
general and administrative expenses consist primarily of
salaries, consulting fees, office operations, administrative and
general management activities, including legal, accounting and
other professional fees. Selling, general and administrative
expenses for the three months ended September 30, 2001,
were $2,238,529, compared to $1,642,239 for three months ended
September 30, 2000. The increase in selling, general and
administrative expenses in the third quarter of 2001 primarily
reflects the effects of the Summus, Ltd. asset acquisition in
February 2001.

Non-Cash Compensation. Non-cash compensation for the
three months ended September 30, 2001 was $126,794 compared
to $875,739 for the three months ended September 30, 2000.
During the three months ended September 30, 2001, stock
options were granted to employees at prices below the fair value
of the underlying common stock resulting in total compensation
of $184,478, of which $64,478 was charged to expense during the
three months ended September 30, 2001. The remaining
amount, $120,000, has been classified as deferred compensation
and will be charged to expense as future vesting of the stock
options occurs. The remaining amount of non-cash compensation
for the three months ended September 30, 2001 of $62,316,
reflects the amortization for three months of deferred
compensation resulting from stock options granted during the
year ended December 31, 2000 and during the nine months
ended September 30, 2001, at prices below the fair value of
the underlying common stock. For the three months ended
September 30, 2000, amortization of the deferred
compensation was $875,739. The decrease in amortization of
deferred compensation recorded in the three months ended
September 30, 2001 as compared to the corresponding period
in the

21



---



##### 





Research and Development. Research and development costs
for the three months ended September 30, 2001, were
$149,042 compared to $217,523 for the three months ended
September 30, 2000. The decrease in these costs was due
primarily to the reduced staffing level in the third quarter of
2001 compared with that during the comparable period in the
prior year.

Non-Cash Settlement. Non-cash settlement for the three
months ended September 30, 2001, in the amount of
$1,051,915, is entirely attributable to the settlement of claims
of Van Ernst Jakobs N.V. See Note 7 to the condensed
consolidated financial statements included in this
Form 10-Q.

Gain on Sale of Stock of Equity Investee. Gain on the
sale of stock of equity investee for the three months ended
September 30, 2000 was $435,298. In 1999, Summus, Ltd.
acquired shares of HSNS common stock which it later sold to
third parties. During the three months ended September 30
2000, Summus, Ltd. sold 85,000 shares of HSNS common stock for
gross proceeds of $500,000, resulting in a gain on sale of
$435,298.

Participation in loss of Equity Investee.Participation
in loss of equity investee for the three months ended
September 30, 2000, was $954,512. In 1999, Summus, Ltd.
acquired a majority ownership interest in HSNS. Summus, Ltd.
accounted for its investment in HSNS using the equity method of
accounting. Under the equity method of accounting, Summus, Ltd.
adjusted its investment in HSNS for its share of HSNSs
losses subsequent to the date of Summus, Ltd.s initial
investment. During 2000, Summus, Ltd.s investment in HSNS
was reduced to zero as a result of Summus, Ltd.s sales of
shares of HSNS common stock and through Summus, Ltd.s
share of the losses of HSNS.

Net Interest Income (Expense). Net interest expense for
the three months ended September 30, 2001, was $10,439,
compared to net interest income of $1,716 for the corresponding
period of the prior year. Net interest expense for the three
months ended September 30, 2001 related to interest costs
associated with capital lease obligations and note payable
agreements. The net interest income in the three months ended
September 30, 2000, resulted from earnings on cash balances
generated from the sale of shares of HSNS common stock, net of
interest costs on capital lease obligations and note payable
agreements.

Loss from Discontinued Rich Media Direct Operations. The
Company recorded a loss from operations of its rich media
direct business of $85,810 for the nine months ended
September 30, 2001. The Companys divestiture of this
business includes the sale of Douglas May & Co. to
Mr. May on September 19, 2001. See Note 8 to the
condensed consolidated financial statements included in this
Form 10-Q.

Nine Months ended September 30, 2001
compared to Nine Months ended September 30, 2000

Revenues. Total revenues decreased $144,646 to $624,458
in the nine months ended September 30, 2001, down 18.8%
from $769,104 in the nine months ended September 30, 2000.
The decrease in revenues was primarily due to a decrease in
providing government contract services.

Costs of Revenues. Total costs of revenues decreased
$39,272 to $290,144 in the nine months ended September 30,
2001, down 11.9% from $329,416 in the corresponding period of
the prior year. Costs of contracts and license fees for the nine
months ended September 30, 2001 and 2000 were comprised
primarily of salaries and related costs of providing government
contract services.

Total gross profit decreased $105,374, or 24.0%, to $334,314 for
the nine months ended September 30, 2001, compared with
$439,688 for the nine months ended September 30, 2000. The
decrease was primarily attributable to less license fee income
in the nine months ended September 30, 2001 compared to the
corresponding period of the prior year. License fee income
generates a higher gross profit percentage compared to contract
revenues.

Selling, General and Administrative Expenses. Selling,
general and administrative expenses consist primarily of
salaries, consulting fees, office operations, administrative and
general management activities,

22



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##### 





Non-Cash Compensation. Non-cash compensation for the nine
months ended September 30, 2001 was $899,056 compared to
$1,699,738 for the nine months ended September 30, 2000.
During the nine months ended September 30, 2001, stock
options were granted to employees at prices below the fair value
of the underlying common stock resulting in total compensation
of $1,064,166, of which $703,666 was charged to expense during
the nine months ended September 30, 2001. The remaining
amount, $360,500, has been classified as deferred compensation
and will be charged to expense as future vesting of the stock
options occurs. The remaining amount of non-cash compensation
for the nine months ended September 30, 2001 of $195,390,
reflects the amortization for nine months of deferred
compensation resulting from stock options granted during the
year ended December 31, 2000 and during the nine months
ended September 30, 2001, at prices below the fair value of
the underlying common stock. For the nine months ended
September 30, 2000, amortization of deferred compensation,
resulting from the issuance of stock options at prices below the
fair value of the underlying common stock, was $1,699,738. The
decrease in amortization of deferred compensation recorded in
the nine months ended September 30, 2001 as compared to the
corresponding period in the prior year from options granted in
year 2000 is primarily the result of the reversal of deferred
compensation from forfeited stock options during 2001, plus the
large number of fully vested options granted during the nine
months ended September 30, 2000.

Research and Development. Research and development costs
for the nine months ended September 30, 2001, were $366,428
compared to $991,436 for the nine months ended
September 30, 2000. The decrease in these costs was due
primarily to the reduced staffing level in the first half of
2001 compared to that during the comparable period of the prior
year.

Non-Cash Settlement. Non-cash settlement for the nine
months ended September 30, 2001, in the amount of
$1,051,915, is entirely attributable to the settlement of claims
of Van Ersnt Jakobs N.V. See Note 7 to the
consolidated condensed financial statements included in this
Form 10-Q.

Gain on Sale of Stock of Equity Investee. Gain on the
sale of stock of equity investee for the nine months ended
September 30, 2000 was $3,680,065. In 1999, Summus, Ltd.
acquired shares of HSNS common stock which it later sold to
third parties. During the nine months ended September 30
2000, Summus, Ltd. sold 1,000,000 shares of HSNS common stock
for gross proceeds of $4,493,428, resulting in a gain on sale of
$3,680,065.

Participation in loss of Equity Investee. Participation
in loss of equity investee for the nine months ended
September 30, 2000, was $3,037,205. In 1999, Summus, Ltd.
acquired a majority ownership interest in HSNS. Summus, Ltd.
accounted for its investment in HSNS using the equity method of
accounting. Under the equity method of accounting, Summus, Ltd.
adjusted its investment in HSNS for its share of HSNSs
losses subsequent to the date of Summus, Ltd.s initial
investment. During 2000, Summus, Ltd.s investment in HSNS
was reduced to zero as a result of Summus, Ltd.s sales of
shares of HSNS common stock and through Summus, Ltd.s
share of the losses of HSNS.

Net Interest Income (Expense). Net interest expense for
the nine months ended September 30 2001, was $22,512,
compared to net interest income of $51,690 for the corresponding
period of the prior year. Net interest expense for the nine
months ended September 30, 2001 related to interest costs
associated with capital lease obligations and note payable
agreements. The net interest income in the nine months ended
September 30, 2000, resulted from earnings on cash balances
generated from the sale of shares of HSNS common stock, net of
interest costs on capital lease obligations and note payable
agreements.

Loss from Discontinued Rich Media Direct Operations. The
Company recorded a loss from operations of its rich media
direct business of $135,798, as well as a loss on disposal
of this business segment of $215,500, for the nine months ended
September 30, 2001. The Companys divestiture of this
business includes

23



---



##### 





Liquidity and Capital Resources

As of September 30, 2001, the Company had $246,751 of cash
on hand and negative working capital of approximately
$7.1 million. Contributing to the negative working capital
balance is a current liability of approximately
$1.1 million relating to the non-cash settlement of claims
of Van Ernst Jakobs, N.V. This liability will be satisfied
in full during in the fourth quarter of 2001 through the
issuance of shares of the Companys common stock and stock
purchase warrants. As of September 30, 2001, the Company
had approximately $5.4 million of accounts payable, accrued
expenses, notes payable and capital lease obligations. As of
September 30, 2001, the Company had entered into settlement
agreements or arrangements with approximately 30 of its
vendors, to which the Company owed roughly $1.5 million,
under which such vendors have agreed to the Companys
payment of less than the amounts due, the extension of payment
terms by between 9-18 months and/or the satisfaction of the
amounts due through a combination of cash and stock. The vendor
to which the Company owed the largest amount is Analysts
International Corporation (AIC), which provided the
Company with computer programming services during the 1999-2000
period. The Company entered into a settlement agreement and
release, dated August 7, 2001, with AIC. Under the terms of
the settlement agreement, the Company has agreed to pay the sum
of $358,426, plus interest accruing at the rate of 8% per annum
from March 31, 2000 (the Indebtedness)
according to the following payment schedule: (i) $20,000
upon execution of the settlement agreement, (ii) $5,000 per
month for a period of nine months, commencing one month after
execution of the agreement, and (iii) $10,000 per month
thereafter until the balance of the Indebtedness is paid in full.

The Companys principal sources of liquidity for operating
activities and capital expenditures for the past three years and
through September 30, 2001, has consisted of capital
contributed and borrowings from certain principal shareholders
and their affiliates, the sale of shares of common stock of its
equity investee, HSNS, the licensing of software products to
HSNS under the February 1999 Marketing License Agreement
and loans from HSNS under the Asset Purchase Agreement.

As of September 30, 2001, the Company anticipated that the
sale of its equity securities would represent the primary source
of the Companys funding, as the Company has no credit
facilities. We cannot guarantee that we will continue to be able
to raise capital or that if we do so it will be on favorable
terms. We may have to sell equity at below market rates, and any
future sales of our capital stock to finance our business plan
will dilute our existing shareholders ownership. The
Companys continuation as a going concern depends on its
ability to generate sufficient cash flow to meet its obligations
on a timely basis, to obtain additional financing as may be
required and ultimately to attain profitability.

The success and growth of the Companys business, following
the Summus, Ltd. asset acquisition, is dependent in large part
on our ability to partner and develop relationships within the
wireless industry. In order for the Company to execute on its
business plan, the Company anticipates that it will require
approximately $15 million in working capital within the
next twelve months, in part to expand its operations to Europe
and Asia, where the wireless network infrastructure is currently
more developed than it is in North America. It is imperative
that the Company market and sell or license its products where
the infrastructure is capable of supporting our technology. This
will represent a significant cost to the Company but is critical
to its future success. By establishing operations in targeted
areas around the world, supported by the necessary marketing
resources, the Company will be able to work with local carriers,
device manufacturers and content providers and seek to shorten
sales cycles established with its targeted customer base.

Cash Flow used in Operating Activities. Net cash used in
operating activities was $4,895,683 in the nine months ended
September 30, 2001, compared to $4,533,266 in the
corresponding period of the prior year. The increase in net cash
used in operating activities was due primarily due to the
acquisition of the assets and operations of Summus, Ltd. by HSNS
on February 16, 2001, offset by the reduced staffing level
in the first half of 2001 compared with that during the
comparable period in the prior year.

24



---



##### 



Cash Flow from Investing Activities. Net cash used in
investing activities was $337,451 in the nine months ended
September 30, 2001, representing internal capitalized
software development costs, compared to net cash provided by
investing activities of $4,361,195 in the corresponding period
of the prior year, representing the proceeds from Summus,
Ltd.s sale of 1,000,000 shares of common stock in HSNS,
its equity investee.

Cash Flow from Financing Activities. Net cash provided by
financing activities was $5,271,390 in the nine months ended
September 30, 2001 compared to net cash provided by
financing activities of $319,778 in the corresponding period of
the prior year. Net cash provided by financing activities in the
nine months ended September 30, 2001 related to:



| |   |                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the sale of 2,179,956 shares of the Companys common stock,
	along with warrants to purchase an additional 4,637,346 shares
	of common stock, at exercises prices ranging from $3.50 to
	$5.25 per share (all such securities being restricted
	securities as defined in Rule 144) to accredited
	investors, generating aggregate proceeds of $4,953,157;
|
| |  | $2,521, representing proceeds from the exercise of stock options
	for 6,043 shares of common stock;                                                                                                                                                                                                                                                        
|
| |  | $540,000, representing the proceeds of a loan from HSNS extended
	under the terms of the Asset Purchase Agreement. Upon the
	closing of the Summus, Ltd. asset acquisition, the indebtedness
	was cancelled in its entirety;                                                                                                                               
|
| |  | $124,288 in principal payments on capital lease obligations; and                                                                                                                                                                                                                                                                                           
|
| |  | $100,000 in cash payments in partial settlement of the Dunavant
	loss contingency.                                                                                                                                                                                                                                                                         

Net cash flow provided by financing activities of $319,778 in
the nine months ended September 30, 2000, represented
proceeds of a loan form HSNS of $500,000, offset by $180,222 in
cash payments on capital lease and note agreements.

New Accounting Pronouncements

On June 29, 2001, the Financial Accounting Standards Board
(FASB) unanimously approved the issuance of
Statements of Financial Accounting Standards (SFAS)
No. 141, Business Combinationsand
No. 142, Goodwill and Other Intangible
Assets.SFAS 141 eliminates the
pooling-of-interests method of accounting for business
combinations except for qualifying business combinations that
were initiated prior to July 1, 2001. SFAS 141 also
includes new criteria to recognize intangible assets separately
from goodwill. The requirements of SFAS 141 are effective
for any business combination accounted for by the purchase
method that is completed after June 30, 2001. Under
SFAS 142, goodwill and intangible assets with indefinite
lives are no longer amortized but are reviewed annually, or more
frequently if impairment indicators arise, for impairment.
Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful
lives. The amortization provisions of SFAS 142 requiring
non-amortization of goodwill and indefinite-lived intangible
assets apply to goodwill and indefinite-lived intangible assets
acquired after June 30, 2001. With respect to goodwill and
intangible assets acquired prior to July 1, 2001, the
Company will adopt SFAS 142 in the fiscal year beginning
January 1, 2002, and therefore cease all amortization of
goodwill as of January 1, 2002. The effect of adopting
SFAS 142 by the Company beginning January 1, 2002 is
not expected to have a significant effect on the operating
results or financial position of the Company.



|        |                                                            
|------- | -----------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures About Market
	Risk

We do not use any derivative financial instruments for hedging,
speculative or trading purposes. Our exposure to market risk is
currently immaterial.

25



---



##### 



PART II.

OTHER INFORMATION


Item 1.  Legal Proceedings

The Analysts International Corporation
Litigation

On March 30, 2001, Analysts International Corporation
(AIC) filed a civil summons and complaint in General
Court of Justice, District Court Division, County of Wake, North
Carolina, against High Speed Net Solutions, Inc. The complaint
alleged that we breached certain contracts with AIC, dated
December 9, 1999, February 11, 2000, April 25,
2000, May 9, 2000, and May 23, 2000, under which AIC
provided us with computer programming services. AIC requested
that the court enter judgment in its favor for $358,426, plus
pre-judgment interest from September 26, 2000 on certain
invoices at the rate of 18% per annum, post-judgment interest at
the rate of 8% per annum, reasonable costs of AIC and other
relief the court deemed equitable.

The Company and AIC entered into a settlement agreement and
release, dated August 7, 2001, under which we agreed to pay
the sum of $358,426, plus interest accruing at the rate of 8%
per annum from March 31, 2000 (the
Indebtedness) according to the following payment
schedule: (i) $20,000 upon execution of the settlement
agreement, (ii) $5,000 per month for a period of nine months,
commencing one month after execution of the agreement, and (iii)
$10,000 per month thereafter until the balance of the
Indebtedness is paid in full. We also executed a consent order
in favor of AIC providing for AICs entry of a judgment by
consent in the amount of the Indebtedness, less any payments
made under the settlement agreement, in the event we default on
our obligations under the settlement agreement.

The Cale Yarborough Litigation

On April 25, 2001, Cale Yarborough, a Company shareholder,
filed a summons and complaint against High Speed Net Solutions,
Inc., David Gordon, Bear Stearns Securities Corp., MidSouth
Capital, Inc., and Interwest Stock Transfer Co. in the United
States District Court, District of South Carolina, Florence
Division, alleging, among other things, (i) breach of an
agreement Mr. Yarborough entered into with David Gordon under
which Mr. Gordon was to provide an opinion letter as to
Mr. Yarboroughs ability to resell shares of our
common stock in accordance with Rule 144 promulgated under
the Securities Act of 1933, (ii) violation of
Rule 144, (iii) professional negligence and breach of
fiduciary duty, and (iv) violation of federal and state
securities laws. All of the causes of action in the complaint
stem from the alleged failure to properly advise
Mr. Yarborough as to when the shares of our common stock
held by Mr. Yarborough could properly be resold under
Rule 144.

On May 17, 2001, the complaint was dismissed without
prejudice. As such, it is subject to being reopened upon the
showing of good cause within the 60-day period following the
issuance of the dismissal order. A check of the court docket has
revealed that nothing was filed during this 60-day period. We
believe that Mr. Yarborough and Mr. Gordon are in the
process of reaching or have reached a settlement of this matter.
The Company has not recorded a loss contingency relating to this
complaint because; in managements opinion, it is not
probable that a loss contingency exists and an amount cannot be
reasonably estimated.

The ENELF Litigation

On March 15, 2001, ENELF, LLC filed a civil lawsuit in the
United States District Court for the Eastern District of Texas
alleging patent infringement by Microsoft Corporation, Texas
Instruments, Incorporated, Aware, Inc. and Summus, Ltd. ENELF
alleged that certain modules of MaxxSystem and PhotoID SDK
infringed upon ENELFs U.S. Patent Number 4,599,567
entitled Signal Representation Generator. ENELF
sought to enjoin Summus, Ltd. from making, selling, offering for
sale, using, or importing its wavelet-based video and image
processing technology. In addition, ENELF sought an unspecified
amount of monetary damages. We have filed an answer denying
ENELFs allegations, and seeking a declaratory judgment of
non-infringement, invalidity and unenforceability. We have
recently entered into settlement discussions with ENELF, but are
prepared to provide a vigorous defense to this lawsuit.
Mediation has been scheduled for

26



---



##### 





The Pin High Company Litigation

In February, 2001, the Pin High Company, Inc. filed suit against
Summus, Ltd. and us in the Superior Court of Wake County, North
Carolina, for non-payment of consulting services rendered. On
April 30, 2001, HSNS, Summus, Ltd. and Pin High entered
into a Release and Settlement Agreement. Under the terms of the
agreement, Summus, Ltd. agreed to pay an aggregate amount of
$20,145.08 in eight installments, the last of which will be due
in December, 2001. The agreement stipulates that if Summus, Ltd.
defaults in its payment obligations, Pin High will have the
right to file a confession of judgment previously executed by
both HSNS and Summus, Ltd. making HSNS and Summus, Ltd. jointly
and severally liable for the amounts due under the agreement,
plus costs and attorneys fees.

Item 2.  Changes in Securities and Use of
Proceeds

During the three months ended September 30, 2001, the
Company issued an aggregate of 1,131,250 shares of its common
stock to 48 persons and entities. These securities were not
registered under the Securities Act of 1933. Except as noted
below, the securities described below were issued in
transactions deemed to be exempt from registration under
Section 4(2) of the Securities Act as transactions by an
issuer not involving any public offering. All of such securities
are deemed to be restricted securities as defined in
Rule 144(a)(3) under the Securities Act. Except as noted below,
no commissions were paid in connection with any of the issuances.

Stock Issuances for Cash

From July 1, 2001 to September 30, 2001, the Company
issued an aggregate of 1,125,857 shares of common stock to 32
accredited investors (all of whom were unaffiliated with the
Company) for a price per share ranging from $1.80 to $3.00, and
issued warrants to purchase, at an exercise price of $2.50 to
$4.00 per share, an additional 2,504,714 shares of common stock,
for aggregate consideration of $2,214,300. In connection with
the issuance of these shares, the Company issued 1,350 shares of
its restricted common stock, as commissions, to the placement
agents involved in such sales. The shares and warrants were
issued in transactions deemed to be exempt from registration
under the Securities Act in reliance upon the exemption provided
by Rule 506 of Regulation D. The names of the
purchasers and the number of shares purchased are as follows:

|                                           |  |           |         | 
|------------------------------------------ |  | --------- | ------- | 
|                                           |  | Number   
|Name of Purchaser                          |  | of Shares
|                                           |  |          
|James D. Andrews                           |  |           | 5,000   | 
|                                          
|                                          
|                                          
|                                          
|James N. Ashby                             |  |           | 5,000   | 
|                                          
|                                          
|                                          
|                                          
|James D. Bailey & Eleanor M. Bailey JT TEN |  |           | 6,500   | 
|                                          
|                                          
|                                          
|                                          
|William B. Bandy                           |  |           | 30,000  | 
|                                          
|                                          
|                                          
|                                          
|Thomas Bivens                              |  |           | 28,278  | 
|                                          
|                                          
|                                          
|                                          
|James L. Bonds                             |  |           | 12,500  | 
|                                          
|                                          
|                                          
|                                          
|Richard W. Bonenberger                     |  |           | 137,500 | 
|                                          
|                                          
|                                          
|                                          
|Robert Bonenberger                         |  |           | 77,500  | 
|                                          
|                                          
|                                          
|                                          
|Gerald Brink & Pamela A. Vancil            |  |           | 25,000  | 
|                                          
|                                          
|                                          
|                                          
|C.E. Bryant, Jr.                           |  |           | 100,000 | 
|                                          
|                                          
|                                          
|                                          
|Jennifer Catano                            |  |           | 1,300   | 
|                                          
|                                          
|                                          
|                                          
|Gina M. Cimino                             |  |           | 166,667 | 
|                                          
|                                          
|                                          
|                                          
|David C. Cox                               |  |           | 5,000   | 
|                                          
|                                          
|                                          
|                                          
|D&R Holding, Co. L.L.C.                    |  |           | 15,000  | 
|                                          
|                                          
|                                          
|                                          
|Douglas J. DeDecker & Lorna Trowbridge     |  |           | 5,000   | 

27



---



##### 



|                                                       |  |           |        | 
|------------------------------------------------------ |  | --------- | ------ | 
|                                                       |  | Number   
|Name of Purchaser                                      |  | of Shares
|                                                       |  |          
|Christopher V. Devone                                  |  |           | 5,000  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Herbert E. Fitgerald III                               |  |           | 12,500 | 
|                                                      
|                                                      
|                                                      
|                                                      
|The Great Commission                                   |  |           | 55,556 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Gregory E. Gilbert                                     |  |           | 10,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Neal Gunther and Nancy Jablonski                       |  |           | 92,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Henk Hazeleger                                         |  |           | 17,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Mark O. Henrikson                                      |  |           | 12,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Marion and Dorothy J. Jablonski                        |  |           | 27,500 | 
|                                                      
|                                                      
|                                                      
|                                                      
|R. Michael Johns and Debra Lee Johns                   |  |           | 5,000  | 
|                                                      
|                                                      
|                                                      
|                                                      
|C.W. McDonald                                          |  |           | 50,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Larry McKenzie                                         |  |           | 32,500 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Eric Raeber                                            |  |           | 70,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Clayton J. Roberts                                     |  |           | 5,000  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Ronald Johnson                                         |  |           | 5,000  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Richard J. & Rita M. Seifert                           |  |           | 55,556 | 
|                                                      
|                                                      
|                                                      
|                                                      
|Richard G. Singer                                      |  |           | 20,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|John Stephanus                                         |  |           | 25,000 | 
|                                                      
|                                                      
|                                                      
|                                                      
|H. Randolph Straughan III & Diana K.
	Straughan JT TEN |  |           | 6,000  | 

In July 2001, the Company issued 4,043 shares of its common
stock upon the exercise of an outstanding stock option. The
Company received $2,021 in proceeds from the exercise of the
stock option.

Stock/ Option Issuances to Directors,
Officers, Employees and Consultants

During the three months ended September 30, 2001, the
Company granted options to purchase an aggregate of 255,230
shares of common stock to employees and consultants under the
Companys 2000 Equity Compensation Plan. These options were
issued with exercise prices below the fair market value at the
time of issuance, and we recorded total deferred compensation
expense of $189,878 related to the option issuances.

Options exercisable for 200,000 shares of common stock were
issued to John Maxwell upon his execution of an employment
agreement with the Company. These options are subject to a
three-year vesting schedule and conditioned upon his continued
employment with the Company.

Options exercisable for 15,000 shares of common stock were
issued to three Summus [?] employees for services rendered to
the Company. These options were fully vested upon issuance.

Options exercisable for 40,230 shares of common stock were
issued to two consultants on August 2001, and vested one
month after issuance.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of
Security Holders

None.

Item 5.  Other Information

None.

28



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##### 



Item 6.  Exhibits and Reports on
Form 8-K

(a)  Exhibits

|        |      |             |  |                                                                                                                                                                                                                                                                                                                                     
|------- | ---- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      | Exhibit    
|Number  |      | Description
|        |      |            
|        | 10.1 |             |  | Settlement Agreement and Release, dated
	August 7, 2001, between Analysts International Corporation
	and High Speed Net Solutions, Inc. (incorporated by reference to
	Exhibit  10.3 of our Quarterly Report on Form 10-Q for
	the quarter ended June 30, 2001, filed on August 14,
	2001)                                          
|        | 10.2 |             |  | Master Porting Agreement, dated as of
	July 27, 2001, between High Speed Net Solutions, Inc. d/b/a
	Summus, Ltd. and Samsung Electronics America (incorporated by
	reference to Exhibit 10.41 of our registration statement on
	Form 10, originally filed on July 5, 2001, and amended
	on September  28, 2001 and October 31, 2001)
|        | 10.3 | *           |  | Letter of Employment, dated August 9, 2001,
	between High Speed Net Solutions, Inc. and John Maxwell
	(incorporated by reference to Exhibit 10.7 of our Quarterly
	Report on Form  10-Q for the quarter ended June 30,
	2001, filed on August  14, 2001)                                                                            
|        | 10.4 |             |  | Consulting Agreement, dated July 9, 2001,
	between High Speed Net Solutions, Inc. d/b/a Summus and Chris
	Kremer (incorporated by reference to Exhibit 10.8 of our
	Quarterly Report on Form 10-Q for the quarter ended
	June 30, 2001, filed on August 14, 2001)                                                                   




|  |                                              
|- | ---------------------------------------------
|* | Executive compensation plans and arrangements

(b)  Reports on Form 8-K

During the quarterly period ended September 30, 2001, the
Company filed with the Securities and Exchange Commission the
following Current Reports on Form 8-K:

On August 28, 2001, the Company filed a Current Report on
Form 8-K which consisted of a letter to the Companys
shareholders advising as to, among other things, the progress
being made in the Companys relationship with Qualcomm, the
Companys efforts to generate revenues through its
contractual relationship with Samsung, the status of the
Companys SEC filings and its capital raising efforts.

29



---



##### 



SIGNATURES

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

|                        |  |                                                                
|----------------------- |  | ---------------------------------------------------------------
|                        |  | High Speed Net Solutions, Inc.                                 
|                       
|Date: November 14, 2001 |  | By: /s/ BJORN JAWERTHBjorn JawerthCo-Chief Executive Officer   
|                       
|Date: November 14, 2001 |  | By: /s/ ROBERT S. LOWREYRobert S. LowreyChief Financial Officer

30



---



##### 



EXHIBIT INDEX

| |       |  |  |                                                                                                                                                                                                                                                                                                                                     
| | ----- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.1  |  |  | Settlement Agreement and Release, dated
	August 7, 2001, between Analysts International Corporation
	and High Speed Net Solutions, Inc. (incorporated by reference to
	Exhibit  10.3 of our Quarterly Report on Form 10-Q for
	the quarter ended June 30, 2001, filed on August 14,
	2001)                                          
| | 10.2  |  |  | Master Porting Agreement, dated as of
	July 27, 2001, between High Speed Net Solutions, Inc. d/b/a
	Summus, Ltd. and Samsung Electronics America (incorporated by
	reference to Exhibit 10.41 of our registration statement on
	Form  10, originally filed on July 5, 2001, and
	amended on September 28, 2001 and October 31, 2001)
| | 10.3* |  |  | Letter of Employment, dated August 9, 2001,
	between High Speed Net Solutions, Inc. and John Maxwell
	(incorporated by reference to Exhibit 10.7 of our Quarterly
	Report on Form 10-Q for the quarter ended June 30,
	2001, filed on August 14, 2001)                                                                              
| | 10.4  |  |  | Consulting Agreement, dated July 9, 2001,
	between High Speed Net Solutions, Inc. d/b/a Summus and Chris
	Kremer (incorporated by reference to Exhibit 10.8 of our
	Quarterly Report on Form 10-Q for the quarter ended
	June  30, 2001, filed on August 14, 2001)                                                                  




|  |                                               
|- | ----------------------------------------------
|* | Executive compensation plans and arrangements.

31