<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A
                                (Amendment No. 1)

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

                For the Quarterly Period Ended September 30, 2003
                                               ------------------
                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the Transition Period from                 to
                               ---------------    --------------

                             COMMISSION FILE NUMBER

                               CLAIMSNET.COM INC.

             (Exact name of registrant as specified in its charter)

            Delaware                                              75-2649230

(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

14860 Montfort Dr, Suite 250
       Dallas, Texas                                               75254

  (Address of principal                                         (Zip Code)
    executive offices)

Registrant's telephone number, including area code: 972-458-1701

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), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock, $.001 par value,
23,701,180 shares outstanding as of March 26, 2004.

                                       1
<PAGE>


                        CLAIMSNET.COM INC. AND SUBSIDIARY

                                TABLE OF CONTENTS




PART I.  FINANCIAL INFORMATION

         ITEM 1.    Financial Statements

                    Consolidated Balance Sheets as of September 30, 2003
                    (unaudited, restated) and December 31, 2002

                    Consolidated Statements of Operations (unaudited) for the
                    Three Months Ended September 30, 2003 (restated) and 2002,
                    and for the Nine Months Ended September 30, 2003 (restated)
                    and 2002

                    Consolidated Statements of Changes in Stockholders' Deficit
                    for the Year Ended December 31, 2002 and the Nine Months
                    Ended September 30, 2003 (unaudited, restated)

                    Consolidated Statements of Cash Flows (unaudited) for the
                    Nine Months Ended September 30, 2003 (restated) and 2002

                    Notes to Consolidated Financial Statements

         ITEM 2.    Management's Discussion and Analysis of Financial Condition
                    and Results of Operations

         ITEM 4.    Controls and Procedures


PART II.  OTHER INFORMATION

         ITEM 6.    Exhibits and Reports on Form 8-K


SIGNATURES

CERTIFICATIONS

                                       2
<PAGE>
<TABLE>

PART I - FINANCIAL INFORMATION

ITEM 1:   FINANCIAL STATEMENTS

                                           CLAIMSNET.COM INC. AND SUBSIDIARIES
                                               CONSOLIDATED BALANCE SHEETS
                                            (In thousands, except share data)
<CAPTION>
                                                                                     (Unaudited)
                                                                                     September 30,  December 31,
                                                                                         2003           2002
                                                                                      (Restated)
                                                                                       ---------      ---------
<S>                                                                                    <C>            <C>
ASSETS

CURRENT ASSETS
   Cash and equivalents                                                                $     29       $    153
   Accounts receivable, net of allowance for
     doubtful accounts of $9 and $33 as of September 30, 2003
     and December 31, 2002, respectively                                                    140            150
   Prepaid expenses and other current assets                                                 82             79
                                                                                       ---------      ---------
     Total current assets                                                                   251            382

EQUIPMENT, FIXTURES AND SOFTWARE
   Computer hardware and software                                                         1,097          1,685
   Software development costs                                                             1,966          1,922
   Furniture and fixtures                                                                    31            108
   Office equipment                                                                          25             25
   Leasehold Improvements                                                                    26             --
                                                                                       ---------      ---------
                                                                                          3,145          3,740
   Accumulated depreciation and amortization                                             (3,031)        (3,601)
                                                                                       ---------      ---------
     Total equipment, fixtures and software                                                 114            139
                                                                                       ---------      ---------
TOTAL ASSETS                                                                           $    365       $    521
                                                                                       =========      =========
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Notes payable to related parties - short term                                       $    151       $    118
   Accounts payable                                                                         168            486
   Accrued severance                                                                         --            241
   Accrued acquisition costs                                                                 --            500
   Accrued payroll and other current liabilities                                            164            228
   Deferred revenues                                                                        149             47
                                                                                       ---------      ---------
     Total current liabilities                                                              632          1,620

LONG TERM LIABILITIES
   Notes payable to related parties - long term                                              10             10
   Notes payable - long term                                                                 25             25
                                                                                       ---------      ---------
     Total long term liabilities                                                             35             35
                                                                                       ---------      ---------
     Total liabilities                                                                      667          1,655

STOCKHOLDERS' DEFICIT
   Preferred stock, $.001 par value; 4,000,000 shares authorized;
     850 and 3,471 shares issued and outstanding as of September 30, 2003
     and December 31, 2002, respectively (liquidation preference of $215 and $876
     at September 30, 2003 and December 31, 2002, respectively)                              --             --
   Common stock, $.001 par value; 40,000,000 shares authorized;
     22,112,000 shares and 14,816,000 shares issued and outstanding as of
     September 30, 2003 and December 31, 2002, respectively                                  22             15
   Additional capital                                                                    42,380         41,275
   Accumulated deficit                                                                  (42,704)       (42,424)
                                                                                       ---------      ---------
     Total stockholders' deficit                                                           (302)        (1,134)
                                                                                       ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                            $    365       $    521
                                                                                       =========      =========


                                     See notes to consolidated financial statements.
</TABLE>
                                                           3
<PAGE>
<TABLE>

                                      CLAIMSNET.COM INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (In thousands, except per share data)
                                                  (Unaudited)
<CAPTION>

                                                      Three Months Ended           Nine Months Ended
                                                          September 30,               September 30,
                                                   ------------------------     -------------------------
                                                      2003          2002           2003           2002
                                                   (Restated)                   (Restated)
                                                   ---------      ---------      ---------      ---------
<S>                                                <C>            <C>            <C>            <C>
REVENUES                                           $    157       $    285       $    487       $    938

Cost of Revenues                                        115            446            489          1,469
                                                   ---------      ---------      ---------      ---------
Gross PROFIT (Loss)                                      42           (161)            (2)          (531)
                                                   --------       --------       --------       --------
OPERATING EXPENSES:
   Research and development                              10             54             24            230
   Selling, general and administrative                  308            441          1,125          1,728
                                                   --------       --------       --------       --------
     Total operating expenses                           318            495          1,149          1,958
                                                   --------       --------       --------       --------

LOSS FROM OPERATIONS                                   (276)          (656)        (1,151)        (2,489)

OTHER INCOME (EXPENSE)
   Gain on settlement of liabilities                     --             --            916             --
   Interest expense - related parties                    (4)            (6)            (9)           (15)
   Interest expense - other                              (1)            --             (5)            --
   Gain (loss) on sale of assets                        (31)           640            (31)           640
                                                   --------       --------       --------       --------
     Total other income (expense)                       (36)           634            871            625
                                                   --------       --------       --------       --------
NET LOSS                                           $   (312)      $    (22)      $   (280)      $ (1,864)
                                                   ========       ========       ========       ========

NET LOSS PER COMMON SHARE (BASIC AND DILUTED)      $  (0.02)      $  (0.00)      $  (0.02)      $  (0.16)
                                                   ========       ========       ========       ========
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING (BASIC AND DILUTED)                 20,537         12,707         17,882         11,678
                                                   ========       ========       ========       ========
</TABLE>


                                See notes to consolidated financial statements.

                                                      4
<PAGE>
<TABLE>

                                                CLAIMSNET.COM INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                          Year Ended December 31, 2002 and the Nine Months Ended September 30, 2003 (Restated)
                                                          (In thousands)
                                                            (Unaudited)
<CAPTION>

                                 Number of                  Number of
                                 Preferred                  Common                                                   Total
                                 Shares          Preferred  Shares                       Additional   Accumulated    Stockholders'
                                 Outstanding     Stock      Outstanding    Common Stock  Capital      Deficit        Deficit
                                 -------------   ---------- -------------  ------------  ------------ ------------   --------------
<S>                                       <C>      <C>          <C>         <C>           <C>            <C>            <C>
Balances at January 1, 2002               --       $  --        11,141      $     11      $ 39,571       $(39,497)      $     85

Sale of preferred stock                    3          --            --            --           875             --            875

Sale of common stock                      --          --         3,675             4           731             --            735

Issuance of warrants and
options for services                      --          --            --            --            98             --             98

Net loss                                  --          --            --            --            --         (2,927)        (2,927)
                                    ---------      ------     ---------     ---------     ---------      ---------      ---------
Balances at December 31, 2002              3          --        14,816            15        41,275        (42,424)        (1,134)
                                    ---------      ------     ---------     ---------     ---------      ---------      ---------

Preferred stock converted into
common stock                              (2)         --         2,621             2            (2)            --             --

Sale of common stock                      --          --         3,300             4           653             --            657

Issuance of common stock in
payment of notes payable and
accrued interest                          --          --           375            --            75             --             75

Issuance of warrants and
options to related parties for
services                                  --          --            --            --           180             --            180

Warrants exercised for common
stock                                     --          --         1,000             1           199             --            200

Net loss (restated)                       --          --            --            --            --           (280)          (280)
                                    ---------      ------     ---------     ---------     ---------      ---------      ---------
Balances at September 30, 2003
(restated)                                 1       $  --        22,112      $     22      $ 42,380       $(42,704)      $   (302)
                                    =========      ======     =========     =========     =========      =========      =========


                                          See notes to consolidated financial statements.
</TABLE>

                                                                5
<PAGE>
<TABLE>

                                 CLAIMSNET.COM INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (In thousands)
                                             (Unaudited)
<CAPTION>
                                                                         Nine Months Ended
                                                                            September 30,
                                                                         2003          2002
                                                                      (Restated)
                                                                       --------      --------
<S>                                                                    <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                            $  (280)      $(1,864)
     Adjustments to reconcile net loss to net cash
     used in operating activities:
       Depreciation and amortization                                        81           370
       Provision for doubtful accounts                                      (3)           13
       Stock options and warrants issued for services                      180            53
       Gain on settlement of liabilities                                  (916)           --
       (Gain) loss on sale of assets                                        31          (640)
       Changes in operating assets and liabilities:
         Accounts receivable                                                 9            12
         Prepaid expenses and other current assets                          (4)           26
         Current liabilities                                               (90)          151
                                                                       --------      --------
         Net cash used in operating activities                            (992)       (1,879)
                                                                       --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                   (46)          (19)
     Proceeds from sale of assets                                            2           640
     Capitalized software development costs                                (43)         (266)
                                                                       --------      --------
       Net cash provided by (used in) investing activities                 (87)          355
                                                                       --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from notes payable to related parties                        100           475
     Payment of notes payable to related parties                            (2)         (412)
     Proceeds from note payable to director                                 --            50
     Proceeds from notes payable                                            --            85
     Proceeds from issuance of common stock                                857           445
     Proceeds from issuance of preferred stock                              --           826
                                                                       --------      --------
       Net cash provided by financing activities                           955         1,469
                                                                       --------      --------
NET DECREASE IN CASH AND EQUIVALENTS                                      (124)          (55)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD                                  153           531
                                                                       --------      --------
CASH AND EQUIVALENTS, END OF PERIOD                                    $    29       $   476
                                                                       ========      ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest                                                 $    --       $     6
                                                                       ========      ========

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:

Payment of notes payable and accrued interest through issuance of
     common stock                                                      $    75       $    --
                                                                       ========      ========

</TABLE>

                           See notes to consolidated financial statements.

                                                 6
<PAGE>


                       CLAIMSNET.COM INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


1. BASIS OF PRESENTATION

         In the opinion of management, the accompanying unaudited consolidated
         financial statements include all necessary adjustments (consisting of
         normal recurring accruals) and present fairly the consolidated
         financial position of Claimsnet.com inc. (the "Company") and
         subsidiaries as of September 30, 2003 and the results of their
         operations and cash flows for the three months and nine months ended
         September 30, 2003 and 2002, in conformity with generally accepted
         accounting principles for interim financial information applied on a
         consistent basis. The results of operations for the three and nine
         months ended September 30, 2003 are not necessarily indicative of the
         results to be expected for the full year.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been omitted. These financial statements
         should be read in conjunction with the audited consolidated financial
         statements and notes thereto included in the Company's Annual Report on
         Form 10-K for the year ended December 31, 2002, as filed with the
         Securities and Exchange Commission on April 1, 2003.

2. RESTATEMENT OF PREVIOUSLY REPORTED RESULTS

         The Company is amending and restating its Form 10-Q for the three and
         nine months ended September 30, 2003. Subsequent to the issuance of the
         Company's financial results for the quarters ended March 31, June 30,
         and September 30, 2003, the Company, after consultation with its
         auditors, determined that certain implementation fees previously
         reported as revenue during the quarters did not meet the technical
         requirements to be accounted for as a separate unit of accounting, as
         defined in the Emerging Issues Task Force Issue No. 00-21, "Revenue
         Arrangements with Multiple Deliverables", and as further clarified by
         Staff Accounting Bulletin No. 104, "Revenue Recognition", as issued by
         the SEC on December 17, 2003. As a result, the implementation fees must
         be recognized as revenue ratably over the expected period of the
         customer business arrangement.

         Accordingly, the consolidated financial statements for the three and
         nine months ended September 30, 2003, have been restated to defer
         implementation fees and recognize those fees over the expected life of
         the customer arrangement. The Company expenses costs related to
         implementation services as they are incurred. Therefore, the net loss
         for the three and nine month periods ended September 30, 2003 increased
         by the same amount as the increase in the net revenue deferral,
         approximately $73,000 and $87,000, respectively. The revenue
         restatement also resulted in a restatement of deferred revenues at
         September 30, 2003.

         The restatement also resulted in a $0.01 increase in the net loss per
         common share reported for the three and nine month periods ended
         September 30, 2003.


3. NEED FOR ADDITIONAL CAPITAL AND LIQUIDITY

         Management believes that available cash resources, together with
         anticipated revenues from operations and the proceeds of recently
         completed financing activities and funding commitments will not be
         sufficient to satisfy the Company's capital requirements past November
         30, 2003. Necessary additional capital may not be available on a timely
         basis or on acceptable terms, if at all. The Company may be unable to
         implement current plans for expansion or to repay debt obligations as
         they become due. If sufficient capital cannot be obtained, the Company
         may be forced to significantly reduce operating expenses to a point
         which would be detrimental to business operations, curtail research and
         development activities, sell business assets or discontinue some or all
         of its business operations, take other actions which could be
         detrimental to business prospects and result in charges which could be
         material to its operations and financial position, or cease operations
         altogether. In the event that any future financing should take the form
         of equity securities, the holders of the common stock and preferred
         stock may experience additional dilution. In the event of a cessation
         of operations, there may not be sufficient assets to fully satisfy all
         creditors, in which case the holders of equity securities will be
         unable to recoup any of their investment.

                                       7
<PAGE>

4. EQUITY TRANSACTIONS

         From January through September 2003, the Company completed the private
         placement of 3,675,000 shares of common stock to accredited investors
         at $0.20 per share, resulting in net proceeds to the Company of
         $657,000. In connection with these private placements, the Company also
         issued warrants to the investors to purchase an aggregate of 3,675,000
         shares of common stock. These warrants contain an exercise price of
         $0.20 per share and expire December 31, 2007. These private placements
         included 350,000 shares of common stock plus warrants to acquire an
         additional 350,000 shares of common stock purchased by National
         Financial Corporation ("NFC"), a related party, for net proceeds of
         $20,000 and retirement of debt of $50,000; 2,000,000 shares of common
         stock plus warrants to acquire an additional 2,000,000 shares of common
         stock purchased by Elmira United Corporation, which owned at the time
         more than 5% of the outstanding shares of common stock of the Company,
         for net proceeds of $400,000; 100,000 shares of common stock plus
         warrants to acquire an additional 100,000 shares of common stock
         purchased by J.R. Schellenberg, a related party, for retirement of debt
         plus accrued interest of $20,000; and 150,000 shares of common stock
         plus warrants to acquire an additional 150,000 shares of common stock
         purchased by a director of the Company for net proceeds of $25,000 and
         payment of accrued interest of $5,000.

         On April 7, 2003, Elmira United Corporation, a 5% shareholder,
         exercised a previously issued warrant to purchase 1,000,000 shares of
         the Company's common stock and tendered payment in the amount of
         $200,000 ($0.20 per share).

         From May through August 2003, the Company issued an aggregate 2,621,000
         shares of its common stock upon conversion and surrender of 2,621
         shares of preferred stock by the holders thereof.

5. ISSUANCE OF WARRANTS

         In June 2003, the Company issued warrants to acquire an aggregate of
         3,450,000 shares of common stock to certain employees. These warrants
         contain an exercise price of $0.15 per share and expire in June 2013.
         In June 2003, the Company issued ten-year warrants to acquire an
         aggregate of 1,200,000 shares of common stock to two directors as
         compensation for services outside of their director duties. The
         1,200,000 warrants were valued at $0.15 per warrant resulting in a
         total charge against earnings of approximately $180,000 based on the
         Black-Scholes valuation method (using the following assumptions: life
         of ten years, risk free rate of 4.77%, no dividends during the term,
         and a volatility of 2.04). See Note 3 for information regarding
         issuances to investors of warrants to purchase 3,675,000 shares of
         common stock.

6. GAIN ON SETTLEMENT OF LIABILITIES

         During March and April 2003, the Company entered into settlement
         agreements with various creditors, contingent upon the Company making
         payment within ten days of the date of agreement. When the agreed
         payment was made by the Company, the creditor released the Company from
         all other liabilities. The aggregate amount of the agreements entered
         into required payments totaling $217,000 to settle certain accounts
         payable, accrued severance and accrued acquisition cost liabilities
         totaling $1,133,000, resulting in a gain on settlement of liabilities
         totaling $916,000.

7. LOANS FROM RELATED PARTIES

         In May 2003, the Company entered into an unsecured short-term loan
         agreement with NFC, a related party, pursuant to which NFC loaned the
         Company an aggregate amount of $100,000. In June 2003, The Company
         repaid a portion of this note in the aggregate amount of $32,000 by
         issuing 160,000 share of Company common stock and warrants to purchase
         160,000 shares of Company common stock. Also in June 2003, an aggregate
         of $2,000 plus accrued interest on the note was paid.

         In June 2003, The Company also repaid a second note to NFC in the
         principal amount of $18,000 by issuing to the shareholder 90,000 shares
         of Company common stock and warrants to purchase 90,000 shares of
         Company common stock. Also in June 2003, all accrued interest on the
         note was paid.

         In June 2003, the Company retired a portion of an outstanding note with
         J.R. Schellenberg, a related party, in the principal amount of $15,000
         plus $5,000 accrued interest thereon by issuing to Mr. Schellenberg
         100,000 shares of Company common stock and warrants to purchase 100,000
         shares of Company common stock in a private placement as more fully
         described in Note 3. The remaining principal amount of $35,000 plus
         interest, at 9.5% per annum on the unpaid principal, is due on demand.

                                       8
<PAGE>

8. STOCK-BASED COMPENSATION

         The Company accounts for its stock-based employee compensation plan
         using the intrinsic value-based method prescribed by Accounting
         Principles Board Opinion No. 25, "Accounting for Stock Issued to
         Employees," and related interpretations. As such, compensation expense
         is recorded on the date of grant to the extent the current market price
         of the underlying stock exceeds the exercise price. The Company
         recorded no compensation expense associated with options issued to
         employees during the three and nine months ended September 30, 2003 and
         2002. Had the Company determined compensation based on the fair value
         at the grant date for its stock options under SFAS 123 "Accounting for
         Stock-Based Compensation," as amended by SFAS No. 148 "Accounting for
         Stock-Based Compensation - Transition and Disclosure," net loss and net
         loss per share would have been affected as indicated below (in
         thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                   Three Months Ended          Nine Months Ended
                                                      September 30,               September 30,
                                                   2003          2002          2003          2002
                                                (Restated)                  (Restated)
                                                 --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>
Net loss, as reported                            $  (312)      $   (22)      $  (280)      $(1,864)
Stock-based compensation expense:
     Included in reported net loss                    --            --            --            --
     Determined using the fair value method          (45)          (92)          (64)         (275)
                                                 --------      --------      --------      --------
Pro forma net loss                               $  (357)      $  (114)      $  (344)      $(2,139)
                                                 --------      --------      --------      --------

Net loss per share - basic and diluted
     As reported                                 $ (0.02)      $ (0.00)      $ (0.02)      $ (0.16)
     Pro forma                                   $ (0.02)      $ (0.01)      $ (0.02)      $ (0.18)
</TABLE>


9. SALE OF ASSETS

         On September 11, 2002 the Company sold certain assets consisting
         primarily of customer contracts (the "Assigned Contracts") and related
         revenue streams thereunder to ProxyMed, Inc. ("Purchaser") in a
         negotiated arms-length transaction for a purchase price consideration
         of $700,000. The Company received cash consideration of $690,000, net
         of contractual expenses, recognized a gain of $640,000 on the sale, and
         recorded $50,000 as deferred revenue.

         The Company's office lease expired on September 30, 2003 and the
         Company moved into similar space under a substantially less expensive
         sublease. During the relocation, the Company sold all excess furniture
         and equipment and recorded a $31,000 loss on the disposal.

10. SUBSEQUENT EVENTS

         In October 2003, the Company completed the private placement of 125,000
         shares of common stock to accredited investors at $0.20 per share, for
         net proceeds of $25,000. In connection with these private placements,
         the Company also issued warrants to the investors to purchase an
         aggregate of 125,000 shares of common stock. The warrants contained an
         exercise price of $0.20 per share and expired December 31, 2007. The
         Company issued an aggregate of 375,000 shares of common stock pursuant
         to the exercise of outstanding warrants in October 2003 for net
         proceeds of $75,000. In addition, 80 shares of preferred stock were
         converted into 80,000 shares of common stock.

                                       9
<PAGE>

ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS AND OTHER PORTIONS OF THIS REPORT CONTAIN FORWARD-LOOKING INFORMATION
THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED BY THE FORWARD-LOOKING INFORMATION. FACTORS THAT MAY
CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, AVAILABILITY OF
FINANCIAL RESOURCES FOR LONG TERM NEEDS, PRODUCT DEMAND, MARKET ACCEPTANCE AND
OTHER FACTORS DISCUSSED ELSEWHERE IN THIS REPORT. THIS MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHOULD BE READ IN
CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES
INCLUDED ELSEWHERE IN THIS REPORT.

GENERAL OVERVIEW

As of September 30, 2003, we had a working capital deficit of $(381,000) and
stockholders' deficit of $(302,000). We generated revenues of $487,000 for the
nine months ended September 30, 2003 and $938,000 for the nine months ended
September 30, 2002. We have incurred net losses since inception and had an
accumulated deficit of $(42,704,000) at September 30, 2003. We expect to
continue to operate at a loss for the near future. There can be no assurance
that we will ever achieve profitability. See Note 2 of the Notes to Consolidated
Financial Statements regarding our need for additional capital and liquidity.

We have been in operation since 1996, and have operated under several different
business strategies. As a result, the relationships between revenue and cost of
revenue, and operating expenses reflected in the financial information included
in this report may not represent future expected financial relationships. Much
of the cost of revenue and operating expenses reflected in our consolidated
financial statements are associated with people costs, and not directly related
to transaction volumes. Our expenses decreased for the year ended December 31,
2002 due to staffing and other cost reductions and further expense reductions
were effected at the beginning of 2003. In 2002 we recognized a significant gain
on sale of certain business assets and a significant one-time expense due to the
impairment of in-process software development. In 2003, we realized a gain of
$916,000 from the settlement of certain liabilities. The majority of our
revenues in prior years were generated by contracts which have either terminated
or were assigned through an asset sale in September 2002. Our operating expenses
in prior years included a significant one-time charge related to termination of
a business agreement and significant costs associated with an asset acquisition
and the subsequent impairment of purchased assets. Accordingly, we believe that,
at our current stage of operations, period to period comparisons of results of
operations are not meaningful.

PRIVATE PLACEMENTS, OPTIONS AND WARRANTS

From January through September 2003, we completed the private placement of
3,675,000 shares of common stock to accredited investors at $0.20 per share,
resulting in net proceeds to us of $657,000 and the extinguishment of $75,000 of
notes payable and accrued interest. In connection with these private placements,
we also issued warrants to the investors to purchase an aggregate of 3,675,000
shares of common stock. These warrants contain an exercise price of $0.20 per
share and expire December 31, 2007. These private placements included 350,000
shares of common stock plus warrants to acquire an additional 350,000 shares of
common stock purchased by National Financial Corporation ("NFC"), a related
party, for net proceeds of $20,000 and retirement of debt of $50,000; 2,000,000
shares of common stock plus warrants to acquire an additional 2,000,000 shares
of common stock purchased by Elmira United Corporation, which owned at the time
more than 5% of the outstanding shares of our common stock, for net proceeds of
$400,000; 100,000 shares of common stock plus warrants to acquire an additional
100,000 shares of common stock purchased by J.R. Schellenberg, a related party,
for retirement of debt plus accrued interest of $20,000; and 150,000 shares of
common stock plus warrants to acquire an additional 150,000 shares of common
stock purchased by a member of our Board of Directors for net proceeds of
$25,000 and payment of accrued interest of $5,000.

From May through August 2003, we issued an aggregate 2,621,000 shares of our
common stock upon conversion and surrender of 2,621 shares of preferred stock by
the holders thereof.

In April 2003, Elmira United Corporation, a 5% shareholder, exercised a
previously issued warrant to purchase 1,000,000 shares of our common stock and
tendered payment in the amount of $200,000 ($0.20 per share).

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<PAGE>

The Company used $217,000 of the proceeds from the April 2003 private placement
and warrant exercise to make payments pursuant to creditor agreements, as
described in Note 5 to the consolidated financial statements.

None of the above sales of securities involved the use of an underwriter and
except as indicated no commissions were paid in connection with the sale of any
securities. The certificates evidencing the common stock issued in each of the
transactions referenced above were appropriately legended.

The offer and sale of the securities in each of the transactions referenced
above was exempt from registration under the Securities Act of 1933 by virtue of
Section 4(2) thereof or, with respect to the conversion of the preferred stock,
Section 3(a)(9) thereof, and the rules promulgated thereunder. Each of the
offerees and investors in such private placements provided representations to us
that the offeree or investor is an "accredited investor," as defined in Rule 501
under the Act, as well as highly sophisticated (some of whom were existing
stockholders of us at the time of such transaction.) The shares subject to the
options have not been registered under the Act.

PLAN OF OPERATIONS

Our recently modified business strategy is as follows:

o    to utilize our state of the art technology to help large healthcare
     organizations achieve more efficient and less costly administrative
     operations;
o    to market our services directly to the payer community and its trading
     partners;
o    to aggressively pursue and support strategic relationships with companies
     that will in turn aggressively market our services to large volume
     healthcare organizations, including insurers, HMO's, third party
     administrators, provider networks, re-pricing organizations, clinics,
     hospitals, laboratories, physicians and dentists;
o    to provide total claim management services to payer organizations,
     including internet claim submission, paper claim conversion to electronic
     transactions, and receipt of EDI transmissions;
o    to continue to expand our product offerings to include additional
     transaction processing solutions, such as HMO encounter forms, eligibility
     and referral verifications, claim status inquiries, electronic remittance
     advices, claim attachments, and other healthcare administrative services,
     in order to diversify sources of revenue; and
o    to license our technology for other applications, including stand-alone
     purposes, Internet systems and private label use, and for original
     equipment manufacturers.

We anticipate that our primary source of revenues will be fees paid by payers
and vendors for private-label or co-branded licenses and services. Historically,
our primary source of revenues was fees paid by users for insurance claims and
patient statement services, and fees from medical and dental payers for
processing claims electronically. We expect most of our revenues to be recurring
in nature.

Our principal costs to operate are anticipated to be technical and customer
support services, sales and marketing, research and development, acquisition of
capital equipment, and general and administrative expenses. Subject to receipt
or generation of adequate funds, we intend to continue to develop and upgrade
our technology and transaction-processing systems and continually update and
improve our website to incorporate new technologies, protocols, and industry
standards. No assurance can be given that our development and upgrading efforts
will be successful or that we will receive or generate the funds necessary
therefore. Selling, general and administrative expenses include all corporate
and administrative functions that serve to support our current and future
operations and we hope will provide an infrastructure to support future growth.
Major items in this category include management and staff salaries and benefits,
travel, professional fees, network administration, business insurance, and rent.

CRITICAL ACCOUNTING POLICIES

REVENUE RECOGNITION

We generally enter into services agreements with our customers to provide access
to our hosted software platform for processing of customer transactions. We
operate the software application for all customers and the customers are not
entitled to ownership of our software at any time during or at the end of the
agreements. The end users of our software application access our hosted software
platform or privately hosted versions of our software application via the


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<PAGE>

internet with no additional software required to be located on the customer's
systems. Customers pay implementation fees, transaction fees and time and
materials charges for additional services. Revenues primarily include fees for
implementation and transaction fees, which may be subject to monthly minimum
provisions. Customer agreements may also provide for development fees related to
private labeling of our software platform (i.e. access to our servers through a
web site which is in the name of and/or has the look and feel of the customer's
other web sites) and some customization of the offering and business rules. We
account for our service agreements by combining the contractual revenues from
development, implementation, license, support and certain additional service
fees and recognizing the revenue ratably over the expected period of
performance. We currently use an estimated expected business arrangement term of
three years which is currently the term of the typical contracts signed by our
customers. We do not segment these services and use the underlying contractual
terms to recognize revenue because we do not have objective and reliable
evidence of fair value to allocate the arrangement consideration to the
deliverables in the arrangement. To the extent that implementation fees are
received in advance of recognizing the revenue, we defer these fees and record
deferred revenue. We recognize service fees for transactions and some additional
services as the services are performed. We expense the costs associated with our
customer service agreements as those costs are incurred.

SOFTWARE FOR SALE OR LICENSE

We begin capitalizing costs incurred in developing a software product once
technological feasibility of the product has been determined. Capitalized
computer software costs include direct labor, labor-related costs and interest.
The software is amortized over its expected useful life of 3 years or the
contract term, as appropriate.

Management periodically evaluates the recoverability, valuation, and
amortization of capitalized software costs to be sold, leased, or otherwise
marketed. As part of this review, management considers the expected undiscounted
future net cash flows. If they are less than the stated value, capitalized
software costs will be written down to fair value.


RESULTS OF OPERATIONS FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003
COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002

REVENUES

Revenues in the three months ended September 30, 2003 (the "2003 third quarter")
were $157,000 compared to $285,000 in the three months ended September 30, 2002
(the "2002 third quarter"), representing a decrease of 45%. Revenues of $229,000
during the 2002 third quarter were generated by our Internet-based healthcare
provider clients, under contracts which were sold in September 2002. Revenues
for the 2003 third quarter from recurring revenue sources totaled $151,000 and
represented 96% of total revenues. Revenues from non-recurring sources totaled
$6,000 and were related to support and other fees.

Revenues in the nine months ended September 30, 2003 (the "2003 nine months")
were $487,000 compared to $938,000 in the nine months ended September 30, 2002
(the "2002 nine months"), representing a decrease of 48%. Revenues of $822,000
during the 2002 nine months were generated by our Internet-based healthcare
provider clients, under contracts which were sold in September 2002. Revenues
for the 2003 nine months from recurring revenue sources totaled $465,000 and
represented 95% of total revenues. Revenues from non-recurring sources totaled
$22,000 and were related to support and other fees.

COST OF REVENUES

Cost of revenues in the 2003 third quarter was $115,000, compared with $446,000
in the 2002 third quarter, representing a decrease of 74%. The four ordinary
components of cost of revenues are data center expenses, transaction processing
expenses, customer support operation expenses and software amortization. Data
center expenses decreased by 68% to $33,000 for the 2003 third quarter compared
with $103,000 for the 2002 third quarter. Transaction processing expenses were
eliminated in the 2003 third quarter compared to $86,000 in the 2002 third
quarter. Customer support operations expense decreased by 60% to $80,000 in the
2003 third quarter from $198,000 in the 2002 third quarter. The decreases in
third party transaction processing expenses and customer support operations
expense were primarily attributable to the assignment of contracts with a
majority of our healthcare provider clients in September 2002. Software
amortization and development project amortization expenses decreased 97% to
$2,000 in the 2003 third quarter from $59,000 in the 2002 third quarter. This
decrease reflects completion in 2002 of amortization for earlier versions of
software for customer use.

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<PAGE>

Cost of revenues in the 2003 nine months was $489,000, compared with $1,469,000
in the 2002 nine months, representing a decrease of 69%. Data center expenses
decreased by 56% to $157,000 for the 2003 nine months compared with $359,000 for
the 2002 nine months. Transaction processing expenses were $2,000 in the 2003
nine months compared to $359,000 in the 2002 nine months, nearly a 100%
decrease. Customer support operations expense decreased by 55% to $292,000 in
the 2003 nine months from $642,000 in the 2002 nine months. The decreases in
third party transaction processing expenses and customer support operations
expense were primarily attributable to the assignment of contracts with a
majority of our healthcare provider clients in September 2002. Software
amortization and development project amortization expenses decreased 81% to
$38,000 in the 2003 nine months from $201,000 in the 2002 nine months. This
decrease reflects completion in 2002 of amortization for earlier versions of
software for customer use.

OPERATING EXPENSES

Research and development expenses were $10,000 in the 2003 third quarter,
compared with $54,000 in the 2002 third quarter, representing a decrease of 81%.
Research and development expenses were $24,000 in the 2003 nine months, compared
with $230,000 in the 2002 nine months, representing a decrease of 90%. Research
and development expenses are comprised of personnel costs and related expenses.
Research and development efforts were substantially curtailed at the beginning
of 2003, while the 2002 costs were related to continuous incremental
enhancements to our proprietary software system. Software development expenses
of $95,000 and $266,000 were capitalized during the 2002 third quarter and 2002
nine months, respectively for development efforts required to comply with
provisions of the Health Insurance Portability and Accountability Act of 1996
("HIPAA"). In December 2002, we terminated the ongoing HIPAA remediation
in-process development project in order to pursue a more cost-effective
development alternative and we recognized an impairment charge at that time.
During early 2003, we began development of the alternative HIPAA remediation
project and capitalized development costs of $27,000 and $43,000 during the 2003
third quarter and 2003 nine months, respectively.

Selling, general and administrative expenses were $308,000 in the 2003 third
quarter, compared with $441,000 in the 2002 third quarter, a decrease of 30%.
Selling, general and administrative expenses were $1,125,000 in the 2003 nine
months, compared with $1,728,000 in the 2002 nine months, a decrease of 35%. The
reductions are a result of cost containment measures including staff reductions,
salary reductions and other cost containment measures. A one-time charge of
$162,000 was recorded in the 2002 nine months pursuant to a severance agreement
with our former chief executive officer, of which $50,000 related to the
issuance of options and warrants. A one-time charge of $195,000 was recorded in
the 2003 nine months for services performed by two of our directors outside of
their director duties, of which $180,000 related to the issuance of warrants.

OTHER INCOME (EXPENSE)

Interest expense of $5,000 and $14,000 was incurred in the 2003 third quarter
and 2003 nine months, respectively, on financing fees and affiliate debt
compared with $6,000 and $15,000 in the 2002 third quarter and 2002 nine months,
respectively. A $916,000 gain on settlement of liabilities was recognized during
the 2003 nine months related to settlement agreements with several creditors. A
loss on sale of assets of $31,000 in the 2003 third quarter and 2003 nine months
related to the retirement of certain assets during relocation of the Company's
offices. A gain on sale of assets of $640,000 in the 2002 third quarter and 2002
nine months was related to the sale of certain assets on September 11, 2002 as
previously described.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities of $1,002,000 in the 2003 nine months was
primarily related to a net loss of $280,000, a reduction of $3,000 in the
allowance for doubtful accounts, changes in working capital of $85,000, and a
non-cash gain of $916,000 from settlement of liabilities offset by depreciation
of $81,000, a non-cash loss of $31,000 from sale of assets, and non-cash expense
of $180,000 from issuance of options and warrants. Net cash used in operating
activities of $1,879,000 in the 2002 nine months was primarily related to net
losses of $1,864,000, net of the $640,000 gain on sale of assets, less:
depreciation of $370,000, provision of $13,000 for doubtful accounts, non-cash
expense of $53,000 from issuance of options and warrants, and net changes in
working capital of $189,000.

                                       13
<PAGE>

Net cash used in investing activities in the 2003 nine months of $87,000 related
to the cost of software development capitalized during the year of $43,000 plus
the purchase of software of $20,000 and leasehold improvements of $26,000, less
$2,000 proceeds from sale of assets. Net cash provided in the 2002 nine months
by investing activities was $355,000, comprised of $640,000 net proceeds from
the sale of assets, less $19,000 used for the purchase of property and equipment
and $266,000 for the capitalized cost of software development during the period.

Net cash provided by financing activities in the 2003 nine months was $955,000,
of which $857,000 was related to the issuance of common stock and $98,000
related to proceeds of $100,000 from debt financing, offset by $2,000 used to
repay debt. Net cash provided by financing activities in the 2002 nine months
was $1,469,000 resulting from the issuance of preferred stock for net proceeds
of $826,000, the issuance of common stock for net proceeds of $445,000 and
proceeds of $610,000 from debt financing, offset by $412,000 used to repay debt.

We believe that our available cash resources, together with anticipated revenues
from operations and the proceeds of recently completed financing activities and
funding commitments will not be sufficient to satisfy our capital requirements
past November 30, 2003. Necessary additional capital may not be available on a
timely basis or on acceptable terms, if at all. In any of these events, we may
be unable to implement current plans for expansion or to repay debt obligations
as they become due. If sufficient capital cannot be obtained, we may be forced
to significantly reduce operating expenses to a point which would be detrimental
to business operations, curtail research and development activities, sell
certain business assets or discontinue some or all of our business operations,
take other actions which could be detrimental to business prospects and result
in charges which could be material to our operations and financial position, or
cease operations altogether. In the event that any future financing should take
the form of equity securities, the holders of the common stock and preferred
stock may experience additional dilution. In the event of a cessation of
operations, there may not be sufficient assets to fully satisfy all creditors,
in which case the holders of equity securities will be unable to recoup any of
their investment.

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<PAGE>

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS QUARTERLY REPORT ON
FORM 10-Q AND IN OTHER SEC FILINGS BY THE COMPANY CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO VARIOUS RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM THOSE
PROJECTED IN SUCH FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES ARE
DISCUSSED IN MORE DETAIL IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K WHICH WAS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 2003. NO ASSURANCE
CAN BE GIVEN THAT FUTURE RESULTS COVERED BY THE FORWARD-LOOKING STATEMENTS WILL
BE ACHIEVED.

ITEM 4.  Controls and Procedures

(a)      Evaluation of Disclosure Controls and Procedures

         Within the 90 days prior to the date of this report, the Company
         carried out an evaluation, under the supervision and with the
         participation of the Company's management, including the Company's
         Chief Executive Officer and Chief Financial Officer, of the
         effectiveness of the design and operation of the Company's disclosure
         controls and procedures pursuant to Exchange Act Rule 13a-14. Based
         upon that evaluation, the Chief Executive Officer and Chief Financial
         Officer concluded that the Company's disclosure controls and procedures
         are effective in gathering, analyzing and disclosing information needed
         to satisfy the Company's disclosure obligations under the Exchange Act.

(b)      Changes in Internal Controls

         There were no significant changes in the Company's internal controls or
         in other factors that could significantly affect those controls during
         the quarter ended September 30, 2003.


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PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(b) REPORTS:


         During the quarter ended September 30, 2003, the Company filed a Report
         on Form 8-K dated August 20, 2003 containing information under item 5.


The following Additional Exhibits are filed herewith:

31.1              Certification pursuant to Exchange Act Rules 13a-15(e) and
                  15d-15(e) of the President and Chief Executive Officer

31.2              Certification pursuant to Exchange Act Rules 13a-15(e) and
                  15d-15(e) of the Chief Financial Officer

32.1              Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
                  the President and Chief Executive Officer

32.2              Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
                  the Chief Financial Officer

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

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                                   SIGNATURES


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


CLAIMSNET.COM INC.
(Registrant)


By:      /s/ Don Crosbie
         -----------------------------
         Don Crosbie
         President and
         Chief Executive Officer

By:      /s/ Paul W. Miller
         ----------------------------
         Paul W. Miller
         Chief Financial Officer


April 1, 2004


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