<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                For the quarterly period ended September 30, 2004

Commission File Number 0-29525

                               DEBT RESOLVE, INC.
                               ------------------
        (Exact name of small business issuer as specified in its charter)

       Delaware                                                 33-0889197
       --------                                                 ----------
(State of incorporation)                                 (I.R.S Employer ID No.)

         707 Westchester Avenue, Suite 409, White Plains, New York 10604
         ---------------------------------------------------------------
                    (Address of principal executive offices)

                                 (914) 949-5500
                                 --------------
                           (Issuer's telephone number)

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

As of October 15, 2004, the Company had 29,254,000 shares, $.001 par value, of
common stock issued and outstanding.



<PAGE>
<TABLE>

                               DEBT RESOLVE, INC.

                                      INDEX

                                                                                Page
<S>                                                                             <C>
PART I.  Financial Information

         Item 1.  Financial Statements (Unaudited)

                  Condensed Balance Sheet at September 30, 2004                  3

                  Condensed Statements of Operations for the Three and Nine
                           Months Ended September 30, 2004 and 2003 and
                           Cumulative from inception (April 21, 1997) to
                           September 30, 2004                                    4

                  Condensed Statements of Cash Flows for the Nine Months Ended
                           September 30, 2004 and 2003 and Cumulative from
                           Inception (April 21, 1997) to September 30, 2004      5

                  Notes to Condensed Financial Statements                        6

         Item 2.  Management's Discussion and Analysis or Plan of Operation     12

         Item 3.  Controls and Procedures                                       14

PART II. Other Information

         Item 1.  Legal Proceedings                                             14

         Item 2.  Changes in Securities and Use of Proceeds                     14

         Item 3.  Defaults Upon Senior Securities                               14

         Item 4.  Submission of Matters to a Vote of Security Holders           14

         Item 5.  Other Information                                             14

         Item 6.  Exhibits and Reports on Form 8-K                              14

         Signatures                                                             14

         Certifications
</TABLE>

                                        2


<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements (Unaudited)

                               DEBT RESOLVE, INC.
                          (A Development Stage Company)
                             Condensed Balance Sheet

                                                        September 30,
                                                            2004
                                                         (Unaudited)
                                                        ------------
                             ASSETS

Current assets:
  Cash                                                  $   225,338
  Accounts receivable (net of allowance for
    bad debts of $-0-)                                        2,088
  Deferred offering expenses                                 43,540
  Prepaid expenses and other current assets                  62,666
                                                        ------------
         Total current assets                               333,632

Fixed assets, net                                            67,462
                                                        ------------
Total assets                                            $   401,094
                                                        ============

              LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                     $   138,454
   Accrued compensation expenses                             95,667
   Accrued expenses                                         128,142
   Income taxes payable                                       1,461
   Loan payable to shareholder                               10,000
                                                        ------------
      Total liabilities                                     373,724
                                                        ------------

Commitments and contingencies                                    --

Shareholders' equity:
   Preferred stock, 10,000,000 shares authorized,
      $.001 par value, none issued and outstanding               --
   Common stock, 50,000,000 shares authorized,
      $0.001 par value, 29,254,000 shares issued
      and outstanding                                        29,254
   Additional paid in capital                             3,885,729
   Deficit accumulated during the development stage      (3,887,613)
                                                        ------------
      Total shareholders' equity                             27,370
                                                        ------------
Total liabilities and shareholders' equity              $   401,094
                                                        ============

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

                                        3



<PAGE>

<TABLE>
                                                         DEBT RESOLVE, INC.
                                                    (A Development Stage Company)
                                                 Condensed Statements of Operations
                                                             (Unaudited)
<CAPTION>

                                                                                                                       Cumulative
                                                                                                                     from inception
                                                       Three months                       Nine months               (April 21, 1997)
                                                    ended September 30,               ended September 30,           to September 30,
                                             -------------------------------     -------------------------------    ----------------
                                                  2003              2004              2003              2004              2004
                                             -------------     -------------     -------------     -------------     -------------
<S>                                          <C>               <C>               <C>               <C>               <C>
Revenues                                     $         --      $      2,088      $         --      $      2,088      $      2,088
                                             -------------     -------------     -------------     -------------     -------------
Costs and expenses:
  Payroll and related expenses                    231,445           249,576           531,779           681,853         1,424,698
  General and administrative expenses             540,020           193,896           649,809           663,612         1,924,852
  Research and development expenses                52,754                --           328,981            46,022           499,323
  Depreciation expense                              4,515            11,231             4,515            33,051            46,916
                                             -------------     -------------     -------------     -------------     -------------
Total expenses                                    828,734           454,703         1,515,084         1,424,538         3,895,789
                                             -------------     -------------     -------------     -------------     -------------
Loss from operations                              828 734           452,615         1,515,084         1,422,450         3,893,701
  Interest income                                   1,563               938             1,563             4,482             8,460
                                             -------------     -------------     -------------     -------------     -------------
Loss before taxes                                (827,171)         (451,677)       (1,513,521)       (1,417,968)       (3,885,241)
Income taxes                                           --              --              --                 1,000             2,372
                                             -------------     -------------     -------------     -------------     -------------
Net loss                                     $   (827,171)     $   (451,677)     $ (1,513,521)     $ (1,418,968)     $ (3,887,613)
                                             =============     =============     =============     =============     =============
Basic and diluted net loss per common
  share                                      $      (0.03)     $      (0.02)     $      (0.06)      $     (0.05)
                                             =============     =============     =============     =============
Basic and diluted weighted average
  number of common shares outstanding          28,352,663        29,107,261        25,982,985        29,060,248
                                             =============     =============     =============     =============

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

                                                                 4
</TABLE>



<PAGE>
<TABLE>
                                              DEBT RESOLVE, INC.
                                         (A Development Stage Company)
                                      Condensed Statements of Cash Flows
                                                  (Unaudited)

                                                                                          Cumulative
                                                                                        from inception
                                                                  Nine months           (April 21, 1997)
                                                              ended September 30,       to September 30,
                                                        -----------------------------   ----------------
                                                            2003             2004             2004
                                                        ------------     ------------     ------------
<S>                                                     <C>              <C>              <C>
Cash flows from operating activities:
Net loss                                                $(1,513,521)     $(1,418,968)     $(3,887,613)
Adjustments to reconcile net loss to net cash
    used by operating activities:
  Depreciation                                                4,515           33,051           46,916
  Capital contributions from waived and
    imputed compensation and waived royalty
    and consulting fees                                     889,567          337,500        1,796,309
  Common stock issued in lieu of compensation                27,000               --           27,000
  Deferred offering expenses                                     --          (43,540)         (43,540)
  (Increase) in accounts receivable                              --           (2,088)          (2,088)
  Decrease (increase) in prepaid expenses                   (51,917)         (30,605)         (62,667)
  Increase (decrease) in accounts payable                   224,127           42,811          138,454
  Increase in accrued expenses                                   --           42,873          223,809
  Increase in income taxes payable                               --               89            1,461
                                                        ------------     ------------     ------------
    Net cash used in operating activities                  (420,229)      (1,038,877)      (1,761,959)
                                                        ------------     ------------     ------------
Cash flows from investing activities:
  Purchases of fixed assets                                 (60,874)          (9,995)        (114,377)
                                                        ------------     ------------     ------------
    Net cash used in investing activities                   (60,874)          (9,995)        (114,377)
                                                        ------------     ------------     ------------
Cash flows from financing activities
  Issuance of common stock                                1,287,174          234,000        1,991,674
  Shareholders' loans                                       110,000               --          110,000
                                                        ------------     ------------     ------------
    Net cash provided by financing activities             1,397,174          234,000        2,101,674
                                                        ------------     ------------     ------------
Net increase (decrease) in cash                             916,071         (814,872)         225,338

Cash at beginning of period                                      --        1,040,210               --
                                                        ------------     ------------     ------------
Cash at end of period                                   $   916,071      $   225,338      $   225,338
                                                        ============     ============     ============

There were no cash payments for interest.

Cash payments for income taxes                          $        --      $       911      $       911
                                                        ============     ============     ============
Non cash capital contributions from waived and imputed
  compensation and waived royalty and consulting fees   $   889,567      $   337,500      $ 1,796,309
                                                        ============     ============     ============
Non cash investing and financing activities
  Conversion of shareholder's loan to common stock      $   100,000      $        --      $   100,000
                                                        ============     ============     ============

                             The accompanying notes are an integral part of these
                                        condensed financial statements.
</TABLE>

                                                       5


<PAGE>

                               DEBT RESOLVE, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                     Notes to Condensed Financial Statements
                                   (Unaudited)
                               September 30, 2004

1. ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES:
   ----------------------------------------------

         Organization
         ------------

Debt Resolve, Inc., formerly Lombardia Acquisition Corp. (the "Company"), is a
Delaware corporation and was formed on April 21, 1997. The Company was inactive
and had no significant assets, liabilities or operations through February 24,
2003.

On February 24, 2003, Charles S. Brofman, James D. Burchetta and Michael S.
Harris (collectively, the "Principal Shareholders") purchased 22,500,000
newly-issued shares of the Company's common stock, representing 84.6% of the
then outstanding shares, pursuant to a Stock Purchase Agreement effective
January 13, 2003 between the Company and each of the Principal Shareholders. The
Company received an aggregate cash payment of $22,500 in consideration for the
sale of such shares to the Principal Shareholders.

On February 24, 2003, in accordance with the Company's by-laws for filling
newly-created board vacancies, Danilo Cacciamatta, the sole existing director,
appointed Messrs. Brofman, Burchetta, Harris and Lawrence E. Dwyer, Jr. to the
board of directors of the Company. Mr. Burchetta was named Co-Chairman of the
Board and Chief Executive Officer, Mr. Brofman was named non-executive
Co-Chairman of the Board, Mr. Harris was named Executive Vice President and
General Counsel, and Mr. Cacciamatta resigned his position as Chief Executive
Officer. On April 7, 2003, William M. Mooney, Jr. was elected to the board of
directors. Effective June 9, 2003, Alan M. Silberstein was elected to the board
of directors and was appointed the Company's President and Chief Operating
Officer. Mr. Silberstein submitted his resignation as the Company's President
and Chief Operating Officer, effective October 15, 2004, to pursue other
personal interests, but he will continue to serve as a director.

On May 7, 2003, following approvals by the Board of Directors and holders of a
majority of the Company's common stock, the Company's Certificate of
Incorporation was amended to change the Company's corporate name to Debt
Resolve, Inc. and increase the number of the Company's authorized shares of
common stock from 20,000,000 to 50,000,000 shares.

         Development stage activities
         ----------------------------

Since February 24, 2003, the Company has devoted substantially all of its
efforts to planning and budgeting, research and development activities, and
raising capital. In January 2004, the Company substantially completed the
development of an online system for the settlement of credit card and other
consumer debt and began marketing its product to banks and other creditors. In
February 2004, the Company implemented its online system, on a test basis, with
a collection agency. In July 2004, the Company implemented its online system
with a second client and began generating revenue based on a percentage of the
amount of debt collected by this client. The Company does not expect to generate
significant revenues from these clients during the initial start-up periods.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
   -------------------------------------------

         Going concern
         -------------

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company's
working capital is not sufficient to fund its plan of operations beyond November
2004. This factor raises substantial doubt about the Company's ability to
continue as a going concern. The Company is seeking to raise additional capital
through private equity investments. However, there can be no assurance that the
Company will be able to raise sufficient additional capital as needed to execute
its business plan. If the Company is unable to raise sufficient additional
capital before November 2004, it will have to develop and implement a plan to
eliminate staff and overhead until sufficient additional capital is raised to
support further operations. There can be no assurance that such a plan will be
successful.

                                        6



<PAGE>

         Interim periods
         ---------------

The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information. Accordingly, they do not include all
of the information required by generally accepted accounting principles in the
United States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three months and nine months ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004 or for any other interim period. These statements should be
read in conjunction with the Company's audited financial statements and notes
thereto for the year ended December 31, 2003 included in the Company's annual
report on Form 10-KSB filed with the Securities and Exchange Commission on March
30, 2004.

         Development stage enterprise
         ----------------------------

In accordance with Statement of Financial Accounting Standards No. 7, Accounting
and Reporting by Development Stage Enterprises, the Company is considered to be
in the development stage since it is devoting substantially all of its efforts
to establishing a new business and its planned principal operations have not
produced any significant revenues.

         Use of estimates
         ----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and the accompanying notes. These estimates and assumptions are based
on management's judgment and available information and, consequently, actual
results could be different from these estimates.

         Revenue recognition
         -------------------

The Company earned revenue during the three months ended September 30, 2004 from
a collection agency that implemented the Company's online system. Revenue is
earned based on a percentage of the amount of debt collected from accounts
placed on the Company's online system. Revenue is earned and recognized when the
settlement amount of debt is collected by the Company's client.

         Research and development expenses
         ---------------------------------

Research and development expenses consist primarily of payroll and related
expenses and consulting fees incurred in connection with employees and
consultants involved in the development of the Company's online software
product. The Company follows the guidelines of AICPA Statement of Position 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, Statement of Financial Accounting Standards No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed, and
Statement of Financial Accounting Standards No. 2, Accounting for Research and
Development Costs. Since the Company intended and has begun to market its online
product, these costs have been charged to expense as incurred and classified as
research and development expenses. In January 2004, the Company substantially
completed the development of and began marketing its online product. Commencing
February 2004, costs incurred in connection with the operation, maintenance,
modification, and customization of the Company's product have been charged to
expense as incurred, but are not classified as research and development
expenses.

         Property and equipment
         ----------------------

Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is provided over the estimated useful life of each class of assets
using the straight-line method. Expenditures for maintenance and repairs are
charged to expense as incurred. Additions and betterments that substantially
extend the useful life of the asset are capitalized. Upon the sale, retirement,
or other disposition of property and equipment, the cost and related accumulated
depreciation are removed from the balance sheet, and any gain or loss on the
transaction is included in the statement of operations.

         Income taxes
         ------------

In accordance with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, the Company uses an asset and liability approach
for financial accounting and reporting for income taxes. The basic principles of
accounting for income taxes are: (a) a current tax liability or asset is
recognized for the estimated taxes payable or refundable on tax returns for the
current year; (b) a deferred tax liability or asset is recognized for the
estimated future tax effects attributable to temporary differences and
carryforwards; (c) the measurement of current and deferred tax liabilities and
assets is based on provisions of the enacted tax law and the effects of future
changes in tax laws or rates are not anticipated; and (d) the measurement of
deferred tax assets is reduced, if necessary, by the amount of any tax benefits
that, based on available evidence, are not expected to be realized.

                                        7


<PAGE>

         Stock-based compensation
         ------------------------

Stock options issued under stock-based compensation plans are accounted for
under the recognition and measurement principles of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. No stock-based employee compensation cost is reflected in the
net loss, as all options granted under these plans had an exercise price equal
to the market value of the underlying common stock, as determined by the board
of directors, on the date of grant. Statement of Financial Accounting Standards
No. 148, Accounting for Stock-Based Compensation- Transition and Disclosure - an
Amendment of FASB Statement No. 123, requires the disclosure of the effect on
net loss and loss per share had the Company applied the fair value recognition
provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation,
to stock-based employee compensation. The fair value of each option granted is
estimated as of the grant date using the Black-Scholes option pricing model with
the following assumptions: dividend yield of 0%, expected volatility of 0%,
risk-free interest rates for individual options ranging from 1.66% to 4.12%
based on the closing U.S. Treasury Yield Curve Rate on the date of the grant for
U.S. Treasury securities with a time to maturity equal to or approximately equal
to the expected life of each option, and an expected life of each option,
ranging from three to ten years, equal to the time from the date of the grant to
its expiration date. Since there is no public market for the Company's stock,
its expected volatility cannot be estimated and is not considered in estimating
the fair value of each option. For purposes of pro forma disclosures, the
estimated fair value of the options granted is amortized to expense over the
option vesting periods. During the three months and nine months ended September
30, 2004, the Company granted options to purchase -0- and 140,000 shares,
respectively, of its common stock to an employee, exercisable at $1.00 per
share. As of September 30, 2004, there were options to purchase 4,408,333 shares
outstanding, of which 3,283,333 had vested. As of September 30, 2004, the
weighted average exercise price and the weighted average expected life of the
options granted were $0.59 and 7.53 years, respectively. The following table
illustrates the pro forma effects on net loss and net loss per common share for
the three months and nine months ended September 30, 2004 and 2003 as if the
Company had applied the fair value recognition provisions of FASB Statement No.
123 to stock-based compensation.

<TABLE>
                                                                     Three months                    Nine months
                                                                  ended September 30,            ended September 30,
                                                              -------------------------     -----------------------------
                                                                 2003           2004            2003            2004
                                                              ----------     ----------     ------------    --------------
<S>                                                           <C>            <C>            <C>             <C>
Net loss - as reported                                        $(827,171)     $(451,677)     $(1,513,521)    $  (1,418,968)
Pro forma compensation cost, net of taxes                       120,649          9,558          320,631           103,990
                                                              ----------     ----------     ------------    --------------
Net loss - pro forma                                          $(947,820)     $(461,235)     $(1,834,152)    $  (1,522,958)
                                                              ==========     ==========     ============    ==============
Basic and diluted net loss per common share - as reported     $   (0.03)     $   (0.02)     $     (0.06)    $       (0.05)
                                                              ==========     ==========     ============    ==============
Basic and diluted net loss per common share - pro forma       $   (0.03)     $   (0.02)     $     (0.07)    $       (0.05)
                                                              ==========     ==========     ============    ==============
</TABLE>

         Basic and diluted net loss per share
         ------------------------------------

Net loss per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share, which superseded Accounting
Principles Board Opinion No. 15, Earnings Per Share. Basic net loss per share
was computed by dividing the net loss by the weighted average number of common
shares outstanding. Diluted net loss per share was computed based on the
assumption that all dilutive convertible shares, stock options and warrants were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.

                                        8



<PAGE>

The following table shows the calculation of the numerator and denominator, as
well as the number of common stock equivalents that would have been included in
the denominator if they were dilutive.
<TABLE>
                                              Three months                        Nine months
                                           ended September 30,                ended September 30,
                                   -------------------------------     -------------------------------
                                        2003              2004              2003              2004
                                   -------------     -------------     -------------     -------------
<S>                                <C>               <C>               <C>               <C>
Numerator
  Net loss                         $   (827,171)     $   (451,677)     $ (1,513,521)     $ (1,418,968)
                                   =============     =============     =============     =============
Denominator
  Weighted average common
    shares outstanding               28,352,663        29,107,261        25,982,985        29,060,248
                                   =============     =============     =============     =============

Incremental common shares (not included in denominator of diluted earnings per
share calculation due to their anti- dilutive nature) attributable to
exercise/conversion of:
  Outstanding options                 1,848,000         1,848,000           622,769           620,496
  Preferred stock                            --                --                --                --
                                   -------------     -------------     -------------     -------------
                                      1,848,000         1,848,000           622,769           620,496
                                   =============     =============     =============     =============
</TABLE>

3. PROPERTY AND EQUIPMENT:
   -----------------------
                                                                September 30,
                                       Useful life                  2004
                                       -----------               ----------
Computer equipment                       3 years                 $  70,971
Computer software                        3 years                     1,919
Office equipment                         3 years                     2,192
Furniture and fixtures                   5 years                    24,250
Leasehold improvements                  Lease term                  15,046
                                                                 ----------
                                                                   114,378
Less: accumulated depreciation                                     (46,916)
                                                                 ----------
                                                                 $  67,462
                                                                 ==========

Depreciation expense totaled $11,231 and $33,051 for the three months and nine
months ended September 30, 2004, respectively.

<TABLE>
4. SHAREHOLDERS' (DEFICIT) EQUITY:
   -------------------------------
                                                                                                           Deficit
                                      Preferred Stock               Common stock                         accumulated
                                --------------------------  ---------------------------    Additional    during the
                                 Number of                   Number of                       paid in     development
                                  shares         Amount        shares         Amount         capital        stage           Total
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------

<S>                 <C> <C>                   <C>            <C>           <C>            <C>            <C>             <C>
Balance at December 31, 2003             --   $        --    29,020,000    $    29,020    $ 3,314,463    $(2,468,645)    $  874,838
Common stock issued to pay
  consulting fees                        --            --         9,000              9          8,991             --          9,000
Capital contributed from
  imputed compensation                   --            --            --             --        112,500             --        112,500
Net loss                                 --            --            --             --             --       (500,720)      (500,720)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at March 31, 2004                --   $        --    29,029,000    $    29,029    $ 3,435,954    $(2,969,365)   $   495,618
Sale of common stock in
  private placement                      --            --        75,000             75         74,925             --         75,000
Capital contributed from
  imputed compensation                   --            --            --             --        112,500             --        112,500
Net loss                                 --            --            --             --             --       (466,571)      (466,571)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at June 30, 2004                 --   $        --    29,104,000    $    29,104    $ 3,623,379    $(3,435,936)   $   216,547
Sale of common stock in
  private placement                      --            --       150,000            150        149,850             --        150,000
Capital contributed from
  imputed compensation                   --            --            --             --        112,500             --        112,500
Net loss                                 --            --            --             --             --       (451,677)      (451,677)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at September 30, 2004            --   $        --    29,254,000    $    29,254    $ 3,885,729    $(3,887,613)   $    27,370
                                ============  ============  ============   ============   ============   ============   ============
</TABLE>

In March 2004, the Company issued 9,000 shares of its common stock to two
consultants for services provided to the Company in connection with the
preparation of a private placement memorandum.

In June 2004, the Company issued 75,000 shares of its common stock in a private
placement at a price of $1.00 per share.

In September 2004, the Company issued 150,000 shares of its common stock in a
private placement at a price of $1.00 per share.

                                        9



<PAGE>

5. COMMITMENTS AND CONTINGENCIES:
   ------------------------------

         Limited license agreement
         -------------------------

On February 20, 2003, the Company entered into a Limited License Agreement (the
"License") with Messrs. Brofman and Burchetta (together, the "Licensors") for
the licensed usage (the "Licensed Usage") of the intellectual property rights
relating to U.S. Patent No. 6,330,551 issued by the U.S. Patent and Trademark
Office on December 11, 2001 (the "Patent") for "Computerized Dispute and
Resolution System and Method." The Licensed Usage is limited to the creation of
software and other code enabling an automated system used solely for the
settlement and collection of credit card receivables and other consumer debt,
and specifically excludes the settlement and collection of insurance claims, tax
and other municipal fees of all types. In February 2004, the License was amended
(the "Amendment") to modify the royalty fee obligations and the termination
rights. Pursuant to the Amendment, the Company will pay a royalty fee to the
Licensors as follows: (1) in 2004, the Company will pay no royalties; (2) in
2005, the Company will pay a royalty fee of 10% of the Company's annual gross
revenues attributable to the use of the patented computerized dispute resolution
system and method (the "Fee"); (3) in 2006, the Company will pay the Fee with a
minimum guaranteed royalty payment of $300,000; and (4) in 2007 and thereafter,
the Company will pay the Fee with a minimum guaranteed royalty payment of
$600,000 annually, subject to certain conditions relating to the Licensors'
continued affiliation with the Company, or potentially as much as $3,000,000 in
the aggregate, depending on the circumstances of their separation from the
Company. In addition, pursuant to the Amendment, if the Company's annual gross
revenues do not exceed one hundred and ten percent (110%) of the Company's
annual gross revenues for the immediately preceding calendar year (the "Minimum
Annual Gross Revenue Clause"), the Licensors may not terminate the License prior
to January 1, 2006, provided that the Company has not breached its obligations
to pay the Fee.

In 2003, prior to the Amendment, the License provided for a royalty fee, payable
to the Licensors, of ten percent (10%) of the Company's annual gross revenues
attributable to the Licensed Usage commencing July 1, 2003 and continuing until
the expiration of the Patent. The minimum annual royalty for any fiscal year was
$600,000. Under certain circumstances, if Mr. Burchetta was no longer employed
as a director and officer of the Company, or if Mr. Brofman was no longer
retained as a consultant to the Company, the minimum annual royalty fee for any
fiscal year would be $3,000,000. The Licensors had the right to terminate the
License if, among other reasons, the Company had not developed and produced a
fully functional and commercially usable system contemplated by the License on
or before September 30, 2003 (which was extended to March 31, 2004), or the
Company's annual gross revenues during any calendar year did not exceed $500,000
through December 31, 2004, or if the Company failed to meet the Minimum Annual
Gross Revenue Clause.

Royalty fee expense was $-0- for the three months and nine months ended
September 30, 2004 and was $300,000 for the three months and nine months ended
September 30, 2003.

The Licensors waived the entire amount of the royalty fee for the three and nine
months ended September 30, 2003, resulting in a capital contribution of
$300,000.

         Employment agreements
         ---------------------

The Company has entered into employment agreements with six executives. Future
aggregate minimum compensation under these agreements as of September 30, 2004
is as follows:

2004                          $   285,514
2005                              300,000
2006                              300,000
2007                              300,000
2008                               16,438
                              ------------
Total                         $ 1,201,952
                              ============

Each of Messrs. Burchetta, Harris and Silberstein amended their employment
agreements on February 25, 2004, with each agreeing to modify their respective
level of compensation, subject to the Company meeting certain financial and
performance milestones. The employment agreements, as amended, provide that the
base salary for each of Messrs. Burchetta, Harris and Silberstein will be as
follows: (1) if at the date of any salary payment, the aggregate amount of the
Company's net cash on hand provided from operating activities and net cash
and/or investments on hand provided from financing activities is sufficient to
cover the Company's projected cash flow requirements (as established by the
Company's Board of Directors in good faith from time to time) for the following
succeeding 12 months (the "Projected Cash Requirement"), the annual base salary
will be $150,000; and (2) if at the date of any salary payment, the Company's

                                       10



<PAGE>

net cash on hand provided from operating activities is sufficient to cover the
Company's Projected Cash Requirement, the annual base salary will be $240,000,
and increased to $450,000 upon the later to occur of (a) January 1, 2004 and (b)
the date upon which the Company completes the sale or license of its system with
respect to 400,000 consumer credit accounts. Since the annual base salaries of
Messrs. Burchetta, Harris and Silberstein are subject to the Company meeting
these specified financial and performance milestones, any salary payments to
Messrs. Burchetta, Harris and Silberstein will be allocated equally among each
of them at the time payment is made.

Under the terms of the amended employment agreements, no salary payments were
made to Messrs. Burchetta, Harris and Silberstein during the three months and
nine months ended September 30, 2004. The Company recorded compensation expense
and a capital contribution totaling $112,500 and $337,500 during the three
months and nine months ended September 30, 2004,respectively, representing an
imputed compensation expense for the minimum base salary amounts under the
agreements with Messrs. Burchetta, Harris and Silberstein, as if the Company had
met the condition for paying their salaries.

         Office lease
         ------------

The Company leases office facilities under a non-cancelable operating lease
through July 2005. Rent expense and utilities for the three months and nine
months ended September 30, 2004 was $16,782 and $55,939, respectively. Future
aggregate minimum lease payments as of September 30, 2004 are $16,782 for 2004
and $39,158 for 2005.

6. TRANSACTIONS WITH RELATED PARTIES:
   ----------------------------------

As described in Note 5 above, on February 20, 2003, the Company entered into a
Limited License Agreement with Messrs. Brofman and Burchetta, directors of the
Company, which provides for a royalty fee payable to the Licensors, subject to
minimum annual amounts, and which contains certain termination rights of the
Licensors.

On February 20, 2003, Charles S. Brofman entered into a consulting agreement
with the Company under which he would serve as the Company's non-executive
Co-Chairman of the Board. The Company and Mr. Brofman mutually agreed to
terminate the consulting agreement on February 25, 2004. Although the consulting
agreement has been terminated, Mr. Brofman will continue to serve as the
Co-Chairman of the Board.

In March 2003, the Company's former Chief Financial Officer, Mr. Cacciamatta,
provided the Company with a $10,000 loan. The Company agreed to issue 50,000
shares of its common stock at $0.20 per share (representing fair value at that
time as determined by the board of directors) as repayment for the loan.
However, Mr. Cacciamatta later rescinded his acceptance of the Company's common
stock as repayment for the loan and the Company reversed the original
transaction and restored the original loan payable to shareholder amount. There
is no formal loan agreement and the Company and Mr. Cacciamatta have not agreed
upon any terms for payment of interest or repayment of the loan.

Mr. Harris's wife has provided bookkeeping services to the Company since July
2003. During the three months and nine months ended September 30, 2004, Mrs.
Harris's fees totaled $2,250 and $8,887, respectively, and are included in
general and administrative expenses.

7. RECENTLY ISSUED AND PROPOSED ACCOUNTING PRONOUNCEMENTS:
   -------------------------------------------------------

In December 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 132 (revised 2003), Employers'
Disclosures About Pensions and Other Postretirement Benefits - an Amendment of
Fasb Statements No. 87, 88, and 106 ("SFAS 132"). SFAS 132 revises employers'
disclosures about pension plans and other postretirement benefit plans.
Currently, the Company does not have a pension plan or postretirement benefit
plan and adoption of SFAS 132 had no effect on the Company's financial position
or results of operations.

In May 2003, FASB issued Statement of Financial Accounting Standards No. 150,
Accounting for Certain Financial Instruments With Characteristics of Both
Liabilities and Equity ("SFAS 150"). SFAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. Currently, the Company does not
have any financial instruments with characteristics of both liabilities and
equity and adoption of SFAS 150 had no effect on the Company's financial
position or results of operations.

In April 2003, FASB issued Statement of Financial Accounting Standards No. 149,
Amendment of Statement 133 on Derivative Instruments and Hedging Activities
("SFAS 149"). SFAS 149 amends and clarifies financial accounting and reporting
for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities. Currently, the Company does not have any derivative
instruments and hedging activities and adoption of SFAS 149 had no effect on the
Company's financial position or results of operations.

                                       11



<PAGE>

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

Since February 24, 2003, we have devoted substantially all of our efforts to
planning and budgeting, research and development activities, and raising
capital. In January 2004, we substantially completed the development of an
online system for the settlement of credit card and other consumer debt and
began marketing our product to banks and other creditors. In February 2004, we
implemented our online system, on a test basis, with a collection agency. In
July 2004, the Company implemented its online system with a second client and
began generating revenue based on a percentage of the amount of debt collected
by this client. The Company does not expect to generate significant revenues
from these clients during the initial start-up periods.

Initially, we intend to market our service to credit card issuers, their
collection agencies, and the buyers of their defaulted debt in the United
States. Eventually, we intend to market our service to other segments served by
the collections industry worldwide. We have had discussions with a number of
potential clients to test the Debt Resolve System with their portfolios. As of
the date of this report, one client has implemented our online system, on a test
basis, with a limited sample of accounts. We recognized $2,088 of revenue from
this client during the three months ended September 30, 2004. We do not expect
to generate any significant revenues during this initial test period.

We have financed our activities to date through our management's contributions
of cash and forgiveness of compensation, the forgiveness of royalty and
consulting fees, advances from two shareholders, and the proceeds from sales of
our common stock in private placements.

As of September 30, 2004 and October 15, 2004, our working capital (deficit)
totaled ($40,092) and ($69,533), respectively. We believe that our working
capital as of the date of this report is not sufficient to fund our plan of
operations beyond November 2004. We intend to continue seeking to raise
additional capital over the next 12 months through private equity investments.
However, we have no agreements or commitments concerning the sale of our equity
securities and there can be no assurance we will be able to raise sufficient
additional capital as needed to execute our business plan. If we are unable to
raise sufficient additional capital before November 2004, we will have to
develop and implement a plan to eliminate staff and overhead until sufficient
additional capital is raised to support further operations. There can be no
assurance that such a plan would be successful.

We are classified as a development stage company because, to date, we have
devoted substantially all of our efforts to planning and budgeting, research and
development activities, and raising the capital necessary to execute our
business plan, and our planned principal operations have not produced any
significant revenues. There can be no assurance that we will be successful in
implementing our business plan.

Three months ended September 30, 2004 compared to three months ended September
30, 2003

REVENUE. Revenue totaled $2,088 and $-0- for the three months ended September
30, 2004 and 2003, respectively. The Company earned revenue during the three
months ended September 30, 2004 from a collection agency that implemented the
Company's online system. Revenue was earned based on a percentage of the amount
of debt collected from accounts placed on the Company's online system.

PAYROLL AND RELATED EXPENSES. Payroll and related expenses totaled $249,576 for
the three months ended September 30, 2004 and $231,445 for the three months
ended September 30, 2003. For the three months ended September 30, 2004, these
expenses include $112,500 of imputed compensation expense for the minimum base
salary amounts under the agreements with Messrs. Burchetta, Harris and
Silberstein, as if the Company had met the condition for paying their salaries.
No salary payments were made to Messrs. Burchetta, Harris and Silberstein during
the three months ended September 30, 2004 and the Company recorded their imputed
compensation as a capital contribution. Commencing February 2004, these expenses
also include payroll and related expenses incurred in connection with employees
involved in the operation, maintenance, modification, and customization of the
Company's online product. For the three months ended September 30, 2003, these
expenses primarily consist of compensation incurred in connection with
employment agreements with members of the executive management team. During the
three months ended September 30, 2003, payroll and related expenses incurred in
connection with employees involved in the development of the Company's online
product were classified as research and development expenses.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses totaled
$193,896 for the three months ended September 30, 2004 and $540,020 for the
three months ended September 30, 2003. For the three months ended September 30,
2004, these expenses consist of $52,670 for telecommunication costs, including
website hosting, $35,065 for legal and accounting fees, $41,023 for marketing
and promotion costs, and $65,138 for other general expenses, primarily
consisting of consulting fees, insurance, occupancy costs and travel related
expenses. For the three months ended September 30, 2003, these expenses consist
of $300,000 for the royalty fee incurred in connection with the limited license
agreement, $121,707 for consulting fees incurred in connection with business
advisory services, marketing services and computer programming services, and
$118,313 for other general expenses, primarily consisting of legal fees,
occupancy costs and travel related expenses.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses totaled
$-0- for the three months ended September 30, 2004 and $52,754 for the three
months ended September 30, 2003. In January 2004, the Company substantially
completed the development of and began marketing its online product. Commencing
February 2004, costs incurred in connection with the operation, maintenance,
modification, and customization of the Company's online product have been
charged to expense as incurred, but are not classified as research and
development expenses. For the three months ended September 30, 2003, research
and development expenses consist of payroll and related expenses and consulting
fees incurred in connection with employees and consultants involved in the
development of the Company's software product.

                                       12



<PAGE>

Nine months ended September 30, 2004 compared to nine months ended September 30,
2003

REVENUE. Revenue totaled $2,088 and $-0- for the nine months ended September 30,
2004 and 2003, respectively. The Company earned revenue during the nine months
ended September 30, 2004 from a collection agency that implemented the Company's
online system. Revenue was earned based on a percentage of the amount of debt
collected from accounts placed on the Company's online system.

PAYROLL AND RELATED EXPENSES. Payroll and related expenses totaled $681,853 for
the nine months ended September 30, 2004 and $531,779 for the nine months ended
September 30, 2003. For the nine months ended September 30, 2004, these expenses
include $337,500 of imputed compensation expense for the minimum base salary
amounts under the agreements with Messrs. Burchetta, Harris and Silberstein, as
if the Company had met the condition for paying their salaries. No salary
payments were made to Messrs. Burchetta, Harris and Silberstein during the nine
months ended September 30, 2004 and the Company recorded their imputed
compensation as a capital contribution. Commencing February 2004, these expenses
also include payroll and related expenses incurred in connection with employees
involved in the operation, maintenance, modification, and customization of the
Company's online product. For the nine months ended September 30, 2003, these
expenses primarily consist of compensation incurred in connection with
employment agreements with members of the executive management team. During the
nine months ended September 30, 2003, payroll and related expenses incurred in
connection with employees involved in the development of the Company's online
product were classified as research and development expenses.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses totaled
$663,612 for the nine months ended September 30, 2004 and $649,809 for the nine
months ended September 30, 2003. For the nine months ended September 30, 2004,
these expenses consist of $103,522 for telecommunication costs, including
website hosting, $190,062 for legal and accounting fees, $94,950 for marketing
and promotion costs, and $275,078 for other general expenses, primarily
consisting of consulting fees, insurance, occupancy costs and travel related
expenses. For the nine months ended September 30, 2003, these expenses consist
of $300,000 for the royalty fee incurred in connection with the limited license
agreement, $248,400 for consulting fees incurred in connection with business
advisory services, marketing services and computer programming services, and
$101,409 for other general expenses, primarily consisting of legal fees,
occupancy costs and travel related expenses.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses totaled
$46,022 for the nine months ended September 30, 2004 and $328,981 for the nine
months ended September 30, 2003. These expenses consist of payroll and related
expenses and consulting fees incurred in connection with employees and
consultants involved in the development of the Company's online product. In
January 2004, the Company substantially completed the development of and began
marketing its online product. Commencing February 2004, costs incurred in
connection with the operation, maintenance, modification, and customization of
the Company's online product have been charged to expense as incurred, but are
not classified as research and development expenses.

         Critical Accounting Policies
         ----------------------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
the accompanying notes. These estimates and assumptions are based on
management's judgment and available information and, consequently, actual
results could be different from these estimates. We believe that the most
critical accounting policy concerns the doubt about the Company's ability to
continue as a going concern. This and our other critical accounting policies are
described in note 1 and 2 to the financial statements contained in this report,
in Item 2 above, Management's Discussion and Analysis or Plan of Operation, and
in notes 1 and 2 to our financial statements contained in our Annual Report on
Form 10-KSB for the year ended December 31, 2003.

         Statement Relating to Forward-Looking Statements
         ------------------------------------------------

This Report contains forward-looking statements that are based on our beliefs as
well as assumptions and information currently available to us. When used in this
report, the words "believe," "expect," "anticipate," "estimate" "potential" and
similar expressions are intended to identify forward-looking statements. These
statements are subject to risks, uncertainties and assumptions, including,
without limitation, the risks and uncertainties concerning our recent research
and development activities; the risks and uncertainties concerning acceptance of
our services and products, if and when fully developed, by our potential
customers; our present financial condition and the risks and uncertainties
concerning the availability of additional capital as and when required; the
risks and uncertainties concerning the Limited License Agreement with Messrs.
Brofman and Burchetta; the risks and uncertainties concerning the Company's
dependence on its key executives; the risks and uncertainties concerning
technological changes and the competition for our services and products; and the
risks and uncertainties concerning general economic conditions. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. We caution you not to place undue reliance
on any forward-looking statements, all of which speak only as of the date of
this report.

                                       13



<PAGE>

Item 3.  Controls and Procedures

As of the end of the period covered by this Report, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operations of our disclosure controls and
procedures, as defined in Securities Exchange Act Rule 13a-15(e). Based upon
that evaluation, our officers concluded that our disclosure controls and
procedures are effective in timely alerting management to material information
relating to the Company required to be included in our periodic SEC filings.
There has been no change in our internal controls over financial reporting
during the last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During the three months ended September 30, 2004, we issued 150,000 shares of
our common stock in a private placement sale at a price of $1.00 per share.
During the three months ended June 30, 2004, we issued 75,000 shares of our
common stock in a private placement sale at a price of $1.00 per share. During
the three months ended March 31, 2004, we issued 9,000 shares of our common
stock to two consultants for services provided to the Company in connection with
the preparation of a private placement memorandum. These issuances were exempt
from registration pursuant to Section 4(2) of the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

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

         None

ITEM 5.  OTHER INFORMATION

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         31.1     Certification of Chief Executive Officer required by Rule
                  13(a)-14(a).
         31.2     Certification of Chief Financial Officer required by Rule
                  13(a)-14(a).
         32.1     Certifications required by Rule 13(a)-14(b) and 18 U.S.C.
                  Section 1350.

(b) Reports on Form 8-K

         None
                                   SIGNATURES

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

                                          DEBT RESOLVE, INC.

Date: October 15, 2004                    By: /s/ JAMES D. BURCHETTA
                                              ------------------------
                                              James D. Burchetta
                                              Chief Executive Officer
                                              (principal executive officer)

Dated: October 15, 2004                   By: /s/ John M. Porta
                                              ------------------------
                                              John M. Porta
                                              Chief Financial Officer
                                              (principal accounting
                                               and financial officer)

                                       14