Edgar Filing: NMXS COM INC

As filed with the Securities and Exchange Commission on

February 12, 2004

REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM SB-2

REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933

NMXS.COM, INC.
-----------------------------
(Name of Small Business Issuer in its Charter)

DELAWARE 7389 91-1287406
------------- ------------- -------------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or organization)

5041 Indian School Road, Suite 200
Albuquerque, New Mexico 87110
(505) 255-1999
---------------------------------------
(Address, including zip code, and telephone number, including
area code,
of registrant's principal executive offices)

RICHARD GOVATSKI
PRESIDENT AND DIRECTOR
NMXS.COM, INC.
5041 INDIAN SCHOOL ROAD, SUITE 200
ALBUQUERQUE, NEW MEXICO 87110
(505) 255-1999
-----------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies of communications to:

RICHARD I. ANSLOW, ESQ.
ANSLOW & JACLIN, LLP
4400 ROUTE 9, 2ND FLOOR
FREEHOLD, NEW JERSEY 07728
TELEPHONE NO.: (732) 409-1212
FACSIMILE NO.: (732) 577-1188

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes
effective.

-i-

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, check the following box. |X|

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of
1933, please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
|_|

If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act of 1933, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
|_|

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|

CALCULATION OF REGISTRATION FEE

PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED PER SHARE OFFERING PRICE FEE
---------------------------- ----------------------- ---------------- ---------------- ------------

Common Stock, par value 5,969,090 $.48 $2,865,163 $ --
$.001 per share (1)

Common Stock, par value
$.001 per share (2) 2,325,581 $.43 $1,000,000 $ --

Common Stock, par value
$.001 per share (3) 1,000,000 $.48 $ 480,000 $ --
---------- --------
Total 9,294,671 $4,345,163 $550.53

(1) Represents Selling Security Holders shares being sold to the
public. The price of $.48 per share is being estimated solely for
the purpose of computing the registration fee pursuant to Rule
457(c) of the Securities Act and based on the last trade price
reported on the OTC Bulletin Board on February 9, 2004.

(2) Represents shares being sold to the public. The price of $.43
per share is based on a 10% discount to the closing sales price
of the shares to the public. On February 9, 2004 our share price
closed at $.48 per share.

(3) Represents shares of common stock issuable in connection with
the conversion of warrants issued to First Mirage, Inc. The
price of $.48 is being estimated solely for the purpose of
computing the registration fee pursuant to Rule 457(c) of the
Securities Act and is based on the last trading price reported on
the OTC Bulletin Board on February 9, 2004.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

-1-

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES
UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED , 2004

NMXS.COM, INC.

2,325,581 SHARES OF COMMON STOCK
5,969,090 SELLING SECURITY HOLDER SHARES OF COMMON STOCK
1,000,000 SHARES OF COMMON STOCK ISSUABLE IN CONNECTION WITH
CONVERSION OF WARRANTS

We are offering 2,325,581 shares of our common stock at $0.43 per
share. In addition, our selling security holders are offering to
sell 5,969,090 shares of our common stock and 1,000,000 shares of
our common stock issuable in connection with their conversion of
our warrants.

THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE
OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED
UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 3.

NEITHER THE SECURITES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

The date of this prospectus is ________________, 2004

PRICE TO PUBLIC PROCEEDS TO
COMPANY

Per Share $0.43 $0.43
Total $1,000,000 $1,000,000

Currently, we have not established an underwriting arrangement
for the sale of these shares. Richard Govatski, our President and
Director will be the only person that will conduct the best-
efforts offering. He intends to offer and sell the shares in the
primary offering through his business and personal contacts. All
funds that are received by us in the offering are available for
immediate use. There is no minimum number of shares that must be
sold before we can utilize the proceeds of the offering. Funds
will not be placed in an escrow or similar account until a
minimum amount has been raised.

Our common stock is listed on the OTC Bulletin Board under the
symbol "NMXS." The last reported sale price of our common stock
on February 9, 2004 was $0.48.

This prospectus also relates to the resale by the selling
stockholders of up to 5,969,090 shares of common stock and
1,000,000 shares of our common stock issuable in connection with
the conversion of our warrants. The selling stockholders may sell
the stock from time to time at the prevailing market price or in
negotiable transactions.

We will receive no proceeds from the sale of the shares by the
selling stockholders. However, we will receive proceeds from the
sale of the 2,325,581 shares as well as the exercise of the
outstanding warrants.

-2-

TABLE OF CONTENTS

ABOUT US............................................................4

RISK FACTORS........................................................5

USE OF PROCEEDS.....................................................9

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............10

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION...........11

BUSINESS............................................................24

LEGAL PROCEEDINGS...................................................25

MANAGEMENT..........................................................25

PRINCIPAL STOCKHOLDERS..............................................26

DILUTION............................................................27

SELLING STOCKHOLDERS................................................28

PLAN OF DISTRIBUTION................................................29

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................29

DESCRIPTION OF SECURITIES...........................................30

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.................................30

TRANSFER AGENT......................................................31

EXPERTS.............................................................31

LEGAL MATTERS.......................................................31

FINANCIALS..........................................................31

RECENT SALES OF UNREGISTERED SECURITIES.............................64

-3-

ABOUT US

HOW WE ARE ORGANIZED

We were originally incorporated under the laws of the State of
Utah on August 12, 1983, under the name "Raddatz Exploration,
Inc." The name was changed to "Renaissance Guild, Inc." on
February 16, 1984, and to "C.O.N.S.E.R.V.E Corporation" on
October 3, 1985. On April 28, 1997, we changed domicile to the
State of Delaware by merging into a Delaware corporation
incorporated on October 14, 1980, under the name "Costs of Owning
the Newest Systems of Energy Reduction are Virtually Eliminated,
Inc." The name was changed to "Conserve, Inc." on May 11, 1999.
On August 3, 1999, our corporate name was changed to "NMXS.com,
Inc."

WHERE YOU CAN FIND US

We are located at 5041 Indian School Road NE, Suite 200,
Albuquerque, New Mexico 87110. Our telephone number is (505) 255-
1999 and our facsimile number is (505) 255-7201.

SECURITIES OFFERED BY US

We are offering a maximum amount of 2,325,581 shares of common
stock, $.001 par value at $0.43 per share. Currently, we have not
established an underwriting arrangement for the sale of these
shares. All funds that are received by us in the offering are
available for immediate use. The shares are being offered on a
best efforts basis by Richard Govatski, our officer, and
director. There is no minimum number of shares that must be sold
before we can utilize the proceeds of the offering. Funds will
not be placed in an escrow or similar account until a minimum
amount has been raised.

PLAN OF DISTRIBUTION

This offering of a maximum of 2,325,581 of our shares of common
stock is being made on a self-underwritten basis by us through
Richard Govatski, our President and Director, who will not be
paid any commissions or other compensation and without the use of
securities brokers.

Selling shareholders may also be selling up to 5,969,090
additional shares and 1,000,000 shares issuable in connection
with the conversion of our warrants. Such shares of our common
stock may be sold from time to time to purchasers directly by the
selling shareholders. Alternatively, the selling shareholders may
from time to time offer shares through underwriters, dealers or
agents, who may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling security
holders for whom they may act as agent. The selling shareholders
and any underwriters, dealers or agents that participate in the
distribution of our common stock may be deemed to be
underwriters, and any commissions or concessions received by any
such underwriters, dealers or agents may be deemed to be
underwriting discounts and commissions under the Securities Act.
Shares may be sold from time to time by the selling shareholders
in one or more transactions at a fixed offering price, which may
be changed, or at varying prices determined at the time of sale
or at negotiated prices. We may indemnify any underwriter against
specific civil liabilities, including liabilities under the
Securities Act. We will bear all expenses of the offering of
shares of our common stock by the selling shareholders other than
payment that they may agree to make to underwriters.

The selling security holder offering will run concurrently with
the primary offering. All of the stock owned by the selling
security holders will be registered by the registration statement
of which this prospectus is a part. The selling security holders
may sell some or all of their shares immediately after they are
registered. There is no restriction on the selling security
holders to address the negative effect on the price of your
shares due to the concurrent primary and secondary offering. In
the event that the selling security holders sell some or all of
their shares, which could occur while we are still selling shares
directly to investors in this offering, trading prices for the
shares could fall below the offering price of the shares. In such
event, we may be unable to sell all of the shares to investors,
which would negatively impact the offering. As a result, our
planned operations may suffer from inadequate working capital.

-4-

RISK FACTORS

An investment in our common stock is highly speculative and
involves a high degree of risk. Therefore, you should consider
all of the risk factors discussed below, as well as the other
information contained in this document. You should not invest in
our common stock unless you can afford to lose your entire
investment and you are not dependent on the funds you are
investing.

Please note that throughout this prospectus, the words "we",
"our" or "us" refer to NMXS.com, Inc. and not to the selling
shareholders.

WE WILL REQUIRE ADDITIONAL FUNDS TO ACHIEVE OUR CURRENT BUSINESS
STRATEGY AND OUR INABILITY TO OBTAIN ADDITIONAL FINANCING COULD
CAUSE US TO CEASE OUR BUSINESS OPERATIONS

Even with the proceeds from this offering, we will need to raise
additional funds through public or private debt or sale of equity
to achieve our current business strategy. Such financing may not
be available when needed. Even if such financing is available, it
may be on terms that are materially adverse to your interests
with respect to dilution of book value, dividend preferences,
liquidation preferences, or other terms. Our capital requirements
to implement our business strategy will be significant. However,
at this time, we can not determine the amount of additional
funding necessary to implement such plan. We intend to assess
such amount at the time we will implement our business plan.
Furthermore, we intend to effect future acquisitions with cash
and the issuance of debt and equity securities. The cost of
anticipated acquisitions may require us to seek additional
financing. We anticipate requiring additional funds in order to
fully implement our business plan to significantly expand our
operations. We may not be able to obtain financing if and when it
is needed on terms we deem acceptable. Our inability to obtain
financing would have a material negative effect on our ability to
implement our acquisition strategy, and as a result, could
require us to diminish or suspend our acquisition strategy.

If we are unable to obtain financing on reasonable terms, we
could be forced to delay, scale back or eliminate certain product
and service development programs. In addition, such inability to
obtain financing on reasonable terms could have a material
negative effect on our business, operating results, or financial
condition to such extent that we are forced to restructure, file
for bankruptcy, sell assets or cease operations, any of which
could put your investment dollars at significant risk.

OUR INDEPENDENT AUDITORS HAVE ISSUED A REPORT WHICH MAY HURT OUR
ABILITY TO RAISE ADDITIONAL FINANCING AND DECREASE THE PRICE OF
OUR COMMON STOCK

The report of our independent auditors on our financial
statements for the year ended December 31, 2002 contains an
explanatory paragraph which indicates that we have recurring
losses from operations and negative cash flow since our
inception. The deficit accumulated as of September 30, 2003 was
8,631,000. This report states that, because of these
losses, there may be a substantial doubt about our ability to
continue as a going concern. This report and the existence of
these recurring losses from operations may make it more difficult
for us to raise additional debt or equity financing needed to run
our business and is not viewed favorably by analysts or
investors. We urge potential investors to review this report
before making a decision to invest in us. In addition, this
report may have the effect of decreasing our common stock price.

OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF KEY PERSONNEL, THE
LOSS OF WHOM COULD NEGATIVELY AFFECT US

Richard Govatski and Teresa B. Dickey, our senior executives are
important to our success. If they become unable or unwilling to
continue in their present positions, our business and financial
results could be materially negatively affected.

-5-

NOTWITHSTANDING THE STEPS WE HAVE TAKEN TO PROTECT OUR
INTELLECTUAL PROPERTY, MISAPPROPRIATION OF OUR INTELLECTUAL
PROPERTY CAN RESULT IN A SIGNIFICANT NEGATIVE EFFECT ON OUR
REVENUES AND OPERATIONS

We have several proprietary aspects to our software that we
believe make our products unique and desirable in the
marketplace. Consequently, we regard protection of the
proprietary elements of our products to be of paramount
importance and we attempt to protect them by relying on
trademark, service mark, trade dress, copyright and trade secret
laws, and restrictions on disclosure and transferring of title.
We have entered into confidentiality and non-disclosure
agreements with our employees and contractors in order to limit
access to, and disclosure of, our proprietary information. There
can be no assurance that these contractual arrangements or the
other steps taken by us to protect our intellectual property will
prove sufficient to prevent misappropriation of our technology or
to deter independent third-party development of similar
technologies. Such misappropriation can cause our revenues and
operations to be negatively effected.

ALTHOUGH WE BELIEVE WE HAVE NOT INFRINGED UPON ANY PROPRIETARY
RIGHTS, OUR INDUSTRY IS SUBJECT TO LAWSUITS INVOLVING
INFRINGEMENT OF PROPRIETARY RIGHTS WHICH COULD RESULT IN COSTLY
LITIGATION

Although we do not believe that we infringe the proprietary
rights of third parties, there can be no assurance that third
parties will not claim infringement by us with respect to past,
current, or future technologies. We expect that participants in
our markets will be increasingly subject to infringement claims
as the number of services and competitors in our industry grows.
Any such claim, whether meritorious or not, could be time-
consuming, result in costly litigation, cause service upgrade
delays, or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements may not be
available on terms acceptable to us or at all. As a result, any
such claim could have a material adverse effect upon our
business, results of operations, and financial condition.

IF THE FEDERAL GOVERNMENT AND STATE GOVERNMENTS ENACT LAWS
APPLICABLE TO THE INTERNET IT COULD IMPOSE ADDITIONAL FINANCIAL
BURDENS AND OTHER BURDENS ON US

IF STATES DECIDE TO IMPOSE A TAX ON COMPANIES ENGAGED IN INTERNET
SERVICES THIS WOULD IMPOSE AN ADDITIONAL FINANCIAL BURDEN ON US

Tax authorities in a number of states are currently reviewing the
appropriate tax treatment of companies engaged in online
commerce, and new state tax regulations may subject us to
additional state sales and income taxes. This would cause a
financial burden to us and strain our cash flow.

BASED ON THE NATURE OF OUR OPERATIONS WE MAY BE REQUIRED TO
QUALIFY TO DO BUSINESS IN SEVERAL STATES SUBJECTING US TO TAXES
AND PENALTIES

Because our services are accessible worldwide, other
jurisdictions may claim that we are required to qualify to do
business as a foreign corporation in a particular state or
foreign country. Our failure to qualify as a foreign corporation
in a jurisdiction where it is required to do so could subject us
to taxes and penalties for the failure to qualify and could
result in our inability to enforce contracts in such
jurisdictions. Any such new legislation or regulation, or the
application of laws or regulations from jurisdictions whose laws
do not currently apply to our business, could have a material
adverse effect on our business, results of operations, and
financial condition.

-6-

SINCE WE ARE IN THE PROCESS OF PROTECTING OUR TRADE NAMES,
CERTAIN PARTIES MAY TRY TO MISAPPROPRIATE OUR TRADE NAMES WHICH
COULD CAUSE CONFUSION IN THE MARKETPLACE AND BE COSTLY AND TIME-
CONSUMING TO US

While we have commenced the process to protect our trade names,
we have not completed the process. Thus, others could attempt to
use trade names that we have selected. Such misappropriation of
our brand identity could cause significant confusion in the
highly competitive Internet technology marketplace and legal
defense against such misappropriation could prove costly and time-
consuming. As part of the brand identity creation process that
defines our products to be unique in the Internet technology
marketplace and proprietary in nature, we have begun the process
to protect certain product names and slogans as registered
trademarks to designate exclusivity and ownership.

OUR INTELLECTUAL PROPERTY RIGHTS MAY NOT BE AVAILABLE IN ALL
COUNTRIES WHICH CAN CAUSE THIRD PARTIES TO INFRINGE UPON SUCH
RIGHTS RESULTING IN A NEGATIVE EFFECT ON ANY INTERNATIONAL
OPERATIONS WE UNDERTAKE

Although trademarked in the U.S., effective trademark, copyright
or trade secret protection may not be available in every country
in which our products may eventually be distributed. There can
also be no assurance that the steps taken by us to protect our
rights to use these trademarked names and slogans and any future
trademarked names or slogans will be adequate, or that third
parties will not infringe or misappropriate our copyrights,
trademarks, service marks, and similar proprietary rights. This
can have a negative effect on any international operations that
we undertake.

IF WE FAIL TO ADEQUATELY MANAGE OUR GROWTH, WE MAY NOT BE
SUCCESSFUL IN GROWING OUR BUSINESS AND BECOMING PROFITABLE

We expect our business and number of employees to grow over the
next 12 months. In particular, we intend to hire additional
sales, marketing and administrative personnel. We expect that our
growth will place significant stress on our operation,
management, employee base and ability to meet capital
requirements sufficient to support our growth. Any failure to
address the needs of our growing business successfully could have
a negative impact on our chances of success.
COMPETITION FROM OTHER COMPANIES THAT HAVE GREATER RESOURCES THAN
WE DO COULD PREVENT US FROM EXPANDING AND BECOMING PROFITABLE

The Proprietary Internet technology-based software industry is
highly competitive. Many of our competitors have substantially
greater financial, marketing, personnel and other resources than
we do. Moreover, we expect that competition will increase as
larger beverage companies seek to compete more intensely with us
in our fat-free, sugar-free end of the market. This could cause
us to fail to obtain market share in order to become profitable.

OUR RELIANCE ON ISSSUANCES OF SHARES OF OUR COMMON STOCK FOR
SERVICES PERFORMED FOR US IN LIEU OF PAYING FOR SUCH SERVICES
WILL RESULT IN DILUTION OF YOUR INVESTMENT AND A DEPRESSED MARKET
PRICE FOR OUR SHARES OF COMMON STOCK

We have entered into agreements with companies that perform
services for us. Under the terms of such agreements, we pay for
such services by issuing shares of our common stock in lieu of
making cash payments. The issuance of such shares will result in
the dilution of your investment in us. Furthermore, since such
shares are normally registered in a Form S-8 registration
statement and such registration statement has the effect of being
able to issue such shares as unrestricted shares, or freely
tradable upon receipt, the sale of such shares can have the
effect of decreasing the price for our shares of common stock.

SALES BY SELLING SECURITY HOLDERS BELOW THE $.43 OFFERING PRICE
MAY CAUSE OUR STOCK PRICE TO FALL AND DECREASE DEMAND IN THE
PRIMARY OFFERING WHICH MAY DECREASE THE VALUE OF YOUR INVESTMENT

-7-

SELLING SHAREHOLDERS MAY IMPACT OUR STOCK VALUE THROUGH THE
EXECUTION OF SHORT SALES WHICH MAY DECREASE THE VALUE OF OUR
COMMON STOCK

Short sales are transactions in which a selling shareholder sells
a security it does not own. To complete the transaction, a
selling shareholder must borrow the security to make delivery to
the buyer. The selling shareholder is then obligated to replace
the security borrowed by purchasing the security at the market
price at the time of replacement. The price at such time may be
higher or lower than the price at which the security was sold by
the selling shareholder. If the underlying security goes down in
price between the time the selling shareholder sells our security
and buys it back, the selling shareholder will realize a gain on
the transaction. Conversely, if the underlying security goes up
in price during the period, the selling shareholder will realize
a loss on the transaction. The risk of such price increases is
the principal risk of engaging in short sales. Such short selling
could impact the value of our stock in an extreme and volatile
manner to the detriment of other shareholders.

THE PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY BASED
ON THE NUMBER OF SHARES WE ARE REGISTERING FOR SELLING SECURITY
HOLDERS AND YOU MAY FIND IT DIFFICULT TO SELL YOUR SHARES AT OR
ABOVE THE PRICE YOU PAID FOR THEM

We do not know the extent to which the market for our shares of
common stock will expand or contract upon the resale of the
shares registered under this prospectus. Therefore, your ability
to resell your shares may be limited. Actions or announcements by
our competitors, regulatory developments and economic conditions,
as well as period-to-period fluctuations in our financial
results, may have significant effects on the price of our common
stock and prevent you from selling your shares at or above the
price you paid for them.

SHARES ELIGIBLE FOR PUBLIC SALE IN THE FUTURE COULD DECREASE THE
PRICE OF OUR COMMON SHARES AND REDUCE OUR FUTURE ABILITY TO RAISE
CAPITAL

Sales of substantial amounts of our common stock in the public
market could decrease the prevailing market price of our common
stock and our ability to raise equity capital in the future.

"PENNY STOCK" RULES MAY MAKE BUYING OR SELLING OUR COMMON STOCK
DIFFICULT

Trading in our securities is subject to the "penny stock" rules.
The SEC has adopted regulations that generally define a penny
stock to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. These rules
require that any broker-dealer who recommends our securities to
persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability
determination for the purchaser and receive the purchaser's
written agreement to execute the transaction. Unless an exception
is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated with
trading in the penny stock market. In addition, broker-dealers
must disclose commissions payable to both the broker-dealer and
the registered representative and current quotations for the
securities they offer. The additional burdens imposed upon broker-
dealers by such requirements may discourage broker-dealers from
effecting transactions in our securities, which could severely
limit the market price and liquidity of our securities. Broker-
dealers who sell penny stocks to certain types of investors are
required to comply with the Commission's regulations concerning
the transfer of penny stocks. These regulations require broker-
dealers to:

- Make a suitability determination prior to selling a penny stock
to the purchaser;

- Receive the purchaser's written consent to the transaction; and

- Provide certain written disclosures to the purchaser.

These requirements may restrict the ability of broker-dealers to
sell our common stock and may affect your ability to resell our
common stock.

-8-

WE DO NOT EXPECT TO PAY DIVIDENDS AND INVESTORS SHOULD NOT BUY
OUR COMMON STOCK EXPECTING TO RECEIVE DIVIDENDS

We have not paid any dividends on our common stock in the past,
and do not anticipate that we will declare or pay any dividends
in the foreseeable future. Consequently, you will only realize an
economic gain on your investment in our common stock if the price
appreciates. You should not purchase our common stock expecting
to receive cash dividends.

USE OF PROCEEDS

The selling stockholders are selling shares of common stock
covered by this prospectus for their own account. We will not
receive any of the proceeds from the resale of these shares. The
gross proceeds to us from the sale of up to the additional
2,325,581 shares of our common stock at a price of $0.43 per
share, are estimated to be $1,000,000. We expect to use the net
proceeds from this offering, for . We have agreed to bear the
expenses relating to the registration of our own shares as well
as for the selling security holders.

Gross Proceeds $ $1,000,000

Amount Percentage
Offering Expenses .......... $ 50,000 10.00%

Payment of IRS Obligation (1) $ 277,000 27.70%
Repayment of Los Alamos
National Bank Loan $ 175,000 17.50%
Sales Representatives (2) $ 300,000 30.00%
Repurchase of Company Stock(3) $ 150,000 15.00%
General Corporate Purposes $ 38,000 3.80%

Gross Proceeds ............. $1,000,000 100%

Less Offering Expenses ..... 50,000

Net Proceeds ............... $ 950,000

(1) Represents past due tax obligations for 941 payroll withholding
taxes.
(2) Represents the hiring of 5 sales representatives at an annual
salary of $60,000 per sales representative.
(3) We intend to use this amount to undertake the repurchase of our
shares of common stock on the open market.

-9-

DETERMINATION OF OFFERING PRICE

The price of $0.43 per share for the offering of 2,325,581 shares
has been determined based on a 10% discount to the closing price
of $0.48 for our shares of common stock as reported on the OTC
Bulletin Board on February 9, 2004.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is currently traded on the OTC Bulletin Board
under the symbol "CPLY." The following table sets forth the high
and low bid prices for our common stock since the first quarter
of 2001.

YEAR QUARTER HIGH LOW

2002 First 0.40 0.32
2002 Second 0.50 0.20
2002 Third 0.26 0.17
2002 Fourth 0.23 0.17
2003 First 0.19 0.05
2003 Second 0.11 0.05
2003 Third 0.17 0.06
2003 Fourth 0.71 0.17
2004 First 0.51 0.41
(to February 9, 2004)

As of January 20, 2004, based on our transfer agent records, we
had 349 shareholders holding 29,642,256 shares of our common
stock.

The above quotations reflect the inter-dealer prices without
retail mark-up, mark-down or commissions and may not represent
actual transactions.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information as of
December 31, 2002, with respect to compensation plans under which
our equity securities are authorized for issuance:

(a) (b) (c)

-------------------- -------------------- -------------------
Number of securities
remaining available
Number of securities for future issuance
to be issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excludeing securites
warrants and rights warrants and rights reflected in column (a))
-------------------- -------------------- -------------------

Equity compensation
plans approved by
security holders 2,532,267 $0.63 618,290(2)

Equity compensation
plans not approved
by security holders 4,936,545(2) $0.68 -0-

Total 8,398,225 150,557
---

(1) Represents 467,733 shares available for issuance under our
Stock Option Plan and 150,557 under our 2001 Stock Issuance Plan
as of December 31, 2002.
(2) Includes 1,000,000 shares of common stock issuable upon
exercise of Series A warrants exercisable at $1.25 per share at
any time through November 14, 2003; 1,090,000 Series B warrants
exercisable at $1.00 per share at any time through August 1,
2005; 1,500,000 Series C warrants exercisable at $0.50 per share
at any time through February 20, 2006; and 1,346,545 Series D
warrants exercisable at $0.21 per share through July 22, 2009.

-10-

DIVIDENDS

We have never paid a cash dividend on our common stock. It is our
present policy to retain earnings, if any, to finance the
development and growth of our business. Accordingly, we do not
anticipate that cash dividends will be paid until our earnings
and financial condition justify such dividends. There can be no
assurance that we can achieve such earnings.

PENNY STOCK CONSIDERATIONS

Trading in our securities is subject to the "penny stock" rules.
The SEC has adopted regulations that generally define a penny
stock to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. These rules
require that any broker-dealer who recommends our securities to
persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability
determination for the purchaser and receive the purchaser's
written agreement to execute the transaction. Unless an exception
is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated with
trading in the penny stock market. In addition, broker-dealers
must disclose commissions payable to both the broker-dealer and
the registered representative and current quotations for the
securities they offer. The additional burdens imposed upon broker-
dealers by such requirements may discourage broker-dealers from
effecting transactions in our securities, which could severely
limit their market price and liquidity of our securities. Broker-
dealers who sell penny stocks to certain types of investors are
required to comply with the Commission's regulations concerning
the transfer of penny stocks. These regulations require broker-
dealers to:

- Make a suitability determination prior to selling a penny stock
to the purchaser;

- Receive the purchaser's written consent to the transaction; and

- Provide certain written disclosures to the purchaser.

These requirements may restrict the ability of broker-dealers to
sell our common stock and may affect your ability to resell our
common stock.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis provides information which
management believes is relevant to an assessment and
understanding of our results of operations and financial
condition. The discussion should be read in conjunction with our
financial statements and notes thereto appearing in this
prospectus. The following discussion and analysis contains
forward-looking statements, which involve risks and
uncertainties. Our actual results may differ significantly from
the results, expectations and plans discussed in these forward-
looking statements.

OVERVIEW

We are a leading provider of digital asset management solutions.
We provide services for content owners to better manage the
digital lifecycle of intellectual property which includes
digitizing, encoding, storing, managing, licensing, and
distributing digital files in government, medical, entertainment,
and IT markets.

-11-

Our core product, Roswell, is an enterprise-level platform that
manages digital assets or files, which is anything digital that a
company or organization would consider an asset. It manages
assets by creating catalogs, or groups
of assets, catalog hierarchies, users, user groups, and user
permissions. The assets are managed by a database that maintains
both the membership of the asset in a catalog, or catalogs, and
information about the asset. Roswell's main user interface is a
web browser, which makes it accessible and more intuitive to a
greater number of users. Roswell can be run on the Linux
operating systems.

Our business creates software that is used by our clients on a
hosted basis. This model is referred to as an Application
Service Provider (ASP). Our clients use our software which we
build for them, but the equipment/ hosting is the property of
NMS. Their fees consist of the following: development fees,
monthly hosting fees,
and yearly renewal fees. The one time development fee depends on
the customization a client requires. There is a renewal fee each
year thereafter. The renewal fee is a percentage of the one time
development fee. The hosting fees vary depending on the
complexity of the site.

The second type of revenue we receive is from custom programming.
Custom programming allows us to make client changes to our
standard software code and include such items as tailoring the
application to a client's workflow, customizing user and
administrative interfaces, custom reporting, user data
collection, and multi-division support. The average revenue
received from custom programming varies from month to month, but
in the past few years it only averaged about $5,000 per month.
These contracts were from the U.S. Department of Energy and a
large entertainment company. We expect follow on contracts to
occur in the first quarter of 2004.

The third revenue source consists of professional services. This
includes archive scanning, customer support, and database
consulting. This business has improved and recently we were
awarded a multi-year commitment from a large entertainment studio
to scan promotional material from their archive of 8,000 movies.
In our business we do not use contracts or purchase orders. We
have an agreement on price and performance issues signed by both
parties. Billing is performed at the time of delivering the
work. We had thought this business was on a downward slide.

The last type of revenue comes from the sale of our Digital
Filing Cabinet software. We have recently augmented the program
to provide our own branded servers with our software. In
addition, there are monthly maintenance fees for hardware and a
recurring yearly maintenance fee for the software upgrades. We
will continue to work with OEM hardware vendors to generate
revenues from this source.

Cost of services consists primarily of engineering salaries and
supplies, and compensation-related expenses, as well as hardware
purchases and equipment rental. General and administrative
expenses consist primarily of salaries and benefits of personnel
responsible for business development and operating activities,
and include corporate overhead expenses. Corporate overhead
expenses relate to salaries and benefits of personnel responsible
for corporate activities, including acquisitions, administrative,
and reporting responsibilities. We record these expenses
when incurred.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported
amount of assets and liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities at the
date of our financial statements. Actual results may differ from
these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are
reflective of significant judgments and uncertainties, and
potentially result in materially different results under
different assumptions and conditions. We believe there are no
critical accounting policies that would have a material impact on
our financial presentation.

Notwithstanding the foregoing, we recognize revenue from sales of
proprietary software which do not require further commitment from
us upon shipment. During 2002 we shipped software under a
contract with Physicians Telehealth Network ("PTN") and
recognized $500,000 in license fees from the sale. The agreement
with PTN provided for the licensing of the technology for
$500,000, which amount was recorded as income during 2002. In
the first quarter of 2003, certain of PTN's assets were taken
over by a group of investors headed by Kurt Grossman and the
initial contract we received continued with the new investor
group named Doctors Telehealth Network ("DTN"). DTN had made no
payments under the contract. During second quarter 2003
management determined that DTN was not going to proceed with the
project and we wrote off the receivable related to it.
Management does not intend to pursue the contract and has
rescinded the license granted in the agreement.

-12-

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003, COMPARED TO THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2002

A summary of operating results for the three months ended
September 30, 2003 and 2002 is as follows:

2003 2002
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues $ 377,000 100% $ 212,000 100%
Cost of services 80,000 21% 181,000 85%
------ ------
Gross profit 297,000 79% 31,000 15%

General & administrative 143,000 38% 268,000 126%
Compensation expense 15,000 4% -0-
Research & development 28,000 7% 44,000 21%
------ ------
186,000 49% 312,000 147%

Other income (expense) (5,000) (1)% (13,000) (6)%
------ ------
Net income (loss) $ 106,000 28% $(294,000) (139)%
====== ======

2003 2002
------ ------
Earnings (loss) per share: $0.00 $(0.01)

A summary of operating results for the nine months ended
September 30, 2003 and 2002 is as follows:

2003 2002
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues $1,004,000 100% $1,488,000 100%
Cost of services 245,000 24% 423,000 28%
------ ------
Gross profit 759,000 76% 1,065,000 72%

General & administrative 701,000 70% 1,124,000 76%
Compensation expense 15,000 1% -0-
Research & development 90,000 9% 137,000 9%
Bad Debt 501,000 50% -0-
------ ------
1,307,000 130% 1,261,000 85%

Other income (expense) (19,000) (2)% (51,000) (3)%
------ ------
Net income (loss) $ (567,000) (56)% $(247,000) (17)%
====== ======

2003 2002
------ ------
Earnings (loss) per share: $(0.02) $(0.01)

-13-

Revenues. Total revenues increased 78%, or $165,000 for the
three months ended September 30, 2003, as compared to the same
period in the prior year (the "comparable prior year period").
Total revenues decreased 32%, or $484,000, for the nine months
ended September 30, 2003, as compared to the comparable prior
year period. Management believes the trend represented by the
third quarter of this year is more indicative of future revenue
generation. We are developing more customers from our
distribution program with the Digital Filing Cabinet and we have
initiated a strong sales program. These revenues were generated
principally from the following four revenue streams:

* Revenues generated by software sales and maintenance
increased 15,700%, or $157,000, for the three months ended
September 30, 2003,
as compared to the comparable prior year period. Revenues
generated by software maintenance increased 146%, or $385,000,
for the nine months ended September 30, 2003, as compared to the
comparable prior year period. This increase is attributable to
the fact that we are now marketing our product as an off-the-
shelf product. The hosting model is less of a factor for us.
Our marketing efforts are for continuing the sale of our standard
products as compared with building custom products. Management
believes software sales and maintenance will remain strong in the
future due to an increasing number of customers requiring our
services.

* Custom programming revenue increased 132%, or $86,000, for
the three months ended September 30, 2003, as compared to the
comparable prior year period. Custom programming revenue
increased 102%, or $101,000, for the nine months ended September
30, 2003, as compared to the comparable prior year period. There
are some customers that purchase our standard products and
require customization, and we continue to offer this service.
While this could be a significant growth area for us in the
future, it will depend on the customer base and their
requirements for customizing our products.

* Revenues generated by license fees increased 15%, or $2,000,
for the three months ended September 30, 2003, as compared to the
comparable prior year period. Revenues generated by license fees
decreased 96%, or $894,000, for the nine months ended September
30, 2003, as compared to the comparable prior year period.
Management believes that this category may not be a significant
portion of future revenues. We may license our software, or
parts of the software, in certain cases. However, we anticipate
most revenues will be generated from software sales of our
Digital Filing Cabinet package.

* Revenue generated by scanning services decreased 62%, or
$83,000, for the three months ended September 30, 2003, as
compared to the comparable prior year period. This type of
revenue decreased 40%, or $81,000, for the nine months ended
September 30, 2003, as compared to the comparable prior year
period. This part of our business is not a primary focus,
although management believes it generates adequate income when
scanning contracts are received. Generally, these contracts are
made available to us when the promotion budgets are available for
new television shows or archived shows. We are unable to predict
when and to what extent these budgets will be available in the
future. Therefore, management believes revenues in this category
may fluctuate in the future depending on the availability of
promotional funds from the studios.

We continue to rely on a small number of customers to generate
our revenues. During the nine month period ended September 30,
2003, Toshiba accounted for 30% of the total revenues generated
during the period. In addition, Forbes, Inc. comprised 39% of
the total accounts receivable balance at September 30, 2003.

Cost of Services. Cost of services decreased 56%, or $101,000,
for the three months ended September 30, 2003, as compared to the
comparable prior year period. Cost of services decreased 42%, or
$178,000, for the nine months ended September 30, 2003, as
compared to the comparable prior year period. This reduction in
costs of services is attributable primarily to a reduction of
overhead expenses following completion of the primary research
and development phase of our software. Cost of services as a
percentage of revenues decreased to 24% for the nine months ended
September 30, 2003 from 28% for the comparable prior year period.
Management believes this current percentage is more indicative of
the percentage of costs associated with revenues in the future,
but until we have been in the active marketing phase for a longer
period, management is unable to yet determine to what extent this
percentage may change in the future.

-14-

General and Administrative. General and administrative expenses
decreased 47%, or $125,000, for the three months ended September
30, 2003, as compared to the comparable prior year period.
General and administrative expenses decreased 38%, or $423,000,
for the nine months
ended September 30, 2003, as compared to the comparable prior
year period. This decrease was primarily attributable to a
reduction in engineering and administrative staff, reducing our
monthly lease payments for our office space in Albuquerque, and
reducing our accounting and legal expenses. General and
administrative expenses as a percentage of revenues were 70% for
the nine months ended September 30, 2003, as compared to 76% for
the comparable prior year period. Management believes this
current percentage is more indicative of the percentage of
general and administrative costs associated with revenues in the
future. However, management believes general and
administrative may increase slightly in the future if more
customer support and sales persons are required to handle an
increase in customers. Until we have been in the active
marketing phase for a longer period, management is unable to yet
determine to what extent this percentage may change in the
future.

Compensation Expense - Related Party. Compensation expense for
shares issued to Brian McGowan, one of our consultants, increased
$15,000 from zero for the three months ended September 30, 2003,
as compared to the comparable prior year period, as well as for
the nine months ended September 30, 2003, as compared to the
comparable prior year period. This increase represents
compensation pursuant to a five year consulting agreement with
Mr. McGowan. The total compensation is being expensed over the
life of the contract. Management expects this amount to be
representative of future quarterly expenses related to this item
during the term of the contract.

Research and Development. Research and development expenses
decreased 36%, or $16,000, for the three months ended September
30, 2003, as compared to the comparable prior year period.

Research and Development expenses decreased 34%, or $47,000, for
the nine months ended September 30, 2003, as compared to the
comparable prior year period. This decrease was primarily due to
less time required to complete product enhancements and a
reduction in the number of software developers. It is also
attributable to the need to develop additional product areas.
Since our products are mature and now in the market, most of the
research and development category will have a lesser importance
in the future. In addition we will add a maintenance development
category in the future.

Bad Debt. Management has determined that the account receivable
from Doctors Telehealth Network generated by the sale of a
software license for $500,000 is not collectable. Therefore,
management decided to write-off the receivable during the second
quarter of 2003. Bad debt expenses as a percentage of revenues
were 50% for the nine months ended September 30, 2003, as
compared to nothing for the comparable prior year period.

Other Income (Expense). Interest expense decreased 62%, or
$8,000, for the three months ended September 30, 2003, as
compared to the
comparable prior year period. Interest expense decreased 30%, or
$8,000, for the nine months ended September 30, 2003, as compared
to the comparable prior year period. The decrease in interest
expense was attributable to retiring existing promissory notes
and issuing fewer notes.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2003, cash and cash equivalents totaled
$70,000, representing a $31,000 increase from the beginning of
the period. This increase was attributable to cash generated
from our financing activities.

Operating Activities used net cash of $139,000 for the nine
months ended September 30, 2003, compared to $69,000 used during
the nine months in the prior year comparable period.

-15-

Our cash flow has improved significantly in that we believe we
are able to meet our on-going expenses from our revenues.
Nevertheless, at September 30, 2003, we had negative working
capital of ($361,000). At September 30, 2003, we also owed
approximately $277,371, without penalties and interest, for
unpaid federal and state payroll taxes, although we have
negotiated a settlement with the state taxing authority and an
interim settlement with the IRS. At September 30, 2003, we had
trade accounts payable in the amount of $114,041, of which
$76,224 were current as of September 30, 2003, and $37,814 were
past due. The largest creditor, excluding taxing agencies, is
Forbes which is owed $15,000 which we intend to satisfy upon
completion of the advertising campaign in first quarter of 2004.
The remainder of the past due amounts is owed to our former
counsel which the company negotiated a complete settlement and
our former counsel has decided to continue to work with us. We
also continue to accrue the salary of our president, which, at
September 30, 2003, was an aggregate of $110,800, of which
$15,000 was accrued for the nine months ended September 30, 2003.

During the nine months ended September 30, 2003, we issued common
stock or stock options for salaries and services totaling
$185,000, as compared with $469,000 for the comparable prior year
period. We anticipate that this downward trend in such
compensation will continue as we are able to reduce our
compensation expenses and generate more revenue from operations.
However, we might continue to compensate employees and
consultants with equity incentives where possible and during 2003
and part of 2004 may continue to utilize equity instruments. We
believe this strategy provides the ability to increase
stockholder value as well as utilize cash resources more
effectively. To support this strategy we may seek an increase in
the number of equity securities that can be issued under our
existing stock plan in order to allow management greater
flexibility in its use of stock based compensation. The
continued issuance of equity securities under the stock plan may
result in dilution to existing shareholders.

Investing activities used $6,000 of cash for the nine months
ended September 30, 2003, as compared to $1,000 for the
comparable prior year period. The increase in the cash used for
investing activities was primarily attributable to acquisition of
fixed assets for replacement of computer hardware.

Financing activities provided $176,000 in cash for the nine
months ended September 30, 2003, as compared to financing
activities providing $161,000 for the comparable prior year
period. The increase in cash provided by financing activities
was primarily attributable to funds borrowed by us and sales of
our stock. Of the cash provided by financing activities for the
nine months ended September 30, 2003, $25,000 of the total amount
was attributable to a loan from First Mirage, Inc. In March 2003
we issued a promissory note for $25,000 with an interest rate of
7%. The note was due on September 30, 2003. We negotiated an
extension of the note to March 31, 2004. Also during second and
third quarters we sold 135 shares of Series A preferred stock.
The Series A shares are convertible into common shares at the
option of the holder at the rate of 70% of the average bid price
of the common stock on the conversion date, based upon the value
of the Series A shares being converted which is deemed to be
$1,000 per share. During third quarter we received notification
from two on the investors holding 105 of the preferred shares of
their intention to convert their shares into 1,600,000 shares of
common stock. The remaining $28,000 was provided by net proceeds
from a private stock offering of 250,000 shares of common stock
to John Handley, one of our directors.

Management anticipates that our primary uses of capital in the
future periods will be allocated to working capital purposes.
Our business strategy is to achieve growth internally through
continued sale of licenses for our Roswell and Digital Filing
Cabinet products, and maintenance of these licenses, and
externally through the sale of potentially dilutive securities.
We may also continue to incur debt as needed to meet our
operating needs. In addition, we may be forced to issue
additional equity compensation to employees and outside
consultants to meet payroll and pay for needed legal and other
services.

During the quarter ended September 30, 2003, we negotiated the
settlement of several outstanding obligations, including the
following:

* We negotiated a reduction in the amount of space we lease at
our Albuquerque, New Mexico, facilities to approximately 2,886
square feet and reduced our monthly rent payment to $3,000. We
also issued 365,000 shares of our common stock to the landlord in
satisfaction of past due lease payments in the amount of $29,352,
provided that we register the resale of these shares by February
2003. If we fail to register the shares, we must repay the back
lease amount.

-16-

* We settled an account payable to our former auditor. We had
received invoices for approximately $109,000 from the auditor and
settled the payable for $20,000 which we paid in September 2003.

* We settled a dispute with Sunrise International Leasing
Corporation in which it claimed that we owed approximately
$71,000 under two equipment leases. We returned the equipment
and paid $1,000 to the leasing company in settlement of this
dispute.

At September 30, 2003, we had an outstanding balance of $212,849
on an original line of credit with Los Alamos National Bank. The
total amount this loan was due on October 15, 2003. Effective
October 15, 2003, we negotiated a six month extension of the
amount due on the line of credit by paying $25,000 of the
principal amount due and $7,500 in interest due. The loan is now
due April 15, 2004, and the principal balance due for this line
of credit is $187,776 as of October 15, 2003. Our inability to
retire this debt, negotiate an extension of the payment amount
and/or date, or obtain an alternative loan would likely have a
material negative impact on our business, and could impair our
ability to continue operations if the bank were to foreclose on
the note after April 15, 2004.

Subsequent to the quarter ended September 30, 2003, we negotiated
a commitment from a related party by which it expressed its
intent to invest approximately $500,000 in our company over the
next approximately six months. This investment is intended to be
in the form of either an acquisition of our common stock,
convertible notes, and/or convertible preferred stock. The
investment will be subject to certain conditions, including
registration of the securities for resale, negotiation of
satisfactory deal terms, and satisfactory completion of its due
diligence
investigation of our company. The funds will be used to pay back
the delinquent taxes owed to the IRS.

Year Ended December 31, 2002, Compared to Year Ended December 31,
2001

A summary of operating results for the years ended December 31,
2002 and 2001 is as follows:

2002 2001
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues $ 1,658,000 100% $1,279,000 100%
Cost of services 527,000 31.8% 487,000 38.1%
------ ------
Gross profit 1,131,000 68.2% 792,000 61.9%
------ ------
General & administrative 1,386,000 83.6% 2,723,000 212.9%
Research & development 176,000 10.6% 279,000 21.8%
Impairment of goodwill 22,000 1.3% - -
------ ------
1,584,000 95.5% 3,002,000 234.7%
------ ------
Other income (expense) (69,000) (4.2)% (30,000) (2.3)%
------ ------
Net income (loss) $ (522,000) (31.5)% $(2,240,000) (175.1)%
====== ======

2002 2001
---------- ----------
Earnings (loss) per share: $ (0.02) $ (0.10)

Revenues. Total revenues increased 29.6%, or $379,000, for the
year ended December 31, 2002, as compared to the same period in
the prior year (the "comparable prior year period"). These
revenues were generated from the following four revenue streams:

-17-

* Revenues generated by software maintenance increased 163%,
or $653,000, for the year ended December 31, 2002, as compared to
the comparable prior year period. This increase is attributable
to the increase in the number of license agreements with
continuing annual maintenance fee provisions. This increase was
also due in part to a single contract with Physicians Telehealth
Network (PTN) from which we recognized revenue of $500,000 in
license fees during the first half of this year. The agreement
with PTN provides for the licensing of the technology for
$500,000, which amount was booked as revenue in the first half of
this year. The agreement, dated June 15, 2002, called for a down
payment by PTN of $25,000 and the balance in 90 days. Neither the
down payment nor any of the balance has been paid by PTN. In
February, 2003 PTN assets were acquired by a group of investors
headed by Kurt Grossman. PTN assets, including contract rights,
trade secrets, and intellectual property, have been acquired by a
new corporation named Doctors Telehealth Network (DTN). DTN also
assumed the obligation to pay the $500,000 under the original PTN
agreement. PTN was unable to fulfill its original contract with
New Mexico Software and this significantly delayed the deployment
of their network. Mr. Grossman, also an investor in our company,
reconfirmed his intention to work with New Mexico Software to
develop the latest generation of digital asset management system
for DTN. Prior to year-end, we had booked the $500,000 as
license fee revenue. Support, maintenance, and development costs
related to this contract are estimated at $500,000 and will be
governed by a separate agreement, which management hopes to
complete during the first half of 2003. Management anticipates
that revenues in this category will continue to increase,
although there is no assurance that they will increase at the
current rate.

* Custom programming revenue decreased 73%, or $287,000, for
the year ended December 31, 2002, as compared to the comparable
prior year period. This decrease was primarily due to a shift
from providing customized software services to marketing of
developed software products. Management anticipates that the
decrease in revenue from custom programming will continue.

* Revenues generated by license fees decreased 44.2%, or
$138,000, for the year ended December 31, 2002, as compared to
the comparable prior year period. This decrease is primarily
attributable to the fact that we did not enter into any new
significant licenses during the year. The renewal fees under our
license agreements are substantially lower than the initial
license fee paid when the license is first entered into with the
client. We anticipate in the future that sales of licenses will
be static but will be broader to a larger customer base.

* Revenue generated by scanning services decreased 46.4%, or
$65,000, for the year ended December 31, 2002, as compared to the
comparable prior year period. Although management anticipates
that revenues generated by Working Knowledge will remain
consistent or even increase modestly in the future, the services
provided by Working Knowledge will generally be limited to our
existing or future clients and will not be our primary focus.
However, Working Knowledge will continue to accept unsolicited
work.

* Other revenue was generated by commissions from Sprint,
consulting services for data base design, and other miscellaneous
items. Revenue generated by these other services increased 635%
or 216,000, for the year ended December 31, 2002, as compared to
the comparable prior year period. The Sprint agreement was
terminated by both parties and a settlement of monies owed by
both parties was agreed to in late January 2003. The agreement
calls for New Mexico Software to make a total of $16,000 in
payments to Sprint. Payments will be made over a period of 16
months at the rate of $1,000 per month.

Cost of Services. Cost of services increased 8.2%, or $40,000,
for the year ended December 31, 2002, as compared to the
comparable prior year period. Cost of services as a percentage
of revenues decreased to 31.8% for the year ended December 31,
2002 from 38.1% for the comparable prior year period. This
decrease was primarily due to a decrease in salaries and
compensation previously associated with the development of our
digital asset management software in the comparable prior year
period. During the first year ended December 31, 2002, this
product went into production which required less expense.
Management believes this current percentage is more indicative of
the percentage of costs associated with revenues in the future,
but until we have been in the active marketing phase for a longer
period, management is unable to yet determine to what extent this
percentage may change in the future.

General and Administrative. General and administrative expenses
decreased 49.1%, or $1,337,000, for the year ended December 31,
2002, as compared to the comparable prior year period. This
decrease was primarily attributable to the reduction in the
number of employees and the change of auditors. General and
administrative expenses as a percentage of revenues were 83.6%
for the year ended December 31, 2002, as compared to 212.9% for
the comparable prior year period. Management believes this
current percentage is more indicative of the percentage of
general and administrative costs associated with revenues in the
future, but until we have been in the active marketing phase for
a longer period, management is unable to yet determine to what
extent this percentage may change in the future.

-18-

Research and Development. Research and development expenses
decreased 36.9%, or $103,000, for the year ended December 31,
2002, as compared to the comparable prior year period. This
decrease was primarily due to the completion of the development
of our core software products during the last quarter of 2001 and
the refocusing of research and development to upgrading the
existing products to remain competitive in the industry.

Other Income. Interest income decreased 80%, or $4,000, for the
year ended December 31, 2002, as compared to the comparable prior
year period. Interest expense increased 28.6%, or $10,000, for
the year ended December 31, 2002, as compared to the comparable
year period.

The increase in interest income was attributable to the increase
in the interest expense due to additional promissory notes sold
by us. The loss on disposal of fixed assets was attributable to
the return of the Sony Petasite equipment. This equipment had
been sold to us by Sony for a custom project which was completed
during the period. Although Sony had invoiced us for the
equipment, the invoice had not been paid, so that with the return
of the equipment, we realized no additional cash. Rather it
received a credit on the invoice, less a restocking fee and other
costs charged by Sony and nominal transportation expenses.

Liquidity and Capital Resources

Our negative cash flow continues to be of concern to management.
As discussed below, we suffer from a lack of available cash to
meet our continuing operating requirements. Amounts due a number
of suppliers for services and products remain delinquent which
may cause these parties to seek legal action against us to
collect delinquent accounts. At December 31, 2002, we had trade
accounts payable in the amount of $307,401, of which $67,179 were
current, $18,182 were between 31 and 60 days delinquent, $5,992
were between 61 and 90 days delinquent, and $211,212 were over
ninety days delinquent. The four largest creditors include our
former auditor ($91,255), Sprint Data Services (14,000), another
former auditor ($11,878.00), and legal counsel ($8,605).
Management continues to work with our creditors and to seek
additional sources of capital, but there is no assurance that it
will be successful, or that additional capital can be obtained at
rates or terms favorable to us. We also continue to accrue the
salary of the president, which at December 31, 2002, was an
aggregate of $109,003. Payroll taxes due at December 31, 2002,
were $145,827, excluding penalties and interest. Our inability
to pay or settle these obligations, especially the amount due to
the IRS, could have a material negative impact on our business
and could affect our ability to continue as a going concern.

Accounts receivable increased from $469,000 in 2001 to $643,000.
Of the total increase, $500,000 is due to the receivable from
PTN. Taking into account this single account receivable,
receivables have decreased significantly from last year.
Management believes this is due to better collection methods
initiated during the year and the completion of more projects.

Operating activities generated $76,000 of cash for the year ended
December 31, 2002, as compared to operating activities using
$321,000 of cash for the comparable prior year period. The
decrease in the use of cash was primarily due to lower operating
expenses and decreased salaries, some of which was a result of
completing much of the development stage of the Roswell product,
and in a significant increase in accounts payable and accrued
expenses. There was a significant decrease in deferred revenue
from hosting activities provided by a change in sales methodology
where sales of licenses are immediately included in revenue
instead of a term contract over a period of time which required
deferral of revenue. In addition, because we did not have access
to available cash for payroll during the period, we paid employee
salaries and outside consulting fees with equity based
compensation.

Investing activities used $354,000 of cash for the year ended
December 31, 2002, as compared to $49,000 for the comparable
prior year period. The increase in the cash used for investing
activities for the year ended December 31, 2002, was primarily
attributable to the disposal of the Sony Petasite equipment.

-19-

Financing activities provided $260,000 in cash for the year ended
December 31, 2002, as compared to financing activities providing
$413,000 for the comparable prior year period. The decrease in
cash provided by financing activities was primarily attributable
to a reduction in funds borrowed by us. Of the cash provided by
financing activities for the year ended December 31, 2002,
$63,000 of the total amount was attributable to loans from two
individuals who are acquaintances of management. On April 23,
2002, we issued a one year convertible promissory note to one of
these individuals for $50,000 with a fixed sum of interest of
$5,000. The note is convertible into shares of common stock at
the rate of one share for each $0.25 of principal and imputed
interest due on the conversion date. The remaining $13,000 was
advanced to us without a promissory note and is deemed due on
demand. Also, $148,000 was attributable to net proceeds from a
private stock offering of shares of common stock and Series D
warrants. In September 2002 we issued 1,346,545 shares of common
stock and 1,346,545
Series D Warrants for gross proceeds of $148,120. The Series D
Warrants are exercisable at $0.21 per share at any time prior to
July 22, 2009. In October 2002 we issued 300,000 shares of
common stock to twenty investors for gross proceeds of $20,000.We
also reduced the amount due on our line of credit during this
period by $50,000. Also during the year we used the proceeds of
a certificate of deposit used as security on a loan from Bank of
the West to retire the loan.

Management anticipates that our primary uses of capital in the
future periods will be allocated to satisfy delinquent
obligations and for working capital purposes. Our business
strategy is to achieve growth internally through continued sale
of licenses for our digital asset management products, and
maintenance of these licenses, and externally through the sale of
potentially dilutive securities. We may also continue to incur
debt as needed to meet our operating needs. In addition, we may
be forced to issue additional equity compensation to employees
and outside consultants to meet payroll and pay for needed legal
and other services.

At December 31, 2002, we had an outstanding balance on a line of
credit with Los Alamos National Bank which was originally due on
July 24, 2002. The outstanding principal amount due at that date
was $300,000, plus interest of $10,545. We negotiated a three
month extension on the repayment of the outstanding balance of
the line of credit by reducing the principal amount of the debt
with the payment of $50,000 and the payment of the interest due
on July 24, 2002. We were able to negotiate an extension of the
amount due on the line of credit until April 24, 2003, by paying
$25,000 of the principal amount due and $4,555 in interest due at
October 24, 2002. The principal balance due for this line of
credit is now $225,000. We and the bank have negotiated another
six month extension by the payment of $25,000 on or before April
24, 2003. Our inability to retire this debt, negotiate an
extension of the payment amount and/or date, or obtain an
alternative loan would likely have a material negative impact on
our business, and could impair our ability to continue operations
if the bank foreclosed on the note.

We do not currently have material commitments for capital
expenditures and do not anticipate entering into any such
commitments during the next twelve months. Our current
commitments consist primarily of lease obligations for office
space. There is no assurance that our capital resources are
sufficient to meet our present obligations and those to be
incurred in the normal course of business for the next twelve
months. If we are unable to secure additional sources of
capital, or significantly increase revenues from operations, it
may not be able to continue operating.

-20-

BUSINESS - OUR COMPANY

A SUMMARY OF WHAT WE DO

About Us

Through our wholly owned subsidiaries, New Mexico Software, Inc. and Working
Knowledge, Inc., we develop and market proprietary Internet technology-based
software for the management of digital high-resolution graphic images, video
clips, and audio recordings. Through New Mexico Software we develop and
market the software, and through Working Knowledge we provide data
maintenance services related to the New Mexico Software digital asset
management system. New Mexico Software operates as a business segment with
the role of product development and support. Currently, New Mexico Software
has developed a media asset management product called Roswell. We market
Roswell in two ways; as a hosted application on the Internet, and as a highly
customized application according to clients' specifications. A hosted
application provides a customer access to the Roswell product over the
Internet. Customers log on to our server and use Roswell to manage, view and
distribute their media assets. The hosted application customers' media files
are also stored on our server. Customers can choose the number of features
needed for the particular business and are billed according to the number of
features chosen and the amount of disk space the customer's media files will
occupy. New Mexico Software has developed a product called MagZoom that
allows magnified views of images on the Internet. MagZoom can be purchased as
a hosted application or for local installation on a customer's web server. In
addition to the products we have developed based on our technology, we have
cooperative agreements with other vendors to either incorporate their
products with our product, or offer their products as an additional feature.
For instance, we cooperate with manufacturers like Toshiba with whom we sell
our software pre-loaded on their hardware.

Our Technology

We engineer products around a central core of unique Internet technology that
makes it possible to rapidly view, distribute and manage media files such as
graphic images, animation sequences and film clips. Characteristically, media
files are very large, thus making them more time consuming to view and
distribute using conventional Internet technology. For instance, a media file
such as an x-ray might be as large as 70mega-bytes. Conventional Internet
technology moves the entire media file. Using a standard 56.6 kilo-byte modem
connection, moving such a file would take more than 20 hours to load to a
Netscape or Internet Explorer browser window if the Internet connection could
be maintained that long, and if the browser did not crash. Using our
technology that same 70mega-byte file can be viewed in approximately 37
seconds over a 56.6 kilo-byte modem connection. If it is necessary to move
the actual media file, our technology provides a highly expedited method of
doing this as well. However, for many e-commerce and other common Internet
uses, it is not necessary to move the file, only to view it. In addition, our
viewing technology also provides several magnification features. One type of
magnification makes it possible to magnify regions of interest in a graphic
image by clicking on them with the computer mouse. The viewer can then move
the mouse around to magnify different areas of the image. Another type of
magnification provides the ability to click on the image to greatly magnify
the entire image. By holding down the mouse button and moving the mouse, the
viewer can then move the magnified image to fit in the screen. While the
ability to magnify images over the Internet is not unique, our product
differs from many others in that the viewer does not require any special
software to perform these various types of magnification. The magnification
capability is generated by our Internet technology on our server--a high
speed computer that handles multiple streams of incoming and outgoing data--
rather than being deployed as an application that must reside on the viewer's
desktop computer. This means that e-commerce sites using our technology can
offer their viewers the ability to examine products in detail without
requiring them to download additional software.

Besides our viewing technology we also provide the ability to manage large
numbers of media files in a visual database displaying small, thumbnail
representations of the media. This database can be searched by natural
language queries.

Our core technology is characterized by these additional features that also
contribute to what we perceive to be marketplace advantages:

* Ability to use high-resolution graphics files large files with lots of
detail as opposed to the low resolution files with indistinct detail used by
conventional Internet technology.

* Ability to use a single image in multiple resolutions.

* Media stored using our unique technology has more modest storage
requirements than media stored in conventional formats.

* Our technology works on MacIntosh, PC and UNIX computers. If a business has
a network of these different types of computers it will work with
combinations of these computers.

* The ability to create private, password required viewing salons on the
Internet for the purposes of inter-business collaboration.

* Ability to convert existing images in other file formats such as computer
aided design files and medical digital imaging and communications in medicine
files to the file format used by our technology.

* Easy to use because it does not require any new software programs, only a
familiarity with Netscape or Internet Explorer.

We employ programmers and engineers tasked with adding new features to our
products and fixing any problems users might encounter. There are risks
inherent in software development including unanticipated delays, technical
problems that could mean significant deviation from original product
specifications, and hardware problems. In addition, once improvements and bug
fixes are deployed there is no assurance that they will work as anticipated
or that they will be durable in actual use by customers.

During the years ended December 31, 2002 and 2001, our research and
development costs were $176,000 and $279,000, respectively, none of the costs
of which were borne directly by our customers.

Working Knowledge

Working Knowledge, Inc. provides services that are necessary to prepare,
enter, and maintain the customer's data on our image management system. These
include web design, database development, image scanning, asset uploading,
and database support. In addition, Working Knowledge is able to serve the
customer by utilizing the stored images to produce compact discs, digital
prints, and large poster formats. These complementary services allow us to
complete our cycle of comprehensive image management.

-21-

New Partner Program

We just established a new Partner program aimed at establishing sales and
marketing relationships with qualified organizations that provide
complementary services and solutions to customers using New Mexico Software
products.

Marketing

Our primary sales and marketing efforts have been to develop alliances with
large companies that help to bring our products to market using their sales
forces and distribution channels. Our marketing focus has been in three
principal fields. Approximately 80% of our clients have been in the
entertainment industry, approximately 10% have been in the medical field, and
approximately 10% have been government agencies.

Our technology permits the information to be stored on a specially built
server called NAS (Network Appliance Server), which has as its core
technology our AssetWare built into the server.

* Entertainment Industry, Television, Movie Studios, and Ad Agencies
We also provide digital asset management to the Hollywood entertainment
studios. New Mexico Software provides software solutions for the management
of large volumes of media of digital material sent over the Internet. These
digital files include database management of graphic images, animation
sequences, video clips, audio recordings, text, television program material,
and educational films.

Our technology allows clients and their customers to access certain files
themselves and limits their access to only those jobs the studio wants them
to have. This is especially significant since we serve clients with multiple
offices all over the world. We can allow our customer's customers to access
marketing materials and archived data created at the studio instantly,
securely, and at virtually no cost. In addition, our technology permits them
to find what they need easily because of powerful cataloging features that
can be accessed by keyword, color, texture or shape, or phonetic searching.

* Government

We also work with many government agencies and have developed for them an
asset sharing multiple database technology that allows assets from different
agencies to share information. Our technology permits agencies to upload one
record for all divisions, which we believe would save money for the agency by
eliminating duplication of the same file(s) by different divisions.

Customers

During the year ended December 31, 2002, we were dependent upon a small
number of clients. Three of these clients accounted for approximately 67% of
our gross revenues. Due to the nature of our business, we will continue to
deal with a relatively small number of customers. However, we are working to
expand our products and sales volume, and we anticipate that our reliance on
any one or two customers will decrease.

Sales Agreement with Ryan & Associates

We recently entered into a sales agreement with Ryan & Associates whereby we
opened a regional sales office in Austin, Texas. This office will be managed
by Ryan & Associates and headed by Gabrielle Ryan. Ryan & Associates is a
sales and marketing company that will promote and sell the entire range of
our products in Texas, Louisiana, Oklahoma, Arkansas and Mexico.

Our Intellectual Properties

We have several proprietary aspects to our software that we believe make our
products unique and desirable in the marketplace. Consequently, we regard
protection of the proprietary elements of our products to be of paramount
importance and we attempt to protect them by relying on trademark, service
mark, trade dress, copyright and trade secret laws, and restrictions on
disclosure and transferring of title. We have entered into confidentiality
and non-disclosure agreements with our employees and contractors in order to
limit access to, and disclosure of, our proprietary information. There can be
no assurance that these contractual arrangements or the other steps taken by
us to protect our intellectual property will prove sufficient to prevent
misappropriation of our technology or to deter independent third-party
development of similar technologies.

Although we do not believe that we infringe the proprietary rights of third
parties, there can be no assurance that third parties will not claim
infringement by us with respect to past, current, or future technologies. We
expect that participants in our markets will be increasingly subject to
infringement claims as the number of services and competitors in our industry
grows. Any such claim, whether meritorious or not, could be time- consuming,
result in costly litigation, cause service upgrade delays, or require us to
enter into royalty or licensing agreements. Such royalty or licensing
agreements may not be available on terms acceptable to us or at all. As a
result, any such claim could have a material adverse effect upon our
business, results of operations, and financial condition.

While we have commenced the process to protect our trade names, we have not
completed the process for all of our trade names. Thus, others could attempt
to use trade names which we have selected. Such misappropriation of our brand
identity could cause significant confusion in the highly competitive Internet
technology marketplace and legal defense against such misappropriation could
prove costly and time-consuming. As part of the brand identity creation
process that defines our products to be unique in the Internet technology
marketplace and proprietary in nature, we have begun the process to protect
certain product names and slogans as registered trademarks to designate
exclusivity and ownership.

Although trademarked in the U.S., effective trademark, copyright or trade
secret protection may not be available in every country in which our products
may eventually be distributed. There can also be no assurance that the steps
taken by us to protect our rights to use these trademarked names and slogans
and any future trademarked names or slogans will be adequate, or that third
parties will not infringe or misappropriate our copyrights, trademarks,
service marks, and similar proprietary rights.

-22-

Government Regulation

Our company, operations, products, and services are all subject to
regulations set forth by various federal, state and local regulatory
agencies. We take measures to ensure our compliance with all such regulations
as promulgated by these agencies from time to time. The Federal
Communications Commission sets certain standards and regulations regarding
communications and related equipment.

There are currently few laws and regulations directly applicable to the
Internet. It is possible that a number of laws and regulations may be adopted
with respect to the Internet covering issues such as user privacy, pricing,
content, copyrights, distribution, antitrust and characteristics and quality
of products and services. The growth of the market for online commerce may
prompt calls for more stringent consumer protection laws that may impose
additional burdens on companies conducting business online. Tax authorities
in a number of states are currently reviewing the appropriate tax treatment
of companies engaged in online commerce, and new state tax regulations may
subject us to additional state sales and income taxes.

Because our services are accessible worldwide, other jurisdictions may claim
that we are required to qualify to do business as a foreign corporation in a
particular state or foreign country. Our failure to qualify as a foreign
corporation in a jurisdiction where it is required to do so could subject us
to taxes and penalties for the failure to qualify and could result in our
inability to enforce contracts in such jurisdictions. Any such new
legislation or regulation, or the application of laws or regulations from
jurisdictions whose laws do not currently apply to our business, could have a
material adverse effect on our business, results of operations, and financial
condition.

How We Compete

The media asset management market is one of the newest in the rapidly growing
information services industry. Competition at this time is broad with many
vendors offering systems that have some comparable features as our current
product. However, to our knowledge, few have comparable features for the
management and distribution of images and to the best of our knowledge none
has the advanced viewing technology that we provide. We believe our viewing
technology offers a competitive advantage over companies that offer just
media asset management products.

Another competitive strategy we are using is offering our product as a hosted
application. We believe that our strategy to provide AssetWare as a hosted
application and our custom system design capabilities provide us a diversity
of competitive market penetration opportunities.

An important development in the sales and marketing of our products occurred
in 2002. In May, 2002 we started a new relationship with an existing
customer, Toshiba America Information Systems. Toshiba and New Mexico
Software are now marketing a product called the Digital Filing Cabinet.
Originally, the product was to be called DoorS for which we had applied for a
trademark. The trademark was granted in January 2003. However, it was later
learned that a Swedish company, Telelogic, had used the name in commerce
since 1993 for a type of software used by programmers. Although the name
probably would not be a conflict for either of the two companies, it was
decided that New Mexico Software would withdraw our use of the name, DoorS.
A Digital Filing Cabinet organizes, searches, retrieves, displays, archives
and distributes digital content from a central repository. Further, it
converts analog and digital files to all digital. It uses the Linux based
operating system. The software handles photographs and images, email,
electronic files, and paper documents. It includes a web server, database,
firewall and search engine. The product receives faxes in digital and
searchable Adobe PDF format. It can scan documents from high speed Fujitsu
document scanners. Like Roswell Professional version, the Digital Filing
Cabinet can e-mail customized collection baskets of unlimited size - sending
recipients a link and not an attachment. It also provides instantaneous
distribution which reduces the cost of overnight courier services.

Additional features which are provided to the user of the Digital Filing
Cabinet are:

* Fax and Scan documents into the database.

* Copy documents into the database with a network-enabled copier. (Toshiba,
Canon, Kyocera, Sharp)

* Documents are automatically converted to Adobe PDF and scanned with New
Mexico Software OCR technology.

* Document conversion from PDF to Word and Word to PDF.

* Improved search engine; quick search and Boolean search; and search entire
database or search specific folders.

* Locate a document: type into the search field a keyword, name or invoice
number off the document and that document is instantly retrieved and
displayed.

* Users are assigned to groups, groups are given certain permissions
(viewing, downloading, and emailing) and assigned to catalogs.

* Easy to set-up and user friendly.

* Upload and download original files of any size.

* Creates a Web site automatically with the customer simply providing the
content.

* Creates thumbnails for all office file types.

* Ships with Open Office Suite and compatible with Microsoft Office 2004.

* Strong control environment and permission structure allows administrators
to decide who has access to what content.

* Version control.

* Full Text Indexing for Office documents.

* Master/slave software to use multiple servers for backup on different IP
addresses and different networks at different locations (requires second
license). Ideal for disaster recovery programs.

* CD or DVD archiving. (In Beta)

-23-

* Search within CD or DVD without the need for a server connection. (In Beta)

* Search indexed words within PDF documents for content on the Internet or
after downloaded. Print specific page from search page.

* Enhanced MagZoom. Cinemascope Loupe technology for reading documents and
images.

* Scan preview of pages coming into the copier queue.

* Scan to a selected file folder.

* Create barcode templates for each directory and use separator pages to scan
to the directory or sub-directory in which the documents belong.

* New Folder creation for ordinary users. Non administrative users can upload
or delete files if given permission.

* Turn OCR on/off. Turn Version Control on/off.

* Backup software for Exabyte Tape Backup Systems.

The program with Toshiba includes marketing funds, joint marketing and sales
programs, trade show exposure, and an advertising program in Forbes Magazine
and Forbes.com. The Forbes advertising program is being funded in part by
Toshiba and the majority of the program is funded by sales of our software.
The program has been prepaid to Forbes magazine with the first advertisements
already appearing on Forbes.com and the magazine advertisements will start
with one half page four color pages in the May or June 2003 issues. They will
continue for several months to help build exposure for the program.

We believe that establishing and maintaining brand identity of our products
and services is critical to attracting new customers and retaining our
customer base of large corporations. The importance of brand recognition will
continue to increase as new competitors enter the digital asset management
marketplace. Promotion and enhancement of our brands will depend largely on
our success in continuing to provide high quality service and developing
leading edge products and this cannot be assured. If businesses do not
associate our product names or brands with high quality, or if we introduce
new products or services that are not favorably received, we will run the
risk of compromising our product line and decreasing the attractiveness of
our products to potential new customers. In addition, to attract and maintain
customers and to promote our products in response to competitive pressures,
we may find it necessary to increase our financial commitment substantially
to create and maintain product loyalty among our customers. If we are unable
to provide high quality services, or otherwise fail to promote and maintain
our products, or if we incur excessive expenses in an attempt to improve our
services, or promote and maintain our products, our business, results of
operations, and financial condition could be adversely affected.

Other, better financed companies may be developing similar products as ours
which could compete with our products. Such competition could materially
adversely affect our financial condition. Although we have been established
for eight years, our initial product was not marketed until 1998. There may
exist better-capitalized companies on a parallel development path with
similar products addressing our target markets. While the Internet technology
marketplace is extremely competitive, we have anticipated a first-to-market
advantage with our products. However, other highly capitalized companies that
have recognized the absence of digital image management products could
overwhelm our first-to-market advantage with expensive and expansive media
blitzes that create the perception of a dominant market presence and/or
superior products. If we are unsuccessful in addressing these risks and
uncertainties, our business, results of operations, and financial condition
will be materially and adversely affected.

We are continuing to develop our core products using a mix of readily
available open source software development tools. Knowledgeable competitors
may be able to deduce how we have assembled our code base and be able to
develop competing products. The principal advantage in utilizing open source
tools is the extremely high degree of portability they ensure. Migrating our
products from one operating system or hardware base to another is more easily
accomplished by avoiding proprietary development tools. The risk factor
inherent in the use of such freely available tools is the fact that a
sophisticated competitor might be able to imitate our work and produce
similar functionality. Our product has two unique and highly desirable
features for e-commerce, medical, and other commercial applications. Our
product offers the ability to magnify details in high-resolution graphic
images. Our product also allows rapid transmission of a portion of such an
image based on user input, significantly enhancing the responsiveness of the
system to deliver images over the Internet. The ability to perform these
operations is based on a specific graphic image file format. We recognize
that these significant features of our product could be a target for
imitation. Any such imitation, should it occur, could have material adverse
effects on our business, operations, and financial condition.

Copyrights and Trademarks

We have four copyright registrations, one which was effective June 18, 2001,
and three federal trademark applications which were filed in January 2000.
The copyright is for our 13 MagZoom product. Three additional trademarks were
granted in 2002 and they are: for the names "AssetWare," "Real Time Real
Organized Real Simple," and "The Look and Feel of e-Commerce."

Employees

As of January 23, 2004, we had 15 employees, including 7 in systems
engineering and quality assurance; 6 in administration and sales; and 2 in
scanning and site development. We offer and share in the cost of health and
dental insurance. A stock option plan and a stock issuance plan for employees
and others were adopted on August 3, 1999, and July 27, 2001, respectively.
The competition for qualified personnel in our industry and geographic
location is intense, and there can be no assurance that we will be successful
in attracting, integrating, retaining and motivating a sufficient number of
qualified personnel to conduct our business in the future. We have never had
a work stoppage, and no employees are represented under collective bargaining
agreements. We consider our relations with our employees to be good. From
time to time, we also utilize services of independent contractors for
specific projects or to support our research and development effort.

-24-

DESCRIPTION OF PROPERTY

We lease a 2,886 square foot facility in Albuquerque, New Mexico, at a cost
of $3,000 per month. The lease expires July 31, 2004. The facility provides
both administration and engineering offices. It is in close proximity to the
location of the servers, and the two locations are networked together by
fiber optics. The current space provides adequate room for expansion. It
also contains an advanced telephone system which will provide the capability
needed to provide adequate customer telephone support.

We have also leased approximately 1,200 square feet of office space in Santa
Monica, California, to house the Working Knowledge, Inc. operations. The
lease term commenced June 8, 2000, and expires on June 30, 2004. Current
monthly lease payments are $3,337. We intend to renew this lease prior to
termination. If we are unable to renew the lease with terms satisfactory to
us, we believe similar space would be available at comparable rates.

LEGAL PROCEEDINGS

Kurt Paul Grossman and Ann Grossman filed a complaint for Breach of Contract
on a Promissory Note against us on November 25, 2003, in the Superior Court
of Caifornia, Orange County Division, case # 03CC14074. There is a question of
whether the complaint was properly served and whether the California courts
have jurisdiction over us. The Grossmans filed an Application for Write of
Attachment which was denied on January 30. The Grossmans asked for $55,000
($50,000 on the promissory note plus $5,000 interest); $304.40 in costs; and
$24,000 in attorneys fees. It appears the Grossmans are owed $55,000 pursuant
to the note. They are not owed attorney fees since they are not attorneys.
The Grossmans, through a seperate entity, purchased software from us and
it has not been paid for. We will be able to join that entity in this lawsuit
and assert a set-off against the Grossmans

Neither our parent company nor any of its subsidiaries, or any of their
properties, is a party to any pending legal proceeding. We are not
aware of any contemplated proceeding by a governmental authority. Also, we
do not believe that any director, officer, or affiliate, any owner of record
or beneficially of more than five percent of the outstanding common stock, or
security holder, is a party to any proceeding in which he or she is a party
adverse to us or has a material interest adverse to us.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information about our executive officers and
directors.

Name Age Position Director Since

Richard Govatski 59 Chairman, President & CEO 1999
Teresa B. Dickey 60 Director, Secretary & Treasurer 2003
John E. Handley 42 Director 2003

Set forth below is certain biographical information regarding our executive
officers and directors:

RICHARD GOVATSKI has been the President of NMXS.com, Inc. since August 1999,
and has been chairman, CEO, and President of New Mexico Software, Inc., since
1996. Mr. Govatski founded New Mexico Software in 1995 after identifying
market inefficiencies in how intellectual property owners managed their image
assets. Prior to New Mexico Software, Mr. Govatski spent 18 years in systems
integration and publishing, both in sales management and software
development. Mr. Govatski led the sales teams for Popular Electronics,
Computer Shopper, Shutterbug, and MacWeek. Later he sold numerous solutions
for vendors, including Kodak, Apple Computer, and Sun Microsystems. Mr.
Govatski also spent several years in systems development as President of
Media Publishing Group and built graphic applications for companies including
Ferrari Color, Time Magazine, New York Daily News, and Getty Images. He
received a Bachelor of Science Degree in Communications from Butler
University, located in Indianapolis, Indiana in 1968.

TERESA B. DICKEY has been the secretary/treasurer of our company since August
1999. She became a member of our Board of Directors on December 19, 2002 and
has held such position since such time. From 1988 until 1999 she was
employed by Sandia National Laboratory as art director. Sandia National
Laboratory is a U.S. Department of Energy national security laboratory. In
1964, Ms. Dickey received her Bachelor of professional Arts from the Art
center College of design in Pasadena, California.

JOHN E. HANDLEY has been our director since January 2003. He has been self-
employed since September 2002 as a telecommunications consultant. From
August 1987 until August 2002 he was employed, as an associate partner (from
September 1997 until August 2000) and as a partner (September 2000 until
August 2002), by Accenture LLP, a business and technology consulting and
outsourcing company. He received his Bachelor of Arts degree in Psychology
and Business from Roanoke College in 1983. Thereafter, he received his
Masters in Business Administration from Virginia Tech in 1987.

-25-

EXECUTIVE COMPENSATION

Compensation of Executive Officers

Summary Compensation Table. The following table sets forth information
concerning the annual and long-term compensation awarded to,
earned by, or paid to the named executive officer for all services rendered
in all capacities to our company, or any of its subsidiaries, for the years
ended December 31, 2003, 2002 and 2001:

SUMMARY COMPENSATION TABLE

Long-Term
Annual Compensation Compensation
--------------------------------------- -------------------------------------------------
Securities
Restricted Securiites
Name and Other Annual Stock Underlying
Principal Position Year Salary Bonus Compensation Award(s) Options
------------------------------------------------------------------------------------------------------------------

Richard Govatski 2003 $ 20,000 (4) -0- -0- -0- -0-
2002 $120,000 (1) -0- $3,600(2) -0- -0-
CEO 2001 $-0- (3) -0- -0- -0- -0-

(1) Mr. Govatski did not receive payment of any of his 2002 salary, but he
did apply $26,000 of the amount of this payable toward the satisfaction of a
like amount advanced by us to him in prior years. The remaining $94,000 has
been booked as an account payable to him.
(2) Mr. Govatski is afforded the use of a company automobile.
(3) Mr. Govatski agreed to forgo his annual salary for 2001, none of which
was paid. However, the company did record a charge to operations in the
amount of $120,000 to reflect the fair value of the services rendered
during 2001.
(4) Mr. Govatski agreed to forgo most of his salary in 2003. In lieu thereof,
Mr. Govatski received a salary of $20,000. He intends to receive a salary of
$44,000 in 2004.

Option Grants Table. The following table sets forth information concerning
individual grants of stock options to purchase our common stock
made to the executive officer named in the Summary Compensation Table during
fiscal 2002.

OPTIONS GRANTS IN LAST FISCAL YEAR
(Individual Grants)

Number of securities Percent of total
underlying options options granted to Exercise or base
granted employees in last price Expiration
Name (#) fiscal year ($/Share) Date
------------------------------------------------------------------------------------------------

Richard Govatski -0- N/A N/A N/A

Aggregated Option Exercises and Fiscal Year-End Option Value Table. The
following table sets forth certain information regarding stock options
exercised during fiscal 2002 and held as of December 31, 2002, by the
executive officer named in the Summary Compensation Table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
at Fiscal at Fiscal
Year-End(#) Year-End($)(1)
------------- --------------
Shares acquired on Exercisable/ Exercisable/
Name exercise (#) Value realized ($) Unexercisable Unexercisable
--------------------------------------------------------------------------------------------

Richard Govatski -0- N/A 300,000/200,000 $-0-/$-0-(2)

(1) Value is based on the closing sale price of the Common Stock on December
31, 2002, the last trading day of fiscal 2002 ($0.13), less the applicable
option exercise price.
(2) Of these options, 380,000 were exercisable at $0.75 per share and 120,000
were exercisable at $0.825 per share.

-26-

Employment Contracts

We have a three-year employment contract with Mr. Govatski to act as our
President and Chief Executive Officer on a full-time basis. The
agreement commenced on January 1, 2003 and expires on December 31, 2005. The
annual base salary is $200,000. Base Salaryis paid quarterly in the form of
50 shares of Series A Convertible Preferred Stock. He is entitled to a bonus
from time-to-time as may be determined solely by our Board of Directors. As
part of his benefits, he receives options to purchase 500,000 shares of our
common stock. The options expire on December 31, 2007. The exercise price
is the greater of $.06 per share or 110% of the fair market value per share
of common stock on the grant date provided our stock option plan. The
agreement is terminable for cause by a vote of two-thirds of our directors.
It could also be terminated upon three-month's notice if he becomes
incapacitated for a period of six consecutive months or immediately upon his
death.

Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for
their services as directors. The Board of Directors has the authority
to fix the compensation of directors. No amounts have been paid to, or
accrued to, directors in such capacity.

Stock Option and Stock Issuance Plans

Our 1999 Stock Option Plan permits the grant of options exercisable for
shares of our common stock to corporate officers, directors, employees, and
consultants upon such terms, including exercise price and conditions and
timing of exercise, as may be determined by the Board of Directors. The plan
authorizes the grants of awards up to a maximum of 3,000,000 shares of our
common stock. In 2002, we granted 352,686 stock options under the plan. At
April 10, 2003, 2,732,267 remained outstanding and unexercised. Of these
outstanding options, 1,275,474 had vested.

Our 2001 Stock Issuance Plan, as amended, permits the grant of shares of our
common stock to employees of our company and any of its
subsidiaries, non-employee members of our board or non-employee members of
the board of directors of any of our subsidiaries, and consultants and other
independent advisors who provide services to us or any of our subsidiaries,
upon such terms and conditions as may be determined by the Board of
Directors. The plan authorizes the grants of awards up to a maximum of
2,400,000. In 2002 we granted 878,995 shares under the plan. At April 10,
2003, an aggregate of 1,449,443 shares had been granted under the plan, all
of which were fully vested upon issuance.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information derived from the named
person, or from the transfer agent, concerning the ownership of
common stock as of January 20, 2004, of (i) each person who is known to us to
be the beneficial owner of more than 5 percent of the common stock; (ii) all
directors and executive officers; and (iii) directors and executive officers
as a group:

Amount and Nature
Name and Address of Beneficial
of Beneficial Owner Ownership(1) Percent of Class (1)
------------------------------------------------------------------------------
Richard Govatski 5,080,500 17.14%
5041 Indian School Rd. NE 5,380,500 (including
Albuquerque, NM 87110 the 300,000 options)(2) 17.97%
on a fully diluted
basis including the
300,000 options

Teresa B. Dickey 107,563 *
532,016(3)(including
the 424,453 options) 1.77%

John Handley 265,000(4) *

Executive Officers and
Directors as a Group
(3 Persons) 5,453,063 18.40%
6,177,516 20.34% on a fully
(including the options diluted basis
set forth above)

* - Represents beneficial ownership of less than 1% of the total number of
shares of common stock outstanding.

(1) All of the persons are believed to have sole voting and investment power
over the shares of common stock listed or share voting and investment power
with his or her spouse, except as otherwise provided.
(2) This number of shares includes options to purchase 300,000 shares, which
options have vested and are currently exercisable. The shares
underlying these options are included in the table and are considered to be
outstanding for purposes of computing the percentage interest held by Mr.
Govatski. The number of shares also includes 400,000 shares pledged by Mr.
Govatski to First Mirage Corpporation secure a loan to the company which is
due and payable on June 30, 2003. Such shares are presently in the name of
David A. Rapaport. Mr. Govatski retains the right to vote these shares until
foreclosure under the terms of the pledge agreement.
(3) This number of shares includes 107,563 shares issued to Ms. Dickey and
options to purchase 424,453 shares, which options have vested and are
currently exercisable. The shares underlying these options are included in
the table and are considered to be outstanding for purposes of computing the
percentage interest held by Ms. Dickey.

-27-

DILUTION

As of January 20, 2004, we had issued and outstanding
29,642,256 shares of common stock. In addition, we have
1,000,000 warrants being registered in this offering that
convert into shares of our common stock; 3,304,545 shares
being registered in this offering that have not been issued;
and 2,325,581 shares being offered in this offering.
Therefore, the dilution tables below are based on 36,272,382
shares of our common stock on a fully diluted basis.
Dilution is a reduction in the net tangible book value of a
purchaser's investment measured by the difference between
the purchase price and the net tangible book value of the
shares after the purchase takes place. The net tangible book
value of common stock is equal to stockholders' equity
applicable to the common stock as shown on our balance sheet
divided by the number of shares of common stock outstanding.
As a result of such dilution, in the event we liquidated, a
purchaser of shares may receive less than their initial
investment and a present stockholder may receive more.

The following calculations assume that all of the shares we
are registering are issued pursuant to the outstanding
warrants and shares to be issued pursuant to the outstanding
agreements. Our net tangible book value as of September 30,
2003 was $(58,500) or $(0.0019) per share (based on
29,642,256 shares issued and outstanding). The adjusted pro
forma net tangible book value after this offering (assuming
the issuance of all shares as set in the selling
shareholders table that are not issued and all of the shares
are sold in the offering) will be $891,500 or $.0245 per
share based on a per share price of $0.43.

Therefore, the increase in the net tangible book value per
share attributable to the offering is $.0264. There is no
minimum or maximum amount of shares that must be sold in
this offering. Therefore, purchasers of shares of common
stock in this offering will realize immediate dilution of
$(.4055) per share assuming all of our shares offered in
this prospectus are sold. The following table describes the
dilution effect if 100% of the shares are sold in this
offering:

NMXS.com, Inc.
Dilution calculation
As of September 30, 2003

Tangible book value before offering $(58,500) $(.0019)
Offering to new investors $ 1,000,000 $ .43
Less expenses $ 50,000
Net proceeds $ 950,000
Tangible book value after offering $ 891,500 $ .0245
Increase in Net Tangible
Book value by old investors $ .0264
Offering price paid by new investors $ .43
Dilution for new investor $ (.4055)

-28-

SELLING STOCKHOLDERS

The shares being offered for resale by the selling stockholders consist of
the total of 5,969,090 shares of our common stock and 1,000,000 shares of our
common stock issuable in connection with their conversion of our warrants.
None of the selling stockholders have and, within the past three years have
not had, any position, office or other material relationship with us or any
of our predecessors or affiliates.

The following table sets forth the name of the selling stockholders, the
number of shares of common stock beneficially owned by each of the selling
stockholders as of January 20, 2004 and the number of shares of common stock
being offered by the selling stockholders. The shares being offered hereby
are being registered to permit public secondary trading, and the selling
stockholders may offer all or part of the shares for resale from time to
time. However, the selling stockholders are under no obligation to sell all
or any portion of such shares nor are the selling stockholders obligated to
sell any shares immediately upon effectiveness of this prospectus. All
information with respect to share ownership has been furnished by the selling
stockholders.

Shares of Percent of Shares of Percent of
common stock common common stock Number of shares
owned prior shares owned to be sold shares owned owned
Name of selling to the prior to the in the after the after
stockholder offering offering(1) offering(1) offering(1) offering(1)
------------------------------ ----------- ---------- ----------- --------- --------

John Shaver 0 0% 700,000(2) 0 0
ABQ Energy 0 0% 1,500,000(2) 0 0
James Warlick 0 0% 200,000(2) 0 0
Rahim Salamohammed 0 0% 400,000(2) 0 0
Lewis White(3) 454,545 1.53% 909,090(3) 0 0
First Mirage, Inc.(4) 0 0% 1,000,000 0 0
John Handley 265,000 .89% 265,000 0 0
Brian McGowan 1,230,000 4.15% 1,230,000 0 0
Frank Reidy 590,000 1.99% 150,000 440,000 1.37%
Hawley Revocable Trust(5) 217,000 .73% 100,000 117,000 .36%
Lowell R. Addis's Family Trust 100,000 .34% 100,000 0 0
Richard I. Anslow(6) 0 0% 35,000 0 0
Gregg E. Jaclin(6) 0 0% 15,000 0 0
Jonathan Rose(7) 365,000 1.23% 365,000 0 0

(1) Assumes that all of the shares of common stock offered in this prospectus
(2,564,103)are sold and no other shares of common stock are sold during the
offering period. The percentage of shares is based on 29,642,256 shares
issued and outstanding as of January 20, 2004. The number of shares owned
after the offering is based on 29,642,256 plus 2,564,103 or an aggregate of
32,206,359 shares of our common stock.
(2) Represents the number of shares of common stock that each party shall
receive upon conversion of our preferred stock held by such parties.
(3) Mr. White's shares are held jointly with his wife Ellen White. Since
January 20, 2004, the Whites converted warrants representing the additional
454,545 shares.
(4) Represents 1,000,000 shares of our common stock underlying the warrants
given to First Mirage, Inc. pursuant to their consulting agreement with us
dated August 21, 2003. The warrants are exercisable at the price of $.08 per
warrant.
(5) Greg A. Hawley and Marilyn F. Hawley are the trustees of the Hawley
Revocable Trust dated August 30, 1993.
(6) Richard I. Anslow and Gregg E. Jaclin are partners of Anslow & Jaclin,
LLP, the law firm representing us in the preparation and filing of this
registration statement. The shares being registered for each of them
represents part of the compensation paid to Anslow & Jaclin, LLP. The shares
have not yet been issued, but will be issued immediately after the filing of
this registration statement.
(7) Jonathan Rose is the principal of our landlord, TC Albuquerque Rose
Interests, LLC and TC Albuquerque Rabina Interest, LLC.

PLAN OF DISTRIBUTION

We are offering our shares of common stock on a "best efforts" basis. There
is no minimum number of shares that we must sell before we can utilize the
proceeds of the offering. We are making the offering through our officers,
directors and employees who will not be compensated for offering the shares.
Richard Govatski, our President and director will be the only person that
will conduct the best-efforts offering. He intends to offer and sell the
shares in the primary offering through his business and personal contacts. We
will, however, reimburse Mr. Govatski for all expenses incurred by him in
connection with the offering. The shares may also be offered by participating
broker-dealers which are members of the National Association of Securities
Dealers, Inc. We may, in our discretion, pay commissions of up to 10% of the
offering price to participating broker-dealers and others who are
instrumental in the sale of shares.

-29-

Richard Govatski, our President and director is the only person that plans to
sell our common stock. He is not a registered broker-dealer. He intends to
claim reliance on Exchange Act Rule 3a4-1 which provides an exemption from
the broker-dealer registration requirements of the Exchange Act for persons
associated with an issuer. Specifically, Mr. Govatski (i)at the time of sale,
he will not be subject to a statutory disqualification as that term is
defined in section 3(a)39 of the Securities Act; (ii) will not be compensated
in connection with his participation in the offering by payment of
commissions or other remuneration; at the time of participation in the sale
of shares, he will not be an associated person of a broker or a dealer; (iv)
pursuant to Rule 3a4-1(a)(4)(ii), Mr. Govatski will meet all of the following
requirements: at the end of the offering, Mr. Govatski will perform
substantial duties for us, other than in connection with transactions in
securities; Mr. Govatski was not a broker or dealer, or an associated person
of a broker or dealer within the last 12 months; and Mr. Govatski has not
participated in, or does not intend to participate in, selling an offering of
securities for any issuer more than once every 12 months other than in
reliance on paragraph(a)(4)(i) or (iii) of Rule 3a4-1.

The selling security holder offering will run concurrently with the primary
offering. All of the stock owned by the selling security holders, including
our officers and directors, will be registered by the registration statement
of which this prospectus is a part. The selling security holders may sell
some or all of their shares immediately after they are registered. There is
no restriction on the selling security holders to address the negative effect
on the price of your shares due to the concurrent primary and secondary
offering. In the event that the selling security holders sell some or all of
their shares, which could occur while we are still selling shares directly to
investors in this offering, trading prices for the shares could fall below
the offering price of the shares. In such event, we may be unable to sell all
of the shares to investors, which would negatively impact the offering. As a
result, our planned operations may suffer from inadequate working capital.

The selling security holders shares may be sold or distributed from time to
time by the selling stockholders or by pledgees, donees or transferees of, or
successors in interest to, the selling stockholders, directly to one or more
purchasers (including pledgees) or through brokers, dealers or underwriters
who may act solely as agents or may acquire shares as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices, which may be changed.
The distribution of the shares may be effected in one or more of the
following methods:

* ordinary brokers transactions, which may include long or short sales,

* transactions involving cross or block trades on any securities or market
where our common stock is trading,

* purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this prospectus, "at the
market" to or through market makers or into an existing market for the common
stock,

* in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents,

* through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or

* any combination of the foregoing, or by any other legally available means.

In addition, the selling stockholders may enter into hedging transactions
with broker-dealers who may engage in short sales, if short sales were
permitted, of shares in the course of hedging the positions they assume with
the selling stockholders. The selling stockholders may also enter into option
or other transactions with broker-dealers that require the delivery by such
broker-dealers of the shares, which shares may be resold thereafter pursuant
to this prospectus.

Brokers, dealers, underwriters or agents participating in the distribution of
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may
be in excess of customary commissions). The selling stockholders and any
broker-dealers acting in connection with the sale of the shares hereunder may
be deemed to be underwriters within the meaning of Section 2(11) of the
Securities Act of 1933, and any commissions received by them and any profit
realized by them on the resale of shares as principals may be deemed
underwriting compensation under the Securities Act of 1933. Neither the
selling stockholders nor we can presently estimate the amount of such
compensation. We know of no existing arrangements between the selling
stockholders and any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of the shares.

We will not receive any proceeds from the sale of the shares of the selling
security holders pursuant to this prospectus. We have agreed to bear the
expenses of the registration of the shares, including legal and accounting
fees, and such expenses are estimated to be approximately $50,000.

We have informed the selling stockholders that certain anti-manipulative
rules contained in Regulation M under the Securities Exchange Act of 1934 may
apply to their sales in the market and have furnished the selling
stockholders with a copy of such rules and have informed them of the need for
delivery of copies of this prospectus. The selling stockholders may also use
Rule 144 under the Securities Act of 1933 to sell the shares if they meet the
criteria and conform to the requirements of such rule.

-30-

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Richard Govatski, our president, director, and principal shareholder, may be
deemed a promoter or founder in relation to the organization of our business.
In connection with the acquisition of New Mexico Software, Mr. Govatski
exchanged all 1,000 of his shares of New Mexico Software for 5,597,000 shares
in the public company.

During the years ended December 31, 1999 and 2000, we advanced a total of
$50,000 to Mr. Govatski. After repayment of $25,000 by Mr. Govatski in 2001,
the principal and interest due was reduced to approximately $32,000 at
December 31, 2001, including $4,000 advanced by us to Mr. Govatski during
2001. During 2002, Mr. Govatski received none of his agreed annual salary of
$120,000. However, effective December 31, 2002, he agreed to cancel $26,000
of the 2002 salary amount and apply it to the former advances. At December
31, 2002, he owed a balance of $6,000 for the prior cash advances.

In January 2001 our wholly owned subsidiary, New Mexico Software, Inc.,
entered into a line of credit agreement with Los Alamos National Bank in the
maximum principal amount of $300,000. It also issued a promissory note dated
January 24, 2001, in the principal amount of $300,000, representing the
amount that it borrowed under the line of credit. The note is secured by all
of New Mexico Software's furniture, fixtures, equipment, inventory, accounts,
chattel paper, tangibles and general intangibles, and a letter of credit in
the amount of $250,000 issued by another bank and provided by Murray Kelly.
We issued 250,000 shares to Mr. Kelly for providing this letter of credit as
collateral on this note. The note was originally due on or before July 24,
2001, and was extended to July 24, 2002. At July 24, 2002, we negotiated a
three-month extension until October 24, 2002, by paying $50,000, plus accrued
interest. At or about October 24, 2002, we were able to negotiate an
extension of the note until April 24, 2003, by paying $25,000, plus interest.
The note bears interest at 7%. Mr. Govatski has personally guaranteed to the
bank repayment of $50,000 of this line of credit.

The lease payments for our office space in Albuquerque, New Mexico, of
$47,000 and improvements of approximately $28,000 were provided through the
payment of 75,000 shares of our common stock to the landlord by Richard
Govatski, our president, a director, and a principal shareholder. In March
2001 we issued 75,000 shares to Mr. Govatski for providing his shares to the
landlord.

In March 2001 we issued 1,500,000 Series C Warrants to Manhattan Scientifics,
Inc., one of our 5% shareholders. These warrants were issued
in consideration of Manhattan Scientifics issuing 100,000 of its common
shares to a consultant for services performed by the consultant for us.

We have granted options to Mr. Govatski under our option plan to purchase an
aggregate of 500,000 shares of common stock. The options were granted in
August 1999 and vest at the rate of 20% per year. Of the total options,
380,000 are exercisable at $0.75 per share and 120,000 are exercisable at
$0.825 per share.

We have granted options under our option plan to Teresa Dickey, one of our
executive officers, to purchase an aggregate of 518,780 shares. Of the total
options, 56,000 were granted in January 2000 and are exercisable at $2.125
per share; 56,000 were granted in July 2000 and are exercisable at $1.25 per
share; 3,000 were granted in January 2001 and are exercisable at $0.77 per
share; 400,000 were granted in October 2001 and are exercisable at $0.34 per
share; and 3,780 were granted in January 2002 and are exercisable at $0.34
per share. The options vest at the rate of 50% per year.

In March 2003 we borrowed $25,000 from an outside lender. To secure
repayment of this loan Mr. Govatski pledged 400,000 of his person shares as
collateral.

DESCRIPTION OF SECURITIES

The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and by-laws, copies of which
have been incorporated by reference as exhibits to the registration statement
of which this prospectus forms a part. The following discussion is qualified
in its entirety by reference to such exhibits.

Common Stock

We are presently authorized to issue 50,000,000 shares of $.001 par value
common stock. At January 20, 2004, we had 29,642,256 shares of common stock
outstanding. The holders of our common stock are entitled to equal dividends
and distributions when, as, and if declared by the Board of Directors from
funds legally available therefore. No holder of any shares of common stock
has a preemptive right to subscribe for any of our securities, nor are any
common shares subject to redemption or convertible into other of our
securities, except for outstanding options described above. Upon
liquidation, dissolution or winding up, and after payment of creditors and
preferred stockholders, if any, the assets will be divided pro-rata on a
share-for-share basis among the holders of the shares of common stock. All
shares of common stock now outstanding are fully paid, validly issued and non-
assessable. Each share of common stock is entitled to one vote with respect
to the election of any director or any other matter upon which shareholders
are required or permitted to vote. Holders of our common stock do not have
cumulative voting rights, so the holders of more than 50% of the combined
shares voting for the election of directors may elect all of the directors if
they choose to do so, and, in that event, the holders of the remaining shares
will not be able to elect any members to the Board of
Directors.

-31-

Preferred Stock

We are authorized to issue up to 500,000 shares of $.001 par value preferred
stock. At January 20, 2004, we had 135 shares of preferred stock
outstanding. Under our Certificate of Incorporation, the Board of Directors
will have the power, without further action by the holders of the common
stock, to designate the relative rights and preferences of the preferred
stock, and to issue the preferred stock in one or more series as designated
by the Board of Directors. The designation of rights and preferences could
include preferences as to liquidation, redemption and conversion rights,
voting rights, dividends or other preferences, any of which may be dilutive
of the interest of the holders of the common stock or the preferred stock of
any other series. The issuance of preferred stock may have the effect of
delaying or preventing a change in control of our company without further
shareholder action and may adversely affect the rights and powers, including
voting rights, of the holders of common stock. In certain circumstances, the
issuance of preferred stock could depress the market price of the common
stock.

Series A Warrants

On August 29, 2003, we issued a total of 1,000,000 warrants to First Mirage,
Inc. Each warrant provides the warrant holder the right to purchase 1 share
of our common stock at $.08 per share. The warrants can be exercised at any
time until August 29, 2008. To date, no warrants have been exercised.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

During the two most recent fiscal years and interim period subsequent to
December 31, 2002, there have been no disagreements with Beckstead and Watts,
LLP, our independent auditor, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.

TRANSFER AGENT

The Transfer Agent and Registrar for our common stock is Interwest Transfer
Company, Inc., 1981 East Murray Holladay Road, Salt Lake City, Utah 84117.
Its telephone number is (801) 272-9294.

EXPERTS

The financial statements included in this prospectus have been audited by
Beckstead & Watts, LLP, independent auditors, as stated in their report
appearing herein and elsewhere in the registration statement (which report
expresses an unqualified opinion and includes an explanatory paragraph
referring to our recurring losses from operations which raise substantial
doubt about our ability to continue as a going concern), and have been so
included in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.

LEGAL MATTERS

The validity of our common shares offered will be passed upon for us by
Anslow & Jaclin, LLP, Freehold, New Jersey 07728.

FINANCIAL STATEMENTS

We have attached to this prospectus copies of our audited financial
statements as of December 31, 2002 and 2001. We have also included unaudited
financial statements for the nine months ended September 30, 2003 and 2002.

-32-

NMXS.com, Inc. and Subsidiaries

Balance Sheet
as of
September 30, 2003

and

Statements of Operations
for the Three Months and Nine Months Ended
September 30, 2003 and 2002,

and

Cash Flows
for the Nine Months Ended
September 30, 2003 and 2002

-33-

TABLE OF CONTENTS

Page

Independent Accountants' Review Report 1

Balance Sheet 2

Statements of Operations 3

Statements of Cash Flows 4

Footnotes 5

-34-

Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540 fax

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

Board of Directors
NMXS.com, Inc. and Subsidiaries

We have reviewed the accompanying balance sheet of NMXS.com, Inc.
and Subsidiaries as of September 30, 2003 and the related
statements of operations for the three-months and nine-months
ended September 30, 2003 and 2002, and statements of cash flows
for the nine-months ended September 30, 2003 and 2002. These
financial statements are the responsibility of the Company's
management.

We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data, and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the
objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying financial
statements referred to above for them to be in conformity with
generally accepted accounting principles in the United States of
America.

Beckstead and Watts, LLP has previously audited, in accordance
with generally accepted auditing standards, the balance sheet of
NMXS.com, Inc. and Subsidiaries as of December 31, 2002, and the
related statements of operations, stockholders' equity, and cash
flows for the year then ended (not presented herein) and in our
report dated February 6, 2003, we expressed an unqualified
opinion on those financial statements.

November 19, 2003

-35- F1

NMXS.com, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)

September 30,
2003
Assets ------------

Current assets:
Cash and equivalents $ 70,000
Restricted cash 449,000
Accounts receivable, net 10,000
Prepaid expenses and other assets 53,000
------------
Total current assets 582,000
------------

Furniture, equipment and improvements, net 163,000
Security deposits 39,000
Goodwill, net 75,000
------------
$ 859,000
============
Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable $ 150,000
Accrued expenses 435,000
Deferred revenue 25,000
Notes payable 300,000
------------
Total current liabilities 910,000
------------
Stockholders' equity:
Preferred stock, $0.001 par value, 500,000
shares authorized, no shares issued and
outstanding -
Common stock, $0.001 par value, 50,000,000
shares authorized, 28,623,387 shares
issued and outstanding 29,000
Additional paid-in capital 8,677,000
Deferred compensation - related party (120,000)
Prior period adjustment (6,000)
Retained (deficit) (8,631,000)
------------
(51,000)
------------

$ 859,000
============

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

-36- F2

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)

For the three months ended For the nine months ended
September 30, September 30,
----------------------------- ----------------------------
2003 2002 2003 2002
------------- ------------- ------------- ------------

Revenue
Software sales and maintenance $ 158,000 $ 1,000 $ 648,000 $ 263,000
Custom programming 151,000 65,000 200,000 99,000
License fees 15,000 13,000 30,000 924,000
Scanning services 50,000 133,000 121,000 202,000
Other 3,000 - 5,000 -
------------- ------------- ------------- ------------
377,000 212,000 1,004,000 1,488,000
------------- ------------- ------------- ------------

Operating costs and expenses:
Cost of services 80,000 181,000 245,000 423,000
General and administrative 143,000 268,000 701,000 1,124,000
Compensation expense - related
party 15,000 - 15,000 -
Research and development 28,000 279,000 90,000 137,000
Bad debt expense - - 501,000 -
------------- ------------- ------------- ------------
Total operating costs and 266,000 493,000 1,552,000 1,684,000
expenses ------------- ------------- ------------- ------------

Net operating (loss) 111,000 (281,000) (548,000) (196,000)

Other income (expense):
Interest income - - - 1,000
Interest (expense) (5,000) (13,000) (19,000) (27,000)
(Loss) on disposal of fixed assets - - - (25,000)
------------- ------------- ------------- ------------
Total other income (expense) (5,000) (13,000) (19,000) (51,000)
------------- ------------- ------------- ------------

Net Income (loss) $ 106,000 $ (294,000) (567,000) (247,000)
============= ============= ============= ============
Weighted average number of
common shares outstanding - 27,998,224 23,351,000 26,466,073 22,825,000
basic and fully diluted ============= ============= ============= ============

Net Income (loss) per share - $ 0.00 $ (0.01) $ (0.02) $ (0.01)
basic and fully diluted ============= ============= ============= ============

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

-37- F3

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)

For the nine months ended
September 30,
-------------------------------
2003 2002
------------- ----------------
Cash flows from operating activities
Net income (loss) $ (567,000) $ (247,000)
Adjustments to reconcile net income (loss) to
net cash (used) by operating activities:
Prior period adjustment (6,000) -
Common stock issued for salaries 69,000 108,000
Common stock issued for services 140,000 205,000
Stock options issued for services 9,000 156,000
Bad debt expense 501,000 -
Depreciation and amortization 65,000 74,000
Loss on disposal of fixed assets - 25,000
Changes in:
Restricted cash - (1,000)
Accounts receivable (307,000) (206,000)
Inventory (10,000) -
Estimated earnings in excess of billings - 18,000
on uncompleted contracts
Prepaid expenses and other assets (11,000) 31,000
Officer advances 1,000 (23,000)
Accounts payable (165,000) 249,000
Accrued expenses 117,000 (45,000)
Deferred revenue 25,000 (413,000)
------------- ----------------
Net cash (used) by operating activities (139,000) (69,000)
------------- ----------------
Cash flows from investing activities
Acquisition of fixed assets (6,000) (6,000)
Security deposits - 5,000
------------- ----------------
Net cash (used) by investing activities (6,000) (1,000)
------------- ----------------
Cash flows from financing activities
Proceeds from notes payable 25,000 63,000
Repayment of note payable (12,000) (50,000)
Net proceeds from the issuance of common stock 28,000 148,000
Net proceeds from the issuance of preferred
stock 135,000 -
------------- ----------------
Net cash provided by financing activities 176,000 161,000
------------- ----------------

Net increase in cash and equivalents 31,000 91,000
Cash and equivalents - beginning 39,000 57,000
------------- ----------------
Cash and equivalents - ending $ 70,000 $ 148,000
============= ================
Supplemental disclosures:
Interest paid $ - $ 36,000
============= ================
Income taxes paid $ - $ -
============= ================
Non-cash transactions:
Disposal of fixed asset and corresponding $ - $ 327,000
reduction in accounts payable ============= ================
Common shares issuable for leasehold - 62,000
improvements and prepaid rent ============= ================
Acquisition of Investment - (225,000)
Disposition of investment - 225,000
============= ================

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

-38- F4

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE A - BASIS OF PRESENTATION

The interim financial statements included herein, presented in
accordance with United States generally accepted accounting
principles and stated in US dollars, have been prepared by the
Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading.

These statements reflect all adjustments, consisting of normal
recurring adjustments, which, in the opinion of management, are
necessary for fair presentation of the information contained
therein. It is suggested that these interim financial statements
be read in conjunction with the financial statements of the
Company for the year ended December 31, 2002 and notes thereto
included in the Company's Form 10-KSB. The Company follows the
same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative
of annual results.

NOTE B - ACCOUNTS RECEIVABLE

During the nine months ended September 30, 2003, the Company
elected to write off $500,000 of accounts receivable to bad debt
due to one customer. The Company is no longer doing business
with this customer and is in negotiations to collect the entire
balance.

NOTE C - FURNITURE, EQUIPMENT, AND IMPROVEMENTS

Furniture, equipment, and improvements as of September 30, 2003
consisted of the following:

Computers $ 300,000
Furniture, fixtures and equipment 144,000
Leasehold improvements 83,000
-----------
527,000
Accumulated depreciation (364,000)
-----------
163,000
===========

NOTE D - NOTE PAYABLE

During January 2001, the Company borrowed $300,000. The loan is
collateralized by substantially all of the Company's assets and
personally guaranteed by an officer of the Company. Additional
collateral was provided by a letter of credit issued by a then
unrelated third party. The letter of credit expired on January
19, 2002. The note was renewed with a due date of July 24, 2002
at a current interest rate of 7%. On July 24, 2002, the Company
paid $50,000 of principal and $10,525 of interest. The remaining
$250,000 of principal was extended to October 24, 2002 at a
current interest rate of 7%. On October 24, 2002 the Company paid
$25,000 of principal and $4,555 of interest. On April 24, 2003,
the Company paid $12,224 of principal and $12,768 of interest.
The remaining $212,849 of principal was extended until October
15, 2003 at a current interest rate of 7%. As of September 30,
2003, the Company had a balance due of $212,849. On October 20,
2003, the Company has negotiated a payment of $25,000 in
principal and $7,500 in interest and extended the note to April
23, 2004.

On April 22, 2002, the Company borrowed $50,000. The loan is due
on April 23, 2003 at a current interest rate of 10% per annum.
This note is secured by 500,000 shares of the Company's $0.001
par value common stock. As of September 30, 2003, the Company is
in default and is negotiating with the note holder.

-39- F5

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

In April 2002, the Company borrowed $12,500. The loan is due on
demand and bears no interest. As of September 30, 2003, the
Company had a balance due of $12,500.

On March 1, 2003, the Company borrowed $25,000. The loan was due
on September 30, 2003 at a current interest rate of 7% per annum.
On August 29, 2003, the note was extended to December 31, 2003.
As of September 30, 2003, the Company had a balance due of
$25,000.

NOTE E - CAPITAL TRANSACTIONS

Preferred stock:

During the nine month period ended September 30, 2003, the
Company effected the following stock transactions:

The Company received a total of $135,000 from four individuals to
purchase 135 shares of the Company's $0.001 par value preferred
stock. As of August 31, 2003, the Company closed the preferred
stock offering and all of the shareholders will receive their
preferred stock.

Common stock:

During the nine month period ended September 30, 2003, the
Company effected the following stock transactions:

On January 13, 2003, the Company issued a total of 65,351 shares
of the Company's $0.001 par value common stock to its employees
in lieu of salary which was valued at $12,000.

On January 31, 2003, the Company agreed to issue 250,000 shares
of its $0.001 par value common stock to an individual for cash of
$28,000. As of September 30, 2003, the shares have not been
issued and the total amount is considered subscriptions payable.

On February 20, 2003, the Company issued a total of 154,741
shares of the Company's $0.001 par value common stock to its
employees in lieu of salary which was valued at $21,000 and to
its independent contractors for services rendered in the amount
of $2,000.

On March 10, 2003, the Company issued a total of 217,467 shares
of the Company's $0.001 par value common stock to its employees
in lieu of salary which was valued at $22,000 and to its
independent contractors for services rendered in the amount of
$2,000.

On March 24, 2003, the Company issued a total of 182,991 shares
of the Company's $0.001 par value common stock to its employees
in lieu of salary which was valued at $16,000 and to its
independent contractors for services rendered in the amount of
$4,000.

On March 31, 2003, the Company issued a total of 10,000 shares of
the Company's $0.001 par value common stock to its independent
contractors for services rendered in the amount of $1,100.

On April 17, 2003, the Company issued a total of 100,000 shares
of the Company's $0.001 par value common stock to a former
director for services rendered in the amount of $20,000.

On May 16, 2003, the Company issued a total of 170,000 shares of
the Company's $0.001 par value common stock to an independent
contractor for services rendered in the amount of $17,000.

On May 30, 2003, the Company issued a total of 42,500 shares of
the Company's $0.001 par value common stock to an independent
contractor for services rendered in the amount of $2,975.

-40- F6

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

On June 6, 2003, the Company issued a total of 57,611 shares of
the Company's $0.001 par value common stock to an independent
contractor for services rendered in the amount of $4,000.
On June 6, 2003, the Company issued a total of 1,500,000 shares
of the Company's $0.001 par value common stock to a shareholder
of the Company as part of a five year consulting agreement in the
amount of $90,000. The entire amount is considered deferred
compensation.

On August 1, 2003, the Company issued a total of 500,000 shares
of the Company's $0.001 par value common stock to a shareholder
of the Company as part of a five year consulting agreement in the
amount of $30,000. The entire amount is considered deferred
compensation.

On September 18, 2003, the Company issued a total of 250,000
shares of the Company's $0.001 par value common stock to a
shareholder of the Company as part of a five year consulting
agreement in the amount of $15,000. The entire amount is
considered deferred compensation.

On September 30, 2003, the Company adjusted deferred compensation
in the amount of $15,000.

Warrants:

On August 29, 2003, the Company issued a total of 1,000,000
warrants to a notes payable holder which gives them the right to
purchase up to 1,000,000 shares of the Company's $0.001 par value
common stock at $0.08 per share. The warrants can be exercised
at any time until August 29, 2008.

During the nine month period ended September 30, 2003, no
warrants have been exercised.

Stock options:

Disclosures required by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"), including pro forma operating results had the
Company prepared its financial statements in accordance with the
fair value based method of accounting for stock- based
compensation prescribed therein are shown below. Exercise prices
and weighted-average contractual lives of stock options
outstanding as of September 30, 2003 are as follows:

Options Outstanding Options Exercisable
--------------------------------------- ------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Number Remaining Exercise Number Exercise
Prices Outstanding Contractual Life Prices Exercisable Price
------- ----------- ---------------- ---------- ----------- ----------
$0.05- 3,144,000 4.64 $0.13 1,347,000 $0.21
$0.30

$0.31- 1,139,000 7.56 $0.39 449,000 $0.39
$0.50

$0.54- 693,000 2.11 $0.70 643,000 $0.67
$0.83

$1.25- 180,000 6.63 $1.69 180,000 $1.69
$2.13

Summary of Options Granted and Outstanding:

For the nine months ended September 30,
------------------------------------------------
2003 2002
---------------------- -----------------------
Shares Weighted Shares Weighted
Average Average
Exercise Exercise
Price Price
--------- ----------- -------- ------------
Options:
Outstanding at 2,526,000 $0.63 2,202,000 $0.77
beginning
of year

Granted 1,700,000 $0.06 255,000 $0.29

Cancelled (6,000) $1.25 (2,000) $1.25
--------- ----------- -------- ------------
Outstanding 4,220,000 $0.63 2,455,000 $0.63
at end of year ========= =========== ======== ============

-41- F7

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

On February 27, 2003, the Company granted 1,000,000 stock options
to Gerald Grafe, the Company's former legal counsel, with an
exercise price of $0.06, equal to the fair value of the common
stock, with a contractual life of 5 years and the options vest
immediately. The fair value of the options has been estimated on
the date of grant using the Black-Scholes option pricing model.
The weighted average fair value of these options was $12,800. The
following assumptions were used in computing the fair value of
these option grants: weighted average risk-free interest rate of
4.42%, zero dividend yield, volatility of the Company's common
stock of 122%, and an expected life of the options of ten years.

The following table summarizes the pro forma operating results of
the Company for September 30, 2003. The compensation costs for
the stock options granted to employees been determined in
accordance with the fair value based method of accounting for
stock based compensation as prescribed by SFAS No. 123.

Proforma net income (loss) available to common stockholders $ 24,000

Proforma basic and diluted loss per share $ 0.00

NOTE F - COMMITMENTS

Leases:

The Company leases office space in New Mexico and California.
Future minimum lease payments as of September 30, 2003 are as
follows:

Year Amount
------ --------
2003 $121,000
2004 76,000

Rent expense for the period ended September 30, 2003 amounted to
$98,000.

Employment agreement:

The Company entered into an employment and non-competition
agreement with a stockholder to act in the capacity of President
and Chief Executive Officer (CEO). The term of the employment
agreement is for three years commencing on January 1, 2003. The
agreement allows for a one year renewal option unless terminated
by either party. Base salary is $200,000 per annum with
available additional cash compensation as defined in the
agreement. The base salary shall be paid in the form of 50
shares of Series A Convertible Preferred stock of the Company
payable at the end of each fiscal quarter. The CEO has the
option to convert up to 25 shares of Series A Convertible
Preferred stock to Common stock at a discount of 30%.
Compensation under this agreement of $15,000 is included in
general and administrative expenses for the period ended
September 30, 2003. The non-competition agreement commences upon
the termination of the employment agreement for a period of one
year. As of September 30, 2003, there was a total of $15,000 in
accrued payroll which will be eliminated upon issuance of the
shares of stock.

-42- F8

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Consulting agreement:

The Company entered into a consulting agreement with a
stockholder to advise the CEO on business strategy and to
formulate marketing ideas. The term of the employment agreement
is for approximately five years commencing on July 1, 2003 and
terminating on December 31, 2008. The shareholder will receive a
total of 5,500,000 shares of the Company's $0.001 par value
common stock valued at $330,000. As of September 30, 2003, the
shareholder was paid a total of 2,250,000 shares of common stock,
but he has earned only 250,000 shares and the difference of
2,000,000 shares is considered deferred compensation. During the
nine months ended September 30, 2003, the Company has expensed
$15,000 in consulting fees.

NOTE G - MAJOR CUSTOMERS

During the nine month period ended September 30, 2003, one
customer accounted for 30% of the Company's revenue. The Company
recognized $245,000 as revenue from barter agreements for the
nine months ended September 30, 2003.

As of September 30, 2003, balances due from one customer
comprised 39% of total accounts receivable.

NOTE H - REPORTABLE SEGMENTS

Management has identified the Company's reportable segments based
on separate legal entities. New Mexico Software, Inc. (NMS)
derives revenues from the development and marketing proprietary
internet technology-based software and Working Knowledge, Inc.
(WKI) provides data maintenance services related to NMS digital
asset management system. Information related to the Company's
reportable segments for 2003 is as follows:

NMS WKI Total
----------- ----------- ------------
Revenue $ 979,000 $ 25,000 $ 1,004,000

Cost of services 199,000 46,000 245,000
General and administrative 597,000 91,000 688,000
Research and development 90,000 - 90,000
Bad debt expense 500,000 1,000 501,000
----------- ----------- ------------
Operating income (loss) ($407,000) ($113,000) ($520,000)
=========== =========== ============

Total assets $ 753,000 $ 106,000 $ 859,000
=========== =========== ============

WKI revenue consists primarily of software maintenance and
scanning services.

A reconciliation of the segments' operating loss to the
consolidated net loss/comprehensive loss is as follows:

Segment's operating income ($ 520,000)
------------
Other income (expense) ( 19,000)
------------
Consolidated net income/comprehensive income ($ 539,000)
============

Prior to acquisition of WKI, in April 2000, the Company operated
within one business segment.

For the nine month period ended September 30, 2003, amortization
and depreciation expense amounted to $282,000 and $81,000 for NMS
and WKI, respectively. Also, total fixed asset additions amounted
to $6,000 and $0 for NMS and WKI, respectively.

-43- F9

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE I - CONTINGENCIES AND OTHER LIABILITIES

Contingencies:

As of September 30, 2003, the Company had accumulated debt
totaling $55,000 in line charges with Sprint. The Company was
also owed commissions in connection with its contract with Sprint
as a Sprint Data Partner. The Company and Sprint have agreed in
principle to apply the outstanding commissions to the debt
thereby reducing the debt from $55,000 to $16,000. The Company
expects to pay the $16,000 over a period of 16 months starting
Feb 2003. During the nine months period ended September 30,
2003, the Company has paid a total of $8,000 to Sprint.

As of September 30, 2003, the Company settled with Sun
Microsystems, Inc. (Sun) over the terms of equipment leased from
Sun whereby the Company continued to make lease payments and
failed to notify Sun past the lease termination date during 2002.
The Company ceased making payments in October 2002 until the
matter was resolved. Sun is pursuing collection of payments it
considers in arrears totaling $78,000. The Company claims that
the missed termination date is a technicality, and that it has
overpaid Sun by $50,000. On July 23, 2003, the Company settled
with Sun and paid a total of $1,000 and has returned the majority
of the equipment to Sun and does not consider this to impair its
ability to continue servicing its customer base.

As of September 30, 2003, the Company had settled with Eisner,
LLP (Eisner) over past due accounting fees totaling $109,000.
The Company and Eisner have agreed to settle for $20,000 and in
September 2003 the Company has paid the entire amount.

As of September 30, 2003, the Company had settled with TC
Albuquerque Ross Interests, LLC and TC Albuquerque Rabina
Interest, LLC (Landlord) over past due office rent totaling
$29,000. The Company has agreed to issue 365,000 of the
Company's $0.001 par value common stock to cancel the outstanding
balance due of $29,000 plus $3,500 in anticipated brokerage fees.
The Company renegotiated its lease to a month-to-month
arrangement at a rate of $3,000 per month.

Outstanding Payroll Taxes:

The Company has unpaid Federal and State payroll taxes totaling
$277,371 as of September 30, 2003. No action has been taken by
the Company or the Internal Revenue Service (IRS) to negotiate
payment terms, and no plan for repayment has been determined by
the Company. The penalties and interest associated with this
liability is estimated to be in excess of 10% of the total
payroll taxes due, but has not been accrued because the Company
feels that until a settlement is reached with the IRS the Company
cannot reasonably determine the amount due in penalties and
interest.

On June 1, 2003, the Company settled with the State of New Mexico
and agreed to pay $1,000 per month of past due payroll taxes plus
the current amount due. During the nine months ended September
30, 2003, the Company paid a total of $3,000 of past due payroll
taxes.

On October 17, 2003, the Company settled with the IRS and agreed
to pay $5,000 per month of past due payroll taxes plus the
current amount due. During the nine months ended September 30,
2003, the Company paid a total of $0 of past due payroll taxes.
On November 1, 2003, the Company has made its first payment of
$5,000 to the IRS.

-44- F10

NMXS.com, Inc. and Subsidiaries

Consolidated Balance Sheets
as of
December 31, 2002 and 2001

and

Consolidated Statement of Operations,
Changes in Stockholders' Equity, and
Cash Flows
for the years ended
December 31, 2002 and 2001

-45-

TABLE OF CONTENTS

PAGE

Independent Auditors' Report 1

Consolidated Balance Sheets 2

Consolidated Statements of Operations 3

Consolidated Statements of Changes in Stockholders' Equity 4

Consolidated Statements of Cash Flows 5

Footnotes 6

-46-

Beckstead and Watts, LLP
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540 (fax)

INDEPENDENT AUDITORS' REPORT

Board of Directors
NMXS.com, Inc. and Subsidiaries
Albuquerque, New Mexico

We have audited the Balance Sheets of NMxS.com, Inc. and
Subsidiaries (the "Company"), as of December 31, 2002 and 2001,
and the related Statements of Operations, Stockholders' Equity,
and Cash Flows for the years then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on my audit.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of NMXS.com, Inc. and Subsidiaries as of December 31, 2002 and
2001, and the results of its operations and cash flows for the
years then ended, in conformity with generally accepted
accounting principles in the United States of America.

The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note A to the financial statements, the Company has had limited
operations and have not commenced planned principal operations.
This raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to these matters are
also described in Note A. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.

February 6, 2003

-47- F1

NMXS.com, Inc. and Subsidiaries
Consolidated Balance Sheets

December 31,
--------------------------
2002 2001
Assets ------------ ------------

Current assets:
Cash and equivalents $ 39,000 $ 57,000
Restricted cash - 42,000
Accounts receivable, net 643,000 469,000
Estimated earnings in excess of billings on - 18,000
uncompleted contract
Prepaid expenses and other assets 42,000 50,000
Officer advances 1,000 32,000
------------ ------------
Total current assets 725,000 668,000
------------ ------------

Furniture, equipment and improvements, net 226,000 652,000
Security deposits 39,000 54,000
Goodwill, net 75,000 97,000
------------ ------------
$ 1,065,000 $ 1,471,000
============ ============
Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable and accrued expenses $ 315,000 $ 680,000
Deferred revenue 318,000 424,000
Notes payable 287,000 337,000
------------ ------------
Total current liabilities 920,000 1,441,000
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value, 500,000
shares authorized, no shares issued and
outstanding as of 12/31/02 and 12/31/01, - -
respectively
Common stock, $0.001 par value, 50,000,000
shares authorized, 24,757,726 and
22,116,784 shares issued and outstanding
as of 12/31/02 and 12/31/01, respectively 24,000 22,000

Additional paid-in capital 8,185,000 7,550,000
Subscriptions receivable - -
Retained (deficit) (8,064,000) (7,542,000)
------------ ------------
145,000 30,000
------------ ------------

$ 1,065,000 $ 1,471,000
============ ============

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

-48- F2

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Operations

For the years ended
December 31,
-----------------------------
2002 2001
------------- -------------
Revenue
Software maintenance $ 1,053,000 $ 400,000
Custom programming 106,000 393,000
License fees 174,000 312,000
Scanning services 75,000 140,000
Other 250,000 34,000
------------- -------------
1,658,000 1,279,000
------------- -------------

Operating costs and expenses:
Cost of services 527,000 487,000
General and administrative 1,386,000 2,723,000
Research and development 176,000 279,000
Impairment of goodwill 22,000 -
------------- -------------
Total operating costs and 2,111,000 3,489,000
expenses ------------- -------------

Net operating (loss) (453,000) (2,210,000)

Other income (expense):
Interest income 1,000 5,000
Interest (expense) (45,000) (35,000)
(Loss) on disposal of fixed assets (25,000) -
------------- -------------
Total other income (expense) (69,000) (30,000)
------------- -------------

Net (loss) $ (522,000) $(2,240,000)
============= =============
Weighted average number of
common shares outstanding - 23,270,000 21,520,000
basic and fully diluted ============= =============

Net (loss) per share - basic and $ (0.02) $ (0.10)
fully diluted ============= =============

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

-49- F3

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity

Common Stock Additional Total
Paid-in Retained Stockholders'
Shares Amount Capital (Deficit) Equity
---------- ---------- ---------- ----------- -------------

Balance forward
December 31, 2000 20,733,836 $ 20,000 6,071,000 (5,302,000) 789,000

Issuance of shares
previously issuable 75,000 -

Sale of common
stock, net 287,500 115,000 115,000

Issuance of common
stock for personal
guarantee 250,000 188,000 188,000

Issuance of common
stock for salaries 46,396 22,000 22,000

Issuance of stock
options for services 399,000 399,000

Issuance of
warrants for services 225,000 225,000

Issuance of common
stock for services 724,052 2,000 410,000 412,000

Fair value of
services provided
by founder 120,000 120,000

Net (loss)
For the year ended
December 31, 2001 (2,240,000) (2,240,000)
---------- ---------- ---------- ----------- -------------

Balance, December
31, 2001 22,116,784 22,000 7,550,000 (7,542,000) 30,000

Issuance of shares
previously issuable 21,946 -

Issuance of common
stock for salaries 42,349 15,000 15,000

Issuance of common
stock for services 29,497 212,000 212,000

Issuance of common
stock for services 492,480 1,000 90,000 91,000

Issuance of common
stock for severance 34,422 13,000 13,000

Issuance of common
stock for salaries 148,082 53,000 53,000

Issuance of common
stock for services 103,305 58,000 58,000

Issuance of common
stock for salaries 122,316 27,000 27,000

Sale of common
stock, net 1,346,545 1,000 147,000 148,000

Sale of common
stock, net 300,000 20,000 20,000

Net (loss)
For the year ended
December 31, 2002 (522,000) (522,000)
---------- ---------- ---------- ----------- -------------

Balance, December 24,757,726 $ 24,000 $ 8,185,000 $ (8,064,000) $ 145,000
31, 2002 ========== ========== ========== =========== =============

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

-50- F4

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

For the years ended
December 31,
-------------------------------
2002 2001
------------- ----------------
Cash flows from operating activities
Net (loss) $ (522,000) $ (2,240,000)
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
Common stock issued for salaries 108,000 -
Common stock issued for services 205,000 434,000
Stock options issued for services 156,000 399,000
Warrants issued for services - 225,000
Fair value of services provided by founder - 120,000
Depreciation 100,000 104,000
Provision for bad debt - 23,000
Amortization of goodwill 22,000 30,000
Amortization of gurantee fee - 176,000
Loss on disposal of fixed assets 25,000 -
Changes in:
Accounts receivable (174,000) (269,000)
Estimated earnings in excess of billings 18,000 165,000
on uncompleted contracts
Prepaid expenses and other assets 8,000 24,000
Officer advances 31,000 18,000
Accounts payable and accrued expenses 365,000 170,000
Deferred revenue (266,000) 300,000
------------- ----------------
Net cash (used) by operating activities 76,000 (321,000)
------------- ----------------
Cash flows from investing activities
Acquisition of fixed assets (369,000) (8,000)
Security deposits 15,000 (41,000)
------------- ----------------
Net cash (used) by investing activities (354,000) (49,000)
------------- ----------------
Cash flows from financing activities
Proceeds from notes payable 100,000 350,000
Repayment of note payable (50,000) (50,000)
Net proceeds from the issuance of common stock 168,000 115,000
Restricted cash 42,000 (2,000)
------------- ----------------
Net cash provided by financing activities 260,000 413,000
------------- ----------------

Net increase (decrease) in cash equivalents (18,000) 43,000
Cash equivalents - beginning 57,000 14,000
------------- ----------------
Cash equivalents - ending $ 39,000 $ 57,000
============= ================
Supplemental disclosures:
Interest paid $ - $ 24,000
============= ================
Income taxes paid $ - $ -
============= ================
Non-cash transactions:
Issuance for a note payable $ - $ 188,000
============= ================
Number of shares issued for services - 250,000
============= ================

Obligation for acquisition of fixed assets - 337,000
============= ================

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

-51- F5

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE A - ORGANIZATION AND OPERATIONS

NMXS.com, Inc. and its wholly-owned subsidiaries New Mexico
Software, Inc. ("NMS") and Working Knowledge, Inc. ("WKI")
(collectively "the Company"), each operating as a business
segment that develop and market proprietary internet technology-
based software for the management of digital high- resolution
graphic images, video clips and audio recordings. The Company
believes that its software has applications for the media,
advertising, publishing, medical, entertainment, e-commerce and
university markets.

In August 1999, the Company effected a reverse merger in which
NMXS.com, Inc. acquired all of the outstanding common stock of
NMS.

NMS, a New Mexico corporation, was formed in April 1996. NMS
develops and markets proprietary internet technology-based
software.

During April 2000, the Company purchased 100% of the capital
stock of WKI, a Kansas corporation located in California, for a
total price of $152,000. The business combination has been
accounted for using the purchase method. Tangible assets
purchased were of nominal value. WKI provides services which are
necessary to prepare, enter, and maintain the customer's data on
the Company's digital asset management system. The Company
recorded goodwill of $150,000 in connection with the acquisition.
The accompanying financial statements include the results of
operations of WKI commencing April 1, 2000 (date of acquisition).

The Company has commenced principal business operations and
conducts its operations in the United States. Subsequent to
September 30, 2001, the Company is no longer in the development
stage.

There is no assurance that the Company's marketing efforts will
be successful, or that the Company will achieve the necessary
sales volume to sustain operations. The Company has incurred net
losses and negative cash flows from operations since its
inception. In addition, the Company operates in an environment of
rapid change in technology and is dependent upon the services of
its employees and its consultants. If the Company is unable to
increase its sales volume, the Company would require additional
funding and there is no assurance that such funding will be
available to the Company under acceptable conditions. If such
events do not occur, it is unlikely that the Company could
continue its business.

The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern and
realization of assets and settlement of liabilities and
commitments in the normal course of business. The Company will
continue to require the infusion of capital until operations
become profitable. During 2003, the Company anticipates
increasing revenues and continuing to monitor their expenses
primarily in the area of compensation. The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] Principles of consolidation:

The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All material inter-
company accounts and transactions have been eliminated.

-52- F6

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

[2] Revenue recognition:

Revenue from proprietary software sales that does not require
further commitment from the company is recognized upon shipment.
Maintenance contract revenue is recognized on a straight-line
basis over the life of the respective contract. Revenue from
custom software development, which is generally billed separately
from the Company's proprietary software, is recognized based on
its percentage of completion. Revenue recognized under percentage
of completion contracts are generally based upon specific
milestones achieved as specified in customer contracts. The
Company also derives revenue from the sale of third party
hardware and software. Consulting revenue is recognized when the
services are rendered. License revenue is recognized ratably over
the term of the license.

Due to uncertainties inherent in the estimation process it is at
least reasonably possible that completion costs for contracts in
progress will be further revised in the near- term.

The cost of services, consisting of staff payroll, outside
services, equipment rental, communication costs and supplies, is
expensed as incurred.

[3] Cash and cash equivalents:

The Company considers all highly liquid instruments purchased
with a maturity of three months or less to be cash equivalents.

[4] Furniture, equipment and improvements:

Furniture, equipment and improvements are recorded at cost. The
cost of maintenance and repairs is charged against results of
operations as incurred. Depreciation is charged against results
of operations using the straight-line method over the estimated
economic useful life. Leasehold improvements are amortized on a
straight-line basis over the life of the related lease.

[5] Income taxes:

The Company recognizes deferred tax liabilities and assets for
the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined on the
basis of the differences between the tax basis of assets and
liabilities and their respective financial reporting amount
("temporary differences") at enacted tax rates in effect for the
years in which the differences are expected to reverse.

[6] Per share data:

The basic and diluted per share data has been computed on the
basis of the net loss available to common stockholders for the
period divided by the historic weighted average number of shares
of common stock. Weighted average number of shares in 2002 and
2001 also includes 0 and 29,946 shares issuable as of December
31, 2002 and 2001, respectively. The 29,946 shares were issued in
March 2002. All potentially dilutive securities have been
excluded from the computations since they would be antidilutive,
however, these dilutive securities could potentially dilute
earnings per share in the future.

[7] Research and development expenses:

Costs of research and development activities are expensed as
incurred.

-53- F7

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

[8] Advertising expenses:

The Company expenses advertising costs which consist primarily of
direct mailings, promotional items and print media, as incurred.
Advertising expenses amounted to $15,348 and $21,000 for the
years ended December 31, 2002 and 2001, respectively.

[9] 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 amount of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from
those estimates.

[10] Stock-based compensation:

Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("FAS 123") allows companies to
either expense the estimated fair value of stock options and
warrants, or to continue following the intrinsic value method set
forth in Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25") but disclose the pro
forma effects on net loss had the fair value of the options and
warrants been expensed. The Company has elected to apply APB 25
in accounting for grants to employees under its stock based
incentive plans. Equity instruments issued to non-employees are
measured based on their fair values.

[11] Software development:

The Company accounts for computer software development costs in
accordance with Statement of Financial Accounting Standards No.
86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed". As such, all costs incurred prior
to the product achieving technological feasibility are expensed
as research and development costs. Technological feasibility is
generally achieved upon satisfactory beta test results. Upon
achieving technological feasibility, programming costs are
capitalized and amortized over the economic useful live which is
estimated to be two years. There were no capitalized software
development costs as of December 31, 2002 and 2001.

[12] Rental expense:

The Company has recognized the total minimum rental payments due
under the lease on a straight-line basis over the lease term. As
of December 31, 2001, the Company has a prepaid rent asset of
$7,000.

-54- F8

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

[13] Goodwill:

The Financial Accounting Standards Board ("FASB") recently issued
Statements of Financial Accounting Standards Nos. 141 "Business
Combinations", 142 "Goodwill and Other Intangible Assets" and 144
"Accounting for the Impairment or Disposal of Long-Lived Assets".
("SFAS 141", "SFAS 142" and "SFAS 144"). All of these
pronouncements are effective for fiscal years beginning after
December 31, 2001. Under SFAS 141, a company must use the
purchase method of accounting for all business acquisitions. SFAS
142 requires a company to periodically evaluate for impairment
(as opposed to amortize) goodwill and intangible assets.

Goodwill resulting from the acquisition of Working Knowledge,
Inc., accounted for as a purchase, was being amortized on a
straight-line basis over 5 years through December 31, 2001. The
Company adopted SFAS No. 142 effective January 1, 2002 and as
such, will test the goodwill balance for impairment at least on
an annual basis. Such analysis will be based upon the expected
future cash flows of Working Knowledge, Inc. There was $22,000
and $0 as impairment of goodwill as of December 31, 2002 and
2001.

Amortization of $30,000 has been included in general and
administrative expenses for the year ended December 31, 2001.

SFAS 144 supercedes SFAS 121. Management does not expect SFAS 144
to have a material impact on the consolidated financial
statements.

NOTE C - RESTRICTED CASH

As of December 31, 2001, the Company renewed a certificate of
deposit in the amount of $42,000 to collateralize a note payable.
Interest is compounded on a quarterly basis at an annual
percentage yield of 3.875%. As of December 31, 2002, there was
no restricted cash.

NOTE D - FURNITURE, EQUIPMENT, AND IMPROVEMENTS

Furniture, equipment, and improvements as of December 31, 2002
consisted of the following:

Computers $ 270,000
Furniture, fixtures and equipment 172,000
Leasehold improvements 83,000
------------
525,000
Accumulated depreciation (298,000)
------------
227,000
============

NOTE E - NOTE PAYABLE

During January 2001, the Company borrowed $300,000. The loan is
collateralized by substantially all of the Company's assets and
personally guaranteed by an officer of the Company. Additional
collateral was provided by a letter of credit issued by a then
unrelated third party (Note F). The letter of credit expired on
January 19, 2002. The note was renewed with a due date of July
24, 2002 at a current interest rate of 7%. On July 24, 2002, the
Company paid $50,000 of principal and $10,525 of interest. The
remaining $250,000 of principal was extended to October 24, 2002
at a current interest rate of 7%. On October 24, 2002 the Company
paid $25,000 of principal and $4,555 of interest. The remaining
$225,000 of principal was extended until April 24, 2003 at a
current interest rate of 7%. As of December 31, 2002, the Company
had a balance due of $225,000.

-55- F9

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE F - CAPITAL TRANSACTIONS

Common stock:

During the year ended December 31, 2001, the Company effected the
following stock transactions:

During January, the Company borrowed $300,000 for working capital
purposes. The loan is collateralized by substantially all of the
Company's assets and personally guaranteed by an officer of the
Company as well as a then unrelated third party. The third party
was issued 250,000 shares of the Company's common stock valued at
approximately $187,500 in exchange for the personal guarantee.
Approximately $176,000 has been included in general and
administrative expenses in the statement of operations for the
year ended December 31, 2001.

During May, the Company sold 287,500 shares of its common stock
for $115,000.

The Company compensated two employees in lieu of cash in the form
of the Company's common stock. The Company issued 46,396 shares
of its common stock to these employees, and approximately $22,000
is included in the statement of operations for the year ended
December 31, 2001.

In July, the Company issued 75,000 shares of common stock to it's
Chief Executive Officer (Note H)

The Company issued 724,052 shares and has 29,946 shares issuable
of its common stock for various legal and other professional
services. Approximately $405,000 has been included in the
statement of operations for the year ended December 31, 2001.

On July 27, 2001 the Board of Directors adopted the 2001 Stock
Issuance Plan. On February 5, 2002, the Board of Directors
amended the plan to increase the number of shares available under
the plan from the original 800,000 to 1,600,000. The plan
provides for a stock issuance program under which, at the sole
discretion of the plan administrator, eligible persons may be
issued shares of our common stock by the immediate purchase of
such shares or as a bonus for either past service to our company,
or any of its subsidiaries, or as an incentive to accept
employment or a board position with our company or any of its
subsidiaries.

During the year ended December 31, 2002, the Company effected the
following stock transactions:

During February, the Company compensated four employees in the
form of the Company's common stock as additional compensation.
The Company issued 42,349 shares of its common stock to these
employees, and approximately $15,000 is included in the statement
of operations for the three months ended March 31, 2002.

The Company issued 51,443 shares, including 21,946 shares which
had been issuable at December 31, 2001, for legal expenses and
sales commission advances. A total of 13,512 shares for legal
expenses are shown as issuable at March 31, 2002. In addition,
227,941 shares are shown as issuable as payment for consulting
services rendered during 2001.

The Company issued 574,509 shares for legal and consulting
services during the three months ended June 30, 2002, 256,853 of
which were shown as issuable at March 31, 2002. Approximately
$91,000 of expense is included in the statement of operations for
the three months ended June 30, 2002. No shares are shown as
issuable at June 30, 2002.

During April, the Company compensated five employees in the form
of the Company's common stock as a severance package. A total of
34,422 shares were issued to these employees, and approximately
$13,000 was included in the statement of operations for the three
months ended June 30, 2002.

-56- F10

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Common stock: (continued)

During April and May, the Company compensated all its employees
in the form of the Company's common stock in lieu of payroll. A
total of 148,082 shares of the Company's common stock were issued
to these employees, and approximately $53,000 was included in the
statement of operations for the three months ended June 30, 2002.

During the three months ended September 30, 2002, the Company
issued 103,304 shares for legal and consulting services.
Approximately $18,000 was included in the statement of operations
for that period.

In July, the Company compensated all its employees in the form of
the Company's common stock in lieu of payroll. A total of 122,316
shares were issued to these employees, and approximately $27,000
was included in the statement of operations for the three months
ended September 30, 2002.

In September, the Company sold 1,346,545 shares of its common
stock for $148,000.

In December, the Company sold 300,000 shares of its common stock
for $20,000.

Warrants:

In conjunction with the closing of the reverse merger (Note A),
the Company declared a distribution of 1,000,000 Series A
warrants at the rate of one warrant for each 5.3 common shares
held by the stockholders of record as of the beginning of
business on August 3, 1999. The warrants have an exercise price
of $1.25 per share and a three year contractual life from date of
issuance. The warrants are redeemable by the Company for $0.01
per warrant subject to 30 days written notice at any time the
closing bid price of the stock equals or exceeds 300% of the
exercise price of the warrant for ten consecutive trading days.
The warrants became issuable on November 14, 2000, the date the
Company's Form SB-2 filing was declared effective. As a result,
the Company recorded a warrant dividend valued at $1,153,000, the
fair value of the warrants on the effective date. The fair value
was estimated using the Black-Scholes pricing model. The
following assumptions were used in computing the fair value of
the warrant dividend: risk free interest rate of 5.7%, zero
dividend yield, volatility of the Company's common stock 218% and
an expected life of three years. The warrants were issued on
January 25, 2001.

In January and February of 2000, the Company issued 1,090,000
Series B warrants in connection with a private placement
offering. The Series B warrants are exercisable for a period of
up to five years from the date of issuance.

On February 20, 2001, the Company entered into a stock swap
agreement with a principal corporate stockholder (a public
company). The agreement provides for the exchange of cashless
assignable Series C warrants to purchase 1,500,000 shares of the
Company's common stock at an exercise price of $.50 per share for
150,000 restricted shares of the stockholder's common stock. The
transaction was recorded as an investment valued at $225,000,
which represented the market value of the stockholder's common
stock exchanged on the date of the agreement (See Note L).

In September, the Company issued 1,346,545 warrants in
conjunction with the sale of the 1,346,545 shares above at the
rate of one warrant for each common share. The warrants have an
exercise price of $0.21 per share and a seven year contractual
life from date of issuance. The fair value of the warrants has
been estimated on the date of grant using the Black-Scholes
option pricing model. The weighted average fair value of these
warrants was $0.17. The following assumptions were used in
computing the fair value of these warrants: weighted average risk-
free interest rate of 4.05%, zero dividend yield, volatility of
the Company's common stock of 122% and an expected life of the
warrants of seven years. Approximately $2,000 of expense was
included in the statement of operations for the three months
ended September 30, 2002.

-57- F11

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Warrants: (continued)

No warrants have been exercised through December 31, 2002.

Stock options:

Summary of Options Granted and Outstanding:

For the Years Ended December 31,
------------------------------------------------
2002 2001
---------------------- -----------------------
Shares Weighted Shares Weighted
Average Average
Exercise Exercise
Price Price
--------- ----------- -------- ------------
Options:

Outstanding 2,202,000 $0.77 1,593,000 $1.33
at beginning
of year

Granted 353,000 $0.29 1,739,000 $0.47

Cancelled (2,000) $1.25 (1,130,000) $0.09

Outstanding 2,553,000 $0.63 2,202,000 $0.77
at end of year

The fair value of each option granted prior to 2000 has been
estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair value of the options
granted during 1999 was $2.42. The following weighted average
assumptions were used in computing the fair value of option
grants for 1999: weighted average risk-free interest rate of
5.50%; zero dividend yield, volatility of the Company's common
stock of 40% and an expected life of the options of five years.
The options vest ratably over a five year period.

-58- F12

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Stock options: (continued)

During the year ended December 31, 2001, the Company granted the
following stock options:

In January 2001, the Company granted 83,000 stock options to
employees with an exercise price of $.77, equal to the fair value
of the common stock, with a contractual life of ten years and a
two year vesting period, 50% at the end of each one year period
from the date of grant, 25,000 of such options have been
cancelled. The fair value of the options has been estimated on
the date of grant using the Black- Scholes option pricing model.
The weighted average fair value of these options was $.77. The
following assumptions were used in computing the fair value of
these option grants: weighted average risk-free interest rate of
6.05%; zero dividend yield, volatility of the Company's common
stock of 218% and an expected life of the options of ten years.

During March, 2001, the Company granted 60,000 stock options for
legal services to a member of the Board of Directors with an
exercise price of $.3125, equal to the fair value of the common
stock, with a contractual life of five years and a thirty day
vesting period from the date of grant. The fair value of the
options has been estimated using the Black- Scholes option
pricing model. The weighted average fair value of these options
was $.3125. The following assumptions were used in computing the
fair value of these option grants: weighted average risk-free
interest rate of 4.64%; zero dividend yield, volatility of the
Company's common stock of 247% and an expected life of the
options of five years. Options valued at approximately $19,000
were earned and are included in general and administrative
expense for the year ended December 31, 2001.

During April, 2001, the Company granted 300,000 stock options for
outside consulting services with an exercise price of $.28, equal
to the fair value of the common stock, with a contractual life of
five years, exercisable as of the date of grant. The fair value
of the options has been estimated on the date of grant using the
Black-Scholes option pricing model. The options were forfeited as
of December 31, 2001 and no expense has been recognized for 2001.

During April, 2001, the Company granted 100,000 stock options for
outside consulting services with an exercise price of $.39, $.11
more than the fair value of the common stock, with a contractual
life of ten years and a two year vesting period, 50% at the end
of each one year period from the date of grant. The fair value of
the options has been estimated on the date of grant using the
Black-Scholes option pricing model. The weighted average fair
value of these options was $.28. The following assumptions were
used in computing the fair value of these option grants: weighted
average risk-free interest rate of 5.14%; zero dividend yield,
volatility of the Company's common stock of 247% and an expected
life of the options of ten years. An expense of approximately
$10,000 is included in general and administrative expense for the
year ended December 31, 2001 for the estimated value of the
options over the period services are to be received.

During April 2001, the Company granted 300,000 stock options to
an employee with an exercise price of $.50, $.25 over the fair
value of the common stock, with a contractual life of ten years
and a two year vesting period, 50% at the end of each one year
period from the date of grant. The fair value of the options has
been estimated on the date of grant using the Black-Scholes
option pricing model. The weighted average fair value of these
options was $.25. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of
6.05%; zero dividend yield, volatility of the Company's common
stock of 247% and an expected life of the options of ten years.

-59- F13

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Stock options: (continued)

During April, 2001, the Company granted 60,000 stock options for
professional services with an exercise price of $.61, equal to
the fair value of the common stock, with a contractual life of
five years, exercisable as of the date of grant. The fair value
of the options has been estimated on the date of grant using the
Black-Scholes option pricing model. The weighted average fair
value of these options was $.61. The following assumptions were
used in computing the fair value of these option grants: weighted
average risk- free interest rate of 4.76%; zero dividend yield,
volatility of the Company's common stock of 247% and an expected
life of the options of five years. An expense of approximately
$36,000 is included in general and administrative expense for the
year ended December 31, 2001, for the estimated value of options
over the period services are to be received.

During June 2001, the Company granted 35,000 stock options to an
employee with an exercise price of $1.49, $.84 over the fair
value of the common stock, with a contractual life of ten years
and a vesting period of 50% at the end of five months and 50% at
the end of seventeen months. The fair value of the options has
been estimated on the date of grant using the Black-Scholes
option pricing model. The weighted average fair value of these
options was $.65. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of
6.05%; zero dividend yield, volatility of the Company's common
stock of 247% and an expected life of the options of ten years.

During July 2001, the Company granted 100,000 stock options to an
employee with an exercise price of $.54, equal to the fair value
of the common stock, with a contractual life of ten years and a
vesting period of 50% at the end of five months and 50% at the
end of seventeen months. The fair value of the options has been
estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair value of these options
was $.54. The following assumptions were used in computing the
fair value of these option grants: weighted average risk-free
interest rate of
6.05%; zero dividend yield, volatility of the Company's common
stock of 247% and an expected life of the options of ten years.

During October 2001, the Company granted 650,000 stock options to
three employees, 450,000 options with an exercise price of $.34,
and 200,000 options with an exercise price of $.70, all equal to
the fair value of the common stock, with a contractual life of
ten years and a two year vesting period, 50% at the end of each
one year period from the date of grant. The fair value of the
options has been estimated on the date of grant using the Black-
Scholes option pricing model. The weighted average fair value of
these options was $.45. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk- free interest rate of 4.57%; zero dividend yield,
volatility of the Company's common stock of 222% and an expected
life of the options of ten years.

During October, 2001, the Company granted 50,000 stock options
for outside consulting services with an exercise price of $.34,
equal to the fair value of the common stock, with a contractual
life of ten years and a two year vesting period, 50% at the end
of each one year period from the date of grant. The fair value of
the options has been estimated on the date of grant using the
Black-Scholes option pricing model. The weighted average fair
value of these options was $.34. The following assumptions were
used in computing the fair value of these option grants: weighted
average risk- free interest rate of 4.57%; zero dividend yield,
volatility of the Company's common stock of 222% and an expected
life of the options of ten years. An expense of approximately
$1,000 is included in general and administrative expense for the
year ended December 31, 2001, for the estimated value of options
over the period services are to be received.

-60- F14

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Stock options: (continued)

During the year ended December 31, 2002, the Company granted the
following stock options:

In January 2002, the Company granted 53,000 stock options to
employees with an exercise price of $.34, equal to the fair value
of the common stock, with a contractual life of ten years and a
two year vesting period, 50% at the end of each one year period
from the date of grant. The fair value of the options has been
estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair value of these options
was $.34. The following assumptions were used in computing the
fair value of these option grants: weighted average risk-free
interest rate of 5.04%, zero dividend yield, volatility of the
Company's common stock of 222% and an expected life of the
options of ten years.

During January 2002, the Company granted 3,000 stock options for
outside consulting services with an exercise price of $.34, equal
to the fair value of the common stock, with a contractual life of
ten years and a two year vesting period, 50% at the end of each
one year period from the date of grant. The fair value of the
options has been estimated on the date of grant using the Black-
Scholes option pricing model. The weighted average fair value of
these options was $.34. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of 5.04%, zero dividend yield, volatility
of the Company's common stock of 222% and an expected life of the
options of ten years.

During February 2002, the Company granted 200,000 stock options
to an employee with an exercise price of $.34, equal to the fair
value of the common stock, with a contractual life of ten years
and a two year vesting period, 50% at the end of each one year
period from the date of grant. The fair value of the options has
been estimated on the date of grant using the Black-Scholes
option pricing model. The weighted average fair value of these
options was $.34. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of 4.91%, zero dividend yield, volatility
of the Company's common stock of 222% and an expected life of the
options of ten years.

In August 2002, the Company granted 103,125 stock options to an
employee with an exercise price of $0.17, equal to the fair value
of the common stock, with a contractual life of ten years and a
21 month vesting period. The fair value of the options has been
estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average fair value of these options
was $0.16. The following assumptions were used in computing the
fair value of these option grants: weighted average risk-free
interest rate of 4.42%, zero dividend yield, volatility of the
Company's common stock of 122%, and an expected life of the
options of ten years.

Stock options: (continued)

The following table summarizes the pro forma operating results of
the Company for December 31, 2002 had compensation costs for the
stock options granted to employees been determined in accordance
with the fair value based method of accounting for stock based
compensation as prescribed by SFAS No. 123.

Proforma net loss available to common stockholders ($406,000)

Proforma basic and diluted loss per share ($0.02)

As of December 31, 2002, the Company has reserved 884,865 shares
of its common stock for issuance upon exercise of stock options
and warrants.

-61- F15

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE G - INCOME TAXES

The Company accounts for income taxes using the liability method,
under which deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying
amounts and the tax bases of assets and liabilities using enacted
tax rates in effect in the years in which the differences are
expected to reverse.

As of December 31, 2002, the Company had net operating loss
carryforwards of approximately $4,000,000, which expire in
varying amounts between 2016 and 2021. Realization of this
potential future tax benefit is dependent on generating
sufficient taxable income prior to expiration of the loss
carryforward. The deferred tax asset related to this potential
future tax benefit has been offset by a valuation allowance in
the same amount. The amount of the deferred tax asset ultimately
realizable could be increased in the near term if estimates of
future taxable income during the carryforward period are revised.

The difference between the statutory federal income tax rate on
the Company's pre-tax loss and the Company's effective income tax
rate is summarized as follows:

2002 2001
------- -------
Statutory federal income tax rate (34.0%) (34.0%)
Increase in valuation allowance 34.0% 34.0%
Other 0.0% 0.0%
------- -------
Effective income tax rate 0.0% 0.0%
------- -------

NOTE H - RELATED PARTY TRANSACTIONS

Officer advances:

Represents advances to the Chief Executive Officer who is a
principal stockholder of the Company which bears interest at 7%
per annum. During 2001, repayments of $25,000 were made by the
principal stockholder which was offset by advances of $4,000 plus
interest earned but not paid of $3,000. The amount was charged
against interest expense and accrued payroll.

Rent:

In May 2000, the Chief Executive Officer, who is a principal
stockholder of the Company, transferred 75,000 shares to a lessor
of the Company for future rent obligations and certain leasehold
improvements. As a result of this transaction, the Company
recognized a credit to additional paid-in capital of $109,000,
representing the fair value of the stock transaction. The Company
issued 75,000 replacement shares to this individual in July 2001.

NOTE I - COMMITMENTS

Leases:

The Company leases office space, equipment and an automobile
under operating leases. Future minimum lease payments as of
December 31, 2002 are as follows:

Year Amount
---- ------
2003 $121,000
2004 70,000

Rent expense for the years ended December 31, 2002 and 2001
amounted to $149,000 and $272,000, respectively.

Employment agreement:

The Company entered into an employment and noncompetition
agreement with a stockholder to act in the capacity of President
and Chief Executive Officer. The term of the employment agreement
is for three years commencing on January 1, 2000. The agreement
allows for a one year renewal option unless terminated by either
party. Base salary is $120,000 per annum with available
additional cash compensation as defined in the agreement.
Compensation under this agreement of $120,000 is included in
general and administrative expenses for the year ended December
31, 2002; the individual has agreed to forgo his compensation for
the year ended December 31, 2001. The Company recorded a charge
to operations of $120,000 representing the fair value of such
services rendered with a corresponding increase to additional
paid in capital. The noncompetition agreement commences upon the
termination of the employment agreement for a period of one year.
As of December 31, 2002, there was a total of $109,000 in accrued
payroll.

NOTE J - MAJOR CUSTOMERS

During the year ended December 31, 2002, three customers
accounted for 47%, 11% and 9% of the Company's revenue. During
the year ended December 31, 2001, three customers accounted for
16%, 13%, and 12% of the Company's revenue.

As of December 31, 2002, balances due from two customers
comprised 70% and 8% of total accounts receivable. As of December
31, 2001, balances due from two customers comprised 57% and 21%
of total accounts receivable.

NOTE K - CONSULTING AGREEMENT

The Company entered into an agreement with a company to provide
consulting and public relation services. The consultant received
an initial fee of 150,000 shares of Manhattan Scientifics, Inc.
stock. In consideration of furnishing this initial fee, the
Company issued 1,500,000 Series C warrants to Manhattan
Scientifics, Inc. (see Note F). In addition, a total fee of
75,000 shares was furnished during the term of agreement. The
agreement, as revised, was terminated as of October 31, 2001.
Expense of $267,000 has been included in the statement of
operations for the year ended December 31, 2001.

-62- F16

NMXS.com, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE L - REPORTABLE SEGMENTS

Management has identified the Company's reportable segments based
on separate legal entities. NMS derives revenues from the
development and marketing proprietary internet technology-based
software and WKI provides data maintenance services related to
NMS digital asset management system. Information related to the
Company's reportable segments for 2002 is as follows:

NMS WKI Total
----------- --------- -----------
Revenue $1,607,000 $ 51,000 $1,658,000

Cost of services 485,000 42,000 527,000
General and administrative 1,227,000 159,000 1,386,000
Research and development 176,000 - 176,000
Impairment of goodwill 22,000 - 22,000

Operating income (loss) (303,000) (150,000) (453,000)

Total assets $1,029,000 $ 36,000 $1,065,000

WKI revenue consists primarily of software maintenance and
scanning services.

A reconciliation of the segments' operating loss to the
consolidated net loss/comprehensive loss is as follows:

Segment's operating loss $(453,000)
----------
Other income (expense) (69,000)
----------
Consolidated net loss/comprehensive loss $(522,000)
==========

Prior to acquisition of Working Knowledge, Inc., in April 2000,
the Company operated within one business segment.

For the year ended December 31, 2002, amortization and
depreciation expense amounted to $75,000 and $25,000 for NMS and
WKI, respectively. Also, total fixed asset additions amounted to
$ 6,000 and $0 for NMS and WKI, respectively, while fixed asset
disposals amounted to $342,000 and $0 for NMS and WKI,
respectively.

NOTE M - COMMITMENTS AND CONTINGENCIES

Contingencies:

During the year ended December 31, 2002, the Company accumulated
debt totaling $55,000 in line charges with Sprint. The Company
was also owed commissions in connection with its contract with
Sprint as a Sprint Data Partner. The Company and Sprint have
agreed in principle to apply the outstanding commissions to the
debt thereby reducing the debt from $55,000 to $16,000. The
Company expects to pay the $16,000 during the first six months of
2003.

During the year ended December 31, 2002, the Company was in
dispute with Sun Microsystems, Inc. (Sun) over the terms of
equipment leased from Sun whereby the Company continued to make
lease payments and failed to notify Sun past the lease
termination date during 2002. The Company ceased making payments
in October 2002 until the matter was resolved. Sun is pursuing
collection of payments it considers in arrears totaling $18,000.
The Company claims that the missed termination date is a
technicality, and that it has overpaid Sun by $50,000. The
Company intends to return the equipment to Sun as settlement in
full, and does not consider this to impair its ability to
continue servicing its customer base.

NOTE M - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Outstanding Payroll Taxes:

The Company has unpaid Federal and State payroll taxes totaling
$145,827 as of December 31, 2002. No action has been taken by the
Company or the Internal Revenue Service (IRS) to negotiate
payment terms, and no plan for repayment has been determined by
the Company. The penalties and interest associated with this
liability is estimated to be in excess of 10% of the total
payroll taxes due, but has not been accrued because the Company
feels that until a settlement is reached with the they cannot
reasonably determine the amount due in penalties and interest.

-63- F17

NMXS.COM, INC.

2,325,581 Shares of Common Stock
5,969,090 Selling Security Holder Shares of Common Stock
1,000,000 Shares of Common Stock Issuable in Connection With Conversion of
Warrants

PROSPECTUS

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON
STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.

, 2004

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.

Section 145 of the General Corporation Law of the State of Delaware expressly
authorizes a Delaware corporation to indemnify its officers, directors,
employees, and agents against claims or liabilities arising out of such
persons' conduct as officers, directors, employees, or agents for the
corporation if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the Company.
Neither the articles of incorporation nor the Bylaws of the Company provide
for indemnification of the directors, officers, employees, or agents of the
Company. The Company has not adopted a policy about indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.

The eighth article of our Certificate of Incorporation includes provisions to
eliminate, to the fullest extent permitted by Delaware General
Corporation Law as in effect from time to time, the personal liability of our
directors for monetary damages arising from a breach of their fiduciary
duties as directors.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered hereby. All such expenses
will be borne by the registrant; none shall be borne by any selling
stockholders.

SEC registration fee $ 400
Legal fees and expenses (1) $25,000
Accounting fees and expenses (1) $20,000
Miscellaneous and Printing fees(1) $ 4,600
----------
Total (1) $50,000
==========

(1) Estimated.

-64-

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

NMXS.com, Inc. restricted stock issuance list from
February 1, 2001 to February 10, 2004

On February 5, 2001, we issued 250,000 shares of our
restricted common stock to Murray W. Kelly. The issuance was
valued at $.75 per share or $187,500. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Murray W. Kelly was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Murray W. Kelly had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On July 12, 2001, we issued 75,000 shares of our restricted
common stock to Richard Govatski. The issuance was valued at
$1.453 per share or $109,000. Our shares were issued in
reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Richard Govatski was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Richard Govatski had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-65-

On August 21, 2001, we issued 75,000 shares of our
restricted common stock to Stockbrokers Associates
Corporation. The issuance was valued at $.001 per share or
$75.00. Our shares were issued in reliance on the exemption
from registration provided by Section 4(2) of the Securities
Act of 1933. No commissions were paid for the issuance of
such shares. All of the above issuances of shares of our
common stock qualified for exemption under Section 4(2) of
the Securities Act of 1933 since the issuance of such shares
by us did not involve a public offering. Stockbrokers
Associates Corporation was a sophisticated investor and had
access to information normally provided in a prospectus
regarding us. The offering was not a "public offering" as
defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner
of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of
shares to a high number of investors. In addition,
Stockbrokers Associates Corporation had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

On August 21, 2001, we issued 75,000 shares of our
restricted common stock to William Copeland. The issuance
was valued at $.49 per share or $36,750. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. William Copeland was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, William Copeland had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On August 21, 2001, we issued 50,000 shares of our
restricted common stock to Quorum Capital. The issuance was
valued at $.52 per share or $26,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Quorum Capital was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Quorum Capital had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-66-

On August 21, 2001, we issued 150,000 shares of our
restricted common stock to Lynn Dixon. The issuance was
valued at $.40 per share or $60,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Lynn Dixon was a sophisticated investor and
had access to information normally provided in a prospectus
regarding us. The offering was not a "public offering" as
defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner
of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of
shares to a high number of investors. In addition, Lynn
Dixon had the necessary investment intent as required by
Section 4(2) since they agreed to and received a share
certificate bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act.
These restrictions ensure that these shares would not be
immediately redistributed into the market and therefore not
be part of a "public offering." Based on an analysis of the
above factors, we have met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933
for the above transaction.

On August 21, 2001, we issued 137,500 shares of our
restricted common stock to Trinity American. The issuance
was valued at $.40 per share or $55,000. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Trinity American was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Trinity American had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On April 12, 2002, we issued 15,400 shares of our restricted
common stock to Hawk Associates Inc. The issuance was valued
at $.374 per share or $5,764. Our shares were issued in
reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Hawk Associates Inc. was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Hawk Associates Inc. had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-67-

On April 12, 2002, we issued 10,000 shares of our restricted
common stock to Owen Coleman. The issuance was valued at
$.435 per share or $4,350. Our shares were issued in
reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Owen Coleman was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Owen Coleman had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On April 23, 2002, we issued 90,000 shares of our restricted
common stock to Owen Coleman. The issuance was valued at
$.40 per share or $36,000. Our shares were issued in
reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Owen Coleman was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Owen Coleman had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On September 12, 2002, we issued 454,545 shares of our
restricted common stock to Lewis White and Ellen White. The
issuance was valued at $.11 per share or $50,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Lewis White and Ellen White were
a sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Lewis White and Ellen White had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

-68-

On September 12, 2002, we issued 575,000 shares of our
restricted common stock to Frank A Reidy. The issuance was
valued at $.11 per share or $63,250. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Frank A Reidy was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Frank A Reidy had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On September 12, 2002, we issued 100,000 shares of our
restricted common stock to Lowell R. Addis Family Trust. The
issuance was valued at $.11 per share or $11,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Lowell R. Addis Family Trust was
a sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Lowell R. Addis Family Trust had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

On September 12, 2002, we issued 217,000 shares of our
restricted common stock to Greg A. Hawley & Marilyn F.
Hawley TTEES FBO Hawley Revocable Trust. The issuance was
valued at $.11 per share or $23,870. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Greg A. Hawley & Marilyn F. Hawley TTEES
FBO Hawley Revocable Trust was a sophisticated investor and
had access to information normally provided in a prospectus
regarding us. The offering was not a "public offering" as
defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner
of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of
shares to a high number of investors. In addition, Greg A.
Hawley & Marilyn F. Hawley TTEES FBO Hawley Revocable Trust
had the necessary investment intent as required by Section
4(2) since they agreed to and received a share certificate
bearing a legend stating that such shares are restricted
pursuant to Rule 144 of the 1933 Securities Act. These
restrictions ensure that these shares would not be
immediately redistributed into the market and therefore not
be part of a "public offering." Based on an analysis of the
above factors, we have met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933
for the above transaction.

-69-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Brian McGowan. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Brian McGowan was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Brian McGowan had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Chris Rybacki & Holly Rybacki.
The issuance was valued at $.067 per share or $1,000. Our
shares were issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act
of 1933. No commissions were paid for the issuance of such
shares. All of the above issuances of shares of our common
stock qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance of such shares by
us did not involve a public offering. Chris Rybacki & Holly
Rybacki were a sophisticated investor and had access to
information normally provided in a prospectus regarding us.
The offering was not a "public offering" as defined in
Section 4(2) due to the insubstantial number of persons
involved in the deal, size of the offering, manner of the
offering and number of shares offered. We did not undertake
an offering in which we sold a high number of shares to a
high number of investors. In addition, Chris Rybacki &
Holly Rybacki had the necessary investment intent as
required by Section 4(2) since they agreed to and received a
share certificate bearing a legend stating that such shares
are restricted pursuant to Rule 144 of the 1933 Securities
Act. These restrictions ensure that these shares would not
be immediately redistributed into the market and therefore
not be part of a "public offering." Based on an analysis of
the above factors, we have met the requirements to qualify
for exemption under Section 4(2) of the Securities Act of
1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Rafael Rubio. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Rafael Rubio was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Rafael Rubio had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-70-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Bernadette M. Candaleria. The
issuance was valued at $.067 per share or $1,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Bernadette M. Candaleria was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Bernadette M. Candaleria had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Michael Rozenblum. The issuance
was valued at $.067 per share or $1,000. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Michael Rozenblum was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Michael Rozenblum had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to John E. Handley. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. John E. Handley was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, John E. Handley had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-71-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to John M. Fox. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. John M. Fox was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, John M. Fox had the necessary investment intent as
required by Section 4(2) since they agreed to and received a
share certificate bearing a legend stating that such shares
are restricted pursuant to Rule 144 of the 1933 Securities
Act. These restrictions ensure that these shares would not
be immediately redistributed into the market and therefore
not be part of a "public offering." Based on an analysis of
the above factors, we have met the requirements to qualify
for exemption under Section 4(2) of the Securities Act of
1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Shay M. Fox. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Shay M. Fox was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Shay M. Fox had the necessary investment intent as
required by Section 4(2) since they agreed to and received a
share certificate bearing a legend stating that such shares
are restricted pursuant to Rule 144 of the 1933 Securities
Act. These restrictions ensure that these shares would not
be immediately redistributed into the market and therefore
not be part of a "public offering." Based on an analysis of
the above factors, we have met the requirements to qualify
for exemption under Section 4(2) of the Securities Act of
1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Joseph R. White. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Joseph R. White was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Joseph R. White had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-72-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Alan S. Bouhamdan. The issuance
was valued at $.067 per share or $1,000. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Alan S. Bouhamdan was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Alan S. Bouhamdan had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Cecilia Gutierrez-White. The
issuance was valued at $.067 per share or $1,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Cecilia Gutierrez-White was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Cecilia Gutierrez-White had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Carolyn Paige Lopour. The
issuance was valued at $.067 per share or $1,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Carolyn Paige Lopour was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Carolyn Paige Lopour had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

-73-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to David Gregory Lopour. The
issuance was valued at $.067 per share or $1,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. David Gregory Lopour was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, David Gregory Lopour had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Anna L. Reidy. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Anna L. Reidy was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Anna L. Reidy had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Frank A. Reidy. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Frank A. Reidy was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Frank A. Reidy had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

-74-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Frank N. Hawkins Jr. The issuance
was valued at $.067 per share or $1,000. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Frank N. Hawkins Jr. was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Frank N. Hawkins Jr. had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Michael D. Haight. The issuance
was valued at $.067 per share or $1,000. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Michael D. Haight was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Michael D. Haight had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Kim Haight. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Kim Haight was a sophisticated investor and
had access to information normally provided in a prospectus
regarding us. The offering was not a "public offering" as
defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner
of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of
shares to a high number of investors. In addition, Kim
Haight had the necessary investment intent as required by
Section 4(2) since they agreed to and received a share
certificate bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act.
These restrictions ensure that these shares would not be
immediately redistributed into the market and therefore not
be part of a "public offering." Based on an analysis of the
above factors, we have met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933
for the above transaction.

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On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Taylor P. Haight. The issuance
was valued at $.067 per share or $1,000. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Taylor P. Haight was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Taylor P. Haight had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Karen Rozenblum. The issuance was
valued at $.067 per share or $1,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Karen Rozenblum was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Karen Rozenblum had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On June 9, 2003, we issued 1,500,000 shares of our
restricted common stock to Brian McGowan. The issuance was
valued at $.06 per share or $90,000. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. Brian McGowan was a sophisticated investor
and had access to information normally provided in a
prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, Brian McGowan had the necessary investment intent
as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

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On June 9, 2003, we issued 57,611 shares of our restricted
common stock to Cody Pisto. The issuance was valued at $.07
per share or $4,033. Our shares were issued in reliance on
the exemption from registration provided by Section 4(2) of
the Securities Act of 1933. No commissions were paid for the
issuance of such shares. All of the above issuances of
shares of our common stock qualified for exemption under
Section 4(2) of the Securities Act of 1933 since the
issuance of such shares by us did not involve a public
offering. Cody Pisto was a sophisticated investor and had
access to information normally provided in a prospectus
regarding us. The offering was not a "public offering" as
defined in Section 4(2) due to the insubstantial number of
persons involved in the deal, size of the offering, manner
of the offering and number of shares offered. We did not
undertake an offering in which we sold a high number of
shares to a high number of investors. In addition, Cody
Pisto had the necessary investment intent as required by
Section 4(2) since they agreed to and received a share
certificate bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act.
These restrictions ensure that these shares would not be
immediately redistributed into the market and therefore not
be part of a "public offering." Based on an analysis of the
above factors, we have met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933
for the above transaction.

On October 16, 2003, we issued 250,000 shares of our
restricted common stock to John E. Handley. The issuance was
valued at $.11 per share or $27,500. Our shares were issued
in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. No commissions
were paid for the issuance of such shares. All of the above
issuances of shares of our common stock qualified for
exemption under Section 4(2) of the Securities Act of 1933
since the issuance of such shares by us did not involve a
public offering. John E. Handley was a sophisticated
investor and had access to information normally provided in
a prospectus regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size
of the offering, manner of the offering and number of shares
offered. We did not undertake an offering in which we sold a
high number of shares to a high number of investors. In
addition, John E. Handley had the necessary investment
intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that
such shares are restricted pursuant to Rule 144 of the 1933
Securities Act. These restrictions ensure that these shares
would not be immediately redistributed into the market and
therefore not be part of a "public offering." Based on an
analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.

On October 16, 2003, we issued 200,000 shares of our
restricted common stock to Brockington Securities Inc. The
issuance was valued at $.10 per share or $20,000. Our shares
were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Brockington Securities Inc. was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Brockington Securities Inc. had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

-77-

On October 16, 2003, we issued 365,000 shares of our
restricted common stock to Jonathan F. P. Rose. The issuance
was valued at $.09 per share or $32,850. Our shares were
issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such shares. All
of the above issuances of shares of our common stock
qualified for exemption under Section 4(2) of the Securities
Act of 1933 since the issuance of such shares by us did not
involve a public offering. Jonathan F. P. Rose was a
sophisticated investor and had access to information
normally provided in a prospectus regarding us. The offering
was not a "public offering" as defined in Section 4(2) due
to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of
shares offered. We did not undertake an offering in which we
sold a high number of shares to a high number of investors.
In addition, Jonathan F. P. Rose had the necessary
investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend
stating that such shares are restricted pursuant to Rule 144
of the 1933 Securities Act. These restrictions ensure that
these shares would not be immediately redistributed into the
market and therefore not be part of a "public offering."
Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of
the Securities Act of 1933 for the above transaction.

Unless otherwise specifically stated, we issued shares in the
above transactions: (a) to consultants because our cash flow was
not sufficient to satisfy our obligations to various consultants
based on agreements with such consultants; (b) to various parties
that subscribed for the purchase of our shares in stock purchase
agreements and financing agreements; or (c) in repayment of loans
or other obligations.

All of the above issuances of shares of our common stock qualified
for exemption under Section 4(2) of the Securities Act of 1933 since
the issuance of such shares by us did not involve a public offering.
Each of these shareholders was a sophisticated investor and had
access to information regarding us. The offering was not a "public
offering" as defined in Section 4(2) due to the insubstantial number
of persons involved in the deal, size of the offering, manner of the
offering and number of shares offered. We did not undertake an
offering in which we sold a high number of shares to a high
number of investors. In addition, these shareholders had the necessary
investment intent as required by Section 4(2) since they agreed to and
received a share certificate bearing a legend stating that such shares
are restricted pursuant to Rule 144 of the 1933 Securities Act. These
restrictions ensure that these shares would not be immediately
redistributed into the market and therefore not be part of a "public
offering." Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transactions.

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ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

The following exhibits are filed as part of this registration statement:

EXHIBIT DESCRIPTION

3.1(a) Certificate of Incorporation and amendments(1)
3.1(b) Articles of Incorporation of New Mexico Software, Inc.
3.1(c) Articles of Incorporation of Working Knowledge, Inc.,
shall be submitted by amendment.
3.2(a) By-Laws(1)
3.2(b) By-Laws of New Mexico Software, Inc.
3.2(c) By-Laws of Working Knowledge, Inc.,
shall be submitted by amendment.
4.1 2001 Stock Option Plan
5.1 Opinion and Consent of Anslow & Jaclin, LLP
10.1 Richard Govatski Employment Agreement
10.2 First Mirage, Inc., Agreement
10.3 Brian McGowen Consulting Agreement
21.1 Subsidiaries of NMXS.com, Inc.
23.1 Consent of Beckstead & Watts, LLP, independent auditors.
24.1 Power of Attorney (included on signature page of Registration
Statement)

(1) Incorporated herein by reference to the Company's Form SB-2 originally
filed with the SEC on February 11, 2000 (SEC File No. 333-30176)

ITEM 28. UNDERTAKINGS.

(A) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act
of 1933;

(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement; and

(iii)Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of
the securities being registered which remain unsold at the termination of
the
offering.

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(B) Undertaking Required by Regulation S-B, Item 512(e).

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel that the matter has been settled by
controlling
precedent, submit to a court of appropriate jurisdiction the question
whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such
issue.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.

-80-

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by
the
undersigned, thereunto duly authorized, in the City of Albuquerque, State of
New Mexico, on the 12th day of February, 2004.

NMXS.com, Inc.

By:/S/ RICHARD GOVATSKI
-------------------------
RICHARD GOVATSKI
Chairman of the Board of
Directors, Chief Executive
Officer and President

POWER OF ATTORNEY

The undersigned directors and officers of NMXS.com, Inc. herbey constitute
and appoint Richard Govatski, with full power to act without the other and
with full power of substitution and resubstitution, our true and lawful
attorneys-in-fact with full power to execute in our name and behalf in the
capacities indicated below any and all amendments (including post-effective
amendments and amendments thereto) to this registration statement under the
Securities Act of 1933 and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and hereby ratify and confirm each and every act and thing that
such attorneys- in-fact, or any them, or their substitutes, shall lawfully
do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on
the dates indicated.

SIGNATURE TITLE DATE

/S/ RICHARD GOVATSKI Chairman of the Board of Directors, February 12, 2004
-------------------- Chief Executive Officer and President
RICHARD GOVATSKI

/S/ TERESA B. DICKEY Principal Financial Officer February 12, 2004
---------------------- and Director
TERESA B. DICKEY

/S/ JOHN E. HANDLEY
---------------------- Director February 12, 2004
JOHN E. HANDLEY

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