`UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K
                                  (As Amended)


[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2001

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ TO ____________

                         Commission File Number 0-24768

                              MEDIX RESOURCES, INC.
                 (Name of small business issuer in its charter)

       Colorado                                                          84-1123311
(State or Other Jurisdiction of                                        (IRS Employer
Incorporation or Organization                                      Identification No.)

                        420 Lexington Avenue, Suite 1830
                            New York, New York 10170
                    (Address of Principal Executive Offices)

                    Issuer's Telephone Number: (212) 697-2509

         Securities Registered Under Section 12(b) of the Exchange Act:
                         Common Stock - $.001 Par Value.

         Securities Registered Under Section 12(g) of the Exchange Act:
                                      None


Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d)
of the Securities 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 [  ]


Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-X contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]



The  aggregate   market  value  of  the   registrant's   Common  Stock  held  by
non-affiliates  of the  registrant  as of  March  15,  2002  was  approximately  $31,707,233
for   purposes  of  the  foregoing  calculation  only,  each  of  the
registrant's officers and directors is deemed to be an affiliate).

There were 58,386,516 shares of registrant's Common Stock outstanding as of March
15, 2002.


                      Documents incorporated by reference:
                                      None



                                TABLE OF CONTENTS


PART I..........................................................................3

ITEM 1.    BUSINESS.............................................................3
ITEM 2     PROPERTIES..........................................................15
ITEM 3.    LEGAL PROCEEDINGS...................................................16
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................17

PART II....................................................................... 17

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS.................................................17
ITEM 6.    SELECTED FINANCIAL DATA.............................................18
ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATION......................19
ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                       MARKET RISK.............................................25
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.........................25
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
           ON ACCOUNTING AND FINANCIAL DISCLOSURE..............................25

PART III.......................................................................25

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................25
ITEM 11.   EXECUTIVE COMPENSATION..............................................29
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
           AND MANAGEMENT......................................................35
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................37

PART IV    ....................................................................38

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
           REPORTS ON FORM 8-K.................................................38




                                     PART I



ITEM 1.   BUSINESS

Our Company


      Medix  Resources,  Inc.,  a Colorado  corporation  ("Medix" or the  "Company"),  is an
information  technology  company with its principal  executive office in New York, New York.
The Company also maintains offices in Agoura Hills, California,  Greenwood Village, Colorado
and  Marietta,  Georgia.  We  specialize in the  development,  marketing  and  management of
connectivity  solutions  for  clinical  and  business  transactions  within  the  healthcare
industry.  Through  our  wholly  owned  subsidiary,  Cymedix  Lynx  Corporation,  a Colorado
corporation  ("Cymedix"),  we have  developed  the Cymedix(R)suite of service  products as a
toolkit to help modernize physician and healthcare  communication  technology and facilitate
transaction productivity.  We continue to enhance and refine our products to enable the many
disparate  information  systems  within the  healthcare  industry  to  communicate  with one
another and to expand the scope of healthcare transaction automation.

      The  Cymedix(R)suite of  products  enables  the  transmission  of  critical  clinical,
financial  and  administrative  information  between  healthcare  information  systems,  and
provides healthcare  institutions (such as health plans, insurers,  hospitals and practicing
physicians)  with  non-invasive  connectivity  products  that can be  integrated  with their
existing software applications to provide  Internet-enabled  transaction  capability between
all  parties.  This  approach  is  significant  because  it offers  substantial  utility  to
physicians who are cautious about making major adjustments to their practice  disciplines or
reluctant to invest heavily in new, administrative technologies.

      The  implementation  of Cymedix(R)service  products targets improved  efficacy of daily
interactions  between  health  caregivers  and their  staffs,  ancillary  providers  such as
laboratories  and  pharmacy  benefit  managers  (PBMs),   insurance  companies,   hospitals,
Integrated  Delivery Networks (IDNs) and Health  Maintenance  Organizations  (HMOs).  Recent
State and Federal  legislative  actions, as well as industry mandates to promote quality and
the privacy of patient  information while controlling costs, have created fertile ground for
effective  technology  solutions  that unite systems and enable digital  communication.  The
market for robust and practical  healthcare  solutions  will grow  rapidly,  and that growth
will  continue  to  accelerate  as  the  joined  emphases  of  consumer   choice,   quality,
administrative  service and  cost-containment  ratchet up the demand for more  efficient and
user-friendly methods of delivering quality healthcare.

      Moreover,  Medix  understands  the  essentially  local nature of  healthcare  and will
deploy Cymedix(R)service products only in regions where we can guarantee that each installed
physician can use our  technologies to serve most of his or her patients.  This  disciplined
market approach,  combined with the Cymedix(R)suite of physician-centric products, provides a
foundation for rapid adoption,  ongoing  utilization and stable,  recurring revenue streams.
Our regional strategy and focus on authentic  physician  adoption is what  differentiates us
from most eHealth companies,  including those who have survived the rough justice of today's
market, as well as the many who have perished.


      Medix was  incorporated  in the State of Colorado in 1988.  For the next  decade,  the
Company operated as a temporary  healthcare staffing company,  with offices at various times
in Colorado, New York, Texas and California.  Medix disposed of the its remaining healthcare
staffing  operations  in  February  2000.  In January  1998,  the Company  acquired  Cymedix
Corporation,  a California  corporation,  which was merged into our wholly owned  healthcare
technology subsidiary, Cymedix Lynx Corporation.






      As of March 15, 2002,  we are in various  stages of project  development,  testing and
market  implementation  with six clients using components of the Cymedix(R)software suite to
link  healthcare  participants  by using the  Internet.  While none of these  projects  have
generated  any  significant  revenues to date,  if funding  can be obtained to continue  and
expand our operations,  these projects  should position us as one of the technology  leaders
in the emerging  eHealth  industry.  All of these projects  involve working with an existing
healthcare  insurer,   reference  laboratory  or  pharmacy  benefit  management  company  to
integrate  selected  Cymedix(R)products into their networks to enable physicians to use those
products for pharmacy  management  transactions,  laboratory orders and results reporting or
claims   processing.   See   "Forward-Looking   Statements  and   Associated   Risks"  under
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION below.

      Our principal  executive  office is located at 420 Lexington  Avenue,  Suite 1830, New
York, NY 10170,  and its telephone  number is (212) 697-2509.  Our principal  administrative
office is at 7100 East  Belleview  Ave.,  Greenwood  Village,  CO 80111,  and its  telephone
number is (303) 741-2045.

Recent Developments

      We executed an Amended and Restated  Common  Stock  Purchase  Warrant  with  WellPoint
Pharmacy  Management a wholly owned  subsidiary of WellPoint  Health  Networks  Inc.,  dated
February 18, 2002, to restructure  our  obligations  to issue  warrants to WellPoint.  Under
that  Warrant,  we are  obligated  to issue up to  7,000,000  shares of our common  stock at
exercise prices of $0.30 per share for 3,000,000,  $0.50 per share for 3,000,000  shares and
$1.75 per share for 1,000,000 shares, if various  performance  related vesting  requirements
are  satisfied  by  WellPoint.   Currently,   WellPoint  has  satisfied   certain  of  these
requirements  giving  WellPoint the right to purchase  1,850,000  shares of our common stock
at $0.30 per share. The Warrant grants to WellPoint certain  registration  rights to require
us to register  with the SEC the shares  issued to  WellPoint  for resale to the public.  In
the Warrant,  WellPoint  has agreed to restrict  sales to the public of these shares  during
the first year after they have been issued to 200,000  shares per month and  100,000  shares
in any five trading days.  The Warrant  contains  anti-dilution  provisions  providing  that
the number of shares that may be purchased  by  WellPoint  under the Warrant may be adjusted
in certain  circumstances.  WellPoint's  rights to  purchase  our shares  under the  Warrant
expire on September 8, 2004.

      We entered into a secured  convertible  loan agreement with WellPoint,  dated February
19, 2002,  pursuant to which we borrowed  $1,000,000 from WellPoint Health Networks Inc. The
loan becomes  payable on February 19, 2003,  if not  converted  into our common  stock.  The
loan earns  annual  interest at a floating  rate of 300 basis  points  over prime,  as it is
adjusted  from time to time,  which is also payable at maturity  and may be  converted  into
common  stock.  Conversion  into common stock is at the option of either  WellPoint or Medix
at a contingent  conversion  price.  The conversion price will be either (i) at the price at
which  additional  shares are sold to other  private  placement  investors if Medix  obtains
written  commitments  for at  least an  additional  $4,000,000  of  equity  by the  close of
business on September 30, 2002, from persons not affiliates of WellPoint,  and if such sales
are  closed  by the  maturity  date of the  loan,  or (ii)  at a price  equal  to 80% of the
then-current  Fair Market  Value (as  defined  below) if Medix is unable to obtain a written
commitment  for the additional  equity  investment by the close of business on September 30,
2002 or close the sales by the maturity  date.  For this purpose,  "Fair Market Value" shall
be the average  closing  price of Medix common  stock for the twenty  trading days ending on
the day prior to the day of the  conversion.  The loan is secured by the grant of a security
interest  in all  Medix's  intellectual  property,  including  its  patent,  copyrights  and
trademarks.  While  Medix  can cure a  default  in the  repayment  of the loan at the  fixed
maturity date by the forced  conversion of the loan into its common stock,  a cross default,
breach of  representation  or  warranty,  and  bankruptcy  or similar  event of default will
trigger  the  foreclosure  provision  of the  security  agreement.  The  Company  expects to
require  conversion at the earliest possible time, which may be before September 30, 2002 if
the required funds are received at which point the pledge of collateral will be received.






      In  October  2001,  Medix  announced  the  introduction  of  Cymedix(R)III,  the  next
generation of its proprietary,  point-of-care products.  Cymedix(R)III is based upon a robust
and  device-neutral  architecture  that  leverages  established  workstation,  handheld  and
wireless  technologies  and supports Medix'  long-term  commitment to support  emerging exam
room and point-of-care technologies.  Cymedix(R)III products,  including working applications
for Cymedix(R)Pharmacy,  Laboratory  and  PlanConnect  services,  will be made  available to
physicians in 2002. Until recently, the combination of expensive,  front-end equipment costs
coupled  with  time-consuming  and  often  problematic  data  synchronization   requirements
effectively  dampened the  physician's  appetite for any of the  point-of-care  technologies
being offered.  Our new Cymedix(R)III architecture is both fully scalable and device-neutral,
allowing our Pharmacy,  Lab and  PlanConnect  products to be delivered via  workstation  and
wireless  handheld  devices with the  technologies  available  today as well as those of the
future.  The  addition of  wireless  capability  within our  Cymedix(R)III  product  release
naturally  complements the Medix suite of transaction  products,  and enables physicians and
their  office  staff to execute the full range of clinical  and  support  transactions  from
their office  workstation,  their home desktop or from the exam room itself,  via a handheld
device with real-time  synchronization  of secure patient data. We believe that the expanded
capabilities  of  Cymedix(R)III offer a  compelling  value  return for  physicians  and will
accelerate their adoption of our technology.

      Finally,  during 2001, we ceased  operations of our Automated Design Concepts division
(ADC),  a Web design  business.  We had acquired ADC in early 2000 from a former officer and
director  of the Company  for cash and stock  valued at  $474,000.  In  connection  with our
general cost reduction  program,  we determined  that the business of the subsidiary was not
part of our core business  operations and therefore did not justify our continued  financial
support.  In  connection  with the  termination  of our  subsidiary's  operations  we took a
write-off  of goodwill in the amount of  $443,000.  We also  determined  that our license of
proprietary  software  from  ZirMed.com  had no value to us and had no more  than a  nominal
market value. In 2001, we wrote-off the unamortized  value of the related  intangible asset,
which was $668,000.

Our Industry

      The U.S. Centers for Medicare and Medicaid Services  (formerly the Health Care Finance
Administration)  estimates  that $1.4 trillion  dollars,  or 14% of the U.S.  Gross domestic
product,  is spent annually on healthcare.  Healthcare  expenditures are expected to grow to
approximately  $2.8  trillion  by 2011,  due to  increasingly  expensive  and  sophisticated
clinical  technology,  an aging  population base and the growing demands of  newly-empowered
and health conscious consumers.

      Every year,  the healthcare  industry  conducts its business by executing more than 30
billion transactions,  more than 90% of which are untouched by integrated  automation.  Core
transactions   --  such  as  enrollment   and   eligibility   verification,   referrals  and
authorizations,   lab   orders  and  lab   results   reporting,   billing   and  claims  and
prescription-writing  with drug  interaction  checks -- are  processed  through a disjointed
matrix of isolated  systems,  including paper, fax and phone. Of necessity,  every provider,
insurer or supplier has invested in its own  proprietary  and often  antiquated  information
system.  As a result,  duplication  is rampant,  error  probabilities  are  enormous and the
waste of precious resources is glaringly obvious.

      Health  economists  estimate  that  20% or  more  of  the  nation's  total  healthcare
expenditures is spent on backroom  administration.  Another 10% funds the fallout of adverse
health  events  that are  caused by  inaccurate  or  unavailable  patient  information.  The
cumulative  effect is that,  more than 4% of our nation's  annual  economic  output is being
consumed by a service and transactions industry that pleases no one and angers many.

      Today's  inefficient  and "silo"  healthcare  information  systems  are created by the
extreme fragmentation and complexity of the industry. Briefly:

  o  Healthcare  remains a quintessentially cottage   industry.  There  are   currently
     approximately  645,000 practicing  physicians,  6,200 hospitals,  16,500 nursing homes,
     8,000 home health care  agencies,  4,500  independent  laboratories  and  thousands  of
     managed care organizations and other ancillary (usually local) health care providers.

  o  The  various constituents  of  healthcare have  sharply  different  levels of access to
     capital. Typically,  insurers have had the finances to fund large-scale systems able to
     structure  and  share  uniform  information.  Physicians  do not.  This  imbalance  has
     produced  an  industry  rich  in  proprietary   administrative   systems  but  poor  in
     patient-focused point-of-care information systems.

  o  Government  regulation  of the industry is splintered  across 50 states,  coupled  with
     substantial federal intervention.

  o  Healthcare is an extremely complex business. Literally,  errors can be life-threatening.
     Until  recently,   affordable   technologies   capable  of  replacing   wasteful,   but
     comparatively safe administrative practices were not available.

      The  Internet   provides  a  platform  for  catalytic  change  within  the  healthcare
industry.   Grabbing  hold  of  that  opportunity   requires  the  deployment  of  effective
connectivity  tools that enable disparate systems to effectively and affordably  communicate
with one another. The Internet's emerging,,  ubiquitous accessibility and growing acceptance
make it an  increasingly  critical tool for  business-to-business  and  business-to-consumer
interaction.  Moreover,  Internet use is  undergoing a  transformation  from simple,  static
information   publishing,   messaging,   and  data   gathering  to  real-time,   interactive
applications  that are capable of supporting  core  business  transactions  and  fundamental
business processes.

      In many  industries,  work is in progress to harness the power of the  Internet and to
fuse  previously   disconnected  business  processes  that  allow  companies  to  reengineer
workflows,  reduce  administrative  and  distribution  costs and  leverage  core-competency,
expert  resources.  Because of its size,  complexity  and  dependence on accurate and timely
information  exchange,   the  healthcare  industry  is  well  suited  to  benefit  from  the
connectivity and data  integration  solutions that we are developing.  In addition,  as more
and more powerful  technology tools become  available at decreasing cost levels,  (including
workstations,  handheld  devices and wireless  networks),  we believe that  physicians  will
acquire more advanced technology  platforms to optimize patient care, automate processes and
better leverage their clinical experience.

      Administrative  processes in healthcare  consume  approximately $300 billion per year.
Insurers  typically  spend 10-12% of gross premiums in  administration,  not including sales
acquisition  costs. A typical physician practice spends between 25%-50% of gross billings on
administration.  Medix's  mission is to offer a set of tools to  physicians  and to insurers
that takes direct aim at the present tab of  administrative  cost and reduces the  potential
of clinical error. For the eHealth industry, we believe it to be a $20 billion opportunity.

Our Products and Technology


      Cymedix(R)is a suite of  Web-enabled  products and  integration  tools that  seamlessly
moves clinical and administrative  information among health insurers,  physicians,  pharmacy
benefit   management   companies  and   reference   labs.   Collectively,   they  create  an
indispensable,  non-invasive  technology platform that establishes secure connectivity among
the many  isolated  systems  of the  healthcare  industry.  The  Cymedix(R)platform  enables
physicians  or their staff to use a Web portal that  transparently  performs the  timesaving
activity of gathering and  transmitting  vital patient  information to healthcare  entities.
Since physicians can offload  substantial  administrative  burdens to the Cymedix(R)services
products,  we believe they will see the  opportunity  to employ the Cymedix(R)product  suite
(PBM, payor,  pharmacy, lab and hospital connections) to improve the quality of patient care
and to grow their business.


      We deliver  our  solutions  via the  Internet  using  secure  socket  layers and other
encryption  technologies that protect  confidential  patient  information while reducing the
physician's need to purchase and manage on-site hardware and software systems.  The Cymedix(R)
suite of products may be utilized on any device that supports an Internet browser,  allowing
our software to run on a wide range of equipment,  from aging personal  computers to leading
edge exam room technologies  (handheld devices,  tablets,  etc.). In addition, the advent of
low cost,  secure  wireless  networking  solutions makes the last inch of the "last mile" of
physician practice implementation vastly easier today than even a year ago.


      Our  Cymedix(R)Universal  Interface  (CUI) is  central  to the  implementation  of the
Cymedix(R)suite of products.  Physicians  generally  reject new  technology  solutions  that
require  new  investments  in time or money  over and  above  their  primary  investment  in
practice  management  systems.  Therefore,  we believe it is imperative to deliver solutions
that effectively  leverage their practice  management  investment at no additional cost. The
CUI toolkit  automatically  extracts  pre-selected  data elements from existing  systems and
remaps the targeted  information  for use by the Cymedix(R)products  suite.  This technology
permits the Cymedix(R)suite to  efficiently  and  effectively  integrate  with virtually any
practice management system, thereby eliminating the need to hard code unique,  expensive and
time-consuming   interfaces.   Typically,   the  practice  management  system  is  the  only
administrative  information  system in a  physician's  practice  and is  therefore  the most
trusted  source for patient  and billing  data.  The CUI  enables the  physician's  staff to
embrace the Cymedix(R)suite as a  value-added  adjunct of their legacy  practice  management
system,  all without having to bear duplicative  processes such as the re-keying of critical
patient data.

The Cymedix(R)product suite of services includes:



     PRODUCT                            FUNCTIONALITY
     ----------------------------  --------------------------------------

        Cymedix(R)Pharmacy   >>>>  o  Pharmacy benefit manager
                                      identification (eligibility
                                      verification and an automatic
                                      link to formulary/benefits
                                      information.)
                                   o  Electronic prescribing (retail
                                      and mail order).
                                   o  Medication history.
                                   o  Treatment and formulary
                                      compliance.
                                   o  Drug to drug interaction, drug to
                                      allergy, duplicate therapy and
                                      other clinical checks.
                                   o  Messaging and prompts.
                                   o  Compliance analysis
        Cymedix(R)Lab   >>>>       o  Complete lab order entry.
                                   o  Medical necessity verification.
                                   o  24/7  results  reporting  (partial
                                      and full).
                                   o  Specimen tracking.
                                   o  Messaging and prompts.
                                   o  Cumulative and custom reporting.
        Cymedix(R)PlanConnect >>>> o  Eligibility verification.
                                   o  Referrals and authorizations.
                                   o  Custom messaging and prompts.
                                   o  Electronic claim validation,
                                      submission and tracking.


      The  introduction of our  proprietary,  point-of-care  products is proceeding with our
six  active  customers.  Our  suite  of  technology  services  is based  upon a  robust  and
device-neutral  architecture  that  leverages  proven  workstation,  handheld  and  wireless
technologies.   Our  Cymedix(R)technology   architecture  includes  a  flexible  integration
framework  that  facilitates   rapid  and  reliable   connectivity   efforts.   All  product
components,  including  Cymedix(R)Pharmacy,  Cymedix(R)Laboratory  and Cymedix(R)PlanConnect
services are in final testing as we prepare for production-level  physician installations in
second quarter 2002.


      On the sponsor host side, we are in late-stage  development and testing for customized
integrations with each of our active contracts.  When we sign a connectivity  agreement with
a  transaction  sponsor  (PBM,  payor,  lab,  hospital,  etc.),  we move into a  disciplined
integration  phase in which we establish  the interface  connection  to the sponsor,  enable
transactions,  tailor the  front-end to the  sponsor's  requirements,  and  incorporate  any
sponsor-specific  rules within our  applications.  Generally,  this integration phase should
take between 90-120 days,  depending upon the pace, regimen and internal resource allocation
set by our customers.  However,  as we have learned with earlier  pilots,  these time frames
are  variable and may be extended  indefinitely  for reasons  beyond our control.  After the
integration  phase  is  completed,  we move to the  deployment  and  production  phase  when
transaction fee revenues will be generated.

      We have targeted our initial,  production-level  physician  installations  to begin in
second quarter 2002 and we currently expect  transaction fee revenues to commence before the
end of the second  quarter 2002.  While we had expected to begin  receiving such revenues in
the first  quarter  of 2002,  the scope and  timing of  several  sponsor  host  integrations
required that we push the physician  launch date to the next quarter.  As a result,  we have
yet to receive any transaction fee revenue.


      The marketing and  development of our Cymedix(R)suite of services  products is our sole
business at this time,  and a substantial  portion of our net operating  loss is due to such
efforts.  We are funding such expenses as well as our  administrative  expenses  through the
sale of our securities.


Our Sponsor Customer Relationships

      As an eHealth  connectivity  company,  Medix must build relationships with two sets of
customers:  physician  end-users  and sponsor host  institutions,  including  health  plans,
pharmacy benefit  managers,  reference  laboratories  and other,  ancillary types of managed
care networks. These sponsor organizations,  typically large enterprises,  pay our per-click
transaction  fees as described  in the section  titled "Our  Strategy  and  Business  Model"
below.  Our  relationships  with  WellPoint  Pharmacy  Management,  Merck-Medco  and Express
Scripts, Inc. all recorded key sponsor customer events in 2001

WellPoint Pharmacy Management

      In 2001,  Medix  announced  that we had  completed  our pilot  program with  WellPoint
Pharmacy Management (WPM) and a joint deployment of Web-based  transactions  services to WPM
health plan  customers and their  participating  physicians  will begin during 2002. WPM has
long committed to providing value to customers,  patients and physician partners through the
elimination  of  administrative  waste,  clinical  error,  fraud  and  abuse.  They  enjoy a
well-earned  reputation  for  extraordinary  growth and  clinical  programs  of  excellence.
Together,  Medix and WPM have forged  deep,  long-term  ties bound by a common  objective to
provide  physicians  with the tools and means to elevate  the  clinical  experience  through
shared  information and decision  support.  Our robust pilot program with WPM, combined with
the gathering  momentum in the emerging  eHealth  industry,  has allowed Medix to strengthen
our  sales  pipeline  over a  compressed  timeframe.  In  addition,  our  multi  dimensional
relationship involves the following:

      Product  Distribution  -  Through  the  execution  of  an  amendment  to  the  Warrant
Agreement,  WellPoint Pharmacy  Management has formally agreed to recommend Medix Resources,
Inc.  to their  customers  and key  vendors.  WPM enjoys a  diversified  customer  base that
includes health plans,  employers and regional PBMs.  Initially,  Medix and WPM are focusing
joint sales  activities  on WPM's large Blue Cross Blue  Shield  plan  customers.  Executing
customer  agreements with WPM's large customers will provide Medix with significant  patient
density  in  several  key  markets.  Under a formal  agreement  with  specific  targets  and
incentives,  WPM will earn warrants in Medix shares when  WPM-sponsored  customers  agree to
implement the Cymedix(R)technology set.

      Product  Development  -  Medix  and WPM are  executing  a  shared,  formal  agenda  to
continually  research,  test and implement  new product  enhancements.  These  collaborative
product  development  efforts  offer a  substantive  benefit to Medix,  as WPM  possesses  a
powerful repository of pharmacy industry knowledge and distinguished clinical expertise.

      Our  longstanding  and close working  relationship  with WPM is a  significant  asset,
especially  as they are a  first-rate  reference  with  which  we can  expand  our  reach to
healthcare's other large constituencies.

Merck-Medco and Express Scripts, Inc.

      In October 2001, we announced  agreements  with two of the nation's  leading  pharmacy
benefit managers,  Merck-Medco and Express Scripts, Inc. These business  relationships allow
us to provide  physicians with point-of-care  access to clinical  information and electronic
prescribing.  Client  integration  work is well  underway  and we will  shortly  begin joint
deployment of these  services to Merck-Medco  and Express  Scripts health plan customers and
physicians.  Different than the start-up of our WPM  relationship,  neither  Merck-Medco nor
Express Scripts requires a phased product pilot program.

      Our  agreements  with  Merck-Medco  and Express  Scripts are important  milestones for
Medix.  Merck-Medco is the nation's second largest pharmacy benefits manager,  with a client
roster  that  includes  major  insurers  and  corporations  throughout  the  nation and more
importantly  within our target markets.  Likewise,  Express Scripts,  Inc. is an ideal match
because of their demonstrated  market  leadership.  Both Merck-Medco and Express Scripts are
leading sponsors of technology  initiatives that place decision-making tools in the hands of
physicians at the point of care.  Together,  our joint efforts will provide  physicians  and
their  staffs  with  easy-to-use  connectivity  solutions  that  support  all aspects of the
prescription process.

Our Strategy and Business Model


      General. Our market  strategy is organized  around  several  well-defined  components.
First,  we believe  that there is  significant  value  attached  to offering  products  that
complement today's commonly available  technologies.  This is a critical aspect of the added
value that we bring to our sponsor customers and physicians.  For Medix, it means delivering
connectivity  and  service  solutions  that  take  into  consideration  our  users'  current
technology and workflows.  For example,  many physician practices have not yet invested in a
high-speed  (DSL/cable)  Internet  connection.  Therefore  we have  designed our products to
excel at every level of  connectivity,  from the less  sophisticated  dial-up  capability to
high speed, persistent connections.


      Second,  our  business  model is a per-click  transaction  fee model paid for by large
institutional  sponsors  with an interest in enabling  their  connectivity  and  information
sharing with physician offices.  Physicians' offices operate on a private network created by
Medix and financed by per click  transaction  fees from sponsoring  institutions.  We expect
that  this  approach  will  offer  favorable  returns  to  sponsoring  institutions  through
aggregate  administrative and underwriting cost savings while enabling  physicians'  offices
to  reduce  paperwork  and  costs  within  their  practice  environment  with  no  front-end
investment.  In  the  longer  term,  as  the  value  proposition  becomes  more  obvious  to
physicians, they may elect to pay for an expanded suite of services.

      Third,  we believe  that the  functionality  provided by the Cymedix(R)product  suite,
together with the CUI,  gives us a distinct  competitive  advantage.  By enabling  physician
practices  to  continue  to use their  existing  information  systems  while  accessing  our
non-invasive  technology,  we recognize and honor the physician's investment in their choice
of practice management  technology.  Our approach recognizes that, as in medicine, our first
duty is to do no harm. Thus, while the Cymedix(R)product suite offers  attractive  timesaving
clinical  and  administrative  capabilities,  our  products  do not put at  risk  any of the
assumed "safe" features of today's processes.

      Fourth,  we act as support partners to our customers and users. Our intent is to leave
the  business of medicine to  physicians  and the  business of managed  care to managed care
companies.  We bring value by  constructing  safe and secure,  high-speed data highways that
enable connectivity and provide hassle-free productivity tools for all users.

      Finally,  we believe that our  approach and the products  that we make take direct aim
at the  wasteful  administration  costs that plague all of  healthcare's  stakeholders.  Our
internal  standards  mandate that we make a substantive  difference in this area, and we ask
our users and customers to judge us accordingly.

      Taken  together,  these  strategy  components  position  Medix  to  earn  substantial,
recurring  revenue  streams  at  attractive  margins.  Moreover,  once  critical  density is
reached,  continued  growth in our core product line can be  supported  without  substantial
reinvestment in added support or fulfillment  infrastructure,  further leveraging our market
investment returns for the future.

      Our  plan  to  secure  long-term   recurring  revenue  streams  via  the  creation  of
contractual  relationships  with large  sponsors is well  underway.  As  physicians  grow to
appreciate the benefit of our  institutionally  sponsored product offerings and to recognize
the value of clinical and  administrative  data captured  during  ongoing use of our product
suite, we believe we can establish a market for  physician-centric  enhancements and add-ons
to our  products.  Medix  plans to offer  physicians  additional  timesaving  features  that
further  improve  patient  care and practice  profitability.  Among these  features  will be
connectivity gateways to non-sponsored  transactions,  charge capture,  patient relationship
management  services and document  management.  We expect that physicians will pay for these
additional  services  under a subscription  model.  Broadly cast, our business model follows
the following regimen:

||   Medix establishes a connection between sponsor organizations and physicians.

||   Using the CUI and our product  suite,  physicians  and practice  administrators  drive
         transactions via their practice management  systems,  handheld or wireless devices,
         or through a direct Internet connection to Medix servers.

||   Sponsor organizations pay for transactions.

||    Physicians  will pay for  subscription  services  to gain  access to  future  product
         enhancements   that  leverage  their   administrative   efficiencies  and  clinical
         effectiveness.


      Our Regional Strategy.  Healthcare  services are insured,  delivered  and  remunerated
differently  from one region to another.  Medix  understands the essential,  local nature of
healthcare  and will deploy  Cymedix(R)service  products only in regions where we can assure
that  each  installed  physician  can  use  our  technologies  to  serve  most of his or her
patients.   This  disciplined   market  approach,   combined  with  the  Cymedix(R)suite  of
physician-oriented  service  products,   provides  a  foundation  for  rapid  adoption,  and
sustained  physician   utilization.   Moreover,  we  believe  that  contracting  with  large
communities  of  physicians  and sponsor  organizations  within highly  defined  geographies
creates a highly  desirable  financial and  operating  scenario for Medix as well as lasting
brand presence that sharply differentiates us from our competition.


      Given  adequate  long term  financing,  we intend to initially  focus our resources on
deploying  the  Cymedix(R)software  suite  in  five  markets.  They  are  Atlanta,  Northern
California,  Southern  California,  the New York Metropolitan Area, and Chicago. As of March
2002,  our Atlanta market  development  efforts are underway with a planned Q2, 2002 product
launch.

      See "Forward-Looking  Statements and Associated Risks" under "MANAGEMENT'S  DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" below.

Our Marketing and Sales Approach

      The Company  intends to pursue a focused  but  multi-dimensional  marketing  and sales
strategy over the next several years.  Specifically:

o  We will  concentrate our energies on selected,  geographical  target markets that provide
   ample  transaction  potential  and offer us the  opportunity  to penetrate a  significant
   share of physician desktops.

o  We will seek to partner  first  with a leading,  anchor  client or  consortium  of anchor
   clients in each of the selected markets.

o  Following platform  development with the anchor client(s),  we will concentrate our sales
   focus  on  enlisting  the  second  tier  of  potential  customers,   including  corollary
   agreements with regional-specific  suppliers such as pharmacy benefit managers,  labs and
   large, organized provider groups. Our goal is to achieve major market density.

o  Concurrent with the market breadth effort described above, the Company will  aggressively
   seek added market depth by up-selling  and  cross-selling  the full  portfolio of product
   services to existing customers and their affiliates.

o  As our  brand  and  presence  gains  local  strength,  we will  seek to  market  relevant
   enhancements  and  add-ons  to our  products  directly  to  physicians,  using a  monthly
   subscription model.

Sales Process

      Most of our  customers  are  large  health  plans,  PBM's and lab  companies  that are
national  in  scope,  but are  operated  on a local  or  regional  basis.  Therefore,  it is
imperative  to organize  sales efforts at both the national and local levels to close sales,
gain market share and retain existing  customers.  Consistent with our regional  approach to
market sales and  implementations,  the Medix sales process draws  resources and  experience
from both corporate and regional teams.

        NATIONAL SALES PROCESS TEAM            REGIONAL SALES PROCESS TEAMS
       ----------------------------------     ---------------------------------
       |X|   CEO                              |X|   Regional Market CEO
       |X|   EVP & CTO                        |X|   Local Implementation Team
       |X|   EVP Operations                   |X|   Local    Consultants   (as
       |X|   Selected Technology Team              needed)
           Members                            |X|   Selected Technology Team
                                                   Members
       ----------------------------------     ---------------------------------

      Medix views the sales process to gain customer  relationships  as a two-step  process.
This process can happen  sequentially  or be pursued  along  parallel  tracks.  The national
sales  process  team is  responsible  for  negotiating  and  executing  contracts as well as
charged with the  responsibility  to expand customer  relationships in terms of product base
or market expansion.  The regional sales process team is responsible for local account sales
and  account  management  and the  local  administration  of the  sale's  execution  for our
national customers.

      At present,  our executive staff devotes a substantive portion of their time to sales,
marketing and account  management  activities.  Longer term, with  appropriate  financing in
place, we expect to recruit and hire a new head of Corporate Business  Development,  as well
as to staff our regional  organizations  with  resident  sales  professionals  to complement
current resources.


      Outside  consultants  have been  engaged to assist  with sales leads  development  and
target-customer  introductions.  Outside  contractors  also have been  retained  to  develop
marketing  and sales  literature  for  Cymedix(R)services.  Materials to promote the various
Cymedix  products are being  developed for direct mailing to physicians  affiliated with our
customers.


Competition

      eHealth Services. The market for eHealth services is evolving,  highly  fragmented and
subject to fast-moving  technological change. Although our competitive position is difficult
to  characterize,  due  principally  to the youth of our market  niche and the  diversity of
current and future competitors,  we believe the primary competitive  elements in the eHealth
connectivity  business  are:  (i) the scope,  quality and  performance  of the  technologies
offered;  (ii)  rates of  physician  adoption  and  sustained  utilization;  and  (iii)  the
integrity and market-worthiness of pricing and data models.

      We believe  our  principal  competitive  advantages  are:  (i) our  robust  technology
architecture;  (ii) our CUI toolkit;  (iii) our clinical  product base;  (iiii) our regional
and  physician-centric  focus;  and  (iiiii)  our  customer  relationships.  There are other
connectivity  companies,  in the United States, both publicly held and private, that compete
directly or indirectly with Medix Resources,  Inc. Moreover,  competition can be expected to
emerge from  established  healthcare  information  vendors and  established  or new Internet
related  vendors.  The most  likely  competitors  are  companies  with a focus  on  clinical
information  systems and enterprises with an Internet commerce or electronic  network focus.
Currently, we view our main competitors as WebMD, ProxyMed,  NaviMedix and AllScripts. These
competitors may have greater  financial  marketing or technology  resources than us. We will
seek to raise  capital  to  develop  and  implement  Cymedix  products  in a timely  manner,
however,  so long as our  operations  remain under funded,  as they are now, we will be at a
competitive disadvantage.


      Software Development Personnel.     The success of the  development  of our underlying
Cymedix(R)software is dependent to a significant  degree on our key management and technical
personnel.  We believe  that our  success  will also  depend  upon our  ability to  attract,
motivate  and  retain  highly  skilled,  managerial,  sales  and  marketing,  and  technical
personnel,  including  software  programmers and systems  architects skilled in the computer
languages  in which our Cymedix  products  operate.  Competition  for such  personnel in the
software and information services industries is intense.  The loss of key personnel,  or the
inability to hire or retain  qualified  personnel,  could have a material  adverse effect on
our results of operations, financial condition or business.


Patents, Trademarks and Copyrights

      US  Patent  No  5,995,939  was  issued  on  November  30,  1999  to  our  wholly-owned
subsidiary,  Cymedix Lynx Corporation  from the U.S. Patent and Trademark Office  ("USPTO").
The patent  covers our  automated  service  request and  fulfillment  system and will expire
October 14, 2017. A divisional  U.S. patent  application,  including five claims directed to
the method by which the system operates through the Cymedix  Universal  Interface,  has been
abandoned

      The USPTO issued to Cymedix U.S.  Trademark  Registration  No.  2,269,377 for the mark
CYMEDIX  in  connection  with  "computer  software  for  data  base  and  electronic  record
management in the healthcare  field" on August 10, 1999,  U.S.  Trademark  Registration  No.
2,316,240  for the mark  LYNX in  connection  with  "computer  software  to  provide  secure
communication on a global  communication  information network" on February 8, 2000, and U.S.
Trademark  Registration  No. 2,409,248 for the mark CYMEDIX.COM in connection with "computer
software for database and electronic  record management in the healthcare field" on November
28, 2000.

      Cymedix has obtained seven copyright  registrations  for two versions of each of three
modular  software  components  of the  Cymedix  suite of  products,  as well as a  technical
evaluation document that describes the software products.

      No assurance can be given that any of our software  products  will receive  additional
patent or other  intellectual  property  protection.  Cymedix has  assigned the above patent
and copyrights registrations to Medix.

      We seek to protect our software,  documentation and other written materials  primarily
through a  combination  of trade  secret,  trademark  and  copyright  laws,  confidentiality
procedures  and  contractual  provisions.  In addition,  we seek to avoid  disclosure of our
trade  secrets,  by,  among  other  things,  requiring  those  persons  with  access  to our
proprietary  information  to  execute  confidentiality  agreements  with us and  restricting
access to our source code.

      Despite  our  efforts to protect  our  proprietary  rights,  unauthorized  parties may
attempt to copy  aspects of our  products  or obtain and use  information  that we regard as
proprietary.  Policing  unauthorized  use of our products is difficult.  While we are unable
to  determine  the extent to which  piracy of our products  exists,  software  piracy can be
expected to be a persistent  problem,  particularly in foreign  countries where the laws may
not protect our proprietary rights as fully as in the United States.

      From time to time, we are involved in intellectual  property  disputes.  We may notify
others that we believe their products  infringe upon our intellectual  property rights,  and
we may be  notified  by  others  that  they  believe  that our  products  infringe  on their
intellectual   property  rights.   We  expect  that  providers  of  eHealth  solutions  will
increasingly be subject to infringement  claims as the number of products and competitors in
our industry grows and traditional  suppliers of health care data and transaction  solutions
begin to offer  Internet-based  products.  If our  proprietary  technology  is  subjected to
infringement claims, we may have to expend substantial amounts to defend ourselves,  and, if
we lose,  pay damages or seek a license from third  parties,  which could delay sales of our
products.  If  our  proprietary  technology  is  infringed  upon,  we  may  have  to  expend
substantial amounts to prosecute the infringing parties,  and we may experience losses if we
cannot support our claim of infringement.

      We have been notified by a party that it believes our pharmacy product may infringe
on patents that it holds.  We have retained patent counsel who has made a preliminary
investigation and determined that our product does not infringe on the identified patents.
At this time no legal action has been instituted.

Government Regulation

      Federal and state laws and  regulations  regulate many aspects of our business.  Since
sanctions  may be  imposed  for  violations  of  these  laws,  compliance  is a  significant
operational  requirement.  We believe we are in  substantial  compliance  with all  existing
legal  requirements  material  to the  operation  of our  businesses.  There  are,  however,
significant  uncertainties  involving the application of many of these legal requirements to
our  business.  We are unable to predict what  additional  federal or state  legislation  or
regulatory  initiatives  may be enacted in the future relating to our business or the health
care industry in general,  or what effect any such legislation or regulations  might have on
us. We cannot  provide  any  assurance  that  federal or state  governments  will not impose
additional  restrictions  or adopt  interpretations  of  existing  laws  that  could  have a
material  adverse affect on our results or operations,  financial  position and/or cash flow
from operations.

      HIPAA and Standardized Transactions.  Our sponsor customers and physician users must
comply with the Administration Simplification provision of the Health Insurance Portability
and Accountability Act of 1996 (HIPAA), which includes regulations for privacy,
transactions, code sets, security and standard identifiers.  Final regulations and
implementation deadlines exist for transactions, code sets and privacy while only proposed
regulations exist for security and standard identifiers.  Accordingly, our products must
contain features and functionality that allow our customers and users to comply with
existing law.

      As the  effective  date of the  HIPAA  regulations  approach,  they  will have a major
impact on us as well as every other  participant  in the  healthcare  industry.  Significant
resources  will be required to  implement  these  regulations.  Major  retooling  of medical
information  technology  will be  required to install the  required  standardized  codes and
procedures.  Transaction standards,  code sets, and identifiers will need to be installed on
medical participants'  networks and office computers.  Security and privacy regulations will
be the most  difficult to  implement  and  maintain  because  they are broad in scope,  less
definitive,  and  require  ongoing  vigilance  to  assure  compliance.   Estimate  costs  of
implementation  vary widely but will be in the billion of dollars.  Failure to comply  could
put us or any other healthcare participant out of business.

      We believe  that our Cymedix(R)software  product  offerings  are designed to allow for
full  compliance  with known HIPAA  regulations.  However,  until all such  regulations  are
issued  and  final,  they  could be  modified,  which may  require  us to expend  additional
resources to comply with the revised standards.  In addition,  given their novelty,  breadth
in scope,  and uncertainty as to  interpretation,  implementation  will be uncertain and the
possibility of  inadvertently  failing to meet these  standards is high.  Such failure could
result in fines and penalties  being assessed  against us or cause our business to suffer in
other ways.

      Government  Regulation  of the  Internet.  Laws and  regulations  may be adopted  with
respect to the Internet or other  on-line  services  covering  issues such as user  privacy,
pricing, content,  copyrights,  distribution and characteristics and quality of products and
services.  The adoption of any additional  laws or regulations  may impede the growth of the
Internet or other  on-line  services,  which  could,  in turn,  decrease  the demand for our
software  applications and services,  increase our cost of doing business, or otherwise have
an adverse effect on our business, financial condition and results of operations.  Moreover,
the  applicability  to the  Internet of  existing  laws in various  jurisdictions  governing
issues such as property  ownership,  sales and other taxes,  libel and  personal  privacy is
uncertain  and may take  years to  resolve.  Any such new  legislation  or  regulation,  the
application of laws and regulations from jurisdictions  whose laws do not currently apply to
our business,  or the application of existing laws and regulations to the Internet and other
online services could have a material  adverse effect on our business,  financial  condition
and results of operations.

      Confidentiality  and  Security.  While HIPAA  regulations,  as  discussed  above,  are
expected to generally  govern in this area,  regulation by various  state  agencies may also
still apply to  confidentiality  of patient records and the  circumstances  under which such
records may be released for inclusion in our  databases.  Such  regulations  govern both the
disclosure and the use of  confidential  patient  medical  records.  Such  regulation  could
require holders of such  information,  including us, to implement costly security  measures,
or may materially  restrict the ability of health care providers to submit  information from
patient  records  using our  applications.  We utilize  an  architecture  that  incorporates
encrypted  messaging,  firewalls  and  other  security  methods  to  assure  customers  of a
compliant and secure  computing  environment.  However,  no security  procedure is failsafe,
and we will always be subject to a potential  breach of security by wither  determined human
effort or  inadvertent  human  error.  If we were  found  liable for any such  breach,  such
finding  could have a material  adverse  affect on our  business,  financial  condition  and
results of operations.

       False Claims Act.  Under the federal False Claims Act, liability may be imposed on
any individual or entity who knowingly submits or participates in submitting claims for
payment to the federal government which are false or fraudulent, or which contain false or
misleading information. Liability may also be imposed on any individual or entity who
knowingly make or use a false record or statement to avoid an obligation to pay the federal
government. Certain state laws impose similar liability. The federal government or private
whistleblowers may bring claims under the federal False Claims Act. If we are found liable
for a violation of the federal False Claims Act, or any similar state law, due to our
processing of claims for Medicaid and Medicare, it may result in substantial civil and
criminal penalties. In addition, we could be prohibited from processing Medicaid or
Medicare claims for payment.

      Government Investigations.  There is significant scrutiny by law enforcement
authorities, the U.S. Department of Health and Human Services Office of Inspector General,
the courts and Congress of agreements between healthcare providers and suppliers or other
contractors that have a potential to increase utilization of government health care
resources. In particular, scrutiny has been placed on the coding of claims for payment,
incentive programs that increase use of a product and contracted billing arrangements.
Investigators have demonstrated a willingness to look beyond the formalities of business
arrangements to determine the underlying purposes of payments between health care
participants.  Although, to our knowledge, neither we nor any of our customers is the
subject of any investigation, we cannot tell whether  we or our customers will be the
target of governmental investigations in the future.

      Federal and State  Anti-Kickback  Laws.  Provisions of the Social  Security Act, which
are commonly  known as the Federal  Anti-Kickback  Law,  prohibit  knowingly  or  willfully,
directly  or  indirectly,  paying or  offering  to pay,  or  soliciting  or  receiving,  any
remuneration in exchange for the referral of patients to a person  participating  in, or for
the  order,   purchase  or   recommendation  of  items  or  services  that  are  subject  to
reimbursement  by,  Medicare,  Medicaid  and  similar  other  federal  or  state  healthcare
programs.  Violations may result in civil and criminal  sanctions and  penalties.  If any of
our  health  care  communications  or  electronic  commerce  activities  were  deemed  to be
inconsistent  with the  Federal  Anti-Kickback  Law or with state  anti-kickback  or illegal
remuneration  laws,  we could  face  civil and  criminal  penalties  or be barred  from such
activities.   Further,  we  could  be  required  to  restructure  our  existing  or  planned
sponsorship  compensation  arrangements and electronic  commerce activities in a manner that
could harm our business.

      If compliance  with government  regulation of healthcare  becomes costly and difficult
for us and our  customers,  we may not be able to grow our  business  as we plan,  or we may
have to abandon a product or service we are providing or plan to provide altogether.

Employees

      As of March 15, 2002,  we had 28  full-time  and no  part-time  employees.  Fifteen of
these employees are involved in software  programming and support of the Cymedix network,  7
are  involved  in the  marketing  and  deployment  of  product,  and 6 are  involved  in our
administrative  and financial  operations.  None of our employees is  represented by a labor
union, and we have never  experienced a work stoppage.  We believe our relationship with our
employees  to be good.  However,  our  ability  to achieve  our  financial  and  operational
objectives depends in large part upon our continuing ability to attract,  integrate,  retain
and motivate  highly  qualified  sales,  technical and  managerial  personnel,  and upon the
continued  service of our  senior  management  and key sales and  technical  personnel.  See
"Executive Officers  Compensation - Employment  Agreements."  Competition for such qualified
personnel  in our  industry  and the  geographical  locations  of our  offices  is  intense,
particularly in software development and technical personnel.


ITEM 2.    PROPERTIES

      Our  principal  executive  office is located at 420  Lexington  Avenue,  Suite 1830,  New
York, NY 10170. In addition,  we have three other offices  located in Colorado,  California and
Georgia.

                                 Square           Expiration             2002
                                Footage              Date             Rent (est.)
                               -----------        ------------        -----------
   New York, New York            10,495             1-31-05            $212,526
   Greenwood Village              5,236             7-31-03             $98,000
   Colorado(1)
   Agoura Hills, California       3.474             3-31-07             $69,305
   Marietta, Georgia              2,060             2-28-04             $31,930
                               ===========                            ===========
                       Totals:   21,265                                $411,761

-----
(1)   In connection with the sale of our remaining  staffing  business in 2000, we subleased
2,735  square feet of this space to the  purchaser,  who will pay $50,000 in rent  annually for
such  space  until  July 31,  2002.  We remain  jointly  liable  for  rental  payments  on such
subleased  space  until the end of the  sublease  and liable for all the space until the end of
the lease indicated above.

      In addition to the properties  listed in the above table,  the Company also is liable for
rental payments on an old lease in East Brunswick,  New Jersey,  encompassing  7888 square feet
of vacant office space. The monthly rent is  approximately  $12,500,  with a lease  termination
date of April 30, 2003.  Management is currently  engaged in negotiations  with the landlord to
terminate this agreement.

      We believe these  facilities will be suitable for our needs for the  foreseeable  future.
We have insured all of our  properties  at the levels  required to meet our lease  obligations.
We believe that these levels are reasonable measures of adequate levels of insurance.


ITEM 3.    LEGAL PROCEEDINGS

   On August 7, 2001, a former  officer of the Company filed an action in the District Court
of Arapahoe  County,  Colorado,  against the Company and its former  President and CEO, John
Yeros,  entitled Barry J. McDonald v. Medix  Resources,  Inc f/k/a/  International  Nursing
Services,  Inc. and John Yeros, (Case No. 01CV2119).  The plaintiff alleges (1) breach of an
employment  agreement,  a stock option  agreement  and the related  stock  option plan,  (2)
breach of the duty of good faith and fair  dealing,  and (3)  violation of the Colorado Wage
Claim Act.  Plaintiff seeks  unspecified  damages to be determined at jury trial,  including
interest,  punitive  damages,  plaintiff's  attorneys  fees,  and a 50%  penalty  under  the
Colorado Wage Claim Act. The Company's and its  co-defendant  have answered the  plaintiff's
complaint,  denying any  liability.  The Court has set discovery to be completed by July 31,
2002,  and the trial to begin on September  9, 2002.  Management  of the Company  intends to
vigorously  defend this action and does not expect any  resolution  of this matter to have a
material adverse effect on the Company's results of operations or financial condition.

   On December  17,  2001,  Plaintiff,  Vision  Management  Consulting,  L.L.C.,  filed suit
against us in the  Superior  Court of New  Jersey,  Law  Division - Essex  County,  entitled
Vision Management  Consulting,  L.L.C v. Medix Resources,  Inc., Docket No.  ESX-L-11438-01.
The complaint  alleges  breach of contract,  unjust  enrichment,  breach of the duty of good
faith  and  fair  dealing  and  misrepresentations  by us in  connection  with a  negotiated
settlement agreement,  which had resulted from claims between the parties arising out of the
termination  of  operations  by our  Automated  Design  Concepts  division  earlier in 2001.
Plaintiff  seeks  unspecified  damages to be proven at jury trial,  together with  attorneys
fees,  costs of suit and interest on the  judgment,  as well as such  further  relief as the
Court deems just and  equitable.  We have answered the  plaintiff's  complaint,  denying any
liability  and  setting  forth a  counterclaim  seeking  the  award  to us of our  costs  of
defending  this  action  and such  further  relief  as the  Court  deems  just  and  proper.
Management  intends to vigorously  defend this action and does not expect any  resolution of
this matter to have a material  adverse  effect on the  Company's  results of  operations or
financial  condition.  The Court has  appointed a mediator for the case to try to facilitate
a settlement between the parties.

    From time to time,  the Company is involved in claims and  litigation  that arise out of
the normal  course of  business.  Currently,  other than as  discussed  above,  there are no
pending matters that in Management's  judgment might be considered  potentially  material to
us.  Management  does not believe  that any of the  litigation  described  above will have a
material adverse effect on the Company.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

   The following  matters were submitted to our  shareholders  at the 2001 Annual Meeting of
Shareholders held on October 16, 2001:

Proposal #1          Election of Directors
                                                 For              Withheld
                       Joan E. Herman        45,231,857            181,986
                     Patrick W. Jeffries     45,231,857            181,986
                       John R. Prufeta       45,231,857            181,986
                        Guy L. Scalzi        45,232,126            181,717


Proposal #2 Ratification and approval of the Board of Director's increase in the number of
            shares authorized and reserved for issuance under the Company's 1999 Stock Option
            Plan from 10 million shares of the Company's common stock to 13 million shares.

                       For           Against        Abstained       Not Voted
                   11,371,866       1,944,632        251,501       31,845,844

Proposal #3  Ratification  of the  selection  by the Board of  Directors  of Ehrhardt  Keefe
             Steiner & Hottman PC as the Company's  independent  public  accountants,  to audit
             the financial statements of the Company for the 2001 fiscal year.

                       For           Against        Abstained
                   45,117,923        171,218         124,702


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER  MATTERS

      On April 6, 2000,  our common stock was listed and began trading on The American Stock
Exchange  under the  symbol  "MXR."  Prior to that our  common  stock was  traded on the OTC
Bulletin  Board  under the symbol  "MDIX."  The  following  table shows high ask and low bid
price  information  for each quarter in the last two  calendar  years as reported by Prophet
Information  Services,  Inc., a provider of online historical stock price data for all major
U. S.  securities  markets.  Such quotations  reflect  inter-dealer  prices,  without retail
mark-ups,  markdowns or commissions,  and may not necessarily represent actual transactions.
On March 15, 2001, the last sales price was reported to be $0.55.


                               Common Stock Price
                               High        Low
2000
    First Quarter             $9.50      $1.88
    Second Quarter             4.87       1.68
    Third Quarter              3.62       1.06
    Fourth Quarter             2.37        .75

2001
   First Quarter              $1.62        .52
   Second Quarter              1.49        .41
   Third Quarter               1.36        .50
   Fourth Quarter              1.09        .49

      There were  approximately  400 holders of record (and  approximately  9,000 beneficial
owners) of our common  stock as of March 15,  2002.  The number of record  holders  includes
shareholders who may hold stock for the benefit of others.

      We do not expect to pay any dividends on its common stock in the  foreseeable  future.
Management  currently  intends  to retain all  available  funds for the  development  of its
business  and for use as working  capital.  The payment of  dividends on the common stock is
subject to our prior  payment of all accrued and unpaid  dividends  on any  preferred  stock
outstanding.


ITEM 6.  SELECTED FINANCIAL DATA

      The  following  consolidated  selected  financial  data,  at the end of the last  five
fiscal years, should be read in conjunction with our Consolidated  Financial  Statements and
related  Notes  thereto  appearing  elsewhere  in this  Report.  The  consolidated  selected
financial  data are  derived  from our  consolidated  financial  statements  which have been
audited by Ehrhardt Keefe Steiner & Hottman PC, our  independent  auditors,  as indicated in
their report included herein.  The selected financial data provided below is not necessarily
indicative of our future results of operations or financial performance.

--------------------------------------------------------------------------------
                        2001      2000(1)        1999       1998(2)      1997
--------------------------------------------------------------------------------
Operating revenues     29,000     326,000       24,000    17,412,000  24,875,000
--------------------------------------------------------------------------------
Software research    1,075,000    685,000      596,000      780,000        0
and  development
costs (3)
--------------------------------------------------------------------------------
(Loss) or  profit  (10,636,000) (6,344,000)  (5,422,000)   (515,000)  610,000
from  continuing
operations
--------------------------------------------------------------------------------
(Loss) or profit      (.21)       (.15)        (.29)        (.15)        .06
from continuing
operations per share
--------------------------------------------------------------------------------
Total assets        3,101,000   5,089,000    4,629,000    5,175,000  10,140,000
--------------------------------------------------------------------------------
Working Capital    (1,404,000)   394,000      644,000    (2,612,000)  (329,000)
--------------------------------------------------------------------------------
Long-term              0           0         400,000    0           0
obligations
--------------------------------------------------------------------------------
Stockholders'      1,345,000   4,202,000    2,376,000    (218,000)   4,504,000
Equity(Deficit)
--------------------------------------------------------------------------------



The following is supplementary information related to software development expenses

---------------------------------------------------------------------------------
Software               2001       2000(1)       1999       1998(2)      1997
Development Costs:
---------------------------------------------------------------------------------
Software research    1,075,000    685,000     596,000      780,000        0
and development
costs (3)
---------------------------------------------------------------------------------
Capitalized           434,000     495,000        0            0           0
software
development costs
---------------------------------------------------------------------------------
Total Software       1,512,000   1,180,000    596,000      780,000        0
development costs
incurred
---------------------------------------------------------------------------------

(1)   In  February of 2000,  we disposed of our  remaining  medical  staffing  business  and
      became  solely a developer  of software for our own use in  providing  Internet  based
      communications for the medical services industry.
(2)   In January of 1998,  we acquired the Cymedix  software  business and began the process
      of disposing of our medical staffing business.
(3)   Excludes amortization of previously  capitalized  development software costs which are
      included in cost of services in the Company's Statement of Operations



ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS  OF
OPERATION

Overview


      We are an information  technology company headquartered in New York City, with offices
in  Agoura  Hills,  California,  Greenwood  Village,  Colorado  and  Marietta,  Georgia.  We
specialize in the  development,  marketing  and  management  of  connectivity  solutions for
clinical and business  transactions  within the healthcare industry Through our wholly owned
subsidiary,  Cymedix Lynx Corporation, a Colorado corporation, we have developed Cymedix(R), a
unique  healthcare  communication  technology  product.  Created  by a  team  of  healthcare
professionals,  Cymedix software  provides  healthcare  institutions,  such as health plans,
insurers  and  hospitals,  as  well as  practicing  physicians,  with a set of  non-invasive
technology tools to enable Internet-based health care transactions among all parties.

      Implementation  of the  Cymedix(R)products  suite  promises  to speed and  improve the
efficacy of daily interactions  between health caregivers and their staffs,  other ancillary
providers  (such as labs or pharmacy  benefit  managers),  insurance  companies,  hospitals,
Integrated Delivery Networks (IDNs) and Health Management  Organizations  (HMOs). We believe
that the market for robust and practical  healthcare  solutions will grow rapidly,  and that
segment  growth  will  continue to  accelerate  as the joined  emphases of consumer  choice,
quality,  administrative  service  and cost  containment  ratchets  up demand  for ever more
efficient and user-friendly methods of delivering quality healthcare.


Forward-Looking Statements and Associated Risks

      This  Report  contains  forward-looking  statements,  which mean that such  statements
relate to events or transactions  that have not yet occurred,  our expectations or estimates
for our future operations and economic performance,  our growth strategies or business plans
or other events that have not yet  occurred.  Such  statements  can be identified by the use
of   forward-looking   terminology  such  as  "might,"  "may,"  "will,"  "could,"  "expect,"
"anticipate,"  "estimate,"  "likely,"  "believe," or  "continue" or the negative  thereof or
other  variations  thereon or  comparable  terminology.  The  following  paragraphs  contain
discussions  of important  factors that should be  considered by  prospective  investors for
their  potential  impact  on  forward-looking  statements  included  in this  Report.  These
important  factors,  among  others,  may  cause  actual  results  to differ  materially  and
adversely from the results expressed or implied by the forward-looking statements.

      We have reported net losses of ($10,636,000),  ($5,415,000),  and ($4,847,000) for the
years ended  December 31, 2001,  December 31, 2000 and December 31, 1999,  respectively.  At
December 31, 2001, we had an  accumulated  deficit of  ($33,412,000),  and negative  working
capital of  ($1,404,000).  These factors and other  concerns have caused our  accountants to
include a "going  concern"  exception in their report in connection  with their audit of our
financial statements for the year ended December 31, 2001.


      We expect to continue to experience  losses,  in the near term, until such time as our
Cymedix(R)products can be  successfully  deployed with  customers and produce  revenue.  The
current  operation  of our  business  and our  ability to continue to develop and market our
Cymedix(R)services products will depend upon our ability to obtain additional  financing.  At
present,  we are not  receiving  any  significant  revenues  from the  sale of our  Cymedix(R)
technology  products.  We are  attempting  to meet our  current  cash flow  needs by raising
capital in the  private  debt and equity  markets and  through  the  exercise  of  currently
outstanding  warrants.  The  development  and  marketing  of  the  Cymedix(R)products  suite
requires  substantial  capital  investments.  There  can  be no  assurance  that  additional
investments  or financings  will be available to us as needed to support the  development of
Cymedix  products.  Failure to obtain such  capital on a timely  basis could  result in lost
business  opportunities,  the sale of the  Cymedix  business  at a  distressed  price or the
financial failure of our company.


      We have  recently  entered  into a secured  financing  arrangement.  See  "BUSINESS  -
Recent  Developments."  The use of  secured  borrowings  increases  the  risk of loss of the
assets  used to secure the  borrowing.  If an event of  default  occurs  under the  security
agreement,  the lender will be able to foreclose on the assets used to secure the  borrowing
and sell those assets to the highest  bidder.  In addition,  it is generally  believed  that
foreclosure sales, which are "distress sales",  will not maximize the proceeds that are paid
for the assets  being sold.  The loan we entered  into is secured by the grant of a security
interest  in all  Medix's  intellectual  property,  including  its  patent,  copyrights  and
trademarks.  While  Medix can cure a payment  default by the forced  conversion  of the loan
into  its  common  stock,  a  bankruptcy  or  similar  event of  default  will  trigger  the
foreclosure provision of the security agreement.


      We are still in the  process  of  gaining  experience  in  marketing  technology-based
service products,  providing support services,  evaluating demand for products,  financing a
technology  business and dealing with government  regulation of various  products.  While we
are  putting  together  a team of  experienced  executives,  they have  come from  different
backgrounds  and may  require  some time to develop an  efficient  operating  structure  and
corporate  culture for our company.  We believe our structure of multiple offices serves our
customers  well,  but it does present an  additional  challenge  in building  our  corporate
culture and operating structure.

      Our products  are in the  integration  and  deployment  stages,  and have proven their
effectiveness  with some sponsors.  We have not yet proven our technology with a significant
number  of  physicians.  As a  developer  of  service  products,  we  will  be  required  to
anticipate  and adapt to evolving  industry  standards and new  technological  developments.
The market for our  connectivity  products and services is  characterized  by continued  and
rapid technological  advances in both hardware and software  development,  requiring ongoing
expenditures  for  research and  development,  and timely  introduction  of new products and
enhancements to existing  products.  The establishment of standards is largely a function of
user acceptance.  Therefore,  such standards are subject to change.  Our future success,  if
any,  will  depend in part  upon our  ability  to  enhance  existing  products,  to  respond
effectively to technology  changes,  and to introduce new products and  technologies to meet
the evolving needs of its clients in the healthcare information systems market.


      The success of our products and services in  generating  revenue may be subject to the
quality and  completeness of the data that is generated and stored by the physician or other
healthcare  professional  and entered  into our  interconnectivity  systems,  including  the
failure to input  appropriate  or  accurate  information.  Failure or  unwillingness  by the
healthcare  professional to accommodate the required  information  quality may result in the
payor refusing to pay Medix for its services.


      The  introduction  of  connectivity  products  in that market has been slow due to the
large number of small  practitioners  who are resistant to change,  as well as the financial
investment or workflow  interruptions  associated  with change,  particularly in a period of
rising  pressure  to reduce  costs in the  market.  We are  currently  devoting  significant
resources  toward  the  development  of  products.  There can be no  assurance  that we will
successfully  complete the  development  of these  products in a timely  fashion or that our
current or future  products  will satisfy the needs of the  healthcare  information  systems
market.  Further,  there can be no  assurance  that  products or  technologies  developed by
others  will not  adversely  affect  our  competitive  position  or render our  products  or
technologies noncompetitive or obsolete.


      Certain  of our  products  provide  applications  that  relate to  patient  medication
histories and treatment plans. Any failure by our products to provide  accurate,  secure and
timely  information  could result in product  liability  claims against us by our clients or
their affiliates or patients.  We maintain  insurance that we believe  currently is adequate
to protect  against  claims  associated  with the use of our  products,  but there can be no
assurance that our insurance  coverage  would  adequately  cover any claim asserted  against
us.  The  limits  of that  coverage  is  $2,000,000  in the  aggregate  and  $1,000,000  per
occurrence.  A  successful  claim  brought  against us in excess of our  insurance  coverage
could have a material  adverse effect on our results of operations,  financial  condition or
business.  Even unsuccessful  claims could result in the expenditure of funds in litigation,
as well as diversion of management time and resources.

      We have been granted certain patent rights,  trademarks and copyrights relating to its
software  business.  However,  patent and  intellectual  property  legal issues for software
programs,  such as the Cymedix products,  are complex and currently  evolving.  Since patent
applications  are secret until patents are issued,  in the United States,  or published,  in
other  countries,  we cannot be sure that we are first to file any  patent  application.  In
addition,  there  can be no  assurance  that  competitors,  many of which  have far  greater
resources  than we do, will not apply for and obtain  patents that will  interfere  with our
ability to develop or market  product ideas that we have  originated.  Further,  the laws of
certain  foreign  countries do not provide the protection to  intellectual  property that is
provided in the United  States,  and may limit our ability to market our products  overseas.
We cannot give any assurance  that the scope of the rights we have are broad enough to fully
protect our Cymedix software from infringement.

      Litigation  or  regulatory  proceedings  may be necessary to protect our  intellectual
property rights,  such as the scope of our patent.  In fact, the computer  software industry
in general is  characterized  by  substantial  litigation.  Such  litigation  and regulatory
proceedings are very expensive and could be a significant  drain on our resources and divert
resources  from product  development.  There is no assurance that we will have the financial
resources to defend our patent rights or other  intellectual  property from  infringement or
claims of  invalidity.  We have been  notified  by a party  that it  believes  our  pharmacy
product may  infringe on patents  that it holds.  We have  retained  patent  counsel who has
made a preliminary  investigation  and determined  that our product does not infringe on the
identified patents.  At this time no legal action has been instituted.

      We also rely upon  unpatented  proprietary  technology  and no assurance  can be given
that others will not independently develop substantially  equivalent proprietary information
and  techniques or otherwise gain access to or disclose our  proprietary  technology or that
we can meaningfully protect our rights in such unpatented  proprietary  technology.  We will
use our best efforts to protect such information and techniques,  however,  no assurance can
be given that such  efforts  will be  successful.  The failure to protect  our  intellectual
property  could cause us to lose  substantial  revenues  and to fail to reach our  financial
potential over the long term.

      The  healthcare and medical  services  industry in the United States is in a period of
rapid change and uncertainty.  Governmental  programs have been proposed,  and some adopted,
from time to time, to reform various aspects of the U.S.  healthcare  delivery system.  Some
of these programs contain proposals to increase government involvement in healthcare,  lower
reimbursement  rates and  otherwise  change the  operating  environment  for our  customers.
Particularly,  HIPAA and the regulations that are being  promulgated  thereunder are causing
the healthcare  industry to change its procedures  and incur  substantial  cost in doing so.
Although we expect these  regulations to have the beneficial  effect of spurring adoption of
our software  products,  we cannot predict with any certainty what impact, if any, these and
future  healthcare   reforms  might  have  on  our  software   business.   See  "BUSINESS  -
Governmental Regulation."

      In connection with our equity line of credit financing,  we have registered  9,500,000
additional  shares  with  the SEC for  sale by the  providers  of the  financing,  of  which
5,031,371  shares  remain  available  for issuance as of March 15,  2002.  The resale of the
common  stock that may be issued by us under the equity  line of credit  will  substantially
increase  the number of our  publicly  traded  shares  ("float").  If existing  shareholders
perceive that this increased  float is not  accompanied by a commensurate  increase in value
to the Company,  then shareholder  value--real or  perceived--will  be diluted.  Such dilution
could cause holders of our shares of common stock to sell,  thus depressing the price of our
common stock.  Therefore,  the very existence of the equity line financing could depress the
market price of our common stock.

      The  resale of the common  stock  that will be issued by us under our  equity  line of
credit  financing  could  depress  the market  price of our common  stock.  The terms of the
equity line  provide  that we will sell shares of our common  stock to the  providers of the
financing  at 91% of the average of the three  lowest of the daily  volume-weighted  average
prices of our common stock during the 22-trading day period  immediately  before our request
for the  advance.  Therefore,  since all of the shares  that are issued by us in  connection
with advances under the equity line  financing  will have a "built-in"  discount of at least
9% upon  issuance,  this could  produce an impetus for the  providers  of the equity line to
resell their shares  sooner or in greater  quantity than they would  otherwise.  Such resale
could have the effect of  depressing  our share  price.  At March 15,  2002 the  Company had
issued  2,748,552  shares to the equity line providers,  all of which has been sold into the
public  market.  Trading  activity  related to the  liquidation of these shares shown little
correlation to downward movements in share price.

      As of March 15, 2002,  we had  58,386,516  shares of common stock  outstanding.  As of
that date,  approximately  24,117,525  shares were issuable upon the exercise of outstanding
options,  warrants or other rights,  and the  conversion of preferred  stock.  Most of these
shares  will  be  immediately  saleable  upon  exercise  or  conversion  under  registration
statements  we have filed with the SEC.  The exercise  prices of options,  warrants or other
rights to acquire  common stock  presently  outstanding  range from $0.19 per share to $4.97
per share.  During the respective  terms of the  outstanding  options,  warrants,  preferred
stock and other outstanding derivative securities,  the holders are given the opportunity to
profit  from a rise in the  market  price  of the  common  stock,  and the  exercise  of any
options,  warrants or other  rights may dilute the book value per share of the common  stock
and put downward  pressure on the price of the common  stock.  The existence of the options,
conversion  rights,  or any outstanding  warrants may adversely affect the terms on which we
may obtain  additional  equity  financing.  Moreover,  the  holders of such  securities  are
likely to exercise  their rights to acquire  common stock at a time when we would  otherwise
be able to obtain  capital  on terms  more  favorable  than could be  obtained  through  the
exercise  or  conversion  of such  securities.  See also the  impact of our  equity  line of
credit financing discussed in the following paragraphs.

      As  with  any  business,   growth  in  absolute   amounts  of  selling,   general  and
administrative  expenses or the  occurrence  of  extraordinary  events  could  cause  actual
results  to  vary   materially   and  adversely  from  the  results   contemplated   by  the
forward-looking  statements.  Budgeting and other  management  decisions  are  subjective in
many respects and thus  susceptible to incorrect  decisions and periodic  revisions based on
actual  experience and external business  developments,  the impact of which may cause us to
alter our marketing,  capital expenditures or other budgets,  which may, in turn, affect our
results of operation.  Assumptions  relating to the foregoing involve judgments with respect
to, among other things,  future  economic,  competitive  and market  conditions,  and future
business decisions,  all of which are difficult or impossible to predict accurately and many
of which are  beyond our  control.  Although  we  believe  the  assumptions  underlying  the
forward-looking  statements are reasonable,  any of the assumptions  could prove inaccurate,
and  therefore,   there  can  be  no  assurance  that  the  results   contemplated   in  the
forward-looking statements will be realized.

      In light of the significant uncertainties inherent in the forward-looking  information
included  herein,   the  inclusion  of  such  information   should  not  be  regarded  as  a
representation  by us or any other person that our  objectives or plans for the Company will
be achieved.


      Critical Accounting Policies

     We  have  identified  the  policies  below  as  critical  to  our  business
     operations and the  understanding of our results of operations.  The impact
     and  any  associated  risks  related  to  these  policies  on our  business
     operations is discussed throughout  Management's Discussion and Analysis of
     Financial  Condition and Results of Operations  where such policies  affect
     our reported and expected financial results.

     In the ordinary course of business,  we have made a number of estimates and
     assumptions  relating  to  the  reporting  of  results  of  operations  and
     financial  condition in the  preparation  of our  financial  statements  in
     conformity  with  accounting  principles  generally  accepted in the United
     States of America.  Actual  results could differ  significantly  from those
     estimates under different  assumptions and conditions.  We believe that the
     following discussion addresses our most critical accounting policies, which
     are  those  that are  most  important  to the  portrayal  of our  financial
     condition  and  results  of  operations  and  require  our most  difficult,
     subjective,  and complex  judgments,  often as a result of the need to make
     estimates about the effect of matters that are inherently uncertain.

      Revenue Recognition

     We recognize revenue when the communication  transaction has been completed
     by the customer, persuasive evidence of the terms of the arrangement exist,
     our  fee is  fixed  and  determinable,  and  collectibility  is  reasonably
     assured.   Delivery  takes  place  electronically  when  the  customer  has
     completed  the  exchange  (transmission  or  receipt)  of data.  Revenue is
     charged to the customer on a per transaction  basis as each  transaction is
     completed and is billed monthly.


   Valuation of Goodwill

     We  assess  the  impairment  of  goodwill  whenever  events or  changes  in
     circumstances  indicate  that the  carrying  value may not be  recoverable.
     Factors we  consider  important  that could  trigger an  impairment  review
     include the following:

o  significant underperformance relative to expected historical or projected future
         operating results;
o  significant changes in the manner of our use of the acquired assets or the strategy for
         our overall business;
o  significant negative industry or economic trends; significant decline in our stock price
         for a sustained period; and
o  our market capitalization relative to net book value.

     Until our adoption of SFAS No. 142 discussed below,  when we determine that
     the  carrying  value of  goodwill  may not be  recoverable  based  upon the
     existence  of one or  more  of  the  above  indicators  of  impairment,  we
     determine whether  impairment has occurred by comparing the gross projected
     cash  flows to the  carrying  value of the  goodwill,  and we  measure  any
     impairment based on the discounted projected cash flows consistent with the
     provisions  of SFAS No. 121.  Net  goodwill  amounted to $1.7 million as of
     December 31, 2001.

     In 2002,  Statement of  Financial  Accounting  Standards  ("SFAS") No. 142,
     "Goodwill and Other Intangible Assets" became effective. As of December 31,
     2001, the net carrying amount of goodwill of $1.7 million will no longer be
     amortized and will be subject to impairment  testing under SFAS No. 142. In
     lieu of  amortization,  we are  required  to perform an initial  impairment
     review of our goodwill in 2002 and an annual impairment review  thereafter.
     Although we do not expect to record an impairment charge upon completion of
     the initial  impairment  review,  we cannot assure you that at the time the
     review is completed a material impairment charge will not be recorded.


      Capitalized Software Development Costs

     We capitalize  costs,  which primarily  include salaries in connection with
     developing  software  for  internal  use. We use  judgment  in  determining
     whether  development  costs  meet the  criteria  for  immediate  expense or
     capitalization.  Direct costs  incurred in the  development of software are
     capitalized once the preliminary project stage is completed, management has
     committed to funding the project,  and  completion  and use of the software
     for  its  intended  purpose  are  probable.   We  cease  capitalization  of
     development costs once the software has been substantially completed and is
     ready for its intended use. We capitalized  $0,  $495,000,  and $434,000 of
     costs  during  the  years  ended   December  31,  1999,   2000,  and  2001,
     respectively. The software development costs capitalized are amortized over
     the  estimated  useful life of the  software,  which we estimate to be five
     years.  Amortization  expense was $0, $134,000,  and $156,000 for the years
     ended December 31, 1999, 2000, and 2001, respectively.


Results of Operation

Comparison of years ended December 31, 2001 and December 31, 2000

   Total  revenues  decreased  approximately  $297,000  from  $326,000 in 2000 to $29,000 in
2001.  The decrease is due to a decrease in Cymedix pilot program fees billed during 2001 of
$189,000,  and a decrease  in ADC  revenue of  $108,000  as a result of  discontinuing  that
business segment.

       Direct costs of services  increased  approximately  $33,000 from  $180,000 in 2000 to
$213,000 in 2000. The increase is due to  amortization of capitalized  software  development
costs related to Cymedix.

       Software  development  costs  increased  approximately  57% from  $685,000 in 2000 to
$1,075,000 in 2000, as a result of costs incurred in the ongoing  development of the Cymedix
product line.

       Selling,   general  and  administrative  expenses  decreased  approximately  3%  from
$5,925,000  in 2000 to $5,746,000 in 2001.  The decrease is  attributable  to a company wide
salary reduction program that was undertaken early in 2001.


   During 2001, the Company  recorded  impairment  expense of $1,111,000  resulting from the
discontinuance of its Automated Design Concepts division,  which totaled $443,000,  to focus
staff  resources on the Company's  primary  technology,  and the  cancellation of its ZirMed
license agreement totaling $668,000,  which was a result of management's assessment that the
Company's needs would be better served by superior technology.


       Other  income  decreased  approximately  $151,000  from 2000 to 2001.  This  increase
reflects a decline in  interest  income that had been  earned on excess  cash  received  and
invested during 2000 from the exercise of options and warrants.

       Interest  expense  increased  $61,000 from 2000 to 2001 due to interest that was paid
on a convertible promissory note issued during 2001.

Financing  costs of $2,428,000  were  incurred in 2001 due to warrants  issued and an in-the
money  conversion  feature in  connection  with the  convertible  debt  credit  facility  of
$581,000,  a warrant issued in the private equity placement  valued at $113,000,  and shares
issued in the conversion of debt and related  equity share  issuances at below market prices
which resulted in costs of $1,734,000.

       Net gain (loss) from discontinued  operations decreased  approximately  $929,000 from
$929,000  in 2000 to $0 in  2001,  due to the sale  during  February  2000 of the  remaining
assets of the company's staffing operations.

       Net loss increased  approximately  $5,221,000  from $5,415,000 in 2000 to $10,636,000
in 2001 due to the reasons discussed above.

Comparison of years ended December 31, 2000 and December 31, 1999

       Total revenues increased  approximately  $302,000 from $24,000 in 1999 to $326,000 in
2000.  The increase is due to Cymedix pilot program fees billed during 2000, and ADC revenue
from the date of acquisition (March 8, 2000) through December 31, 2000.

       Direct  costs of services  increased  approximately  $178,000  from $2,000 in 1999 to
$180,000 in 2000. The increase is due to  amortization of capitalized  software  development
costs  related to Cymedix  of  $124,000,  as well as costs  associated  with ADC  revenue of
$16,000, from the period March 8, 2000 through December 31, 2000.


       Software development costs increased approximately 15% from $596,000 in 1999 to
$685,000 in 2000, as a result of costs incurred in the ongoing development of the Cymedix
product line.  During the third quarter of 2000 the company began capitalizing and
amortizing software development costs.

       Selling,  general  and  administrative  expenses  increased  approximately  57%  from
$3,777,000 in 1999 to  $5,925,000  in 2000.  The increase is due primarily to an increase in
executive  management and  operational  salaries and benefits as of  $1,088,000,  as well as
consulting  fees related to employee  recruitment  and  placement  of  $272,000,  and legal,
accounting and advisory services of $248,000.

       Net loss from operations increased  approximately  $2,113,000 from $4,351,000 in 1999
to $6,464,000 in 2000.  This increase is primarily due to the increases in selling,  general
and administrative expenses described above.

       Other  income  increased  approximately  $156,000  from 1999 to 2000.  This  increase
reflects  interest  income on excess cash  received  and  invested  during the year from the
exercise of options and warrants.

       Interest expense  decreased 79%, or  approximately  $161,000 from 1999 to 2000 due to
interest that was paid and imputed on a convertible promissory note during 1999.

       Net  loss  from  continuing  operations  increased   approximately   $1,796,000  from
$4,548,000 in 1999 to $6,344,000 in 2000 due to all of the reasons discussed above.

       Net  gain  (loss)  from  discontinued  operations  increased  approximately  411%  or
$1,228,000  from  $(299,000)  in 1999 to $929,000 in 2000,  due to the sale during  February
2000 of the remaining assets of the company's staffing operations.

       Net loss increased  approximately  $568,000 from  $4,847,000 in 1999 to $5,415,000 in
2000 due to the reasons discussed above.

Liquidity and Capital Resources


      We had $8,000 in cash as of December  31, 2001  compared to  $1,007,000  in cash as of
December  31,  2000 and  $1,229,000  as of  December  31,  1999.  Net  working  capital  was
($1,404,000)  as of  December  31, 2001  compared  to  $394,000 as of December  31, 2000 and
$644,000 as of December 31, 1999.  During 2001,  net cash used in operating  activities  was
$5,397,000  compared to  $5,173,000  in 2000.  As a result of our cash  balances at December
31,  2001,  we have not been able to pay certain  accounts  payable and have  experienced  a
significant  increase at December  31,  2001.  We have since been able to pay down a portion
of these balances  subsequent to December 31, 2001. During 2001, we raised $1,500,000 from a
convertible  note  financing,  $1,200,000  from  private  placements  of our  common  stock,
$1,510,000  from our equity  line of credit  and  $369,000  from  exercise  of  options  and
warrants.  During 2000,  we raised  $6,091,000  from the  exercise of options and  warrants.
During 1999,  we raised  $4,112,000  from private  placements of preferred  stock,  $500,000
from issuance of a convertible  promissory  note,  and $150,000 from exercise of options and
warrants.


   Subsequent to year-end and through March 15, 2002, we received  approximately $3,800 from
the exercise of options and warrants,  $1,000,000 from a secured convertible note financing,
and  $883,000  from our equity line  financing.  As of March 15,  2002,  we had  outstanding
warrants  exercisable for 5,136,000 shares of common stock,  exercisable at $0.50 per share,
with a aggregate  exercise price of $2,568,000  which are callable for $.01 per warrant upon
thirty  days  written  notice.  However,  no  assurance  can be given  that if  called  such
warrants  would be  exercised.  From time to time,  members of senior  management  have made
short-term  loans to us to meet payroll  obligations.  However,  there is no  commitment  to
continue that practice.

   We will  continue to have  financing  costs charged to our statement of operations in the
future for convertible debt we issue with in-the-money conversion features.


   We continue to make significant  investments in capitalized  software  development costs,
andcurrently,  we are funding our  development and deployment  activities  through an equity
line of credit financing.  We incurred $1,509,000 in software  development costs in 2001, of
which we  capitalized  $434,000 of these  costs and  expensed  $1,075,000.  Draws under this
financing  are triggered by a "Put Notice"  (advance  request)  initiated by ourselves  each
time we wish to draw funds.  The  financing  investors  are  committed to accept the advance
request  provided  certain  conditions  are met,  some of which may be  waived by  agreement
among the parties.  Such advance  request  obligates us to issue to the investors  shares of
our common  stock at a discount  to market  which is fixed in the  contract.  The shares are
immediately  re-saleable in the public  markets by the  investors.  As of March 15, 2002, we
had received  $2,584,910  in  advances,  from which  offering  expenses of $191,278 was paid
under the  financing,  and we had  issued to the  investors  4,468,629  shares of our common
stock  relating to the advances and an  additional  542,847  shares to their  affiliates  as
fees for arranging the equity line facility.  The shares issued  pursuant to the equity line
advances to date have been priced from $0.46 to $0.77 per share.

      We expect to continue to experience loses and negative cash flows from operations,  in
the near term,  until such time as we are  deployed on  physicians'  desktops in  sufficient
numbers to cover our  overhead  The current  operation  of our  business  and our ability to
continue to further  develop and deploy our Cymedix  software  products will depend upon our
ability to obtain  additional  financing.  At present,  we are not receiving any significant
revenues  from the sale of our Cymedix  software  products.  We are  attempting  to meet our
current  cash flow  needs by raising  capital in the  private  debt and equity  markets  and
through the exercise of currently  outstanding  warrants.  The  development and marketing of
the Cymedix  connectivity  products require  substantial capital  investments.  There can be
no assurance that additional  funding,  if needed,  will be available on terms acceptable to
us, or at all.  Failure  to obtain  such  capital  on a timely  basis  could  result in lost
business  opportunities,  the sale of the  Cymedix  business  at a  distressed  price or the
financial failure of our company.



ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The  Company  does not hold or engage  in  transactions  with  market  risk  sensitive
instruments


ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Attached hereto and filed as a part of this Form 10-K are our  Consolidated  Financial
Statements, beginning on page F-1.


ITEM 9.     CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND  FINANCIAL
DISCLOSURE


     None

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

              Our directors and executive  officers,  as of the March 15, 2002,  and their  biographical
information
 are set forth below:

----------------------------------------------------------------------------------
         Name          Date of Birth          Position           Director Since
----------------------------------------------------------------------------------
John R. Prufeta (1)(4)(5) 7/1/60     President, Chief Executive       1999
                                     Officer and a Director
----------------------------------------------------------------------------------
Louis E. Hyman            1/15/68    Executive Vice President and     N.A.
                                     Chief Technology Officer
----------------------------------------------------------------------------------
Patricia A. Minicucci     4/1/49     Executive Vice President for     N.A.
                                     Operations
----------------------------------------------------------------------------------
Gary L. Smith             6/2/54     Executive Vice President and     N.A.
                                     Chief Financial Officer
----------------------------------------------------------------------------------
Brian R. Ellacott         3/8/57     Senior Vice President and        N.A.
                                     Division CEO, Southeast
                                     Region
----------------------------------------------------------------------------------
John T. Lane (1)(2)(3)(4) 4/13/42    Director and Chairman of         1999
                                     The Board
----------------------------------------------------------------------------------
Samuel H. Havens (4)(5)   6/19/43    Director and Chair of the        1999
                                     Nominating Committee
----------------------------------------------------------------------------------
Joan E. Herman (2)(3)     6/2/53     Director and Chair of the        2000
                                     Audit Committee
----------------------------------------------------------------------------------
Patrick  W. Jeffries(4)   1/25/53    Director and Chair of the        2001
                                     Finance Committee
----------------------------------------------------------------------------------
Guy L. Scalzi(5)          7/18/46    Director                         2001

----------------------------------------------------------------------------------
Dr. David B. Skinner (1)(24/28/35    Director and Chair of the        1999
(3)                                  Compensation Committee
--------------------
(1)   Member of the Executive Committee
(2)   Member of the Audit Committee
(3)   Member of the Compensation Committee
(4)   Member of the Finance Committee
(5)   Member of Nominating Committee

      All of the our  executive  officers  devote  full-time to our  company's  business and
affairs.  Biographical  information  on each current  executive  officer and director is set
forth below.

Biographical Information

John R. Prufeta.  Mr.  Prufeta  joined  the  Company  as a  full  time  employee  and as its
President and Chief  Executive  Officer on March 1, 2000.  Mr.  Prufeta also is the Chairman
of the  Board  of the  Company's  Cymedix  Lynx  subsidiary.  He had been  appointed  to the
position of Chief  Executive  Officer  while a  consultant  to the Company in October  1999.
Prior to that he was the Managing  General  Partner of The Creative  Group,  Creative Health
Concepts,  and TCG  Development,  and the President and Chief Executive  Officer of Creative
Management  Strategies,  Inc. for over 11 years.  Those  affiliated  companies  cover a wide
spectrum of services within the healthcare  industry.  He was elected to the Company's Board
of  Directors  in April  1999.  A 1983  graduate  of St.  John's  University  with a B.S. in
management,  Mr. Prufeta graduated from the Executive  Program,  OPM at Harvard  University,
Graduate School of Business.

Louis E. Hyman.   On May 14,  2001,  Mr.  Hyman  became an officer of the  Company  with the
titles of Executive  Vice  President  and Chief  Technology  Officer.  Prior to that,  since
March 9, 2001,  he was a consultant  to the  Company,  serving as interim  Chief  Technology
Officer.  From September 1999 until joining Medix,  Mr. Hyman was President and CEO of Ideal
Technologies,  Inc.,  a  healthcare  integration  consulting  firm.  Mr.  Hyman held  senior
technology  management and executive  positions with  CareInsite,  Inc. (from August 1999 to
September  2000 as Vice President of  Information  Technology)  and LaPook Lear Systems Inc.
(from  August 1992 to August 1999 as Vice  President  and Director of  Technology),  both of
which were merged into WebMD,  Inc. in September  2000.  As a result of these  transactions,
Mr. Hyman  maintained his position as Vice President of  Information  Technology  with WebMD
through November 2000, where he played a key role in WebMD's  integration efforts as well as
initiatives to improve the Company's  profitability.  He graduated  Summa Cum Laude from St.
John's University where he earned a B.S. degree in Computer Science.

Patricia A. Minicucci.  In March 2000,  Ms.  Minicucci  joined the Company as Executive Vice
President of Operations.  Prior to joining Medix's staff,  Ms. Minicucci served as Executive
Vice  President and a principal of Creative  Health  Concepts.  In 1995, she founded and was
Chief  Executive  Officer of  Practice  Paradigms,  an  organization  serving  primary  care
physicians.   Prior  to   founding   Practice   Paradigms,   Minicucci   was   Senior   Vice
President-Managed  Care with Empire Blue Cross Blue Shield and,  before  that,  President of
the Employee Benefits Division of Washington National  Corporation.  Ms. Minicucci began her
career in  healthcare at CIGNA  Corporation  where she held  numerous  positions,  including
President of the South Central Division,  CIGNA Healthplan Inc.; Vice President of the Human
Resources  Division,  Employee  Benefits  Group;  Vice  President  of  the  Human  Resources
Department,   Group  Insurance  Division;   and  Regional  Vice  President  of  Field  Claim
Operations,  Group  Insurance  Division.  She holds a B.A.  in  History  from  Russell  Sage
College.

Gary L. Smith.         Mr. Smith joined the Company as Executive  Vice  President  and Chief
Financial  Officer in  December of 2000.  From 1995 to 2000,  Mr.  Smith was with  Provident
Group, a financial  advisory firm serving companies  operating in emerging market countries,
where he was a  principal.  Previously,  Mr.  Smith was an  executive  of  American  Express
Bank,  the  international  banking  arm  of the  financial  services  conglomerate  American
Express  Corporation  (NYSE:  AXP), where he held various senior financial  positions,  most
recently as Senior  Director and  Commercial  Banking  Head,  London  Branch.  He holds a BS
degree in Economics  from the Wharton  School and an MS in  Accounting  and Finance from the
London School of Economics.

Brian R. Ellacott.   In  March  2000,  Mr.  Ellacott  joined  the  Company  as  Senior  Vice
President of Business Development.  In mid-2001,  Mr. Ellacott was appointed as the Division
CEO for Southeast  Region  Markets.  Mr.  Ellacott  served as president of Cosmetic  Surgery
Consultants from November 1998 until March 2000, when he joined Medix  Resources,  Inc. From
1996 to 1998 he was executive  vice  president of Alignis Inc.,  an  alternative  healthcare
PPO.  Before that, he was  President-Bibb  Hospitality  (Atlanta) for The Bibb Company.  Mr.
Ellacott  began his career in healthcare at Baxter  International/American  Hospital  Supply
where he held  numerous  positions,  including  Director  of  National  Accounts  (Chicago);
Director  of  Marketing  (Australia);   Director  of  Marketing  (Canada);  Systems  Manager
(Canada);  Regional Manager (British Columbia);  and Product Manager (hospital products). He
holds a B.A. in Business  Administration,  with  Honors,  from  Wilfrid  Laurier  University
(Waterloo, Canada).

John T. Lane.   Prior to his  retirement  from J.P.  Morgan & Company in 1994,  Mr. Lane was
head of that firm's U.S.  Private Clients Group. He also served as Chairman of J.P.  Morgan,
Florida; a Director of Morgan Shareholder  Services,  J.P. Morgan of California,  and Morgan
Futures;  and a member of the firm's Credit Policy committee.  Earlier,  he held a number of
positions in the J. P. Morgan  organization,  which he joined in 1968.  Since  retiring from
J.P. Morgan,  Lane has served as a consultant to various  organizations.  Mr. Lane currently
serves or the Boards of Acme Metals Incorporated and Biospecifics  Technologies Corp., whose
common  shares are  publicly  traded.  Mr. Lane holds an MBA degree from the  University  of
Michigan, and a BA degree from Dartmouth College.

Samuel H. Havens.   Prior to his  retirement  in 1996,  Mr.  Havens  served as  President of
Prudential  Healthcare  for  five  years.  He had  begun  his  career  with  The  Prudential
Insurance  Company as a group sales  representative  in 1965, and served in various posts in
Prudential healthcare operations over three decades.  Since retiring,  Mr. Havens has served
on the Board and as a  consultant  to various  healthcare  organizations.  He is a member of
the Board of  Advisors  of  Temple  Law  School  and the  Editorial  Board of  Managed  Care
Quarterly.  Havens completed the Executive  Program in Business  Administration  at Columbia
University.  He holds a JD degree from Temple Law School, a CLU from the American College of
Life Underwriters, and a BA degree from Hamilton College.

Joan E. Herman.  Ms Herman is the Group  President of WellPoint's  Senior,  Specialty,  and
State Sponsored Programs division and is responsible for the Company's Dental,  Life & AD& D,
Pharmacy,  Behavioral Health, Workers' Compensation Managed Care Services,  Senior Services,
and  Disability  businesses.  She  is  also  responsible  for  WellPoint's  State  Sponsored
Programs,  which  include  MediCal  and Healthy  Families.  In 1999,  a WellPoint  affiliate
entered  into  an  agreement  with  the  Company  to  implement  a  pilot  program  for  the
introduction  of Cymedix(R)software to healthcare  providers  identified by such  affiliate.
Ms.  Herman  serves  on the  Company's  Board of  Directors  pursuant  to the  terms of that
agreement.  Prior to joining  WellPoint in 1998,  Ms. Herman was the Senior Vice  President,
Strategic  Development  and Senior Vice  President,  Group  Insurance  for Phoenix Home Life
Mutual  Insurance  Company.  Ms.  Herman has served as chairman  of the board of  Leadership
Greater  Hartford and been a member of the board of  directors  of the  American  Academy of
Actuaries,  the American  Leadership  Forum, the Hartford Ballet,  the Greater Hartford Arts
Council, and the Children's Fund of Connecticut.  She is a member of the American Academy of
Actuaries  and a Fellow of the Society of Actuaries.  Ms. Herman holds an MA in  Mathematics
from Yale University,  an MBA from Western New England  College,  and an A.B. in mathematics
from Barnard College.

Patrick W. Jeffries.    In March 2002, Mr.  Jeffries became the Executive Vice President for
IT and Central  Services of WellPoint  Health  Networks  Inc.  Mr.  Jeffries is the founding
partner of Health Technology Partners,  LLC and a predecessor company,  which was founded in
1997 and provides consulting services for healthcare and technology  companies.  From August
1997 to March 1999, Mr. Jeffries was the CEO and Chairman of the Board of OpTx  Corporation,
during  which time he lead this disease  management  company in its  transition  from a late
development stage company to commercial  profitability.  From December 1995 to July 1997, he
was  Executive  Vice  President  of Salick  Health Care,  Inc., a national  system of cancer
treatment  facilities.  From 1985 to 1995,  Mr.  Jeffries was first an associate  and then a
partner of McKinsey & Company,  Inc., an international  management consulting firm. He holds
an MBA from Cornell University and a BSEE from Washington University.

Guy L. Scalzi.    Mr.  Scalzi  is  Vice  President  of  First  Consulting  Group  Management
Services,  LLC, a  healthcare  information  technology  consultant.  Prior to  joining  that
company in January 2000, he was Senior Vice President and Chief Information  Officer for New
York  Presbyterian  Healthcare System from April 1996 to December 1999. From January 1995 to
March  1996,  Mr.  Scalzi was  Director  of Planning  for  Information  Services at New York
Hospital-Cornell  Medical Center.  From June 1993 to December 1994, he was Chief Information
Officer,  The Hospital for Joint Diseases,  New York University Medical Center. From 1984 to
1993,  he  was a  founder  and  senior  executive  with  DataEase  International,  Inc.,  an
international  PC software  development  and marketing  company.  Mr. Scalzi has an MBA from
Manhattan College and a B.S. degree from The State University of New York at Oswego.

Dr. David B. Skinner.   Dr.  Skinner  is  President  Emeritus  of the New  York-Presbyterian
Hospital and the New  York-Presbyterian  Healthcare  System. He was Vice  Chairman/President
and CEO of the Society of the New York Hospital and its Healthcare  System and  subsequently
of the merged  institution  for 13 years. He is also a professor of  cardiothoracic  surgery
and surgery at the Weill  Medical  College of Cornell  University,  professor  of surgery at
Columbia  University  College of Physicians  and Surgeons,  and an attending  surgeon at New
York Presbyterian  Hospital.  He was professor of surgery at Johns Hopkins University School
of Medicine from 1968 to 1972,  and  professor and chairman of surgery at the  University of
Chicago,  Pritzker  School of  Medicine  from 1973 to 1987.  Dr.  Skinner  has been  awarded
numerous honorary degrees, faculty appointments,  corporate directorships,  and domestic and
international  honors,  awards,  and  prizes.  Dr.  Skinner  holds a BA  degree,  with  high
distinction,  from the  University  of  Rochester  and an MD degree,  cum  laude,  from Yale
University.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

      Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires directors
and  executive  officers,  and  persons  who own more  than 10% of a  registered  class of a
company's  equity  securities,  to file with the U. S.  Securities  and Exchange  Commission
initial  reports of ownership  and reports of changes in ownership of the  Company's  common
stock and other equity  securities.  Officers,  directors and greater than 10%  shareholders
are required by Securities and Exchange  Commission  regulations to furnish the Company with
copies of all Section  16(a) reports they file.  Based solely upon such reports,  we believe
that none of such persons  failed to comply with the  requirements  of Section  16(a) during
2001.


ITEM 11.    EXECUTIVE COMPENSATION

Executive Officer Compensation

Summary  Compensation  Table.  The  following  table sets  forth the  annual  and  long-term
compensation  for  services  in all  capacities  to the  Company  for the three  years ended
December 31, 2001,  awarded or paid to, or earned by our Chief Executive Officer ("CEO") and
our four other most highly compensated officers (the "Named Officers").


                                  Annual Compensation                Long-Term
                                                                   Compensation
Name and Principal   Fiscal     Salary       Bonus      Other(1)      Securities
     Position         Year     -------      ------      --------      Underlying
     --------        ------                                            Options
                                                                      (Shares)
                                                                      ---------
John R. Prufeta       2001    $114,000         0                      425,000
President and CEO     2000    $120,000         0                      600,000
                      1999    $171,000(2)      0                      925,000

Louis E. Hyman,       2001    156,625(3)       0                      250,000
Executive Vice
President and
Chief Technology
Officer

Patricia A.                   $197,000         0                      175,000
Minicucci             2001    $163,846         0                      400,000
Executive Vice
President for         2000
Operations

Gary L. Smith,        2001    $197,000         0                      175,000
Executive Vice        2000      $2,430         0                      250,000
President and
Chief Financial
Officer

Brian R. Ellacott     2001    $165,000         0                      175,000
Senior Vice           2000    $125,769                                150,000
President


 (1) Other annual compensation,  except as noted, is made up of automobile  allowances,  and
   disability  and health  insurance  premiums,  in amounts  less than 10% of the  officer's
   annual salary plus bonus.
(2)   During  1999,  Mr.  Prufeta  served  as a  consultant  to the  Company  pursuant  to a
   consulting   agreement  between  the  Company  and  his  employer,   Creative  Management
   Strategies,  Inc.,  which company was paid or accrued the amount shown above and received
   options to purchase  25,000  shares of Common  Stock,  included in the amount  shown.  He
   became an employee of the Company in early 2000.
(3)   During 2001, Mr. Hyman, through an affiliated entity,  served as a consultant to Medix
   before he became a full time employee and  executive  officer.  This amount  includes the
   consulting  compensation  to his firm.  He also  received a grant of options to  purchase
   20,000 shares for his consulting services.

      Stock Option Awards.  In August 1999,  our Board of Directors  approved and authorized
our  1999  Stock  Option  Plan  (the  "1999  Plan"),  which  is  intended  to  grant  either
non-qualified  stock options or incentive  stock options,  as described  below. In 2000, our
shareholders  approved the 1999 Plan.  The purpose of the 1999 Plan is to enable our company
to provide  opportunities  for certain  officers and key  employees to acquire a proprietary
interest in our  company,  to increase  incentives  for such  persons to  contribute  to our
performance and further  success,  and to attract and retain  individuals  with  exceptional
business,  managerial  and  administrative  talents,  who will  contribute  to our progress,
growth and profitability.

      Options  granted under our 1999 Plan include both  incentive  stock options  ("ISOs"),
within the meaning of Section 422 of the  Internal  Revenue  Code of 1986,  as amended  (the
"Code"),  and  non-qualified  stock  options  ("NQOs").  Under the  terms of the  Plan,  all
officers and employees of our company are eligible for ISOs.  Our company  determines in its
discretion,  which  persons  will receive  ISOs,  the  applicable  exercise  price,  vesting
provisions  and the exercise term thereof.  The terms and conditions of option grants differ
from  optionee to  optionee  and are set forth in the  optionees'  individual  stock  option
agreement.  Such options  generally vest over a period of one or more years and expire after
up to ten years.  In order to qualify for  certain  preferential  treatment  under the Code,
ISOs must satisfy the  statutory  requirements  thereof.  Options that fail to satisfy those
requirements  will be deemed  NQOs and will not  receive  preferential  treatment  under the
Code.  Upon  exercise,  shares will be issued upon payment of the exercise price in cash, by
delivery of shares of Common Stock,  by delivery of options or a combination of any of these
methods.  At our 2001 Annual  Meeting,  our  shareholders  approved an increase of 3,000,000
shares  to  13,000,000  as the  amount of total  shares of our  Common  Stock  reserved  for
issuance under the 1999 Plan.

      As of March 15,  2002,  we had  issued  5,736,560  shares  of our  Common  Stock  upon
exercise of options to current or former employees and directors,  and have 6,568,667 shares
currently covered by outstanding  options held by current or former employees and directors,
with exercise  prices  ranging form $.19 to $4.97.  Such options have been granted under the
1999 Plan and earlier stock option plans.

      Option information for fiscal 2001 relating to the Named Officers is set forth below:

                                  Options Granted in 2001
       Name           Number of    Percentage   Exercise Expiration  Valuation
       ----           Shares of     of Total      Price      Date     under
                     Common Stock     Options   --------   -------  Black-Scholes
                     Underlying    Granted to                        Pricing
                       Options    Employees in                       Method(1)
                     Granted in       2001
                        2001          ----
                        ----
John R. Prufeta        400,00         21.2%       $.62     4/17/06    $217,755
                       25,000          1.3%       $.60     3/23/06     $13,171
Louis E. Hyman        230,000         12.2%       $.61     5/14/06    $123,190
                       20,000          1.1%       $.70     3/03/03     $15,580
Patricia A.           150,000          7.9%       $.61     5/14/06     $80,341
Minicucci              25,000          1.3%       $.60     3/23/06     $13,171
Gary L. Smith         150,000          7.9%       $.61     5/14/06     $80,341
                       25,000          1.3%       $.60     3/23/06     $13,171
Brian R. Ellacott     150,000          7.9%       $.61     5/14/06     $80,341
                       25,000          1.3%       $.60     3/23/06     $13,171

      (1) The Black-Scholes option-pricing model estimates the options fair value by
considering the following assumptions: the options exercise price and expected life, the
underlying current market price of the stock and expected volatility, expected dividends
and the risk free interest rate corresponding to the term of the option.   The fair values
calculated above use expected volatility of 132%, a risk-free rate of 5.5%, no dividend
yield and anticipated exercise at the end of the term.


               Option Exercises and Year-End Values in Fiscal 2001
     Name       Shares      Value     Number of Shares     Value of Unexercised
     ----      Exercised   Realized       Underlying       In-the-Money Options
               ----------  --------   Unexercised Options       at Year-End(1)
                                        at Year-End             -------------
                                         -----------
                                   Exercisable  Unexer      Exerci     Unexer
                                    ----------  cisale       sable     cisable
                                                -------    --------    -------
John R. Prufeta     0         0     1,450,000(2)500,000    $258,250    $80,000
Louis E. Hyman      0         0      112,500    137,500     $8,325     $12,375
Patricia A.         0         0      575,000       0        $16,000       $0
Minicucci
Gary L. Smith       0         0      325,000    100,000     $16,000       $0
Brian R.            0         0      312,500     12,500    $16,000        $0
Ellacott
--------------
(1) The dollar values are calculated by determining the difference  between $0.70 per share,
the fair market value of the Common Stock at December  31, 2001,  and the exercise  price of
the respective options.
(2) Includes  options  covering  25,000 of these shares were granted to a company that is an
affiliate of Mr. Prufeta for executive search services.

      Medix has no  retirement,  pension or  profit-sharing  program  for the benefit of its
directors,  executive officers or other employees,  but the Board of Directors may recommend
one  or  more  such  programs  for  adoption  in  the  future.   Medix  does  not  make  any
contributions to its 401(k) Plan for its employees.

      Employment Agreements.

      Mr. Prufeta's Employment  Agreement,  which has an initial term of one year and renews
in automatic one year  increments  thereafter,  provides that he will be  compensated at the
base salary of $275,000 annually,  plus a bonus of $400,000,  subject to certain performance
criteria.  He holds the  positions of President and Chief  Executive  Officer and reports to
the Board of Directors.  Pursuant to his Employment Agreement,  Mr. Prufeta has been granted
options to purchase  200,000  shares of Common Stock at $.70 per share,  which vest upon the
occurrence of certain  performance goals. His Employment  Agreement provides for termination
at any  time by the  employee  with or  without  cause or by the  Company  with  cause.  The
Employment  Agreement is also subject to termination by the Company without cause, after the
initial  one-year  of the term  subject to the right of the  employee to continue to receive
salary  and  pro-rata  bonus  compensation  for 6  months.  The  Employment  Agreement  also
contains a non-compete  provision that extends for a period of one year after termination or
resignation of the employee, as well as certain confidentiality  provisions.  The Employment
Agreement  contains  provisions  providing that, upon the occurrence of a "Triggering Event"
(defined to include a change in ownership of 50% of the outstanding  shares of the Company's
Common  Stock  through a merger or  otherwise)  during the term of his  employment,  he will
receive a lump sum payment equal to his then current year's base and bonus pay.

      Mr. Hyman's Employment  Agreement,  which has an initial term of two years,  ending on
May 14, 2003,  provides that he will be compensated at the salary of $200,000  annually.  He
holds the position of Executive Vice President and Chief Technology Officer,  and reports to
the President and CEO.  Pursuant to his Employment  Agreement,  he has been granted  options
to purchase  230,000  shares of Common  Stock at $.61 per share,  which vest over the 2-year
term of his Employment  Agreement.  His Employment Agreement provides for termination at any
time by the  employee  with or without  cause or by the Company with cause.  The  Employment
Agreement  is also subject to  termination  by the Company  without  cause after the initial
one-year  of the  term,  subject  to the  right  of the  employee  to  continue  to  receive
compensation for 6 months.  The Employment  Agreement also contains a non-compete  provision
that extends for a period of one year after  termination or resignation of the employee,  as
well as certain  confidentiality  provisions.  The Employment  Agreement contains provisions
providing that, upon the occurrence of a "Triggering  Event" (defined to include a change in
ownership of 50% of the  outstanding  shares of the Company's  Common Stock through a merger
or otherwise)  during the term of his  employment,  he will receive a lump sum payment equal
to his then current year's base and bonus pay.

      Ms. Minicucci's  Employment Agreement,  which had an initial term of two years, ending
on March 1, 2002,  provided  that she be  compensated  at the salary of  $200,000  annually.
Such term has been  extended  to May 1,  2002.  She holds the  position  of  Executive  Vice
President,  Operations,  and reports to the  President and CEO.  Pursuant to her  Employment
Agreement,  she has been granted options to purchase 400,000 shares of Common Stock at $4.97
per share,  which vest over the 2-year  term of his  Employment  Agreement.  Her  Employment
Agreement  provides for  termination at any time by the employee with or without cause or by
the Company with cause.  The  Employment  Agreement is also  subject to  termination  by the
Company without cause after the initial one-year term,  subject to the right of the employee
to continue to receive  compensation for 6 months. The Employment  Agreement also contains a
non-compete  provision  that  extends  for  a  period  of  one  year  after  termination  or
resignation of the employee, as well as certain confidentiality  provisions.  The Employment
Agreement  contains  provisions  providing that, upon the occurrence of a "Triggering Event"
(defined to include a change in ownership of 50% of the outstanding  shares of the Company's
Common Stock  through a merger or  otherwise)  during the term of her  employment,  she will
receive a lump sum payment equal to his then current year's base and bonus pay.

      Mr. Smith's Employment  Agreement,  which has an initial term of two years,  ending on
December  11,  2002,  provides  that  he will  be  compensated  at the  salary  of  $200,000
annually.  He holds the position of Executive  Vice President and Chief  Financial  Officer,
and reports to the  President and CEO.  Pursuant to his  Employment  Agreement,  he has been
granted options to purchase  250,000 shares of Common Stock at $1.125 per share,  which vest
over the 2-year term of his  Employment  Agreement.  His Employment  Agreement  provides for
termination  at any  time by the  employee  with or  without  cause or by the  Company  with
cause.  The  Employment  Agreement is also  subject to  termination  by the Company  without
cause  after the  initial  one-year  of the term,  subject to the right of the  employee  to
continue to receive  compensation  for 6 months.  The  Employment  Agreement also contains a
non-compete  provision  that  extends  for  a  period  of  one  year  after  termination  or
resignation  of  the  employee,  as  well  as  certain   confidentiality   provisions.   The
Employment   Agreement  contains  provisions  providing  that,  upon  the  occurrence  of  a
"Triggering  Event"  (defined  to include a change in  ownership  of 50% of the  outstanding
shares of the Company's  Common Stock through a merger or otherwise)  during the term of his
employment,  he will receive a lump sum payment  equal to his then  current  year's base and
bonus pay.

      Mr. Ellacott's  Employment  Agreement,  which had an initial term of two years, ending
on March 1, 2002,  provided that he be compensated at the salary of $150,000 annually.  Such
term has been  extended to May 1, 2002.  In March 2001,  Mr.  Ellacott's  annual  salary was
increased to $175,000.  He initially  held the position of Senior Vice  President,  Business
Development,  and recently was appointed as Senior Vice  President  and  Southeast  Division
Market  CEO,  reporting  to  the  Executive  Vice  President,  Operations.  Pursuant  to his
Employment  Agreement,  he has been  granted  options to purchase  150,000  shares of Common
Stock at $3.97 per share, which vest over the 2-year term of his Employment  Agreement.  His
Employment  Agreement  provides for  termination at any time by the employee with or without
cause  or  by  the  Company  with  cause.  The  Employment  Agreement  is  also  subject  to
termination by the Company  without cause,  subject to the right of the employee to continue
to receive compensation
for 6 months.  The Employment  Agreement also contains a non-compete  provision that extends
for a period of one year  after  termination  or  resignation  of the  employee,  as well as
certain confidentiality provisions.




Director Compensation

      In 1999,  we adopted the policy of  compensating  non-employee  Directors,  $1,000 for
attending  each  regular  quarterly  Board  meeting in person,  and $250 for  attendance  by
telephone.  The Board of  Directors  has also  authorized  payment of  reasonable  travel or
other  out-of-pocket  expenses  incurred by  non-employee  directors for attending  Board or
committee  meetings.  Notwithstanding  this policy,  during 2001, the Directors  waived such
fees but not reimbursements for out-of-pocket  expenses.  Independently,  Ms Joan Herman has
waived her director fees altogether, based on WellPoint company policy.

      From time to time, the Board of Directors will grant  non-employee  Directors  options
to acquire  shares of Common  Stock as  compensation  for their  services  to the Company as
Directors.  During 2001, we granted options  covering 200,000 shares of Common Stock each to
Mr.  Jeffries and Mr. Scalzi,  at the time they became  Directors,  which are exercisable at
$.78 per share.

      In January 2002, the Directors  discontinued  the policy of cash fees to Directors for
attending Board or committee meetings.  Instead,  non-employee Directors will be compensated
for their  services  through  the grant of  options to  purchase  our  Common  Stock.  As of
January 22, 2002,  each Director,  except Ms. Herman based on the policy  referred to above,
has been granted  options to purchase  40,000 shares of Common Stock at an exercise price of
$0.70 per share.  Those options vest in quarterly 10,000 share increments,  from the date of
grant, provided that the Director remains on the Board of the Company.

      In 1999,  we  entered  into a  consulting  agreement  with Mr.  Samuel  Havens,  which
provides that we pay Mr. Havens $5,000 per month for his  consulting  services in connection
with our marketing  efforts.  Mr. Havens has deferred his monthly payment since April, 2001,
with the  accrued  amount  payable to Mr.  Havens at March 15,  2002 being  $55,000.  During
2001, we paid Mr. Havens $20,000 for his services.

Board Compensation Committee Report on Executive Compensation

      The Compensation Committee of the Board of Directors (the "Committee") administers
the Medix stock option plans and oversees our executive compensation, subject to approval
of its recommendations by the Board of Directors. Executive compensation includes base
salaries, annual incentives and long term stock option plans, as well as any executive
benefits and/or prerequisites.

      Our general  compensation  philosophy for our executive officers,  including our Chief
Executive Officer ("CEO"), is to offer competitive  compensation  packages that are designed
to attract and retain key  executives  critical to the success of the  Company.  At present,
packages include annual cash compensation  (salaries) and long-term compensation  consisting
of options to purchase the Company's  stock, to align the interests of management with those
of the Company's  shareholders.  Beginning with calendar year 2002,  executive packages will
include variable amounts of annual bonus potential,  tied to specific  performance goals for
the Company and the individual  executives.  The Committee intends to review the performance
and  compensation  of  executives  annually,  in  conjunction  with the  performance  of the
Company.  Incentive  Stock Option awards are based upon the  Committee's  judgment as to the
relative rank and  contribution  of each  executive  (or other  employee) to the success and
survival of the Company.

      In addition,  the Company has entered into  employment  agreements  with its executive
officers, as outlined earlier in this report.

                                                   Compensation Committee,

                                                   Dr. David B. Skinner, Chairman
                                                   Ms. Joan E. Herman
                                                   Mr. John T. Lane

Compensation Committee Interlocks and Insider Participation

      In 1999, we entered into  agreements  with WellPoint  Pharmacy  Management  ("WPM") to
implement a pilot program for the introduction of Cymedix(R)software to healthcare  providers
identified by WPM. After the required  testing of the software,  the agreements  provide for
a production  program to install the software  broadly among WPM managed  providers.  One of
the agreements  provides that Medix will nominate a  representative  of WPM to be elected to
the Company's  Board of Directors.  Ms. Herman is that  representative.  Such agreement also
provided  that WPM  would be  granted  warrants  evidencing  the  right  to  purchase  up to
6,000,000  shares of Common Stock,  which vest upon the  occurrence  of certain  performance
criteria.  The agreement  provides for the grant of warrants covering  3,000,000 shares with
an  exercise  price of $0.30 per share,  and  warrants  covering  3,000,000  shares  with an
exercise  price  of $0.50  per  share,  all  expiring  five  years  from the date of  grant,
September  8, 2004.  In  February  2002,  the  warrant  agreement  was amended to revise the
performance  criteria and to add an additional right to purchase up to 1,000,000  additional
shares  at  $1.75  per  share.  At March  15,  2002,  warrants  covering  1,850,000  shares,
exercisable at $.30 per share,  had vested.  In February  2002,  WellPoint  Health  Networks
Inc.,  the  parent  of WPM made a  secured  convertible  loan to Medix  of  $1,000,000.  See
"DESCRIPTION  OF  BUSINESS - Recent  Developments"  for a  description  of the terms of both
these agreements.  In addition,  Mr. Jeffries,  who became a director of ours in 2001, is an
officer and consultant to WellPoint Health Network.

Comparison of Cumulative Total Returns

   The following graph and data point tables compare the  performance of the Company's
common stock with the performance of the AMEX-U.S. Index, as adjusted, and as provided by
the American Stock Exchange and a Custom  Composite  Index (4 stocks) over the five year
period  extending  through the end of 2001. The graph
and tabular  information  assume that $100 was  invested on December 31, 1996 in the
Company's common stock, the AMEX-U.S.  Index and the Custom Composite Index, with any
dividends being reinvested. The Company has provided this graph and the tabular information
using publicly available information that it has no reason to believe is not accurate.
However, the Company takes no responsibility for such information.

     The Custom Composite Index includes Cybear, AllScripts, WebMD and ProxyMed, companies
that the Company  believes are its peers and that are involved in the same or similar lines
of business.  The Company believes that this peer group is a better comparison than broader
indices which are publicly available.  Data for
Cybear, AllScripts and WebMD were not available for periods prior to 1999.









               Based on the reinvestment of $100 beginning December 31, 1996

             12/31/1996    12/31/1997     12/31/1998     12/31/1999     12/31/2000    12/31/2001

Medix       $  100          $   23         $    9       $  288           $  100         $   65
Resources,
Inc. (1)
AMEX U.S.   $  100          $  125         $  134       $  177           $  166         $  151
Index
Custom      $  100          $   98         $  165       $  138           $   16         $   20
Composite
Index

(1)    Medix acquired its Cymedix Internet software and services business in January of
    1998.  Before then it operated only a medical temporary staffing business.  It did not
    dispose of all of its medical staffing business until February 2000.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information  regarding  beneficial ownership of
Common  Stock as of March 15, 2002 by (i) each person known by us to own  beneficially  more
than 5 % of the  outstanding  shares of Common Stock.  (ii) each director,  named  executive
officer and (iii) all  executive  officers and  directors as a group.  On such date,  we had
58,386,516  shares  of  Common  Stock   outstanding.   Shares  not  outstanding  but  deemed
beneficial1y  owned by virtue of the right of any  individual  to acquire  shares  within 60
days are treated as outstanding  only when  determining  the amount and percentage of Common
Stock  owned by such  individual.  Each  person has sole  voting and  investment  power with
respect to the shares shown, except as noted.

     Name and Address            Number of Shares         Percentage of Class
     ----------------            ----------------         -------------------


      John R. Prufeta              2,453,000(1)                  4.1%
 420 Lexington Ave., Suite
           1830
    New York, New York

       John T. Lane                 560,000(2)                     *
      94 Sixth Street
  Garden City, New Jersey

     Samuel H. Havens               210,000(3)                     *
   58 Winged Foot Drive
  Livingston, New Jersey

      Joan E. Herman                 None(4)                      0%
     One Wellpoint Way
 Thousand Oaks, California

    Patrick W. Jeffries             110,000(3)                     *
     One Wellpoint Way
 Thousand Oaks, California

       Guy L Scalzi                 110,000(3)                     *
  The Chrysler Building,
        37th Floor
  42nd and Lexington Ave.
    New York, New York

   Dr. David B. Skinner             210,000(3)                     *
   525 East 68th Street
    New York, New York

      Louis E. Hyman                167,500(3)                     *
 420 Lexington Ave., Suite
           1830
    New York, New York


   Patricia A. Minicucci            575,000(3)                     *
 420 Lexington Ave., Suite
           1830
    New York, New York

       Gary L. Smith                350,000(3)                     *
 420 Lexington Ave., Suite
           1830
    New York, New York

      Brian Ellacott                325,000(3)                     *
    101 Village Parkway
       Building One
     Marietta, Georgia


All directors and executive officers5,070,500                    8.0%
 as a group (11 persons)
*Less than 1% of the outstanding shares
-------------------
(1)   Mr.  Prufeta owns 737,000  shares of Common Stock,  with the remainder  available upon
   the exercise of warrants and options held by him.
(2)   All of Mr. Lane's  reported  holdings are available upon the conversion or exercise of
   convertible  preferred  stock,  warrants and options held by him,  including 50 shares of
   the Company's 1999 Series B Convertible  Preferred Stock (100% of the outstanding  shares
   of that class), and 25 shares of the Company's 1999 Series C Convertible  Preferred Stock
   (6.7% of the outstanding shares of that class).
(3)   Represents shares of Common Stock available upon the exercise of outstanding options.
(4)   Ms. Herman has declined the grant of any options based on Wellpoint company policy.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Since 1996, we have had a policy that any  transactions  with directors or officers or
any entities in which they are also  officers or directors or in which they have a financial
interest,  will  only be on terms  that  would be  reached  in an  arms-length  transaction,
consistent  with  industry  standards  and  approved  by a  majority  of  our  disinterested
directors.  This  policy  provides  that no such  transaction  by  shall be  either  void or
voidable  solely because of such  relationship  or interest of such directors or officers or
solely  because  such  directors  are present at the meeting of the Board of  Directors or a
committee  thereof that approves such  transaction or solely because their votes are counted
for such  purpose.  In addition,  interested  directors  may be counted in  determining  the
presence  of a quorum at a meeting of the Board of  Directors  or a committee  thereof  that
approves  such a  transaction.  We have also  adopted a policy  that any loans to  officers,
directors  and 5% or  more  shareholders  are  subject  to  approval  by a  majority  of the
disinterested  directors.  All  of the  transactions  described  below  have  been  approved
according to this policy.

      Before Mr.  Prufeta was elected to our Board of  Directors in 1999,  OnPoint  Partners
(formerly known as Creative  Management  Strategies)  ("OPP"),  a company partially owned by
Mr. John Prufeta,  entered into agreements with us to provide  executive search services and
sales and  marketing  services  to us. In  connection  with  those  agreements,  we issued a
3-year  option to acquire up to 25,000  shares of our Common  Stock at an exercise  price of
$0.55 per share to OPP. We also paid such  company  $71,000  during 1999.  In addition,  for
Mr.  Prufeta's  service  to us as  Chief  Executive  Officer  until he  became  a  full-time
employee,  and the above services provided by the affiliated  company, we have paid $110,000
to OPP in 2000.  At the time Mr.  Prufeta  became a  full-time  employee  of the  Company in
January of 2000,  such agreements  with OPP were  terminated.  During 2001 and 2000, we have
paid OPP approximately $111,000 and $93,000,  respectively,  as reimbursements for rents and
services  for our  former New York  office  space,  which was leased in the name of OPP.  In
addition,  we have paid OPP  employee  search fees of  approximately  $38,361  and  $152,000
during  2001  and  2000,  respectively,  for  their  employee  search  services.  OPP  is  a
recognized  provider of executive  and employee  search  services to all areas of the health
care  industry,  and provides it services to us at standard  rates.  The Board of Directors,
through the Audit  Committee,  reviews and  approves of our  contractual  arrangements  with
OPP.

      We have entered into a consulting  agreement  with Mr. Samuel  Havens,  which provides
that we pay Mr. Havens $5,000 per month for his consulting  services in connection  with our
marketing  efforts.  Mr. Havens has deferred his monthly  payment since April 2001, with the
accrued amount  payable to Mr. Havens at March 15, 2002 being $55,000.  During 2001, we paid
Mr. Havens $20,000 for his services.

      See  "EXECUTIVE   COMPENSATION  -  Compensation   Committee   Interlocks  and  Insider
Participation" for a description of other related party  transactions.



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

(a)        Documents filed as part of this Report

    (1)  Financial Statements

        See Financial Statements included after the signature page beginning at page F-1.

(2) Financial statement schedules

         All schedules are omitted because they are not applicable or
         the required information is shown in the consolidated financial
         statements or the notes thereto.

    (3)  List of Exhibits

         See Index to Exhibits in paragraph (c) below.

(b)   Reports on Form 8-K.  The Company filed seven reports on Form 8-K during the
last quarter of 2001 as follows:

1. Report filed with the SEC on October 9, 2001, reporting under Item 5, the issuance of a
press release announcing that Medix Resources and Express Scripts will jointly deploy
web-based pharmacy transaction services to physicians.

2. Report filed with the SEC on October 24, 2001, reporting under Item 5, the issuance of a
press release announcing that a strategic  alliance between Medix Resources and Merck-Medco
to provide  physicians with point of care access to clinical  information and electronic
prescribing  through  Cymedix(R)suite of web-based pharmacy benefit  management
transaction  services.

3. . Report filed with the SEC on October 31, 2001, reporting under Item 5, the issuance of
a press release announcing that a strategic  alliance between Medix Resources and
Merck-Medco to provide  physicians with point of care access to clinical  information and
electronic  prescribing  through  Cymedix(R)suite of web-based pharmacy benefit  management
transaction  services.

4. Report filed with the SEC on November 2, 2001, reporting under Item 5, the issuance of a
press release announcing the introduction of Cymedix(R)III, the next generation of Medix's
proprietary, point-of-care  products.

5. Report filed with the SEC on November 15, 2001, reporting under Item 5, the issuance of
a press release announcing that Medix Resources will assist Georgia doctors with electronic
Medicaid claims filing.

6. Report filed with the SEC on December 11, 2001, reporting under Item 5, the issuance of
a press release announcing that Medix will provide a telephonic progress report.

7. Report filed with the SEC on December 26, 2001, reporting under Item 5, that Medix
Resources had announced that its business plan indicates that the certain financial goals
could be attained provided adequate financing is available.

(c)   Exhibits  required by Item 601 of Regulation S-K. We will furnish to our  shareholders
a copy of any of the  exhibits  listed  below  upon  payment  of $.25 per page to cover  the
costs of the Company of furnishing the exhibits.

Exhibit No. Description
----------  -----------

3.1.1       Articles  of  incorporation  of the  Company as filed on April 22, 1988 with the
            Secretary  of State of the  State of  Colorado,  incorporated  by  reference  to
            Exhibit 3.1.1 to the Registration  Statement on Form SB-2 (Reg. No. 33-81582-D),
            filed with the SEC in July 14,1994 (the "1994 Registration Statement").

3.1.2       Articles of  Amendment to Articles of  Incorporation  of the Company as filed on
            May 24, 1988 with the Secretary of State of the State of Colorado,  incorporated
            by reference to Exhibit 3.1.2 to the 1994 Registration Statement.

3.1.3       Articles of  Amendment to Articles of  Incorporation  of the Company as filed on
            February  16,  1990  with  the  Secretary  of State  of the  State of  Colorado,
            incorporated by reference to Exhibit 3.1.3 to the 1994 Registration Statement.

3.1.4       Articles of  Amendment to Articles of  Incorporation  of the Company as filed on
            August  12,  1994  with  the  Secretary  of  State  of the  State  of  Colorado,
            incorporated  by  reference  to  Exhibit  3.1.4 to  Amendment  No. 1 to the 1994
            Registration Statement, filed with the SEC on August 15, 1994.

3.1.5       Articles of  Amendment to Articles of  Incorporation  of the Company as filed on
            September  12,  1994  with the  Secretary  of State  of the  State of  Colorado,
            incorporated  by  reference  to  Exhibit  3.1.5 to  Amendment  No. 3 to the 1994
            Registration Statement, filed with the SEC on September 12, 1994.

3.1.6       Certificate of Designation of 1996 Convertible Preferred Stock,  incorporated by
            reference to Exhibit 3.1 to  Amendment  No. 1 to the  Registration  Statement of
            the Company on Form S-3,  filed with the SEC October 10, 1996.

3.1.7       Articles to Amendment to Articles of  Incorporation  filed with the Secretary of
            State of the State of Colorado on October 9, 1996,  incorporated by reference to
            Exhibit 3.2 to Amendment No. 1 to the  Registration  Statement of the Company on
            Form S-3 filed with the SEC on October 10, 1996.

3.1.8    Articles of  Amendment  containing  Articles  of  Designation  of 1997  Convertible
            Preferred  Stock,  incorporated  by reference to Exhibit  3.1.8 to the Company's
            Form 10-KSB filed with the SEC on March 31, 1997.

3.1.9   Articles   of   Amendment   to  Articles   of   Incorporation   of  the  Company  as
            filed on  November  14,  1997  with  the  Secretary  of  State  of the  State of
            Colorado,  incorporated  by reference  to Exhibit  3.1.9 to the  Company's  Form
            10-KSB filed with the SEC on March 30, 1998.

3.1.10            Articles  of  Amendment  to Articles  of  Incorporation  of the Company as
            filed on  February  17,  1998  with  the  Secretary  of  State  of the  State of
            Colorado,  incorporated  by reference to Exhibit  3.1.10 to the  Company's  Form
            10-KSB filed with the SEC on March 30, 1998.

3.1.11   Articles  of  Amendment  to Articles  of  Incorporation  of the Company as filed on
            March  17,  1998  with  the  Secretary  of  State  of  the  State  of  Colorado,
            incorporated  by reference to Exhibit  3.1.11 to the Company's Form 10-KSB filed
            with the SEC on March 30, 1998.

3.1.12            Articles of Amendment of Articles of  Incorporation  establishing the 1999
            Series A Convertible  Preferred Stock as filed on April 21, 1999, with Secretary
            of State of the State of Colorado,  incorporated  by reference to Exhibit 3.1.12
            to the Company's Form 10-KSB, filed with the SEC on March 30, 2000.

3.1.13            Articles  of  Amendment  of  Articles  of  Incorporation   increasing  the
            authorized  capital of the Company as filed on June 11, 1999,  with Secretary of
            State of the State of Colorado,  incorporated  by reference to Exhibit 3.1.13 to
            the Company's Form 10-KSB, filed with the SEC on March 30, 2000.

3.1.14            Articles of Amendment of Articles of  Incorporation  establishing the 1999
            Series B Convertible  Preferred  Stock as filed on July 22, 1999, with Secretary
            of State of the State of Colorado,  incorporated  by reference to Exhibit 3.1.14
            to the Company's Form 10-KSB, filed with the SEC on March 30, 2000.

3.1.15            Articles of Amendment of Articles of  Incorporation  establishing the 1999
            Series  C  Convertible  Preferred  Stock  as filed on  January  21,  2000,  with
            Secretary  of State of the  State of  Colorado,  incorporated  by  reference  to
            Exhibit  3.1.15 to the  Company's  Form 10-KSB,  filed with the SEC on March 30,
            2000.

3.1.16            Articles  of  Amendment  of  Articles  of  Incorporation   increasing  the
            authorized  capital of the Company as filed on March 22, 2000, with Secretary of
            State of the State of Colorado,  incorporated  by reference to Exhibit 3.1.16 to
            the Company's Form 10-KSB, filed with the SEC on March 30, 2000.

3.2          Amended and  Restated  By-Laws of the  Company,  incorporated  by  reference to
            Exhibit 3.2.2 to Amendment No. 1 to the  Registration  Statement  filed with the
            SEC on August 15, 1994.

4.1               Form  of  specimen   certificate   for  common   stock  of  the   Company,
            incorporated  by reference to Exhibit  4.1. to the  Company's  Form 10-KSB filed
            with the SEC on March 30, 1998.

4.2   Form of 1996 Unit Warrant,  incorporated  by reference to Exhibit 4.1 to Amendment No.
            1 to the  Registration  Statement  of the Company on Form S-3 filed with the SEC
            on October 10, 1996.

4.3         Warrant issued January 28, 1997 to Millenco,  L.P,  Incorporated by reference to
            Exhibit 4.9 to the Company's  Form 10-KSB filed  with the SEC on March 31, 1997.

4.4         Form of 1997 Unit  Warrant,  incorporated  by  reference  to Exhibit 4.11 to the
            Company's Form 10-KSB filed  with the SEC on March 31, 1997.

4.5         Form of Warrant  issued with the 1999 Series A, B, and C  Convertible  Preferred
            Stock,  incorporated  by reference to Exhibit 4.7 to the Company's  Form 10-KSB,
            filed with the SEC on March 30, 2000.

4.6         Amended and Restated Warrant to Purchase Common Stock issued to Wellpoint
            Pharmacy  Management,  dated  September  8, 1999 and amended  February 18, 2002,
            incorporated  by reference to Exhibit 10.7 to the  Company's  Amendment  No.1 to
            Registration  Statement on Form S-2 (Reg. No. 333-73572),  filed with the SEC on
            February 28, 2002.

10.1.1      Incentive  Stock Option  Plan,  adopted May 5, 1988,  authorizing  100,000
            shares of common  stock  for  issuance  pursuant  to the Plan,  incorporated  by
            reference to Exhibit No. 10.2.1 of the 1994 Registration Statement.

10.1.2      Omnibus Stock Option Plan, adopted effective January 1, 1994,  authorizing
            500,000 shares of common stock for issuance  pursuant to the Plan,  incorporated
            by reference to Exhibit No. 10.2.2 of the 1994 Registration Statement.

10.1.3      1996 Stock Incentive Plan,  adopted by the Company's Board of Directors on
            November 27,  1996,  authorizing  4,000,000  shares of common stock for issuance
            pursuant  to the Plan.,  incorporated  by  reference  to  Exhibit  10.2.3 to the
            Company's Form 10-KSB filed with the SEC on March 30, 1998.

10.1.4      1999 Stock  Option  Plan,  adopted by the Board of Directors on August 16,
            1999, as amended,  incorporated  by reference to Exhibit 10.2.4 to the Company's
            Form 10-KSB filed with the SEC on March 21, 2001.

10.2        Agreement  and Plan of  Merger,  dated as of  November  17,  1997,  among
            International  Nursing  Services,  Inc.,  Cymedix Lynx  Corporation  and Cymedix
            Corporation,  incorporated by reference to Exhibit 2.1 to the Company's  Current
            Report on Form 8-K filed with the SEC on December 24, 1997.

10.3        Amendment No. 1 to Agreement and Plan of Merger,  dated as of December 10, 1997,
            among  International  Nursing  Services,  Inc.,  Cymedix  Lynx  Corporation  and
            Cymedix  Corporation,  incorporated by reference to Exhibit 2.2 to the Company's
            Current Report on Form 8-K filed with the SEC on December 24, 1997.

10.4        Purchase  and Sale  Agreement,  dated  September  14, 1998,  among  Premier Home
            Health Care Services,  Inc.,  National Care Resources-New  York, Inc., and Medix
            Resources,  Inc.,  incorporated  by reference to Exhibit  10.23 to the Company's
            Form 8-K, filed with the SEC on September 28, 1998.

10.5        Employment  Agreement  between  the  Company  and Mr.  John R.  Prufeta,  dated  as of
            February 1, 2002.*

10.6        Employment  Agreement  between  the  Company and Mr.  Brian R.  Ellacott,  dated as of
            February 11, 2000,  incorporated  by reference to Exhibit 10.21 to the Company's
            Form 10-KSB, filed with the SEC on March 30, 2000.

10.7        Employment  Agreement  between the Company and Ms. Patricia A. Minicucci,  dated as of
            February 15, 2000,  incorporated  by reference to Exhibit 10.22 to the Company's
            Form 10-KSB, filed with the SEC on March 30, 2000.

10.8        Asset Purchase Agreement,  dated as of February 19, 2000, among Medix Resources, Inc.,
            Medical Staffing Network,  Inc., National Care Resources - Texas, Inc., National
            Care  Resources  -  Colorado,  Inc.  and  TherAmerica,   Inc.,  incorporated  by
            reference  to  Exhibit  10.2 to the  Company's  Form 8-K,  filed with the SEC on
            March 7, 2000.

10.9        Agreement and Plan of Merger, dated as of March 8, 2000, among Medix Resources,  Inc.,
            Cymedix Lynx  Corporation,  Automated Design Concepts,  Inc. and David R. Pfeil,
            incorporated  by reference to Exhibit 10.24 to the Company's Form 10-KSB,  filed
            with the SEC on March 30, 2000.

10.10       Consulting  Agreement  between  the  Company  and Mr.  Samuel H.  Havens,  dated as of
            October 1, 1999,  incorporated  by reference to Exhibit  10.25 to the  Company's
            Form 10-KSB, filed with the SEC on March 30, 2000.

10.11       Executive  Employment Agreement between the Company and Mr. Gary L. Smith, dated as of
            December 11, 2000,  incorporated  by reference to Exhibit 10.20 to the Company's
            Form 10-KSB filed with the SEC on March 21, 2001.

10.12       Executive  Employment  Agreement between the Company and Louis E. Hyman, dated May 14,
            2001*

10.13       Securities    Purchase    Agreement,     dated    as    of    December    29,    2000,
            between    RoyCap    Inc.    and    Medix    Resources,    Inc.,    incorporated
            by reference to Exchibit 10.1 to the Company's form S-2  registration  Statement
            filed with the SEC on January 29, 2001.

10.14       Convertible  Note of Medix  Resources,  Inc.,  dated as of  December  29,  2000 in the
            principal amount of up to $2,500,000,  in favor of RoyCap Inc.,  incorporated by
            reference to Exchibit  10.2 to the  Company's  form S-2  registration  Statement
            filed with the SEC on January 29, 2001.

10.15       Registration    Rights    Agreement,     dated    as    of    December    29,    2000,
            between    RoyCap    Inc.    and    Medix    Resources,     Inc.    incorporated
            by reference to Exchibit 10.3 to the Company's Form S-2  Registration  Statement
            filed with the SEC on January 29, 2001.

10.16       Warrant Agreement, dated as of December 29, 2000, between RoyCap Inc. and Medix
            Resources,  Inc.,  incorporated  by reference to Exchibit  10.4 to the Company's
            Form S-2
            Registration Statement filed with the SEC on January 29, 2001.

10.17       Securities  Purchase  Agreement,  dated February 19, 2002,  between Medix
            and Wellpoint Health Networks Inc.  incorporated by reference to Exhibit 10.8 to
            the Company's  Amendment  No.1 to  Registration  Statement on Form S-2 (Reg. No.
            333-73572), filed with the SEC on February 28, 2002.

10.18       General Security Agreement,  dated February 19, 2002, among Medix, Cymedix
            and Wellpoint  Health  Networks Inc.,  incorporated by reference to Exhibit 10.9
            to the Company's Amendment No.1 to Registration  Statement on Form S-2 (Reg. No.
            333-73572) filed with the SEC on February 28, 2002.

10.19       Participation  Agreement,  dated as of April 2, 2001,  between Medix
            and Kaiser  Foundation Health Plan of Georgia,  Inc.,  incorporated by reference
            to Exhibit 10.1 to the Company's  Amendment  No.1 to  Registration  Statement on
            Form S-2  (Reg.  No.  333-73572),  filed  with  the SEC on  February  28,  2002.
            (Portions  of  this  Exhibit  have  been  omitted  pursuant  to  a  request  for
            confidential   treatment   filed  with  the  Office  of  the  Secretary  of  the
            SEC)

10.20       Agreement,   dated  as  of  October  18,  2001,  between  Medix  and
            Merck-Medco  Managed Care, L.L.C.,  incorporated by reference to Exhibit 10.2 to
            the Company's  Amendment  No.1 to  Registration  Statement on Form S-2 (Reg. No.
            333-73572),  filed with the SEC on February 28, 2002.  (Portions of this Exhibit
            have been omitted  pursuant to a request for  confidential  treatment filed with
            the Office of the Secretary of the SEC)

10.21       Vendor  Services   Agreement,   dated  as  of  September  28,  2001,   between  Medix
            and Express  Scripts,  Inc.,  incorporated  by  reference to Exhibit 10.3 to the
            Company's  Amendment  No.1 to  Registration  Statement  on Form  S-2  (Reg.  No.
            333-73572),  filed with the SEC on February 28, 2002.  (Portions of this Exhibit
            have been omitted  pursuant to a request for  confidential  treatment filed with
            the Office of the Secretary of the SEC)

10.22       Binding  Letter of Intent for Pilot and Production  Programs,  dated
            September 8, 1999,  between Medix,  Cymedix and  Professional  Claims  Services,
            Inc.  (d/b/a  Wellpoint  Pharmacy  Management),  incorporated  by  reference  to
            Exhibit 10.4 to the Company's  Amendment No.1 to Registration  Statement on Form
            S-2 (Reg.  No.  333-73572),  filed with the SEC on February 28, 2002.  (Portions
            of this  Exhibit  have  been  omitted  pursuant  to a request  for  confidential
            treatment filed with the Office of the Secretary of the SEC)

10.23       Pilot Agreement,  dated as of December 28, 1999, between Cymedix and
            Professional  Claims  Services,  Inc.  (d/b/a  Wellpoint  Pharmacy  Management),
            incorporated  by reference to Exhibit 10.5 to the  Company's  Amendment  No.1 to
            Registration  Statement on Form S-2 (Reg. No. 333-73572),  filed with the SEC on
            February  28, 2002.  (Portions  of this Exhibit have been omitted  pursuant to a
            request for  confidential  treatment  filed with the Office of the  Secretary of
            the SEC)

10.24       Agreement  For Internet  Medical  Communications  Network,  dated March 2, 2000,
            between Cymedix and Loyola University Medical Center,  incorporated by reference
            to Exhibit 10.6 to the Company's  Amendment  No.1 to  Registration  Statement on
            Form S-2  (Reg.  No.  333-73572),  filed  with  the SEC on  February  28,  2002.
            (Portions  of  this  Exhibit  have  been  omitted  pursuant  to  a  request  for
            confidential treatment filed with the Office of the Secretary of the SEC)

10.25       Lease between SLG Graybar Sublease, LLC and the Company, dated
            January 17, 2002 for the Company's principal executive office.*

21.         Subsidiaries of the Company.*

23.         Consent of Ehrhardt  Keefe Steiner & Hottman PC,  independent  certified  public
            accountants  for the Company,  to the  incorporation  by reference of its report
            dated  March  19,  2002,  appearing  elsewhere  in this  From  10-KSB  into  the
            Company's   Registration   Statements  on  Form  S-3  (Reg.  No.  333-32308  and
            333-85483)  and  Registration  Statements  on  Form  S-8  (Reg.  No.  333-31684,
            333-57558 and 333-73578).*
--------------
*Filed herewith
                               Medix.resources, inc.
                        Connecting the world of healthcare

                         Consolidated Financial Statements
                                        and
                           Independent Auditors' Report
                            December 31, 2001 and 2000




                                 Table of Contents



Independent Auditors' Report

Consolidated Financial Statements

      Consolidated Balance Sheets

      Consolidated Statements of Operations

      Consolidated Statement of Changes in Stockholders' Equity

      Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements







                           INDEPENDENT AUDITORS' REPORT



Board of Directors and Stockholders
Medix Resources, Inc.
Englewood, CO


We have audited the accompanying consolidated balance sheets of Medix Resources,
Inc. as of December 31, 2001 and 2000, and the related  consolidated  statements
of operations, changes in stockholders' equity (deficit) and cash flows for each
of the three years in the period ended  December 31,  2001.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Medix Resources,
Inc. as of December 31, 2001 and 2000,  and the results of their  operations and
their cash flows for each of the years in the three year period  ended  December
31, 2001 in conformity  with  accounting  principles  generally  accepted in the
United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 2 to the
consolidated financial statements,  the Company has experienced recurring losses
and has a working  capital  deficit  which  raise  substantial  doubt  about its
ability to continue  as a going  concern.  Management's  plans  regarding  those
matters also are described in Note 2. The consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.



                                                Ehrhardt Keefe Steiner & Hottman PC

March 19, 2002
Denver, Colorado


MEDIX RESOURCES, INC.

                            Consolidated Balance Sheets


                                                                 December 31,
                                                         ---------------------------
                                                              2001             2000
                                                         -------------    --------------
                                      Assets

Current assets
   Cash                                                  $       8,000     $   1,007,000
   Accounts receivable, net                                          -            49,000
   Prepaid expenses and other                                  344,000           225,000
                                                         -------------    --------------
     Total current assets                                      352,000         1,281,000
                                                         -------------    --------------

Non-current assets
   Software development costs, net                             649,000           371,000
   Property and equipment, net                                 365,000           418,000
   Intangible assets, net                                    1,735,000         3,019,000
                                                         -------------    --------------
     Total non-current assets                                2,749,000         3,808,000
                                                         -------------    --------------

Total assets                                             $   3,101,000     $   5,089,000
                                                         =============    ==============

                       Liabilities and Stockholders' Equity

Current liabilities
   Notes payable                                         $     158,000     $     137,000
   Accounts payable                                            851,000           159,000
   Accounts payable - related parties                          166,000                -
   Accrued expenses                                            450,000           391,000
   Accrued payroll taxes, interest and penalties               131,000           200,000
                                                         -------------    --------------
     Total current liabilities                               1,756,000           887,000
                                                         -------------    --------------

Commitments and contingencies

Stockholders' equity
   1996 Preferred stock, 10% cumulative convertible, $1
    par value 488 shares authorized, 155 issued, 1
    share outstanding, liquidation preference $17,000               -                 -
   1997 convertible preferred stock, $1 par value 300
    shares authorized 167.15 shares issued, zero shares
    outstanding                                                     -                 -
   1999 Series A convertible preferred stock, $1 par
    value, 300 shares authorized, 300 shares issued,
    zero shares outstanding                                         -                 -
   1999 Series B convertible preferred stock, $1 par
    value, 2,000 shares authorized, 1,832 shares
    issued, 50 shares outstanding, liquidation
    preference $50,000                                              -                 -
   1999 Series C convertible stock, $1 par value, 2,000
    shares authorized, 1,995 shares issued, 375 and 875
    shares outstanding as of December 31, 2001 and
    2000, respectively, liquidation preference $375,000
    and $875,000                                                    -              1,000
   Common stock, $.001 par value, 100,000,000 shares
    authorized, 56,651,409 and 46,317,022 issued and
    outstanding, respectively                                   56,000            46,000
   Dividends payable with common stock                           7,000             5,000
   Additional paid-in capital                               35,341,000        27,573,000
   Accumulated deficit                                    (34,059,000)       (23,423,000)
                                                         -------------    --------------
     Total stockholders' equity                              1,345,000         4,202,000
                                                         -------------    --------------

Total liabilities and stockholders' equity               $   3,101,000     $   5,089,000
                                                         =============    ==============

                 See notes to consolidated financial statements.
Consolidated Statements of Operations


                                                      For the Years Ended
                                                         December 31,
                                          -------------------------------------------
                                               2001           2000          1999
                                          -------------- ------------- --------------

Sales
   Revenues                               $      29,000  $     326,000  $      24,000
                                          -------------- ------------- --------------
                                                 29,000        326,000         24,000
                                          -------------- ------------- --------------

Cost of goods sold
   Direct costs of services                     213,000        180,000          2,000
                                          -------------- ------------- --------------
     Total cost of goods sold                   213,000        180,000          2,000
                                          -------------- ------------- --------------

Gross (loss) profit                           (184,000)        146,000         22,000
                                          -------------- ------------- --------------

Operating expenses
   Software research and development
    costs                                     1,075,000        685,000        596,000
   Selling, general and administrative
    expenses                                  5,746,000      5,925,000      3,777,000
   Impairment of intangible assets            1,111,000             -              -
                                          -------------- -------------  -------------
     Total operating expenses                 7,932,000      6,610,000      4,373,000
                                          -------------- ------------- --------------

Other income (expense)
   Other income                                  12,000        163,000          7,000
   Interest expense                            (104,000)       (43,000)      (204,000)
   Financing costs                           (2,428,000)            -              -
                                          -------------- -------------  -------------
                                             (2,520,000)       120,000       (197,000)
                                          -------------- ------------- --------------
Loss from continuing operations            (10,636,000)    (6,344,000)    (4,548,000)
                                          -------------- ------------- --------------
Discontinued operations
   Discontinued operations                           -         929,000       (299,000)
                                          -------------- ------------- --------------
                                                     -         929,000       (299,000)
                                          -------------- ------------- --------------

Net loss                                   (10,636,000)    (5,415,000)     (4,847,000)

Preferred stock dividends                            -         (1,000)     (2,212,000)
                                          -------------- ------------- --------------

Net loss available to common Stockholders $(10,636,000)  $ (5,416,000)   $ (7,059,000)
                                          ============== ============= ==============

Basic and diluted weighted average
 common shares outstanding                   50,740,356     41,445,345     23,384,737
                                          ============== ============= ==============

Basic and diluted (loss) per common share
 - continuing operations                  $      (0.21)  $      (0.15)   $      (0.29)

Basic and diluted income (loss) per
 common share - discontinued operations             -            0.02          (0.01)
                                          -------------- ------------- --------------

Basic and diluted loss per common share   $      (0.21)  $      (0.13)   $      (0.30)
                                          ============== ============= ==============

                  See notes to consolidated financial statements.
Consolidated Statement of Changes in Stockholders' Equity
               For the Years Ended December 31, 2001, 2000 and 1999




                                                                        1999 Series A        1999 Series B        1999 Series C                                            Dividend                      Total
                         1996 Preferred Stock  1997 Preferred Stock    Preferred Stock      Preferred Stock      Preferred Stock         Common Stock        Additional     Payable                   Stockholders'
                         --------------------  --------------------   ------------------  -------------------   -----------------    ---------------------    Paid-in     with Common   Accumulated      Equity
                           Shares     Amount     Shares     Amount     Shares    Amount    Shares    Amount      Shares    Amount      Shares     Amount      Capital        Stock        Deficit       (Deficit)
                         ---------  ---------   --------  ---------   -------- ---------  --------- ---------   -------- ---------   ----------- ---------  ------------  -----------   ------------  --------------

Balance - December 31,
1998                          8.00  $      -       19.50  $      -          -  $      -   $      -  $      -    $     -   $     -     21,500,724 $  22,000  $ 12,882,000$      39,000   $(13,161,000)   $    (218,000)

Issuance of warrants
  with convertible note
  payable                       -          -          -          -          -         -          -         -          -         -             -         -        238,000           -              -           238,000

1999 preferred stock
  issuances (net of
  $15,500 of offering
  costs)                        -          -          -          -         300        -       1,832     2,000      1,995     2,000            -         -      4,108,000           -              -         4,112,000

Preferred stock
  conversions                (4.50)        -      (14.50)        -        (115)       -      (1,015)   (1,000)        -         -      3,161,342     3,000        10,000      (12,000)            -                -

Repurchase of 1996
  preferred stock            (2.50)        -          -          -          -         -          -         -          -         -             -         -        (17,000)      (8,000)            -           (25,000)

Conversion of note
  payable into common
  stock                         -          -          -          -          -         -          -         -          -         -        200,000        -        100,000           -              -           100,000

Conversion of
  redemption payable
  into common stock             -          -          -          -          -         -          -         -          -         -      2,115,241     2,000       633,000           -              -           635,000

Exercise of warrants            -          -          -          -          -         -          -         -          -         -        400,000        -        123,000           -              -           123,000

Exercise of stock
  options                       -          -          -          -          -         -          -         -          -         -        256,384        -         27,000           -              -            27,000

Stock issued for
  services                      -          -          -          -          -         -          -         -          -         -          9,000        -          5,000           -              -             5,000

Stock options and
  warrants issued for
  services                      -          -          -          -          -         -          -         -          -         -             -         -      2,226,000           -              -         2,226,000

Net loss                        -          -          -          -          -         -          -         -          -         -             -         -             -            -      (4,847,000)      (4,847,000)

Dividends declared              -          -          -          -          -         -          -         -          -         -             -         -         (6,000)       6,000             -                -
                         ---------  ---------  ---------  ---------  --------- ---------  --------- ---------  ---------  --------   ----------- ---------   -----------   ----------    -----------    -------------

Balance - December 31,
1999                          1.00         -        5.00         -         185        -         817    1,000       1,995     2,000    27,642,691    27,000    20,329,000       25,000    (18,008,000)       2,376,000

Conversion of note
  payable into common
  stock                         -          -          -          -          -         -          -         -          -         -        800,000     1,000       399,000           -              -           400,000

Warrants issued in
  settlement                    -          -          -          -          -         -          -         -          -         -             -         -        238,000           -              -           238,000

Common stock issued in
  connection with ADC
  merger                        -          -          -          -          -         -          -         -          -         -         60,400        -        374,000           -              -           374,000

Preferred stock
  conversions                   -          -       (5.00)        -        (185)       -        (767)   (1,000)    (1,120)   (1,000)    4,564,000     5,000        18,000      (21,000)            -                -

Exercise of warrants            -          -          -          -          -         -          -         -          -         -      9,352,620     9,000     4,585,000           -              -         4,594,000

Exercise of stock
  options                       -          -          -          -          -         -          -         -          -         -      4,039,734     4,000     1,493,000           -              -         1,497,000

Stock options and
  warrants issued for
  services                      -          -          -          -          -         -          -         -          -         -             -         -        138,000           -              -           138,000

Cancellation of shares
  issued in error               -          -          -          -          -         -          -         -          -         -       (142,423)       -             -            -              -                -

Net loss                        -          -          -          -          -         -          -         -          -         -             -         -             -            -      (5,415,000)      (5,415,000)

Dividends declared              -          -          -          -          -         -          -         -          -         -             -         -         (1,000)       1,000             -                -
                         ---------  ---------  ---------  ---------  --------- ---------  --------- ---------  ---------  --------   ----------- ---------  ------------   ----------    -----------    -------------

Balance - December 31,
2000                          1.00         -          -          -          -         -          50        -         875  $  1,000    46,317,022 $  46,000  $ 27,573,000$       5,000   $(23,423,000)     $ 4,202,000

Exercise of options and
  warrants                      -          -          -          -          -         -          -         -          -         -      1,462,642     1,000       368,000           -              -           369,000

Warrants and in the
  money conversion
  feature issued with
  convertible note
  payable                       -          -          -          -          -         -          -         -          -         -             -         -        581,000           -              -           581,000

Stock issued on
  conversion of note
  payable                       -          -          -          -          -         -          -         -          -         -      2,618,066     3,000     2,823,000           -              -         2,826,000

Stock and warrants
  issued in private
  placement                     -          -          -          -          -         -          -         -          -         -      1,872,308     2,000     2,061,000           -              -         2,063,000

Preferred stock
  conversions                   -          -          -          -          -         -          -         -        (500)   (1,000)    1,000,000     1,000            -            -              -                -

Stock issued with
  equity line                   -          -          -          -          -         -          -         -          -         -      3,291,369     3,000     1,507,000           -              -         1,510,000

Stock issued in legal
  settlements                   -          -          -          -          -         -          -         -          -         -         90,000        -        285,000           -              -           285,000

Stock options and
  warrants issued for
  services                      -          -          -          -          -         -          -         -          -         -             -         -        145,000           -              -           145,000

Net loss                        -          -          -          -          -         -          -         -          -         -             -         -             -            -     (10,636,000)     (10,636,000)

Dividends declared              -          -          -          -          -         -          -         -          -         -             -         -         (2,000)       2,000             -                -
                         ---------  ---------  ---------  ---------  --------- ---------  --------- ---------  ---------  --------   ----------- ---------  ------------   ----------    -----------    -------------

Balance - December 31,
2001                          1.00  $      -          -   $      -          -  $      -          50 $      -         375  $     -     56,651,407 $  56,000  $ 35,341,000   $    7,000   $(34,059,000)     $ 1,345,000
                         =========  =========  =========  =========  ========= =========  ========= =========  =========  ========   =========== =========  ============   ==========   ============    =============



Consolidated Statements of Cash Flows


                                                      For the Years Ended
                                                          December 31,
                                          -------------------------------------------
                                               2001           2000          1999
                                          -------------   ------------  -------------
Cash flows from operating activities
  Net loss                                $ (10,636,000)  $ (5,415,000) $  (4,847,000)
                                          -------------   ------------  -------------
  Adjustments to reconcile net loss to
   net cash used in operating activities
   Depreciation and amortization                488,000        426,000        243,000
   Impairment of intangible assets            1,111,000             -              -
   Financing costs                            2,428,000             -         238,000
   Common stock, options and warrants
     issued for settlements                     149,000             -              -
   Common stock, options and warrants
     issued for services                        145,000        376,000      2,231,000
   Discontinued operations                           -              -         299,000
   Gain on sale of staffing business                 -      (1,102,000)            -
   Change in net assets of discontinued
     operations                                      -         857,000     (1,243,000)
   Changes in assets and liabilities
     Accounts receivable, net                    49,000        (29,000)     2,046,000
     Prepaid expenses and other                (119,000)       (49,000)         5,000
     Accounts payable and accrued
      liabilities                               988,000       (237,000)    (2,141,000)
     Checks written in excess of bank
      balance                                        -              -         (72,000)
                                          -------------   ------------   ------------
                                              5,239,000        242,000      1,606,000
                                          -------------   ------------   ------------
      Net cash used in operating
       activities                            (5,397,000)    (5,173,000)    (3,241,000)
                                          -------------   ------------   ------------

Cash flows from investing activities
  Proceeds from sale of divisions                    -         500,000             -
  Software development costs incurred          (434,000)      (495,000)            -
  Purchase of property and equipment            (70,000)      (400,000)       (72,000)
  Purchase of software license                       -        (720,000)            -
  Proceeds from notes receivable                     -         500,000        563,000
  Business acquisition costs, net of
   cash acquired                                     -         (94,000)            -
                                          -------------   ------------   ------------
      Net cash (used in) provided by
       investing activities                    (504,000)      (709,000)       491,000
                                          -------------   ------------   ------------

Cash flows from financing activities
  Proceeds from issuance of debt and
   notes payable                              1,824,000        178,000        500,000
  Advances under financing agreement                 -              -      11,272,000
  Payments under financing agreement                 -        (484,000)   (11,781,000)
  Principal payments on debt and notes
   payable                                     (303,000)      (125,000)      (289,000)
  Issuance of preferred and common
   stock, net of offering costs               3,012,000             -       4,112,000
  Proceeds from the exercise of options
   and warrants                                 369,000      6,091,000        150,000
  Repurchase of preferred stock                      -              -         (25,000)
                                          -------------   ------------   ------------
      Net cash provided by financing
       activities                             4,902,000      5,660,000      3,939,000
                                          -------------   ------------   ------------

Net (decrease) increase in cash                (999,000)      (222,000)     1,189,000

Cash - beginning of year                      1,007,000      1,229,000         40,000
                                          -------------   ------------   ------------

Cash - end of year                        $       8,000   $  1,007,000   $  1,229,000
                                          =============   ============   ============

Supplemental disclosure of cash flow information:

Cash paid for:                      Interest
                                  ------------

    2001                          $     42,000
    2000                          $     21,000
    1999                          $    324,000

Supplemental disclosure of non-cash activity:
      Dividends  declared  payable in common stock were  $2,000,  $1,000 and $6,000
      for December 31, 2001, 2000 and 1999, respectively.

      During 2001,  500 shares of the series C preferred  stock was converted  into
      1,000,000 shares of common stock.

      During 2001,  $1,500,000  note payable  advances under a credit  facility and
      $40,000 of accrued  interest  were  converted  and  redeemed  into  2,618,066
      shares of common stock.

      During 2001,  the Company  issued  90,000 shares of common stock and warrants
      valued at $285,000 in  connection  with  settlement  of certain legal claims,
      of which  $137,000  was an  adjustment  to  goodwill  related to the  Cymedix
      acquisition.

      During 2001, the Company  issued options and warrants  valued at $145,000 for
      services provided.

      During  2001,  the  Company  issued  829,168  warrants  valued at $506,000 in
      connection  with a  convertible  note payable  credit  facility.  The Company
      also recorded  $75,000 for the value of the in-the-money  conversion  feature
      on the debt.

      During 2001,  shares issued in private placements in connection with its note
      payable credit facility at below market prices resulted in financing costs of
      $448,000.

      During  2001,  shares  issued  for  conversions  and  redemptions  under  the
      convertible  notes payable  credit  facility at below market prices  resulted
      in financing costs of $1,286,000.

      During  2001,  the  Company  issued   warrants  in  connection  with  private
      placements of common stock in connection with its note payable credit facility
      valued at $415,000.

      During 2001,  the Company wrote off old payroll tax  liabilities  of $100,000
      assumed in the Cymedix acquisition which reduced goodwill.

      During 2000,  5.0 units of the 1997 preferred  stock,  185 shares of the 1999
      Series A preferred  stock,  767 shares of the Series B preferred  stock,  and
      1,120 shares of the series C preferred  stock were  converted  into 3,161,342
      shares of common stock.

      During  2000,   the  Company   acquired   the  assets  and  assumed   certain
      liabilities of a business from a related party (Note 4).

      During 2000, the Company  disposed of the remainder of its staffing  business
      (Note 2).

      During  2000,  the Company  converted a $400,000  note  payable  into 800,000
      shares of common stock.

      During 1999, the  Company  issued a $500,000  convertible  note  payable with
      warrants  to purchase  common  stock,  of which  $100,000  of  principal  was
      converted  into  200,000  shares of common  stock.  The warrant was valued at
      $238,000 and recorded as additional interest expense.

      During 1999, the Company  converted  $635,000 of preferred  stock  redemption
      payable into 2,115,241 shares of common stock.

      During  1999,  4.50 units of the 1996  preferred  stock,  14.50  units of the
      1997 preferred  stock,  1,015 shares of the 1999 series A preferred  stock, and
      1,015 shares of the series B preferred stock were  converted  into  3,161,342
      shares of common stock.




Note 1 - Description of Business and Summary of Significant Accounting Policies

Medix  Resources,  Inc. and  subsidiary  (the  Company),  main business  focus is a
suite  of  fully  secure,   patented  Internet   communication   software  for  the
healthcare  industry.   The  Company  divested  its  remaining  healthcare  related
staffing businesses in February of 2000 (Note 3).

Principles of Consolidation

The accompanying  consolidated  financial  statements include the accounts of Medix
Resources,  Inc.  and its  subsidiary,  Cymedix  Lynx  Corporation  (Cymedix).  All
intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial  statements in conformity  with accounting  principles
generally  accepted in the United  States of America  requires  management  to make
estimates  and  assumptions   that  affect  the  reported  amounts  of  assets  and
liabilities,  disclosures of contingent  assets and  liabilities at the date of the
financial  statements and the reported  amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

Concentrations of Credit Risk

The Company  grants  credit in the normal  course of business to  customers  in the
United States. The Company  periodically  performs credit analysis and monitors the
financial condition of its customers to reduce credit risk.

Fair Value of Financial Instruments

The  carrying  amounts of  financial  instruments  including  accounts  receivable,
notes  receivable,  accounts  payable and accrued expenses  approximate  their fair
value as of December 31, 2001 and 2000 due to  the  relatively  short  maturity  of
these instruments.

The  carrying  amounts of notes  payable  and debt  issued  approximate  their fair
value as of December 31, 2001 and 2000 because interest rates on these  instruments
approximate market interest rates.

Revenue Recognition


We earn revenue as transaction  services are provided to our customers  throught
the use of our suite of  communication  software,  and currently do not generate
any  revenue  from  the  licensing,   slae  or  installation  of  our  suite  of
communication software.

We  recognize  revenue  is earned  when the  communication  transaction  has bee
completed by the customner,  persuasive evidence of the terms of the arrangement
exist,  our fee is fixed and  determinable,  and  collectibility  is  reasonably
assured. Delivery takes place electronically when the customer has completed the
exchange  (transmission or receipt) of data.  Revenue is charged to the customer
on a per  transaction  basis as each  transaction  is  completed  and is  billed
monthly.


Income Taxes

The  Company   recognizes   deferred  tax  liabilities  and  assets  based  on  the
differences  between  the tax basis of assets and  liabilities  and their  reported
amounts in the  financial  statements  that will  result in  taxable or  deductible
amounts in future  years.  The Company's  temporary  differences  result  primarily
from capitalized  software  development costs,  depreciation and amortization,  and
net operating loss carryforwards.

Property and Equipment

Property and equipment is stated at cost.  Depreciation  is provided  utilizing the
straight-line  method over the  estimated  useful lives for owned  assets,  ranging
from 3 to 7 years.

Software Development Costs

The Company  applies the provisions of Statement of Position 98-1,  "Accounting for
Costs of Computer  Software  Developed for Internal Use". The Company  accounts for
costs  incurred in the  development of computer  software as software  research and
development  costs until the preliminary  project stage is completed.  Direct costs
incurred  in the  development  of software  are  capitalized  once the  preliminary
project  stage is  completed,  management  has committed to funding the project and
completion  and use of the  software  for its intended  purpose are  probable.  The
Company  ceases  capitalization  of  development  costs once the  software has been
substantially  completed  and is ready for its intended use.  Software  development
costs  are  amortized  over  their  estimated  useful  lives of five  years.  Costs
associated with upgrades and enhancements  that result in additional  functionality
are capitalized.

Financing Costs

The  company   records  as  financing   costs  in  its   statement  of   operations
amortization  of  in-the-money  conversion  features on convertible  debt accounted
for in  accordance  with  EITF  98-5 and  00-27,  amortization  of  discounts  from
warrants   issued   with  debt  securities  in  accordance  with  APB  No.  14  and
amortization of discounts resulting  from  other  securities  issued in  connection
with  debt  based  on  their relative fair values,  and any value  associated  with
inducements to convert debt in accordance with FASB 84.

Intangible assets

Intangible  assets are stated at cost,  and  consist  of  goodwill,  which is being
amortized using the straight-line method over fifteen years.

The  Company  reviews  its  long-lived  asset  for  impairment  whenever  events or
changes in  circumstances  indicate  that the carrying  amount of the asset may not
be recovered.  The Company looks  primarily to the  undiscounted  future cash flows
of  its  acquisition  in  its  assessment  of  whether  or not  goodwill  has  been
impaired.

Reclassifications

Certain amounts in the 2000 and 1999  consolidated  financial  statements have been
reclassified to conform to the 2001 presentation.

Advertising Costs

The Company expenses advertising costs as incurred.

Advertising  expenses were $23,000, $36,000 and $45,000 for the years ended December
31, 2001, 2000 and 1999.

Basic Loss Per Share

The Company  applies the provisions of Statement of Financial  Accounting  Standard
No. 128,  "Earnings  Per Share" (FAS 128).  All dilutive  potential  common  shares
have an  antidilutive  effect on diluted per share amounts and therefore  have been
excluded in determining  net loss per share.  The Company's  basic and diluted loss
per  share  are  equivalent  and  accordingly  only  basic  loss per share has been
presented.

For the  years  ended  December  31,  2001,  2000 and  1999  total  stock  options,
warrants and  convertible  debt and preferred  stock of 14,693,254,  13,767,143 and
23,109,003,  were not  included  in the  computation  of  diluted  loss  per  share
because  their  effect was  antidilutive,  however,  if the company were to achieve
profitable operations in the future, they could potentially dilute such earnings.

Recently Issued Accounting Pronouncements

In July 2001,  the FASB issued SFAS Nos. 141 and 142 " Business  Combinations " and
" Goodwill  and other  Intangible  Assets ".  Statement  141  requires all business
combinations  initiated  after June 30, 2001 to be accounted for using the purchase
method.  Under the  guidance of  Statement  142,  goodwill is no longer  subject to
amortization  over its estimated useful life.  Rather,  goodwill will be subject to
at least an annual  assessment  for  impairment by applying a fair value base test.
Statement 142 is effective for financial  statement  dates  beginning after January
1, 2001.  Goodwill  will be tested for  impairment  at the time of adoption  and on
an annual  basis.  As allowed  under  Statement  142, the Company will complete its
goodwill  impairment  test  within the first six months of the  fiscal  year.  As a
result of Statement  142, the Company will no longer be  recognizing  approximately
$155,000 in annual amortization expense related to goodwill.

In August  2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  SFAS No. 143  requires  the fair value of a  liability  for an asset
retirement  obligation  to be recognized in the period in which it is incurred if a
reasonable  estimate of fair value can be made.  The  associated  asset  retirement
costs are  capitalized  as part of the  carrying  amount of the  long-lived  asset.
SFAS No. 143 is  effective  for the Company for fiscal years  beginning  after June
15,  2002.  The  Company  believes  the  adoption  of this  statement  will have no
material impact on its consolidated financial statements.

In October 2001,  the FASB issued SFAS No. 144,  "Accounting  for the Impairment or
Disposal  of  Long-Lived  Assets."  SFAS No. 144  requires  that  those  long-lived
assets be  measured at the lower of  carrying  amount or fair  value,  less cost to
sell,  whether  reported  in  continuing  operations  or  discontinued  operations.
Therefore,  discontinued  operations  will no longer be measured at net  realizable
value or include  amounts for  operating  losses that have not yet  occurred.  SFAS
No. 144 is effective for  financial  statements  issued for fiscal years  beginning
after December 15, 2001 and, generally, is to be applied prospectively.



Note 2 - Going Concern

The accompanying  financial  statements have been prepared on a going concern basis
which  contemplates  the  realization  of assets and  liquidation of liabilities in
the ordinary course of business.

Management's Plan for Continued Existence

The  Company  has  incurred  operating  losses  for the  past  several  years,  the
majority  of which are  related  to the  development  of the  Company's  healthcare
connectivity  technology and were fully  anticipated  by  management.  These losses
have produced operating cash flow deficiencies, and negative working capital  which
raise  substantial  doubt  about  its  ability  to  continue  as  a going  concern.
Management has secured an equity line of credit, as further  described  in  Note 8,
and  management  is presently  in  discussions  regarding  alternative  sources  of
additional  equity  capital,  which  would  enable  the Company to continue to fund
operations until such time as revenues from the  Company's  internet  communication
products  for  the  healthcare  industry  will  be  sufficient to fund  operations.
Management reports that progress continues with regard to new  strategic  alliances
with  major  healthcare  organizations  as  well  as  in  advancing  the  Company's
existing  alliances  from the "pilot program" stage toward the "production contract
stage".


Note 3 - Discontinued Operations

In February  2000,  the Company  closed on the sale of the assets of its  remaining
staffing  businesses  for  $1,000,000.  The purchase  price was paid with  $500,000
cash  at  closing  and  the  Company   receiving  a  $500,000   subordinated   note
receivable.  The note  provided  for  interest  at prime plus 1% and was due in May
of 2001.  The note was repaid on December  29,  2000.  This sale was the final step
of a plan  approved by the board of directors  in December  1999 for the Company to
divest  itself of the  staffing  businesses  and focus its efforts on its  internet
communication software products for the healthcare industry.

The  accompanying  financial  statements  reflect the results of  operations of the
remaining   staffing   businesses  as  a   discontinued   business   segment.   The
discontinued  results of  operations  include  those  direct  revenues and expenses
associated  with  running  the  remaining   staffing   businesses  as  well  as  an
allocation of corporate costs.

The  results  of  operations  of  the  Company's  discontinued  remaining  staffing
businesses are as follows:

                                                             For the Years Ended
                                                                 December 31,
                                                         ---------------------------
                                                              2000          1999
                                                         ---------------------------

Revenue                                                  $   1,128,000  $ 10,812,000
Direct costs of services                                       927,000     8,472,000
                                                         ---------------------------
Gross margin                                                   201,000     2,340,000
                                                         ---------------------------
Selling, general and administrative                            219,000     2,193,000
Interest expense                                                18,000       446,000
Litigation settlement                                          137,000            -
                                                         ---------------------------

Net loss                                                 $    (173,000) $   (299,000)
                                                         ===========================

During the fourth  quarter  of 2000,  the  Company  wrote off  unrealizable  assets
related to the  discontinued  operations in the amount of $43,000,  and $322,000 in
remaining  related  liabilities.  The  net  write-off  of  assets  and  liabilities
totaling $279,000,  less net assets acquired by the purchaser of $77,000,  has been
recorded  as an  increase  of  $202,000  to  the  gain  from  the  disposal  of the
remaining staffing businesses as of December 31, 2000.

During the first quarter of 2000,  the Company  reported the following  gain on the
disposal of the assets of its remaining staffing businesses:


Sales price                                              $  1,000,000
Accounts receivable collection costs                         (100,000)
                                                         ------------
                                                              900,000
Net assets acquired, liabilities assumed and
liabilities written off                                       202,000
                                                         ------------
Gain on disposal of the remaining staffing businesses       1,102,000
Loss from operation of the remaining staffing
businesses through the disposal date                         (173,000)
                                                         ------------

Net gain on disposal of the remaining staffing
businesses                                               $    929,000
                                                         ============

Also as  previously  noted the  purchaser  did not acquire the  Company's  accounts
receivable  as  part of the  sale.  However,  in  connection  with  the  sale,  the
purchaser  will  collect the  Company's  receivables  and remit the proceeds to the
Company net of a 10% collection fee. The $100,000  reflected  above  represents the
Company's  estimate of the collection  costs to be paid to purchaser for performing
this function.



Note 4 - Acquisition of Assets

On  March  1,  2000,  the  Company   purchased  the  assets  and  assumed   certain
liabilities of Automated  Design  Concepts,  Inc., an entity owned by a director of
the Company,  for the issuance of 60,400  shares of common stock valued at $374,000
and a payment of  $100,000.  The Company  also  entered  into a two-year  lease for
$1,000 per month  expiring in February  2002.  Assets  purchased  include  cash and
accounts receivable.

The purchase was accounted for under the purchase  method.  The purchase  price was
allocated  to the  assets  purchased  and  liabilities  assumed  based  on the fair
market values at the date of acquisition as follows:

Cash                                                     $      6,000
Accounts receivable                                            27,000
Goodwill                                                      487,000
Accounts payable                                              (41,000)
Accrued liabilities                                            (5,000)
                                                         ------------

                                                         $    474,000
                                                         ============

The  results  of  operations  have  been  reflected  from the  date of  acquisition
forward.  The resulting goodwill is being amortized over 15 years.

During  the third  quarter  of 2001,  the  Company  discontinued  operation  of its
Automated  Design  Concepts  division to focus on its core  business  and as a cost
saving  measure.  As a result,  $443,000 of  impairment  expense has been  included
in  Consolidated  Statements  of Operations  for the year ended  December 31, 2001.
This amount  represents  the  unamortized  balance of the investment at the time of
discontinuance.

The  following  table  summarizes  the  unaudited  pro forma results of the Company
giving  effect to the  acquisition  as if it had  occurred on January 1, 2000.  The
unaudited pro forma  information  is not  necessarily  indicative of the results of
operations  of the Company had this  acquisition  occurred at the  beginning of the
years presented, nor is it necessarily indicative of future results.

                                                             For the Years Ended
                                                                 December 31,
                                                         ---------------------------
                                                              2000          1999
                                                         ---------------------------

Sales                                                    $     440,000  $    569,000
                                                         ===========================

Net income (loss)                                        $  (5,408,000) $ (4,816,000)
                                                         ===========================

Loss per share                                           $       (0.13) $      (0.20)
                                                         ===========================


Note 5 - Balance Sheet Disclosures

Software development costs consist of the following:
                                                                 December 31,
                                                         ---------------------------
                                                              2001          2000
                                                         ---------------------------
Software development costs                               $     929,000 $     495,000
Less accumulated amortization                                 (280,000)     (124,000)
                                                         ---------------------------
                                                         $     649,000 $     371,000
                                                         ===========================

Annual  amortization  expense,  which is included in costs of services provided was
$156,000  and   $124,000   for  the  years  ended   December  31,  2001  and  2000,
respectively.

Property and equipment consists of the following:
                                                                 December 31,
                                                         ---------------------------
                                                              2001          2000
                                                         ---------------------------
Furniture and fixtures                                   $     103,000 $      91,000
Computer hardware and purchased software                       609,000       552,000
Leasehold improvements                                          29,000        28,000
                                                         ---------------------------
                                                               741,000       671,000
Less property, plant and equipment - accumulated
 depreciation                                                 (376,000)     (253,000)
                                                         ---------------------------
                                                         $     365,000 $     418,000
                                                         ===========================

Depreciation expense was $123,000, $97,000 and $86,000 for the years ended
December 31, 2001, 2000 and 1999, respectively.


Intangible assets consist of the following:
                                                                 December 31,
                                                         ---------------------------
                                                              2001          2000
                                                         ---------------------------
Goodwill acquired through Cymedix acquisition            $   2,369,000 $   2,332,000
Goodwill acquired through the Automated Design
 Concepts, Inc. acquisition                                         -        487,000
License agreement with ZirMed.com                                   -        720,000
                                                         ---------------------------
                                                             2,369,000     3,539,000
Less accumulated amortization                                 (634,000)     (520,000)
                                                         ---------------------------
                                                         $   1,735,000 $   3,019,000
                                                         ===========================

Amortization expense was $209,000, $205,000, and $157,000 for the years ended
December 31, 2001, 2000 and 1999, respectively.


During  the third  quarter  of 2001,  the  Company  discontinued  operation  of its
Automated  Design  Concepts,  division,  and terminated its license  agreement with
ZirMed.com.  As a result,  $1,111,000  of  impairment  expense has been included in
the  Consolidated  Statements of Operations  for the year ended  December 31, 2001.
This amount  represents the  unamortized  balance of each investment at the time of
discontinuance.

Accrued expenses consists of the following:
                                                                 December 31,
                                                         ---------------------------
                                                              2001          2000
                                                         ---------------------------
Accrued payroll and benefits                             $     294,000 $     310,000
Accrued professional fees                                       57,000        60,000
Accrued license fees                                            53,000            -
Other accrued expenses                                          29,000        21,000
Accrued interest                                                17,000            -
                                                         ---------------------------
                                                         $     450,000 $     391,000
                                                         ===========================

At various  times  during  2001,  the  Company  was  delinquent  with  payroll  tax
deposits.  At December 31, 2001 and 2000,  $131,000 and $200,000,  respectively was
accrued for  estimated  taxes,  interest and  penalties.  During 2001,  the Company
wrote off $100,000 of previously  recorded accrued payroll tax liabilities  assumed
in the Cymedix  acquisition  as management  determined the Company was over accrued
and has recorded the write-off as an adjustment to previously recorded goodwill.



Note 6 - Long-Term Debt

Long-term debt consists of:
                                                                 December 31,
                                                         ---------------------------
                                                              2001          2000
                                                         ---------------------------
Notes  payable - finance  company,  interest  accrues at
 7%,  monthly  payments  of  principal  and  interest of
 $23,730 are payable through July 2002.                  $     140,000 $     115,000

Notes  payable - finance  company,  interest  accrues at
 7%,  monthly  payments  of  principal  and  interest of
 $1,417 are payable through October 2002.                       18,000        22,000
                                                         ---------------------------
                                                               158,000       137,000
      Less current portion                                    (158,000)     (137,000)
                                                         ---------------------------

                                                         $          -  $          -
                                                         ===========================

Convertible Promissory Note

In  October  1999,  the  Company  raised  approximately  $488,000  net of  expenses
through the issuance of a $500,000  14%  Convertible  Promissory  Note and warrants
to purchase  500,000  shares of the Company's  common stock at $.50 per share.  The
$500,000 in  principal  plus accrued  interest  was payable on June 28,  2000.  The
note was  convertible  into the  Company's  common stock at a  conversion  price of
$.50 per  share,  for the first 90 days  outstanding,  and at the lower of $.50 per
share or 80% of the lowest  closing bid price for the Common  Stock during the last
five trading days prior to  conversion,  for the  remaining  life of the note.  The
note was  secured  by the  intellectual  property  of the  Company's  wholly  owned
subsidiary  Cymedix Lynx  Corporation.  The warrants were recorded as a discount on
the debt valued at $238,000  using the  Black-Scholes  option  pricing  model using
assumptions  of life of 3 years,  volatility  of 225%, no dividend  payment,  and a
risk-free  rate of 5.5%.  The  discount  was fully  amortized at December 31, 1999,
as the  remaining  debt of $400,000 at December 31, 1999,  was converted in January
2000 into 800,000 shares of common stock and the security interest released.

Convertible Note Payable Credit Facility

In December  2000, the Company  obtained a credit  facility under which it issued a
convertible  promissory  note  and  common  stock  purchase  warrants.  The  credit
facility  provided  that the Company could draw against this facility in increments
as follows:  $750,000  upon  closing,  which  occurred  January 10, 2001;  $250,000
within 10 days of an effective  registration  statement,  which  occurred  February
13, 2001;  and $500,000  draws at the 60th day, 90th day and the 150th day from the
effective  registration  statement.  These  advances  could  be  made  only  if the
Company's  common stock price  remained  above $1 for five  business  days prior to
the draw.  During the draw down  periods,  the Company  drew  $1,500,000  under the
convertible  note.  Advances under the convertible  note bear interest at an annual
rate of 10% and provide for  semi-annual  payments on July 10, 2001 and January 10,
2002. All outstanding  balances under this  arrangement  were converted or redeemed
during 2001 into common shares.  The note payable  balance was  convertible at $.90
per share for up to the  first  $750,000  and any  remaining  balance  at $1.00 per
share.  The  initial  $750,000  draw on this  arrangement  has an imputed  discount
recorded,  which was valued at $75,000 for the  "in-the-money"  conversion  feature
of the first  advance.  In addition,  the  noteholder can force a redemption of the
note or any  portion  thereof,  for  either  cash or  stock  at the  option  of the
Company,  but if for stock,  at a redemption  price of eighty (80%)  percent of the
Volume  Weighted  Market  Price (as  defined)  per common  share  during the twenty
Trading Days ending on the day of the notice delivered by the holder.

In  connection  with  this  credit  facility,  the  Company  also  agreed  to issue
warrants  to  purchase  common  stock to the holder of the  convertible  promissory
note. The Company issued 750,000  warrants in connection  with drawdowns  under the
convertible  note.  The warrants  have an exercise  price of $1.75 and terms of two
years from the date of  issuance.  The  Company  also  issued  54,167  warrants  to
purchase  common stock to two finders  assisting with the  transaction.  The finder
warrants also have terms of two years and an exercise price of $1.75.

The Company has imputed  values for the 750,000 and 54,168  warrants  issued to the
provider of the credit  facility  and the finders  using the  Black-Scholes  Option
pricing  model.  The first  500,000  warrants  issued to the provider of the credit
facility  were valued at $249,000  and have been  treated as a discount on the debt
to be amortized  over its remaining  life. The related  54,168  warrants  issued to
finders  which  have been  recorded  as debt  issue  costs and  amortized  over the
remaining  life  of  the  debt.  In  connection  with  the  final  draw  under  the
credit  facility in May,  the Company  issued  250,000  warrants to the provider of
the credit  facility.  The 250,000  warrants  issued to the  provider of the credit
facility  were valued at $209,000  using the  Black-Scholes  pricing model and have
been treated as a discount on the debt to be  amortized  over its  remaining  life.
In connection  with the final draw under the credit  facility,  The Company  issued
warrants  to  purchase  25,000  shares  issued to the  finders.  The  total  finder
warrants  have  been  valued at  $48,000  using  the  Black-Scholes  option-pricing
model,  and have been  treated as a discount on the debt to be  amortized  over its
remaining  life.  The  values of all  warrants  issued  under  this  facility  were
determined  using the following  assumptions;  lives of two years,  exercise prices
of $1.75, volatility of 117%, no dividend payment and a risk-free rate of 5.5%.

During February 2001,  $100,000 of the convertible  note was converted into 111,111
shares of common  stock.  During the period April  through  September,  $900,000 of
the  note was  redeemed.  These  redemptions  were  satisfied  by the  issuance  of
1,384,661  shares of common  stock.  During  October 2001,  the remaining  $500,000
convertible  note was  redeemed  by the  issuance  of  1,069,368  shares  of common
stock.  During July 2001,  52,928  shares of common  stock was issued as payment of
accrued  interest of $40,000  through  July 10,  2001.  As a result of  conversions
and  redemptions at modified conversion prices  $1,286,000 of financing  costs were
recorded  reflecting  the  intrinsic  value  of the share differences from issuable
shares at the date the advances were received.

During  March  2001,  the  Company,  under an  amendment  to its  convertible  note
payable credit facility,  received  $350,000 from the credit facility  provider for
the  issuance  of  636,364  shares  of its  common  stock  as a  private  placement
transaction.  As  a  part  of  this  common  stock  issuance,  the  Company  issued
warrants to purchase  636,364  shares of common stock at $.80 per share with a term
of two years from the date of issuance.  As a result of the warrant  issuance,  the
Company has recorded  financing  expense of $262,000 in the accompanying  financial
statements,   using  the  Black-Scholes  option-pricing  model.  The  company  also
issued  warrants to purchase  63,636  shares of common stock at $.80 per share with
a  term  of two  years  to two  finders  assisting  the  transaction.  The  finders
warrants  have been valued at $40,000  using the  Black-Scholes  pricing  model and
have been included as financing  costs in the  accompanying  financial  statements.
The  calculated  values were computed using the following  assumptions:  lives of 2
years,  exercise  prices of $.80,  volatility of 117%,  no dividend  payments and a
risk free rate of 5.5%.

During the period May through December 2001, the Company received  $850,000,  under
a second  amendment to the credit  facility,  for the issuance of 1,235,944  shares
of its common stock, in additional  private  placement  transactions.  As a part of
these common  stock  issuances,  the Company  issued  warrants to purchase  168,919
shares of common  stock at $1.00 per share  with a term of two years  from the date
of issuance.  The Company has recorded  finanacing  expense of $113,000  related to
the  warrant  issuance  in  the  accompanying   financial  statements,   using  the
Black-Scholes  option-pricing  model. The calculated values were computed using the
following  assumptions:  lives of 2 years,  exercise prices of $.80,  volatility of
117%, no dividend payments and a risk free rate of 5.5%.

As a result of shares issued under the private  placements at below market  prices,
which  have been  treated as a  discount  on the debt  based on their  fair  market
values at issuance, financing costs of $448,000 have been recorded.



Note 7 - Commitments and Contingencies

Operating Leases

The  Company  leases  office  facilities  in New York,  New  Jersey,  Colorado  and
California and various equipment under non-cancelable operating leases.

Rent expense for these leases was:

                       Year Ending December 31,
                       ------------------------

                                 2001                                  $     396,000
                                 2000                                  $     315,000
                                 1999                                  $     293,000

Future minimum lease payments under these leases are approximately as follows:

                       Year Ending December 31,
                       ------------------------
                                 2002                                  $     550,000
                                 2003                                        413,000
                                 2004                                        309,000
                                 2005                                         26,000
                                                                       -------------
                                                                       $   1,298,000
                                                                       =============

Litigation

In the normal course of business,  the Company is party to litigation  from time to
time. The Company  maintains  insurance to cover certain  actions and believes that
resolution  of such  litigation  will not have a  material  adverse  effect  on the
Company.

During the fourth  quarter of 1997,  an action was filed against the Company in the
Eastern  District  of New York  under the  caption  New York  Healthcare,  Inc.  v.
International  Nursing  Services,  Inc.,  et al. On February 15, 2000,  the Company
agreed in principle to settle this claim. In connection  with the  settlement,  the
Company  issued a warrant  to  purchase  35,000 of the  Company's  common  stock at
$3.96 per share. The Company  recorded  expense of  approximately  $137,000 related
to the  issuance  of the  warrant,  which  has  been  included  in the  results  of
discontinued   operations.   The  warrants  were  valued  using  the  Black-Scholes
pricing model,  using  assumptions of volatility of 273%, no dividend  payments and
a risk free rate of 5.5%.

On November 12, 1999, an action was filed in California  Superior Court,  which has
since been removed to the U. S. District  Court,  Central  District of  California,
against  Medix  Resources,  Inc.  and its wholly  owned  subsidiary,  Cymedix  Lynx
Corporation.  As of November 3, 2000, a settlement  agreement  was reached  between
the  Company and the  plaintiff  whereby the  company  paid the  plaintiff  $66,000
cash,  and issued an option to purchase  50,000 of the  Company's  common  stock at
$.25 per share.  The Company  recorded  expense of  approximately  $102,000 related
to the  issuance of the option.  The warrants  were valued using the  Black-Scholes
pricing model,  using  assumptions of volatility of 273%, no dividend  payments and
a risk free rate of 5.5%.

On June 1, 2000,  an action was filed in the District  Court of the City and County
of  Denver,  Colorado,   against  Medix  Resources,   Inc.,  and  its  wholly-owned
subsidiary,  Cymedix  Lynx  Corporation,  alleging  that a  predecessor  company of
Cymedix Lynx  Corporation  had promised to issue stock options to the plaintiff but
had failed to honor  that  promise.  On June 15,  2001,  the matter was  settled by
paying the  plaintiff  $35,000  and  issuing  to him 2 year  warrants  to  purchase
195,000  shares of the  Company's  common stock at $.50 per share.  The  settlement
was  approved  by the  court on July 6,  2001.  The case  has been  dismissed  with
prejudice.  The  warrants  issued in this  settlement  have been valued at $137,000
using the  Black-Scholes  pricing model,  using  assumptions of volatility of 132%,
no dividend  payments and a risk-free  rate of 5.5%,  and have been  included as an
increase to goodwill in the accompanying  financial  statements,  as a result of an
unrecorded liability that existed at the time of the Cymedix merger.

On July 11,  2000,  an  action  was  filed in the  United  States  District  Court,
Southern  District of New York,  against Medix Resources,  Inc.,  alleging that the
Company  granted to plaintiff  the right to purchase  preferred  stock  convertible
into the  Company's  common  stock and warrants to purchase  the  Company's  common
stock in connection  with the Company's  private  financings  during 1999, and then
failed to permit  plaintiff  to exercise  that right.  On May 2, 2001,  the Company
agreed to settle the matter by paying  the  plaintiff  $20,000  and  issuing  him a
three year warrant  (issued over a 18 month period) to purchase  137,500  shares of
the Company's  common stock at $.50 per share.  The  settlement was approved by the
Court on May 3, 2001.  The case has been  dismissed  with  prejudice.  The warrants
issued in this  settlement  have been  valued at  $64,000  using the  Black-Scholes
pricing model, using assumptions of volatility of 132%, no dividend payments, and a
risk-free rate of 5.5%, and have been included  as an  expense  in the Consolidated
Statement of Operations.

On September  27, 2000, an action was filed in the United  States  District  Court,
Eastern  District of New York,  against  Medix  Resources,  Inc.  alleging that the
Company  failed to properly and fully convert the Company's  convertible  preferred
stock held by one of the  Plaintiffs,  and had failed to maintain the  registration
for public sale with the  Securities and Exchange  Commission of shares  underlying
warrants held by both  Plaintiffs.  The Company  settled the  litigation by issuing
to one plaintiff  90,000 shares of the Company's  common stock,  valued at $51,000,
and  extending  the exercise  period of the warrants of the other  plaintiff  until
December  31,  2003,  valued at  $33,000.  The shares and  warrants  issued in this
settlement have been valued at $84,000 using the  Black-Scholes  pricing model, for
the modification to the warrant,  using assumptions of a life of 2 years,  exercise
price of $1.00,  volatility of 132%, no dividend  payments and a risk-free  rate of
5.5%,  and have been  included  as an  expense  in the  Consolidated  Statement  of
Operations.

On  August  7,  2001,  a former  officer  of the  Company  filed an  action  in the
District  Court of Arapahoe  County,  Colorado,  against the Company and its former
President  and CEO. The plaintiff  alleges (1) breach of an  employment  agreement,
a stock option  agreement  and the related  stock  option plan,  (2) a duty of good
faith  and  fair  dealing,  and (3)  violation  of the  Colorado  Wage  Claim  Act.
Plaintiff's  seeks  unspecified  damages to be determined at jury trail,  including
interest,  punitive  damages,  plaintiff's  attorney  fees, and a 50% penalty under
the Colorado  Wage Claim Act. The Company and its  co-defendants  have answered the
plaintiff's  complaint,  denying  any  liability.  The  court set  discovery  to be
completed  by July  31,  2002,  and the  trial  to  begin  on  September  9,  2002.
Management of the Company  intends to vigorously  defend this action,  and does not
expect  any  resolution  of this  matter to have a material  adverse  effect on the
Company's  financial  condition or results of  operation.  Currently an estimate of
possible  loss to the Company if  unsucessful  in defending  this action  cannot be
made.

On December 17, 2001, Plantiff,  Vision Management  Consulting,  L.L.C., filed suit
against us in the  Superior  Court of New  Jersey,  Law  Division  - Essex  County,
entitled Vision Managment Consulting,  L.L.C. v. Medix Resources,  Inc., Docket No.
ESX-L-11438-01.  The  complaint  alleges  breach of  contract,  unjust  enrichment,
breach  of duty in good  faith and fair  dealing  and  misrepresentations  by us in
connection with a negotiated settlement  agreement,  which had resulted from claims
between the parties  arising out of the  termination of operations by our Automated
Design Concepts division earlier in 2001.  Plaintiff seeks  unspecified  damages to
be proven at jury trial,  together with attorneys fees,  costs of suit and interest
on  judgement,  as well  as  such  further  relief  as the  Court  deems  just  and
equitable.  We have answered the plaintiff's  complaint,  denying any liability and
setting  forth a  counterclaim  seeking  the award to us of our costs of  defending
this  action  and  such  further  relief  as  the  Court  deems  just  and  proper.
Management  intends  to  vigorously  defend  this  action  and does not  expect any
resolution  of this  matter to have a  material  adverse  effect  on the  Company's
results of  operations or financial  condition.  The Court has appointed a mediator
for the case to try to  facilitate a settlement  between the parties.  Currently an
estimate of possible loss to the Company if  unsucessful  in defending  this action
cannot be made.



Note 8 - Stockholders' Equity

On March 20, 2000, the Company authorized 2,500,000 shares of preferred stock.

1996 Private Placement

In July and  September  1996,  the  Company  completed a private  placement  of 244
units,  each unit  consisting of a share of convertible  preferred  stock,  $10,000
per unit,  $1 par value  ("1996  Preferred  Stock"),  a warrant to  purchase  8,000
shares  of the  Company's  common  stock at $2.50  per  share  and a unit  purchase
option to purchase an additional unit at $10,000 per unit.

During  1998,  18.25  units  were  converted   resulting  in  the  issuance  of  an
additional 939,320 shares of common stock in 1998.

During  1999 4.5  units  were  converted  into  241,072  shares  of  common  stock.
Additionally,   the  Company  repurchased  from  another  holder  2.5  units  in  a
negotiated  agreement for $25,000.  The Company has 1.0 remaining  unit of its 1996
preferred  stock  outstanding  at December 31, 2001 and 2000.  The  remaining  unit
may be converted into the Company's  common stock  including  accrued  dividends at
the lesser of $1.25 per common  share or 75% of the prior five day trading  average
of the Company's common stock.

1997 Private Placement

In January and February 1997, the Company  completed a private  placement of 167.15
Units,  each unit consisting of one share of convertible  preferred stock,  $10,000
per unit, $1 par value,  "1997 Preferred  Stock",  and a warrant to purchase 10,000
shares of common stock at $1.00 per share.

In 1998,  5.0 units were  converted  resulting in the issuance of 178,950 shares of
common stock.

During 1999 14.5 units were converted  into 572,694 shares of common stock.  During
2000, the remaining 5.0 units were converted into 50,000 shares of common stock.

1999 Private Placement

During  1999,  the  Company  initiated  three  private  placement   offerings  each
consisting  of one  share of  preferred  stock  (as  designated)  and  warrants  to
purchase  common stock.  There are no dividends  payable on the preferred  stock if
a  registration  statement  is filed by a certain date as specified in the offering
agreements  and  remains  effective  for  a  two  year  period.  If  dividends  are
payable,  the  preferred  stock will  provide for a 10% dividend per annum for each
day  during  which the  registration  statement  is not  effective.  The  preferred
shares are also  redeemable  at the option of the Company after a date as specified
in  the  offering   agreements  for  $1,000  per  share  plus  any  accrued  unpaid
dividends.  In addition,  if a registration  statement is not effective by the date
as specified in the offering  agreements  the shares may be redeemed at the request
of the holder at $1,000 per share plus any accrued unpaid dividends.

The first  private  placement  consisted of 300 shares of Series A preferred  stock
each with 1,000  warrants  for $1,000 per unit,  which  raised  total  proceeds  of
$300,000.  The  warrants  included  with each unit  entitle  the holder to purchase
common  shares at $1.00 per share,  expiring  in October  1,  2000.  The  preferred
shares are  currently  convertible  into  common  shares at $.25 per  common  share
through  March 1, 2003.  During 1999,  115 shares of Series A preferred  stock were
converted  into  460,000  common  shares.  During  2000,  185  shares  of  Series A
preferred  stock were converted  into 740,000  common  shares.  All of the warrants
included with the Series A preferred stock were exercised in 2000.

The  second  private  placement  consisted  of 1,832  shares of Series B  preferred
stock each with 2,000  warrants for $1,000 per unit,  which  raised total  proceeds
of  $1,816,500  (net of  offering  costs of  $15,500).  The  Company  also issued a
warrant to purchase  50,000  shares of common stock at $.50,  which  expires in May
2002,  for  services  rendered  in  connection  with  the  private  placement.  The
warrants  included  with each unit entitle the holder to purchase  common shares at
$.50 per share,  expiring in October 1, 2003.  The  preferred  shares are currently
convertible  into common shares at $.50 per common share  through  October 1, 2003.
During  1999,  1,015  shares  of  Series B  preferred  stock  were  converted  into
2,030,000  common  shares.  During  2000,  767 shares of Series B  preferred  stock
were  converted  into  1,534,000  common  shares.  The warrants are callable by the
Company for $.01 upon thirty days  written  notice.  The Company has not called any
of these warrants as of the date hereof.

The third private  placement  consisted of 1,995 shares of Series C preferred stock
each with 4,000  warrants  for $1,000 per unit,  which  raised  total  proceeds  of
$1,995,000.  The  warrants,  included  with  each  unit,  entitled  the  holder  to
purchase  common  shares  at $.50  per  share,  expiring  in  April  1,  2003.  The
preferred  shares are  convertible  beginning  April 1, 2000 into common  shares at
$.50 per common share  through April 1, 2003.  During 2000,  1,120 shares of Series
C preferred  stock were converted into  2,240,000  common shares.  During 2001, 500
shares of Series C preferred  stock were converted into 1,000,000  shares of common
stock.  After  April 1, 2000,  the  warrants  are  callable by the Company for $.01
upon  thirty  days  written  notice.  The  Company  has  not  called  any of  these
warrants as of the date hereof.

Equity Line 

The Company has entered  into an Equity Line of Credit  Agreement  dated as of June
12,  2001,  which  provides  that the Company can put to the  provider,  subject to
certain  conditions,  the  purchase  of  common  stock  of the  Company  at  prices
calculated  from a formula as defined in the agreement.  Under the  agreement,  the
providers  of the Equity  Line of Credit have  committed  to advance to the Company
funds in an  amount of up to  $10,000,000,  as  requested  by the  Company,  over a
24-month  period  in  return  for  common  stock  issued  by  the  Company  to  the
providers.  The  principal  conditions  to any such  advance,  which may be waived,
are as follows:

o     There must be thirteen  stock  market  trading  days between any two requests
for advances made by the Company.

o     The  Company  can only  request an advance  if the  volume  weighted  average
price of the common  stock as reported  by  Bloomberg  L.P.  for the day before the
request is made is equal to or greater than the volume  weighted  average  price as
reported by Bloomberg L.P. for the 22 trading days before a request is made.

o     The  Company  will not be able to receive an advance  amount  that is greater
than 175% of the  average  daily  volume of its  common  stock  over the 40 trading
days prior to the advance request multiplied by the purchase price.

The  purchase  price  for each  advance  will be equal to 91% of the  three  lowest
daily volume  weighted  average  prices during the 22 trading days before a request
is made.

The Company will receive the amount  requested as an advance  within 10 days of its
request,  subject to  satisfying  standard  closing  conditions.  The  issuance  of
shares  of  common  stock to the  providers  in  connection  with the  equity  line
financing  will be  exempt  from  registration  under  the  Securities  Act of 1933
pursuant  to  Section  4(2)  thereof.  The  Company  has  agreed  to  register  for
immediate  re-sale the shares being  issued to the  providers of the Equity Line of
Credit  before any  drawdowns  may occur.  The  Company  has  registered  9,500,000
shares.  The related  Registration  Statement was declared  effective by the SEC on
August 6, 2001.  The  Company  has also  agreed  that its  executive  officers  and
directors  will not sell any shares of its  common  stock  during  the ten  trading
days following any advance request by the Company.

The Company will pay an aggregate  of 7% of each amount  advanced  under the equity
line financing to two parties  affiliated  with the providers of the Equity Line of
Credit for their services  relating thereto.  In addition,  upon the effective date
of this  Registration  Statement  registering the securities to be issued under the
Equity Line of Credit,  the Company  issued to those same two parties an  aggregate
of 198,020  shares of common  stock,  and on  December  9, 2001 (180 days after the
date  of the  Equity  Line of  Credit  Agreement)  the  Company  issued  to them an
additional  344,827  shares of our common stock  shares.  In addition,  the Company
has paid legal fees in an aggregate amount of  $15,000.

During the period August to December 2001,  the company  received  $1,510,000,  net
of  commissions  and escrow fees from nine equity line  advances,  resulting in the
issuance  of  2,748,522  shares of  common  stock.  The  542,847  shares  issued to
finders in  connection  with the  equity  line,  described  above,  were  valued at
$407,000, additionally the incremental differences of shares issued at below market
prices  on  the  line  totaled  $391,000,  both  of which have been  presented as a
reduction to net proceeds from the advances received.

Accumulated Deficit

Of the  $34,059,000  cumulative  deficit at December  31, 2001 and  $23,423,000  at
December 31, 2000,  the  approximate  amount  relating to the Company's  technology
business  from  inception  is  $21,112,000  and   $10,631,000,   respectively.   In
addition,  a premium of $2,332,000  was paid upon the  acquisition  of Cymedix Lynx
in 1998,  producing a total  investment  of  $23,544,000  at December  31, 2001 and
$12,963,000 at December 31,  2000 in the technology to date.

Stock Options

In May 1988,  the Company  adopted an  incentive  stock  option  plan (ISO),  which
provides  for the  grant  of  options  representing  up to  100,000  shares  of the
Company's  common  stock to officers  and  employees  of the Company upon terms and
conditions  determined  by the Board of Directors.  Options  granted under the plan
are  generally  exercisable  immediately  and expire up to ten years after the date
of grant.  Options  are  granted at a price  equal to the market  value at the date
of  grants,  or in the  case of a  stockholder  who  owns  greater  than 10% of the
outstanding  stock of the  Company,  the  options  are  granted at 110% of the fair
market value.

In 1994, the Board of Directors  established,  the Omnibus Stock Plan of 1994 (1994
Plan) and reserved  500,000  shares of the  Company's  common stock for grant under
terms,  which could extend through  January 2004.  All options and warrants  issued
under  this  plan  are  non-qualified.  Grants  under  the  1994  Plan  may  be  to
employees,  non-employee  directors,  and selected  consultants to the Company, and
may take the form of  non-qualified  options,  not  lower  than 50% of fair  market
value.  To date,  the Company has not issued any  options  below fair market  value
at the date of grant.

In 1996, the Board of Directors  established  the 1996 Stock Option Plan (the "1996
Plan")  with  terms  similar  to the  1994  Plan.  The  Board of  Directors  of the
Company  reserved  4,000,000  shares of common  stock for  issuance  under the 1996
Plan.

In August  1999,  the Board of  Directors  established  the 1999 Stock  Option Plan
(the  "1999  Plan"),  which  provides  for the  grant of  incentive  stock  options
("ISOs") to officers and other employees of the Company and  non-qualified  options
to  directors,   officers,  employees  and  consultants  of  the  Company.  Options
granted under the plan are generally  exercisable  immediately and expire up to ten
years  after  the  date of  grant.  Options  are  granted  at a price  equal to the
market  value  at  the  date  of  grant.   The  Board  of  Directors  has  reserved
10,000,000 shares of common stock for granting of options under the 1999 Plan.

The following table presents the activity for options outstanding:

                                                                           Weighted
                                                Incentive  Non-qualified    Average
                                                  Stock        Stock       Exercise
                                                 Options      Options       Price
                                              ------------ ------------ ------------

Outstanding - December 31, 1998                  3,054,065    1,157,050 $       0.35
      Granted                                    5,050,000      662,500         0.31
      Forfeited/canceled                          (586,188)    (930,366)        0.41
      Exercised                                         -      (256,184)        2.78
                                              ------------ ------------ ------------

Outstanding - December 31, 1999                  7,517,877      633,000         0.32
      Granted                                    2,255,000      110,000         3.82
      Forfeited/canceled                           (10,000)           -         0.25
      Exercised                                 (3,900,235)    (139,499)        0.28
                                              ------------ ------------ ------------

Outstanding - December 31, 2000                  5,862,642      603,501         1.62
      Granted                                    2,289,000           -          0.71
      Forfeited/canceled                          (865,000)     (65,834)        3.03
      Exercised                                 (1,267,142)    (173,500)        0.25
                                              ------------ ------------ ------------

Outstanding - December 31, 2001                  6,019,500      364,167 $       1.40
                                              ============ ============ ============

The  following   table  presents  the   composition  of  options   outstanding  and
exercisable:

                           Options Outstanding                 Options Exercisable
                         -----------------------             -----------------------
Range of Exercise Prices    Number      Price*       Life*      Number      Price*
------------------------ ----------- ----------- ----------- ----------- -----------
      $.19 - .55           2,723,667 $      0.41        7.46   2,601,833 $      0.40
      $.60 - 1.88          2,365,000        0.76        0.54   1,943,750        0.73
      $2.25 - 4.97         1,295,000        4.67        6.45     800,000        4.56
                         ----------- ----------- ----------- ----------- -----------

Total - December 31,
2001                       6,383,667 $      1.40        4.69   5,345,583 $      1.14
                         =========== =========== =========== =========== ===========

*Price and Life reflect the weighted  average  exercise price and weighted  average
remaining contractual life, respectively.

The  Company  has  issued  110,000  stock  options to  consultants  which have been
valued at $79,000  and  recorded as  consulting  expense,  using the  Black-Scholes
options  pricing  model.  The  assumptions  used include  lives ranging from 2 to 5
years,  exercise  prices  ranging  from  $0.67 to  $0.92,  volatility  of 132%,  no
dividend payments and a risk free rate of 5.5%.

The Company has adopted the  disclosure-only  provisions  of Statement of Financial
Accounting   Standards  No.  123,   "Accounting  for   Stock-Based   Compensation."
Accordingly,  no  compensation  cost  has  been  recognized  for the  stock  option
plans.  Had  compensation  cost for the Company's  option been determined  based on
the fair value at the grant  date for  awards  consistent  with the  provisions  of
SFAS No.  123,  the  Corporation's  net loss and basic loss per common  share would
have been changed to the pro forma amounts indicated below:

                                                      For the Years Ended
                                                          December 31,
                                          -----------------------------------------
                                               2001           2000          1999
                                          -------------- ------------- ------------

Net loss - as reported                    $(10,636,000)  $ (5,415,000) $ (4,847,000)
Net loss - pro forma                       (12,035,000)   (14,256,000)   (6,136,000)
Basic loss per common share - as reported        (0.21)         (0.13)        (0.30)
Basic loss per common share - pro forma          (0.24)         (0.34)        (0.36)

The fair value of each  option  grant is  estimated  on the date of grant using the
Black-Scholes    option-pricing   model   with   the   following   weighted-average
assumptions used:

                                                      For the Years Ended
                                                          December 31,
                                          ----------------------------------------
                                               2001           2000         1999
                                          -------------- ------------- -----------

Approximate risk free rate                    5.50%          5.50%         5.50%
Average expected life                        5 years       10 years      10 years
Dividend yield                                  0%            0%            0%
Volatility                                     132%          273%          225%

Estimated fair value of total options
granted                                     $1,399,000    $8,841,000    $1,289,000


Warrants

The  Company  has  an  obligation  to  issue  up to  7,000,000  warrants  under  an
agreement  with  a  pharmacy  management  company  for  the  Company's  proprietary
software to be  interfaced  with core medical  service  providers,  in which one of
the  Company's  audit  committee  members  is  a  related  party  to  the  pharmacy
management  company.   The  agreement  provides  for  3,000,000  warrants  with  an
exercise  price of $.30,  3,000,000  warrants with an exercise  price of $.50,  and
1,000,000  warrants  with an  exercise  price of $1.75 all  expiring  September  8,
2004.  The  warrants  to  be  issued  by  the  Company  are  granted  in  1,000,000
increments  based  on  certain   performance   criteria.   At  December  31,  1999,
1,000,000   of  the  warrants  had  been  granted  but  were  not  issued  yet.  In
connection  with the  obligation  to  issue  the  1,000,000  warrants  earned,  the
Company  recorded  expense of  $1,364,000  valued  using the  Black-Scholes  option
pricing  model,  with  assumptions  of 132%  volatility,  no  dividend  yield and a
risk-free  rate of 5.5%.  No  warrants  were  granted  during  2000.  During  2001,
850,000  of the  warrants  had been  granted  but were not issued by  December  31,
2001.  In connection  with the  obligation  to issue the 850,000  warrants  earned,
the Company  recorded  expense of $590,000  during the third quarter of 2001 valued
using  the   Black-Scholes   option  pricing  model,   with   assumptions  of  132%
volatility, no dividend yield and a risk-free rate of 5.5%.

At December  31,  2001,  the Company will have the  obligation  to grant  5,150,000
warrants under the agreement in the future if the  performance  criteria  specified
are met.

The Company also issued and modified  warrant  terms in the  settlement  of certain
litigation  (Note  7).  These  warrants  and  modifications  have  been  valued  at
$234,000 using the  Black-Scholes  option pricing model.  (See  assumptions used in
Note 7).

The following table presents the activity for warrants outstanding:

                                                                           Weighted
                                                                            Average
                                                            Number of      Exercise
                                                            Warrants         Price
                                                         ---------------------------

Outstanding - December 31, 1998                              3,463,954 $        1.81
      Issued                                                12,721,000          0.51
      Forfeited/canceled                                     (993,828)          4.84
      Exercised                                              (400,000)          0.31
                                                         ---------------------------

Outstanding - December 31, 1999                             14,791,126          0.53
      Issued                                                    35,000          3.96
      Forfeited/canceled                                      (32,506)          0.71
      Exercised                                            (9,352,620)          0.53
                                                         ---------------------------

Outstanding - December 31, 2000                              5,441,000          0.53
      Issued                                                 2,066,587          1.12
      Forfeited/canceled                                      (36,000)          0.80
      Exercised                                               (22,000)          0.19
                                                         ---------------------------

Outstanding - December 31, 2001                              7,449,587 $        0.69
                                                         ===========================

All of the  outstanding  warrants  are  exercisable  and  have a  weighted  average
remaining contractual life of 2.31 years.


Note 9 - Income Taxes

As of December 31, 2000,  the Company has net  operating  loss (NOL)  carryforwards
of  approximately  $21,800,000,  which expire in the years 2000 through  2021.  The
utilization of the NOL  carryforward  is limited to $469,000 on an annual basis for
net operating  loss  carryforwards  generated  prior to September  1996,  due to an
effective  change  in  control,  which  occurred  as a result  of the 1996  private
placement.  As a result of the  significant  sale of  securities  during 1999,  the
Company's net operating loss  carryforwards  will be further  limited in the future
to an annual  amount of  $231,000  due to those  changes in  control.  The  Company
also  has  a  deferred  tax  liability  of   approximately   $221,000   related  to
capitalized   software   development   costs.  The  Company  has  concluded  it  is
currently  more  likely  than not that it will not  realize  its net  deferred  tax
asset and  accordingly  has  established  a valuation  allowance  of  approximately
$7,400,000  and  $5,000,000,  respectively.  The change in the valuation  allowance
for 2001 and 2000 was approximately $2,413,000 and $1,668,000, respectively.



Note 10 - Employee Benefit Plan

Effective  March 25, 1997, the Company  adopted a defined  contribution  retirement
savings plan,  which covers all  employees age 21 or older with one thousand  hours
of annual  service.  Matching  contributions  are made by the  Company at $0.25 for
each $1 that the employee contributes up to 8% of compensation during 1998.

The  Company  has  certain   violations   under  the  plan,  which  are  considered
reportable  transactions.  The Company  was  delinquent  in filing a complete  Form
5500,  and was  notified by the  Department  of Labor to complete  its filing.  The
Company  has  complied in filing the Form 5500 within the  specified  time  period,
however, the Company could be subject to certain penalties as a result.

The  Company's  matching  contributions  vest to the  participant  according to the
following vesting schedule:


                           Years of Service
                           ----------------
                                  1                                    10%
                                  2                                    20%
                                  3                                    30%
                                  4                                    40%
                                  5                                    60%
                                  6                                    80%
                                  7                                    100%


Note 11 - Related Party Transactions

Prior to being  elected  to the  board  of  directors  of the  Company  in 1999,  a
company  affiliated  with one of the Company's  directors,  entered into agreements
with us to provide  executive  search  services and sales and marketing  service to
us. In  connection  with those  agreements,  the Company  issued a 3-year option to
acquire up to 25,000 shares of the Company's  common stock at an exercise  price of
$.55 per share.  An expense of  approximately  $13,000  related to the  issuance of
the option  was  recorded.  The  Company  paid the  related  company  approximately
$51,000  and  $152,000  during  2001  and  2000,  respectively.  The  Company  also
entered into an agreement  with the  affiliated  company for rental  space,  use of
clerical  employees  and to pay a portion  of utility  and  telephone  costs.  Rent
expense for 2001 and 2000 was approximately $111,000 and $93,000, respectively.

During  2000,  the  Company  paid two  companies  affiliated  with  another  of the
Company's  directors  $118,000 for services and related expenses and  approximately
$66,000 for software  development  and web-site  hosting and  development  services
and purchase of computer  equipment.  The Company also  acquired a business  from a
director of the Company for $474,000 in 2000 (Note 4).

The Company  also has an  obligation  to issue  warrants  to a pharmacy  management
company in which a member of the  Company's  audit  committee  is a related  party,
if certain performance criterion are met in the future (Note 7).

The Company has a  consulting  agreement  with one of the  Company's  directors  to
assist with  marketing  of the  Company's  products.  The Company paid the director
$0 and $52,000 for such consulting services in 2001 and 2000, respectively.

During July 2001,  the Company  received  $136,000 as a short- term  advance from a
related  party,  $50,000 of which was repaid  during  August  2001.  An  additional
$30,000  and  $50,000 was  advanced  to the  company by the  related  party  during
September  and  December  2001,  leaving  an  outstanding  balance of  $166,000  at
December 31, 2001.  The entire amount was repaid during February 2002.



Note 12 - Subsequent Events

The Company  entered  into a secured  convertible  loan  agreement  with a Company,
dated February 19, 2002,  pursuant to which we borrowed  $1,000,000  from WellPoint
Health  Networks  Inc.  The loan  becomes  payable on  February  19,  2003,  if not
converted  into our common  stock.  The loan earns  annual  interest  at a floating
rate of 300 basis  points over prime,  as it is adjusted  from time to time,  which
is also  payable at maturity  and may be converted  into common  stock.  Conversion
into common  stock is at the option of either  WellPoint  or Medix at a  contingent
conversion  price.  The  conversion  price will be either (i) at the price at which
additional  shares are sold to other private  placement  investors if Medix obtains
written  commitments  for at least an additional  $4,000,000 of equity by the close
of business on September 30, 2002,  from persons not  affiliates of WellPoint,  and
if such  sales are  closed  by the  maturity  date of the loan,  or (ii) at a price
equal to 80% of the  then-current  Fair Market Value (as defined below) if Medix is
unable to obtain a written  commitment for the additional  equity investment by the
close of business on September  30, 2002 or close the sales by the  maturity  date.
For this purpose,  "Fair Market Value" shall be the average  closing price of Medix
common  stock for the  twenty  trading  days  ending on the day prior to the day of
the   conversion.   The  Company  will  be  required  to  record   financing  costs
during the first quarter of 2002 associated  with this loan  agreement  as a result
of  the  in-the-money  conversion  feature  totalling  approximately  $70,000.  The
loan   is  secured  by   the   grant  of  a  security  interest   in   all  Medix's
intellectual  property, including its patent,  copyrights  and  trademarks.   While
Medix can cure a default in the repayment of the loan at the fixed   maturity  date
by  the  forced  conversion  of  the  loan  into its common stock, a cross default,
breach of  representation  or warranty,  and bankruptcy or similar event of default
will trigger the  foreclosure provision of the security agreement.



Note 13 - Summarized Quarterly Results (Unaudited)

The following table presents  unaudited  operating  results for each quarter within
the two most recent years.  The Company  believes  that all  necessary  adjustments
consisting  only  of  normal  recurring  adjustments,  have  been  included  in the
amounts  stated below to present fairly the following  quarterly  results when read
in  conjunction  with the  financial  statements.  Results  of  operations  for any
particular  quarter are not  necessarily  indicative of results of operations for a
full fiscal year.


                                           First        Second          Third           Fourth
                                        Quarter (4)     Quarter      Quarter (2)    Quarter (3),(5)
                                        -----------   -----------   -----------     ---------------
December 31, 2000
   Revenues                             $    64,000   $   126,000   $   104,000      $    32,000
   Operating expenses                     1,054,000     2,011,000     1,455,000        2,090,000
   Gross profit (loss)                       61,000       106,000        31,000          (52,000)
   Loss from continuing operations         (981,000)   (1,849,000)   (1,380,000)      (2,134,000)
   Gain   (loss)   from    discontinued
    operations                              650,000            -             -           279,000
   Net income (loss)                       (331,000)   (1,849,000)   (1,380,000)      (1,855,000)
   Basic earnings (loss) per share (1)        (0.01)        (0.04)        (0.03)           (0.02)
   Diluted earnings (loss) per share (1)      (0.01)        (0.04)        (0.03)           (0.02)

December 31, 2001
   Revenues                             $    30,000   $        -    $        -       $    (1,000)
   Operating expenses                     2,190,000     1,427,000     3,053,000        1,261,000
   Gross profit (loss)                       25,000       (28,000)       (5,000)        (176,000)
   Loss from continuing operations       (2,259,000)   (1,635,000)   (3,183,000)      (2,912,000)
   Net income (loss)                     (2,259,000)   (1,635,000)   (3,183,000)      (2,912,000)
   Basic earnings (loss) per share (1)        (0.05)        (0.03)        (0.06)           (0.07)
   Diluted earnings (loss) per share (1)      (0.05)        (0.03)        (0.06)           (0.07)

(1)  Earnings per share are computed independently for each quarter and the full
     year based upon respective average shares outstanding.  Therefore,  the sum
     of the  quarterly  net earnings per share  amounts may not equal the annual
     amounts reported.

(2)  Included in third  quarter 2001 operating expense is $1,111,000 of expenses
     related to the impairment of intangible assets. (Note 4)

(3)  Included in fourth  quarter 2001 operating loss is  $1,022,000 in financing
     costs. (Notes 6 and 8)

(4)  During  the first quarter of 2000, the Company closed on the sale of assets
     of  its  remaining  staffing  business  and  discontinued these operations.
     (Note 3)

(5)  During  the  fourth  quarter  of  2000, the  Company wrote off unrealizable
     assets  related to the  discontinued  operations,  and  adjusted  remaining
     liabilities settled for less than recorded amounts. (Note 3)













                                   SIGNATURES


      In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on behalf by the undersigned, thereunto duly
authorized on May 23, 2002.


                                    MEDIX RESOURCES, INC.

                                    By: /s/ John R. Prufeta
                                        President and CEO

In accordance with the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities indicated and on
the dates indicated.

      Signature                 Title                             Date



    /s/ John R. Prufeta
    -------------------
                                                                        May 24, 2002
     John R. Prufeta          President and Chief Executive
                              Officer (Principal  Executive
                              Officer)

    /s/ Gary L. Smith
   -----------------                                                    May 24, 2002
     Gary L. Smith            Executive Vice President and
                              Chief Financial Officer(Principal
                              Accounting and Financial Officer)

    /s/Joan E.Herman
    -----------------         Director                                  May 24, 2002
    Joan E. Herman


    /s/ Dr. David B. Skinner
    ------------------------  Director                                   May 24, 2002
    Dr. David B. Skinner


    /s/ John T. Lane
    ----------------          Director                                   May 24, 2002
       John T. Lane

    /s/ Samuel H. Havens
    ---------------------     Director                                   May 24, 2002
      Samuel H. Havens


     ------------------       Director                                   May 24, 2002
     Patrick W. Jeffries


      /s/ Guy L. Scalzi
      -----------------      Director                                    May 24, 2002
        Guy L. Scalzi`