form 10q 033101
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q



(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001


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



Commission File Number:                         0-24768

                                MEDIX RESOURCES, INC.
               (Exact name of issuer as specified in its charter)


            Colorado                                        84-1123311
(State or other jurisdiction of                 (I.R.S. Employer Identification No.)
 incorporation or organization)

 305 Madison Avenue, Suite 2033, New York, New York             10165 
(Address of principal executive offices)                              (Zip Code)


                                  (212) 697-2509
                    (Issuer's telephone number, including area code)


     Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the
past 90 days.     [X] Yes           [  ] No

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of May 10, 2001.

            Common Stock, $0.001 par value         48,634,938
                        Class                      Number of Shares











                              MEDIX RESOURCES, INC.



                                   INDEX


PART I.  Financial Information

          Item 1. Financial Statements

                  Consolidated Balance Sheets - March 31, 2001 (Unaudited) and
                   December 31, 2000

                  Unaudited Consolidated Statements of Operations -- For the Three
                   Months Ended March 31, 2001 and March 31, 2000

                  Unaudited Consolidated Statements of Cash Flows -- For the Three Months
                   Ended March 31, 2001 and March 31, 2000

                  Notes to Unaudited Consolidated Financial Statements

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

PART II.  Other Information

          SIGNATURES

          Index to Exhibits








                              MEDIX RESOURCES, INC

                          Consolidated Balance Sheets


                                                            March 31,      December 31,
                                                               2001            2000
                                                           -----------     -----------
                                                           (Unaudited)
                                         Assets
Current assets
  Cash and cash equivalents                                $   412,000     $ 1,007,000
  Accounts receivable, net                                      41,000          49,000
  Prepaid expenses and other                                   170,000         225,000
                                                           -----------     -----------
      Total current assets                                     623,000       1,281,000

Software development costs, net                                515,000         371,000
Property and equipment, net                                    451,000         418,000
Intangible assets, net                                       2,960,000       3,019,000
                                                           -----------     -----------

Other assets                                                    49,000              -
                                                           -----------     ----------

Total assets                                               $ 4,598,000     $ 5,089,000
                                                           ===========     ===========

                          Liabilities and Stockholders' Equity
Current liabilities
  Notes payable                                            $    68,000     $   137,000
  Convertible note payable, net of discount of $262,000        638,000              -
  Accounts payable                                             213,000         159,000
  Accrued expenses                                             560,000         591,000
                                                           -----------     -----------
      Total current liabilities                              1,479,000         887,000
                                                           -----------     -----------

Stockholders' equity
  1996 Preferred stock, 10% cumulative  convertible,  $1
   par value; 488 shares authorized;  155 shares issued;
   1 share outstanding.                                             -               -
  1997  Convertible  preferred  stock, $1 par value; 300
   shares authorized;  167.15 shares issued; zero shares
   outstanding.                                                     -               -
  1999  Series A  convertible  preferred  stock,  $1 par
   value;  300 shares  authorized;  1,832 shares issued;
   50 shares outstanding.                                           -               -
  1999  Series B  convertible  preferred  stock,  $1 par
   value; 2,000 shares authorized;  1,832 shares issued;
   50 shares outstanding                                            -               -
  1999  Series C  convertible  preferred  stock,  $1 par
   value; 2,000 shares authorized;  1,995 shares issued;
   375 and 875 shares outstanding.                                  -            1,000
  Common   stock,    $.001   par   value;    100,000,000
   authorized;  48,406,664  and  46,317,022  issued  and
   outstanding.                                                 48,000          46,000
  Dividends payable with common stock                            6,000           5,000
  Additional paid-in capital                                28,748,000      27,573,000
  Accumulated deficit                                      (25,683,000)    (23,423,000)
                                                           -----------     -----------
      Total stockholders' equity                             3,119,000       4,202,000
                                                           -----------     -----------

Total liabilities and stockholders' equity                 $ 4,598,000     $ 5,089,000
                                                           ===========     ===========


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                Unaudited Consolidated Statements of Operations


                                                          For the Three    For the Three
                                                           Months Ended    Months Ended
                                                            March 31,        March 31,
                                                               2001            2000
                                                           -----------     -----------

Revenues                                                   $    30,000     $    64,000

Direct costs of services                                         5,000           3,000
                                                           -----------     -----------

Gross margin                                                    25,000          61,000
                                                           -----------     -----------

Software research and development costs                        279,000         229,000

Selling, general and administrative expenses                 1,911,000         825,000
                                                           -----------     -----------

Net loss from operations                                    (2,165,000)       (993,000)

Other income                                                        -          (32,000)

Interest expense                                                94,000          20,000
                                                           -----------     -----------

Net loss from continuing operations                         (2,259,000)       (981,000)

Net gain (loss) from discontinued operations                        -          650,000
                                                           -----------     -----------

Net loss                                                   $(2,259,000)    $  (331,000)
                                                           ===========     ===========

Net loss per common share-continuing operations            $     (0.05)    $     (0.03)

Net  income   (loss)   per   common   share-discontinued
operations                                                          -             0.02
                                                           -----------     -----------

Net loss per common share                                  $     (0.05)    $     (0.01)
                                                           ===========     ===========

Weighted average shares outstanding                         47,419,671      33,965,334
                                                           ===========     ===========



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                 Unaudited Consolidated Statements of Cash Flows


                                                            For the Three Months Ended
                                                                     March 31,
                                                           ---------------------------
                                                               2001            2000
                                                           -----------     -----------
Cash flows from operating activities
  Net loss                                                 $(2,259,000)    $  (331,000)
  Adjustments  to  reconcile  net  income  (loss) to net
   cash flows (used in) provided by operating activities
   Gain on sale of staffing business                                -         (823,000)
   Depreciation and amortization                               110,000          33,000
   Amortization  of  discount  and  warrants-convertible
debt                                                            67,000              -
   Options  and  warrants  issued  in  conjunction  with
    stock  issuance,   and  for  litigation  settlement,
    respectively                                               262,000         137,000
   Net changes in current assets and current liabilities        89,000        (145,000)
                                                           -----------     -----------
      Net cash flows  (used in)  provided  by  operating
       activities                                           (1,731,000)     (1,129,000)
                                                           -----------     -----------

Cash flows from investing activities
  Proceeds from the disposal of staffing business                   -          500,000
  Software development costs incurred                         (164,000)             -
  Purchase of property and equipment                           (64,000)       (105,000)
  Business acquisition costs, net of cash acquired                  -          (94,000)
                                                           -----------     -----------
      Net cash flows (used in) investing activities           (228,000)        301,000
                                                           -----------     -----------

Cash flows from financing activities
  Advances received on convertible note                      1,000,000              -
  Advances (payments) under financing agreement, net                -         (484,000)
  Payments on capital leases and debt                          (72,000)             -
  Proceeds from the issuance of common stock                   350,000              -
  Net proceeds from exercise of options and warrants            87,000       2,140,000
                                                           -----------     -----------
      Net cash  flows  provided  by (used in)  financing
       activities                                            1,365,000       1,656,000
                                                           -----------     -----------

Net increase (decrease) in cash and cash equivalents          (595,000)        828,000
Cash and cash equivalents at beginning of period             1,007,000       1,229,000
                                                           -----------     -----------

Cash and cash equivalents at end of period                 $   412,000     $ 2,057,000
                                                           ===========     ===========

Non-cash and investing and financing activities for the three months ended
March 31, 2001:
      Conversion of preferred stock into common stock (Note 3).
      Conversion of $100,000 note payable into 111,111 shares of common stock
(Note 3).
      Financed insurance policies of $3,000 by issuing a note payable.

Non-cash and investing and financing activities for the three months ended
March 31, 2000:
      Acquisition of the assets and assumption of certain liabilities of a
       business from a related party.
      Financed insurance policies of $7,000 by issuing a note payable.
      Conversion of a $400,000 note payable into 800,000 shares of common stock.
      Conversion of preferred stock into common stock.




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                              MEDIX RESOURCES, INC.

                          Notes to Unaudited Consolidated Financial Statements


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The  consolidated  financial  statements  are  unaudited  and  reflect all
adjustments  (consisting  only of normal recurring  adjustments),  which are, in
the opinion of management,  necessary for a fair  presentation  of the financial
position  and  operating   results  for  the  interim  periods.   The  unaudited
consolidated  financial  statements  as of March 31, 2001 have been derived from
audited financial statements.  The unaudited  consolidated  financial statements
contained  herein should be read in  conjunction  with the financial  statements
and notes  thereto  contained in the  Company's  Form 10-KSB for the fiscal year
ended  December 31, 2000.  The results of operations  for the three months ended
March  31,2001  are not  necessarily  indicative  of the  results for the entire
fiscal year ending December 31, 2001.


2.    INTANGIBLE ASSETS

                                                             March 31,
                                                               2001
                                                           -----------

  Goodwill acquired through the Cymedix acquisition        $ 1,822,000
  Goodwill   acquired   through  the  Automated   Design
   Concepts, Inc. acquisition                                  454,000
  License agreement with ZirMed.com                            684,000
                                                           -----------

                                                           $ 2,960,000
                                                           ===========


3.    EQUITY TRANSACTIONS

      During  the  first  quarter  of  2001,  500  shares  of the  1999  Series C
preferred stock were converted into 1,000,000 shares of common stock.

      Additionally,  the Company  received  proceeds of $87,000 from the exercise
of stock  options and warrants  resulting  in the  issuance of 342,167  shares of
common stock.

      The  Company  has  obtained a $2.5  million  credit  facility  through  the
issuance of a convertible  note payable and common stock purchase  warrants.  The
credit  facility  provides  that the Company can make draws against this facility
as evidenced by a convertible  promissory note, in tranches as follows:  $750,000
upon closing,  which  occurred  January 10, 2001;  $250,000  within 10 days of an
effective  registration   statement,   which  occurred  February  13,  2001;  and
$500,000  draws at the 60th day,  90th day and the  150th day from the  effective
registration  statement.  These  advances  may be  made  only  if  the  Company's
common stock price  remains  above $1 for five  business  days prior to the draw.
Advances  under the  convertible  note bear interest at an annual rate of 10% and
provide for  semi-annual  payments on July 10,  2001 and  January 10,  2002.  All
outstanding  balances  under this  arrangement  are due and payable no later than
January  10,  2002.  The note  payable  balance is also  convertible  at $.90 per
share for up to  $750,000  and any  remaining  balance  at $1.00 per  share.  The
initial  $750,000  draw on this  arrangement  has an imputed  discount  recorded,
which was  valued at  $75,000  for the  in-the-money  conversion  feature  of the
first  advance.

      During February 2001,  $100,000 of the convertible  note was converted into
111,111  shares of common  stock.  During April,  a further  $100,000 of the note
was redeemed.  The  redemption  was  satisfied by the issuance of 213,274  shares
of common stock.

      In  connection  with this  credit  facility  being made,  the Company  also
agreed  to issue  1,250,000  warrants  to  purchase  common  stock.  The  Company
issued 500,000  warrants upon the execution of the  agreement,  and in accordance
with the warrant  agreement  will issue  warrants to purchase  250,000  shares of
common  stock at each time the  subsequent  draws of  $500,000  under the  credit
facility as  described  above are made.  The warrants  have an exercise  price of
$1.75  and  terms of two  years  from  the date of  issuance.  The  company  also
issued 83,333  warrants to purchase  common stock to two finders  assisting  with
the  transaction.  The finder  warrants  have terms of two years and an  exercise
price of $1.75.

      The Company has imputed values for the 500,000 and 83,333  warrants  issued
to the provider of the credit  facility and the finders  using the  Black-Scholes
Option  pricing  model.  The  500,000  warrants  issued  to the  provider  of the
credit  facility  were  valued at  $249,000  and will be treated as a discount on
the debt to be amortized  over its remaining  life.  The 83,333  warrants  issued
to finders  were  valued at $42,000  and will be recorded as debt issue costs and
amortized  over the  remaining  life of the  debt.  The  values  were  determined
using the following  assumptions;  lives of two years,  exercise prices of $1.75,
volatility of 117%, no dividend payment and a risk-free rate of 5.5%.

      The Company  also made a second draw on the credit  facility  for  $250,000
in February 2001. In connection  with this draw,  the Company issued  warrants to
purchase  25,000  shares  to the  finders.  The  warrants  have  been  valued  at
$12,000 using the Black-Scholes option-pricing model.

      The  Company  also  has a  commitment  to  issue  150,000  warrants  to the
finders for future draws on the credit facility.

      During  March  2001,  the Company  received  $350,000  for the  issuance of
636,364  shares of its common  stock.  As a part of this common  stock  issuance,
the Company  issued  warrants to purchase  636,364 shares of common stock at $.80
per share  with a term of two  years  from the date of  issuance.  As a result of
the share  issuance,  the  Company  has  recorded  an expense of  $262,000 in the
accompanying financial statements, using the Black-Scholes option-pricing model.


4.    STOCK OPTIONS

      In March 2001, the Company  granted  options to purchase  454,000 shares at
an  exercise-  price of $.67 per  share  to  current  and  former  employees  and
consultants of the Company, under the Company's 1999 Stock Option Plan.


5.   ACCUMULATED DEFICIT

      Of the  $25,683,000  cumulative  deficit at March 31, 2001, the approximate
amount  relating  to  the  Company's   technology   business  from  inception  is
$12,863,000.   In  addition,   a  premium  of   $2,332,000   was  paid  upon  the
acquisition   of  Cymedix  Lynx  in  1998,   producing  a  total   investment  of
$15,195,000 in the technology business to date.


6.    RELATED PARTY TRANSACTIONS

      During the three month period  ended March 31,  2001,  the Company had paid
approximately  $35,000 to a related  party for  services.  The  President  of the
Company has an ownership interest in the related party.


Return to Index

                              MEDIX RESOURCES, INC.


Item 2: Management's  Discussion and Analysis of Financial  Condition and Results
of Operations

Overview

      We are an information  technology  company  headquartered in New York City,
with offices in Denver,  Colorado,  Thousand Oaks,  California,  East  Brunswick,
New Jersey,  and Atlanta,  Georgia.  We specialize in the development,  marketing
and management of software and  connectivity  solutions for clinical and business
transactions   within  the   healthcare   industry.   Through  our  wholly  owned
subsidiary,  Cymedix Lynx Corporation, a Colorado corporation,  we have developed
Cymedix(R),  a  unique  healthcare  communication   technology  product.   Cymedix(R)
provides  instantaneous access to patient clinical,  financial and administrative
information.  Its software also supplies healthcare institutions,  such as health
plans,  insurers and hospitals,  as well as practicing  physicians  with a set of
non-invasive  technology  tools that can be attached to their  existing  software
applications  and provide  Internet-enabled  transaction  capability  between all
parties.

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

Forward-Looking Statements and Associated Risks

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

      We  have   reported   net   losses  of   ($5,415,000),   ($4,847,000)   and
($5,422,000)  for the years  ended  December  31,  2000,  December  27,  1999 and
December  28,  1998.  At  March  31,  2001  we  had  an  accumulated  deficit  of
($25,683,000).  These  losses and  negative  operating  cash flow have caused our
accountants  to  include  a "going  concern"  qualification  in their  report  in
connection  with  their  audit of our  financial  statements  for the year  ended
December 31, 2000.

     In March 2001, the Company divested its web-hosting  business and, in doing
so,  realized  cost savings  associated  with the furlough of the seven  related
staff who were  deemed to be  non-essential  to the  Company's  core  technology
business. In addition,  five other administrative and support staff, not related
to the web business but also deemed to be  non-essential  to the Company's  core
technology business, were furloughed as a general cost-saving measure.

      We expect to  continue  to  experience  losses,  in the near  term,  as our
software products are not yet deployed in full-scale  transaction  production and
therefore are not generating  significant  revenue.  Working  capital is required
to support  the  ongoing  development  and  marketing  of the  Cymedix(R)software
products  until  such  time  as  revenue   generation  can  support  the  Company
financially.  To  address  this  need,  we are  presently  in  negotiations  with
institutional   sources  regarding  debt  and  equity  instruments  to  fund  the
company.  While  there  can  be  no  assurance  that  additional  investments  or
financings  will be  available  to us as  needed,  management  fully  expects  to
conclude  the  necessary  financing  in the near  term.  Failure  to obtain  such
capital on a timely basis could result in lost business  opportunities,  the sale
of the Cymedix(R)business at a distressed  price or the financial  failure of our
company.

      Our  products  are  still  in the  pre-deployment  stage  and  have not yet
proven their  effectiveness  or their  marketability.  As a developer of software
products,  we will be  required  to  anticipate  and adapt to  evolving  industry
standards  and new  technological  developments.  The  market  for  our  software
products is characterized by continued and rapid  technological  advances in both
hardware and software  development,  requiring ongoing  expenditures for research
and  development,  and timely  introduction  of new products and  enhancements to
existing  products.  The  establishment  of  standards  is largely a function  of
user  acceptance.  Therefore,  such  standards are subject to change.  Our future
success,  if any,  will  depend  in part upon our  ability  to  enhance  existing
products,  to respond  effectively  to technology  changes,  and to introduce new
products  and  technologies  to meet the  evolving  needs of its  clients  in the
healthcare  information  systems market. The introduction of software products in
that  market  has been slow due to the large  number of small  practitioners  who
are resistant to change and the costs  associated with change,  particularly in a
period of  rising  pressure  to  reduce  costs in the  market.  We are  currently
devoting  significant  resources  toward the  development of products.  There can
be no  assurance  that we will  successfully  complete the  development  of these
products  in a timely  fashion  or that  our  current  or  future  products  will
satisfy the needs of the healthcare  information systems market.  Further,  there
can be no assurance  that products or  technologies  developed by others will not
adversely   affect  our   competitive   position   or  render  our   products  or
technologies noncompetitive or obsolete.

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

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

      Litigation  or  regulatory  proceedings  may be  necessary  to protect  our
intellectual  property  rights,  such as the scope of our patents.  In fact,  the
computer   software   industry  in  general  is   characterized   by  substantial
litigation.  Such  litigation and regulatory  proceedings  are very expensive and
could be a significant  drain on our resources and divert  resources from product
development.  There is no  assurance  that we will have the  financial  resources
to defend our patent rights or other  intellectual  property from infringement or
claims of invalidity.

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

      The healthcare and medical  services  industry in the United States is in a
period  of  rapid  change  and  uncertainty.   Governmental  programs  have  been
proposed,  and some adopted,  from time to time, to reform various aspects of the
U.S.  healthcare  delivery system.  Some of these programs  contain  proposals to
increase  government  involvement in healthcare,  lower  reimbursement  rates and
otherwise change the operating environment for our customers.  Particularly,  the
Health Insurance  Portability and  Accountability Act of 1996 and the regulations
that are being  promulgated  thereunder  are causing the  healthcare  industry to
change its procedures and incur  substantial  cost in doing so. We cannot predict
with any certainty what impact,  if any,  proposals for healthcare  reforms might
have on our software business.

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

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

Results of Operation

Comparison of These Three Months Ended March 31, 2001 and March 31, 2000

      Total  revenues for the three  months  ended March 31,  2001,  were $30,000
compared  with $64,000 for the three  months  ended March 31, 2000.  The decrease
represents  an increase in ADC revenues  (ADC was acquired by the Company  during
February 2000), offset by a decrease in Cymedix pilot program fees.

      Research and development costs increased  approximately $50,000 or 22% from
$229,000 for the three  months  ended March 31,  2000,  to $279,000 for the three
months ended March 31, 2001.  This increase  represents  the Company's  continued
efforts in developing medical software products.

     Selling,  general,  and  administrative  expenses  increased  approximately
$1,086,000  or 132% from  $825,000 for the three months ended March 31, 2000, to
$1,911,000 for the three months ended March 31, 2001. The increase is attributed
to increases in administrative staff, primarily executive management,  and staff
associated with software development; Black-Scholes expense of $262,000 incurred
as a result of a warrant  issued in  connection  with a common  stock  issuance;
increased  depreciation expense related to fixed asset purchases;  and increased
amortization  expense related to convertible debt, software license and business
acquisitions.

      Interest expense  increased  approximately  370% from $20,000 for the three
months  ended  March 31,  2000 to $94,000  for the three  months  ended March 31,
2001.  This  increase  is  the  result  of  interest   expense  incurred  on  the
convertible  note that was obtained  during January 2001, as well as amortization
of discounts attributed to the convertible note, warrants and offering costs.

      Interest  income  decreased  100% from  $32,000 for the three  months ended
March 31, 2000 to $0 for the three  months  ended March 31,  2001.  The  decrease
is due to a  decrease  in  cash  available  for  investment  that  was  used  for
operations.

      Net loss from  continuing  operations  increased  approximately  $1,278,000
from $981,000 for the three months ended March 31, 2000,  to  $2,259,000  for the
three months ended March 31, 2001, due to all of the reasons discussed above.

      Results from  discontinued  operations  changed from a gain of $650,000 for
the three  months  ended March 31,  2000,  to $0 for the three months ended March
31, 2001.  This change  reflects the  disposal of the  staffing  business  during
February 2000.

      Net loss  increased  approximately  $1,928,000  from $331,000 for the three
months ended March 31, 2000, to  $2,259,000  for the three months ended March 31,
2001, due to the reasons discussed above.

Liquidity and Capital Resources

      We have  $412,000  in cash as of March 31,  2001 with net  working  capital
deficit of  $(856,000)  at March 31,  2001.  During the three  months ended March
31,  2001,  net cash used in  operating  activities  was  $1,732,000.  During the
three  months  ended March 31,  2001,  we raised  $437,000  from the  exercise of
options and warrants,  and the issuance of common stock.  As noted above,  we are
presently in negotiations  with  institutional  sources regarding debt and equity
instruments  to fund the  company.  Management  fully  expects  to  conclude  the
necessary financing in the near term.

      In  February  of  2000,  we  sold  the  assets  of our  remaining  staffing
businesses  for  $1,000,000.  The purchase  price was paid with  $500,000 cash at
closing  and a  $500,000  subordinated  note which was  payable in May 2001.  The
subordinated note was repaid on December 29, 2000.

      During  December 2000, the Company  obtained a $2.5 million credit facility
through the issuance of a  convertible  note  payable and common  stock  purchase
warrants.  The credit  facility  provides that the Company can make draws against
this facility as evidenced by a convertible  promissory  note payable in tranches
as follows:  $750,000 upon closing,  which  occurred  January 10, 2001;  $250,000
within 10 days of an effective  registration  statement,  which occurred February
13,  2001;  and $500,000  draws at the 60th day,  90th day and the 150th day from
the  effective  registration  statement.  These  advances may be made only if the
Company's  common stock price  remains  above $1 for five  business days prior to
the draw.  The  advance  under the  convertible  note bear  interest at an annual
rate of 10% and  provide  for  semi-annual  payments on July 10, 2001 and January
10, 2002. All  outstanding  balances under this  arrangement  are due and payable
no later than January 10,  2002.  The note  payable  balance is also  convertible
at $.90 per share  for up to  $750,000  and any  remaining  balance  at $1.00 per
share.

      The company  also made a second draw on the credit  facility  for  $250,000
during  February 2001.  Also during  February 2001,  $100,000 of the  convertible
note was converted into 111,111  shares of common stock.  During April, a further
$100,000  of  the  note  was  redeemed.  The  redemption  was  satisfied  by  the
issuance of 213,274 shares of common stock.

      During  March  2001,  the company  received  $350,000  for the  issuance of
636,364 shares of its common stock.

      Subsequent  to March  31,  2001  and  through  May 10,  2001,  we  received
approximately  $0 from  the  exercise  of  options  and  warrants.  As of May 10,
2001,  we had  outstanding  5,136,000  warrants  with a total  exercise  price of
$2,568,000,  which are  callable  for $.01 per warrant  upon thirty days  written
notice.  Currently,  we have not provided  any written  notice to holders that we
will call these  warrants.  $2,568,000  could be  available  from the exercise of
these  callable  warrants.  However,  there can be no assurance that any of these
warrants will be exercised.



Return to Index


                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

      On June 1,  2000,  an action  was filed in the  District  Court of the City
and  County  of  Denver,  Colorado,   against  Medix  Resources,  Inc.,  and  its
wholly-owned subsidiary,  Cymedix Lynx Corporation, under the caption Michael J.
Ruxin  v.  Cymedix   Lynx   Corporation,   and  Medix   Resources,   Inc.   (Case
No.00CV2997),  alleging  that a predecessor  Company of Cymedix Lynx  Corporation
had  promised to issue  stock  options to the  plaintiff  but had failed to honor
that  promise.  Plaintiff  is claiming the right to receive an option to purchase
90,000  shares  of  Medix  common  stock  at   approximately   $0.44  per  share.
Plaintiff   seeks  damages  in  an  amount  to  be  determined  at  trial,   plus
prejudgment interest,  costs,  including attorney's fees, and such further relief
as  the  Court  deems  just  and  proper.   Management   does  not  believe  that
plaintiff's  claims have any merit and intends to vigorously  defend this action.
We are now in the  discovery  stage of the  proceeding  with trial  scheduled for
September  10, 2001.  Management  does not expect any  resolution  of this matter
to have a material adverse effect on our financial condition.

    On July 11, 2000,  an action was filed in the United States  District  Court,
Southern District of New York,  against Medix Resources,  Inc., under the caption
Guli R.  Rajani  v.  Medix  Resources,  Inc.  (00CIV.  5061),  alleging  that the
Company granted to plaintiff the right to purchase  preferred  stock  convertible
into the  Company's  common stock and warrants to purchase the  Company's  common
stock in connection with the Company's  private  financings during 1999, and then
failed to permit  plaintiff  to purchase  shares in those  financings.  Plaintiff
seeks damages of $12,600,000,  plus interest thereon,  alleging that such damages
resulted  from  the  Company's  failure  to let him  purchase  securities  in the
private  offerings.  Management  believes  plaintiff's claims to be frivolous and
totally  without  merit  and  intends  to  vigorously  defend  this  action.  The
Company's  motion to dismiss  was heard by the Court on  November  1,  2000.  The
court ruled in favor of  plaintiff  on one count,  and in favor of the Company on
the other.  However,  the ruling in favor of the Company gave the  plaintiff  the
opportunity  to replead the second  count,  which  plaintiff  has since done.  We
have  answered the complaint  denying the  substantive  allegations  and asserted
defenses  and a  counterclaim  in an as yet  unspecified  amount.  On  April  24,
2001,  after a  settlement  conference  in the matter,  we reached  agreement  in
principal  on the terms of a  settlement  of this  matter.  The  principal  terms
require us to pay Mr.  Rajani  $20,000 in cash and issue him warrants to purchase
137,500  shares of our  common  stock at $.50 per share  over the next 18 months.
The  definitive  settlement  agreement has not yet been signed and the settlement
remains  subject  to  approval  by the  court.  Management  does not  expect  any
resolution  of this  matter to have a material  adverse  effect on our  financial
condition.

      On September 27, 2000,  an action was filed in the United  States  District
Court,  Eastern District of New York,  against Medix  Resources,  Inc., under the
caption,  Yecheskel  Munk and The Nais  Corporation,  v. Medix  Resources,  Inc.
f/k/a  International  Nursing  Services,  Inc.  (CV 00 5816),  alleging  that the
Company  had failed to  properly  and fully  convert  the  Company's  convertible
preferred  stock held by one of the  Plaintiffs,  and had failed to maintain  the
registration  for public sale with the  Securities  and  Exchange  Commission  of
shares  underlying  warrants held by both Plaintiffs.  Plaintiffs seek damages of
approximately  $2,700,000,  plus  interest  thereon.  We are now in the discovery
stage of the  proceeding  with discovery to be completed by the end of June 2001.
Management  intends  to  vigorously  defend  this  action and does not expect any
resolution  of this  matter to have a material  adverse  effect on the  Company's
financial condition

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


Item 2.  Changes in Securities and Use of Proceeds

      Set forth below are the  unregistered  sales of  securities  by the Company
for  the  quarter  reported  on.  See  Note  6  to  the  unaudited   consolidated
financial  statements  elsewhere  herein  for a  description  of the terms of the
Units of Preferred Stock and warrants.

   Security                 Number of                                   Exemption
    Issued         Date       Shares      Consideration   Purchasers     Claimed
------------     -------   ----------     -------------   ----------    ---------
Common Stock     January    1,000,000     Conversion of     Private     Section 3(a)(9)
                                           Preferred         investors

Common Stock     January       22,000     $4,126 for        Private     Section 4(2)
                                            exercised         investors
                                            warrants

Common Stock     February     111,111     Conversion of     Private     Section 3(a)(9)
                                           $100,000          investor
                                           principal amount
                                           of note

Common Stock      March       636,364     $350,000          Private     Section 4(2) &
                                                            investor     Regulation D



Item 3.  Defaults Upon Senior Securities
      None.

Item 4.  Submission of Matters to a Vote of Security Holders
      None.

Item 5.  Other Information
      None.

Item 6.  Exhibits and Reports on Form 8-K

      a.    Exhibits

            Included  as  exhibits  are the items  listed on the  Exhibit  Index.
            The  Registrant  will  furnish a copy of any of the  exhibits  listed
            below  upon  payment  of $5.00 per  exhibit to cover the costs to the
            Registrant of furnishing such exhibit.

      b.    Reports on Form 8-K during the quarter reported on:

        1)    Form 8-K, filed with the Commission on January 9, 2001, reporting in Item
                5 a press release announcing the signing of a letter of intent
                to organize a pilot program with Kaiser Permanente of Georgia

        2)    Form 8-K, filed with the Commission on January 16, 2001, reporting in
                Item 5 a press release announcing the launching of a stand-alone
                Cymedix Universal Interface (CUI) product for physicians.

        3)    Form 8-K, filed with the Commission on January 17, 2001, reporting in
                Item 5 two press releases announcing, respectively, the first
                live Medix business telephonic presentation by CEO, John
                Prufeta, and announcing the signing of a contingent credit
                facility by the Company.

        4)    Form 8-K, filed with the Commission on January 29, 2001, announcing Medix
                to present at UBS Warburg's Global Healthcare Services
                Conference.

        5)    Form 8-K, filed with the Commission on February 1, 2001, announcing the
                Medix business conference call report and summary.

        6)    Form 8-K, filed with the Commission on February 1, 2001, announcing time
                change for Medix presentation at UBS Warburg's Global Healthcare
                Services Conference.

        7)    Form 8-K, filed with the Commission on February 20, 2001, announcing the
                resignation of Mr. David Pfeil from his position as Medix
                Executive Vice President and Chief Technology Officer, his
                position as a member of the Medix Board of Directors, and his
                positions as President and COO and a director of the Medix
                subsidiary, Cymedix Lynx Corporation.

        8)    Form 8-K, filed with the Commission on March 15, 2001, announcing the
                appointment of an interim Chief Technology Officer and results
                of March 3rd Board meeting.

        9)    Form 8-K, filed with the Commission on March 27, 2001, announcing the
                divestiture of the Company's non-core website development and
                hosting business unit, and a general reduction-in-force.



                                   SIGNATURES


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


Dated:  May 10, 2001

                                   MEDIX RESOURCES, INC.
                                    (Registrant)






                                    /s/ Gary L. Smith
                                         Gary L. Smith
                                                Executive Vice President
                                  (Principal   Financial  and  Chief  Financial Officer)


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                                INDEX TO EXHIBITS