form_10q-063002
                                UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002


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



Commission File Number:                         0-24768
                        --------------------------------------------------------

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


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

 420 Lexington Avenue, Suite 1830  New York, New York              10170
     (Address of principal executive offices)                    (Zip Code)


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

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of August 10, 2002.

      Common Stock, $0.001 par value             62,923,624
                 Class                        Number of Shares






                                    INDEX


PART I.   Financial Information

      Item 1. Financial Statements

           Consolidated Balance Sheets - June 30, 2002 (Unaudited)and
            December 31, 2001

           Unaudited Consolidated Statements of Operations - For the Six
            Months Ended June 30, 2002 and June 30, 2001

           Unaudited Consolidated Statements of Cash Flows - For the Six Months
            Ended June 30, 2002 and June 30, 2001

           Notes to Unaudited Consolidated Financial Statements

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

PART II.  Other Information

          SIGNATURES

          Index to Exhibits



                            MEDIX RESOURCES, INC.

                         Consolidated Balance Sheets

                                                             June 30,      December 31,
                                                               2002            2001
                                                          ------------     -----------
                                                           (Unaudited)
                                         Assets
Current assets
  Cash and cash equivalents                                $   281,000     $     8,000
  Accounts receivable, trade                                    80,000              -
  Prepaid expenses and other                                   340,000         344,000
                                                           -----------     -----------
      Total current assets                                     701,000         352,000

Software development costs, net                                876,000         649,000
Property and equipment, net                                    353,000         365,000
Goodwill, net                                                1,735,000       1,735,000
                                                           -----------     -----------

Total assets                                               $ 3,665,000     $ 3,101,000
                                                           ===========     ===========

                          Liabilities and Stockholders' Equity
Current liabilities
  Notes payable                                            $    39,000     $   158,000
  Convertible note payable                                   1,000,000              -
  Accounts payable                                             353,000         851,000
  Accounts payable-related parties                                  -          166,000
  Accrued expenses                                             389,000         450,000
  Deferred revenue                                             150,000              -
  Accrued payroll taxes interest and penalties                 131,000         131,000
                                                           -----------     -----------
      Total current liabilities                              2,062,000       1,756,000
                                                           -----------     -----------

Stockholders' equity
  1996 Preferred stock, 10% cumulative  convertible,  $1
   par value; 488 shares authorized;  155 shares issued;
   1 share outstanding.                                             -               -
  1999  Series B  convertible  preferred  stock,  $1 par
   value; 2,000 shares authorized;  1,832 shares issued;
   50 shares outstanding                                            -               -
  1999  Series C  convertible  preferred  stock,  $1 par
   value; 2,000 shares authorized;  1,995 shares issued;
   100 and 375 shares outstanding.                                  -                -
  Common   stock,    $.001   par   value;    100,000,000
   authorized;  62,923,624  and  56,651,409  issued  and
   outstanding.                                                 63,000          56,000
  Dividends payable with common stock                            8,000           7,000
  Additional paid-in capital                                38,577,000      35,341,000
  Accumulated deficit                                      (37,045,000)    (34,059,000)
                                                           -----------     -----------
      Total stockholders' equity                             1,603,000       1,345,000
                                                           -----------     -----------

Total liabilities and stockholders' equity                 $ 3,665,000     $ 3,101,000
                                                           ===========     ===========




               Unaudited Consolidated Statements of Operations


                                                    For the
                                     For the         Three
                                   Three Months      Months     For the Six    For the Six
                                      Ended          Ended     Months Ended   Months Ended
                                     June 30,       June 30,      June 30,      June 30,
                                       2002           2001         2002          2001
                                   -----------     ---------    -----------   -----------

Revenues                            $      -       $      -     $   10,000     $  30,000

Direct costs of services              178,000         28,000       392,000        34,000
                                    ---------      ---------     ---------     ---------

Gross margin                         (178,000)       (28,000)     (382,000)       (4,000)
                                    ---------      ---------     ---------     ---------

Software research and
development costs                       9,000        320,000       380,000       599,000

Selling, general and
 administrative expenses            1,078,000      1,107,000     1,968,000     3,017,000
                                    ---------      ---------     ---------     ---------

Net loss from operations           (1,265,000)    (1,455,000)   (2,730,000)   (3,620,000)

Other income                            4,000             -          5,000            -

Financing Costs                            -        (167,000)     (203,000)     (236,000)

Interest expense                      (48,000)       (13,000)      (58,000)      (38,000)
                                    ---------      ---------     ---------     ---------

Net loss                          $(1,309,000)   $(1,635,000)  $(2,986,000)  $(3,894,000)
                                  ===========    ===========   ===========   ===========

Net loss per common share         $     (0.02)    $    (0.03)   $    (0.05)   $     (.08)
                                  ===========     ==========    ==========    ==========

Weighted average shares
outstanding                        60,402,930     49,196,979    59,139,133    48,313,235
                                   ==========     ==========    ==========    ==========


Had the  Company  adopted  FAS 142 as of  January  1,  2001,  the  historical
amounts previously reported would have been adjusted to the following:

Net (loss) as reported                           $(1,635,000)                $(3,894,000)
Add back:  Goodwill amortization                      39,000                      78,000
                                                 -----------                   ---------

Adjusted net loss                                $(1,596,000)                $(3,972,000)
                                                 ===========                 ===========

Basic and diluted  loss per share
as reported                                      $     (0.03)                $     (0.08)
                                                 ===========                 ===========

Goodwill amortization                            $        -                  $        -
                                                 ===========                 ===========

Adjusted loss per share                          $     (0.03)                $     (0.08)
                                                 ===========                 ===========




               Unaudited Consolidated Statements of Cash Flows


                                                        For the Six Months Ended June 30,
                                                        ---------------------------------
                                                               2002            2001
                                                        --------------     --------------
Cash flows from operating activities
  Net loss                                                 $(2,986,000)    $(3,894,000)
  Adjustments  to  reconcile  net  income  (loss) to net
   cash flows (used in) provided by operating activities
   Depreciation and amortization                               206,000         252,000
   Amortization of discount and warrants-convertible
    debt                                                        70,000         223,000
   Options and warrants issued in conjunction with
    stock issuance, services and for litigation
    settlements, respectively                                  158,000         366,000
   Net changes in current assets and current liabilities       (28,000)        290,000
                                                           -----------     -----------
      Net cash flows (used in) provided by operating
       activities                                           (2,580,000)     (2,763,000)
                                                           -----------     -----------

Cash flows from investing activities
  Software development costs incurred                         (373,000)       (275,000)
  Purchase of property and equipment                           (48,000)        (64,000)
                                                           -----------     -----------
      Net cash flows (used in) investing activities           (421,000)       (339,000)
                                                           -----------     -----------

Cash flows from financing activities
  Advances received on convertible note                      1,000,000       1,500,000
  Advances (payments) under financing agreement, net                -               -
  Payments on capital leases and debt                         (186,000)        (98,000)
  Proceeds from the issuance of common stock, net of
   offering costs                                            2,345,000         550,000
  Net proceeds from exercise of options and warrants           115,000         165,000
                                                           -----------     -----------
      Net cash flows provided by (used in) financing
       activities                                            3,274,000       2,117,000
                                                           -----------     -----------

Net increase (decrease) in cash and cash equivalents           273,000        (985,000)
Cash and cash equivalents at beginning of period                 8,000       1,007,000
                                                           -----------     -----------

Cash and cash equivalents at end of period                 $   281,000     $    22,000
                                                           ===========     ===========

Non-cash and investing and financing activities for the six months ended
June 30, 2002:

      Options and warrants valued at $27,000 for services provided.
      Options valued at $132,000 as financing costs issued to an officer
       for past financial support.
      An accrued liability of $590,000 for warrants earned in 2001 was
       satisfied by issuing the warrants.
      In-the-money conversion feature on convertible debt valued at $70,000.
      Financed insurance policies of $65,000 by issuing a note payable.

Non-cash and investing and financing activities for the six months ended
June 30, 2001:

      Conversion of preferred stock into common stock (Note 3).
      Conversion of $600,000 note payable into 1,088,534 shares of common
       stock (Note 3).
      Financed insurance policies of $3,000 by issuing a note payable.



            Notes to Unaudited Consolidated Financial Statements


Note 1 - Summary of Significant Accounting Policies

The consolidated  financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments),  which are, in the opinion of
management,  necessary for a fair  presentation  of the  financial  position and
operating results for the interim periods. The unaudited  consolidated financial
statements  as of June  30,  2002  have  been  derived  from  audited  financial
statements.  The unaudited  consolidated  financial  statements contained herein
should be read in  conjunction  with the financial  statements and notes thereto
contained  in the  Company's  Form 10-K for the fiscal year ended  December  31,
2001. The results of operations for the three months ended June 30, 2002 are not
necessarily indicative of the results for the entire fiscal year ending December
31, 2002.

Cost of Services Provided

Cost of services provided includes amortization of software development costs on
projects ready for their intended use, license and data service fees.


Note 2 - Goodwill

                                                          June 30, 2002
                                                          -------------
  Goodwill acquired through the Cymedix acquisition        $ 2,369,000
  Less accumulated amortization                               (634,000)
                                                           -----------

                                                           $ 1,735,000
                                                           ===========

The Company has  completed  step one,  impairment  review of FAS 142,  effective
January  1,  2002,  and has  determined  that  the fair  value of that  goodwill
associated  with its Cymedix  reporting unit using a discounted cash flow method
had no impairment.


Note 3 - Equity Transactions

The Company  received  proceeds of $114,750  from the exercise of stock  options
resulting in the issuance of 315,000 shares of common stock during the first two
quarters of 2002.

Equity Line

The Company had entered into an Equity Line of Credit Agreement dated as of June
12, 2001, which provided that the Company could put to the provider,  subject to
certain  conditions,  the  purchase  of common  stock of the  Company  at prices
calculated from a formula as defined in the agreement.  Under the agreement, the
providers  of the Equity Line of Credit had  committed to advance to the Company
funds in an amount of up to  $10,000,000,  as requested  by the Company,  over a
24-month  period  in return  for  common  stock  issued  by the  Company  to the
providers.  The Equity Line of Credit  Agreement  was  terminated  by the mutual
agreement of the parties on August 6, 2002. In  connection  with our equity line
of credit financing, we had registered 9,500,000 shares with the SEC for sale by
the providers of the financing, of which 4,796,763 shares remained available for
issuance at the time the equity line of credit  financing  was  terminated.  The
Company will de-register  those shares from registration with the SEC.

During the period January to April 2002, the Company received  $972,000,  net of
commissions  and escrow fees from eight equity line  advances,  resulting in the
issuance of 1,954,715 shares of common stock.

Warrants

As of February 18,  2002,  the Company  executed a Amended and  Restated  Common
Stock Purchase Warrant  obligating the Company to issue up to 7,000,000 warrants
under  an  agreement  with a  pharmacy  management  company  for  the  Company's
proprietary  software to be interfaced with core medical service  providers,  in
which one of the  Company's  audit  committee  members is a related party to the
pharmacy management company.  The agreement provides for 3,000,000 warrants with
an exercise  price of $.30,  3,000,000  warrants with an exercise price of $.50,
and 1,000,000 warrants with an exercise price of $1.75 all expiring September 8,
2004.  The right to exercise  the  warrants  are earned in  increments  based on
certain performance  criteria.  At December 31, 1999,  1,000,000 of the warrants
had been earned. In connection with the 1,000,000  warrants earned,  the Company
recorded  expense of $1,364,000  valued using the  Black-Scholes  option pricing
model,  with assumptions of 132%  volatility,  no dividend yield and a risk-free
rate of 5.5%. No warrants were earned during 2000.  During 2001,  850,000 of the
warrants had been earned. In connection with the obligation to issue the 850,000
warrants  earned,  the Company  recorded  expense of  $590,000  during the third
quarter of 2001  valued  using the  Black-Scholes  option  pricing  model,  with
assumptions of 132% volatility, no dividend yield and a risk-free rate of 5.5%.

The Company has the obligation to provide  5,150,000  warrants under the Amended
and Restated  Common  Stock  Purchase  Warrant in the future if the  performance
criteria specified are met.

Under the agreement,  the current performance criteria in effect provide for the
issuance of 600,000 warrants.  Had the current performance  criteria been met at
June 30,  2002,  the fair value of the related  warrants and  resulting  expense
would have been approximately  $197,000,  using the Black-Scholes option pricing
model,  with assumptions of 121%  volatility,  no dividend yield and a risk-free
rate of 5.5%.

Convertible Loan

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

Private Placement

During April 2002,  the Company  initiated a private  placement of its $.001 par
value common stock. A total of 3,452,500  units were placed,  each consisting of
one share of common stock and one warrant.  Subscribers  purchased each unit for
$0.40 and are entitled to exercise  warrant  rights to purchase one share of the
common  stock of the company at a purchase  price of $.0.50 per share for a five
year period on or after  September 1, 2002 and prior to  September 1, 2007.  The
Company received a total of $1,381,000 from this private placement.  The Company
has  committed  to  register  the  above  underlying  shares  in a  registration
statement  with  the  Securities  and  Exchange  Commission  within  90  days of
completion of the offering.


Note 4 - Stock Options

During the first six months of 2002,  the  Company  granted  options to purchase
1,099,500  shares  at  exercise-  prices  of $.59 to $.94 per  share to  current
employees and directors and consultants of the Company, under the Company's 1999
Stock Option Plan.  During the first six months of 2002,  315,000  stock options
were exercised.


Note 5 - Related Party Transactions

The Company received advances from a related party in 2001 that totaled $166,000
at December 31, 2001. The entire amount was repaid during February 2002.

The Company has also entered into  transactions  and  agreements  with Wellpoint
Health  Networks,  Inc., in which a member of the Company's audit committee is a
related party. (See Note 3, Warrants and Convertible Loan.)


Note 6 - Litigation

August 7, 2001, a former officer of the Company filed an action,  entitled Barry
J. McDonald v. Medix Resources,  Inc.,  f/k/a  International  Nursing  Services,
Inc., and John Yeros,  CN 01CV2119,  in the District  Court of Arapahoe  County,
Colorado,  against the Company and its former  President  and CEO. The plaintiff
alleged (1) breach of an employment agreement,  a stock option agreement and the
related stock option plan,  (2) a duty of good faith and fair  dealing,  and (3)
violation  of the  Colorado  Wage Claim Act. On August 13,  2002,  we reached an
agreement in principal  with the  plaintiff to settle the  litigation  by paying
plaintiff  $25,000 on or before October 1, 2002,  with no admission of liability
on our part.  This  settlement is subject to the  negotiation and execution of a
final settlement agreement.

On December 17, 2001, Vision Management  Consulting,  L.L.C., filed suit against
us in the  Superior  Court of New Jersey,  Law  Division - Essex  County,  in an
action entitled Vision Management Consulting,  L.L.C. v. Medix Resources,  Inc.,
Docket No.  ESX-L-11438-01.  The  complaint  filed by Vision  alleged  breach of
contract,  unjust enrichment,  breach of the duty of good faith and fair dealing
and  misrepresentation  on the part of Medix in connection  with our performance
under a  negotiated  settlement  agreement  which we had entered into to resolve
certain  claims  that  existed  between  the  parties  and that arose out of the
termination of operations of our Automated  Design Concepts  division earlier in
2001.  On August 12, 2002,  we reached an agreement in principal  with Vision to
settle this litigation by payment from us to Vision of $55,000,  to be paid over
the next  three  months,  with no  admission  of  liability  on our  part.  This
settlement is subject to the  negotiation  and  execution of a final  settlement
agreement.


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

Overview

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

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


Forward-Looking Statements and Associated Risks

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

We have reported net losses of ($10,636,000),  ($5,415,000) and ($4,847,000) for
the years ended December 31, 2001, 2000 and 1999, respectively. At June 30, 2002
we had an  accumulated  deficit  of  ($36,925,000)  and a negative  net  working
capital deficit of $(1,362,000).  These losses and negative  operating cash flow
have caused our accountants to include a "going concern"  qualification in their
report in connection  with their audit of our financial  statements for the year
ended December 31, 2001.

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

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

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

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

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

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

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

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

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

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

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

As of August 10, 2002, we had 62,923,624 shares of common stock outstanding.  As
of that date, approximately 28,928,312 shares were issuable upon the exercise of
outstanding  options,  warrants or other rights, and the conversion of preferred
stock.  Most of these  shares  will be  immediately  saleable  upon  exercise or
conversion  under  registration  statements  we have  filed  with the  SEC.  The
exercise  prices of options,  warrants or other  rights to acquire  common stock
presently  outstanding range from $0.19 per share to $4.97 per share. During the
respective terms of the outstanding options, warrants, preferred stock and other
outstanding  derivative  securities,  the holders are given the  opportunity  to
profit from a rise in the market price of the common stock,  and the exercise of
any options, warrants or other rights may dilute the book value per share of the
common stock and put  downward  pressure on the price of the common  stock.  The
existence of the options,  conversion  rights,  or any outstanding  warrants may
adversely affect the terms on which we may obtain  additional  equity financing.
Moreover,  the holders of such securities are likely to exercise their rights to
acquire common stock at a time when we would otherwise be able to obtain capital
on terms  more  favorable  than  could  be  obtained  through  the  exercise  or
conversion of such securities.  Any agreement to sell, or convert debt or equity
securities into,  common stock at a future date and at a price based on the then
current  market price will provide an incentive to the investor or third parties
to sell the common  stock short to decrease the price and increase the number of
shares they may receive in a future purchase, whether directly from us or in the
market. Both our equity line of credit was priced and our outstanding $1,000,000
convertible  promissory  note is priced at a discount to the market price at the
time of a future draw or conversion.

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

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

Results of Operation

Comparison of These Three Months Ended June 30, 2002 and June 30, 2001

Direct  costs  increased  $150,000  from $28,000 at June 30, 2001 to $178,000 at
June 30,  2002.  The  increase  reflects  expenses  incurred  by the company for
licenses  and  service  fees  incurred  in  2002  related  to  establishment  of
infrastructure necessary to provide connectivity services to our customers.

Research and development costs decreased  approximately  $311,000 or 97% for the
three months ended June 30, 2001, to the three months ended June 30, 2002.  This
decrease represents the Company's  capitalization of software  development costs
for products where the preliminary project stage has been completed,  management
has committed to funding the project and  completion and use of the software for
its intended use is probable.

Selling,  general, and administrative  expenses decreased  approximately $29,000
from  $1,107,000 for the three months ended June 30, 2001, to $1,078,000 for the
three months ended June 30, 2002.

Net loss from operations  decreased  approximately  $190,000 from $1,455,000 for
the three months ended June 30, 2001, to  $1,265,000  for the three months ended
June 30, 2002, due to all of the reasons discussed above.

Financing  costs  decreased  in 2002 due to financing  costs  incurred in 2001of
$167,000 related to a $2.5 million  convertible  debt credit facility  available
that did not exist in 2002.

Interest  expense  increased  $35,000 from June 30, 2001 to June 30, 2002 due to
interest  accrued on the convertible  note issued by the company during February
2002.

Total net loss decreased  approximately  $326,000 from  $1,635,000 for the three
months ended June 30, 2001,  to  $1,309,000  for the three months ended June 30,
2002, also due to the reasons discussed above.

Comparison of The Six Months Ended June 30, 2002 and June 30, 2001

Total  revenues for the six months ended June 30,  2002,  were $10,000  compared
with $30,000 for the six months ended June 30, 2001.

Direct  costs  increased  $358,000  from $34,000 at June 30, 2001 to $392,000 at
June 30,  2002.  The  increase  reflects  expenses  incurred  by the company for
licenses  and  service  fees  incurred  in  2002  related  to  establishment  of
infrastructure necessary to provide connectivity services to our customers.

Research and development costs decreased  approximately  $219,000 or 37% for the
six months  ended June 30, 2001,  to the six months  ended June 30,  2002.  This
decrease represents the Company's  capitalization of software  development costs
for products where the preliminary project stage has been completed,  management
has committed to funding the project and  completion and use of the software for
its intended use is probable.

Selling, general, and administrative expenses decreased approximately $1,049,000
or 35% from $3,017,000 for the six months ended June 30, 2001, to $1,968,000 for
the six months ended June 30, 2002. The decrease is due to cost cutting measures
implemented  by the  company  during  2001,  which  resulted  in  the  following
decreases at June 30, 2002 compared to June 30, 2001:

        o     Salaries and wages, $(463,000).
        o     Travel and entertainment, $(27,000)
        o     Consulting fees, $(105,000)
        o     Legal fees, $(11,000)
        o     Black Scholes expense related to options and warrants granted to
               non-employees for services, $(245,000).
        o     Settlements (of lawsuits), $(119,000)
        o     Goodwill amortization, $(78,000)
        o     Shareholder relations, $(58,000)

Those decreases were partially offset by the following increases:

        o     Rent  expense,  $151,000,  due to terminating the New Jersey lease
              with a penalty of $34,000 and increased rent for consolidating our
              offices in New York City
        o     Insurance, $74,000, due to increased rates

Net loss from operations  decreased  approximately  $890,000 from $3,620,000 for
the six months ended June 30, 2001, to $2,730,000  for the six months ended June
30, 2002, due to all of the reasons discussed above.

Financing  costs  decreased  in 2002 due to financing  costs  incurred in 2001of
$236,000 related to a $2.5 million  convertible  debt credit facility  available
that did not exist in 2002,  offset by  financing  costs of $70,000  incurred in
February 2002 related to a $1,000,000 convertible debt facility, and $133,000 in
financing  costs  related to  warrants  issued to an officer of the  company for
loans he had made to the company during 2001.

Interest  expense  increased  $20,000 from June 30, 2001 to June 30, 2002 due to
interest  accrued on the convertible  note issued by the company during February
2002,  as compared  to interest  accrued on the $2.5  million  convertible  debt
facility in 2001.

Net loss  decreased  approximately  $908,000 from  $3,894,000 for the six months
ended June 30, 2001, to $2,986,000  for the six months ended June 30, 2002,  due
to the reasons discussed above.

Liquidity and Capital Resources

We have $281,000 in cash as of June 30, 2002 with net working capital deficit of
$(1,362,000)  at June 30, 2002.  During the six months ended June 30, 2002,  net
cash used in operating  activities was  $2,580,000.  During the six months ended
June 30, 2002, we raised  $3,460,000  from the exercise of options and warrants,
and the  issuance  of  common  stock  and  issuance  of  convertible  debt.  The
additional cash generated  allowed us to pay down  outstanding  accounts payable
outstanding at December 31, 2001. We have been delinquent, from time to time, in
the payment of our current  obligations,  including  payments of withholding and
other tax obligations. From time to time, members of senior management have made
short-term  loans  to us to  meet  payroll  obligations.  However,  there  is no
commitment  to continue  that  practice.  As noted  above,  we are  presently in
negotiations with institutional sources regarding debt and equity instruments to
fund the Company. While there can be no assurance that additional investments or
financings  will be  available  to us as  needed,  management  fully  expects to
conclude  the  necessary  financing  in the near term.  Failure  to obtain  such
capital on a timely basis could result in lost business opportunities,  the sale
of the  Cymedix(R)business  at a distressed  price or the  financial  failure of
Medix.

The Company  entered into a secured  convertible  loan agreement with a Company,
dated February 19, 2002, pursuant to which we borrowed $1,000,000 from WellPoint
Health  Networks  Inc.  The loan becomes  payable on February  19, 2003,  if not
converted  into our common  stock.  Interest is at a floating  rate of 300 basis
points over prime,  as it is  adjusted.  Conversion  into common stock is at the
option of either WellPoint or Medix at a contingent  conversion  price. The loan
is secured  by the grant of a  security  interest  in all  Medix's  intellectual
property, including its patent, copyrights and trademarks. See footnote 3 to the
Financial Statements.

During April 2002,  the Company  initiated a private  placement of its $.001 par
value common stock. A total of 3,452,500 units were placed through May 14, 2002,
each  consisting  of one share of  common  stock  and one  warrant.  Subscribers
purchased  each unit for $0.40 and are  entitled to exercise  warrant  rights to
purchase  one share of the common  stock of the  company at a purchase  price of
$.0.50 per share for a five year period on or after  September 1, 2002 and prior
to  September  1, 2007.  The Company  received a total of  $1,381,000  from this
private  placement.  The Company has committed to register the above  underlying
shares in a registration  statement with the Securities and Exchange  Commission
within 90 days of completion of the offering.


                         PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

On December 17, 2001, Vision Management  Consulting,  L.L.C., filed suit against
us in the  Superior  Court of New Jersey,  Law  Division - Essex  County,  in an
action entitled Vision Management Consulting,  L.L.C. v. Medix Resources,  Inc.,
Docket No.  ESX-L-11438-01.  The  complaint  filed by Vision  alleged  breach of
contract,  unjust enrichment,  breach of the duty of good faith and fair dealing
and  misrepresentation  on the part of Medix in connection  with our performance
under a  negotiated  settlement  agreement  which we had entered into to resolve
certain  claims  that  existed  between  the  parties  and that arose out of the
termination of operations of our Automated  Design Concepts  division earlier in
2001.  On August 12, 2002,  we reached an agreement in principal  with Vision to
settle this litigation by payment from us to Vision of $55,000,  to be paid over
the next  three  months,  with no  admission  of  liability  on our  part.  This
settlement is subject to the  negotiation  and  execution of a final  settlement
agreement.

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


Item 2.  Changes in Securities and Use of Proceeds

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

  Security                    Number of                                     Exemption
   Issued         Date         Shares     Consideration     Purchasers       Claimed
------------   ----------     ---------   -------------   --------------   ------------
Common Stock   April 2002       234,608      $88,956      Cornell          Section 4(2);
                                                          Capital          Rule 506 of
                                                          partners, LP     Regulation D
                                                          and Dutchess
                                                          Private
                                                          Equities Fund,
                                                          LP

Common Stock   May 2002       3,452,500   $1,381,000      A total of 47    Section 4(2);
                                                          individual       Rule 506 of
                                                          investors        Regulation D

Common Stock   April 2002       100,000      $25,000      Option exercise  Section 4(2)


Item 3.  Defaults Upon Senior Securities
      None.

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

Item 5.  Other Information
      None.

Item 6.  Exhibits and Reports on Form 8-K

      a.    Exhibits

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

            10.1   Binding   Letter  of  Intent  for  Pilot  and   Production
            Programs,   dated   September   8,  1999   between   Cymedix  and
            Professional  Claims  Services,  Inc. (d/b/a  WellPoint  Pharmacy
            management).

            10.2 Pilot  Agreement,  dated as of  December  28,  1999  between
            Cymedix and Professional  Claims Services,  Inc. (d/b/a WellPoint
            Pharmacy Management, Inc).

            10.3  Employment  Agreement  between  the Company and Mr. Mark W.
            Lerner, dated as of July 1, 2002.

            10.4  Employment  Agreement  between the Company and  Patricia A.
            Minicucci dated as of February 15, 2002.

            10.5  Employment  Agreement  between  the  Company  and  Louis E.
            Hyman dated as of May 14, 2002.

            10.6  Employment  Agreement  between  the  Company  and  Bryan R.
            Ellacott dated  as of March 1, 2002.

            99.1  Certification  by John R. Prufeta,  President and CEO under
            Section 906 of the Sarbanes-Oxley Act of 2002

            99.2  Certification  by Mark W. Lerner,  Executive Vice President
            and CFO under Section 906 of the Sarbanes-Oxley Act of 2002


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

1) Form 8-K, filed with the  Commission on April 12, 2002,  reporting in Item
5 a  press  release  announcing  that  its  latest  version  of its  Cymedix(R)
product  suite,  Cymedix  III,  is  now  complete,  and  is  available  to be
deployed in target  markets.

2) Form 8-K, filed with the  Commission on May 24, 2002,  reporting in Item 5
a  press  release  announcing  the  completion  of  a  private  placement  of
securities raising $1,381,000.

3) Form 8-K, filed with the  Commission on June 4, 2002,  reporting in Item 5
a press  release  announcing  the formal  launch of market  activities in the
state of  Georgia.

4) Form 8-K,  filed with the  Commission on June 14, 2002,  reporting in Item
5 a press  release  announcing  that the Company  would  provide a telephonic
progress report.

5) Form 8-K,  filed with the  Commission on June 14, 2002,  reporting in Item
5 a press  release  announcing an agreement to expand its  relationship  with
Express  Scripts,   Inc.,  one  of  the  nation's  leading  pharmacy  benefit
managers.

6) Form 8-K,  filed with the  Commission on June 26, 2002,  reporting in Item
5 a press release  announcing  that  effective  July 1, 2002,  Mark W. Lerner
will  replace  Gary L. Smith as the  Company's  Chief  Financial  Officer and
Secretary.


                                 SIGNATURES


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


Dated:  August 19, 2002

                                  MEDIX RESOURCES, INC.
                                  (Registrant)


                                  /s/ Mark W. Lerner
                                  Mark W. Lerner

                                  Executive Vice President and Chief
                                   Financial Officer
                                   (Principal Financial and Accounting Officer)