Edgar Filing: NMXS COM INC

As filed with the Securities and Exchange Commission on

May 5, 2004

REGISTRATION NO. 333-112781
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 1 TO 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
195 ROUTE 9 SOUTH, SUITE 204
MANALAPAN, NEW JERSEY 07726
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 2,714,545 $.55 $1,493,000 $189.16
$.001 per share (1)

Common Stock, par value
$.001 per share (2) 2,325,581 $.43 $1,000,000 $126.70

Common Stock, par value
$.001 per share (3) 1,000,000 $.55 $ 550,000 $ 69.69

Common Stock, par value
$.001 per share (4) 2,800,000 $.55 $1,540,000 $195.12
---------- --------
Total 8,840,126 $4,583,000 $580.67

(1) Represents Selling Security Holders shares being sold to the
public. The price of $.55 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 April 30, 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 April 30, 2004 our share price
closed at $.55 per share.

(3) Represents shares of common stock issuable in connection with
the conversion of warrants issued to First Mirage, Inc. The
price of $.55 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 April 30, 2004.

(4) Represents shares of common stock issuable in connection with
the conversion of preferred stock. The price of $.55 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 April
30, 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
2,714,545 SELLING SECURITY HOLDER SHARES OF COMMON STOCK
1,000,000 SHARES OF COMMON STOCK ISSUABLE IN CONNECTION WITH
CONVERSION OF WARRANTS
2,800,000 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
PREFERRED SHARES

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 2,714,545 shares of our common stock; 1,000,000 shares of
our common stock issuable in connection with their conversion of
our warrants and 2,800,000 shares of our common stock issuable in
connection with their conversion of our preferred shares.

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

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 direct
public 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. There is a possibility that no
proceeds will be raised or that if any proceeds are raised, they
may not be sufficient to cover the cost of the offering.

Our common stock is listed on the OTC Bulletin Board under the
symbol "NMXS." The last reported sale price of our common stock
on April 30, 2004 was $0.55.

This prospectus also relates to the resale by the selling
stockholders of up to 2,714,545 shares of common stock,
1,000,000 shares of our common stock issuable in connection with
the conversion of our warrants and 2,800,00 shares of our common
stock issuable in connection with the conversion of our preferred
shares. 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........................................................4

USE OF PROCEEDS.....................................................8

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

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

BUSINESS............................................................18

LEGAL PROCEEDINGS...................................................22

MANAGEMENT..........................................................23

PRINCIPAL STOCKHOLDERS..............................................25

DILUTION............................................................26

SELLING STOCKHOLDERS................................................27

PLAN OF DISTRIBUTION................................................27

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

DESCRIPTION OF SECURITIES...........................................29

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

TRANSFER AGENT......................................................30

EXPERTS.............................................................30

LEGAL MATTERS.......................................................30

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

RECENT SALES OF UNREGISTERED SECURITIES.............................52

-3-

ABOUT US

HOW WE ARE ORGANIZED AND OUR OPERATIONS

We were originally incorporated under the laws of the State of Utah on
August 12, 1983.On April 28, 1997, we changed domicile to the State of
Delaware by merging into a Delaware corporation incorporated on October
14, 1980.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. You will be purchasing our shares from
us and not our selling security holders.

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.

SINCE THERE IS NO MINIMUM PURCHASE REQUIREMENT IN THIS OFFERING,
WE MAY RECEIVE ONLY PARTIAL, OR NO PROCEEDS FROM THIS OFFERING,
WHICH WILL NOT ALLOW US TO ATTAIN OUR INTENDED USE OF PROCEEDS

There is no minimum purchase requirement in this offering.
Therefore, we may only receive a partial amount of the intended
offering or no amount from the offering. If we do not receive
the full amount of proceeds we may not be able to attain our
intended use of proceeds, specifically, payment of our present
IRS obligation, repayment of our Los Alamos National Bank loan,
hiring of additional sales representatives and repurchase of our
company stock. In addition, we may not even be able to pay the
costs of this registration statement. This would affect our
ability to grow our business.

-4-

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

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, it may be difficult 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.

"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.

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.

A SMALL AMOUNT OF CUSTOMERS REPRESENT A LARGE AMOUNT OF OUR REVENUES AND
THE LOSS OF SUCH CUSTOMERS WILL RESULT IN A SIGNIFICANT DECREASE IN
REVENUES AND THREATEN OUR ONGOING OPERATIONS

During the year ended December 31, 2003, seven customers accounted
for 85% of our revenue. In addition, during the year ended December
31, 2002, three customers accounted for 67% of our revenues. The loss of
such customers will result in a significant decrease in our revenues.
Such decrease will negatively impact our growth and thereaten our ongoing
operations.

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.

-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 2 engineers and 3
sales/marketing people to handle our anticipated growth resulting
from future sales. 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 chance of success.

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. 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.

-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.

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.

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. The proceeds, if any,
may be significantly less than $1,000,000, and there is the
possibility that the proceeds may not be sufficient to cover
the costs associated with this offering We expect to use the
net proceeds from this offering, for the purposes described in
the table below. Any net proceeds would be used first to pay
the offering expenses of $50,000; then the payroll tax obligation
of $350,000. Any net proceeds after the offering expenses and
payroll tax obligation, would be prorated among the other items
listed in the table below . We have agreed to bear the expenses
relating to the registration of our own shares as well as for the
selling security holders.

-8-

Gross Proceeds $ $1,000,000

Amount Percentage
Offering Expenses .......... $ 50,000 5.00%

Payment of IRS Obligation (1) $ 350,000 35.00%
Repayment of Los Alamos
National Bank Loan (2) $ 163,000 16.30%
Sales Representatives (3) $ 300,000 30.00%
Repurchase of Company Stock(4) $ 137,000 13.70%

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

Less Offering Expenses ..... 50,000

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

(1) Represents past due payroll tax obligations which were not
paid at the time they were due because of insufficient cash
flow, plus estimated penalties and interest. The payroll taxes
are for both Federal and State payroll taxes for the second,
third and fourth quarters of 2002 and the first, second and
third quarters of 2003.
(2) Represents a note payable to Los Alamos National Bank with an
annual interest rate of 7%, due October 15, 2004.
(3) Represents the hiring of 2 engineers and 3 sales representatives
at an annual salary of $60,000 per employee. Therefore, since
we are using the initial $400,000 of proceeds for offering
expenses and the IRS obligation and pro-rating the balance of
proceeds received, for each $120,000 raised over $400,000, we
can hire one sales representative.
(4) We intend to use this amount to undertake the repurchase of our
shares of common stock on the open market.

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 20% discount to the closing price
of $0.55 for our shares of common stock as reported on the OTC
Bulletin Board on April 30, 2004.

-9-

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is currently traded on the OTC Bulletin Board
under the symbol "NMXS." The following table sets forth the high
and low bid prices for our common stock since the first quarter
of 2002.

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 0.40
2004 Second 0.78 0.51
(to April 30, 2004)

As of April 23, 2004, based on our transfer agent records, we
had 346 shareholders holding 30,097,479 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, 2003, 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 4,330,775 $0.12 1,069,225(1)

Equity compensation
plans not approved
by security holders 5,936,545(2) $0.57 -0-

Total 10,267,320
---

(1) Represents 100,712 shares available for issuance under our 1999
Stock Option Plan and 968,513 under our 2001 Stock Issuance Plan
as of December 31, 2003.
(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, and
1,000,000 Series E warrants exercisable at $0.08 per share at any time
through August 28, 2008.

-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

New Mexico Software develops digital lifecycle management
systems. The digital lifecycle is the strategy that associates
database information with both paper and digital files including
text, email, images, audio, graphics, video and animation files,
and coordinates access to a common repository of these processes
and files. The digital lifecycle encompasses creation,
approval, sharing, storage, retrieval, usage, capture and archiving
of the database information. It is appropriate for a wide variety
of industries, including government, medical, entertainment, and
IT markets, providing a significant opportunity for market penetration.
Our core product, Roswell, is an enterprise-level platform that manages
digital files. It manages assets by creating folders, or groups of
files, catalog hierarchies, users, user groups, and user permissions.
The files are managed by our database that maintains both the membership
of the file in a folder(s) and information about the file. Roswell's
main user interface is a web browser, which makes it accessible and more
intuitive to a greater number of users. It can be run on Windows or
Linux operating systems.

-11-

Some challenges we face in the next year are developing a sales
force and distribution channels in order to market our products
and educating potential customers about the benefits of digital
management systems. We have hired IT Marketing Corporation, a
marketing firm in Texas, to help us work with end users, and
to assist us with promotions. We have also hired independent
sales agents to help sell our products. We have hired a manager
to focus on providing education about our products to potential
customers, and we provide demo software on the Internet for this
purpose, so that customers can better understand how the digital
lifecycle works.

We presently realize revenues from four primary sources: (i)
software sales, maintenance and hosting; (ii) professional
services, including custom programming, scanning and database
management services; (iii) license fees; and (iv) technical
support. To date, license fees and software maintenance have
been directly related. With each sale of our products, the
end user enters into a license agreement for which an initial
license fee is paid. The license agreement also provides that
in order to continue the license, the licensee must pay an annual
software maintenance fee for which the party receives access to
product upgrades and bug fixes or product patches. This structure
will continue with our Roswell product; therefore, we anticipate a
positive impact on license fees, software maintenance, and custom
programming revenues from Roswell sales. However, according to
an article in Forbes magazine on March 29, 2004, software companies
are gradually relying less on the software license for revenues and
more on professional services such as programming and consulting.
Management believes this trend applies to our revenues as well,
since Roswell is our only product that will use this licensing
structure. Therefore, although we expect a positive impact on
license fees from Roswell, we believe software sales, custom programming,
and professional services will provide a greater portion of our revenues
in the coming years.

With the marketing of the DFC and Taos products, management anticipates
that revenues for direct software sales and technical support will
increase as those products are sold and the associated technical
support programs are purchased. The change in focus on our newer
products reflects management's belief that a broader range of products
and customers will provide greater stability in revenues.

Another new marketing area that we are developing is the need for
customers to hire our engineers to connect our software to existing
software owned by the customer. We now have several contracts in
which we are "welding" different databases to our database with good
success. This could be a very important growth area for us in the future.

Scanning services are performed by Working Knowledge at its site in
Santa Monica, California. Revenues for scanning services increased in
the year ended December 31, 2003, because of a large on-going contract
with a major entertainment studio to scan over 8,000 movie titles and
their associated media files. In the past, management has anticipated
that these services will be reserved in the future primarily for existing
customers and customers of our core products, although revenue could be
generated from unsolicited customers. Accordingly, in 2003 management has
not focused on developing this segment of our business, but will
reassess the importance of this revenue source in the coming year.

Cost of services consists primarily of engineering salaries, engineering
supplies, compensation-related expenses, 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-

2003 2002
% of % of
Amount Revenue Amount Revenue
------ ------- ------ -------
Revenues $ 1,300,000 100% $ 1,658,000 100%
Cost of services 330,000 25.4% 527,000 31.8%
------ ------
Gross profit 970,000 74.6% 1,131,000 68.2%

General & administrative 1,709,000 129.1% 1,386,000 83.6%
Research & development 112,000 8.6% 176,000 10.6%
Impairment of Goodwill 0 22,000 1.3%
------ ------
Net operating (loss) (851,000) (63.1%) (453,000) (27.3%)

Other income (expense) (33,000) (2.5%) (69,000) (4.2%)
------ ------
Net income (loss) $ (884,000) (65.6%) (522,000) (31.5%)
====== ======
Earnings (loss) per share: ($0.03) $(0.02)

Revenues: Total revenues decreased 21.6%, or $358,000, for the year ended
December 31, 2003, 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:

* Revenues generated by software sales and maintenance decreased 20.1%, or
$212,000, for the year ended December 31, 2003, as compared to the comparable
prior year period. This decrease is attributable in part to a single contract
with Physicians Telehealth Network (PTN), from which we recognized revenue of
$500,000 in license fees during 2002. Revenues from software sales and
maintenance other than the PTN contract increased 52.1%, or $288,000 for the
current year as compared to the comparable prior year period (from $553,000
in 2002 to $841,000 in 2003). This increase is attributable to the fact that
we are now marketing our product as a standard retail product. Although we
will continue hosting for various existing clients and for our Roswell product,
we are focusing new marketing efforts on the sale of our standard products as
well as on building custom products. Management anticipates that revenues in
this category will continue to increase, although there is no assurance that
they will increase at the current rate.

-13-

* Custom programming revenue increased 112.3%, or $118,000, for the year
ended December 31, 2003, as compared to the comparable prior year period.
This increase was primarily due to two contracts for customized software
services for $75,000 and $72,000, respectively. There are some customers
that purchase our standard products and require customization, and we
continue to offer this service. In addition, our Roswell product will
be offered as a customizable package. Therefore, we anticipate that this
revenue will continue to increase.

* Revenues generated by license fees decreased 65.5%, or $114,000, for
the year ended December 31, 2003, as compared to the comparable prior
year period. This decrease is primarily attributable to the fact that
we did not enter into any significant new licenses during the year.
Management believes that this category may be a less significant portion
of future revenues. We may license the software in certain products,
however, we anticipate most revenues will be generated from sales of our
software products.

* Revenue generated by scanning services increased 124%, or $93,000, for
the year ended December 31, 2003, as compared to the comparable prior year
period, due to a large long-term contract with a major movie studio.
Although management had anticipated that the services provided by Working
Knowledge would generally be limited to our existing or future clients and
would not be our primary focus, causing revenues generated by Working
Knowledge to remain consistent or increase modestly in the future, we will
reassess the importance of this revenue source in the coming year.

* Other revenue was generated by consulting services for data base design
and other miscellaneous items. Revenue generated by these other services
decreased 97.2% or $243,000, for the year ended December 31, 2003, as
compared to the comparable prior year period. The cessation of Sprint
commissions due to the termination of the Sprint agreement was the main
factor in the decrease of these revenues.

Cost of Services. Cost of services decreased 37.4%, or $197,000, for
the year ended December 31, 2003, as compared to the comparable prior
year period. Cost of services as a percentage of revenues decreased to
25.4% for the year ended December 31, 2003 from 31.8% for the comparable
prior year period. This reduction in costs of services is attributable
primarily to a reduction of engineering expenses following completion
of the primary research and development phase of our software.
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
increased 23.3%, or $323,000, for the year ended December 31, 2003,
as compared to the comparable prior year period. This increase was
primarily attributable to bad debt expense of $500,000 due to the
write-off of the receivable associated with the DTN contract. While
we are attempting to negotiate collection of the balance due, it is unlikely
that such negotiations will be successful. General and administrative
expenses other than the DTN expense decreased from $1,386,000 in 2002
to $1,209,000 in 2003. This decrease of 14.6% or $177,000 is primarily
due to a reduction in staff, resulting in lower salaries and
compensation-related expenses. General and administrative expenses as
a percentage of revenues were 131.5% for the year ended December 31,
2003, as compared to 83.6% for the comparable prior year period.
General and administrative expenses as a percentage of revenues without
DTN contract were 93.0% for the year ended December 31, 2003, as
compared to 119.7% for the comparable prior year period. Management
believes the percentage of general and administrative costs will
decrease in the future because revenues will increase at a greater rate
than general and administrative costs, 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.

Research and Development. Research and development expenses decreased
36.4%, or $64,000, for the year ended December 31, 2003, as compared to
the comparable prior year period. This decrease was primarily due
to the completion of the development of our core software and the
refocusing of research and development to upgrading the existing
products to remain competitive in the industry.

Other Income. Interest income decreased 100.0%, or $1,000, for the year
ended December 31, 2003, as compared to the comparable prior year
period. Interest expense increased 45.2%, or $19,000 for the year ended
December 31, 2003, as compared to the comparable prior year period.
The increase in interest expense was attributable to estimated penalties
and interest on the past-due payroll taxes of approximately $30,000.
There was no loss on disposal of fixed assets in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Although we had a negative operating cash flow during the year ended
December 31, 2003 as compared to a positive operating cash flow
in the comparable prior year period, we believe that our ability to
provide the necessary cash for operations from internal sources is
improving. The positive cash flow in the prior year is partially
attributable to $469,000 in salaries and services paid through equity
transactions. In 2003, payment of salaries and services through equity
transactions decreased by $100,000 to $369,000.

Also, in 2003, we paid down a significant portion of trade accounts
payable, decreasing the balance from $315,000 at December 31, 2002
to $122,000 at December 31, 2003. Of the balance of $122,000 at
December 31, 2003, $33,000 were current, $16,000 were between 31 and
60 days delinquent, $0 were between 61 and 90 days delinquent, and
$73,000 were over ninety days delinquent. The four largest creditors
include a news magazine ($25,000), the State of New Mexico payroll
taxes ($24,000), legal counsel ($10,000), another legal
counsel ($9,000). However, of the $73,000 that is over ninety
days delinquent, $35,000 is being paid in installments according to
agreed-upon payment plans, and we are current in our payments in accordance
with these agreements, and the $25,000 to the news magazine was paid
in full in the first quarter of 2004.

-15-

We also continue to accrue the salary of our president, Richard Govatski,
which at December 31, 2003, was an aggregate of $106,000. Payroll taxes
due at December 31, 2003, were $350,000, including 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 decreased from $643,000 in 2002 to $450,000 in 2003.
The write-off of the DTN receivable accounts for a decrease of $500,000.
Taking into account this write-off, receivables have increased $307,000
from last year. This increase is partially due to an agreement for
advertising, of which $135,000 in advertising is still owed to us and
will be used in 2004, and partially due to beginning large projects for
the U.S. Government and a major Hollywood entertainment studio at the
end of the year (three customers had balances of $82,000, $85,000 and
$72,000 respectively as of December 31, 2003; each was paid in the
first quarter of 2004). These contracts will
continue to produce recurring revenues in 2004.

Operating activities used $179,000 of cash for the year ended December
31, 2003, as compared to operating activities generating $76,000 of cash
for the comparable prior year period. The increase in the use of cash
was primarily due to the effort to pay accumulated accounts payable and
payroll taxes as discussed in Liquidity and Capital Resources above.
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 on several occasions during
the period, we paid employee salaries and outside consulting fees with
equity-based compensation. However, we have had to make equity-based
payments to employees in lieu of cash only one time since March 2003.

Investing activities used $1,000 of cash for the year ended December
31, 2003, as compared to $354,000 for the comparable prior year period.
The decrease in the cash used for investing activities for the year
ended December 31, 2003 was primarily attributable to the disposal of
the Sony Petasite equipment in 2002.

Financing activities provided $152,000 in cash for the year ended December
31, 2003, as compared to financing activities providing $260,000 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, 2003, $25,000 of the total amount was attributable
to a loan from First Mirage, Inc.an investment banking firm. Also,
$28,000 was attributable to net proceeds from a private stock offering of
shares of common stock, and we reduced the amount due on our line of credit
during this period by $44,000.

In January 2003, we issued 250,000 shares of common stock for gross
proceeds of $28,000. During 2003, we issued 135 shares of Series
A Preferred Convertible stock for gross proceeds of $135,000.
These shares are convertible at any time by the shareholder at a rate
equal to 70% of the average bid price of the common stock on the
conversion date, at a minimum of $0.05 and a maximum of $.25 per share.
The Series A Preferred Convertible stock has no preference with respect
to dividends declared by New Mexico Software.

Management anticipates that our primary uses of capital in the future
periods will be allocated to continue to satisfy delinquent obligations
and for working capital purposes. Our business strategy is to
increase working capital by internal growth through continued hosting
of our existing customers, sale of licenses for our Roswell products,
maintenance of these licenses, and sales of our retail products DFC and
Taos, 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, 2003, we had an outstanding balance on a line of credit with
Los Alamos National Bank (LANB) 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. On April 24,
2003, we paid $12,224 of principal and $12,768 of interest, and we negotiated
another six-month extension to October 20, 2003. On October 20, 2003 we
negotiated an extension of the amount due until April 23, 2004 by paying
$25,000 in principal and $7,500 in interest. The principal balance due for
this line of credit was $188,420 as of December 31, 2003. On March 27, 2004,
we received a letter from LANB extending the note until October 15, 2004,
with payment of $25,000 of principal and approximately $6,000 of interest due
on April 15, 2004. The company has the necessary cash to continue to reduce
the note under these circumstances and plans to make payment on time in April
2004. 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. However, the bank
has continued to extend the note six months at a time, providing we pay an
agreed-upon amount of principal and interest at the time of the extension.
We believe that LANB will continue to work with us in this manner.

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.

-16-

Management anticipates that the capital requirements for operations for the
next twelve months will be approximately $1,200,000 - $1,500,000, based on
cash flow projections. The company currently has contracts which provide for
recurring revenues of approximately $600,000 for hosting and technical support
over the next twelve months. Based on the prior year licensing and custom
programming revenue, we can expect these services to generate an additional
$300,000 - $400,000 over the next twelve months. We anticipate that new
clients and our new products will provide the remaining necessary capital for
the next year. In addition, if the company is not able to provide the
necessary capital for the next year from revenues, we have a commitment of a
line of credit of $500,000 to cover any additional funds needed. On November
6, 2003 we received a letter of intent to invest $500,000 in New Mexico
software over the next six months, which will provide working capital
necessary for operations over the next twelve months and to retire long-term
debt and past-due payroll taxes. Through a combination of increased
marketing efforts and continued reduction of expenses, management
anticipates positive working cash flow during 2004.

-17-

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.

-18-

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

Although we were still dependent upon a small number of clients in the year
ended December 31, 2003, we believe that trend is changing. During the year
ended December 31, 2003, seven clients accounted for 85% of our revenues, as
compared to the year ended December 31, 2002, when three clients accounted
for 67% of our revenues. As we retain current clients and gain new clients,
this reliance on a small number of customers will continue to decrease. In
addition, while our Roswell product will continue to depend on a relatively
small number of customers, we expect an expanded customer base for our DFC
product, and a wide retail base for our Taos product. Overall, we anticipate
that our customer base will broaden in the next year with the marketing of
these newer products, giving more stability and predictability to our
revenues.

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.

-19-

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 marketed 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)

-20-

* 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 included marketing funds, joint marketing and sales
programs, trade show exposure, and an advertising program in Forbes Magazine
and Forbes.com. The Forbes advertising program was being funded in part by
Toshiba and the majority of the program was 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 started
with one half page four color pages in the May or June 2003 issues.

Our first marketing effort with IT Marketing Corporation and Toshiba has come
to a conclusion. A second marketing effort was started with IT Marketing
Corporation in 2003. IT Marketing Corporation is located in Austin, Texas.
New Mexico Software is working with IT Marketing Corporation to distribute
products built by New Mexico Software. In addition, they are providing
telemarketing assistance to help build the end user and reseller distribution
channels, which will support the sales of our products.

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.

One of the competitive advantages of our technology is that it is based on
Open Source - software that is mostly free, with no royalties payable to
other companies. By integrating Open Source programs into our technology,
we are able to provide well-built, low-cost products for the digital
management market. In addition, the code that we deliver to customers is
compiled. When you compile software code it makes it difficult to use the
code to create a similar program, even though the code we create originates
from Open Source. This provides better protection and security of our
products.

Another advantage our company has is the ability to provide totally
integrated services that a customer would normally need to outsource to
several different suppliers. For example, with our business model and
technology, we are able to provide the software, custom programming,
hosting, and database administration as a total solution.

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."

-21-

Employees

As of April 30, 2004, we had 15 employees, including 9 in systems
engineering and quality assurance; 4 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. We also
hire independent sales agents who work on commission, and these agents are
paid a percentage of the sale once the transaction has been completed.

DESCRIPTION OF PROPERTY

We currently lease a 3,000 square foot facility in Albuquerque, New Mexico,
at a cost of approximately $3,000 per month. The lease expires on July 31,
2004. On March 29, 2004 we signed a new five-year lease for a new space of
approximately 3,000 square feet in the same building complex, at a cost of
approximately $3,000 per month, to replace the current space. The new 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 new space provides adequate room for expansion.
In addition, we will have access to a large power generator, which will
enable our servers to continue operating during power outages. 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 was a question
of whether the complaint was properly served and whether the California courts
have jurisdiction over us. The Grossmans filed an Application for Writ 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. The Grossmans, through a separate entity, Doctors
Telehealth Network, purchased software from us and it has not been paid for.
We filed a motion to quash the service of summons for lack of personal
jurisdiction and to vacate a default judgment against us. The court
tentatively ruled in favor of the Grossmans. However, after our oral argument
on April 23, 2004, the court withdrew its tentative ruling and ruled in favor
of us. Specifically, the court ruled that we do not have sufficient contact
with California to warrant the exercise of personal jurisdiction. Based on
this ruling, there is no action pending against us at this time.

In October 2003, we entered into an interim agreement with the Internal
Revenue Service concerning the repayment of federal tax deposits which we
failed to pay for the four operating quarters ended September 30, 2003.
We have agreed to pay $5,000 per month beginning November 1, 2003. During
this interim period, the IRS has agreed withhold the filing of a federal tax
lien. Consideration of filing a lien in the future will be based upon a
determination of how long it may take to pay the taxes. Also, our failure
to make timely federal tax deposits will default this interim agreement and
necessitate the filing of the lien. Our tax returns for the unpaid quarters
are being assessed by the IRS, and we expect to receive an assessment notice
for each period upon completion of this assessment. We estimate that
these assessments will total approximately $300,000, plus interest and
penalties. Since the end of the third quarter 2003, we have made on-time
payments of current payroll taxes for both the state and federal agencies.

On March 9, 2004, our legal counsel received a letter from the attorney
representing Manhattan Scientifics. The letter threatened litigation
against us and Richard Govatski for tortious interference with contract.
This is based on the fact that we have declined to honor Manhattan
Scientifics request for a cashless exercise of our Common Stock Purchase
Warrants issued to them. It is our position that the warrants were issued
in a transaction that was not an arms length transaction and therefore,
the warrants should be cancelled.

Other than listed above, 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.

-22-

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, Principal Financial
Officer, Principal Accounting
Officer, 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.

-23-

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 $123,600 (1)(2) -0- -0- -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 representing
$3,600 of salary..
(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 500,000/0 $225,000/$-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, 500,000 were exercisable at $0.06 per share.

-24-

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
In 2003, we granted 1,743,920 stock options under the plan. At May 5, 2004,
2,899,288 remained outstanding and unexercised. Of these outstanding options,
1,331,487 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. In 2003, we
granted 760,000 stock options under the plan. At May 5, 2004, 1,431,487
remained outstanding and unexercised. Of these outstanding options, 1,331,487
had vested.

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 April 30, 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 4,845,500 16.10%
5041 Indian School Rd. NE 5,345,500 (including
Albuquerque, NM 87110 500,000 options)(2) 16.96%

Teresa B. Dickey 107,563 *
532,016(3)(including
424,453 options) 1.69%

John Handley 265,000(4) *
765,000(4)(including 2.43%
500,000 options)

Executive Officers and
Directors as a Group
(3 Persons) 5,218,063 17.34%
6,642,516 21.07% 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. Percentage is based on
30,097,479 shares outstanding as of April 23, 2004. Fully diluted percentage
includes 1,424,453 options.
(2) This number of shares includes options to purchase 500,000 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 Corporation to secure a loan to the company which is
due and payable on June 30, 2004. 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.
(4) This number of shares includes 265,000 shares issued to Mr. Handley and
options to purchase 500,000 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 held by Mr. Handley.

-25-

DILUTION

As of April 23, 2004, we had issued and outstanding 30,097,479 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; 2,850,000
shares being registered in this offering that have not been issued
(2,800,000 shares that are based on conversion of our preferred shares
into our common stock and 50,000 shares registered for Richard Anslow
and Gregg Jaclin that have not yet been issued); and 2,325,581 shares
being offered in this offering. Therefore, the dilution tables below
are based on 36,273,060 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 December 31, 2003 was $(268,000) or $(0.0089) per share
(based on 30,097,479 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 $682,000
or $.0188 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 $.0099. 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 $(.4112) 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 December 31, 2003

Tangible book value before offering $ (268,000) $(.0089)
Offering to new investors $ 1,000,000 $ .43
Less expenses $ 50,000
Net proceeds $ 950,000
Tangible book value after offering $ 682,000 $ .0188
Increase in Net Tangible
Book value by old investors $ .0099
Offering price paid by new investors $ .43
Dilution for new investor $ (.4112)

-26-

SELLING STOCKHOLDERS

The shares being offered for resale by the selling stockholders consist
of the total of 2,714,545 shares of our common stock, 1,000,000 shares
of our common stock issuable in connection with their conversion of our
warrants and 2,800,00 shares of our common stock issuable in connection
with the conversion of our preferred shares.

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 April 23, 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(9) 0 0% 700,000(2) 0 0
ABQ Energy (8)(9) 0 0% 1,500,000(2) 0 0
James Warlick(9) 0 0% 200,000(2) 0 0
Rahim Salamohammed(9) 0 0% 400,000(2) 0 0
Lewis White(3) 454,545 1.51% 454,545(3) 0 0
First Mirage, Inc.(4) 0 0% 1,000,000 0 0
John Handley(10) 265,000 .88% 265,000 0 0
Brian McGowan(11) 1,230,000 4.09% 1,230,000 0 0
Frank Reidy(12) 590,000 1.96% 590,000 0 0
Hawley Revocable Trust(5) 317,000 1.05% 317,000 0 0
Lowell R. Addis's Family Trust(13) 100,000 .33% 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 1.21% 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 30,097,479 shares
issued and outstanding as of April 23, 2004. The number of shares owned
after the offering is based on 30,097,479 plus 6,175,581 or an aggregate
of 36,273,060 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. The Whites
originally purchased 454,545 Units (consisting of one share of common
stock and one warrant) for $50,000. We are registering the common shares
only.
(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. The following persons are representatives of, and
make investment decisions for First Mirage: Frank E. Hart, Fred A.
Brasch and David A. Rapaport.
(5) Greg A. Hawley and Marilyn F. Hawley are the trustees of the Hawley
Revocable Trust dated August 30, 1993. The Hawley Revocable Trust
purchased 217,000 Units (consisting of one share of common stock and
one warrant) for $23,870. It also purchased 100,000 shares of our common
stock for $21,000. We are registering the common shares only. We have
not yet issued 100,00 shares.
(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. His shares
were issued in satisfaction of our past due lease obligation of $32,850.
(8) Scott Kominiak is a representative of, and make investment decisions
for, ABQ Energy.
(9) The following issuances were based on purchase of our preferred
convertible shares: John Shaver purchased 30 preferred convertible
shares for $30,000; ABQ Energy purchased 75 preferred convertible
shares for $75,000; James Warlick purchased 10 preferred convertible
shares for $10,000; Rahim Salamohammed purchased 20 preferred convertible
shares for $20,000. We are registering the shares of our common stock
underlying the preferred shares.
(10) John Handley purchased 250,000 shares of our common stock for $27,500;
and 15,000 shares of our common stock for $1,000.
(11) Brian McGowan's shares represent shares issued to him in accordance
with his consulting agreement with us.
(12) Frank Reidy purchased 575,000 Units (consisting of one share of common
stock and one warrant) for $63,250. He also purchased 15,000 shares of
our common stock for $1,000. We are registering the common shares only.
(13) The Lowell R. Addis Family Trust purchased 100,000 Units (consisting of
one share of common stock and one warrant) for $11,000. We are
registering the common shares only.

PLAN OF DISTRIBUTION

We are offering our shares of common stock in a direct public offering basis.
There is no minimum number of shares that we must sell before we can utilize
the proceeds of the offering. Therefore, there is a possibility that no
proceeds will be raised or that if any proceeds are raised, they may not
be sufficient to cover the cost of this offering. Richard Govatski, our
President and director will be the only person that will conduct the direct
public offering. You will be purchasing our shares from us and not our
selling security holders.

-27-

He intends to offer and sell the shares in the primary offering through his
business and personal contacts. Mr. Govatski will not be paid any
commissions or other 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. Our officers and directors may nor purchase shares in
this offering.

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.

-28-

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 First Mirage, Inc.. To secure
repayment of this loan Mr. Govatski pledged 400,000 of his person shares
as collateral.

The terms of all of the transactions entered into with Mr. Govatski and
the other related parties are the same as we would have negotiated with
an outside party

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 April 23, 2004, we had 30,097,479 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.

-29-

Preferred Stock

We are authorized to issue up to 500,000 shares of $.001 par value preferred
stock. At April 23, 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, 2003, 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, 195 Route 9 South, Suite 204, Manalapan, New Jersey
07726.

FINANCIAL STATEMENTS

We have attached to this prospectus copies of our audited financial
statements as of December 31, 2003 and 2002.

-30-

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, 2003 and 2002, 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, 2003 and 2002, 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.

March 29, 2004

-31-

NMXS.com, Inc. and Subsidiaries
Consolidated Balance Sheets
(Rounded to the nearest thousand)

December 31,
-------------------------
2003 2002
----------- -----------

Assets

Current assets:
Cash and equivalents $ 11,000 $ 39,000
Accounts receivable, net 450,000 643,000
Inventory 3,000 -
Prepaid expenses and other assets 21,000 42,000
Officer advances - 1,000
----------- -----------
Total current assets 485,000 725,000
----------- -----------

Furniture, equipment and improvements, net 141,000 226,000
Security deposits 39,000 39,000
Goodwill, net 75,000 75,000
----------- -----------
$ 740,000 $ 1,065,000
=========== ===========

Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
Accounts payable $ 122,000 $ 315,000
Accrued expenses 465,000 318,000
Deferred revenue 70,000 -
Notes payable 276,000 287,000
----------- -----------
Total current liabilities 933,000 920,000
----------- -----------

Stockholders' equity (deficit):
Preferred stock, $0.001 par value, 500,000 shares
authorized, no shares issued and outstanding
as of 12/31/03 and 12/31/02, respectively - -
Common stock, $0.001 par value, 50,000,000 shares
authorized, 29,392,256 and 24,757,726 shares issued and
outstanding as of 12/31/03 and 12/31/02, respectively 29,000 25,000
Additional paid-in capital 8,861,000 8,184,000
Prepaid compensation (135,000) -
Accumulated (deficit) (8,948,000) (8,064,000)
----------- -----------
(193,000) 145,000
----------- -----------
$ 740,000 $ 1,065,000
=========== ===========

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

-32-

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Operations
(Rounded to the nearest thousand)

For the years ended
December 31,
---------------------------
2003 2002
------------ ------------

Revenue
Software sales and maintenance $ 841,000 $ 1,053,000
Custom programming 224,000 106,000
License fees 60,000 174,000
Scanning services 168,000 75,000
Other 7,000 250,000
------------ ------------
1,300,000 1,658,000
------------ ------------

Operating costs and expenses:
Cost of services 330,000 527,000
General and administrative 1,678,000 1,386,000
Research and development 112,000 176,000
Impairment of goodwill - 22,000
------------ ------------
Total operating costs and expenses 2,120,000 2,111,000
------------ ------------

Net operating (loss) (820,000) (453,000)

Other income (expense):
Interest income - 1,000
Interest (expense) (64,000) (45,000)
(Loss) on disposal of fixed assets - (25,000)
------------ ------------
Total other income (expense) (64,000) (69,000)
------------ ------------

Net (loss) $ (884,000) $ (522,000)
============ ============

Weighted average number of
common shares outstanding - basic and fully diluted 26,794,295 23,271,379
============ ============

Net (loss) per share - basic and fully diluted $ (0.03) $ (0.02)
============ ============

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

-33-

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
(Rounded to the nearest thousand)

Total
Stock-
Preferred Stock Common Stock Additional holders'
------------------ ---------------------- Paid-in Subscriptions Prepaid Accumulated Equity
Shares Amount Shares Amount Capital Payable Compensation (Deficit) (Deficit)
--------- ------- ----------- --------- ----------- ------------- ------------ --------- -----------

Balance forward
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 1,000 19,000 20,000

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

Balance, December 31, 2002 - - 24,757,726 25,000 8,184,000 - - (8,064,000) 145,000

Issuance of common stock
for salaries 60,143 11,000 11,000

Issuance of common stock
for services 5,208 1,000 1,000

Cash received for
sale of common stock 28,000 28,000

Issuance of common stock
for salaries 142,241 21,000 21,000

Issuance of common stock
for services 12,500 2,000 2,000

Issuance of options
for services 65,000 65,000

Issuance of common stock
for salaries 199,422 24,000 24,000

Issuance of common stock
for services 18,045 2,000 2,000

Issuance of common stock
for salaries 146,901 16,000 16,000

Issuance of common stock
for services 36,090 4,000 4,000

Issuance of common stock
for services 10,000 1,000 1,000

Cash received for
sale of preferred stock 30,000 30,000

Issuance of common stock
for services 100,000 20,000 20,000

-34-

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
(Rounded to the nearest thousand)
(continued)

Issuance of common stock
for services 170,000 17,000 17,000

Issuance of common stock
for services 42,500 3,000 3,000

Issuance of common stock
for services 57,611 4,000 4,000

Issuance of common stock
for services to be rendered 1,500,000 2,000 88,000 (90,000) -

Cash received for
sale of preferred stock 30,000 30,000

Issuance of common stock
for services to be rendered 500,000 1,000 29,000 (30,000) -

Issuance of options
for services 7,000 7,000

Issuance of warrants
for services 67,000 67,000

Cash received for
sale of preferred stock 75,000 75,000

Issuance of preferred stock
for cash 135 - 135,000 (135,000) -

Issuance of common stock
for services to be rendered 250,000 15,000 (15,000) -

Compensation
expense 15,000 15,000

Issuance of common stock
for cash 250,000 28,000 (28,000) -

Issuance of common stock
for services 200,000 16,000 16,000

Issuance of common stock
for salaries 41,369 17,000 17,000

Issuance of common stock
for services 365,000 1,000 32,000 33,000

Issuance of common stock
for services to be rendered 500,000 30,000 (30,000) -

Issuance of common stock
for bonuses 27,500 11,000 11,000

Issuance of options
for services 11,000 11,000

Compensation
expense 15,000 15,000

Net (loss)
For the year ended
December 31, 2003 (884,000) (884,000)

--------- ------- ----------- --------- ----------- ------------- ------------ --------- ----------
Balance, December 31, 2003 135 $ - 29,392,256 $ 29,000 $ 8,861,000 $ - $ (135,000) $(8,948,000)$(193,000)
========= ======= =========== ========= =========== ============= ============ ========= ==========

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

-35-

NMXS.com, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Rounded to the nearest thousand)

For the years ended
December 31,
---------------------------
2003 2002
------------ ------------

Cash flows from operating activities
Net (loss) $ (884,000) $ (522,000)
Adjustments to reconcile net (loss) to
net cash provided (used) by operating activities:
Common stock issued for salaries 89,000 108,000
Common stock issued for services 133,000 205,000
Common stock issued for bonuses 11,000 -
Stock options issued for services 83,000 156,000
Warrants issued for services 67,000 -
Depreciation and amortization 86,000 100,000
Amortization of goodwill - 22,000
Loss on disposal of fixed assets - 25,000
Changes in operating assets and liabilities:
Accounts receivable 193,000 (174,000)
Inventory (3,000) -
Estimated earnings in excess of billings on uncompleted contracts - 18,000
Prepaid expenses and other assets 21,000 8,000
Officer advances 1,000 31,000
Security deposits - 15,000
Accounts payable (193,000) 365,000
Accrued expenses 147,000 -
Deferred revenue 70,000 (266,000)
------------ ------------
Net cash provided (used) by operating activities (179,000) 91,000
------------ ------------

Cash flows from investing activities
Acquisition of fixed assets (1,000) (369,000)
------------ ------------
Net cash (used) by investing activities (1,000) (369,000)
------------ ------------

Cash flows from financing activities
Proceeds from notes payable 33,000 100,000
Repayment of note payable (44,000) (50,000)
Net proceeds from the issuance of common stock 135,000 -
Net proceeds from the issuance of preferred stock 28,000 168,000
Restricted cash 0 42,000
------------ ------------
Net cash provided by financing activities 152,000 260,000
------------ ------------

Net (decrease) in cash equivalents (28,000) (18,000)
Cash equivalents - beginning 39,000 57,000
------------ ------------
Cash equivalents - ending $ 11,000 $ 39,000
============ ============

Supplemental disclosures:
Interest paid $ - $ -
============ ============
Income taxes paid $ - $ -
============ ============

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

-36-

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.

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.

[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] Inventory:

Inventory, which is composed of component parts and finished
goods, is valued at cost on a specific identity basis for those
items with serial numbers. The remainder of the inventory is
valued at the lower of first-in-first-out (FIFO) cost or market.
On a quarterly basis, management compares the inventory on hand
with our records to determine whether write-downs for excess or
obsolete inventory are required.

-37-

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

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[5] 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.

[6] 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.

[7] 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. 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.

[8] Research and development expenses:

Costs of research and development activities are expensed as
incurred.

[9] Advertising expenses:

The Company expenses advertising costs which consist primarily of
direct mailings, promotional items and print media, as incurred.
Advertising expenses amounted to $188,210 and $15,000 for the
years ended December 31, 2003 and 2002, respectively.

[10] 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.

[11] Stock-based compensation:

Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 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.

-38-

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

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[11] Stock-based compensation: (continued)

Statement of Financial Accounting Standards No. 148 "Accounting
for Stock-Based Compensation - Transition and Disclosure" ("SFAS
148") provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-
based employee compensation. In addition, SFAS 148 amends the
disclosure requirements of SFAS 123 to require more prominent and
more frequent disclosures in financial statements about the
effects of stock-based compensation.

[12] 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, 2003 and 2002.

[13] 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, 2003, the Company has a prepaid rent asset of
$2,000.

[14] 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 $0 and
$22,000 as impairment of goodwill as of December 31, 2003 and
2002.

-39-

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

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[15] Recent pronouncements:

In November 2002, the FASB issued FASB Interpretation ("FIN") No.
45, "Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees and Indebtedness of
Others", an interpretation of FIN No. 5, 57 and 107, and
rescission of FIN No. 34, "Disclosure of Indirect Guarantees of
Indebtedness of Others". FIN 45 elaborates on the disclosures to
be made by the guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it
has issued. It also requires that a guarantor recognize, at the
inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The initial
recognition and measurement provisions of this interpretation are
applicable on a prospective basis to guarantees issued or
modified after December 31, 2002; while, the provisions of the
disclosure requirements are effective for financial statements of
interim or annual periods ending after December 15, 2002. The
company believes that the adoption of such interpretation will
not have a material impact on its financial position or results
of operations and has adopted such interpretation during fiscal
year 2003, as required.

In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities", an interpretation of Accounting
Research Bulletin No. 51. FIN No. 46 requires that variable
interest entities be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable
interest entity's activities or is entitled to receive a majority
of the entity's residual returns or both. FIN No. 46 also
requires disclosures about variable interest entities that
companies are not required to consolidate but in which a company
has a significant variable interest. The consolidation
requirements of FIN No. 46 will apply immediately to variable
interest entities created after January 31, 2003. The
consolidation requirements will apply to entities established
prior to January 31, 2003 in the first fiscal year or interim
period beginning after June 15, 2003. The disclosure requirements
will apply in all financial statements issued after January 31,
2003. The company will begin to adopt the provisions of FIN No.
46 during the first quarter of fiscal 2003 and the Company
believes that the adoption of such interpretation will not have a
material impact on its financial position or results of
operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of Both
Liabilities and Equity." SFAS No. 150 changes the classification
in the statement of financial position of certain common
financial instruments from either equity or mezzanine
presentation to liabilities and requires an issuer of those
financial statements to recognize changes in fair value or
redemption amount, as applicable, in earnings. SFAS No. 150 is
effective for financial instruments entered into or modified
after May 31, 2003, and with one exception, is effective at the
beginning of the first interim period beginning after June 15,
2003. The effect of adopting SFAS No. 150 will be recognized as a
cumulative effect of an accounting change as of the beginning of
the period of adoption. Restatement of prior periods is not
permitted. SFAS No. 150 did not have any impact on the Company's
financial position or results of operations.

NOTE C - ACCOUNTS RECEIVABLE

During the year ended December 31, 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.

-40-

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

NOTE D - FURNITURE, EQUIPMENT, AND IMPROVEMENTS

Furniture, equipment, and improvements as of December 31, 2003
consisted of the following:

Computers $ 269,000
Furniture, fixtures and equipment 105,000
Leasehold improvements 76,000
450,000
--------------
Accumulated depreciation (309,000)
--------------
$ 141,000
==============

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%. On April 24, 2003, the Company paid
$12,224 of principal and $12,768 of interest. The remaining
$212,776 of principal was extended until October 15, 2003 at a
current interest rate of 7%. 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. As of December
31, 2003, the Company had a balance due of $188,000. On March
27, 2004, the Company received a notice from the bank to extend
the note to October 15, 2004, if the Company pays a principal
payment of $25,000 and $6,000 in interest.

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 December 31, 2003, the Company is
in default and is negotiating with the note holder.

In April 2002, the Company borrowed $12,500. The loan is due on
demand and bears no interest. As of December 31, 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.
On December 31, 2003, the note was extended to April 15, 2004.
As of December 31, 2003, the Company had a balance due of
$25,000.

NOTE F - CAPITAL TRANSACTIONS

Series A convertible preferred stock:

The Series A convertible preferred shares are convertible at any
time by the shareholder at a rate equal to 70% of the average bid
price of the common stock on the conversion date, at a minimum of
$0.05 and a maximum of $.25 per share. The Series A convertible
preferred stock has no preference with respect to dividends
declared by New Mexico Software.

During the year ended December 31, 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 have received their
preferred stock.

-41-

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

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Common stock:

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.

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.

During the year ended December 31, 2003, the Company effected the
following stock transactions:

On January 13, 2003, the Company issued a total of 60,143 shares
of its $0.001 par value common stock to its employees in lieu of
salary which was valued at $11,000.

On January 13, 2003, the Company issued a total of 5,208 shares
of its $0.001 par value common stock to an independent contractor
for services rendered which was valued at $1,000.

On January 31, 2003, the Company agreed to issue 250,000 shares
of its $0.001 par value common stock to a director of the Company
for cash of $28,000 which is considered subscriptions payable.
On October 16, 2003, the shares have been issued.

On February 20, 2003, the Company issued a total of 142,241
shares of the Company's $0.001 par value common stock to its
employees in lieu of salary which was valued at $21,000.

-42-

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

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Common stock: (continued)

On February 20, 2003, the Company issued a total of 12,500 shares
of its $0.001 par value common stock to its and to an independent
contractors for services rendered in the amount of $2,000.

On February 27, 2003, the Company issued 1,000,000 stock options
for legal services totaling $65,000.

On March 10, 2003, the Company issued a total of 199,422 shares
of its $0.001 par value common stock to its employees in lieu of
salary which was valued at $24,000

On March 10, 2003, the Company issued a total of 18,045 shares of
its $0.001 par value common stock to an independent contractor
for services rendered in the amount of $2,000.

On March 24, 2003, the Company issued a total of 146,901 shares
of its $0.001 par value common stock to its employees in lieu of
salary which was valued at $16,000

On March 24, 2003, the Company issued a total of 36,090 shares of
its $0.001 par value common stock 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
its $0.001 par value common stock to an independent contractor
for services rendered in the amount of $1,000.

On April 17, 2003, the Company issued a total of 100,000 shares
of its $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
its $0.001 par value common stock to an attorney for legal
services rendered in the amount of $17,000.

On May 30, 2003, the Company issued a total of 42,500 shares of
its $0.001 par value common stock to an attorney for legal
services rendered in the amount of $3,000.

On June 6, 2003, the Company issued a total of 57,611 shares of
its $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 its $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 its $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 August 1, 2003, the Company issued 100,000 stock options for
consulting services totaling $7,000.

On August 17, 2003, the Company issued 1,000,000 warrants for
consulting services totaling $67,000.

On August 30, 2003, the Company agreed to issue a total of
365,000 shares of its $0.001 par value common stock to its
landlord in exchange for rent which was valued at $32,850. On
December 8, 2003, the shares have been issued.

On September 18, 2003, the Company issued a total of 250,000
shares of its $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.

-43-

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

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Common stock: (continued)

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

On October 16, 2003, the Company issued 250,000 shares of its
$0.001 par value common stock to a director of the Company and
cancelled the subscriptions payable of $28,000.

On November 24, 2003, the Company issued 200,000 shares of its
$0.001 par value common stock in exchange for consulting services
valued at $16,000.

On November 25, 2003, the Company issued a total of 41,369 shares
of its $0.001 par value common stock to its employees in lieu of
salary which was valued at $17,000

On December 8, 2003, the Company issued a total of 365,000 shares
of its $0.001 par value common stock to its landlord in exchange
for rent which was valued at $33,000

On December 8, 2003, the Company issued a total of 500,000 shares
of its $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 December 10, 2003, the Company issued a total of 27,500 shares
of its $0.001 par value common stock to its employees as bonuses
which were valued at $11,000. The Company issued 22,500 shares
in error to an employee and the shares will be returned to the
Company in 2004, the amount is considered due from employee in
the amount of $9,000.

On December 31, 2003, the Company issued 130,000 stock options
for consulting services totaling $11,000.

On December 31, 2003, the Company adjusted deferred compensation
in the amount of $15,000.

Warrants:

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.

On August 17, 2003, the Company issued 1,000,000 warrants to
First Mirage (FM) at the rate of one warrant for each common
share. The warrants have an exercise price of $0.08 per share
and a five 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 $0.06. The following
assumptions were used in computing the fair value of these
warrants: weighted average risk-free interest rate of 3.35%, zero
dividend yield, volatility of the Company's common stock of 181%
and an expected life of the warrants of five years. Approximately
$67,000 of expense was included in the statement of operations
for the year ended December 31, 2003.

No warrants have been exercised through December 31, 2003 and
2002.

-43-

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

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

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 December 31, 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- 8,116,849 7.44 $0.10 5,512,643 $0.10
$0.30

$0.31- 212,520 5.98 $0.36 186,000 $0.36
$0.50

$0.54- 60,000 2.33 $0.61 60,000 $0.61
$0.83

$1.25- 0 0.00 $0.00 0 $0.00
$2.13

Summary of Options Granted and Outstanding:

For the year ended december 31,
------------------------------------------------
2003 2002
---------------------- -----------------------
Shares Weighted Shares Weighted
Average Average
Exercise Exercise
Price Price
--------- ----------- -------- ------------
Options:
Outstanding at 2,202,000 $0.77 1,593,000 $1.33
beginning
of year

Granted 332,000 $0.29 1,739,000 $0.47

Cancelled (2,000) $1.25 (1,130,000) $0.09
--------- ----------- -------- ------------
Outstanding 2,532,000 $0.63 2,202,000 $0.77
at end of year ========= =========== ======== ============

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 $0.34. 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.

-44-

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

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Stock options: (continued)

During February 2002, the Company granted 200,000 stock options
to an employee with an exercise price of $0.34, 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 $0.34. 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.

During the year ended December 31, 2003, the Company granted the
following stock options:

On February 1, 2003, the Company granted 200,000 stock options to
employees with an exercise price of $0.06, 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 $0.04. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of 4.00%, zero dividend yield, volatility
of the Company's common stock of 163% and an expected life of the
options of ten years.

On February 27, 2003, the Company granted 1,000,000 stock options
to Gerald Grafe, the Company's legal counsel, with an exercise
price of $0.06, equal to the fair value of the common stock, with
a contractual life of ten 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 $0.03. The following
assumptions were used in computing the fair value of these option
grants: weighted average risk-free interest rate of 5.84%, zero
dividend yield, volatility of the Company's common stock of 177%,
and an expected life of the options of ten years. Approximately
$65,000 of expense was included in the statement of operations
for the year ended December 31, 2003.

On August 1, 2003, the Company granted 1,943,920 stock options to
employees with an exercise price of $0.06, 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 $0.04. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of 4.27%, zero dividend yield, volatility
of the Company's common stock of 181% and an expected life of the
options of ten years.

-45-

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

NOTE F - CAPITAL TRANSACTIONS (CONTINUED)

Stock options: (continued)

On August 1, 2003, the Company granted 100,000 stock options to
independent contractors for consulting services, with an exercise
price of $0.06, equal to the fair value of the common stock, with
a contractual life of ten 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 $0.04. The following
assumptions were used in computing the fair value of these option
grants: weighted average risk-free interest rate of 4.27%, zero
dividend yield, volatility of the Company's common stock of 181%,
and an expected life of the options of ten years. Approximately
$7,000 of expense was included in the statement of operations for
the year ended December 31, 2003.

On September 29, 2003, the Company granted 500,000 stock options
to a director with an exercise price of $0.06, 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 $0.04. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of 4.09%, zero dividend yield, volatility
of the Company's common stock of 182% and an expected life of the
options of ten years.

On November 24, 2003, the Company granted 60,000 stock options to
an employee with an exercise price of $0.11, equal to the fair
value of the common stock, with a contractual life of five 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 $0.09. The following assumptions were used in
computing the fair value of these option grants: weighted average
risk-free interest rate of 4.23%, zero dividend yield, volatility
of the Company's common stock of 184% and an expected life of the
options of five years.

On December 31, 2003, the Company granted 130,000 stock options
to an independent contractor for consulting services, with an
exercise price of $0.09, equal to the fair value of the common
stock, with a contractual life of five 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 $0.07. The
following assumptions were used in computing the fair value of
these option grants: weighted average risk-free interest rate of
4.27%, zero dividend yield, volatility of the Company's common
stock of 181%, and an expected life of the options of five years.
Approximately $10,500 of expense was included in the statement of
operations for the year ended December 31, 2003.

The following table summarizes the pro forma operating results of
the Company for December 31, 2003 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.

2003 2002
------------------------
Proforma net loss available to common stockholders ($1,079,000) ($406,000)

Proforma basic and diluted loss per shares ($0.04) ($0.02)

As of December 31, 2003, the Company has reserved 1,000,000
shares of its common stock for issuance upon exercise of stock
options and warrants.

-46-

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, 2003, the Company had net operating loss
carryforwards of approximately $8,917,000, 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:

2003 2002
--------- ---------
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:

As of December 31, 2002, officer advances represent advances to
the Chief Executive Officer who is a principal stockholder of the
Company which bears interest at 7% per annum.

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 December 31, 2003, the
shareholder was paid a total of 2,750,000 shares of common stock,
but he has earned only 500,000 shares and the difference of
2,250,000 shares is considered prepaid compensation. During the
year ended December 31, 2003, the Company has expensed $30,000 in
consulting fees.

NOTE I - MAJOR CUSTOMERS

During the year ended December 31, 2003, seven customers
accounted for 85% of the Company's revenue. The Company
recognized $290,000 as revenue and $290,000 as expense from
barter agreements for the year ended December 31, 2003. During
the year ended December 31, 2002, three customers accounted for
47%, 11% and 9% of the Company's revenue.

As of December 31, 2003, balances due from one customer comprised
27% of total accounts receivable. As of December 31, 2002,
balances due from two customers comprised 70% and 8% of total
accounts receivable.

-47-

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

NOTE J - 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 2003 is as follows:

NMS WKI Total
----------- ----------- ------------
Revenue $1,266,000 $ 34,000 $ 1,300,000

Cost of services 267,000 62,000 330,000
General and administrative 1,556,000 123,000 1,687,000
Research and development 112,000 - 112,000
Impairment of goodwill - - -
----------- ----------- ------------
Operating income (loss) ($669,000) ($151,000) ($820,000)
=========== =========== ============

Total assets $ 704,000 $ 36,000 $ 740,000
=========== =========== ============

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 $(820,000)
Other income (expense) (33,000)
Consolidated net loss/comprehensive loss $(853,000)

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

For the year ended December 31, 2003, amortization and
depreciation expense amounted to $62,000 and $24,000 for NMS and
WKI, respectively. Also, total fixed asset additions amounted to
$0 and $0 for NMS and WKI, respectively, while fixed asset
disposals amounted to $0 and $0 for NMS and WKI, respectively.

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 K - COMMITMENTS AND CONTINGENCIES

Leases:

The Company leases office space in New Mexico and California.
Future minimum lease payments as of December 31, 2003 are as
follows:

Year Amount
---------------
2004 76,000

Rent expense for the years ended December 31, 2003 and 2002
amounted to $112,000 and $149,000, respectively.

-48-

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

NOTE K - COMMITMENTS AND CONTINGENCIES (CONTINUED)

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 $20,000 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 $20,000
is included in general and administrative expenses for the period
ended December 31, 2003. The non-competition agreement commences
upon the termination of the employment agreement for a period of
one year. As of December 31, 2003, there was a total of $15,000
in accrued payroll which will be eliminated upon issuance of the
shares of stock.

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, 2003, the Company has
paid a total of $11,000 to Sprint.

During the year ended December 31, 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.

During the year ended December 31, 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 paid the entire amount.

During the year ended December 31, 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 issued 365,000 of its $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
$319,581 as of December 31, 2003. The penalties and interest
associated with this liability is estimated to be in excess of
10% of the total payroll taxes due, and the Company has accrued
$30,419 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 year ended December 31, 2003,
the Company paid a total of $5,000 of past due payroll taxes.

-49-

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

NOTE K - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Outstanding Payroll Taxes: (continued)

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 year ended December 31, 2003, the
Company paid a total of $10,000 of past due payroll taxes.

NOTE L - LEGAL PROCEEDINGS

On October 20, 2003, we received a written demand from Kurt
Grossman for payment in full of a one-year promissory note issued
by us on April 23, 2002, to Mr. Grossman and his wife evidencing
a loan of $50,000 by Mr. and Mrs. Grossman to us. The demand
includes payment for the principal amount of the note of $50,000,
fixed interest of $5,000, and post default interest of $2,665.62.
Mr. Grossman informed us that he intended to commence legal
action if the note, plus interest, was not paid on or before
October 23, 2003. A court date is set for April 23, 2004 in
California to resolve the dispute, and we have hired an attorney
to represent us in that action.

-50-

NMXS.COM, INC.

2,325,581 Shares of Common Stock
2,714,545 Selling Security Holder Shares of Common Stock
1,000,000 Shares of Common Stock Issuable in Connection with Conversion of
Warrants
2,800,000 Shares of Common Stock issuable upon Conversion of Preferred Shares

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 $ 581
Legal fees and expenses (1) $25,000
Accounting fees and expenses (1) $20,000
Miscellaneous and Printing fees(1) $ 4,419
----------
Total (1) $50,000
==========

(1) Estimated.

-51-

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

On February 5, 2001, we issued 250,000 shares of our
restricted common stock to Murray W. Kelly in consideration
for a $250,000 letter of credit guaranteeing $250,000 of the
initial $300,000 loan from Los Alamos National Bank. 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 to reimburse him for the 75,000
personal shares he issued to our landlord. 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.

-52-

On August 21, 2001, we issued 75,000 shares of our
restricted common stock to Stockbrokers Associates
Corporation in consideration for public relations services.
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 for the purchase
of our wholly owned subsidiary, Working Knowledge, Inc.. 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 in consideration
for advising and consulting services regarding restructuring
of debt, which we later elected not to pursue.. 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.

-53-

On August 21, 2001, we issued 150,000 shares of our
restricted common stock to Lynn Dixon for cash consideration of
$60,000. 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 for cash consideration
of $55,000. 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.in consideration of public
relations services. 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.

-54-

On April 12, 2002, we issued 10,000 shares of our restricted
common stock to Owen Coleman for consulting services regarding
advertising, branding, and logo design.. 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 for consulting services regarding
advertising, branding, and logo design. 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
for cash consideration of $50,000. . 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.

-55-

On September 12, 2002, we issued 575,000 shares of our
restricted common stock to Frank A Reidy for cash consideration
of $63,250. . 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
for cash consideration of $11,000. 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 for cash
consideration of $23,870. 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.

-56-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Brian McGowan for cash consideration of
$1,000. . 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 for
cash consideration of $1,000. 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 for cash
consideration of $1,000. . 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.

-57-

On December 3, 2002, we issued 15,000 shares of our
restricted common stock to Bernadette M. Candaleria for
cash consideration of $1,000. . 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 for cash
consideration of $1,000. . 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 for cash consideration of $1,000.
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.

-58-

On December 3, 2002, we issued 15,000 shares of our restricted common
stock to John M. Fox for cash consideration of $1,000. 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 for cash consideration of $1,000. 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 for cash consideration of $1,000. 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.

-59-

On December 3, 2002, we issued 15,000 shares of our restricted common
stock to Alan S. Bouhamdan for cash consideration of $1,000. 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 for cash consideration of $1,000. 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 for cash consideration of $1,000. 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.

-60-

On December 3, 2002, we issued 15,000 shares of our restricted common
stock to David Gregory Lopour for cash consideration of $1,000. 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 for cash consideration of $1,000. 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 for cash consideration of $1,000. 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.

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On December 3, 2002, we issued 15,000 shares of our restricted common
stock to Frank N. Hawkins Jr. for cash consideration of $1,000 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 for cash consideration of $1,000. 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 for cash consideration of $1,000. 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 for cash consideration of $1,000. 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 for cash consideration of $1,000. 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 in consideration for consulting services in
accordance with his contract. 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 for salary owed. 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 for cash consideration of $27,500. 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. in consideration for investment
banking services. 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.

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On October 16, 2003, we issued 365,000 shares of our
restricted common stock to Jonathan F. P. Rose in consideration
for our past due lease obligation. 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.(2)
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.(2)
3.2(c) By-Laws of Working Knowledge, Inc.,
shall be submitted by amendment.
4.1 2001 Stock Option Plan. (2)
5.1 Opinion and Consent of Anslow & Jaclin, LLP (2)
10.1 Richard Govatski Employment Agreement (2)
10.2 First Mirage, Inc., Agreement (2)
10.3 Brian McGowen Consulting Agreement (2)
21.1 Subsidiaries of NMXS.com, Inc. (2)
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)

(2) Submitted with the initial Form SB-2 Registration Statement filed on
February 12, 2004 (SEC File No. 333-112781).

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.

-67-

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 5th day of May, 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, May 5, 2004
-------------------- Chief Executive Officer and President
RICHARD GOVATSKI

/S/ TERESA B. DICKEY Principal Financial Officer, May 5, 2004
---------------------- Principal Accounting Officer,
TERESA B. DICKEY Secretary, Treasurer and Director

/S/ JOHN E. HANDLEY
---------------------- Director May 5, 2004
JOHN E. HANDLEY

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